We lease facilities under non-cancellable operating leases. The leases expire at various dates through fiscal 2028 and frequently include renewal provisions for varying periods of time, provisions which require us to pay taxes, insurance and maintenance costs, and provisions for minimum rent increases. Minimum leases payments, including scheduled rent increases are recognized as rent expenses on a straight-line basis over the term of the lease.

ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant and Equipment – Overall, to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize. As of December 31, 2023, we have not recognized any impairment losses for our ROU assets.

We monitor for events or changes in circumstances that require a reassessment of our leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

We lease a 10,509 square-foot office space in Quincy, MA for approximately $26,000 per month with annual increases of approximately 2.5% per year. This lease term ends May 2025.

We lease an approximately 25,000 square-foot facility which holds an office space and warehouse in Walpole, MA for approximately $16,000 per month with annual increases of 2% per year. This lease term ends May 2028.

We lease a 5,565 square-foot office space in Tomball, TX for approximately $5,300 per month with annual increases of approximately 2.3% per year. This lease term ends January 2026.

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

Lease cost for the years ended December 31, 2023 and 2022 totaled $557,687 and $466,895, respectively.

The following is a schedule by years of future minimum lease payments:

As of December 31, 2023, the Company’s operating leases had a weighted average remaining lease term of 3.74 years and a weighted average discount rate of 4%.