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Leases
 9 Months Ended
Sep. 30, 2023
Leases  
Leases

Note 5. Leases

 

The following provides balance sheet information related to leases as of September 30, 2023 and December 31, 2022:

 

   September 30,   December 31, 
   2023   2022 
Assets          
Operating lease, right-of-use asset, net  $268,637   $47,687 
Liabilities          
Current portion of operating lease liabilities  $168,013   $52,890 
Operating lease liabilities, net of current portion   106,516    - 
Total operating lease liabilities  $274,529   $52,890 

 

At September 30, 2023, the future estimated minimum lease payments under non-cancelable operating leases are as follows:

 

      
2023 (remaining three months)  $44,867 
2024   184,532 
2025   62,448 
Total minimum lease payments   291,847 
Less amount representing interest   17,318 
Present value of future minimum lease payments   274,529 
Less current portion of operating lease liabilities   168,013 
Operating lease liabilities, net of current portion  $106,516 

 

In April 2021, the Company entered into two operating leases for office space that commenced in May 2021. The lease terms were set to expire in April 2023, subject to automatic renewal on a month-to-month basis unless the Company provided three-months written notice to the landlord prior to initial expiration. In January 2023, the Company renewed one of the operating leases for an additional two years and notified the landlord of its intent not to renew the other lease. In January 2023, the Company also entered into two new leases that commenced in March 2023 and May 2023, respectively, and continue through April 2025. The new leases also renew automatically on a month-to-month basis unless the Company provides three-months written notice to the landlord prior to initial expiration. The exercise of lease renewal options is at our sole discretion and is assessed as to whether to include any renewals in the lease term at inception.

 

 

The following table provides a reconciliation for our operating right-of-use assets and operating lease liabilities:

 

   Operating   Operating 
   Right-of- Use   Lease 
   Assets   Liabilities 
Balance at December 31, 2022  $47,687   $52,890 
Remeasurement of operating lease right-of-use assets and operating lease liability   198,847    198,847 
Operating right-of-use asset acquired through operating lease liability   141,989    141,989 
Amortizations and reductions   (119,886)   (119,197)
Balance at September 30, 2023  $268,637   $274,529 

 

Other supplemental information related to operating leases is as follows:

 

   2023   2022 
   As of September 30, 
   2023   2022 
Weighted average remaining term of operating leases (in years)   1.58    0.58 
Weighted average discount rate of operating leases   7.36%   4.65%

 

The Company also leased office space in Dallas, Texas under month-to-month lease arrangements during the nine months ended September 30, 2023 and 2022. In April 2023, the Company entered into a two-year lease for material storage and handling. The lease is cancellable with 45-days’ written notice. Under these short-term leases, the Company elected the short-term lease measurement and recognition exemption under ASC 842 and recorded rent expense as incurred.

 

The components of lease expense were approximately as follows for the three and nine months ended September 30, 2023 and 2022:

 

   2023   2022   2023   2022 
   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2023   2022   2023   2022 
Operating lease cost  $45,000   $30,000   $154,000   $108,000 
Short-term lease cost   4,000    -    9,000    - 
  Total   $49,000   $30,000   $163,000   $108,000