Annual report pursuant to Section 13 and 15(d)

Right-of-Use Assets and Lease Liabilities

v3.20.1
Right-of-Use Assets and Lease Liabilities
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Right-of-Use Assets and Lease Liabilities

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

 

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 60-month term at the end of 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 adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (Topic 842) effective January 1, 2019 using the modified-retrospective method and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of previous conclusions related to contracts containing leases, lease classification and initial direct costs, and therefore the comparative periods presented are not adjusted. In addition, the Company elected to adopt the short-term lease exception and not apply Topic 842 to arrangements with lease terms of 12 months or less. On January 1, 2019, upon adoption of Topic 842, the Company recorded right-of-use assets of $1,099,400, lease liabilities of $1,121,873 and eliminated deferred rent of $22,473. The Company determined the lease liabilities using the Company’s estimated incremental borrowing rate of 8.5% to estimate the present value of the remaining monthly lease payments.

 

Our operating lease cost is as follows:

 

    For the Year Ended December 31, 2019  
Operating lease cost   $ 341,966  
         

 

 

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

 

    For the Year Ended December 31, 2019  
Operating cash flow information:        
Cash paid for amounts included in the measurement of lease liabilities   $ 334,203  

 

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

 

    December 31, 2019  
Remaining lease term     2.7 years  
Discount rate     8.5 %

 

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

 

Year ended December 31, 2020     344,229  
Year ended December 31, 2021     354,561  
Year ended December 31, 2022     271,854  
Total   $ 970,644  
Less: Imputed interest     (114,011 )
Present value of our lease liability   $ 856,633