Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2023

6. Leases


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 the Company’s 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. The Company used the U.S. Treasury rate of 4% at December 31, 2022.


The Company leases a warehouse facility, and the land which are located at 150 Commerce Street, Old Fort, North Carolina (the “Property”) from NC Limited Liability Company. The Company entered into the lease on October 7, 2022, the lease has a term of two years. The current base rent payment is $7,517 per month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security deposit. The base rent will increase three percent (3%) on October 15, 2023.


At September 30, 2023 and December 31, 2022, supplemental balance sheet information related to leases were as follows:


    September 30,   December 31,
    2023   2022
Operating lease ROU asset   $ 97,200     $ 162,069  


    September 30,   December 31,
    2023   2022
Operating lease liabilities:                
Current portion   $ 90,924     $ 86,245  
Non-current portion           68,532  
Total   $ 90,924     $ 154,777  


At September 30, 2023, future minimum lease payments under the non-cancelable operating leases are as follows:


2023 (excluding the nine months ended September 30, 2023)   $ 23,226  
2024     69,680  
Total lease payment   $ 92,906  
Less imputed interest     (1,982 )
Total     90,924  


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


  September 30,
Weighted average discount rate     4 %
Weighted average remaining lease term (years)     1.08  


    Nine Months Ended
September 30, 2023
Operating lease cost   $ 67,650  
Total lease cost   $ 67,650