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LEASES

3 Months Ended

Mar. 31, 2023

NOTE 6—LEASES

OmniMetrix leases office space and office equipment under operating lease agreements. The office lease has an expiration date of September 30, 2025. The office equipment lease was entered into in April 2019 and has a sixty-month term. Operating lease payments for the three months ended March 31, 2023 and 2022 were $31,000 and $30,000, respectively. The present value of future minimum lease payments on non-cancelable operating leases as of March 31, 2023 using a discount rate of 4.5% is $308,000. The 4.5% discount rate used is the incremental borrowing rate which, as defined in ASC 842, is the rate of interest that a lessee would have to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments.

Supplemental cash flow information related to leases consisted of the following (in thousands):

For the three months

ending March 31,

2023

2022

Cash paid for operating lease liabilities

Supplemental balance sheet information related to leases consisted of the following:

	2023
Weighted average remaining lease terms for operating leases		2.49

The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms in excess of one year to the total operating lease liabilities recognized on the unaudited condensed balance sheet as of March 31, 2023 (in thousands):

		Year ended March 31,
2024		$	129
2025			129
2026			67
Total undiscounted cash flows			325
Less: Imputed interest			(17	)
Present value of operating lease liabilities (a)	(a)	$	308

(a)

Includes current portion of $118,000 for operating leases.

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in Buford, Georgia, for a monthly sublease payment of $2,375 (plus an annual escalator each year of 3%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. The estimated amount the Company expects to remit to the landlord each future year of the sublease is $6,100 per year. The sublease commenced on October 1, 2021 and will run through September 30, 2025 which is the end of the Company’s lease term with its landlord. Below are the future payments (in thousands) expected under the sublease net of the estimated annual service cost of $2,220 (gross of the estimated amount expected to be remitted to our landlord):

SCHEDULE OF SUBLEASES

	Year ended March 31,
2024	$	28
2025		28
2026		14
Total undiscounted cash flows	$	70

This sublease receivable is subject to review under ASU 2016-13, (see Notes 2 and 4); however, no credit losses are expected based on the Company’s implementation of ASU 2016-13.