NOTE 12 — COMMITMENTS AND CONTINGENCIES

Operating Leases: The Company occupies an executive office and warehouse space in Fountain Valley, CA, pursuant to separate lease agreements. The aggregate rent expense was $281,000 in 2022 and $281,000 in 2021.

In September 2018, the Company reached an agreement to extend the executive office lease effective February 1, 2019 by an additional five years. The monthly rent payable for the first year of the extended term was $120,620 and increases by 3% on each anniversary date. In April 2020, the Company reached an agreement whereby April, May and June 2020 monthly rent payments related to this lease in the amount of $19,500 were deferred but payable in six monthly installments of $3,250 commencing on the first day of July 2020. In addition, the term of the lease was extended for one year from the anniversary date, through January 2025.

Also, in September 2018, the Company reached an agreement to extend the warehouse lease effective February 1, 2019 by an additional five years. The monthly rent payable for the first year of the extended term was $9,465 and increases by 3% on each anniversary date. In April 2020, the Company reached an agreement whereby April, May and June 2020 monthly rent payments in the amount of $14,624 were deferred but payable in six monthly installments of $2,437 commencing on the first day of July 2020. In addition, the term of the lease was extended for one year from the anniversary date, through January 2025.

Future minimum lease payments at June 30, 2022 under these arrangements are as follows:

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Legal Matters: From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.