Commitments and Contingencies |
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Commitments and Contingencies | 14) Commitments and Contingencies (a) Employment Agreements The Company has employment agreements with certain executive officers and key employees that provide for, among other things, salary and performance bonuses. In connection with the consummation of the Mergers, on December 24, 2020, the Company and Mr. Keith Lavan entered into a Separation Agreement (the “Separation Agreement”), pursuant to which Mr. Lavan resigned as Senior Vice President and Chief Financial Officer of the Company and agreed to serve as an advisor to the Company through December 31, 2020 (the “Separation Date”). Pursuant to the Separation Agreement, in addition to other benefits, Mr. Lavan received a stay-on bonus of $50,000 for continuing to remain employed by the Company through the Separation Date. For his services as an advisor, the Company agreed to pay Mr. Lavan an amount equal to 50% of his base salary as of immediately prior to the Separation Date. The Company paid 70% of such amount on January 15, 2021 and 30% of such amount in equal installments from the Separation Date through June 30, 2021. In addition, Mr. Lavan executed a general release of liabilities in favor of the Company. (b) Legal Proceedings On July 14, 2020, Greg Ford, the Chief Executive Officer of the Company, was terminated. On July 14, 2020, Mr. Ford, through his attorney, claimed that he was entitled to severance pay pursuant to an employment agreement following the termination of his employment on that same date. This claim is currently at an early stage where the Company is unable to determine the likelihood of any unfavorable outcome. The Company is not currently involved in any other significant claims or legal actions that, in the opinion of management, will have a material adverse impact on the Company’s operations, financial position or cash flows. (c) Operating Leases The Company has commitments under operating leases for office and warehouse space used in its operations. The Company’s leases have remaining lease terms ranging from 2.2 years to 4.5 years. On November 30, 2021, the Company entered into a sublease with respect to its entire headquarters facility. The sublessor delivered a $14,000 security deposit to the Company on the lease commencement date and also agreed to pay $7,000 per month for the term beginning January 10, 2022 and continuing until the expiration of the head lease on August 30, 2024. The Company will account for this sublease as an operating lease in accordance with the lessor accounting guidance within ASC 842. The components of lease expense consisted entirely of fixed lease costs related to operating leases. These costs were $89,623 and $89,623 for the six months ended June 30, 2022 and 2021, respectively. Fixed lease costs for the six months ended June 30, 2022 were offset by sublease income of $42,000. Supplemental balance sheet information related to leases was as follows:
Supplemental lease term and discount rate information related to leases was as follows:
Supplemental cash flow information related to leases was as follows:
Future minimum lease payments under non-cancelable leases as of June 30, 2022, were as follows:
Future minimum sublease income under non-cancelable leases as of June 30, 2022, were as follows:
As of June 30, 2022, the Company had no operating leases that had not yet commenced. |