NOTE 5 - OPERATING LEASE

9 Months Ended

Sep. 30, 2022

Notes

NOTE 5 - OPERATING LEASE

NOTE 5 – OPERATING LEASE

The Company’s leases consist of an operating lease for general office space and warehouse facilities. The Company recognizes rent expense for this lease on a straight-line basis over the lease term. Because the lease does not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease Commencement Date in determining the present value of future lease payments.

On June 3, 2021, the Company entered into a lease for the premises located at 1345 Specialty Drive #E, Vista, CA, containing approximately 11,751 square feet of rentable area. The lease commenced on July 1, 2021 and expires on June 30, 2026. The monthly base rent under the lease is $9,988 per month and monthly operating expenses during the term of the lease, subject to adjustment under the lease, is $1,175 per month.

During the three months ended September 30, 2022, cash paid for amounts included in the measurement of operating lease liabilities was $26,412 and the Company recorded operating lease expenses included in operating expenses of $12,633 and cost of sales of $24,657, for a total of $37,290. During the nine months ended September 30, 2022, cash paid for amounts included in the measurement of operating lease liabilities was $93,390 and the Company recorded operating lease expenses included in operating expenses of $37,899 and cost of sales of $73,971, for a total of $111,870.

As of September 30, 2022, maturities of operating lease liabilities were as follows:

Years ending December 31,
2022 (remaining)	$	33,489
2023		141,036
2024		148,074
2025		176,268
2026		88,134
Total lease payments		587,001
Less: imputed interest		(55,008)
Total lease liability	$	531,993
Less:  current lease liability		(115,546)
Long-term lease liability	$	416,447
Weighted average discount rate:
Operating leases		4.94%