v3.23.3
LEASES (DISCONTINUED OPERATIONS)
 6 Months Ended
Jun. 30, 2023
Leases  
LEASES (DISCONTINUED OPERATIONS)

NOTE 6 - LEASES (DISCONTINUED OPERATIONS)

 

Rotmans leases equipment, a showroom, offices and warehouse facilities. These leases expire at various dates through 2031 and have monthly base rents which range from $800 to $81,000. One of the leases may be terminated early by the lessor at the end of 2028 with a six-month notice.

 

 

The table below presents the lease costs for the three and six months ended June 30, 2023 and 2022:

 

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
                 
Operating lease cost  $141,064   $288,134   $306,250   $575,804 
                     
Finance lease cost:                    
                     
Amortization of right-of-use assets   -    39,706    -    84,174 
Interest on lease liabilities   -    6,785    -    14,097 
                     
Total lease cost  $141,064   $334,625   $306,250   $674,075 

 

During the six months ended June 30, 2023 and 2022, the Company recognized sublease income of approximately $14,000 and $68,000, respectively, which in included in discontinued operations in the accompanying condensed consolidated statements of operations.

 

Our leases generally do not provide an implicit rate, and therefore we use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. We used incremental borrowing rates as of the implementation date for operating leases that commenced prior to that date.

 

The following table presents other information related to leases:

 

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
                 
Cash paid for amounts included in the measurement of lease liabilities:                    
                     
Operating cash flows used for operating leases  $217,500   $262,004   $463,424   $525,620 
Financing cash flows used for financing leases   -    45,499    -    95,160 
                     
Assets obtained in exchange for operating lease liabilities   -    -    -    - 
                     
Assets obtained in exchange for finance lease liabilities   -    -    -    - 
                     
Weighted average remaining lease term:                    
Operating leases   7.6 years    8.6 years     7.6 years    8.6 years 
Finance leases   2.9 years    3.9 years    2.9 years    3.9 years 
                     
Weighted average discount rate:                    
Operating leases   5.60%   5.60%   5.60%   5.60%
Finance leases   5.16%   5.16%   5.16%   5.16%

 

 

The future minimum lease payments required under operating and financing lease obligations as of June 30, 2023 having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:

 

   Operating Leases   Finance Leases   Total 
             
Remainder of 2023  $585,927   $139,080   $725,007 
2024   955,272    139,080    1,094,352 
2025   870,000    139,080    1,009,080 
2026   870,000    68,395    938,395 
2027   870,000    -    870,000 
Thereafter   2,682,500    -    2,682,500 
                
Total undiscounted lease liabilities   6,833,699    485,635    7,319,334 
Less: imputed interest   (1,215,246)   (42,108)   (1,257,354)
                
Net lease liabilities  $5,618,453   $443,527   $6,061,980 

 

As of June 30, 2023, Vystar and Rotmans do not have additional operating and finance leases that have not yet commenced.