Nexalin Technology, Inc. Leases Disclosure
NOTE 9 — LEASES
With the adoption of ASC 842, operating lease agreements are required to be recognized on the balance sheet as ROU assets and corresponding lease liabilities.
On January 1, 2022, the Company exercised its right to lease an additional 400 square feet of office space and an increase of monthly rent of $500. In accordance with ASC 842 management accounted for this as a separate lease and, as a result, recorded an ROU asset and lease liability of $11,359.
When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at January 1, 2023. The weighted average incremental borrowing rate applied was 9%.
The following table presents net lease cost and other supplemental lease information:
| Years Ended December 31, |
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| 2023 | 2022 | |||||||
| Leases costs | ||||||||
| Operating lease costs | $ | 54,000 | $ | 54,000 | ||||
| Total lease costs | $ | 54,000 | $ | 54,000 | ||||
Operating leases are included in the audited consolidated balance sheets as follows:
| Classification | December 31, 2023 |
December 31, 2022 |
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| Lease assets | ||||||||||
| Operating lease cost ROU assets | Assets | $ | 496 | $ | 6,171 | |||||
| Total lease assets | $ | 496 | $ | 6,171 | ||||||
| Lease liabilities | ||||||||||
| Operating lease liabilities, current | Current liabilities | $ | 4,463 | $ | 50,797 | |||||
| Operating lease liabilities, non-current | Liabilities | 4,463 | ||||||||
| Total lease liabilities | $ | 4,463 | $ | 55,260 | ||||||
Future minimum payments under non-cancellable leases for operating leases for the remaining terms of the leases following the year ended December 31, 2023:
| Fiscal Year | Operating Leases |
|||
| 2024 | $ | 4,496 | ||
| Total future minimum lease payments | 4,496 | |||
| Amount representing interest | (33 | ) | ||
| Present value of net future minimum lease payments | $ | 4,463 | ||
Additional information related to leases is presented as follows:
| Years Ended December 31, |
||||||||
| 2023 | 2022 | |||||||
| Leases | ||||||||
| Weighted average remaining lease term | 0.25 | 1.00 | ||||||
| Weighted average discount rate | 9.9 | % | 9.9 | % | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2023 | Mar 27, 2024 | Showing above |
| 2022 | Mar 27, 2023 | |
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.