AETHLON MEDICAL INC 10-K

ITEM 2. PROPERTIES Office and Lab Space Leases In December 2020, we entered into an agreement to lease approximately 2,823 square feet of office space and 1,807 square feet of laboratory space located at 11555 Sorrento Valley Road, Suite 203, San Diego, California 92121 and 11585 Sorrento Valley Road, Suite 109, San Diego, California 92121, respectively. The agreement carries a term of 63 months and we took possession of the office space effective October 1, 2021. We took possession of the lab space effective January 1, 2022. On October 1, 2021, we recorded a $343,633 right-of-use lease asset and associated lease liability related to the office space component of the lease based on the present value of lease payments over the expected lease term of 63 months, discounted using our estimated incremental borrowing rate of 4.25%. The current monthly base rent under the office component of the lease is $6,121. During the three months ended March 31, 2022, we recorded a $400,797 right-of-use lease asset and associated lease liability related to the lab space component of the lease based on the present value of lease payments over the expected lease term of 63 months, discounted using our estimated incremental borrowing rate of 4.25%. The initial monthly base rent under the lab component of the lease is $7,456. Manufacturing Space Lease In October 2021, we entered into another lease for an initial period of 58 months for (i) approximately 22,260 square feet of space located at 11588 Sorrento Valley Road, San Diego, California 92121, or the Building, and (ii) 2,655 square feet of space located in the Building and commonly known as Suite 18, to house our manufacturing operations. That manufacturing space is located at 11588 Sorrento Valley Road, San Diego, California 92121 and it is near our new lab and office locations. We anticipate that the landlord will complete construction on this new space in the third calendar quarter of 2022 and we will take occupancy at that time. The initial base rent for the manufacturing space will be $12,080 per month. Based on the assumptions that we used to calculate the right-of-use lease asset for the new office and lab spaces, we estimate that we will record a right- of- use lease asset of $614,240 and associated lease liability for the manufacturing space lease when we take possession of that space. Mobile Clean Room In addition, we rent a mobile clean room on a short term, month-to-month basis, where we house our manufacturing operations until our permanent manufacturing space is completed. We also rent the land on which the mobile clean room is based on a month-to-month basis. The mobile clean room is located on leased land near our office and lab and we pay $2,000 per month for the right to locate it there. We paid approximately $189,000 in rent expense to lease the mobile clean room located on this space during the fiscal year ended March 31, 2022.