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Commitments
 3 Months Ended
Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments

Note 7. Commitments

 

Leases

 

Commencing on September 15, 2019, the Company entered into a five-year lease with Jamboree Center 1 & 2 LLC covering approximately 6,961 square feet of office space in Irvine, CA. Under the terms of the lease agreement, we are required to make the following monthly lease payments: Year 1 $21,927, Year 2 $22,832, Year 3 $23,737, Year 4 $24,712, Year 5 $25,686. As a condition of the lease, we were required to provide a $51,992 security deposit.

 

On February 1, 2022, the Company entered into a lease agreement for approximately 2,533 square feet of office and manufacturing space located in Las Vegas, Nevada. Commencing on March 1, 2022, the Company entered into a three-year lease with Speedway Commerce Center, LLC. Under the terms of the lease agreement, we are required to make the following monthly lease payments: Year 1 $1,950, Year 2 $2,028, Year 3 $2,110. As a condition of the lease, we were required to provide a $2,418 security deposit.

 

On March 28, 2022, the Company entered into a lease agreement for approximately 1,469 square feet of office space located in Lehi, Utah. Commencing on April 1, 2022, the Company entered into a three-year lease with Victory Holdings, LLC. Under the terms of the lease agreement, we are required to make the following monthly lease payments: Year 1 is comprised of April to May 2022 $867, June 2022 to March 2023 $3,550, Year 2 $3,657, Year 3 $3,766. As a condition of the lease, we were required to provide a $3,766 security deposit.

 

The right-of-use asset for operating leases as of March 31, 2022 and December 31, 2021 was $795,107 and $663,291. Rent expense for the three months ended March 31, 2022 and 2021 was $99,968 and $73,329.

 

The following table reconciles the undiscounted cash flows for the leases as of March 31, 2022 to the operating lease liability recorded on the balance sheet:  

     
2022  $266,370 
2023   370,902 
2024   304,892 
2025   16,135 
Total undiscounted lease payments   958,299 
Less: Imputed interest   106,807 
Present value of lease payments  $851,492 
      
Operating lease liabilities, current  $270,452 
Operating lease liabilities, long-term  $581,039 
      
Weighted-average remaining lease term   2.60 
Weighted-average discount rate   7.0% 

 

The discount rate is the Company’s incremental borrowing rate, or the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Based on an assessment of the Company’s borrowings the incremental borrowing rate was determined to be 7%.