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LEASES

3 Months Ended

Mar. 31, 2024

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 had a sixty-month term. This lease is currently month-to-month until the Company negotiates a new term. Operating lease payments for the three-month periods ended March 31, 2024 and 2023 were $32,000 and $31,000, respectively. The present value of future minimum lease payments on non-cancelable operating leases as of March 31, 2024 using a discount rate of 4.5% is $190,000. The 4.5% discount rate used was the estimated incremental borrowing rate when the lease was entered into, which, as defined in ASC 842: Leases, is the rate of interest that a lessee would have had 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,

2024

2023

Cash paid for operating lease liabilities

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

		2024
Weighted average remaining lease terms for operating leases			1.5

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 consolidated balance sheet as of March 31, 2024 (in thousands):

	Year ended March 31,
2025	$	129
2026		67
Total undiscounted cash flows		196
Less: Imputed interest		(6	)
Present value of operating lease liabilities (a)	$	190

(a)

Includes current portion of $124,000 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. During each of the three-month periods ended March 31, 2024 and 2023, after the offset of the investment in leasehold improvements and other expenses related to the sublease, the Company paid its landlord $2,000 for its share of the sublease profit since the lease commencement. 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 $2,750 (gross of the estimated amount expected to be remitted to our landlord):

SCHEDULE OF SUBLEASES

	Year ended March 31,
2025	$	29
2026		14
Total undiscounted cash flows	$	43