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LEASES

9 Months Ended

Sep. 30, 2021

10.

LEASES

The Company leases a building and equipment. Under Accounting Standards Codification Topic 842, at contract inception we determine whether the contract is or contains a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are included in ROU (right-of-use) assets and operating lease liabilities in our consolidated balance sheets.

The Company leases manufacturing and office space under an agreement classified as an operating lease.

The lease agreement, as amended, expires on April 30, 2026 and does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease.

In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes and operating expenses during the lease terms. The Company also leases office equipment in agreements classified as operating leases.

For the three and nine months ended September 30, 2021, the Company’s operating lease expense was $466,869 and $1,400,607, respectively.

Future minimum lease payments under non-cancellable operating leases as of September 30, 2021 were as follows:

Twelve months ending September 30,

2022 $ 1,951,263

2023 1,141,072

2024 11,631

Total undiscounted operating lease payments 3,103,966

Less imputed interest (between 4.0% - 6.0%) (104,902 )

Present value of operating lease payments $ 2,999,064

The following table sets forth the ROU assets and operating lease liabilities as of September 30, 2021:


Assets
ROU assets-net	$	2,790,731

Liabilities

Current operating lease liabilities	$	1,862,933
Long-term operating lease liabilities		1,136,131
Total ROU liabilities	$	2,999,064

The Company’s weighted average remaining lease term for its operating leases is 1.6 years.