LIQTECH INTERNATIONAL INC Leases Disclosure

NOTE 6 - LEASES

 

The Company leases certain vehicles, real property, production equipment, and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes. The majority of our operating leases are non-cancelable operating leases for production and office space in Hobro, Aarhus, and Copenhagen, Denmark. The lease agreements expire on November 30, 2034, August 31, 2024, and August 31, 2028, respectively.

 

During the year ended December 31, 2023, cash paid for amounts included for the measurement of operating lease liabilities was $754,490, and the Company recorded operating lease expenses of $725,337 in operating expenses.

 

During the year ended December 31, 2023, cash paid for amounts included for the measurement of finance lease liabilities was $441,696, and the Company recorded finance lease expenses of $159,766 in other income (expenses).

 

Supplemental balance sheet information related to leases as of December 31, 2023 and 2022 was as follows:

 

		December 31, 2023				December 31, 2022
Operating leases:
Operating lease right-of-use assets		$	4,055,837			$	3,271,997
Operating lease liabilities – current		$	531,355			$	561,182
Operating lease liabilities – long-term			3,527,082				2,710,815
Total operating lease liabilities		$	4,058,437			$	3,271,997
Finance leases:
Property and equipment, at cost		$	5,443,287			$	3,877,955
Accumulated depreciation			(877,578	)			(544,653	)
Property and equipment, net		$	4,565,709			$	3,333,302
Finance lease liabilities – current		$	590,550			$	399,198
Finance lease liabilities – long-term			2,879,932				2,384,011
Total finance lease liabilities		$	3,470,482			$	2,783,209
Weighted average remaining lease term:
Operating leases			8.3				9.6
Finance leases			4.3				5.4
Weighted average discount rate:
Operating leases			6.7	%			6.2	%
Finance leases			6.0	%			2.8	%

 

Maturities of lease liabilities at December 31, 2023 were as follows:

 

		Operating lease				Finance lease
2024		$	785,707			$	804,044
2025			702,899				800,510
2026			692,137				764,105
2027			692,137				1,320,097
2028			566,381				356,983
Thereafter			1,810,499				130,196
Total payment under lease agreements			5,249,760				4,175,935
Less imputed interest			(1,191,323	)			(705,453	)
Total lease liability		$	4,058,437			$	3,470,482