Quarterly report pursuant to Section 13 or 15(d)

Operating Lease Right-of-Use (???Rou???) Assets and Operating Lease Liabilities

v3.21.1
Operating Lease Right-of-Use (“Rou”) Assets and Operating Lease Liabilities
3 Months Ended
Mar. 31, 2021
Operating Lease Right-of-Use (“Rou”) Assets and Operating Lease Liabilities [Abstract]  
OPERATING LEASE RIGHT-OF-USE ("ROU") ASSETS AND OPERATING LEASE LIABILITIES

NOTE 11 – OPERATING LEASE RIGHT-OF-USE (“ROU”) ASSETS AND OPERATING LEASE LIABILITIES


In October 2019, the Company entered into an 18-month lease agreement for the lease of office and warehouse space under a non-cancelable operating lease through May 31, 2021. From the lease commencement date of December 1, 2019 until November 30, 2020, monthly rent shall be $4,444 and from December 1, 2020 to May 31, 2021, monthly rent shall be $4,577 per month.


In adopting ASC Topic 842, Leases (Topic 842) on January 1, 2019, the Company had elected the ‘package of practical expedients’, which permitted it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs (see Note 2). In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. Since the terms of the Company’s operating lease for its office space prior to October 2019 was 12 months or less on the date of adoption, pursuant to ASC 842, the Company determined that the lease met the definition of a short-term lease and the Company did not recognize the right-of use asset and lease liability arising from this lease. Upon renewal of the lease in October 2019, the Company analyzed the new lease and determined it is required to record a lease liability and a right of use asset on its consolidated balance sheet, at fair value.


During the three months ended March 31, 2021 and 2020, in connection with its operating leases, the Company recorded rent expense of $26,537 and $26,168, respectively, which includes rent on a short-term lease for a corporate apartment and is expensed during the period and included in operating expenses on the accompanying condensed consolidated statements of operations.


The significant assumption used to determine the present value of the lease liability in October 2019 was a discount rate of 12% which was based on the Company’s estimated incremental borrowing rate.


On March 31, 2021 and December 31, 2020, right-of-use asset (“ROU”) is summarized as follows:


   

March 31,

2021

    December 31,
2020
 
Office leases right of use assets   $ 74,296     $ 74,296  
Less: accumulated amortization     (65,455 )     (52,524 )
Balance of ROU assets   $ 8,841     $ 21,772  

On March 31, 2021 and December 31, 2020, operating lease liabilities related to the ROU assets are summarized as follows:


   

March 31,

2021

    December 31,
2020
 
Lease liabilities related to office leases right of use assets   $ 9,019     $ 22,216  
Less: current portion of lease liabilities     (9,019 )     (22,216 )
Lease liabilities – long-term   $ -     $ -  

On March 31, 2021, future minimum base lease payments due under non-cancelable operating leases are as follows:


    Amount  
2021   $ 9,155  
Total minimum non-cancelable operating lease payments     9,155  
Less: discount to fair value     (136 )
Total lease liability at March 31, 2021   $ 9,019