Quarterly report pursuant to Section 13 or 15(d)

Operating Lease

v3.20.1
Operating Lease
6 Months Ended
Mar. 31, 2020
Leases [Abstract]  
OPERATING LEASE

7. OPERATING LEASE

 

LMB leased office space from Akrimax (see Note 6) in Cranford, New Jersey at a monthly rental rate of $2,167 pursuant to an agreement which expired on April 30, 2019. Rent expense for the six months ended March 31, 2019 was $13,000.

 

Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ.

  

Citius will also pay its proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are considered to be variable lease payments and are not included in the determination of the lease's right-of-use asset or lease liability. 

 

The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

 

  As the Company's current Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has estimated its incremental borrowing rate based on the remaining lease term as of the adoption date.

 

  Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component.

 

  The expected lease terms include noncancelable lease periods.

 

The elements of lease expense are as follows:  

 

Lease cost   Six Months
Ended
March 31,
2020
 
Operating lease cost   $ 126,844  
Variable lease cost      
Total lease cost   $ 126,844  
         
Other information        
Weighted-average remaining lease term - operating leases     5.6 Years  
Weighted-average discount rate - operating leases     8.0  

 

Maturities of lease liabilities due under the Company's non-cancellable leases as of March 31, 2020 is as follows:

 

Year Ending September 30,   March 31,
2020
 
2020 (excluding the 6 months ended March 31, 2020)   $ 115,401  
2021     234,447  
2022     239,306  
2023     244,165  
2024     249,024  
Thereafter     275,343  
Total lease payments     1,357,686  
Less: interest     (270,120 )
Present value of lease liabilities   $ 1,087,566  

 

Leases   Classification   March 31,
2020
 
Assets          
Lease asset   Operating   $ 1,055,877  
Total lease assets       $ 1,055,877  
             
Liabilities            
Current   Operating   $ 150,411  
Non-current   Operating     937,155  
Total lease liabilities       $ 1,087,566  

 

Interest expense on the lease liability was $44,997 for the six months ended March 31, 2020.