In June 2021, the Company commenced a lease for its corporate office space under an operating lease agreement, and recorded an operating lease right-of-use asset and the related operating lease liability of $165,000. At December 31, 2021, the balance of right-of-use asset was $143,000 and the balance of the lease liability was $144,000. During 2022, the Company amortized $33,000 of the right-of-use asset and paid $32,000 of the lease liability. On October 31, 2022, the Company entered into a lease amendment with the lessor of the space to terminate the lease and be released from lease obligation. The Company accounted for the cancellation of the lease by writing off the right-of-use asset of $110,000 and cancelling the operating lease liability of $112,000, which resulted in the gain on lease cancellation of $2,000 which is recorded in operating expense on the accompany consolidated statements of operations for the year ended December 31, 2022.

Lease with former related party

The Company’s former executive offices were formally located in Tomball, Texas and was leased for $5,000 per month under a month-to-month lease from JBL Energy Partners (“JBL”). JBL was an entity owned by Jason Lane, former Director and Chairman of the Board of the Company who resigned in April 2021, and the lease was terminated in April 2021 in connection with the resignation of Mr. Lane. Total rent expense under this lease during the years ended December 31, 2022 and 2021, was $0 and $8,000. As of December 31, 2022, the balance payable to JBL Energy Partners was $19,000 and is included as part of accounts payable and accrued expenses in the accompanying consolidated balance sheets. Commencing May 1, 2021, the Company agreed to continue to lease a portion of the Tomball facility from the new landlord on a month-to-month basis at $1,000 per month. The Company also rents a storage facility on a month-to-month basis for $250 per month.