LEASES

3 Months Ended

Mar. 31, 2023

LEASES

LEASES

NOTE 11 — LEASES

In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842 requires us to use the interest rate that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in lease agreements, we utilize our incremental borrowing rate.

The Company has nine operating leases as of March 31, 2023—five in DFW, two in Mt. Pleasant, South Carolina and two in Chandler, Arizona. The leases for the consumer segment are: 1) the flagship store located at 13022 Preston Road, Dallas, Texas expiring on January 31, 2027, with an option to extend the lease for an additional five years, at the prevailing market rate for comparable space in comparable buildings in the vicinity; 2) the Grand Prairie, Texas lease which was renewed starting July 1, 2022, expiring June 30, 2027, with an option to extend the lease for an additional five years; 3) the two leases for the Mt. Pleasant, South Carolina location expiring on April 30, 2025, with no additional renewal options; and 4) the lease for the Euless, Texas location expiring June 30, 2025, with an option to extend the lease for an additional five years. The leases for the commercial segment are: 1) the Echo location on W. Belt Line Road, in Carrollton, Texas, expiring January 31, 2026, with an option to extend the lease an additional five years: 2) the lease for the Teladvance location, which also houses ITAD USA and CEX, on Realty Road in Carrollton, Texas expiring January 31, 2027, with no additional renewal options; and 3) the two leases for the Avail location in Chandler, Arizona expiring on May 31, 2025, with no additional renewal options. All of the Company’s nine leases as of March 31, 2023 are triple net, for which it pays its proportionate share of common area maintenance, property taxes and property insurance. Leasing costs for the three months ended March 31, 2023 and 2022 was $659,616 and $622,863 respectively, comprised of a combination of minimum lease payments and variable lease costs.   

As of March 31, 2023, the weighted average remaining lease term and weighted average discount rate for operating leases was 3.3 years and 4.4%, respectively. For the three months ended March 31, 2023 and 2022, the Company’s cash paid for operating lease liabilities was $656,520 and $616,097 respectively. 

Future annual minimum lease payments as of March 31, 2023:

	Operating
	Leases
Consumer
2023 (excluding the three months ending March 31, 2023)		406,955
2024		552,414
2025		434,274
2026		355,000
2027 and thereafter		50,114
Total minimum lease payments		1,798,757
Less imputed interest		(149,993	)
Consumer Sub-Total		1,648,764
Commercial
2023 (excluding the three months ending March 31, 2023)		1,018,905
2024		1,396,129
2025		1,321,297
2026		474,326
2027 and thereafter		33,455
Total minimum lease payments		4,244,112
Less imputed interest		(251,432	)
Commercial Sub-Total		3,992,680
Total		5,641,444
Current portion		1,827,285
	$	3,814,159