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OPERATING LEASE LIABILITIES

12 Months Ended

Dec. 31, 2023

NOTE 9 – OPERATING LEASE LIABILITIES

The Company leases space in four different locations and also has an equipment lease rental with monthly payments ranging from $3,022 to $10,279 which expire at various dates through September 2026.

On September 29, 2022, the Company entered into an operating lease for equipment with Digital Fortress, Inc. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $109,840 during the year ended December 31, 2023.

On October 12, 2022, the Company entered into an operating lease for equipment and space with Cologix USA, Inc. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $106,471 during the year ended December 31, 2023.

On June 2, 2023, the Company entered into an operating lease to extend its lease for its Arizona office with Exeter 17319 DE, LLC. Accordingly, operating lease right of use assets and operating lease liabilities were recognized for the extension in the amount of $108,330 during the year ended December 31, 2023.

On January 3, 2024, the Company extended its lease for two years ended April 30, 2026. Monthly base rent will be $10,258 for the first year and $10,471 for the second year. Accordingly, operating lease right of use assets and operating lease liabilities were recognized for the extension in the amount of $236,872 during the year ended December 31, 2023.

The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The asset and liability were valued using an weighted average interest rate of 4.77%.

The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of December 31, 2023 and 2022 are as follows:

	December 31, 2023			December 31, 2022
Weighted average remaining lease term		2.13			1.19
Weighted average discount rate		4.77	%		4.77	%

The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheet as of December 31, 2023:

2024	$	279,227
2025		196,864
2026		72,673
Total undiscounted future minimum lease payments		548,764
Less: Difference between undiscounted lease payments and discounted lease liabilities		(26,898	)
Total operating lease liabilities	$	521,866
Less current portion		(262,733	)
Long-term operating lease liabilities	$	259,133

Total rent expense under operating leases for the year ended December 31, 2023 was $413,894 as compared to $486,654 for the year ended December 31, 2022. Rent expense paid with cash was $435,491 for the year ended December 31, 2023, as compared to $494,429 for the year ended December 31, 2022.