Annual report pursuant to Section 13 and 15(d)

Property And Equipment

Property And Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and equipment as of December 31, 2019 and 2018 consisted of the following:



	December 31,
	2019			2018
Furniture and equipment	$	143,168		$	133,229
Computers and software	6,708			122,065
Right-of-use asset (Corporate Headquarters' Lease)	718,628			—
Leasehold improvements	657,328			463,381
Total property and equipment	1,525,832			718,675
Less accumulated depreciation	(78,169		)	(132,163		)
Property and equipment, net	$	1,447,663		$	586,512

Depreciation expense was $119,488 and $22,515 for the years ended December 31, 2019 and December 31, 2018, respectively.

Corporate Headquarters' Lease

The Company identified one operating lease, which is for its corporate headquarters located in Rockville, Maryland. The annual base rent for the office space is $161,671, subject to annual 2.5% increases over the term of the lease. The lease provides for a rent abatement for a period of 12 months following the Company's date of occupancy. The lease has an initial term of 10 years from the date the Company makes its first annual fixed rent payment, which occurred in January 2020. The Company has the option to extend the lease two times, each for a period of five years, and may terminate the lease as of the sixth anniversary of the first annual fixed rent payment, upon the payment of a termination fee. As of the lease commencement date, it was not reasonably certain that the Company will exercise the renewal periods or early terminate the lease and therefore, the end date of the lease for accounting purposes is January 31, 2030. The remaining term of the lease at December 31, 2019 was 10.1 years.

Supplemental balance sheet information related to the lease are as follows:



	December 31, 2019
Property and equipment, net	$	718,626
Other current liabilities	$	155,815
Other long-term liabilities	$	1,111,965

The operating lease ROU asset is included in property and equipment and the lease liability is included in accrued expenses and other current liabilities and other long-term liabilities in our condensed consolidated balance sheets. In order to determine the present value of lease payments, the Company utilized a discount rate of 7.7%. This rate was determined based on available information of the rate of interest the Company would pay to borrow on a collateralized basis at an amount equal to the lease payments in a similar economic environment over a similar term on the transition date.

The components of lease expense for the year ended December 31, 2019:



	Year Ended December 31,
	2019		2018
Operating lease cost*	$	160,767	$	239,259
*Includes short-term leases, which are immaterial.

Because the corporate headquarters lease provides for a 12-month lease abatement, the cash paid for amounts included in the measurement of lease liabilities was $0 as of December 31, 2019.

The following table shows a maturity analysis of the operating lease liability as of December 31, 2019:




	Undiscounted Cash Flows
2020	$	155,815
2021	169,510
2022	173,748
2023	178,092
2024	182,544
Thereafter	1,000,746
Total lease payments	$	1,860,455
Less implied interest	(592,675		)
Total	$	1,267,780

Upon consummation of the Aevi Merger on February 3, 2020, the Company also occupies an office in Wayne, Pennsylvania, which is an operating lease. The lease expires April 2020 and goes month-to-month thereafter, however both the Company and the landlord have the right to terminate the lease 60 days after written notice is provided. The monthly rent payment for this lease is $12,050.