Note 7 – Leases

We adopted Accounting Standards Codification (ASC) Topic 842 on the date of the Merger and recognized an operating right-of-use (ROU) asset of $1.4 million and operating lease liabilities of $1.4 million at upon acquiring the lease in the reverse merger. The Company leases office space in Berkeley Heights, New Jersey which expires on November 15, 2021 under an operating lease. The Company has the option to renew the lease for five years. The Company evaluated the renewal option at the lease commencement date and determined that it will not excise the option to renew. The lease provides for an initial monthly base amount plus annual escalations through the term of the lease. In addition to the monthly base amount in the lease agreement, the Company is required to pay its proportionate share of real estate taxes and operating expenses during the lease term which are expensed as incurred. The discount rate implicit within the lease is not determinable, therefore Company estimated an incremental borrowing rate based on the information available on the date of the Merger. The discount rate used to measure the operating lease liability as of June 30, 2019 was 10.15%.

For the three and six months ended June 30, 2019, the Company’s operating lease expense was $147,973 and $172,635, respectively.

As of June 30, 2019, other information related to the operating lease are as follows:

Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows for operating lease	$	172,635
Right-of use asset obtained in exchange for new operating lease liability	$	1,384,810
Remaining lease term - operating lease liability		2.4
Discount rate - operating lease		10.15	%

Reported as of June 30, 2019
Current portion of operating lease liability	$	492,086
Operating leases, net of current portion		774,278
Total	$	1,266,364

Future minimum lease payments under non-cancelable operating leases as of June 30, 2019 were as follows:

Year ended December 31,
2019 (excluding the six months ended June 30, 2019)	$	297,221
2020		603,371
2021		530,386
Total future minimum lease payments		1,430,978
Less imputed interest		(164,614	)
Total	$	1,266,364