Annual report pursuant to Section 13 and 15(d)

Property and Equipment

Property and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property and equipment as of December 31, 2020 and 2019 consisted of the following:


	December 31,
	2020		2019
Furniture and equipment	$	152,940	$	143,168
Computers and software	56,240		6,708
Right-of-use assets	917,472		718,628
Leasehold improvements	657,328		657,328
Total property and equipment	1,783,980		1,525,832
Less accumulated depreciation	(176,910)		(78,169)
Property and equipment, net	$	1,607,070	$	1,447,663

Depreciation expense was $102,095 and $119,488 for the years ended December 31, 2020 and December 31, 2019, respectively.

Leases

The Company currently occupies two leased properties, both of which serve as administrative office space. The Company determined that both leases are operating leases based on the lease classification test performed at lease commencement.

The annual base rent for the Company's office located in Rockville, Maryland is $161,671, subject to annual 2.5% increases over the term of the lease. The lease provided 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 Company entered into a sublease for additional administrative office space in Chesterbrook, Pennsylvania in May 2020 (the “Chesterbrook Lease”"). The annual base rent under the Chesterbrook Lease is $280,185. The lease expires in November 2021.

The weighted average remaining term of the operating leases at December 31, 2020 was 7.7 years.

Supplemental balance sheet information related to the leased properties include:


	As of
	December 31, 2020		December 31, 2019
Property and equipment, net	$	917,472	$	718,626

Accrued expenses and other current liabilities	$	426,346	$	155,815
Other long-term liabilities	1,038,395		1,111,965
Total operating lease liabilities	$	1,464,741	$	1,267,780

The operating lease ROU assets are included in property and equipment and the lease liabilities are included in accrued expenses and other current liabilities and other long-term liabilities in our consolidated balance sheets. The Company utilized a weighted average discount rate of 7.4% to determine the present value of the lease payments.

The components of lease expense for the years ended December 31, 2020 and 2019 were as follows:


	Year Ended December 31,
	2020		2019
Operating lease cost*	$	344,625	$	160,767
*Includes short-term leases, which are immaterial.

The following table shows a maturity analysis of the operating lease liability as of December 31, 2020:



	Undiscounted Cash Flows
2021	$	426,346
2022	173,748
2023	178,092
2024	182,544
2025	187,108
Thereafter	813,638
Total lease payments	$	1,961,476
Less implied interest	(496,735)
Total	$	1,464,741