Note 7 - Lease |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease |
In September 2018, the Company signed a three year lease agreement for its corporate office in Westlake Village, Ventura County. Monthly lease payment amounted to $5,000 up to $6,000 over the term of the lease.
The Company accounted the lease pursuant to ASC 842, Lease. Pursuant to ASC 842, Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The operating lease ROU asset includes any lease payments made and excludes lease incentives
As a result, the Company recorded right-of-use assets of $174,000 and lease liabilities of $174,000. In accordance with ASC 842, the right-of-use assets are being depreciated over the life of the underlying lease, and monthly lease payments are being recorded as reductions to the lease liability and imputed interest expense.
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
During fiscal 2020, as a result of the Covid-19 pandemic and various disputes with the landlord, the Company abandoned the leased area. Subsequently, the Company was sued by the landlord for $250,000 (see Note 10). As a result of abandonment of the facility and the existing lawsuit with the landlord, at December 31, 2020, the Company wrote off the unamortized ROU asset of $56,000 and reclassified the $58,000 operating lease liability as part of accrued expenses. As of December 31, 2020, the Company believes it has made adequate provision for any settlement of this matter.
The Company has no other leases at December 31, 2020 that requires to be accounted in accordance with ASC 842.
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