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LEASES

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2022, the Company’s operating lease expense was $529,004 and $1,579,879, respectively.

Future minimum lease payments under non-cancellable operating leases as of September 30, 2022 were as follows:

Twelve months ending September 30,
2023	$	2,055,806
2024		2,151,496
2025		2,202,321
2026		1,330,474
2027		60,416
Total undiscounted operating lease payments		7,800,513
Less imputed interest (between 4.0% - 10.5%)		(725,887	)
Present value of operating lease payments	$	7,074,626

The following table sets forth the ROU assets and operating lease liabilities as of September 30, 2022:

Assets
ROU assets-net	$	6,736,441

Liabilities
Current operating lease liabilities	$	1,728,707
Long-term operating lease liabilities		5,345,919
Total ROU liabilities	$	7,074,626

The Company’s weighted average remaining lease term for its operating leases is 3.6 years.