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Leases
12 Months Ended
Dec. 31, 2023
Leases  
Leases

Note 5. Leases

 

The following provides balance sheet information related to leases as of December 31, 2023 and 2022:

  

   2023   2022 
Assets          
Operating lease, right-of-use asset, net  $228,295   $47,687 
Liabilities          
Current portion of operating lease liabilities  $172,975   $52,890 
Operating lease liabilities, net of current portion   61,496    - 
Total operating lease liabilities  $234,471   $52,890 

 

 

At December 31, 2023, the future estimated minimum lease payments under non-cancelable operating leases are as follows:

 

      
2024  $184,532 
2025   62,448 
Total minimum lease payments   246,980 
Less amount representing interest   12,509 
Present value of future minimum lease payments   234,471 
Less current portion of operating lease liabilities   172,975 
Operating lease liabilities, net of current portion  $61,496 

 

In April 2021, the Company entered into two operating leases for office space that commenced in May 2021. The lease terms were set to expire in April 2023, subject to automatic renewal on a month-to-month basis unless the Company provided three-months written notice to the landlord prior to initial expiration. In January 2023, the Company renewed one of the operating leases for an additional two years and notified the landlord of its intent not to renew the other lease. In January 2023, the Company also entered into two new leases that commenced in March 2023 and May 2023, respectively, and continue through April 2025. The new leases also renew automatically on a month-to-month basis unless the Company provides three-months written notice to the landlord prior to initial expiration. The exercise of lease renewal options was at the Company’s sole discretion and is assessed as to whether to include any renewals in the lease term at inception.

 

The following table provides a reconciliation for the Company’s right of use assets and lease liabilities:

  

   Right-of-Use Asset   Operating Lease Liability 
Balance at January 1, 2022  $185,943   $204,948 
Amortizations   (138,256)   (152,058)
Balance at December 31, 2022   47,687    52,890 
Remeasurement of operating lease right-of-use assets and operating lease liability   198,847    198,847 
Operating right-of-use asset acquired through operating lease liability   141,989    141,989 
Amortizations   (160,228)   (159,255)
Balance at December 31, 2023  $228,295   $234,471 

 

Other supplemental information related to operating leases is as follows:

  

   2023   2022 
   As of December 31, 
   2023   2022 
Weighted average remaining term of operating leases (in years)   1.33    0.33 
Weighted average discount rate of operating leases   7.36%   4.65%

 

The Company also leased office space in Dallas, Texas under month-to-month lease arrangements during the years ended December 31, 2023 and 2022. In April 2023, the Company entered into a two-year lease for material storage and handling. The lease is cancellable with 45-days’ written notice. Under these short-term leases, the Company elected the short-term lease measurement and recognition exemption under ASC 842 and recorded rent expense as incurred.

 

The components of lease expense were approximately as follows for the years ended December 31, 2023 and 2022:

 

   2023   2022 
Operating lease cost  $178,000   $144,000 
Short-term lease cost   14,000    - 
Lease expense  $192,000   $144,000 

 

During the years ended December 31, 2023 and 2022, cash used in operating activities associated with these leases was approximately $177,000 and $158,000, respectively.