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Leases
 3 Months Ended
Mar. 31, 2025
Leases  
Leases

Note 2 – Leases

 

The Louisville 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 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:

 

   As of
March 31, 2025		 
Operating lease right-of-use asset  $216,891 
Operating lease liability, current  $137,875 
Operating lease liability, long-term  $101,314 
      
Remaining lease term   1.8 years 
Discount rate   3.63%

 

   For the Three
Months Ended
March 31, 2025		 
Cash paid for operating lease  $32,961 

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2025

(in US Dollars except share numbers)

(Unaudited)

 

Future annual minimum lease payments under non-cancellable operating leases as of March 31, 2025, were as follows:

 

Years ended December 31,    
2025 (excluding the three months ended March 31, 2025)   99,540 
2026   136,473 
Thereafter   11,654 
Total minimum lease payments   247,667 
Less imputed interest   (8,478)
Present value of minimum lease payments  $239,189