RGC RESOURCES INC Leases Disclosure
| 13. | LEASES |
During 2023, the Company entered into a land lease in conjunction with its RNG facility that has a 20-year term with -year Company renewal options that are not considered part of the ROU asset and liability as it was not reasonably certain that the Company would exercise these options. The Company also has two other operating leases with original terms ranging from to 6 years, one of which was renewed during fiscal 2025. The operating lease ROU assets of $341,612 are reflected in in the consolidated balance sheets. The current operating lease liabilities of $25,600 and non-current lease liabilities of $319,573 are included in and , respectively, in the consolidated balance sheets. The cost components of the Company’s operating leases are included under operations and maintenance expense in the consolidated statements of income and were less than $50,000 for each period presented.
Other information related to leases were as follows:
| 2025 | 2024 | |||||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid on operating leases | $ | 42,900 | $ | 37,900 | ||||
| Right of use obtained in exchange for operating lease obligations | 36,734 | N/A | ||||||
| Weighted-average remaining term (in years) | 15.7 | 17.4 | ||||||
| Weighted-average discount rate | 5.64 | % | 5.65 | % | ||||
On September 30, 2025, the future minimum rental payments under non-cancelable operating leases were as follows:
| 2026 | $ | 51,268 | ||
| 2027 | 43,238 | |||
| 2028 | 39,600 | |||
| 2029 | 26,400 | |||
| 2030 | 26,400 | |||
| Thereafter | 316,800 | |||
| Total minimum lease payments | 503,706 | |||
| Less imputed interest | (158,533 | ) | ||
| Total | $ |
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.