v3.22.2.2
LEASES
 6 Months Ended
Jun. 30, 2022
Leases  
LEASES

NOTE 7 - LEASES

 

The Company leases equipment, a showroom, offices and warehouse facilities. These leases expire at various dates through 2024 with options to extend to 2031.

 

The table below presents the lease costs for the three and six months ended June 30, 2022 and 2021:

 

                     
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
                 
Operating lease cost  $288,134   $396,492   $575,804   $792,544 
                     
Finance lease cost:                    
                     
Amortization of right-of-use assets   39,706    45,912    84,174    91,824 
Interest on lease liabilities   6,785    8,933    14,097    18,421 
                     
Total lease cost  $334,625   $451,337   $674,075   $902,789 

 

 

During the six months ended June 30, 2022 and 2021, the Company recognized sublease income of approximately $68,000 and $77,000, respectively, which in included in other income (expense), net in the accompanying condensed consolidated statements of operations.

 

Our leases generally do not provide an implicit rate, and therefore we use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. We used incremental borrowing rates as of the implementation date for operating leases that commenced prior to that date.

 

The following table presents other information related to leases:

 

                     
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
                 
Cash paid for amounts included in the measurement of lease liabilities:                    
Operating cash flows used for operating leases  $262,004   $375,911   $525,620   $751,822 
Financing cash flows used for financing leases   45,499    52,427    95,160    104,854 
Assets obtained in exchange for operating lease liabilities   -    -    -    - 
Assets obtained in exchange for finance lease liabilities   -    -    -    - 
Weighted average remaining lease term:                    
Operating leases   8.6 years    8.6 years     8.6 years    8.6 years 
Finance leases   3.9 years    4.6 years    3.9 years    4.6 years 
Weighted average discount rate:                    
Operating leases   5.60%   5.56%   5.60%   5.56%
Finance leases   5.16%   5.16%   5.16%   5.16%

 

The future minimum lease payments required under operating and financing lease obligations as of June 30, 2022 having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:

 

   Operating Leases   Finance Leases   Total 
             
Remainder of 2022  $443,807   $70,342   $514,149 
2023   878,807    139,080    1,017,887 
2024   870,000    139,080    1,009,080 
2025   870,000    139,080    1,009,080 
2026   870,000    68,395    938,395 
Thereafter   3,552,500    -    3,552,500 
                
Total undiscounted lease liabilities   7,485,114    555,977    8,041,091 
Less: imputed interest   (1,522,194)   (54,419)   (1,576,613)
                
Net lease liabilities  $5,962,920   $501,558   $6,464,478 

 

As of June 30, 2022, the Company has entered into a two-year operating lease that has not yet commenced.