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Operating Lease Right-of-Use Assets and Operating Lease Liabilities
 6 Months Ended
Jun. 30, 2022
Operating Lease, Liability [Abstract]  
OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

NOTE 4 – OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

 

In January 2019, the Company renewed and extended the term of its lease facility for another three-year period from January 2019 to December 2021 starting with a monthly base rent of $2,567 plus a pro rata share of operating expenses beginning January 2019. The base rent was subject to annual increases beginning the 2nd and 3rd lease year as defined in the lease agreement. In addition to the monthly base rent, the Company is charged separately for common area maintenance which is considered a non-lease component. These non-lease component payments are expensed as incurred and are not included in operating lease assets or liabilities. On August 27, 2021, the Company entered into an amendment agreement with the same landlord to modify the facility lease to relocate and increase the square footage of the lease premises. The term of the lease commenced on October 1, 2021 and will expire on December 31, 2024 with a new monthly base rent of $7,156 plus a pro rata share of operating expenses beginning January 2022. The base rent will be subject to 3% annual increases beginning in the 2nd and 3rd lease year as defined in the amended lease agreement. For the three months ended June 30, 2022 and 2021, rent expense amounted $23,266 and $15,790, respectively. For the six months ended June 30, 2022 and 2021, rent expense amounted to $45,531 and $31,580, respectively, and was included in general and administrative expenses.

 

On August 27, 2021, upon the execution of the amendment agreement, the Company recorded right-of-use assets and operating lease liabilities of $198,898. The remaining lease term for the operating lease is 3 years and the incremental borrowing rate is 18.0% (based on historical borrowing rates) on December 31, 2021.

 

Right-of- use assets are summarized below: 

 

  

June 30,

2022

  

December 31,

2021

 
Office lease (36 months)  $198,898   $271,507 
Less accumulated amortization   (38,288)   (87,198)
Right-of-use asset, net  $160,610   $184,309 

 

Operating Lease liabilities are summarized below: 

 

  

June 30,

2022

   December 31,
2021		 
Office lease  $204,909   $271,507 
Reduction of lease liability   (25,433)   (66,598)
Total lease liability   179,476    204,909 
Less: current portion   60,271    53,897 
Long term portion of lease liability  $119,205   $151,012 

 

Minimum lease payments under the non-cancelable operating lease on June 30, 2022 are as follows:

 

2022 (remainder of year)  $43,582 
2023   89,193 
2024   92,100 
Total   224,875 
Less: present value discount   (45,399)
Total operating lease liability  $179,476