Commitments and contingencies

12 Months Ended

Dec. 31, 2022

Commitments and contingencies

Commitments and contingencies

Note 9. Commitments and contingencies

Leases

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 was significantly reduced by the payments received in connection with the sublease. The lessee defaulted on their lease obligation in the fourth quarter of 2022 due to significant financial difficulties.  The Company is working with the landlord to attempt to resolve the situation.

The components of lease expense were as follows:

	Year Ended		Year Ended
		December 31, 2022		December 31, 2021
Operating leases:
Operating lease cost	$	396,570	$	383,558
Variable lease cost		111,617		108,071
Operating lease expense	$	508,187	$	491,629
Lease income - sub lease		(402,486)		(424,759)
Net rent expense	$	105,701	$	66,870

Other information:

		Year Ended			Year Ended
		December 31, 2022			December 31, 2021
Operating cash flows - operating leases	$	406,506		$	368,050
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	122,809
Weighted-average remaining lease term – operating leases		1.0			1.9
Weighted-average discount rate – operating leases		14.7	%		14.1	%

As of December 31, 2022, future minimum payments for the lease are as follows:

	Operating
	Leases
Remaining Months in Year Ended December 31, 2022	$	—
Year Ended December 31, 2023	$	357,599
Total	$	357,599
Less present value discount		(26,447)
Operating lease liabilities	$	331,152

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.