Item 2. Properties
ITEM 2. PROPERTIES
Office, Lab and Manufacturing 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 11575 Sorrento Valley Road, Suite 200, 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 laboratory space effective January 1, 2022. In October 2021, we entered into another lease for approximately 2,655 square feet of
space to house our manufacturing operations located at 11588 Sorrento Valley Road, San Diego, California 92121. The term is for 55 months
and we took possession of the manufacturing space in August 2022. The current monthly base rent under the office and laboratory component
of the lease is $13,772. The current monthly base rent under the manufacturing component of the lease is $12,080.
During the fiscal year ended
March 31, 2023, we recorded a $625,471 right-of-use lease asset and associated lease liability related to the manufacturing space component
of the lease based on the present value of lease payments over the expected lease term of 55 months, discounted using our estimated incremental
borrowing rate of 4.25%.
The office, lab and manufacturing
leases are coterminous with a remaining term of 48 months. The weighted average discount rate is 4.25%.
As of our March 31, 2023 balance
sheet, we have a right-of-use lease asset of $1,151,909.
The
following table presents a maturity analysis of expected undiscounted cash flows for operating leases on an annual basis for the next
four fiscal years. All of our leases conterminously expire during the fiscal year ending March 31, 2027.
Fiscal Year Ended March 31,
2024
$ 314,493
2025
323,812
2026
333,462
2027
343,351
Total minimum lease payments
1,315,118
Less amount representing imputed interest
(106,090 )
Present value of minimum lease payments
$ 1,209,028
Mobile Clean Room
In addition, we rented a
mobile clean room on a short term, month-to-month basis, where we housed our manufacturing operations until our permanent manufacturing
space was completed. The mobile clean room was located on leased land near our office and lab and we paid $2,000 per month for the right
to locate it there. We paid approximately $168,171 in total rent expense to lease the mobile clean room located on this space during
the fiscal year ended March 31, 2023. The arrangement was terminated in September 2022 and the mobile clean room was returned to the
vendor that leased it to us.
Overall, our rent expense, which is included in general and administrative expenses, approximated $519,000
and $401,000 for the fiscal years ended March 31, 2023 and 2022, respectively.