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LEASES
 3 Months Ended 12 Months Ended
Mar. 31, 2025
Dec. 31, 2024
Leases    
LEASES

NOTE 16 – LEASES

 

The Company is party to two leases: (i) office space in Centerville, Utah (the “Centerville Lease”) and (ii) a warehouse in North Salt Lake City, Utah (the “SLC Lease”). The Centerville lease is scheduled to expire in May 2028 and the SLC Lease is scheduled to expire in November 2025.

 

The Company has operating leases for its corporate headquarters and warehouse. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating lease right-of-use assets are recorded in the consolidated balance sheets on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. The Company separately accounts for lease and non-lease components within lease agreements. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.

 

Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the consolidated balance sheets. Payments for short-term leases are recognized in the consolidated statements of operations on a straight-line basis over the lease term.

 

 

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at lease inception point. The weighted average incremental borrowing rate applied was 8.39%. As of March 31, 2025, the Company’s leases had a remaining weighted average term of 2.15 years.

 

The following table presents net lease cost and other supplemental lease information:

 

   March 31,   December 31, 
   2025   2024 
Lease cost          
Operating lease cost (cost resulting from lease payments)  $107,336   $403,109 
Net lease costs  $107,336   $403,109 
           
Operating lease - operating cash flows (fixed payments)  $107,336   $403,109 
Operating lease - operating cash flows (liability reduction)  $93,865   $334,254 
Non-current leases - right-of-use assets  $545,915   $634,269 
Current liabilities - operating lease liabilities  $296,291   $363,102 
Non-current liabilities - operating lease liabilities  $278,071   $305,125 

 

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended March 31, 2025, are as follows:

 

Fiscal Year  Operating Leases 
2025  $299,654 
2026   140,163 
2027   144,227 
2028   60,809 
Total future minimum lease payments  $644,853 
Amount representing interest   (70,491)
Present value of net future minimum lease payments  $574,362 

 

NOTE 20 – LEASES

 

The Company is party to two leases: (i) office space in Centerville, Utah (the “Centerville Lease”) and (ii) a warehouse in North Salt Lake City, Utah (the “SLC Lease”). The Centerville lease is scheduled to expire in May 2028 and the SLC Lease is scheduled to expire in November 2025.

 

The Company has operating leases for its corporate headquarters and warehouse. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating lease right-of-use assets are recorded in the consolidated balance sheets on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. The Company separately accounts for lease and non-lease components within lease agreements. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.

 

Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the consolidated balance sheets. Payments for short-term leases are recognized in the consolidated statements of operations on a straight-line basis over the lease term.

 

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at lease inception point. The weighted average incremental borrowing rate applied was 8.39%. As of December 31, 2024, the Company’s leases had a remaining weighted average term of 2.39 years.

 

The following table presents net lease cost and other supplemental lease information:

 

   2024   2023 
Lease cost          
Operating lease cost (cost resulting from lease payments)  $403,109   $322,102 
Net lease costs  $403,109   $322,102 
           
Operating lease - operating cash flows (fixed payments)  $403,109   $322,102 
Operating lease - operating cash flows (liability reduction)  $334,254   $254,945 
Non-current leases - right-of-use assets  $634,269   $972,663 
Current liabilities - operating lease liabilities  $363,102   $334,255 
Non-current liabilities - operating lease liabilities  $305,125   $668,228 

 

 

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the year ended December 31, 2024, are as follows:

 

Fiscal Year  Operating Leases 
2025  $406,990 
2026   140,163 
2027   144,227 
2028   60,808 
Total future minimum lease payments  $752,188 
Amount representing interest   (83,961)
Present value of net future minimum lease payments  $668,227