LEASES

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

LEASES

Note 9. LEASES

The Company has one operating lease for its real estate and office space for the CAP/CLIA laboratory, as well as multiple finance leases for lab equipment in Texas that were acquired through the September 18, 2023, acquisition. The operating lease has a remaining lease term of 3.33 years as of March 31, 2024. The Company has finance leases consisting of office and lab equipment with remaining lease terms ranging from approximately 2.5 to 4.25 years as of March 31, 2024, for which the Company has determined that it will use the equipment for a major part of its remaining economic life.

The lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach as of September 18, 2023, to derive an appropriate incremental borrowing rate to discount remaining lease payments. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed interest rates ranging from 8.01% to 8.07% for the lease term lengths.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord, as is customary with these types of charges for office space. The Company has not entered into any lease arrangements with related parties, and the Company is not the sublessor in any arrangement.

The Company’s existing leases contain escalation clauses and renewal options. The Company has evaluated several factors in assessing whether there is reasonable certainty that the Company will exercise a contractual renewal option. For leases with renewal options that are reasonably certain to be exercised, the Company included the renewal term in the total lease term used in calculating the right-of-use asset and lease liability.

The components of lease expense, which are included in selling, general and administrative expense and depreciation and amortization for the three months ended March 31, 2024 and 2023, are as follows:

Components of lease expense:	2024		2023
Amortization of right-of-use assets - finance lease	$	96,243	$	—
Interest on lease liabilities - finance lease		23,550		—
Operating lease cost		29,915		—
Total lease cost	$	149,708	$	—

Supplemental balance sheet information relating to leases was as follows as of March 31, 2024, and December 31, 2023:

Operating leases:	2024		2023
Operating lease right-of-use assets	$	347,860	$	370,312
Operating lease liability, current	$	96,631	$	94,708
Operating lease liability, long-term	$	258,110	$	283,001

Finance leases:	2024			2023
Finance lease right-of-use asset, gross	$	1,294,168		$	1,294,168
Accumulated amortization		(224,567	)		(128,324	)
Finance lease right-of-use asset, net		1,069,601			1,165,844
Finance lease liability, current portion		372,787			365,463
Finance lease liability, long-term		739,478			835,467
Total finance lease liabilities	$	1,112,265		$	1,200,930

Weighted-average remaining lease term:	2024		2023
Operating leases (in years)		3.33		3.58
Finance leases (in years)		3.04		3.25

Weighted-average discount rate:	2024			2023
Operating leases		8.07	%		8.07	%
Finance leases		8.01	%		8.01	%

Future minimum lease payment under non-cancellable lease as of March 31, 2024, are as follows:

	Operating Leases			Finance Leases
Remaining for 2024	$	91,294		$	336,378
2025		121,726			448,505
2026		121,726			270,395
2027 and thereafter		71,007			202,970
Total undiscounted cash flows		405,753			1,258,248
Less discounting		(51,012	)		(145,983	)
Present value of lease liabilities	$	354,741		$	1,112,265