Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.20.1
LEASES
6 Months Ended
Apr. 30, 2020
Disclosure Text Block [Abstract]  
Lessee, Operating Leases [Text Block]

8.         LEASES         


We lease approximately 2,000 square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices) from an unrelated party pursuant to an operating lease that expires September 30, 2021.  Our base rent is approximately $5,000 per month and the lease provides for annual increases of approximately 3% and an escalation clause for increases in certain operating costs.  Under an operating lease that expired on May 31, 2019 we also leased approximately 3,000 square feet of office space at 12100 Wilshire Boulevard, Los Angeles, California (our former executive offices) from an unrelated party.  As of August 1, 2018, we had subleased these facilities.  Rent expense was approximately $32,000 and $30,000, respectively, for the six months ended April 30, 2020 and 2019, and approximately $16,000 and $12,000, respectively, for the three months ended April 30, 2020 and 2019.


On November 1, 2019, the Company adopted ASC 842, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording  them on the balance sheet as lease assets and lease liabilities.  The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating lease liabilities on the balance sheet.  The Company adopted the new guidance using the modified retrospective approach on November 1, 2019.  As a result, the condensed consolidated balance sheet as of October 31, 2019 was not restated and is not comparative.


The adoption of ASC 842 resulted in the recognition of ROU assets of $106,221, and lease liabilities for operating leases of $106,299 on the Company's condensed consolidated balance sheet as of November 1, 2019. The difference between the ROU assets and the operating lease liability represents the difference between the lease cost and the amount of rent paid in October.


The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs.  Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components.  The Company has also elected the short-term lease accounting policy under which Anixa would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that Anixa is more than reasonably certain to exercise.


For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The remaining 17 month lease term as of April 30, 2020 for the Company’s lease includes the noncancelable period of the lease.  The lease does not contain a Company option to extend the lease or an option to extend the lease controlled by the lessor.  All ROU assets are reviewed for impairment.


Balance sheet information related to the Company’s lease is presented below:


 

Balance Sheet

Location

 

April 30,

2020

 

November 1,

2019

 

October 31,

2019

       

Operating Lease:

                   

Right-of-use asset

Operating lease right-
   of-use asset

 

$

81,166

 

$

106,221

 

$

-

Right-of-use liability,
  current

Operating lease liability

   

55,748

   

51,101

   

-

Right-of-use liability,
  long-term

Operating lease liability,
   non-current

   

25,964

   

55,198

   

-


As of April 30, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:


For Years Ending October 31,

Operating Leases

2020 (excluding the six months ended April 30, 2020)

$

31,476

2021

 

59,136

Total future minimum payments, undiscounted

90,612

Less: Imputed interest

 

(8,900)

Present value of future minimum lease payments

$

81,712