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Note 8 - Leases 1 | 9 Months Ended | 12 Months Ended
--- | --- | ---
Sep. 30, 2023 | Dec. 31, 2022
Notes to Financial Statements |  |
Lessee, Operating Leases [Text Block] | Note 8 – Leases The Company determines if an arrangement is a finance lease or operating lease at inception and recognizes right-of-use (“ROU”) assets and lease liabilities at commencement date based on the present value of the lease payments over the lease term. For operating leases, our right-of-use assets are amortized on a straight-line basis over the lease term with rent expense recorded to operating expenses. The depreciable life of related leasehold improvements is based on the shorter of the useful life or the lease term. The Company leases its 20,945 square foot facility under a non-cancelable real property lease agreement that expires on August 31, 2025, with two five-year options to extend, at a monthly lease rate of $10,036, with approximately a 3% annual escalation of lease payments commencing September 15, 2021. The facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate for the lease at the time of commencement was 5.75%. On July 1, 2023, the Company leased additional warehouse space in Irving, Texas, of approximately 9,000 feet under a 37-month lease at a rate of $8,456 per month, with approximately a 4% annual escalation of lease payments. The facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate for the lease at the time of commencement was 8%. The components of lease expense were as follows:
|  | For the Nine Months Ended |
|  | September 30, |
|  | 2023 |  |  | 2022 |
Right-of-Use lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use asset |  | $ | 79,213 |  |  | $ | 16,816 |
Total lease cost |  | $ | 79,213 |  |  | $ | 16,816 |
Supplemental balance sheet information related to leases was as follows:
|  | September 30, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Operating lease: |  |  |  |  |  |  |  |
Operating lease assets |  | $ | 1,551,252 |  |  | $ | 1,261,525 |
Current portion of operating lease liability |  | $ | 165,869 |  |  | $ | 52,543 |
Noncurrent operating lease liability |  |  | 1,493,001 |  |  |  | 1,301,355 |
Total operating lease liability |  | $ | 1,658,870 |  |  | $ | 1,353,898 |
Weighted average remaining lease term: |  |  |  |  |  |  |  |
Operating leases (in years) |  |  | 7.9 |  |  |  | 13.3 |
Weighted average discount rate: |  |  |  |  |  |  |  |
Operating lease |  |  | 6.20 | % |  |  | 5.75 | %
Supplemental cash flow and other information related to operating leases was as follows:
|  | For the Nine Months Ended |
|  | September 30, |
|  | 2023 |  |  | 2022 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows used for operating leases |  | $ | 128,840 |  |  | $ | 33,609 |
The future minimum lease payments due under operating leases as of September 30, 2023 is as follows:
Fiscal Year Ending |  | Minimum Lease |
December 31, |  | Commitments |
2023 (for the three months remaining) |  | $ | 65,595 |
2024 |  |  | 265,827 |
2025 |  |  | 274,834 |
2026 |  |  | 223,171 |
2027 and thereafter |  |  | 1,412,988 |
|  | $ | 2,242,415 |
Less effects of discounting |  |  | 583,545 |
Lease liability recognized |  | $ | 1,658,870 |
| Note 8 – Leases The Company leases its 20,945 square foot operating and office facility under a non-cancelable real property lease agreement that expires on August 31, 2025, with two five-year options to extend, at a monthly lease term of $10,036, with approximately a 3% annual escalation of lease payments commencing September 15, 2021, subject to the ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The operating and office facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The components of lease expense were as follows:
|  | For the Year Ended |
|  | December 31, |
|  | 2022 |  |  | 2021 |
Operating lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use asset |  | $ | 67,564 |  |  | $ | 65,113 |
Interest on lease liability |  |  | 79,317 |  |  |  | 81,768 |
Total operating lease cost |  | $ | 146,881 |  |  | $ | 146,881 |
Supplemental balance sheet information related to leases was as follows:
|  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Operating lease: |  |  |  |  |  |  |  |
Operating lease assets |  | $ | 1,261,525 |  |  | $ | 1,329,089 |
Current portion of operating lease liability |  | $ | 52,543 |  |  | $ | 45,970 |
Noncurrent operating lease liability |  |  | 1,301,355 |  |  |  | 1,353,898 |
Total operating lease liability |  | $ | 1,353,898 |  |  | $ | 1,399,868 |
Weighted average remaining lease term: |  |  |  |  |  |  |  |
Operating leases (in years) |  | 13.3 |  |  | 14.0 |
Weighted average discount rate: |  |  |  |  |  |  |  |
Operating lease |  |  | 5.75 | % |  |  | 5.75 | %
Supplemental cash flow and other information related to operating leases was as follows:
|  | For the Year Ended |
|  | December 31, |
|  | 2022 |  |  | 2021 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows used for operating leases |  | $ | 45,970 |  |  | $ | 39,870 |
Leased assets obtained in exchange for lease liabilities: |  |  |  |  |  |  |  |
Total operating lease liabilities |  | $ | – |  |  | $ | 1,431,463 |
The future minimum lease payments due under operating leases as of December 31, 2022 is as follows:
Fiscal Year Ending |  | Minimum Lease |
December 31, |  | Commitments |
2023 |  | $ | 129,046 |
2024 |  |  | 132,917 |
2025 |  |  | 136,905 |
2026 |  |  | 141,012 |
2027 and thereafter |  |  | 1,412,988 |
Total |  | $ | 1,952,868 |
Less effects of discounting |  |  | 598,970 |
Lease liability recognized |  | $ | 1,353,898 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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