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OPERATING LEASES
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
OPERATING LEASES

NOTE 9 – OPERATING LEASES

 

At the time of this filing, the Company has operating lease agreements for offices in Florida and Hong Kong.

 

The Company entered into an operating lease agreement, effective October 1, 2017, for our corporate headquarters located in Fort Lauderdale, Florida where we lease approximately 6,500 square feet of office space which expired on March 31, 2024. On February 22, 2024, the Company executed a lease extension for 14 months effective April 1, 2024, and expires on May 31, 2025. The base rent on the extension is approximately $10,000 per month subject to a 3% annual adjustment.

 

The Company entered into an operating lease on August 23, 2023, for approximately 10,000 square feet of ground floor retail space and a portion of the basement underneath the ground floor retail space. During the nine months ended September 30, 2024, the Company abandoned its plans to continue use of the leased space. On September 25, 2024, the Company entered into a Settlement Agreement for a full release and termination of the Lease Agreement in exchange for Company’s payment of $250,000. (See Note 2).

 

Supplemental balance sheet information related to leases as of September 30, 2024 and December 31, 2023 is as follows:

     

Assets:  September 30, 2024   December 31, 2023 
Operating lease - right-of-use assets  $137,000   $3,926,000 
           
Liabilities          
Current          
Current portion of operating leases  $135,000   $84,000 
Operating lease liabilities, net of current portion  $-   $3,925,000 

 

Supplemental statement of operations information related to operating leases is as follows:

    

   Three Months Ended September 30, 2024   Three Months Ended September 30, 2023   Nine Months Ended September 30, 2024   Nine Months Ended September 30, 2023 
                 
Operating lease expense as a component of general and administrative expenses  $45,000   $279,000   $444,000   $762,000 
                     
Supplemental cash flow information related to operating leases is as follows:                    
Cash paid for amounts included in the measurement of lease liabilities:                    
Operating cash flow paid for operating leases  $45,000   $363,000   $136,000   $868,000 
                     
Lease term and Discount Rate                    
Weighted average remaining lease term (years)   0.8    15.1           
Weighted average discount rate   9.0%   12.0%          

 

 

ALGORHYTHM HOLDINGS, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024 and 2023

(Unaudited)

 

Minimum future payments under all operating leases as of September 30, 2024, are as follows:

   

Payments due by period  Amount 
2024 (remaining six months)  $46,000 
2025   94,000 
Total minimum future payments   140,000 
Less: Interest   5,000 
Total operating lease liabilities  $135,000