LEASES

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

LEASES

The Company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective approach. The Company has elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less. The adoption of the standard resulted in the recognition of a ROU asset and lease liability of $12,900 for one operating lease as of January 1, 2019, with no impact to retained earnings. Prior year amounts have not been restated. That lease is for 1,890 square feet of improved office, assembly and warehouse space in Las Vegas, Nevada. In January 2019 the Company recorded an additional $17,101 ROU remeasurement asset and liability from an extension of the operating facility lease to December 31, 2020.

In March 2019 the Company recorded a $57,587 ROU asset and liability for a two-year facility operating lease for 1,906 square feet of improved office, assembly and warehouse space in Lake Forest, California expiring in February 2021.

In June 2019 the Company recorded a $253,412 ROU asset and liability for a 38-month facility operating lease for 11,256 square feet of improved office, assembly, training and warehouse space in Tempe, Arizona expiring in July 2022.

Due to lack of borrowing history or ability the Company used as its incremental borrowing rate a low-grade debt rate published by the Federal Reserve Bank and determined a discount rate of 7.5% for the remeasurement in January 2019, 6.8% for the March 2019 operating lease and 7.0% for the June 2019 operating lease. Management determined these are reasonable borrowing rates.

Amortization of ROU operating lease assets was $28,746 and $50,957 for the three and nine months ended September 30, 2019.

Operating lease expense for capitalized operating leases included in operating activities was $34,682 and $60,278 for the three and nine months ended September 30, 2019. Operating lease obligations recorded on the balance sheet at September 30, 2019 are:

Operating lease liability- short term	$	123,778
Operating lease liability - long term		183,187
Total Operating Lease Liability	$	306,965

Future lease payments included in the measurement of lease liabilities on the balance sheet at September 30, 2019 for future periods are as follows:

Remainder of 2019 (three months)	$	34,507
2020		143,574
2021		101,406
2022		57,328
Total future minimum lease payments		336,815
Less imputed interest		(29,850	)
Total	$	306,965

The weighted average remaining lease term is 2.5 years and the weighted average discount rate is 7.0%.

The Company does not have any finance leases.