Quarterly report pursuant to Section 13 or 15(d)

Commitments, Contingencies

v3.21.2
Commitments, Contingencies
3 Months Ended
Jun. 30, 2021
Commitments, Contingencies  
Note 10 - Commitments, Contingencies,

Note 10.  Commitments and Contingencies

 

Operating Leases

 

We lease our headquarters office and laboratory space in South San Francisco, California under the terms of a lease that expires on July 31, 2022 and that provides an option to renew for an additional five years at then-current market rates. Consistent with the guidance in ASC 842, beginning April 1, 2019, we recorded this lease in our Condensed Consolidated Balance Sheet as an operating lease. For the purpose of determining the right-of-use asset and associated lease liability, we determined that the renewal of this lease was reasonably probable at the time we adopted ASC 842. The lease of our South San Francisco facilities does not include any restrictions or covenants requiring special treatment under ASC 842.

 

The following table summarizes the presentation of the operating lease in our Condensed Consolidated Balance Sheet:

 

 

 

As of June 30,

2021

 

 

As of March 31, 2021

 

Assets

 

 

 

 

 

 

Right of use asset – operating lease

 

$ 3,125,300

 

 

$ 3,219,600

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current operating lease obligation

 

$ 378,400

 

 

$ 364,800

 

Non-current operating lease obligation

 

 

3,252,700

 

 

 

3,350,800

 

Total operating lease liability

 

$ 3,631,100

 

 

$ 3,715,600

 

 

The following table summarizes the effect of operating lease costs in the Company’s Condensed Consolidated Statements of Operations:

 

 

 

For the Three Months Ended

 

 

For the Three Months Ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

Operating lease cost

 

$ 235,700

 

 

$ 212,800

 

 

The minimum (base rental) lease payments related to our South San Francisco operating lease are expected to be as follows:

 

Fiscal Years Ending March 31,

 

 

 

2022 (remaining nine months)

 

$ 505,100

 

2023

 

 

726,000

 

2024

 

 

766,000

 

2025

 

 

789,000

 

2026

 

 

812,700

 

Thereafter

 

 

1,118,700

 

Total lease expense

 

 

4,717,500

 

Less imputed interest

 

 

(1,086,400 )

Present value of operating lease liabilities

 

$ 3,631,100

 

 

The remaining lease term, including the assumed five-year extension at the expiration of the current lease period, and the discount rate assumption for our South San Francisco operating lease is as follows:

 

 

 

As of June 30, 2021

 

Assumed remaining lease term in years

 

 

6.08

 

Assumed discount rate

 

 

8.54 %

 

The interest rate implicit in lease contracts is typically not readily determinable and, as such, we used our estimated incremental borrowing rate based on information available at the adoption of ASC 842, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.

Supplemental disclosure of cash flow information related to our operating lease included in cash flows used by operating activities in the condensed consolidated statements of cash flows is as follows:

 

 

 

For the Three Months Ended

 

 

For the Three Months Ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

Cash paid for amounts included in the measurement of lease liabilities

 

$ 225,900

 

 

$ 197,500

 

 

During the three months ended June 30, 2021, we recorded no new right of use assets arising from new lease liabilities.

 

We also lease a small office in the San Francisco Bay Area under a month-to-month arrangement at insignificant cost and have made an accounting policy election not to apply the ASC 842 operating lease recognition requirements to such short-term lease. We recognize the lease payments for this lease in general and administrative expense over the lease term. We recorded rent expense of $3,600 and $3,500 for the three months ended June 30, 2021 and 2020, respectively, attributable to this lease.