Quarterly report pursuant to Section 13 or 15(d)

Right-of-use Assets and Operating Lease Liabilities

Right-of-use Assets and Operating Lease Liabilities
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Right-of-use Assets and Operating Lease Liabilities


The Company leases certain warehouse, corporate office space and equipment under an operating lease agreement. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets pursuant to ASC 842, Leases.


Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.


The components of lease expense and supplemental cash flow information related to leases for the period are as follows:



Period Ended

March 31, 2021


Period Ended

March 31, 2020

Lease cost                
Operating lease cost (included in general and administration in the Company’s statement of operations)   $ 175,000     $ 175,000  
Other information                
Cash paid for amounts included in the measurement of lease liabilities   $ 196,000     $ -  
Weighted average remaining lease term – operating leases (in years)     4.54       5.11  
Average discount rate – operating leases     4.0 %     4.0 %


    March 31, 2021     December 31, 2020  
Operating leases                
Right-of-use assets   $ 2,590,000     $ 2,730,000  
Short-term operating lease liabilities   $ 591,000     $ 596,000  
Long-term operating lease liabilities     2,786,000       2,943,000  
Total operating lease liabilities   $ 3,377,000     $ 3,539,000  


Year ending   Operating Leases  
2021     595,000  
2022     751,000  
2023     773,000  
2024     472,000  
2025 and thereafter     1,189,000  
Total lease payments     3,780,000  
Less: Imputed interest/present value discount     (403,000 )
Present value of lease liabilities   $ 3,377,000