v3.25.1
COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

14. COMMITMENTS AND CONTINGENCIES

 

Commitments

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

 

The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component.

 

In accordance with ASC 842, the components of lease expense were as follows:

 

For the years ended  2024   2023 
   December 31, 
For the years ended  2024   2023 
Operating lease expense  $1,274,090   $978,504 
Total lease expense  $1,274,090   $978,504 

 

In accordance with ASC 842, other information related to leases was as follows:

 

For the years ended  2024   2023 
   December 31, 
For the years ended  2024   2023 
Operating cash flows from operating leases  $1,109,475   $826,307 
Cash paid for amounts included in the measurement of lease liabilities  $1,109,475   $826,307 
           
Weighted-average remaining lease term—operating leases        6.6 Years 
Weighted-average discount rate—operating leases        7%

 

   Operating 
Year ending:  Lease 
2025  $1,425,588 
2026   1,444,372 
2027   1,417,804 
2028   1,368,842 
2029   1,167,352 
Thereafter   3,310,319 
Total undiscounted cash flows  $10,134,277 
      
Reconciliation of lease liabilities:     
Weighted-average remaining lease terms   6.6 Years 
Weighted-average discount rate   7%
Present values  $8,299,887 
      
Lease liabilities—current   975,210 
Lease liabilities—long-term   7,324,677 
Lease liabilities—total  $8,299,887 
      
Difference between undiscounted and discounted cash flows  $1,834,390 

 

Contingencies

 

From time to time, the Company may be involved in certain legal actions and claims arising in the normal course of business. Management is of the opinion that such matters will be resolved without material effect on the Company’s financial condition or results of operations.

 

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS