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Leases

9 Months Ended

Sep. 30, 2024

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.

Effective May 1, 2024, the Company entered into a new office lease for the existing office located in Grand Cayman, Cayman Islands under similar terms compared to the prior lease. This new lease has a term of five years from the commencement date with an option for an additional five-year term.

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,
	2024		2023
ASSETS
Current
Prepaid expenses and other current assets	$	55,502	$	110,541
Noncurrent
Operating lease right-of-use assets		3,328,936		2,135,446
Total lease right-of-use assets	$	3,384,438	$	2,245,987

LIABILITIES
Current
Current maturities of operating leases	$	633,971	$	456,865
Noncurrent
Noncurrent operating leases		2,784,742		1,827,302
Total lease liabilities	$	3,418,713	$	2,284,167

Weighted average remaining lease term:
Operating leases		5.2 years		6.1 years

Weighted average discount rate:
Operating leases		6.56%		5.67%

The components of lease costs were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease costs	$	213,090	$	181,201	$	633,692	$	544,530
Short-term lease costs		153,227		78,189		270,351		128,992
Lease costs - discontinued operations		5,222		14,942		29,364		34,371
Total lease costs	$	371,539	$	274,332	$	933,407	$	707,893

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, 2024 were as follows:


Years ending December 31,	Total
2024	$	209,949
2025		836,548
2026		763,783
2027		732,904
2028		749,143
Thereafter		978,023
Total future lease payments		4,270,350
Less: imputed interest		(851,637)
Total lease obligations		3,418,713
Less: current obligations		(633,971)
Noncurrent lease obligations	$	2,784,742

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