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NOTE 5. LEASES
We have operating leases for our corporate office, two satellite facilities in the state of Washington and for certain equipment. We account for lease components (such as rent payments) separately from the non-lease components (such as common-area maintenance costs, real estate and sales taxes and insurance costs). The discount rate represents the interest rate implicit in each lease or our incremental borrowing rate at lease commencement date.
As of March 31, 2024, no renewal option periods were included in any estimated minimum lease term as the options were not deemed reasonably certain to be exercised. Our leases have remaining lease terms ranging from 14 months to 36 months.
Supplemental balance sheet information related to leases is as follows:
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March 31, 2024 |
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December 31, 2023 |
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Classification |
Operating leases: |
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Operating lease right-of-use lease assets |
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$ |
720,323 |
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$ |
785,543 |
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Operating lease current liabilities |
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$ |
272,052 |
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$ |
268,541 |
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Current portion of operating lease liabilities |
Operating lease long-term liabilities |
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513,235 |
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585,879 |
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Long-term operating lease liabilities |
Total operating lease liabilities |
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$ |
785,287 |
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$ |
854,420 |
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Weighted-average remaining lease term in years: |
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Operating leases |
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2.72 |
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3.12 |
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Weighted-average discount rate: |
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Operating leases |
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4.4 |
% |
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5.4 |
% |
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The components of lease expense are as follows:
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Three Months Ended March 31, |
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2024 |
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2023 |
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Classification |
Operating lease cost |
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$ |
75,643 |
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$ |
72,071 |
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Selling, general and administrative expense |
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Supplemental cash flow information related to leases is as follows:
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Three Months Ended March 31, |
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2024 |
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2023 |
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Classification |
Cash paid for amounts included in the
measurement of lease liabilities: |
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Operating cash flows from operating leases |
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$ |
65,449 |
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$ |
72,081 |
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Net income |
As of March 31, 2024, future maturities of our operating lease liabilities are as follows:
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Amount |
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For the remaining nine months ending December 31, 2024 |
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$ |
224,889 |
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Years ending December 31, |
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2025 |
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$ |
306,055 |
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2026 |
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302,011 |
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2027 |
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2,985 |
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Total minimum lease payments |
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835,940 |
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Less: imputed interest |
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(50,653 |
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Total operating lease liability |
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785,287 |
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Less: current portion |
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(272,052 |
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Long-term portion |
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$ |
513,235 |
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