Quarterly report pursuant to Section 13 or 15(d)

OPERATING LEASE

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OPERATING LEASE
9 Months Ended
Sep. 30, 2020
Lessee Disclosure [Abstract]  
OPERATING LEASE

NOTE 4 – OPERATING LEASE


On January 31, 2019, the Company entered into an agreement to lease approximately 25,470 square feet of office and manufacturing space in Pompano Beach, Florida. The original term of the lease was approximately five years and two months. On March 25, 2019, the Company entered into an amendment to the agreement to increase the square footage of leased premises to 36,900 square feet, increasing the Company’s base rent obligation to be approximately $33,825 per month for one year and nine months, and increasing annually at a rate of three percent for the remainder of the lease term. The aggregate base rent payments for the term of the lease is $2,073,344. Additionally, as a result of the lease amendment, the lease deposit required was increased to $74,000.


The future minimum lease payments to be made under the operating lease as of September 30, 2020 are as follows:


2020

 

 

$

101,475

 

2021

 

 

 

415,033

 

2022

 

 

 

427,484

 

2023

 

 

 

440,308

 

2024

 

 

 

110,884

 

Total minimum lease payments

 

 

 

1,495,184

 

Discount

 

 

 

(342,527

)

Operating lease liability

 

 

$

1,152,657

 


Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used the incremental borrowing rate based on the information available at the lease commencement date. As of September 30, 2020, the weighted-average remaining lease term is 3.5 years and the weighted-average discount rate used to determine the operating lease liability was 15.0%. For the three months ended September 30, 2020 and 2019, the Company expensed $106,920 and $105,730, respectively for rent. For the nine months ended September 30, 2020 and 2019, the Company expensed $322,103 and $317,426, respectively for rent.