| RIGHT-OF-USE LEASE ASSETS AND LIABILITIES |
Note 11 RIGHT-OF-USE LEASE ASSETS AND LIABILITIES
As discussed in Note 5, the Company leases facilities
for its Myrtle and RCHI operations under operating leases with a subsidiary of RHI. For operating leases with terms greater than 12 months,
including annual options that are expected to be renewed, the Company records the related right-of-use assets and right-of-use liabilities
at the present value of lease payments over the terms.
The Company uses an estimated borrowing interest rate
at lease commencement as its interest rate, as its operating leases do not provide a readily determinable implicit interest rate.
The following table presents the Company’s lease-related
assets and liabilities at March 31, 2025 and December 31, 2024:
SCHEDULE
OF LEASE - RELATED ASSET AND LIABILITY
| |
|
Balance Sheet Classification |
|
March 31,
2025 |
|
|
December 31, 2024 |
|
| |
|
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Operating leases |
|
Right-of-use lease assets |
|
$ |
3,879,886 |
|
|
$ |
3,982,820 |
|
| |
|
|
|
|
|
|
|
|
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|
| Liabilities: |
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|
|
|
|
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|
|
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| Current: |
|
|
|
|
|
|
|
|
|
|
| Operating leases |
|
Right-of-use lease liabilities |
|
$ |
397,223 |
|
|
$ |
367,474 |
|
| Noncurrent: |
|
|
|
|
|
|
|
|
|
|
| Operating leases |
|
Right-of-use lease liabilities |
|
|
3,558,289 |
|
|
|
3,667,553 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total right-of-use lease liabilities |
|
|
|
$ |
3,955,512 |
|
|
$ |
4,035,027 |
|
| |
|
|
|
|
|
|
|
|
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|
| Weighted average remaining term of operating leases, including option periods expected to renew |
|
|
|
|
5.25 years |
|
|
|
5.50 years |
|
| |
|
|
|
|
|
|
|
|
|
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| Discount rate |
|
|
|
|
22.0 |
% |
|
|
22.0% |
|
The following table presents certain information related
to lease expense for the right-of-use operating leases for the three months ended March 31, 2025 and 2024:
SCHEDULE
OF RIGHT-OF-USE OPERATING LEASE
| | |
2025 | | |
2024 | |
| | |
Three Months Ended | |
| | |
March 31, | |
| | |
2025 | | |
2024 | |
| | |
| | |
| |
| Right-of-use operating leases amortization (1) | |
$ | 102,934 | | |
$ | - | |
| Right-of-use operating leases interest expense (2) | |
$ | 220,486 | | |
| - | |
| (1) |
Expense is included in selling, general and administrative expenses in the unaudited condensed consolidated statement of operations. |
| (2) |
Expense is included in interest expense in the unaudited condensed consolidated statements of operations. |
The following table presents supplemental cash flow
information for the three months ended March 31, 2025 and 2024:
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION
| | |
2025 | | |
| 2024 | |
| | |
Three Months Ended | |
| | |
March 31, | |
| | |
2025 | | |
| 2024 | |
| | |
| | | |
| | |
| Operating cash flows for right-of-use operating leases | |
$ | 368,555 | | |
$ | - | |
Aggregate future minimum lease payments under right-of-use
operating leases are as follows:
SCHEDULE
OF LEASE PAYMENTS UNDER THE RIGHT-OF-USE OPERATING LEASE
| | |
Right-of-Use
Operating Leases | |
| Twelve months ending: | |
| | |
| March 31, 2026 | |
$ | 1,229,545 | |
| March 31, 2027 | |
| 1,266,431 | |
| March 31, 2028 | |
| 1,304,424 | |
| March 31, 2029 | |
| 1,343,557 | |
| March 31, 2030 | |
| 1,383,864 | |
| Thereafter | |
| 249,437 | |
| Total | |
| 6,777,258 | |
| | |
| | |
| Less interest | |
| (2,821,746 | ) |
| Present value of minimum lease payments | |
| 3,955,512 | |
| | |
| | |
| Less current portion of right-of-use lease liabilities | |
| (397,223 | ) |
| Right-of-use lease liabilities, net of current portion | |
$ | 3,558,289 | |
|