XML 23 R12.htm IDEA: XBRL DOCUMENT

Right to Use Assets and Lease Liabilities - Operating Leases

6 Months Ended

Jun. 30, 2021

Note 6 - Right to Use Assets and Lease Liabilities – Operating Leases

The Company leases clinic and administrative facilities under operating leases. The Company evaluates its contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease. Currently, all the Company’s leases are classified as operating leases. Leased assets and corresponding liabilities are recognized based on the present value of the lease payments over the lease term. The lease terms may include options to extend when it is reasonably certain that the Company will exercise that option.

Topic ASC 842 requires the Company to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. Right-of-use assets are recorded in other assets on the Company’s condensed consolidated balance sheets. Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on its condensed consolidated balance sheets. Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease.

On November 1, 2020, the Company entered into an agreement to open a clinic in Minneapolis , Minnesota. The initial lease term is 8 years. Fixed rent payments under the initial term are approximately $511,000.

On May 24, 2021, the Company entered into an agreement to open a clinic in St. Louis Park, Minnesota, which is expected to begin operations in the third quarter of 2021. The initial lease term is seven years. Fixed rent payments under the initial term are approximately $673,000.

Additionally, on June 8, 2021, the Company entered into an agreement to open a clinic in Eden Prairie , Minnesota, which is expected to begin operation in the third quarter of 2021. The initial lease term is eight years. Fixed rent payments under the initial term are approximately $620,000.

On June 24, 2021, the Company entered into an agreement to open an administrative office in St. Louis Park, Minnesota. The initial lease term is 2.5 years. Fixed rent payments under the initial term are approximately $244,000.

As of June 30, 2021, the Company had total operating lease liabilities of approximately $1.4 million and right-of-use assets of approximately $1.3 million, which were included in the condensed consolidated balance sheet.

Right to use assets – operating leases are summarized below:	June 30, 2021		December 31, 2020
Clinics	$	1,106,667	$	310,361
Administrative office		200,720		-
Right to use assets, net	$	1,307,387	$	310,361

Operating lease liabilities are summarized below:	June 30, 2021			December 31, 2020
Clinics	$	1,147,945		$	321,004
Administrative office		208,859			-
Lease liability	$	1,356,804		$	321,004
Less: current portion		(89,507	)		(8,905	)
Lease liability, non-current	$	1,267,297		$	312,099

The Company’s lease expense was entirely comprised of operating leases. Lease expense for the three months ended June 30, 2021, was 2020 was $38,500 and $0. For the six months ended June 30, 2021, and 2020 amounted to $59,200 and $0, respectively. The Company’s ROU asset amortization for the three months ended June 30, 2021, and 2020 was $18,500 and $0, respectively. The Company’s ROU asset amortization for the six months ended June 30, 2021, and 2020 was $24,700 and $0, respectively the difference between the lease expense and the associated ROU asset amortization consists of interest at a rate of 12% per annum.

Maturity analysis under these lease agreements are as follows:

For the twelve months ended June 30, 2022	$	242,476
For the twelve months ended June 30, 2023		341,085
For the twelve months ended June 30, 2024		294,286
For the twelve months ended June 30, 2025		254,470
For the twelve months ended June 30, 2026		259,850
Thereafter		625,932
Total	$	2,018,099
Less: Present value discount		(661,295	)
Lease liability	$	1,356,804