Item 2. Properties
Item
2.
Properties.
Pompano
Beach, FL
Our
Pompano Beach, Florida facilities are comprised of two adjoining properties totaling approximately 16,566 square feet of leased space
the bulk of which is factory and warehouse space. The initial 37-month lease covering approximately 8,541 square feet commenced on September
1, 2014. The lease provided for payment of a $5,367 security deposit, base rent of approximately $4,000 per month over the term of the
lease plus sales tax, and payment of 10.76% of annual operating expenses for common areas maintenance, subject to periodic adjustment.
On December 1, 2016, we entered into an amendment to the initial lease agreement, commencing on October 1, 2017, which extended the term
of the lease for an additional 84 months, expiring September 30, 2024. The base rent was increased to $4,626 per month with a 3% annual
escalation throughout the amended term.
On
November 11, 2018, the Company entered a new 69-month lease agreement for an additional 8,025 square feet adjoining its existing facility
in Pompano Beach, Florida. The new lease provided for a $6,527 security deposit, an initial base rent of approximately $4,848 per month
escalating at 3% per year during the term of the lease plus Florida state sales tax and payment of 10.11% of the building’s annual
operating expenses for common area maintenance, subject to adjustment as provided in the lease.
Huntington
Beach, California
Our
Huntington Beach, California facility is comprised of a leased 13,000 square foot free standing building of which the bulk of the square
footage is warehouse and manufacturing space. The initial lease, signed in January, 2013 was for five years with a base rent of $7,410.
On
January 4, 2018, the Company entered into a sixty-one month term lease renewal for its facility in Huntington Beach, California, commencing
on February 1, 2018. Base rent is approximately $9,300 per month for the first 12 months with a 2.5% annual escalation throughout the
term. The Company paid a security deposit of $8,450 with the initial lease that the landlord continues to hold.
We
believe that the facilities are suitable for their intended purpose, are being efficiently utilized and provide adequate capacity to
meet demand for the foreseeable future.
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