XML 29 R17.htm IDEA: XBRL DOCUMENT

Leases

6 Months Ended

Jun. 30, 2024

Note 10 - Leases

Since inception, the Company has entered into four leases for office suites in California and Florida, two were short-term and two leases were long-term and expire in August 2024 and January 2025. Termination of any lease is prohibited unless there is a violation under the lease agreement. The California lease has escalating payments from $15,538 per month to $16,004 per month, while the Florida lease has payments of $16,457 per month for the term of the lease. In determining the length of the lease term, the Company determined there was no embedded extension option. At lease commencement date, the Company estimated the lease liability and the right-of-use assets at present value using the Company’s estimated incremental borrowing rate of 10.5%.

In conjunction with the Credova Merger, the Company acquired a lease agreement for its corporate office in Montana which had a commencement date of May 2022 and contains annual rent increases through April 2027. There is no purchase option or transfer of title of the leased premises at the end of the lease. The Company is responsible for all expenses, maintenance and taxes on the leased premises during the lease term. The Company has the option to renew the lease for an additional five-year period at prevailing rental rates at that time. In determining the length of the lease term, the Company did not include the optional renewal as on commencement date that renewal was not probable. At acquisition date, the Company estimated the lease liability and the right-of-use assets at present value using the Company’s estimated incremental borrowing rate of 9.75%.

Rent expense under the operating leases included in the results of operations, inclusive of common area maintenance charges and real estate taxes, was approximately $142,000 and $63,000 for the three months ended June 30, 2024 and 2023, respectively, and approximately $256,000 and $113,000 for the six months ended June 30, 2024 and 2023, respectively.

The following amounts were recorded in the Company’s condensed consolidated balance sheets relating to its operating lease and other supplemental information:

	June 30, 2024			December 31, 2023
ROU assets	$	456,795		$	324,238
Lease liabilities:
Current lease liabilities	$	243,609		$	310,911
Non-current lease liabilities		218,622			16,457
Total lease liabilities	$	462,231		$	327,368
Other supplemental information:
Weighted average remaining lease term		1.4 years			1 year
Weighted average discount rate		10.0	%		10.5	%

The following table presents the lease payments relating to the Company’s operating leases:

Fiscal Year	June 30, 2024
Remainder of 2024	$	193,558
2025		144,273
2026		131,196
2027		44,112
Total lease payments		513,139
Less: imputed interest		(50,908	)
Present value of operating lease liabilities	$	462,231