Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2023
Leases [Abstract]  



The Company leases warehouse and corporate office space under certain operating lease agreements. The Company determines if an arrangement is a lease at inception. Lease assets are presented as operating lease ROU assets and the related liabilities are presented as operating lease liabilities in the consolidated balance sheets pursuant to ASC 842, Leases.


Operating ROU assets and liabilities are recognized at 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 its obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease 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 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 January 3, 2022, the Company terminated the lease agreements relating to its office and warehouse leases in American Fork, Utah. In accordance with ASC 842, the Company derecognized the ROU assets of $543 and the corresponding lease liabilities of $521, resulting in a loss on lease termination of $22.


On April 26, 2022, the Company entered into an office space sub-lease agreement. The agreement requires payments of $12 per month for an initial term of eighteen months, which increases by 3% per annum after twelve months. In accordance with ASC 842, the Company recognized a ROU asset and the related lease liability of $212 on the commencement date of the lease.


On June 13, 2023, the Company derecognized the Lehi lease as part of the sale of SaaS assets to SW Sales. As a result of the sale, the Company has eliminated any lease-related information related to the SaaS business as part of its presentation of continuing operations.


On July 3, 2023, the Company entered into a lease termination agreement with its landlord related to the office lease in Newport Beach, California. Pursuant to terms of the lease termination agreement, the Company vacated the property by August 15, 2023. A gain on lease termination of $263 was recorded within other income (expense), net in the consolidated statement of operations for the year ended December 31, 2023.


On August 8, 2023, the Company entered into a studio office lease agreement for its office in California. The agreement requires the Company to pay $8 per month for a term through September 30, 2026. In accordance with ASC 842, the Company recognized a right-of-use asset and the related lease liability of $245.


On November 1, 2023, the Company entered into a corporate office sublease agreement with Mr. Cutaia for its executive office in Las Vegas, Nevada. The lease is cancellable by either party with 30 days advance written notice and the monthly rent amount is five hundred dollars due at the beginning of the month.


The components of lease expense and supplemental cash flow information related to leases for the period are as follows:


    2023     2022  
    Years Ended December 31,  
    2023     2022  
Lease cost                
Operating lease cost (included in general and administrative expenses in the Company’s statement of operations)   $ 264     $ 376  
Other information                
Cash paid for amounts included in the measurement of lease liabilities   $ 143     $ 447  
Weighted average remaining lease term – operating leases (in years)     2.75       4.42  
Weighted average discount rate – operating leases     9.0 %     4.0 %


    2023     2022  
    As of December 31,  
    2023     2022  
Operating leases                
ROU assets   $ 218     $ 1,354  
Short-term operating lease liabilities   $ 67     $ 355  
Long-term operating lease liabilities     164       1,581  
Total operating lease liabilities   $ 231     $ 1,936  


Year ending   Operating Leases  
2024   $ 92  
2025     96  
2026     75  
2027     -  
2028 and thereafter     -  
Total lease payments     263  
Less: Imputed interest/present value discount     (32 )
Present value of lease liabilities   $ 231