Leases

9 Months Ended

Sep. 30, 2024

Leases

Leases

Note 9 – Leases

The Company has various operating lease agreements in place for its office and joint ventures. Per FASB’s ASU 2016-02, Leases Topic 842 (“ASU 2016-02”), effective January 1, 2019, the Company is required to report a right-of-use asset and corresponding liability to report the present value of the total lease payments, with appropriate interest calculation. Historically, the Company utilized the applicable federal rate as of the commencement of the lease; however the Company has determined that utilization of the applicable federal rate was not its comparable incremental borrowing rate. The Company has since calculated the incremental borrowing rate for each lease by developing a synthetic credit rating for the Company as of the commencement date of each lease, adjusting the synthetic credit rating to reflect the collateralized nature of the incremental borrowing rate, the Company’s borrowing rate under other debt facilities, and the market spread between secured and unsecured borrowings, and based on the adjusted synthetic rating and the various terms of the leases, selected the incremental borrowing rate based on the commencement date, duration of the lease, and a corresponding weight-adjusted corporate yield curve. Lease renewal options included in any lease are considered in the lease term if it is reasonably certain the Company will exercise the option to renew. The Company’s operating lease agreements do not contain any material restrictive covenants.

As of September 30, 2024, the Company’s lease components included in the consolidated balance sheet were as follows:

Lease component	Balance sheet classification	September 30, 2024
Assets
ROU assets – operating lease	Other assets	$	2,343,645
Total ROU assets		$	2,343,645
Liabilities
Current operating lease liability	Current liabilities	$	230,729
Long-term operating lease liability	Other liabilities		2,252,929
Total lease liabilities		$	2,483,658

Future minimum lease payments as of September 30, 2024 were as follows:

2024		124,848
2025		505,957
2026		518,972
2027		489,807
2028 and beyond		2,329,321
Total future minimum lease payments	$	3,968,905
Less: Interest		(1,485,247	)
Total operating lease liabilities	$	2,483,658

For the nine months ended September 30, 2024, the weighted average remaining lease term for operating leases was 97 months. For the nine months ended September 30, 2024, the weighted average discount rate for operating leases was 12.1%. The Company paid approximately $0.3 million in cash for operating lease amounts included in the measurement of lease liabilities for the nine months ended September 30, 2024. The Company did not have any finance leases as of September 30, 2024.

For the nine months ended September 30, 2024, the Company recognized a gain on lease termination of $94,551 related to the termination of the lease associated with the Tampa Project.