Right to Use Assets and Lease Liabilities - Operating Leases

3 Months Ended

Mar. 31, 2023

Disclosure Text Block [Abstract]

Lessee, Operating Leases [Text Block]

Note 7: Right to Use Assets and Lease Liabilities – Operating Leases

During the year ended December 31, 2022, the Company recognized an impairment of Right-to-Use (RTU) assets in the amount of $3.2 million in connection with the closing of its clinics during the period. During the three months ended March 31, 2023, the Company recognized an additional impairment in the amount of $0.5 million in connection with its remaining leased properties.

As of March 31, 2023, the Company had total operating lease liabilities of approximately $4.1 million and right to use assets of $0, which were included in the condensed consolidated balance sheet.

Right to use assets – operating leases are summarized below:

	March 31, 2023		December 31, 2022
Right to use assets, net	$	-	$	544,063

Operating lease liabilities are summarized below:

	March 31, 2023			December 31, 2022
Lease liability	$	4,066,827		$	4,379,724
Less: current portion		(512,895	)		(442,866	)
Lease liability, non-current	$	3,553,932		$	3,936,858

Maturity analysis under these lease agreements are as follows:

For the twelve months ended March 31, 2024	$	1,087,018
For the twelve months ended March 31, 2025		824,520
For the twelve months ended March 31, 2026		843,270
For the twelve months ended March 31, 2027		862,264
For the twelve months ended March 31, 2028		880,268
Thereafter		1,586,661
Total	$	6,084,001
Less: Present value discount		(2,017,174	)
Lease liability	$	4,066,827

Effective February 3, 2023, the Company entered into a termination agreement for the lease of its clinic located in Wayzata, Minnesota. The terms of the agreement call for a payment by the Company in the amount of $25,000 in full settlement of all amounts payable by the Company under this lease. The amount of operating lease liability recorded by the Company at the time of the settlement was $312,897. The Company accrued a liability in the amount of $25,000 and recorded a gain on settlement of lease liability in the amount of $287,897 during the three months ended March 31, 2023.

Effective March 3, 2023, the Company entered into a termination agreement for the lease of its clinic located in Eagen, Minnesota. The Company is currently involved in legal proceedings with the landlord of this clinic, and no gain or loss was recorded on this lease termination. An estimate of the potential liability resulting from these legal proceedings cannot be made at this time. At March 31, 2023, an operating lease liability in the amount of $474,074 is recorded on the Company’s balance sheet in connection with this lease.