Leases

3 Months Ended

Jun. 30, 2020

PaymentOnCapitalLease

Note Payable Related Party

Note 7. 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 June 30, 2020:

Right-of-use Asset	$	58,530
Lease Liability
Current	$	69,931

Net of the PPP forgivable amount as listed in Note 6, lease expense for the three months ended June 30, 2020 and 2019 was $208 and $35,930, respectively, and lease expense for the six months ended June 30, 2020 and 2019 was $37,356 and $71,860, respectively.

The following table summarizes the Company’s scheduled future minimum lease payments as of June 30, 2020:

Year Ended December 31:
2020	$	53,930
2021		18,124
Minimum lease payments		72,054
Less: imputed interest		(2,123	)
Present value of minimum lease payments		69,931
Less: current maturities of lease liability		69,931
Long-term lease liability	$	—