Annual report [Section 13 and 15(d), not S-K Item 405]

Leases

v3.25.1
Leases
 12 Months Ended
Dec. 31, 2024
Accounting Policies [Abstract]  
Leases Leases
Our leases principally consist of operating leases related to our corporate office, field offices, and our research, manufacturing, and storage facilities. Effective December 19, 2023, we entered into a master finance lease agreement for motor vehicles.
At 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 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 adjacent 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 commenced 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 $900,000 and $1,000,000. 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. On June 17, 2024, we extended our lease for 1,751 square foot Hayward, CA service center for an additional three (3) years through July 31, 2027. The straight-line monthly rent for the extension is $3,662 per month. On January 15, 2025 we entered into a lease agreement for 2,969 square feet of office and storage space in Easton, MA for an initial term of five (5) years, expiring on January 31, 2030, with an option for an additional lease term of five (5) years. The straight-line base monthly rent for the initial lease term is $2,324 per month.
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 years ended December 31, 2024 and 2023 was $796,400 and $812,815, respectively.
Supplemental information related to operating leases for the years ended December 31, 2024 and 2023 was as follows:
December 31, 2024 December 31, 2023
Cash paid for amounts included in the measurement of operating lease liabilities $ 727,418  $ 743,849 
Right-of-use assets obtained in exchange for operating lease liabilities $ 1,650,994  $ 148,093 
Weighted-average remaining lease term - operating leases 4.1 Years 4.6 Years
Weighted-average discount rate - operating leases 7.5  % 6.4  %
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. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.
Lease expense for finance leases, consisting of fixed payments for base rent and initial costs for the year ended December 31, 2024 and 2023 was $119,690 and $2,338, respectively. Depreciation and amortization expense on right-of-use finance lease assets for the years ended December 31, 2024 and 2023 was $61,572 and $0, respectively.
Supplemental information for finance leases for the year ended December 31, 2024 and 2023 was as follows:
December 31, 2024 December 31, 2023
Cash paid for amounts included in the measurement of finance lease liabilities $ 88,845  $ — 
Right-of-use assets obtained in exchange for finance lease liabilities $ 295,085  $ 200,187 
Weighted-average remaining lease term - finance leases 4.3 years 5.0 years
Weighted-average discount rate - finance leases 10.0  % 10.4  %
Supplemental balance sheet information related to operating leases for the years ended December 31, 2024 and 2023 was as follows:
December 31, 2024 December 31, 2023
Operating leases
Right-of-use assets $ 1,730,358  $ 743,096 
Operating lease liability, current $ 430,382  $ 248,933 
Operating lease liability, long-term 1,341,789  523,660 
Total operating lease liability $ 1,772,171  $ 772,593 
Supplemental balance sheet information related to finance leases for the year ended December 31, 2024 and 2023 is as follows:
December 31, 2024 December 31, 2023
Finance leases
Right-of-use assets - motor vehicles $ 425,563  $ 200,187 
Right-of-use asset - boiler 26,827  — 
$ 452,390  $ 200,187 
Finance lease liability, current $ 85,646  $ 40,540 
Finance lease liability, long-term 325,235  159,647 
Total finance lease liability $ 410,881  $ 200,187 
Future minimum lease commitments under non-cancellable operating and finance leases as of December 31, 2024 were as follows:
Operating Leases Finance Leases Total
2025 $ 542,066  $ 122,460  $ 664,526 
2026 538,297  113,845  652,142 
2027 442,471  113,845  556,316 
2028 395,827  113,845  509,672 
2029 55,435  43,669  99,104 
Thereafter 61,569  —  61,569 
Total lease payments 2,035,665  507,664  2,543,329 
Less: imputed interest 263,494  96,783  360,277 
Total $ 1,772,171  $ 410,881  $ 2,183,052