|6 Months Ended|
Jun. 30, 2023
NOTE 5. LEASES
The Company leases its corporate headquarters office space and certain office equipment under arrangements classified as operating leases.
The Company entered into its lease agreement to rent office space for a twelve-month period beginning July 1, 2022 with a monthly base rent of $9,744. The lease did not contain renewal options and was considered a short-term lease at inception. In April 2023, the Company executed an amendment to extend the term of the lease from July 1, 2023 through September 30, 2026. The amended lease provides for monthly base rent of $9,744 through September 2024, with fixed escalating monthly base rent for each year thereafter, and no rent due for the months of July through September 2023.
The Company determined that the amendment results in a lease modification that is not accounted for as a separate contract. Further, due to the extension of the lease term beyond the initial 12 months, the office lease can no longer be considered a short-term lease. The Company has recorded a right-of-use asset and lease liability as of April 17, 2023 (the effective date of the amendment) based on the modified terms and conditions of the amended lease.
The Company entered into a lease agreement for copier equipment in June 2023, requiring monthly lease payments of $329 through May 2026.
For the six-month period ended June 30, 2023, total operating lease expense was $98,352, of which $14,025 was attributable to variable lease expenses, and $65,375 was attributable to short-term lease expense. For the three-month period ended June 30, 2023, total operating lease expense was $49,459, of which $14,025 was attributable to variable lease expenses, and $16,482 was attributable to short-term lease expense. For the three and six-month periods ended June 30, 2022, total operating lease expense was $28,397 and $64,778, respectively, all of which was attributable to short-term lease expense.
Operating lease obligations recorded on the consolidated balance sheet at June 30, 2023 are as follows:
Future lease payments included in the measurement of operating lease liabilities on the consolidated balance sheet at June 30, 2023 are as follows:
The weighted average remaining lease term is 39 months, and the weighted average discount rate is 10%.