XML 26 R13.htm IDEA: XBRL DOCUMENT

Operating Lease

3 Months Ended

Mar. 31, 2020

NOTE 7. OPERATING LEASE

The Company entered into an operating lease with a third party in September 2012 for office and warehouse space in Lenexa, Kansas. The terms of the lease include monthly payments ranging from $38,026 to $38,533 with a maturity date of April 2020. The Company has the option to renew for an additional three years beyond the original expiration date, which may be exercised at the Company’s sole discretion. The Company evaluated the renewal option at the lease commencement date to determine if it is reasonably certain the exercise the option and concluded that it is not reasonably certain that any options will be exercised. The weighted average remaining lease term for the Company’s office and warehouse operating lease as of March 31, 2020 was one month. The Company has entered into a lease for new office and warehouse space: See NOTE 13. SUBSEQUENT EVENTS.

The Company entered into an operating lease with a third party in October 2019 for copiers used for office and warehouse purposes. The terms of the lease include 48 monthly payments of $1,598 with a maturity date of October 2023. The Company has the option to Purchase the equipment at maturity for its estimated fair market value at that point in time. The remaining lease term for the Company’s copier operating lease as of March 31, 2020 was 43 months.

Lease expense related to the office space and copier operating leases were recorded on a straight-line basis over their respective lease terms. Total lease expense under the two operating leases was $98,836 for the three months ended March 31, 2020.

The discount rate implicit within the Company’s operating leases was not generally determinable and therefore the Company determined the discount rate based on its incremental borrowing rate on the information available at commencement date. As of commencement date, the operating lease liabilities reflect a weighted average discount rate of 8%.

The following sets forth the operating lease right of use assets and liabilities as of March 31, 2020:

Assets:
Operating lease right of use assets	$	94,449

Liabilities:
Operating lease obligations-current portion	$	49,828
Operating lease obligations-less current portion	$	44,620
Total operating lease obligations	$	94,448

The components of lease expense were as follows for the three months ended March 31, 2020:

Selling, general and administrative expenses

98,836

Following are the minimum lease payments for each year and in total.

Year ending December 31:
2020	$	52,915
2021		19,176
2022		19,176
2023		15,980
Total undiscounted minimum future lease payments		107,247
Imputed interest		(12,799	)
Total operating lease liability	$	94,448