Note 7 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 7 – Commitments and Contingencies

Lease Agreements

In January 2022, the Company entered into a commercial operating lease agreement for its office space in Florida, expiring on December 31, 2024. The lease requires the Company to pay for its insurance, taxes, and its share of common operating expenses. The lease resulted in an increase in its right of use assets and lease liabilities of $89,312, using a discount rate of 10%. The lease was cancellable by the landlord at any time prior to December 31, 2022 based on certain capital raising contingencies which the Company met in April 2022. 

In February 2022, the Company entered into an additional commercial operating lease for its primary office and warehouse/distribution space in Texas. The lease requires the Company to pay for its insurance, taxes, and its share of common operating expenses. This lease expires in March 2027. The space remained under buildout and Landlord control during the three months ended March 31, 2022 with the Company acquiring control of the lease space effective April 1, 2022; as a result, a right of use asset and lease liability was recognized of $337,226 as of April 1, 2022 using a discount rate of 10%.

Operating lease ROU assets are included in right of use assets in the Company's condensed consolidated balance sheet as of June 30, 2022. Operating lease liabilities are classified as other current and non-current liabilities in the Company’s condensed consolidated balance sheet.

Total lease costs were approximately $39,000 and $49,500 for the three and six months ended June 30, 2022, respectively, consisting solely of base rental and common area maintenance costs.

Future undiscounted cash flows under these leases are:

2022	$	35,344
2023		109,381
2024		112,833
2025		80,273
2026		82,705
2027		21,284
Total		441,820
Discount factor		(88,942	)
Lease liability		352,878
Current lease liability		(56,571	)
Non-current lease liability	$	296,307