Operating Lease Obligations

3 Months Ended

Mar. 31, 2024

Operating Lease Obligations

Operating Lease Obligations

11. Operating Lease Obligations

During the year ended December 31, 2019, the Company signed a lease agreement for warehouse space to commence on August 1, 2019 and end on July 31, 2022 with monthly lease payments of $2,221. During the year ended December 31, 2021, the Company entered into a second lease agreement for warehouse space to commence on June 1, 2021 and end on May 31, 2024 with monthly lease payments of $19,910.

During the year ended December 31, 2022, the Company signed a lease agreement for approximately 20,296 square feet to be used as its primary corporate office and R&D facility pursuant to a five-year lease, dated June 1, 2022, for a variable rate averaging $22,101 per month over the lifetime of the lease. The Company also pays approximately $4,418 in additional fees per month, which varies year to year.

During the year ended December 31, 2023, the Company signed a lease agreement for office space to be used as an R&D facility pursuant to a one-year lease with an option to extend the lease for an additional year, dated June 1, 2023, for a monthly rent of $3,350.

The Company has accounted for its leases upon adoption of ASC 842 whereby it recognizes a lease liability and a right-of-use asset at the date of initial application beginning January 1, 2019. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate of 10%. The Company has measured the right-of-use asset at an initial amount equal to the lease liability.

The Company’s right-of-use asset and lease liability as of March 31, 2024, and December 31, 2024, are as follows:

	March 31, 2024		December 31, 2023
Right-of-use asset	$	803,006	$	917,354
Current lease liability	$	278,064	$	328,229
Long-term lease liability	$	546,566	$	608,761

The following is a summary of the Company’s total lease costs:

	March 31, 2024		March 31, 2023
Operating lease cost	$	133,796	$	126,034

The following is a summary of cash paid during the three months ended March 31, 2024 and 2023 for amounts included in the measurement of lease liabilities:

	March 31, 2024		March 31, 2023
Operating cashflow	$	135,784	$	122,156

The following are future minimum lease payments as of March 31, 2024:

2025	$	343,496
2026		278,352
2027		279,815
2028		46,863
Total future minimum lease payments		948,526
Less: amount representing interest		(123,896	)
Present value of future payments		824,630
Current portion		278,064
Long term portion	$	546,566