Birchtech Corp. Leases Disclosure
Note 9 - Operating Leases
On July 1, 2015, the Company entered into a five-year lease for warehouse space in Corsicana, Texas. The Company is also responsible for the pro rata share of the projected monthly expenses for the property taxes. The current pro rata share is $882. On June 1, 2019, the lease was extended to March 31, 2024, and on March 28, 2024, the lease was further extended for an additional five years from March 31, 2024 to March 31, 2029. Rent is $3,750 monthly until March 31, 2026 and then $3,866 per month until March 31, 2029. The Company recorded a right of use asset and an operating lease liability of $161,728. This amount represents the difference between the value from the remaining lease and the extended lease.
On August 1, 2024, the Company entered into a 3-year lease for laboratory space in Grand Forks, North Dakota. The lease contains an option to extend for a further three years that the Company is reasonably certain to exercise. As a result, the additional three year extension is included as part of the least term. Rent is $1,400 monthly until July 31, 2027, and then effectively $1,540 per month until July 31, 2030. Upon commencement of the lease the Company recorded a right of use asset and an operating lease liability of $69,615.
On November 22, 2024, the Company entered into an approximate 3-year lease for laboratory space in State College, Pennsylvania, commencing December 15, 2024 and ending November 30, 2027. The lease contains an option to extend for a further three years that the Company is reasonably certain to exercise. As a result, the additional three year extension is included as part of the lease term. Rent is $1,800 monthly until November 30, 2025, $1,860 monthly thereafter until November 30, 2026, and $1,920 monthly thereafter until November 30, 2027. During the option period, rent is $1,980 monthly from December 1, 2027 to November 30, 2028, $2,040 monthly thereafter through November 30, 2029, and $2,100 monthly thereafter through November 30, 2030. Upon commencement of the lease the Company recorded a right of use asset and an operating lease liability of $94,942.
For the years ended December 31, 2024 and 2023, the Company recorded an operating lease right of use asset and liabilities as follows:
|
| December 31, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Right of use asset - operating lease |
| $ | 305,142 |
|
| $ | 10,639 |
|
Current portion of operating lease liability |
|
| 42,733 |
|
|
| 11,157 |
|
Operating lease liability |
|
| 306,233 |
|
|
| - |
|
Future remaining minimum lease payments under these non-cancelable leases are as follows:
For the twelve months ended December 31, |
|
|
| |
2025 |
| $ | 83,460 |
|
2026 |
|
| 85,224 |
|
2027 |
|
| 86,992 |
|
2028 |
|
| 88,692 |
|
2029 |
|
| 54,618 |
|
Thereafter |
|
| 33,880 |
|
Total |
|
| 432,866 |
|
Less discount |
|
| (126,643 | ) |
Total lease liabilities |
|
| 306,223 |
|
Less current portion |
|
| (42,733 | ) |
Operating lease obligation, net of current portion |
| $ | 263,490 |
|
The weighted average remaining lease term for operating leases is 5.2 years and the weighted average discount rate used in calculating the operating lease asset and liability is 14.55%. For the years ended December 31, 2024 and 2023, payments on lease obligations were $52,871 and $45,000, respectively, and amortization on the right of use assets was $31,782 and $40,924, respectively.
For the years ended December 31, 2024 and 2023, the Company’s lease cost consists of the following components, each of which is included in costs and expenses within the Company’s consolidated statements of operations:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
Operating lease costs |
| $ | 53,595 |
|
| $ | 45,310 |
|
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.