Annual report pursuant to Section 13 and 15(d)

Leases

v3.24.1
Leases
 12 Months Ended
Dec. 31, 2023
Leases  
Leases

Note 11. Leases

 

Operating lease

 

We have a noncancelable operating lease entered in November 2016 for our office facility that expires in July 2021 and has renewal options to May 2024. The monthly “Base Rent” is $10,392 and the Base Rent is increased by 2.5% each year. In May 2023 the Company exercised its option and extended the lease to May 31, 2024.

 

In May 2021, we entered into a new lease agreement for our office and warehouse space that expires in May 2024. The Company shall have the option to terminate the lease after 12 months and 24 months from the commencement date. The monthly “Base Rent” is $11,855 and the Base Rent may be increased by 2.5% each year.

 

We recognized total lease expense, primarily related to our operating leases, on a straight-line basis in accordance with ASC 842.

 

As of December 31, 2023 and 2022, the Company recorded a refundable security deposit of $10,000 for its warehouse space and is included in other assets on the balance sheet.

 

The operating lease expense were as follows:

 

    2023     2022  
    Year Ended December 31,  
    2023     2022  
Operating lease cost   $ 353,329     $ 338,389  

 

Supplemental balance sheet information related to operating leases was as follows:

 

   

December 31,

2023

    

December 31,

2022

  
Operating lease right-of-use assets at inception   $ 1,276,515     $ 1,119,675  
Accumulated amortization     (1,160,942 )     (869,738 )
Total operating lease right-of-use assets   $ 115,573     $ 249,937  
                 
Operating lease liabilities - current   $ 119,272     $ 199,158  
Operating lease liabilities - non-current     -       63,310  
Total operating lease liabilities   $ 119,272     $ 262,468  
                 
Weighted-average remaining lease term — operating leases (year)     0.42       1.20  
Weighted-average discount rate — operating leases     4.73 %     4.86 %

 

Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at December 31, 2023 were as follows:

 

Year Ending December 31,        
2024   $ 120,211  
Thereafter     -  
Total undiscounted lease payments     120,211  
Less: Imputed interest     (939 )
Operating lease liabilities     119,272  

 

 

Finance lease

 

The Company leases machinery and office equipment under non-cancellable finance lease arrangements. The term of those capital leases is at the range from 59 months to 83 months and annual interest rate is at the range from 4% to 6%.

 

During the year ended December 31, 2022, the Company fully paid off the two outstanding finance leases totaling $148,019, prior to maturity dates. As of December 31, 2023 and 2022, the Company does not have any additional financing lease commitments.

 

During the years ended December 31, 2023 and 2022, the Company recorded depreciation of finance lease assets of $0 and $49,076 and interest expense of finance lease of $0 and $1,891, respectively.