LEASES AND LEASED PREMISES

9 Months Ended

Sep. 30, 2024

Leases And Leased Premises

LEASES AND LEASED PREMISES

NOTE 11 – LEASES AND LEASED PREMISES

Rental Payments under Non-cancellable Operating Leases and Equipment Leases

The Company, through its purchase of Champion, acquired several long-term leases for two manufacturing facilities, three office spaces, five distribution centers, and five retail spaces. Four of its distribution centers also have retail operations for which it leases its facilities. Lease terms on the various spaces’ range from a month-to-month lease (30 days) to a long-term lease expiring in September of 2028.

Rent expense for operating leases totaled $103,562 and $230,226 and $335,743 and $732,360 for the three and nine months ended September 30, 2024, and 2023, respectively. These amounts are included in the condensed consolidated statement of operations within Rental expense, warehousing, outlet expense and Administrative and other. Rental expense, warehousing, outlet expense is specific to warehousing and final manufacturing of products.

Right of Use Assets and Lease Liabilities

Lease expense for operating leases consists of the lease payments plus any initial direct costs, net of lease incentives, and is recognized on a straight-line basis over the lease term.

The Company’s operating leases are comprised primarily of facility leases. and as such we have no finance leases for our vehicles or equipment currently at this time. The Company added approximately $1,000,000 in right-of-use lease assets offset by right-of-use lease liabilities during the 4^th quarter for the year ended December 31, 2023, this included multiple leases that were increased in size and as well as several leases that were extended or options to extend were added in the lease terms.

Balance sheet information related to our leases is presented below:

	Balance Sheet location	September 30, 2024		December 31, 2023
		(Unaudited)		(Audited)
Operating leases:
Right-of-use lease assets	Right-of-use operating lease assets	$	636,530	$	1,244,496
Right-of-use lease liability, current	Other current liabilities		220,584		669,002
Right-of-use lease liability, long-term	Right-of-use operating lease liability		472,155		602,278

As of September 30, 2024, weighted-average remaining lease term and discount rate were as follows:

	September 30, 2024
		(Unaudited)
Weighted Average Remaining Lease Term:
Operating leases		2.6 years
Weighted Average Discount Rate:
Operating leases		10.00	%

The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:

	Operating leases
October 1, 2024 – September 30, 2025	$	297,006
October 1, 2025 – September 30, 2026		199,924
October 1, 2026 – September 30, 2027		175,937
October 1, 2027 – September 30, 2028		180,233
October 1, 2028 – September 20, 2029		-
Thereafter		-
Total future minimum lease payments, undiscounted		853,100
Less: Imputed interest		(160,361	)
Present value of future minimum lease payments	$	692,739