Leases

12 Months Ended

Dec. 31, 2024

Leases

Leases

8. Leases

The Company has leases for corporate and operational facilities (“real estate leases”).

Real estate leases. Substantially all real estate leases have remaining terms of six (6) to nine (9) years, with additional five (5) year extensions available. All of these leases require a fixed lease payment that contains an annual lease payment escalation provision ranging from 3% to 4% per year.

The components of lease expense were as follows:

	YEARS ENDED
	DECEMBER 31,
	2024		2023
Operating lease expense	$	16,684	$	12,463
Finance lease expense:
Amortization of right of use assets	$	673,108	$	684,600
Interest on finance lease liabilities		186,367		214,954
Total finance lease expense	$	859,475	$	899,554

Lease expense is included in general and administrative expenses in the consolidated statement of operations. Amortization of right of use assets is included in depreciation and amortization in the consolidated statement of operations.

Supplemental cash flow information related to leases was as follows:

	YEARS ENDED
	DECEMBER 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from leases	$	203,051	$	227,417
Financing cash flows from leases		636,456		586,833
Right of use assets obtained in exchange for lease obligations:
Operating leases	$	828,608	$	-

Supplemental balance sheet information related to leases was as follows:

	DECEMBER 31,
	2024			2023
Lease right of use assets, net	$	4,183,561		$	4,045,222
Current portion of lease liabilities		735,152			638,258
Lease liabilities, net of current portion		4,200,019			4,114,516
Weighted average remaining lease term
Finance leases		7.2			10.2
Operating lease		4.3			-
Weighted average discount rate
Finance leases		3.5	%		3.5	%
Operating lease		7.3	%		-

Maturities of lease liabilities as of December 31, 2024, were as follows:

	Operating Leases		Finance Leases
2025	$	209,604	$	717,272
2026		217,032		665,480
2027		224,676		633,663
2028		232,536		695,939
2029		60,150		296,985
Thereafter		-		1,931,136
Total undiscounted  lease payments		943,998		4,940,475
Less: Imputed interest		131,760		817,542
Total lease liability	$	812,238	$	4,122,933

On November 1, 2024 the Company entered into a new lease agreement, to sublease from a commercial organization, additional warehouse space in the Columbus Ohio area to support planned growth in its Device as a Service (DaaS) offering.  The lease commenced on November 15, 2024 and is for a term of fifty-three months, with a monthly rent obligation of $17,500, subject to annual rent increase of 3.5%. The operating lease resulted in the Company recording a leased right to use asset of $828,608 and associated liability.