Commitments and contingencies

9 Months Ended

Sep. 30, 2022

Commitments and contingencies

Commitments and contingencies

Note 7. Commitments and contingencies

Leases

On March 10, 2021, the Company entered into a lease agreement with SIG 110 LLC with respect to a 3,127 square foot office space at 110 Allen Road, Suite 401, Basking Ridge, New Jersey. Pursuant to the terms of the lease agreement, the initial term is for twenty-four (24) months expiring on March 10, 2023. The initial base rent is $4,690.50 per month for the first twelve (12) months and $6,514.58 for the remaining twelve (12) months. During the nine months ended September 30, 2021, in connection with the lease, the Company paid a security deposit of $13,000, which is included in deposits on the accompanying condensed consolidated balance sheet as of September 30, 2022.

In connection with the Merger of BioPharmX, the Company acquired a lease and corresponding sublease for the BioPharmX facility in San Jose, California. The sublease is to be used for general office and research laboratory purposes, has an effective date of February 1, 2020, and has a lease term of 4 years which expires on December 30, 2023. The lease expense is significantly reduced by the payments received in connection with the sublease.

The components of lease expense were as follows:

	Three months ended		Nine Months Ended
		September 30, 2022
Operating leases:
Operating lease cost	$	99,142	$	297,247
Variable lease cost		16,672		59,023
Operating lease expense	$	115,814	$	356,270
Lease income - sub lease		(115,281)		(328,803)
Net rent expense	$	533	$	27,467
	Three months ended		Nine Months Ended
		September 30, 2021
Operating leases:
Operating lease cost	$	99,142	$	284,415
Variable lease cost		24,948		77,099
Operating lease expense	$	124,090	$	361,514
Lease income - sub lease		(106,435)		(317,998)
Net rent expense	$	17,655	$	43,516

Other information:

		Nine months Ended			Nine Months Ended
		September 30, 2022			September 30, 2021
Operating cash flows - operating leases	$	303,820		$	273,313
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	122,809
Weighted-average remaining lease term – operating leases		1.2			2.1
Weighted-average discount rate – operating leases		14.4	%		14.1	%

As of September 30, 2022, future minimum payments for the leases are as follows:

	Operating
	Leases
Remaining Months in Year Ended December 31, 2022	$	102,686
Year Ended December 31, 2023		357,599
Total	$	460,285
Less present value discount		(40,603)
Operating lease liabilities	$	419,682

Litigation

The Company is not currently a party to any legal or governmental regulatory proceedings, nor is management aware of any pending or threatened legal or government regulatory proceedings proposed to be initiated against the Company that would have a material adverse effect on the Company’s business, financial condition or operating results.

From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business.  These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, the Company reviews the status of significant matters, if any exist, and assess its potential financial exposure.  If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict; therefore, accruals are based on the best information available at the time.  As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation.