Note 4 – Lease

In March 2021, the Company entered into a lease agreement (the “Original Lease”) for 4,070 square feet of office and laboratory space located in Austin, Texas (“the Original Suite”). The commencement of the lease occurred on June 1, 2021 and the initial term of the lease was 63 months. The actual base rent in the first year of the lease was $56,471 and was net of $18,824 in abated rent over the first three months of the lease term. The annual base rent in the second year of the lease was $77,330 and increased by $2,035 in each succeeding year of the lease. In addition, the Company was required to pay its proportionate share of operating costs for the building under this triple net lease. The lease contained a 5-year fair market renewal option. It did not contain a termination option. The Company recognized a right of use asset of $339,882 and a corresponding lease liability for this lease upon lease commencement. For purposes of calculating the right of use asset and lease liability included in the Company’s financial statements, the Company estimated its incremental borrowing rate at 6% per annum.

In April 2024, the Company entered into a first amendment and relocation agreement (the “Amended Lease”) with its landlord. Under the Amended Lease, the Company will relocate to another, larger suite in the same office building. The Amended Lease is for 5,775 square feet of office and laboratory space (the “New Suite”) and, upon occupancy, will replace the 4,070 square feet of office and laboratory space currently leased by the Company. The term of the Amended Lease will expire sixty-two (62) months from July 1, 2024, the commencement date. The annual base rent for the first year of the Amended Lease is $118,388 and the annual base rent increases approximately 2.75% each year during the lease term. The Company is required to pay its proportionate share of operating costs for the building under this triple net lease.

In accordance with ASC 842, the Company accounted for the modification of the lease contract as a separate lease contract. The lease for the Original Suite terminated on June 30, 2024 and the Company recorded a gain on the termination of the lease for the Original Suite of $15,319 in general and administrative expenses. As a result of the early termination of the lease for the Original Suite, the Company did not have a right of use asset or lease liability on its balance sheet at June 30, 2024. See Note 9 for a discussion of the lease for the New Suite.

For the three months ended June 30, 2024 and 2023, operating cash flows for lease payments totaled $20,011 and $19,502, respectively, and for the six months ended June 30, 2024 and 2023, operating cash outflows for lease payments totaled $39,852 and $38,835, respectively. For the three months ended June 30, 2024 and 2023, operating lease cost, recognized on a straight-line basis, totaled $19,736 and $19,017, respectively, and for the six months ended June 30, 2024 and 2023, operating lease cost, recognized on a straight-line bases, totaled $38,754 and $38,035, respectively.