18. Lease Recognition

On October 1, 2019, we adopted ASU 2016-02. This pronouncement requires lessees to record "right-of-use" assets and corresponding lease liabilities on the balance sheet for most leases. We adopted this pronouncement utilizing the transition practical expedient which eliminated the requirement that entities apply the new lease standard to the comparative periods presented in the year of adoption.

As part of our adoption, we elected to utilize the package of practical expedients permitted under the new standard, which allowed us to not reassess: (a) whether an existing contract is or contains a lease, (b) the classification for existing leases and (c) initial direct costs. Further, as permitted by the standard, we made an accounting policy election not to record right-of-use assets or lease liabilities for leases with an initial term of 12 months or less. Instead, consistent with previous accounting guidance, we will recognize payments for such leases in the statement of operations on a straight-line basis over the lease term.

We lease real estate and equipment under various operating leases. A lease exists when a contract or part of a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In determining whether a lease exists, we consider whether a contract provides us with both: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset and (b) the right to direct the use of the identified asset.

Some of our leases include base rental periods coupled with options to renew or terminate the lease, generally at our discretion. In evaluating the lease term, we consider whether we are reasonably certain to exercise such options. To the extent a significant economic incentive exists to exercise an option, that option is included within the lease term. However, based on the nature of our lease arrangements, options generally do not provide us with a significant economic incentive and are therefore excluded from the lease term for the majority of our arrangements.

Our leases typically include a combination of fixed and variable payments. Fixed payments are generally included when measuring the right-of-use asset and lease liability. Variable payments, which primarily represent payments based on usage of the underlying asset, are generally excluded from such measurement and expensed as incurred. In addition, certain of our lease arrangements may contain a lease coupled with an arrangement to provide other services, such as maintenance, or may require us to make other payments on behalf of the lessor related to the leased asset, such as payments for taxes or insurance. As permitted by ASU 2016-02, we have elected to account for these non-lease components together with the associated lease component if included in the lease payments. This election has been made for each of our asset classes.

The measurement of "right-of-use" assets and lease liabilities requires us to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such rate is utilized. However, based on information available at lease commencement for our leases, the rate implicit in the lease is not known. In these instances, we utilize an incremental borrowing rate, which represents the rate of interest that we would pay to borrow on a collateralized basis over a similar term.

The impact of the adoption of ASU 2016-02 on the balance sheet as of October 1, 2019 was:


	As Reported				Balance
	September 30, 2019		Increase		October 1, 2019
Operating lease right-of-use assets	$	—	$	130,018	$	130,018
Total assets		38,557,025		130,018		38,687,043
Operating lease liabilities		—		84,892		84,892
Total current liabilities		2,219,222		84,892		2,304,114
Operating lease liabilities non-current		—		45,126		45,126
Total liabilities		2,348,873		45,126		2,393,999
Total liabilities and equity		38,557,025		130,018		38,687,043

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


	Twelve Months
	Ending	Operating
	September 30,	Leases
	2020	$	86,822
	2010		47,988
Total minimum lease payments		$	134,810
Amount representing interest			(4,792)
Present value of minimum lease payments			130,018
Current portion			(84,892)
Long-term portion of lease obligations		$	45,126

Rent expense and cash paid for various operating leases in aggregate are $141,000 for the periods ended September 30, 2020. The weighted average remaining lease term is 0.6 years and the weighted average discount rate is 5.0% as of September 30, 2020.

Future minimum lease payments under operating leases are as follows at September 30, 2020:


	Twelve Months
	Ending	Operating
	September 30,	Leases

	2021	$	47,988
Total minimum lease payments		$	47,988
Amount representing interest			(2,862)
Present value of minimum lease payments			45,126
Current portion			(45,126)
Long-term portion of lease obligations		$	—