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Operating Lease Obligations
 6 Months Ended
Jun. 30, 2023
Operating Lease Obligations  
Operating Lease Obligations

13. Operating Lease Obligations

 

During the year ended December 31, 2019, the Company signed a lease agreement for warehouse space to commence on August 1, 2019 and end on July 31, 2022 with monthly lease payments of $2,221. During the year ended December 31, 2021, the Company entered into a second lease agreement for warehouse space to commence on June 1, 2021 and end on May 31, 2024 with monthly lease payments of $19,910.

 

During the year ended December 31, 2022, the Company signed a lease agreement for approximately 20,296 square feet to be used as its primary corporate office and R&D facility pursuant to a five-year lease, dated June 1, 2022, for a variable rate averaging $22,101 per month over the lifetime of the lease. The Company also pays approximately $4,418 in additional fees per month, which varies year to year.

 

The Company has accounted for its leases upon adoption of ASC 842 whereby it recognizes a lease liability and a right-of-use asset at the date of initial application beginning January 1, 2019. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate of 10%. The Company has measured the right-of-use asset at an amount equal to the lease liability.

 

The Company’s right-of-use asset and lease liability as of June 30, 2023 and December 31, 2022 are as follows:

 

   June 30, 2023   December 31, 2022 
Right-of-use asset  $1,067,977   $1,238,055 
Current lease liability  $390,926   $387,329 
Long-term lease liability  $693,289   $884,146 

 

The following is a summary of the Company’s total lease costs:

 

   June 30, 2023   June 30, 2022 
Operating lease cost  $252,068   $154,889 

 

 

The following is a summary of cash paid during the six months ended June 30, 2023 and 2022 for amounts included in the measurement of lease liabilities:

 

   June 30, 2023   June 30, 2022 
Operating cashflow  $244,941   $153,597 

 

The following are future minimum lease payments as of June 30, 2023:

 

      
2023  $476,904 
2024   265,630 
2025   273,672 
2026   257,748 
Total future minimum lease payments   1,273,954 
Less: amount representing interest   (189,739)
Present value of future payments   1,084,215 
Current portion   390,926 
Long term portion  $693,289