Quarterly report pursuant to Section 13 or 15(d)

Leases

Leases

3 Months Ended

Mar. 31, 2024

Our leases principally consist of operating leases related to our corporate office, field offices, and our research, manufacturing, and storage facilities.

At lease inception, we determine if an arrangement constitutes a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of our lease agreements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance, labor charges, etc.). We account for each component separately based on the estimated standalone price of each component.

Operating Leases

Operating leases are included in Right-of-use assets, Lease obligations, current and Long-term liabilities - Lease obligations, net of current portion, on the condensed consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term and using an incremental

borrowing rate consistent with the lease terms or implicit rates when readily determinable. For those leases where it is reasonably certain at the commencement date that we will exercise the option to extend the lease, then the lease term will include the lease extension term. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

On March 31, 2023, we entered into two lease agreements for two adjoining buildings, located in North Billerica, Massachusetts, containing approximately 26,412 square feet of manufacturing, storage and office space to serve as our headquarters and manufacturing facilities. The lease agreements provide for initial lease terms of five (5) years with two successive options to renew for additional terms of five (5) years. Both leases commence on January 1, 2024 and require payment of the base rent, real estate taxes, common maintenance expenses and aggregate deposits of $38,200. Our costs for initial improvements required to the leased premises is estimated to range between $500,000 and $750,000. The estimated straight-line monthly rent expense for the initial term of the lease is approximately $26,962 per month. In accordance with ASC 842-20-30-1, we recorded the lease liability and right-of-use asset using the discount rate for the lease upon the lease commencement date, January 1, 2024. On January 1, 2024 we extended our lease for the 2,800 square foot Valley Stream, NY service center for an additional three (3) years through December 31, 2026, with an option to renew for an additional term of three (3) years. The straight-line base monthly rent for the extension is $4,560 per month. On February 1, 2024 we entered into a lease agreement for 2,063 square feet of office and storage space in East Syracuse, New York for an initial lease term of three (3) years, expiring on January 31, 2027, with an option for an additional lease term of two (2) years. The straight-line base monthly rent for the initial lease term is $1,891 per month.

The lease on our former headquarters located in Waltham, Massachusetts which consists of approximately 43,000 square feet of manufacturing, storage and office space, expired on April 30, 2024. The base monthly rent in 2024 was $44,254.

Lease expense for operating leases, which principally consists of fixed payments for base rent, is recognized on a straight-line basis over the lease term. Operating lease expense for the three months ended March 31, 2024 and 2023 was $271,562 and $189,715, respectively.

Supplemental information related to operating leases for the three months ended March 31, 2024 and 2023 was as follows:


	March 31, 2024			March 31, 2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	269,836		$	184,072
Right-of-use assets obtained in exchange for operating lease liabilities	$	1,429,977		$	—
Weighted-average remaining lease term - operating leases	4.7 Years			3.6 Years
Weighted-average discount rate - operating leases	7.5		%	6.0		%

Supplemental balance sheet information related to operating leases as of March 31, 2024 and December 31, 2023 was as follows:


	March 31, 2024		December 31, 2023
Operating leases
Right-of-use assets	$	1,986,087	$	743,096

Operating lease liability, current	$	438,334	$	248,933
Operating lease liability, long-term	1,573,793		523,660
Total operating lease liability	$	2,012,127	$	772,593

Finance Leases

Finance leases are included in Right-of-use assets, Lease obligations, current and Long-term liabilities - Lease obligations, net of current portion, on the condensed consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term and using an incremental borrowing rate consistent with the lease terms or implicit rates, when readily determinable. For those leases where it is reasonably certain at the commencement date that we will exercise the option to extend the lease, then the lease term will include the lease extension term. Effective December 19, 2023, we entered into a master finance lease agreement for motor vehicles and acquired five (5) service vehicles.

Supplemental information for finance leases for the year ended December 31, 2023 is as follows:


	December 31, 2023
Right-of-use assets obtained in exchange for finance lease liabilities	$	200,187
Weighted-average remaining lease term - finance leases	5.0 years
Weighted-average discount rate - finance leases	10.4		%

Supplemental balance sheet information related to finance leases as of March 31, 2024 and December 31, 2023 is as follows:


	March 31, 2024		December 31, 2023
Finance leases
Right-of-use assets - motor vehicles	$	190,177	$	200,187

Finance lease liability, current	$	31,428	$	40,540
Finance lease liability, long-term	151,483		159,647
Total finance lease liability	$	182,911	$	200,187

Future minimum lease commitments under non-cancellable operating and finance leases as of March 31, 2024 were as follows:


	Operating Leases		Finance Leases		Total
Year 1	$	563,175	$	48,931	$	612,106
Year 2	498,686		48,931		547,617
Year 3	472,862		48,931		521,793
Year 4	421,503		48,931		470,434
Year 5	302,960		36,699		339,659
Thereafter	103,230		—		103,230
Total lease payments	2,362,416		232,423		2,594,839
Less: imputed interest	350,289		49,512		399,801
Total	$	2,012,127	$	182,911	$	2,195,038