Leases

3 Months Ended

Mar. 31, 2020

PaymentOnCapitalLease

Note Payable Related Party

Note 6. Leases

In November 2009, the Company entered into a lease agreement for its corporate office and warehouse facility which became effective in January 2010 for a term of sixty-seven months. In September 2014, the lease was amended to include the following: 1) an extension of the lease term to February 28, 2021; 2) modification of the minimum annual and monthly rents for the extended lease term; 3) a rent abatement period of six months commencing October 1, 2014; and 4) an option to extend the term for a period of five years.

Since the original lease inception, rental expense had been recognized on a straight-line basis over the life of the lease and was recorded as a deferred rent obligation during the abatement period. The deferred rent was reduced by the difference between the rent due and the straight-line expense upon commencement of the rental payments, which was identical to the lease expense that would have been recognized applying the principals under ASC 842 – Leases, which became effective and the Company adopted on January 1, 2019. Since there was no difference in the lease versus rent expense calculation, there was no effect to prior periods and the balance sheet adjustment to record the remaining balances in the right-of-use asset of $177,521, lease liability of $209,864, and to eliminate the balance remaining in the deferred rent account of $32,343 was made as of January 1, 2019.

The following table summarizes the right-of-use asset and lease liability as of March 31, 2020:

Right-of-use Asset $ 79,545

Lease Liability
Current	$	94,724

Lease expense for the three months ended March 31, 2020 and 2019 was $37,148 and $35,930, respectively.

The following table summarizes the Company’s scheduled future minimum lease payments as of March 31, 2020:

Year Ended December 31:
2020	$	80,453
2021		18,124
Minimum lease payments		98,577
Less: imputed interest		(3,853	)
Present value of minimum lease payments		94,724
Less: current maturities of lease liability		94,724
Long-term lease liability	$	-