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Leases | 9 Months Ended
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Sep. 30, 2023
Leases |
Leases | Note 2 – Leases In February 2016 the FASB issued ASU 2016-02, Leases (Topic 842) (“ASC 842” or the “new lease standard”). The Company adopted ASC 842 as of January 1, 2019, using the effective date method. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the “package of practical expedients” which allow the Company to not reassess: (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new lease standard. 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. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) 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 lease cost, cash flows and other information related to the New Facility Lease were as follows: Schedule of Lease Cost
|  | As of September 30, 2023 |
Operating lease right-of-use asset |  | $ | 383,169 |
Operating lease liability, current |  | $ | 124,319 |
Operating lease liability, long-term |  | $ | 290,051 |
Remaining lease term |  |  | 3.6 years |
Discount rate |  |  | 3.63 | %
|  | For the Nine Months Ended September 30, 2023 |
Operating cash outflow from operating lease |  | $ | 93,206 |
CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Future annual minimum lease payments on the New Facility Lease as of September 30, 2023 are as follows: Schedule of Future Annual Minimum Lease Payments
As of September 30, 2023 |  |  |
Years ended December 31, |  |  |
2023 (excluding the nine months ended September 30, 2023) |  | $ | 31,690 |
2024 |  |  | 128,643 |
2025 |  |  | 132,503 |
2026 |  |  | 136,473 |
Thereafter |  |  | 11,654 |
Total minimum lease payments |  |  | 440,963 |
Less imputed interest |  |  | (26,593 | )
Present value of minimum lease payments |  | $ | 414,370 |

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- References No definition available. + Details
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- 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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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