Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.22.2.2
LEASES
6 Months Ended
Jun. 30, 2022
Leases  
LEASES

NOTE 11 – LEASES

 

The components of lease cost for operating leases for the three and six months ended June 30, 2022 and 2021 were as follows:

                       
   

Three Months

Ended

June 30, 2022

   

Three Months

Ended

June 30, 2021

   

Six Months

Ended

June 30, 2022

   

Six Months

Ended

June 30, 2021

 
Lease Cost                                
Operating lease cost   $ 140,583     $ 93,994     $ 299,256     $ 131,019  
Short-term lease cost     90,782       55,438       131,380       88,248  
Variable lease cost                        
Sublease income                        
Total lease cost   $ 231,365     $ 149,432     $ 430,636     $ 219,267  

 

Supplemental cash flow information related to leases for the six months ended June 30, 2022, was as follows:

           
   

June 30,

2022

   

June 30,

2021

 
Other Lease Information                
Cash paid for amounts included in the measurement of lease liabilities:                
Operating cash flows from operating leases   $ 199,966     $ 149,432  

 

The following table summarizes the lease-related assets and liabilities recorded on the balance sheet at June 30, 2022 and December 31, 2021:

           
   

June 30,

2022

   

December 31,

2021

 
Lease Position                
Operating Leases                
Operating lease right-of-use assets   $ 800,843     $ 2,182,612  
Right of use liabilities operating leases short term     301,146       456,207  
Right of use liabilities operating leases long term     509,925       1,767,506  
Total operating lease liabilities   $ 811,071     $ 2,223,713  

  

The Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable. The Company recognized an initial right of use asset and lease liability of $143,540 for leases entered into during the six months ended June 30, 2022.

     
Lease Term and Discount Rate      
Weighted-average remaining lease term (years)      
Operating leases     3.3  
Weighted-average discount rate        
Operating leases     5.5%  

 

The following table provides the maturities of lease liabilities at June 30, 2022:

     
    Operating  
    Leases  
       
Remainder of 2022   $ 117,172  
2023     239,261  
2024     168,010  
2025     146,908  
2026     99,880  
Total future undiscounted lease payments     771,231  
Less: Interest     (74,226 )
Present value of lease liabilities   $ 697,005  

 

As discussed in Note 6 above, the Company terminated the lease, and related amendment, for a manufacturing facility and the above does not include any amounts related to that lease.

 

In addition, the Company closed its Denver, Colorado, store location (the Company’s only store) in June 2022 and entered into a lease termination agreement in July 2022 to relieve the Company of its future obligations under the lease. The Company has recorded a loss of $148,322 in the three and six months ended June 30, 2022 related to this facility which includes the write off of prepaid rent, security deposit, right of use asset and liability to and a loss on the writeoff of leasehold improvements and fixtures and furniture of $46,289.

 

In July 2022, the Company entered into a new lease agreement for office space in Round Rock, Texas with the landlord of its current Round Rock facilities. The lease begins in August 2022 and terminates in August 2026. In connection with signing this lease, the landlord has agreed to terminate the lease on one of the current facilities that would have expired in December 2023. The additional monthly rent after consideration of the rent on the facility being canceled is not significant.