Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies [Abstract]

(5)	Commitments and Contingencies

(a)

Leases

As of December 31, 2021, the Company has the right of use for its facilities located in Suwanee, GA under a long-term operating lease agreement, as amended (Lease Agreement), which expires January 2024. The Company has the option (Extension Option) to extend the term for two consecutive terms of five years each at 100% of the then current market rate, as agreed by both parties, and upon certain terms and conditions, and the Company must provide written notice of its intent to exercise this extension option at least twelve months prior to the expiration date of January 2024. Under the terms of the lease agreement, the Company’s monthly rent is subject to increases on an annual basis. As of December 31, 2021, the Company’s monthly rent payment was $44,339.

Operating right-of-use assets and lease liabilities consist of the following as of December 31:

	2021		2020
Lease right-of-use assets	$	635,668		1,008,887
Total	$	635,668		1,008,887

Lease liabilities:	2021		2020
Lease liabilities – current portion	$	383,616		413,211
Lease liabilities – long-term portion		386,224		769,840
Total	$	769,840		1,183,051

As of December 31, 2021 and 2020, the weighted average discount rate for all operating leases with initial terms of more than one year was approximately 10% and the weighted average remaining term for operating leases was 2.1 years and 3.1 years, respectively.

The operating lease agreement for our facility includes non-lease costs, such as common area maintenance, which are recorded as variable lease costs. Operating lease expenses for the year ended are summarized as follows for the years ending December 31:

Lease cost:	2021		2020
Operating lease cost	$	487,746		490,754
Short-term lease cost		3,343		—
Variable lease cost		17,497		14,326
Total	$	508,586		505,080

(b)

Financing Leases

The Company has the right of use for certain leasehold improvements and office equipment at its facility located in Suwanee, GA. For the years ending December 31, 2021 and 2020, no new financing leases were entered into during the year. Lease expense will be recognized as payment of financing lease, depreciation expense and interest expense.

Financing right-of-use assets and lease liabilities consist of the following as of December 31:

	2021			2020
Lease right-of-use assets	$	150,122			150,122
Accumulated depreciation		(120,043	)		(101,503	)
Net	$	30,079			48,619

Lease liabilities:	2021		2020
Lease liabilities – current portion	$	23,058		20,861
Lease liabilities – long-term portion		16,193		39,252
Total	$	39,251		60,113

As of December 31, 2021 and 2020, the weighted average discount rate for all financing leases with initial terms of more than one year was approximately 10%, and the weighted average remaining term for financing leases was 1.6 and 2.6 years, respectively. Depreciation expense associated with the Company’s financing leases was $18,540 and $18,282, respectively, and interest expense was $5,090 and $7,078 for the years ended December 31, 2021 and 2020, respectively.

The following table summarizes the Company’s undiscounted cash payment obligations for its lease liabilities with initial terms of more than twelve months as of December 31, 2021:

Operating leases:
2022	$	541,307
2023		557,500
2024		47,029
Total undiscounted lease payments -operating leases		1,145,836
Financing leases:
2022		25,951
2023		16,792
Total undiscounted lease payments -finance leases		42,743
Total undiscounted lease payments		1,188,579
Less: imputed interest		(379,488	)
Lease liability		809,091
Less: current portion of lease liability		(406,674	)
Lease liability, less current portion	$	402,417

(c)

Clinical Trial Agreements

As part of the regulatory approval process for taking its products to market or conducting post-market clinical studies to support marketing efforts for products with regulatory clearance, the Company enters into a CTA to compensate each participating medical institution and physician. Generally, upon executing a CTA with a participating medical institution or physician, the Company pays a fee for review board approval that usually requires annual renewals and one time site startup costs. As individual patients are enrolled in the clinical trial by the participating medical institution or physician, the Company pays certain per patient fees according to the CTA for the duration of the trial. Expenses incurred in connection with these CTA activities are expensed as services are provided and are included in research and development expenses on the accompany statements of comprehensive loss.

(d)

Legal Claims

Occasionally, the Company may be a party to legal claims or proceedings of which the outcomes are subject to significant uncertainty. In accordance with ASC 450, Contingencies, the Company will assess the likelihood of an adverse judgment for any outstanding claim as well as ranges of probable losses. When it has been determined that a loss is probable and the amount can be reasonably estimated, the Company will record a liability. For the years ended December 31, 2021 and 2020, there were no material legal contingencies requiring accrual or disclosure.

The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director who is or was serving at the Company’s request in such capacity. The Company entered into employment agreements with its officers, which provides for indemnification protection in the executive’s capacity as an officer for actions taken within the scope of employment. The maximum amount of potential future indemnification is unlimited; however, the Company has obtained director and officer insurance that limits its exposure. The Company believes the fair value for these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of December 31, 2021 and 2020.