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LEASES

9 Months Ended

Sep. 30, 2023

NOTE 9 – LEASES

The Company leases office space domestically under operating leases. The Company’s headquarters are located in New York, New York for which the lease expires in 2025. We operate a marketing and sales center in Huntington Beach, California for which the lease expires in 2024, a patient care center in Greenville, South Carolina for which the lease expires in 2024 and a warehouse and fulfillment center in Columbia, Pennsylvania for which the lease expires in 2024. WorkSimpli leases two office spaces in Puerto Rico for which the leases expire in 2024.

The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of September 30, 2023:


Operating right-of-use assets	$	799,104
Operating lease liabilities - current	$	725,832
Operating lease liabilities - noncurrent	$	169,821

Total accumulated amortization of the Company’s operating right-of-use assets was $1.9 million as of September 30, 2023.

The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2023:


Fiscal year 2023	$	256,581
Fiscal year 2024		604,987
Fiscal year 2025		68,850
Less: imputed interest		(34,765	)
Present value of operating lease liabilities	$	895,653

Operating lease expenses were $214 thousand and $200 thousand for the three months ended September 30, 2023 and 2022, respectively, and $643 thousand and $603 thousand for the nine months ended September 30, 2023 and 2022, respectively, and were included in other operating expenses in our unaudited condensed consolidated statement of operations.

Supplemental cash flow information related to operating lease liabilities consisted of the following:

	September 30,
	2023		2022
Cash paid for operating lease liabilities	$	665,129	$	517,871

Supplemental balance sheet information related to operating lease liabilities consisted of the following:

	September 30, 2023			December 31, 2022
Weighted average remaining lease term in years		2.13			2.82
Weighted average discount rate		7.15	%		7.15	%

We have elected to apply the short-term lease exception to the warehouse space we lease in Lancaster, Pennsylvania. This lease has a term of 12 months and is not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. Straight-line lease payments are $3 thousand per month. Additionally, Conversion Labs PR utilizes office space in Puerto Rico on a month-to-month basis incurring rental expense of approximately $3 thousand per month.