XML 22 R9.htm IDEA: XBRL DOCUMENT
v3.22.1

Leases | 12 Months Ended
--- | ---
Dec. 31, 2021
Leases |
Leases | Note 3 – Leases The Boulder Facility Lease On June 27, 2017, the Company entered into a lease for its manufacturing and office space (the “Boulder Facility Lease”), which commenced September 29, 2017 and continued through August 31, 2022. The Company occupied a 12,700 square foot space for $12,967 per month until January 1, 2018. On January 2, 2018, the leased space was expanded to 18,952 square feet, and the monthly rental rate increased to $18,979 until August 31, 2018. Beginning September 1, 2018 and 2019, the monthly rent increased to $19,549 and $20,135, respectively. On each September 1 through the end of the lease, the monthly rent was to be increased by 3%. Pursuant to the Boulder Facility Lease, the Company made a security deposit of $51,000 on July 31, 2017. The deposit of $1,600 paid to the previous owner of the property was forwarded to the current landlord. The Company had the option to renew the Boulder Facility Lease for an additional five years. Additionally, the Company was to pay the actual amounts for property taxes, insurance, and common area maintenance. The Boulder Facility Lease agreement contained customary events of default, representations, warranties, and covenants. CEA Industries Inc. Notes to Consolidated Financial Statement Under the Boulder Facility Lease, the landlord agreed to pay the Company or the Company’s contractors for tenant improvements made by the Company not to exceed $100,000, which were used for normal tenant improvements. The Company determined that these improvements were not specialized and could be utilized by a subsequent tenant and, as such, the improvements were considered assets of the lessor. As of January 1, 2019, the unamortized amount of tenant improvement allowance of $81,481 was treated as a reduction in measuring the right-of-use asset. Upon adoption of ASC 842 on January 1, 2019, the Company recognized its Boulder Facility Lease on the balance sheet as an operating lease right-of-use asset in the amount of $714,416 and as a lease liability of $822,374. The lease liability was initially measured as the present value of the unpaid lease payments at adoption and the ROU asset was initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease adoption date, plus any initial direct costs incurred less any lease incentives received. The renewal option to extend the Boulder Facility Lease was not included in the right-of-use asset or lease liability, as the option was not reasonably certain to be exercised. The Company regularly evaluated the renewal option and if it is reasonably certain of exercise, the Company would have included the renewal period in its lease term. During 2020, the Company entered into an agreement with its landlord to apply its rent deposit of $52,600 to rent payments due during the period. The deposit required on the lease will be reduced to approximately $32,000 and will be payable in 12 monthly installments from January through December of 2021. Further, the landlord also agreed to defer payment of fifty percent of the three months of lease payments (base rent only) for the period July to September 2020. The deferred lease payments amount to approximately $30,000 and were payable in 12 monthly installments from January to December 2021. On April 30, 2021, the Company entered into an agreement to sublease approximately 6,900 square feet of its office and manufacturing space. The sublease commenced on April 30, 2021 and was to continue on a month-to-month basis until either party gives 30-days’ notice. Subject to the provision to terminate on 30-days’ notice, the sublease was to end upon termination of the Company’s Boulder Facility Lease Agreement with the landlord. Rent was initially charged at $5,989 per month and increased to $11,978 per month effective July 1, 2021. The Sublessor was also responsible for its prorated share of utilities and other related costs. This new sublease did not change the Company’s legal relationship or financial obligations with its landlord. Consequently, the Company continued to be responsible for all the remaining financial obligations under the Boulder Facility Lease agreement with the landlord. Accordingly, entering into the new sublease did not impact the carrying value of the Company’s operating lease right of use asset or operating lease liability. Moreover, after an initial two-month transitional period, the rental rate per square foot under the new sublease was identical to the rental rate per square foot for the Company’s existing lease with its landlord which indicated that there was no impairment to the carrying value of the Company’s operating lease right of use asset. On July 27, 2021, the Company entered into a Boulder Facility Lease Termination Agreement with its landlord for the 18,952 square foot office and manufacturing facility in Boulder, CO, which was previously contracted to expire on August 31, 2022. The termination provided for the Company to vacate the facility no later than November 15, 2021. In exchange for early termination from its lease obligation, the Company paid a nominal lease termination fee on July 28, 2021. The termination was also contingent upon a successor tenant executing a new lease with the landlord and the Company paying the remaining deferred rent and security deposit amounts. The landlord and successor tenant entered into a lease agreement on July 27, 2021. The remaining deferred rent and security deposit was be paid in conjunction with the final rent payment. As a result of the lease termination, effective November 15, 2021, the Company removed the outstanding balances relating to the Boulder Facility Lease right of use asset and lease liability from its balance sheet and recorded a $15,832 gain on lease extinguishment which has been recognized in other income. CEA Industries Inc. Notes to Consolidated Financial Statement The New Facility Lease On July 28, 2021, the Company entered into an agreement to lease 11,491 square feet of office and manufacturing space (the “New Facility Lease”), in Louisville, CO. The New Facility lease commenced on November 1, 2021 and continues through January 31, 2027. From November 2021 through January 2022, the monthly rent was abated. Beginning February 2022, the monthly rent is $10,055 and will increase by 3% annually every November through the end of the New Facility Lease term. Pursuant to the New Facility Lease, the Company made a security deposit of $14,747. The Company has the option to renew the New Facility Lease for an additional five years. Additionally, the Company pays the actual amounts for property taxes, insurance, and common area maintenance. The New Facility Lease agreement contains customary events of default, representations, warranties, and covenants. Upon commencement of the New Facility Lease, the Company recognized on the balance sheet an operating lease right-of-use asset and lease liability in the amount of $582,838. The lease liability was initially measured as the present value of the unpaid lease payments at commencement and the ROU asset was initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The renewal option to extend the New Facility Lease is not included in the right-of-use asset or lease liability, as the option is not reasonably certain to be exercised. The Company regularly evaluates the renewal option and when it is reasonably certain of exercise, the Company will include the renewal period in its lease term. The Company’s operating and finance right-of-use assets and lease liabilities are as follows: Schedule of Lease Cost
|  | As of December 31, 2021 |  |  | As of December 31, 2020 |
Operating lease right-of-use asset |  | $ | 565,877 |  |  | $ | 343,950 |
Operating lease liability, current |  | $ | 100,139 |  |  | $ | 266,105 |
Operating lease liability, long-term |  | $ | 486,226 |  |  | $ | 169,119 |
Remaining lease term |  |  | 5.1 years |  |  |  | 1.7 years |
Discount rate |  |  | 3.63 | % |  |  | 5.00 | %
Cash paid during the year for amounts included in the measurement of lease liabilities is as follows:
|  | For the Year Ended December 31, |
|  | 2021 |  |  | 2020 |
Operating cash outflow from operating lease |  | $ | 257,961 |  |  | $ | 160,934 |
Future annual minimum under non-cancellable operating leases as of December 31, 2021 were as follows: Schedule of Future Annual Minimum Lease Payments
Years ended December 31, |  |  |
2022 |  | $ | 111,204 |
2023 |  |  | 124,897 |
2024 |  |  | 128,643 |
2025 |  |  | 132,503 |
2026 |  |  | 136,473 |
Thereafter |  |  | 11,654 |
Total minimum lease payments |  |  | 645,374 |
Less imputed interest |  |  | (59,009 | )
Present value of minimum lease payments |  | $ | 586,365 |
CEA Industries Inc. Notes to Consolidated Financial Statement

X
- References No definition available. + Details
Name: | CEAD_DisclosureLeasesAbstract
Namespace Prefix: | CEAD_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration