Quarterly report pursuant to Section 13 or 15(d)

Leases ??? Related Party

Leases – Related Party
3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Leases – Related Party

5. 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, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases. We used the U.S. Treasury rate of 0.36% at March 31, 2023 and December 31, 2022.


The Company’s office lease contains rent escalations over the lease term. The Company recognizes 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 the Company’s 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 (the “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, the CEO of the Company and the CEO and majority shareholder of the Company’s parent 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, 2023 and December 31, 2022, supplemental balance sheet information related to leases were as follows:


    March 31,   December 31,
    2023   2022
Operating lease ROU asset   $ 1,070,756     $ 1,167,551  


    March 31,   December 31,
    2023   2022
Operating lease liabilities:                
Current portion   $ 394,910     $ 393,069  
Non-current portion     751,119       851,096  
Total   $ 1,146,029     $ 1,244,165  


At March 31, 2023, future minimum lease payments under the non-cancelable operating leases are as follows:


Year Ending December 31,    
2023 (excluding the three months ended March 31, 2023)     $ 297,675  
2024       416,745  
2025       437,582  
Total lease payment       1,152,002  
Less imputed interest       (5,973 )
Total     $ 1,146,029  


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


    March 31,
Weighted average discount rate     0.36 %
Weighted average remaining lease term (years)     2.67