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LEASES

3 Months Ended

Mar. 31, 2022

10.

LEASES

The Company leases a building and equipment. Under ASC 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 months ended March 31, 2022, the Company’s operating lease expense was $534,991.

Future minimum lease payments under non-cancellable operating leases as of March 31, 2022 were as follows:

Twelve months ending March 31,
2022	$	1,942,229
2023		2,059,080
2024		2,117,775
2025		2,176,090
2026		181,782
Total undiscounted operating lease payments		8,476,956
Less imputed interest (between 4.0% - 6.0%)		(842,956	)
Present value of operating lease payments	$	7,634,000

The following table sets forth the ROU assets and operating lease liabilities as of March 31, 2022:

Assets
ROU assets-net	$	7,360,800

Liabilities
Current operating lease liabilities	$	1,595,988
Long-term operating lease liabilities		6,038,012
Total ROU liabilities	$	7,634,000

The Company’s weighted average remaining lease term for its operating leases is 4.0 years.