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COMMITMENTS AND CONTINGENCIES
 3 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

11. 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.

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

11. COMMITMENTS AND CONTINGENCIES (Continued)

 

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

 

 

For the three months ended  2024   2023 
   March 31, 
For the three months ended  2024   2023 
Operating lease expense  $245,587   $231,970 
Total lease expense  $245,587   $231,970 

 

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

 

 

For the three months ended  2024   2023 
Operating cash flows from operating leases  $221,460   $178,693 
Cash paid for amounts included in the measurement of lease liabilities  $221,460   $178,693 
           
Weighted-average remaining lease term—operating leases        7.8 Years  
Weighted-average discount rate—operating leases        7%

 

 

   Operating 
Year ending:  Lease 
2024 (remaining nine months)  $672,302 
2025   923,862 
2026   919,143 
2027   882,733 
2028   862,836 
Thereafter   3,431,562 
Total undiscounted cash flows  $7,692,438 
      
Reconciliation of lease liabilities:     
Weighted-average remaining lease terms   7.8 Years  
Weighted-average discount rate   7%
Present values  $6,124,495 
      
Lease liabilities—current   589,561 
Lease liabilities—long-term   5,534,934 
Lease liabilities—total  $6,124,495 
      
Difference between undiscounted and discounted cash flows  $1,567,945 

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS