Annual report pursuant to Section 13 and 15(d)

Operating Leases

Operating Leases

12 Months Ended

Dec. 31, 2023

Note 8 – Operating Leases

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term. Operating lease Right-of-Use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical collateralized borrowing rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

On November 19, 2021, the Company entered into a sublease with a third party for 4,500 square feet of office space located in Brisbane, California, with a commencement date of January 1, 2022, and maturing on June 30, 2024. As a result of this agreement, the Company recognized ROU asset and liability of $247,294 pursuant to ASC 842, Leases.

On February 8, 2022, the Company entered into a copier lease which would end on February 7, 2025. As a result, the Company recognized an additional ROU asset and liability of $13,000. In October 2023, this lease was cancelled and the remaining ROU asset of $6,000 was written off against the cancelled lease liability.

Other information related to leases and future minimum lease payments under non-cancellable operating leases were as follows:

	December 31, 2023			December 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	118,000		$	109,000
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	53,000		$	165,000
Weighted-average remaining lease term (in years):
Operating leases		0.5			1.75
Weighted-average discount rate:
Operating leases		10	%		10	%

Future minimum lease payments under non-cancellable operating leases were as follows:

	December 31, 2023
		(Unaudited)
Within one year	$	60,000
Thereafter		-
Total future minimum lease payments		60,000
Less – discount		(2,000	)
Lease liability	$	58,000