Leases – Related Party

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases – Related Party

5. Leases – Related Party

Operating right of use (“ROU”) assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent our right to use an underlying asset and is based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. We used the U.S. Treasury rate of 0.36% and 1.67% at September 30, 2021 and December 31, 2020, respectively.

Our office lease contains rent escalations over the lease term. We recognize expense for this office lease on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

The Company leases its office and warehouse facilities, and the land which are located at 3101 S US-1, Fort Pierce, Florida (the “Property”) from Visconti Holdings, LLC. Visconti Holdings, LLC is a single member LLC that holds the ownership of the property, and its sole member is Joseph C Visconti, the CEO and majority shareholder of the Company. The Company entered into the lease on January 1, 2020, and as amended January 1, 2021, the lease has a term of five  years. The current base rent payment is $30,000 per month including property taxes and the lease required a $25,000 security deposit. The base rent will increase five percent (5%) on the anniversary of each annual term.

At September 30, 2021 and December 31, 2020, supplemental balance sheet information related to leases were as follows:

	September 30,		December 31,
	2021		2020
Operating lease ROU asset	$	1,646,700	$	1,279,595

	September 30,		December 31,
	2021		2020
Operating lease liabilities:
Current portion	$	364,822	$	295,374
Non-current portion		1,336,437		1,015,759
Total lease liabilities	$	1,701,259	$	1,311,133

At September 30, 2021, future minimum lease payments under the non-cancelable operating leases are as follows:

Year Ending December 31,
2021 (excluding the nine months ended September 30, 2021)	$	90,000
2022		373,800
2023		396,900
2024		416,745
2025		437,582
Total lease payment		1,715,027
Less imputed interest		(13,768	)
Total	$	1,701,259

The following summarizes other supplemental information about the Company’s operating lease:

	September 30, 2021
Weighted average discount rate		0.36	%
Weighted average remaining lease term (years)		4.25

	Nine Months Ended
	September 30,
	2021		2020
Operating lease cost	$	293,022	$	248,652
Total lease cost	$	293,022	$	248,652