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COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 4 – COMMITMENTS AND CONTINGENCIES Operating Lease Obligations On July 26, 2021, the Company entered into a new operating lease agreement for office and warehouse combination space of 40,000 square feet, with the lease commencing on November 1, 2021 and ending April 30, 2032. This new space combines the Company’s two separate work locations into one facility, which allows for greater collaboration and also accommodates a larger anticipated workforce and manufacturing facility. On November 24, 2021, the lease was amended to commence on December 1, 2021 and end on May 31, 2032. The Company recognized a ROU asset and operating lease liability in the amount of $4,980,104 at lease commencement. Rent for the first eleven months of the term was calculated based on 30,000 rentable square feet. The rent is subject to an annual escalation of 2.5%, beginning November 1, 2023. The Company made a security deposit payment in the amount of $600,000 on July 26, 2021. Per the contract, on the 18th month, the security deposit was reduced by $50,000. The right of use asset balance at September 30, 2023, net of accumulated amortization, was $4,454,714. As of September 30, 2023, the office and warehouse lease is the Company’s only lease with a term greater than twelve months. The office and warehouse lease has a remaining term of approximately 8.8 years and includes an option to extend for two renewal terms of five years each. The renewal options are not reasonably certain to be exercised, and therefore, they are not included when determining the lease term used to establish the right of use asset and lease liability. The Company also has several short-term leases, primarily related to equipment. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the consolidated balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components (such as common area maintenance) as a single lease component. The following table shows supplemental information related to leases:
Schedule of supplemental information related to leases |  |  |  |  |  |
|  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |
Lease cost: |  |  |  |  |  |  |  |
Operating lease cost |  | $ | 586,228 |  |  | $ | 582,989 |
Short-term lease cost |  | $ | 56,052 |  |  | $ | 26,127 |
Other information: |  |  |  |  |  |  |  |
Operating cash outflow used for operating leases |  | $ | 505,664 |  |  | $ | 323,750 |
Weighted average discount rate |  |  | 9.0 | % |  |  | 9.0 | %
Weighted average remaining lease term |  |  | 8.6 years |  |  |  | 9.6 years |
As of September 30, 2023, future minimum lease payments due under our operating leases are as follows:
Schedule of future minimum lease payments |  |  |
|  | Amount |
Calendar year: |  |  |  |
2023 |  | $ | 191,205 |
2024 |  |  | 779,087 |
2025 |  |  | 798,556 |
2026 |  |  | 818,518 |
2027 |  |  | 838,984 |
Thereafter |  |  | 4,043,427 |
Total undiscounted future minimum lease payments |  |  | 7,469,777 |
Less: Impact of discounting |  |  | (2,384,618 | )
Total present value of operating lease obligations |  |  | 5,085,159 |
Current portion |  |  | (774,306) |
Operating lease obligations, less current portion |  | $ | 4,310,853 |
Executive Severance Agreement Pursuant to a separation agreement with Gianni Arcaini, our former Chief Executive Officer and Chairman of the Board (the “Separation Agreement”), Mr. Arcaini’s employment with the Company ended on September 1, 2020 (“Separation Date”). The Separation Agreement provided that he would receive separation payments over a 36-month period equal to his base salary plus $75,000 as well as certain limited health and life insurance benefits. The Separation Agreement also contained confidentiality, non-disparagement and non-solicitation covenants and a release of claims by Mr. Arcaini. In accordance with the Separation Agreement, the Company paid to Mr. Arcaini the total sum of $747,788. On March 1, 2021, the Company paid to Mr. Arcaini a lump-sum amount equal to the first six months of payments, or $124,631, owed to Mr. Arcaini and the Company continued to pay him in semi-monthly installments for 30 months thereafter, as contemplated in Mr. Arcaini’s Separation Agreement. The remaining balance included in accrued expenses in the accompanying unaudited consolidated balance sheet is zero as of September 30, 2023.

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