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Note 7 - Operating Leases

12 Months Ended

Dec. 31, 2024

Note 7. Operating Leases

The Company leases approximately 10,535 square feet of office space for its San Antonio, TX executive offices and operations. On October 19, 2021 we renewed our lease, to run concurrently with our additional leased space in the same building. The lease expires on December 31, 2025. Rental expense under the operating lease was $165,817 and $157,682 for the years ended December 31, 2024 and 2023, respectively.

On March 15, 2021, we entered into a lease amendment to our existing lease in San Antonio, Texas commencing April 1, 2021. On October 19, 2021 we renewed our lease, to run concurrently with our additional leased space in the same building. The lease expires on December 31, 2025. The incremental space leased is 2,734 square feet. The incremental annual rent during the lease term ranges from $57,000 to $60,000. Rental expense for the years ended December 31, 2024 and 2023 was $49,653 and $48,113, respectively.

On October 19, 2021, the Company entered into a lease amendment to the existing lease in San Antonio, Texas commencing April 1, 2022. The lease expires on December 31, 2025. The incremental space lease is 6,628 square feet. The incremental annual rent during the lease term ranges from $144,000 to $156,000. Rental expense for the years ended December 31, 2024 and 2023 was $109,355 and $75,269, respectively.

The Company leased approximately 3,794 square feet of office space for its Nashville, Tennessee sales offices and operations. Rental expense under the operating lease was $0 and $36,995 for the years ended December 31, 2024 and 2023, respectively. The lease expired on April 30, 2023. We did not enter into a lease extension, or new lease agreement in Nashville, Tennessee upon the expiration of the lease agreement.

The Company assumed a lease in San Antonio, Texas as a part of the Information Management Solutions, LLC acquisition for its Output Solutions employees and warehouse operations. The lease had a remaining life of 45 months and expired on September 30, 2024. On September 16, 2024 the Company entered into a lease amendment commencing on October 1, 2024, extending the term of the existing lease for a period of 60 months, expiring on September 30, 2029. The space leased is 22,400 square feet. Annual rents during the lease term range from $174,000 to $225,000. Rental expense for the years ended December 31, 2024 and 2023 was $135,489 and $117,836, respectively.

On January 1, 2021, we entered into a lease in Austin, Texas commencing on January 1, 2021 for our Austin technology organization. On January 31, 2024, the Company entered into a lease amendment commencing on February 1, 2024, extending the term of the existing lease for a period of 24 months and expiring on January 31, 2027. The space leased is 1,890 square feet. Rental expense for the years ended December 31, 2024 and 2023 was $83,610 and $79,467, respectively.

The Company has various copier equipment with leases that have not expired. Rental expense under the operating leases was $8,921 and $6,546 for the years ended December 31, 2024 and 2023, respectively.

The weighted average remaining lease term is 3.49 years. The weighted average discount rate is 4.42%

The Company recognized total operating lease expense of approximately $660,000 and $674,000 for the years ended December 31, 2024 and 2023, respectively. In 2024, the operating lease expense of $660,000 consisted of $544,000 of fixed operating expense and $116,000 of interest expense.

We believe that our existing and new properties will be adequate to meet our needs through December 31, 2025.

The maturities of lease liabilities are as follows at December 31, 2024:

Year ended December 31,

2025	$	659,941
2026		728,121
2027		728,121
2028		648,426
2029		641,182
Thereafter		206,848
Total minimum lease payments		3,612,639
Less imputed interest		(465,942	)
Total lease liabilities		3,146,697
Less current portion		(612,680	)
Long-term portion	$	2,534,017