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Leases

3 Months Ended

Mar. 31, 2021

LEASES

The Company has one operating lease and three finance leases.

Under the operating lease, the Company leases its executive offices and warehouse facilities in Fort Lauderdale, Florida from an entity controlled by Peter G. Dornau, the Company’s Chairman, President and Chief Executive Officer. The lease, as extended, expires on December 31, 2023. The lease requires an annual minimum base rent of $94,800 and provides for a maximum annual 2% increase in subsequent years, although the entity has not raised the minimum base rent since the Company entered into a previous lease agreement in 1998. Additionally, the leasing entity is entitled to reimbursement of all taxes, assessments, and any other expenses that arise from ownership. Each of the parties to the lease has agreed to review the terms of the lease every three years at the request of the other party. Operating lease expense was approximately $24,000 and $25,000 for the three months ended March 31, 2021 and 2020, respectively. At March 31, 2021 and December 31, 2020, the Company had a right to use asset and a corresponding liability of $247,621 and $268,920, respectively, related to the operating lease. Set forth below is a schedule of future minimum rent payments under the operating lease.

Twelve-month period ending March 31,
2022	$	94,800
2023		94,800
2024		71,100
Total future minimum lease payments		260,700
Less imputed interest		(13,079	)
Total operating lease liability	$	247,621

The Company’s three finance leases relate to office equipment. See Note 3 for information regarding the carrying value of the Company’s finance lease right to use assets and Note 7 for information regarding the finance lease payment schedule.

Expenses incurred with respect to the Company’s leases during the three months ended March 31, 2021 and 2020 are set forth below.

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Operating lease expense	$	24,339	$	24,521
Finance lease amortization		5,254		5,752
Finance lease interest		433		173
Total lease expense	$	30,026	$	30,446

The remaining lease term with respect to the operating lease, weighted average remaining lease term with respect to the finance leases and discount rate with respect to the operating lease and finance leases at March 30, 2021 and December 31, 2020 are set forth below:

	March 31, 2021
Remaining lease term – operating lease		2.75 years
Weighted average remaining lease term – finance leases		4.4 years
Discount rate – operating lease		3.7	%
Weighted average discount rate – finance leases		1.8	%

	December 31, 2020
Remaining lease term – operating lease		3.0 years
Weighted average remaining lease term – finance leases		4.6 years
Discount rate – operating lease		3.7	%
Weighted average discount rate – finance leases		1.8	%