Operating Lease

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

OPERATING LEASE

12. OPERATING LEASE

On September 12, 2019, we entered into a lease covering approximately 14,300 square feet of office and warehouse space with a Possession Date of November 15, 2019 and a Commencement Date of February 13, 2020. We are renovating this space to meet our needs in expanding our production capacity for the First Defense^® product line. We are investing approximately $2,350,000 in leasehold improvements that we expect to depreciate over the ten-year lease term beginning upon issuance of a Certificate of Occupancy by the City of Portland. The lease term is ten years with a right to renew for a second ten-year term and a right of first offer to purchase. At this time, we are not reasonably assured that we would exercise this renewal option. A ten-year period is reflected in the right-of-use (ROU) asset and lease liability on our balance sheet. The total lease liability over the initial ten-year term (including inflationary adjustments) aggregates approximately $1,318,945 and includes real estate and personal property taxes, utilities, insurance, maintenance and related building and operating expenses. Our lease includes variable lease and non-lease components that are included in the ROU asset and lease liability. Such payments primarily include common area maintenance charges and increases in rent payments that are driven by factors such as future changes in an index, such as the Consumer Price Index. As of March 31, 2020, the balance of the operating lease ROU asset was $1,305,450 and the operating lease liability was $1,306,939. The calculated amount of the ROU asset and lease liability is impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The following table represents lease costs and other lease information. As we elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes and common area maintenance.

	During the Three-Month Periods Ended March 31,
	2020			2019
Lease Cost
Operating lease cost	$	15,597			—
Variable lease cost		5,472			—
Total lease cost	$	21,069			—
Operating Lease
Weighted average remaining lease term (in years)		9.8			—
Weighted average discount rate		4.77	%		—

Future lease payments required under non-cancelable operating leases in effect as of March 31, 2020 were as follows:

	March 31, 2020
During the nine-month period ending December 31, 2020	$	115,050
During the year ending December 31, 2021		159,396
During the year ending December 31, 2022		162,102
During the year ending December 31, 2023		165,120
During the year ending December 31, 2024		168,210
During the years ending December 31, 2025 and after		905,687
Total lease payments (undiscounted cash flows)		1,675,565
Less: imputed interest (discount effect of cash flows)		(368,626	)
Total operating lease liabilities	$	1,306,939