Quarterly report pursuant to Section 13 or 15(d)

Right-of-Use Assets and Lease Liability

v3.21.1
Right-of-Use Assets and Lease Liability
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Right-of-Use Assets and Lease Liability

Note 5 – Right-of-Use Assets and Lease Liability

 

On September 20, 2017, the Company renewed its operating lease for its manufacturing facility in Irvine, California, effective October 1, 2017, for five years with an option to extend the lease for an additional five years at the end of the initial lease term. The initial lease rate was $26,838 per month with escalating payments. In connection with the lease, the Company is obligated to pay $7,254 monthly for operating expenses for building repairs and maintenance. The Company has no other operating or financing leases with terms greater than 12 months.

 

The Company accounts for this lease following the guidance in ASC Topic 842, Leases, and elected to adopt the short-term lease exception and not apply Topic 842 to arrangements with lease terms of 12 months or less. The Company determined the lease liabilities using the Company’s estimated incremental borrowing rate of 8.5% to estimate the present value of the monthly lease payments.

 

Our operating lease cost is as follows:

 

    For the Three Months Ended March 31,     For the Three Months Ended March 31,  
    2021     2020  
Operating lease cost   $ 85,492     $ 85,492  
                 

 

Supplemental cash flow information related to our operating lease is as follows:

 

    For the Three Months Ended March 31,     For the Three Months Ended March 31,  
    2021     2020  
Operating Cash Flow Information:                
Cash paid for amounts in the measurement of lease liabilities   $ 87,981     $ 85,416  

 

Remaining lease term and discount rate for our operating lease is as follows:      
   

March 31,

2021

 
Remaining lease term     1.5 years  
Discount rate     8.5 %

 

Maturity of our lease liabilities by fiscal year for our operating lease is as follows:

 

Nine months ended December 31, 2021   $ 266,580  
Year ended December 31, 2022     271,854  
Total   $ 538,434  
Less: Imputed Interest     (49,036 )
Present value of our lease liability   $ 489,398