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Leases

9 Months Ended

Sep. 30, 2023

6. Leases

The Company’s leases consist primarily of leases for office and warehouse space. For leases with terms greater than twelve months, the related asset and obligation are recorded at the present value of the lease payments over the term. Many of these leases contain rental escalation clauses which are factored into the determination of the lease payments when appropriate. When available, the lease payments are discounted using the rate implicit in the lease; however, the Company’s current leases do not provide a readily determinable implicit rate. Therefore, the Company’s incremental borrowing rate is estimated to discount the lease payments based on information available at the lease commencement.

These leases contain both lease and non-lease components, which the Company has elected to treat as a single lease component. The Company elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase obligations, of twelve months or less in its condensed consolidated balance sheets for all classes of underlying assets. Lease costs for such short-term leases are expensed on a straight-line basis over the lease term.

The land used by the Company to operate its seawater desalination plants in the Cayman Islands and The Bahamas is owned by the Company or leased to the Company for immaterial annual amounts and is not included in the lease amounts presented in the condensed consolidated balance sheets.

All lease assets denominated in a foreign currency are measured using the exchange rate at the commencement of the lease. All lease liabilities denominated in a foreign currency are remeasured using the exchange rate as of the condensed consolidated balance sheet date.

Lease assets and liabilities

The following table presents the lease-related assets and liabilities and their respective classification on the condensed consolidated balance sheets:


	September 30,		December 31,
	2023		2022
ASSETS
Current
Prepaid expenses and other current assets	$	192,394	$	35,624
Current assets of discontinued operations		813		7,979
Noncurrent
Operating lease right-of-use assets		1,720,637		2,058,384
Total lease right-of-use assets	$	1,913,844	$	2,101,987

LIABILITIES
Current
Current maturities of operating leases	$	471,506	$	546,851
Current liabilities of discontinued operations		743		7,361
Noncurrent
Noncurrent operating leases		1,481,005		1,590,542
Total lease liabilities	$	1,953,254	$	2,144,754

Weighted average remaining lease term:
Operating leases		6.2 years		6.6 years
Operating leases - discontinued operations		0.1 years		0.8 years

Weighted average discount rate:
Operating leases		5.45%		5.11%
Operating leases - discontinued operations		4.96%		4.96%

The components of lease costs were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease costs	$	181,201	$	168,910	$	544,530	$	523,107
Short-term lease costs		78,189		25,345		128,992		75,629
Lease costs - discontinued operations		14,942		10,185		34,371		29,767
Total lease costs	$	274,332	$	204,440	$	707,893	$	628,503

Supplemental cash flow information related to leases is as follows:

Future lease payments relating to the Company’s operating lease liabilities from continuing operations as of September 30, 2023 were as follows:


Years ending December 31,	Total
2023	$	175,649
2024		482,694
2025		361,961
2026		274,959
2027		229,416
Thereafter		778,460
Total future lease payments		2,303,139
Less: imputed interest		(350,628)
Total lease obligations		1,952,511
Less: current obligations		(471,506)
Noncurrent lease obligations	$	1,481,005

Nine Months Ended September 30,

Cash paid for amounts included in measurement of liabilities:

Operating cash outflows for operating leases

Operating cash outflows for operating leases - discontinued operations