Quarterly report pursuant to Section 13 or 15(d)

LEASE

v3.19.3
LEASE
9 Months Ended
Sep. 30, 2019
LEASE  
Note 6 - LEASE

Operating leases

 

On March 9, 2016, the Company entered into a lease amendment and expansion agreement, whereby the Company agreed to lease office space in Anaheim, California, commencing July 1, 2016 and expiring on June 30, 2019. On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded right to use assets of $25,465, lease liability of $26,229 and eliminated deferred rent of $764.

 

On February 14, 2019, the Company extended the term of its lease for an additional 63 months beginning July 1, 2019 (at expiry of the original lease). The extended term expires on September 30, 2024. The extended lease has escalating payments from $5,522 per month to $6,552 per month. On February 14, 2019, the Company reassessed the value of right to use assets of $281,949 and lease liability of $315,096.

 

On July 15, 2019, the Company and its landlord agreed that the Company would move to a larger space within the building that currently houses its principal executive offices. The Company extended the term of its lease for an additional 63 months beginning approximately November 1, 2019 (upon the landlord's completion of the work on the new space). The extended term expires on January 31, 2025. The extended lease has escalating payments from $9,505 per month to $11,018 per month.

 

During the nine months ended September 30, 2019, the Company recorded $62,329 as lease expense to current period operations.

 

Lease liability is summarized below:

 

 

September 30,

2019

 

Total lease liability

 

$

292,794

 

Less: short term portion

 

45,017

 

Long term portion

 

$

247,777

 

Maturity analysis under these lease agreements are as follows:

 

Three months ended December 31, 2019

 

$

16,567

 

2020

 

67,392

 

2021

 

69,751

 

2022

 

72,222

 

2023

 

74,693

 

2024 and beyond

 

57,620

 

Less: Present value discount

 

(65,451

)

Lease liability

 

$

292,794

 

Note: Future lease payments regarding the new amendment effective in November are not included in the above table. 

 

 

Lease expense for the nine months ended September 30, 2019 was comprised of the following: 

 

Operating lease expense

 

$

62,329

 

Short-term lease expense

 

-

 

Variable lease expense

 

-

 

$

62,329

 

Weighted-average remaining lease term and discount rate for operating leases are as follows:

 

Weighted-average remaining lease term

 

5.01

 

Weighted-average discount rate

 

8

%