Right-of-Use Assets and Liabilities

9 Months Ended

Sep. 30, 2019

Note 12 – Right-of-Use Assets and Liabilities

The Company has signed several lease agreements, with the largest being for its office and manufacturing facility in the Rochester, New York area under an operating lease that commenced October 3, 2015 and expires on October 3, 2020. This lease has an original five-year term with an option by the Company to renew for two additional three-year terms at pre-agreed to lease rates. This renewal term is excluded from our right-to-use asset and liability as of September 30, 2019 as the renewal option for our current leased facility is not reasonably certain. Operating lease cost under the operating leases totaled $132,141 and $117,372 for the three months ended September 30, 2019 and 2018, respectively. Operating lease cost under the operating leases totaled $422,218 and $349,168 for the nine months ended September 30, 2019 and 2018, respectively.

Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements. The leases generally also include real estate taxes and common area maintenance charges in the annual rental payments. Short-term leases are leases having a term of twelve (12) months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases.

As none of our leases provide an implicit interest rate, we use our incremental borrowing rate to determine our discount rate at lease inception based upon the information available at commencement in determining the present value of lease payments. As of September 30, 2019, the weighted average discount rate was 5% and the weighted average remaining lease term was 1.1 years.

Future lease payments under operating leases as of September 30, 2019 were as follows:


Remainder of 2019	$	138,885
2020		443,979
Total Future Lease Payments		582,864
Less: Imputed Interest		(17,085)
Total Lease Liability Balance	$	565,779