Quarterly report pursuant to Section 13 or 15(d)

Operating Lease

v3.21.1
Operating Lease
6 Months Ended
Mar. 31, 2021
Disclosure Text Block [Abstract]  
OPERATING LEASE

7. OPERATING LEASE

 

Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ. Citius will 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 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,
2021
    Six Months Ended
March 31,
2020
 
Operating lease cost   $ 119,412     $ 126,844  
Variable lease cost     194        
Total lease cost     119,606     $ 126,844  
                 
Other information                
Weighted-average remaining lease term - operating leases     4.6 Years       5.6 Years  
Weighted-average discount rate - operating leases     8.0 %     8.0 %

 

Maturities of lease liabilities due under the Company's non-cancellable leases as of March 31, 2021 is as follows:

 

Year Ending September 30,   March 31,
2021
 
2021 (excluding the 6 months ended March 31, 2021)   $ 117,830  
2022     239,306  
2023     244,165  
2024     249,024  
2025 and thereafter     275,343  
Total lease payments     1,125,668  
Less: interest     (188,513 )
Present value of lease liabilities   $ 937,155  

 

Leases   Classification     March 31,
2021
    September 30,
2020
 
Assets                      
Lease asset   Operating     $ 906,092     $ 986,204  
Total lease assets         $ 906,092     $ 986,204  
                       
Liabilities                      
Current   Operating     $ 167,937     $ 158,999  
Non-current   Operating       769,218       855,471  
Total lease liabilities         $ 937,155     $ 1,014,470  

 

Interest expense on the lease liability was $39,300 and $44,997 for the six months ended March 31, 2021 and 2020, respectively.