LEASES

3 Months Ended

Mar. 31, 2023

Leases

LEASES

NOTE 9 – LEASES

The Company leases office space domestically under operating leases. The Company’s headquarters are located in New York, New York for which the lease expires in 2025. We operate a marketing and sales center in Huntington Beach, California for which the lease expires in 2024, a patient care center in Greenville, South Carolina for which the lease expires in 2024 and a warehouse and fulfillment center in Columbia, Pennsylvania for which the lease expires in 2024. WorkSimpli leases office space in Puerto Rico for which the lease expires in 2024.

The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of March 31, 2023:

Operating right-of-use assets	$	1,114,791
Operating lease liabilities - current	$	821,941
Operating lease liabilities - noncurrent	$	407,857

Total accumulated amortization of the Company’s operating right-of-use assets was $1.5 million as of March 31, 2023.

The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2023:

Fiscal year 2023	$	668,402
Fiscal year 2024		562,206
Fiscal year 2025		68,850
Less: imputed interest		(69,660	)
Present value of operating lease liabilities	$	1,229,798

Operating lease expenses were $223 thousand and $202 thousand for the three months ended March 31, 2023 and 2022, respectively, and were included in other operating expenses in our unaudited condensed consolidated statement of operations.

Supplemental cash flow information related to operating lease liabilities consisted of the following:

	March 31,
	2023		2022
Cash paid for operating lease liabilities	$	226,797	$	129,290

Supplemental balance sheet information related to operating lease liabilities consisted of the following:

	March 31, 2023			December 31, 2022
Weighted average remaining lease term in years		2.59			2.82
Weighted average discount rate		7.15	%		7.15	%

We have elected to apply the short-term lease exception to the warehouse space we lease in Lancaster, Pennsylvania. This lease has a term of 12 months and is not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. Straight-line lease payments are $3 thousand per month. Additionally, Conversion Labs PR utilizes office space in Puerto Rico on a month-to-month basis incurring rental expense of approximately $3 thousand per month.