In accordance with ASC 842, Leases, the Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classification and measurement of its right-of-use asset and lease liability at the lease commencement date and, thereafter, if modified. The lease term includes any renewal options that the Company is

In addition to rent, the leases may require the Company to pay additional costs, such as utilities, maintenance and other operating costs, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Only the fixed costs for lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of a right-of-use asset and liability. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

The Company leased its warehouse space under a commercial lease with RII Lundgren Mill, LLC, dated March 1, 2018. The lease commenced March 1, 2018 with monthly payments of $6,475, to escalate after 24 months by the lesser of 3% or the Consumer Price Index (“CPI”) adjustment. The initial lease term was ten years, and the Company had the option to renew the lease for two additional five-year periods.

The Company executed a second lease for additional warehouse and office space under a commercial lease with RII Lundgren Mill, LLC, dated December 17, 2018. The lease commenced on July 1, 2019 with monthly payments of $12,784, to escalate after 24 months by the lesser of 3% or the CPI adjustment. However, for accounting purposes the lease commencement date was June 6, 2019. The initial lease term was ten years.

The Company executed a third lease for additional warehouse and office space under a commercial lease with RII Lundgren Mill, LLC, dated October 1, 2021. The lease commenced on October 1, 2021 with monthly payments of $38,869, to escalate after 24 months by the lesser of 3% or the CPI adjustment. The initial lease term was ten years.

The Company executed a lease cancellation agreement dated December 12, 2022. Under this agreement, the Company's three leases with RII Lundgren Mill, LLC, were terminated effective January 31, 2023, and the Company agreed to pay $1,550,000, of which $500,000 was remitted in 2022 and $1,050,000 was satisfied in the first quarter of 2023. The Company ceased to realize any operational benefit from the leases as of December 31, 2022, and recorded losses on lease termination consisting of the write off of the related right of use assets, net of lease liabilities, as well as the lease termination fee, for a total of $3,596,365, which were included in General and administrative expenses for the year ended December 31, 2022.

The Company assumed an operating lease in the acquisition of Picky Bars, LLC on May 3, 2021. The Company pays monthly rent of $4,609, which escalates by 3% in months 15, 27, 39, and 51. The initial lease term is 62 months, and the Company has the option to renew the lease for two additional three-year periods.

The Company entered into a sublease agreement with Somatic Experiencing Trauma Institute with a commencement date of January 1, 2023, for a 5,257 square foot office space in Boulder, Colorado which serves as the Company's new headquarters. This lease will expire on July 1, 2027. The Company will owe $99,883 in the first twelve months, which will increase by 3% on the first day of each succeeding year.

The components of lease expense were as follows:


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Operating leases
Operating lease cost	$	38,085	$	76,169
Variable lease cost		5,554		18,468
Operating lease expense		43,639		94,637
Short-term lease rent expense		56,960		173,187
Total rent expense	$	100,599	$	267,824


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Operating leases
Operating lease cost	$	267,106	$	534,213
Variable lease cost		27,635		80,638
Operating lease expense		294,741		614,851
Short-term lease rent expense		68,957		103,498
Total rent expense	$	363,698	$	718,349


	Six Months Ended June 30, 2023		Six Months Ended June 30, 2022
Operating cash flows - operating leases	$	62,923	$	370,214
Right-of-use assets obtained in exchange for operating lease liabilities	$	344,382	$	5,285,330


	June 30, 2023			June 30, 2022
Weighted-average remaining lease term – operating leases (in years)		3.5			8.3
Weighted-average discount rate – operating leases		6.56	%		3.75	%

As of June 30, 2023, future minimum payments during the next five years and thereafter are as follows:


2023 (excluding the six months ended June 30, 2023)	$	63,509
2024		138,800
2025		126,715
2026		109,145
2027		56,210
Total		494,379
Less imputed interest		(61,963	)
Operating lease liabilities	$	432,416

The Company executed a sublease agreement of the Picky Bars, LLC operating lease on March 1, 2022. The lease commenced on April 1, 2022. The sublessee pays monthly rent of $4,889 beginning August 1, 2022, to escalate after 12 months by 3%. The initial lease term expires on April 30, 2025. The lease meets all of the criteria of an operating lease and is accordingly recognized straight line over the lease term with a related sublease rental asset accounting for abatements and initial direct costs. The Company had $15,657 and $18,846 of sublease rental assets as of June 30, 2023 and December 31, 2022, respectively, included in prepaid and other current assets on the unaudited consolidated condensed balance sheets.

The components of rental income were as follows:


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Operating leases
Operating lease income	$	14,055	$	28,110
Variable lease income		5,318		10,635
Total rental income	$	19,373	$	38,745