Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

5. LEASES

The Company has one operating lease and two finance leases.

Under the operating lease, the Company leases its executive offices and warehouse facilities in Fort Lauderdale, Florida from an entity controlled by Peter G. Dornau, the Company's Chairman, President and Chief Executive Officer. The lease, as extended, expires on December 31, 2023. The lease requires an annual minimum base rent of $94,800 and provides for a maximum annual 2% increase in subsequent years, although the entity has not raised the minimum base rent since the Company entered into a previous lease agreement in 1998. Additionally, the leasing entity is entitled to reimbursement of all taxes, assessments, and any other expenses that arise from ownership. Each of the parties to the lease has agreed to review the terms of the lease every three years at the request of the other party. Operating lease expense for each of the three months ended March 31, 2020 and 2019 was approximately $25,000. At March 31, 2020, the Company has a right to use asset and a corresponding liability of $331,658 related to the operating lease. Set forth below is a schedule of future minimum rent payments under the operating lease.

Twelve month period ending March 31,
2021	$	94,800
2022		94,800
2023		94,800
2024		71,100
Total future minimum lease payments		355,500
Less imputed interest		(23,842	)
Total operating lease liability	$	331,658

The Company's two finance leases relate to office equipment. See Note 4 for information regarding the carrying value of the Company's finance lease right to use assets and Note 8 for information regarding the finance lease payment schedule.

Expenses incurred with respect to the Company's leases during the three months ended March 31, 2020 and 2019 are set forth below.

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating lease expense	$	25,000	$	25,000
Finance lease amortization		5,752		5,000
Finance lease interest		173		205
Total lease expense	$	30,925	$	30,205

The remaining lease term with respect to the operating lease, weighted average remaining lease term with respect to the finance leases and discount rate with respect to the operating lease and finance leases at March 31, 2020 are set forth below:

	March 31, 2020
Remaining lease term – operating lease		3.75 years
Weighted average remaining lease term – finance leases		2.84 years
Discount rate – operating lease		3.7	%
Weighted average discount rate – finance leases		3.2	%