NOTE 14 – LEASES

 

During the years ended December 31, 2024 and 2023, we recognized additional ROU assets and lease liabilities of $60,215 and $733,782, respectively. We elected to not recognize ROU assets and lease liabilities arising from short-term office leases, leases with initial terms of twelve months or less (deemed immaterial) on the consolidated balance sheets.

 

When measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using its estimated incremental borrowing rate. The weighted average incremental borrowing rate applied was 11.54%. As of December 31, 2024, our leases had a remaining weighted average term of 3.22 years.

 

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

 

   Year Ended
December 31, 2024
   Year Ended
December 31, 2023
 
Lease cost          
Operating lease cost (cost resulting from lease payments)  $294,383   $270,638 
Short term lease cost   32,759    156,828 
Net lease cost  $327,142   $427,466 
           
Operating lease – operating cash flows (fixed payments)  $294,383   $270,638 
Operating lease – operating cash flows (liability reduction)  $219,342   $199,069 
Non-current leases – right of use assets  $537,173   $762,228 
Current liabilities – operating lease liabilities  $170,289   $219,342 
Non-current liabilities – operating lease liabilities  $428,070   $596,307 

 

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  $217,377 
2026   223,177 
2027   229,145 
2028   51,662 
Total future minimum lease payments   721,361 
Amount representing interest   (123,002)
Present value of net future minimum lease payments  $598,359 

 

 

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About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.