LEASES

9 Months Ended

Sep. 30, 2021

LEASES

LEASES

NOTE 7    LEASES

On April 5, 2021, the Company entered into a new lease agreement for office space in San Diego, California, effective June 1, 2021. The initial lease term is three years and there is an option to renew for an additional five years. Management does not expect to exercise its option to renew. Monthly rental payments under the new lease begin at $23,787, which is comprised of $18,518 of base rent plus $5,268 of common area maintenance fees, with annual escalation of 3.5%. The Company paid a security deposit of $50,213 in connection with the new lease agreement.

The Company determined that the value of the lease liability and the related right-of-use asset at inception was $814,817, using an estimated incremental borrowing rate of 5%.

The Company also rents office space in San Diego, California on a month-to-month basis, at monthly rent of $5,127, which is comprised of $4,572 of base rent plus $555 of association fees.

During the three and nine months ended September 30, 2021, aggregate operating lease expense was $89,305 and $144,765, respectively. For the three and nine months ended September 30, 2020, operating lease expense was $15,616 and $42,832, respectively. As of September 30, 2021, the Company did not have any financing leases.

Maturities of lease liabilities as of September 30, 2021 were as follows:

Maturity Date
Remaining three months ending December 31, 2021	$	71,361
2022		289,981
2023		297,917
2024		125,530
Total lease payments		784,789
Less: Imputed interest		(52,051)
Present value of lease liabilities		732,738
Less: current portion		(257,198)
Lease liabilities, non-current portion	$	475,540

Supplemental cash flow information related to the lease was as follows:

	For the Nine Months Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating lease	$	82,079	$	—
Right-of-use asset obtained in exchange for lease obligations
Operating lease	$	814,817	$	—