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LEASES
 12 Months Ended
Dec. 31, 2024
Leases  
LEASES

Note 9. LEASES

 

The Company has one operating lease for its real estate and office space for the CAP/CLIA laboratory, as well as multiple finance leases for lab equipment in Texas that were acquired through the September 18, 2023 acquisition. Additionally, the Company entered into another operating lease on September 1, 2024 with regard to office space. The Company has operating leases consisting of office space with remaining lease terms ranging from 3.1 to 5.9 years as of December 31, 2024. The Company has finance leases consisting of office and lab equipment with remaining lease terms ranging from approximately 1.25 to 3.0 years as of December 31, 2024, for which the Company has determined that it will use the equipment for a major part of its remaining economic life.

 

The lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach as of the date of inception of the leases to derive an appropriate incremental borrowing rate to discount remaining lease payments. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed interest rates ranging from 7.41% to 8.03% for the lease term lengths.

 

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord, as is customary with these types of charges for office space. The Company has not entered into any lease arrangements with related parties, and the Company is not the sublessor in any arrangement.

 

The Company’s existing leases contain escalation clauses and renewal options. The Company has evaluated several factors in assessing whether there is reasonable certainty that the Company will exercise a contractual renewal option. For leases with renewal options that are reasonably certain to be exercised, the Company included the renewal term in the total lease term used in calculating the right-of-use asset and lease liability.

 

The components of lease expense, which are included in selling, general and administrative expense and depreciation and amortization for the year ended December 31, 2024, and 2023 are as follows:

 

Components of lease expense:  2024   2023 
Amortization of right-of-use assets - finance lease  $384,971   $128,324 
Interest on lease liabilities - finance lease   83,041    33,838 
Operating lease cost   93,029    39,887 
Total lease cost  $561,041   $202,049 
           
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows from finance leases  $361,181   $93,238 
Operating cash flows from operating leases   133,605    32,489 

 

Operating leases:  2024   2023 
Operating lease right-of-use, assets  $463,011   $370,312 
Operating lease liability, current   127,498    94,708 
Operating lease liability, non-current   342,098    283,001 
Total operating lease liabilities  $469,596   $377,709 

 

Financing leases:  2024   2023 
Financing lease right-of-use assets, gross  $1,294,168   $1,294,168 
Accumulated amortization   (513,296)   (128,324)
Finance lease right-of-use assets, net  $780,872   $1,165,844 
Financing lease liability, current   395,301    365,463 
Financing lease liability, non-current   444,448    835,467 
Total finance lease liabilities  $839,749   $1,200,930 

 

Weighted-average remaining lease term:  2024   2023 
Operating leases (in years)   4.21    3.58 
Finance leases (in years)   2.39    3.25 

 

Weighted-average discount rate:  2024   2023 
Operating leases   7.41%   8.07%
Finance leases   8.03%   8.01%

 

 

   Operating Leases  

Finance Leases

 
2025  $157,837   $448,505 
2026   159,282    270,395 
2027   110,063    202,970 
2028   40,616    — 
2029   42,252    — 
2030 and thereafter   28,919    — 
Total undiscounted cash flows   538,969    921,870 
Less discounting   (69,373)   (82,121)
Present value of lease liabilities  $469,596   $839,749