Leases

6 Months Ended

Jun. 30, 2024

Leases

Leases

Note 9 – Leases

The Company determines if a contract contains a lease at its inception or as a result of an acquisition and makes certain assumptions and judgments when determining its right–of–use assets and lease liabilities. When determining whether a contract contains a lease, the Company considers whether there is an identified asset that is physically distinct, whether the supplier has substantive substitution rights, whether the Company has the right to obtain substantially all of the economic benefits from the use of the asset, and whether it has the right to control the asset. Certain lease agreements could include options to renew the lease, terminate the lease early, or purchase the underlying asset(s). The Company determines the lease term at the lease commencement date as the non–cancelable period of the lease, including any options to extend or terminate the lease when such an option is reasonably certain to be exercised. The Company recognizes variable lease payments in the period they are incurred. Certain leases contain both lease and non–lease components, which the Company has chosen to account for separately. As of June 30, 2024 and December 31, 2023, all of the Company’s leases are operating leases.

The Company capitalizes its operating right–of–use assets and corresponding lease liabilities separately on its consolidated balance sheets, using the present value of the remaining lease payments over the determined lease term applying the implicit rate of the lease.

The following table presents the components of the Company’s operating leases on its consolidated balance sheets for the periods presented:

	June 30, 2024		December 31, 2023
Operating Leases
Office space	$	171,760	$	—
Vehicles		184,690		155,253
Total right–of–use asset	$	356,450	$	155,253
Office space	$	174,384	$	—
Vehicles		168,968		135,706
Total lease liability	$	343,351	$	135,706

The Company’s weighted–average remaining lease terms and discount rates as of June 30, 2024 are as follows:

	Operating Leases
Weighted–average lease term (years)		1.8
Weighted–average discount rate		10.2	%

The Company has several operating leases for office spaces and vehicles used in its daily operations, under non–cancelable operating leases expiring through 2027. The Company recognizes lease expense for these leases on a straight–line basis.

The following table presents the components of the Company’s lease costs during the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	50,654	$	—	$	89,925	$	—
Short–term lease cost (1)		12,600		—		25,200		—
Total lease cost	$	63,254	$	—	$	115,125	$	—

⁽¹⁾ One of the Company’s office space operating leases, which expired in June 2024, had an initial lease term of less than 12 months and was considered a short-term lease. The Company does not capitalize short–term leases, instead the costs are expensed as they are incurred.

As of June 30, 2024, the Company’s future lease commitments by year consisted of the following:

	Operating Leases
2024	$	96,776
2025		197,138
2026		82,479
2027		3,738
Total lease payments		380,131
Less: imputed interest		(36,780	)
Total lease liability	$	343,351

The Company’s supplemental cash flow disclosures related to operating leases are presented below for the periods indicated:

	Six Months Ended June 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities – operating cash flows from operating leases	$	83,261	$	—
Right–of–use assets obtained in exchange for operating liabilities	$	270,290	$	—