Algorhythm Holdings, Inc. Leases Disclosure
Note 9 – Operating Leases
The Company is a party to various operating leases with rent ranging from $4,900 to $10,000 per month. All of the leases have remaining terms of less than one year. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease terms.
The following table presents supplemental information about the Company’s operating leases and future minimum annual lease payments under its operating leases as of December 31, 2024.
Supplemental balance sheet information related to leases as of December 31, 2024 and 2023 is as follows:
| December 31, 2024 | December 31, 2023 | |||||||
| Assets: | ||||||||
| Operating lease - right-of-use assets | $ | 95,000 | $ | 3,926,000 | ||||
| Liabilities | ||||||||
| Current | ||||||||
| Current portion of operating leases | $ | 92,000 | $ | 84,000 | ||||
| Operating lease liabilities, net of current portion | $ | $ | 3,925,000 | |||||
Supplemental statement of operations information related to operating leases is as follows:
| Twelve Months Ended | Nine Months Ended | |||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Operating lease expense as a component of general and administrative expenses | $ | 489,000 | $ | 717,000 | ||||
| Supplemental cash flow information related to operating leases is as follows: | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flow paid for operating leases | $ | 181,000 | $ | 656,000 | ||||
| Lease term and Discount Rate | ||||||||
| Weighted average remaining lease term (years) | 0.6 | 15.0 | ||||||
| Weighted average discount rate | 9.0 | % | 12.0 | % | ||||
The following table summarizes information regarding lease maturities and balance due as follows:
| Payments due by period | Amount | |||
| 2025 | $ | 94,000 | ||
| Less: Interest | 2,000 | |||
| Total operating lease liabilities | ||||
| $ | 92,000 | |||
ALGORHYTHM HOLDINGS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024 and 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.