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OPERATING LEASES
 12 Months Ended
Dec. 31, 2023
Operating Leases  
OPERATING LEASES

NOTE 8 – OPERATING LEASES

 

The Company periodically enters operating lease contracts for office space and equipment. Arrangements are evaluated at inception to determine whether such arrangements constitute a lease. Right of use assets (“ROU assets”) represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities were recognized on the transition date based on the present value of lease payments over the respective lease term, with the office space ROU asset adjusted for deferred rent liability.

 

The Company has three material operating leases for office space. In March and September of 2023, the Company amended its primary office lease to obtain additional space, as well as extend the term. The leases have remaining lease terms of 84, 20 and 37 months as of December 31, 2023. For practical expediency, the Company has elected to not recognize as ROU assets and lease liabilities related to short-term leases.

 

In accordance with ASC Topic 842, Leases, the Company has recorded ROU assets of $1,995,204 and a related lease liability of $2,098,630 as of December 31, 2023. The Company recorded lease expense of $434,066 for the year ended December 31, 2023 for its leased assets and $297,136 for the year ended December 31, 2022. Cash paid for amounts included in the measurement of operating lease liabilities was $380,576 for the year ended December 31, 2023 and $296,988 for the year ended December 31, 2022. The present value of the Company’s operating lease liabilities as of December 31, 2023 is shown below.

 

Maturity of Operating Lease Liabilities

 

Year  Total 
2024  $505,017 
2025   532,053 
2026   379,529 
2027   297,947 
2028   295,689 
Thereafter   604,050 
      
Total lease payments  $2,614,285 
Less imputed interest   (515,655)
Present Value of Lease Liabilities  $2,098,630 
      
Operating lease liabilities – current  $361,185 
Operating lease liabilities – long-term  $1,737,445 

 

As of December 31, 2023, the Company’s operating leases have a weighted average remaining lease term of 5.9 years and a weighted average discount rate of 7.6%.