SYNTEC OPTICS HOLDINGS, INC. Leases Disclosure
Note 10 Leases
During 2024, the Company entered into lease agreements for equipment utilized in its manufacturing facility. The Company has determined that the lease agreements are finance leases. There is a $1 buyout option at the end of the lease term which makes it reasonably certain that the Company will exercise this option and purchase the machinery and the details of the purchase option are in line with the criteria of a finance lease.
The ROU asset is grouped with property and equipment. The asset is amortized on a straight-line basis over the life of the underlying asset rather than the lease term due to the purchase options in the lease. The amortization expense is grouped with the depreciation expense of the Company’s other property and equipment. The initial recognition of the finance lease liability was recorded based on the present value of future payments. The interest expense is calculated using the incremental borrowing rate of the Company, and is grouped in the interest expense line on the statement of operations.
The components of operating and finance lease costs are as follows for the years ended December 31:
| 2024 | 2023 | |||||||
| Operating lease cost | $ | $ | ||||||
| Finance Lease Cost: | ||||||||
| Amortization of assets | 126,343 | |||||||
| Interest on liabilities | 66,454 | |||||||
| Total lease cost | $ | 192,797 | $ | |||||
There were no variable payments or material short-term rentals for the years ended December 31, 2024 and 2023.
Supplemental cash flow information related to leases are as follows for the years ended December 31:
| 2024 | 2023 | |||||||
| Cash paid for amounts included in measurement of lease obligations: | ||||||||
| Operating cash flows from operating leases | $ | $ | 15,532 | |||||
| Operating cash flows from finance leases | 66,454 | |||||||
| Financing cash flows from finance leases | 95,080 | |||||||
SYNTEC OPTICS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2024 AND 2023
Note 10 Leases – Continued
The following table summarizes weighted average remaining lease term and discount rates as of December 31, 2024 and 2023:
| 2024 | 2023 | |||||||
| Weighted average remaining lease term (years) | ||||||||
| Operating leases | n/a | n/a | ||||||
| Finance leases | 5.00 | N/A | ||||||
| Weighted average discount rate | ||||||||
| Operating leases | n/a | n/a | ||||||
| Finance leases | 8.4 | % | N/A | |||||
Future maturities of our lease liabilities are as follows as of December 31:
| 2025 | $ | 432,009 | ||
| 2026 | 513,525 | |||
| 2027 | 513,525 | |||
| 2028 | 513,525 | |||
| 2029 | 513,524 | |||
| Thereafter | ||||
| Total Undiscounted Lease Obligations | 2,486,108 | |||
| Less: Imputed Interests | 417,657 | |||
| $ | 2,068,451 |
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.