General form of registration statement for all companies including face-amount certificate companies

Leases - Related Party

v3.21.1
Leases - Related Party
3 Months Ended 12 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Accounting Policies [Abstract]    
Leases - Related Party

4. Leases – Related Party

 

Operating right of use (“ROU”) assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent our right to use an underlying asset and is based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. We used the U.S. Treasury rate of 0.36% and 1.67% at March 31, 2021 and December 31, 2020, respectively.

 

Our office lease contains rent escalations over the lease term. We recognize expense for this office lease on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

 

The Company leases its office and warehouse facilities, and the land which are located at 3101 S US-1, Fort Pierce, Florida (he “Property”) from Visconti Holdings, LLC. Visconti Holdings, LLC is a single member LLC that holds the ownership of the Property and its sole member is Joseph C Visconti is the CEO and majority shareholder of the Company. The Company entered into the lease on January 1, 2020 and as amended January 1, 2021, the lease has a term of five years. The current base rent payment is $30,000 per month including property taxes and the lease required a $25,000 security deposit. The base rent will increase five percent (5%) on the anniversary of each annual term.

 

At March 31, 2021 and December 31, 2020, supplemental balance sheet information related to leases were as follows:

 

    March 31,   December 31,
    2021   2020
Operating lease ROU asset   $ 1,838,801     $ 1,279,595  
                 

 

    March 31,   December 31,
    2021   2020
Operating lease liabilities:                
Current portion   $ 357,273     $ 295,374  
Non-current portion     1,520,739       1,015,759  
    $ 1,878,012     $ 1,311,133  

 

At March 31, 2021, future minimum lease payments under the non-cancelable operating leases are as follows:

 

Year Ending December 31,    
2021 (excluding the three months ended March 31, 2021)   $ 270,000  
2022     373,800  
2023     396,900  
2024     416,745  
2025     437,582  
Total lease payment     1,895,027  
Less imputed interest     (17,015 )
Total   $ 1,878,012  

 

The following summarizes other supplemental information about the Company’s operating lease:

 

    March 31, 2021
Weighted average discount rate     0.36 %
Weighted average remaining lease term (years)     4.67  

 

    Three Months Ended
    March 31,
    2021   2020
Operating lease cost   $ 97,674     $ 82,884  

4. Leases – Related Party

 

Operating right of use assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent our right to use an underlying asset and is based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. As we have outstanding secured debt, we used the rate based on loan of 1.67%.

 

Our office lease contains rent escalations over the lease term. We recognize expense for this office lease on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

 

The Company leases its office and warehouse facilities, and the land which are located at 3101 S US-1, Fort Pierce, Florida (he “Property”) from Visconti Holdings, LLC. Visconti Holdings, LLC is a single member LLC that holds the ownership of the Property and its sole member is Joseph C Visconti is the CEO and majority shareholder of the Company. The Company entered into the lease on January 1, 2020 and the lease has a term of five years. The current payment is $25,000 per month including property taxes and the lease required a $25,000 security deposit. On January 1, 2021, the Company entered into a revised five-year lease agreement with a monthly rent of $30,000.

 

Supplemental balance sheet information related to leases was as follows:

 

        December 31,  
Operating Leases   Classification   2020  
Right-of-use assets   Operating right of use assets   $ 1,279,595  
             
Current lease liabilities   Current operating lease liabilities     295,374  
Non current lease liabilities   Long-term operating lease liabilities     1,015,759  
Total lease liabilities       $ 1,311,133  

 

Lease term and discount rate were as follows:

 

    December 31,  
    2020  
Weighted average remaining lease term (years)     4.0  
Weighted average discount rate     1.67 %

 

    Year ended
December 31,
 
    2020  
Operating lease cost   $ 303,910  
Variable lease cost (1)        
Total lease costs   $ 303,910  

 

(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

 

Supplemental disclosures of cash flow information related to leases were as follows:

 

    December 31,  
    2020  
Cash paid for operating lease liabilities   $ 300,000  
Operating right of use assets obtained in exchange for operating lease liabilities   $ 1,311,133  

 

Maturities of lease liabilities were as follows as of December 31, 2020:

 

    Operating  
    Leases  
2021   $ 315,000  
2022     330,750  
2023     347,287  
2024     364,652  
Total     1,357,689  
Less: Imputed interest     (46,556 )
Present value of lease liabilities   $ 1,311,133