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COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

10. COMMITMENTS AND CONTINGENCIES

 

Commitments

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

 

The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component.

 

In accordance with ASC 842, the components of lease expense were as follows:

 

For the nine months ended  2023   2022 
   September 30, 
For the nine months ended  2023   2022 
Operating lease expense  $683,947   $440,144 
Total lease expense  $683,947   $440,144 

 

In accordance with ASC 842, other information related to leases was as follows:

 

For the nine months ended  2023   2022 
Operating cash flows from operating leases  $607,429   $341,775 
Cash paid for amounts included in the measurement of lease liabilities  $607,429   $341,775 
           
Weighted-average remaining lease term—operating leases        8.2 Years  
Weighted-average discount rate—operating leases        7%

 

   Operating 
Year ending:  Lease 
2023 (remaining three months)  $218,878 
2024   893,761 
2025   923,862 
2026   919,143 
2027   882,733 
Thereafter   4,294,398 
Total undiscounted cash flows  $8,132,775 
      
Reconciliation of lease liabilities:     
Weighted-average remaining lease terms   8.2 Years  
Weighted-average discount rate   7%
Present values  $6,393,867 
      
Lease liabilities—current   556,106 
Lease liabilities—long-term   5,837,761 
Lease liabilities—total  $6,393,867 
      
Difference between undiscounted and discounted cash flows  $1,738,908 

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS