Leases

9 Months Ended

Sep. 30, 2024

Leases

Leases

Note 11. Leases

Financing Leases

In January 2024, the Company terminated its finance lease agreement for heavy machinery. At the termination date, the carrying amount of the right-of-use asset and lease liability were $66,613 and $50,615, respectively. The difference of $15,998 was recognized as a loss in the condensed consolidated statements of operations and comprehensive loss. The termination resulted in the derecognition of both the right-of-use asset and the lease liability from the balance sheet, and did not significantly impact the Company’s cash flows for the period.

Operating Leases

In October 2023, the Company entered into a facility lease agreement with an unrelated party for an office and warehouse space located in Bargteheide, Germany. The monthly rental payments due, inclusive of taxes, are $15,356. The lease agreement is for a two-year term expiring on September 30, 2025. The Company also entered into a vehicle lease in October 2023 with an unrelated party with monthly payments of €741 for a three-year term expiring in October 2026.

The Company’s operating leases do not provide an implicit rate that can be readily determined. Therefore, the Company uses discount rates based on the incremental borrowing rate of its most recent external debt of 8%. 

The Company’s weighted-average remaining lease term relating to its operating leases is 1.12 years, with a weighted-average discount rate of 8%.

The Company incurred lease expense for its operating leases of $192,019 and $55,153 during the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024 and 2023, the Company made cash lease payments of $192,019 and $55,153, respectively. At September 30, 2024 and December 31, 2023, the operating lease right-of-use asset was $175,317 and $287,334, respectively, the current portion of operating lease liability was $165,044 and $153,803, respectively, and the operating lease liability, net of current portion, was $10,273 and $133,531, respectively.

The following table presents information about the future maturity of the lease liabilities under the Company’s operating leases as of September 30, 2024.

Maturities of Lease Liabilities	Operating Lease Liabilities
2024 (remainder of year)	$	43,276
2025		132,311
2026		8,276
Total future minimum lease payments		183,864
Less: Imputed interest		(8,547	)
Present value of lease liabilities	$	175,317
Remaining lease term (in years)		1 - 2.08