Quarterly report pursuant to Section 13 or 15(d)

RIGHT TO USE ASSETS AND LEASE LIABILITY

v3.21.1
RIGHT TO USE ASSETS AND LEASE LIABILITY
3 Months Ended
Mar. 31, 2021
Disclosure Text Block [Abstract]  
Lessee, Operating Leases [Text Block]

NOTE 5 – RIGHT TO USE ASSETS AND LEASE LIABILITY

 

Operating leases:

 

On February 10, 2021 the Company entered into a Sixth Amendment to the Office Lease at 12424 Wilshire Blvd in Los Angeles dated August 9, 2011 – it is the Fourth Extended Term with respect to Suite 745 and the Expansion Term with respect to Suite 740 which is from July 1, 2021 until June 30, 2022 with a fixed monthly rent equal to $13,702 (down from $16,289); and the security deposit will be reduced by $5,448 so that the balance remaining shall be $27,404.

 

The Company determined that the Sixth Amendment was a lease modification and accordingly reassessed the lease classification, remeasured the lease liability and adjusted the right-to-use asset. At February 10, 2021 the Company removed the remaining right-to-use net assets of $60,881 and related lease liability of $63,076 and recorded right-to-use assets and related lease liability of $217,903.

 

On October 1, 2019, the Company entered into a lease agreement whereby the Company leased approximately 1,400 square feet of office space in Rochester, Minnesota commencing November 1, 2019 and expiring on October 31, 2021 at an initial rate of $3,411 per month with escalating payments. The lease agreement includes an option to extend the lease for two additional periods of two years each past its initial term. At lease modification date, the Company estimated the lease liability and the right of use assets at present value using the Company’s estimated incremental borrowing rate of 8%.

 

As of March 31, 2021, the Company had outstanding five leases with aggregate payments of $38,535 per month, expiring through December 31, 2022.

 

Right to use assets is summarized below:

 

   

March 31,

2021

   

December 31,

2020

 

Right to use assets, net

  $ 808,511     $ 1,087,075  

Less accumulated depreciation

    (452,245

)

    (780,591

)

Right to use assets, net

  $ 356,266     $ 306,484  

 

During the three months ended March 31, 2021 and 2020, the Company recorded $118,601 and $119,408 as lease expense to current period operations, respectively.

 

Lease liability is summarized below:

 

   

March 31,

2021

   

December 31,

2020

 

Total lease liability

  $ 358,034     $ 313,411  

Less: short term portion

    (329,924

)

    (312,691

)

Long term portion

  $ 28,110     $ 720  

 

Maturity analysis under these lease agreements are as follows:

 

Remainder of 2021

  $ 289,195  

Year ended December 31, 2022

    83,412  

Total

    372,607  

Less: Present value discount

    (14,573

)

Lease liability

  $ 358,034  

 

Lease expense for the three months ended March 31, 2021 and 2020 was comprised of the following:

 

   

March 31,

2021

   

March 31,

2020

 

Operating lease expense

  $ 110,932     $ 113,262  

Short-term lease expense

    7,429       5,655  

Variable lease expense

    240       491  

Total

  $ 118,601     $ 119,408