Commitments and Contingencies
|6 Months Ended|
Jun. 30, 2022
|Commitments and Contingencies.|
|Commitments and Contingencies||
Note 8 — Commitments and Contingencies
The Company may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. In management’s opinion, the outcome of any such litigation will not materially affect the Company’s financial condition. Nevertheless, due to uncertainties in the settlement process, it is at least reasonably possible that management’s view of the outcome could change materially in the near term.
Huddled Masses was named as a defendant in a lawsuit on July 10, 2019 related to a delinquent balance to a vendor. The matter is currently underway, and the Company has estimated a potential liability of approximately $501,078. Such liability has been recorded and included in accrued liabilities on the consolidated balance sheets as of June 30, 2022 and December 31, 2021 (See Note 4 – Accrued Liabilities). On July 28, 2022, the Company entered into a settlement agreement with the vendor and agreed to pay a total of $515,096 with minimum monthly installment payments of $21,500 over the next 24 months (See Note 14 – Subsequent Events).
In June 2019, the Company entered into a sublease for its corporate office headquarters at 1233 West Loop South, Ste 1170 in Houston, TX. The lease term expires July 1, 2022, and has a base monthly rent of approximately $3,600 per month.
In March 2022, the Company entered into a new lease to move its corporate headquarters to 1177 West Loop South, Ste 1310 in Houston, TX effective July 1, 2022, and paid a security deposit of approximately $29,000. The lease is for 7,397 square feet of office space that expires February 28, 2030. The base monthly rent varies annually over the term of the lease. The Company also leases office furniture for its corporate headquarters under a lease agreement effective April 2019 and expiring July 2023. The monthly rent expense is approximately $6,700.
In March 2021, the Company extended its lease for office space at 716 Congress Ave, Ste 100 in Austin, Texas with an effective date of January 1, 2022. The lease expires December 31, 2023 and has a base rent of approximately $6,700 per month.
For the three months ended June 30, 2022 and 2021, the Company incurred rent expense of $52,183 and $63,272, respectively, for the combined leases. For the six months ended June 30, 2022 and 2021, the Company incurred rent expense of $103,561 and $113,443, respectively, for the combined leases.
Supplemental balance sheet information related to operating leases is included in the table below for the year ended June 30, 2022:
The weighted-average remaining lease term for the Company’s operating lease is seven years as of ended June 30, 2022, with a weighted-average discount rate of 8%.
Lease liability with enforceable contract terms that have greater than one-year terms are as follows:
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef