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Commitments and Contingencies
 12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

11. Commitments and Contingencies

 

From time to time we are involved in legal proceedings, claims and litigation related to employee claims, contractual disputes and taxes in the ordinary course of business. Although we cannot predict the outcome of such matters, currently we have no reason to believe the disposition of any current matter could reasonably be expected to have a material adverse impact on our financial position, results of operations or the ability to carry on any of our business activities.

 

Employment Agreements

 

We have entered into employment agreements with three of our key executives, including one of our founders. Under their respective employment agreements, the executives are employed on an “at-will” basis and are bound by typical confidentiality, non-solicitation and non-competition provisions.

 

Leases

 

For each of the below listed leases, management has determined it will utilize the base rental period and have not considered any renewal periods.

 

Location  Square Feet   Monthly Rent   Lease Expiry
Columbus, OH   6,000   $5,100   December 31, 2028
Madison Heights, MI   36,000   $44,049   August 31, 2026
Sterling Heights, MI   37,000   $21,692   April 30, 2028
Traverse City, MI   5,200   $4,500   January 31, 2024
              
Temporary space             
Madison Heights, MI   3,200   $1,605   month to month
              
Vehicles             
various   n/a    $4,901   September 30, 2028

 

The following table sets forth the future minimum lease payments under our leases:

 

For the Year Ending December 31,  Finance Lease   Operating Leases 
2024  $67,358   $955,427 
2025   67,358    956,826 
2026   59,253    721,664 
2027   47,028    355,972 
2028   26,912    166,884 
Less imputed interest   

(42,040

)   

(496,382

)
Less short-term lease payments   

-

   

(4,814

)
Total  $225,869   $2,655,577 

 

 

The following table summarizes the components of lease expense:

 

For the Year Ending December 31,  2023   2022 
Finance lease expense:          
Amortization of ROU assets  $42,115   $6,708 
Interest on lease liabilities   16,514    2,933 
Operating lease expense   954,040    952,270 
Short-term lease expense   19,254    19,254 

 

The following tables set forth additional information pertaining to our leases:

 

For the Year Ending December 31,  2023   2022 
Cash paid for amounts included in the measurement of lease liabilities:          
Financing cash flows from finance leases (interest)  $16,514   $2,933 
Financing cash flows from finance leases (principal)   34,954    5,366 
Operating cash flows from operating leases   720,889    635,324 
ROU assets obtained in exchange for new finance lease liabilities   107,610    160,990 
Weighted average remaining lease term – finance leases   4.2 years    5.8 years 
Weighted average remaining lease term – operating leases   3.5 years    4.5 years 
Discount rate – finance leases   8.87%   7.50 
Weighted average discount rate – operating leases   7.01%   6.97%

 

   December 31, 2023   December 31, 2022 
Operating leases:          
Right-of-use assets, operating  $2,532,928   $3,200,191 
           
Lease liabilities, operating – current  $712,607   $692,074 
Lease liabilities, operating – net of current   1,942,970    2,624,608 
Total operating lease liabilities  $2,655,577   $3,316,682 
           
Finance leases:          
Right-of-use assets, finance  $268,600   $160,990 
Accumulated amortization   (48,823)   (6,708)
Right-of-use assets, finance, net   219,777    154,282 
           
Lease liabilities, finance – current   49,926    22,493 
Lease liabilities, finance – net of current   175,943    133,131 
Total finance lease liabilities  $255,869   $155,624