3. Leases

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition approach allowed under ASU 2018‑11 which releases companies from presenting comparative periods and related disclosures under ASC 842 and requires a cumulative‑effect adjustment to the opening balance of retained earnings in the period of adoption (Note 2). The Company is party to two operating leases for office or laboratory space. The Company’s finance leases are immaterial both individually and in the aggregate. The Company has elected to apply the short‑term lease exception to all leases of one year or less. Rent expense for three and nine months ended September 30, 2019 was $38,734 and $166,518, respectively, which are included in operating expenses.

Further, the Company has applied the guidance in ASC 842 to its corporate office and laboratory leases and has determined that these should be classified as operating leases. Consequently, as a result of the adoption of ASC 842, the Company recognized a ROU lease asset of approximately $329,384 with a corresponding lease liability of approximately $348,040 based on the present value of the minimum rental payments of such leases. In accordance with ASC 842, the beginning balance of the ROU lease asset was reduced by the existing deferred rent liability at inception of approximately $18,656. In the consolidated balance sheets at September 30, 2019, the Company has a ROU asset balance of $251,168 and a current and non‑current lease liability of $114,102 and $152,779, respectively, relating to the ROU lease asset. The balance of both the ROU lease asset and the lease liabilities primarily consists of future payments under the Company’s office lease in Boston, Massachusetts.

The Company is party to an operating lease in Boston, Massachusetts for office and laboratory space. The lease commenced in November 2016 with the initial term set to expire in December 2021. This office lease does not have any renewal options.

The Company was party to an operating lease in Solna, Sweden that had month‑to‑month payments and expired on June 30, 2019. Additionally, the Company entered into a new operating lease for office and laboratory space in Solna, Sweden that is effective July 1, 2019 and expires in June 2022. Base rent for this lease is approximately $128,000 annually. The Company recognized a ROU lease asset of approximately $355,330 with a corresponding lease liability of the same amount based on the present value of the minimum rental payments of such leases. As of September 30, 2019, the Company has a ROU asset balance of $309,150 and a current and non-current lease liability of $112,749 and $205,625, respectively, relating to the ROU lease asset relating to its lease in Solna, Sweden.

Quantitative information regarding the Company’s leases for the three and nine months ended September 30, 2019 is as follows:


	Three Months		Nine Months
	Ended		Ended
Lease Cost	September 30, 2019		September 30, 2019
Operating lease cost	$	54,358	$	106,210
Other Information
Operating cash flows paid for amounts included in the measurement of lease liabilities	$	51,394	$	112,211
Operating lease liabilities arising from obtaining right‑of‑use assets	$	585,256	$	585,256
Weighted average remaining lease term (years)		2.3 - 2.8		2.3 - 2.8
Weighted average discount rate		3.0% - 4.3%		3.0% - 4.3%

Future lease payments under noncancelable leases are as follows at September 30, 2019:


	Operating
Future Lease Payments	Leases
Remainder of 2019	$	60,598
2020		244,688
2021		246,983
2022		60,380
Total Lease Payments	$	612,649
Less: Imputed Interest		(27,393)
Total Lease Liabilities	$	585,256

As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date.