Leases

9 Months Ended

Sep. 30, 2023

11.

Leases

Accounting for Leases as Lessee

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets (“ROU”), operating lease liabilities, and operating lease liabilities, non-current. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. None of the leases entered into have an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future payments. Incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any prepaid lease payments made and initial direct costs incurred and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease, which is recognized when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company has operating leases for real estate. The Company has certain intercompany leases between its subsidiaries, and these transactions and balances have been eliminated in consolidation and are not reflected in the tables and information presented below.

The components of lease expense included on the Company’s statements of operations were as follows:

	Expense Classification	Three Months Ended September 30,				Nine Months Ended September 30,
Operating lease expense:		2023		2022		2023		2022
Amortization of ROU asset	General and administrative	$	28,875	$	17,985	$	86,625	$	30,635
Accretion of Operating lease liability	General and administrative		6,312		6,828		20,141		11,322
Total operating lease expense		$	35,187	$	24,813	$	106,766	$	41,957

Other lease expense	General and administrative		10,605		401		31,936		1,233
Total		$	45,792	$	25,214	$	138,702	$	43,190

Other information related to leases is as follows:

	As of September 30,			As of December 31,
	2023			2022
Weighted-average remaining lease term:
Operating leases (in years)		7.99			8.43
Weighted-average Discount rate:
Operating leases		4.05	%		4.08	%

Amounts relating to leases were presented on the Balance Sheets as of September 30, 2023 and December 31, 2022 in the following line items:

		As of September 30,		As of December 31,
	Balance Sheet Classification	2023		2022
Assets:
Operating lease assets	Right-of-use assets	$	630,187	$	746,973

Liabilities:
Operating lease liabilities	Operating lease liabilities	$	89,579		91,152
Operating lease liabilities	Operating lease liabilities, non-current		569,262		666,179
Total lease liabilities		$	658,841	$	757,331

The future minimum lease payments required under leases as of September 30, 2023, were as follows:

Fiscal Year	Operating Leases
Remainder of 2023	$	31,337
2024		103,168
2025		83,558
2026		85,319
2027		86,979
Thereafter		385,086
Undiscounted cash flows		775,447
Less: imputed interest		(116,606	)
Lease liability	$	658,841