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LEASES
 12 Months Ended
Dec. 31, 2023
Leases  
LEASES

NOTE 7—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 2023 and 2022 were $128,000 and $124,000, respectively. The future minimum lease payments on non-cancelable operating leases as of December 31, 2023 using a discount rate of 4.5% are $221,000. The 4.5% used is the incremental borrowing rate (established at the commencement of the lease) 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 balance sheet information related to leases consisted of the following:

 

   2023 
Weighted average remaining lease terms for operating leases   1.75 

 

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 consolidated balance sheet as of December 31, 2023 (in thousands):

 

   2023 
2024  $129 
2025   99 
Total undiscounted cash flows   228 
Less: Imputed interest   (7)
Present value of operating lease liabilities (a)  $221 

 

  (a) Includes current portion of $123,000 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. As of December 31, 2023, after the offset of the investment in leasehold improvements and other expenses related to the sublease, the Company paid its landlord $12,000 for its share of the sublease profit since the lease commencement. The estimated amount the Company expects to remit to the landlord each year of the sublease subsequent to December 31, 2023 is $6,500 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 expected under the sublease net of the estimated annual service cost of $2,750 (gross of the estimated amount expected to be remitted to our landlord):

 

   2023 
2024  $28 
2025   22 
Total undiscounted cash flows  $50