6. Leases

The Company leases property and equipment under operating leases, primarily land, office and warehouse locations. For leases with terms greater than twelve months, the related asset and obligation are recorded at the present value of lease payments over the term. Many of these leases contain rental escalation clauses which are factored into the determination of lease payments when appropriate. When available, the lease payments are discounted using the rate implicit in the lease; however, the current leases entered into do not provide a readily determinable implicit rate. Therefore, the Company’s incremental borrowing rate is estimated to discount the lease payments based on information available at lease commencement.

These leases contain both lease and non-lease components, which the Company has elected to treat as a single lease component. The Company elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase obligations, of twelve months or less in its consolidated balance sheets for all classes of underlying assets. Lease costs for such short-term leases are expensed on a straight-line basis over the lease term.

The land used by the Company to operate its seawater desalination plants in the Cayman Islands and The Bahamas are owned by the Company or leased to the Company for immaterial annual amounts and are not included in the lease amounts presented on the consolidated balance sheets.

AdR has entered into a lease for land to be used in the Project with an initial effective term of 20‑years from the date of full operation of its proposed seawater desalination plant. The amounts due on this lease are payable in Mexican pesos at an amount that is currently equivalent to approximately $26,000 every two months. The lease is cancellable by AdR should it ultimately not proceed with the project. All lease assets denominated in a foreign currency are measured using the exchange rate at commencement of the lease. All lease liabilities denominated in a foreign currency are remeasured using the exchange rate as of the consolidated balance sheet date.

Effective May 1, 2019, the Company executed a new lease for its office located in the Cayman Islands under terms comparable to the prior lease. This new lease expires April 30, 2024.

Lease assets and liabilities

The following table presents the lease-related assets and liabilities and their respective classification on the consolidated balance sheets:


	March 31, 2020			December 31, 2019
ASSETS
Current
Prepaid expenses and other current assets	$	321,173		$	36,097
Noncurrent
Operating lease right-of-use assets		4,043,717			4,439,212
Total lease right-of-use assets	$	4,364,890		$	4,475,309

LIABILITIES
Current
Current maturities of operating leases	$	761,540		$	755,751
Noncurrent
Noncurrent operating leases		3,166,476			3,836,475
Total lease liabilities	$	3,928,016		$	4,592,226

Weighted average remaining lease term:
Operating leases		16.8 years			17.8 years

Weighted average discount rate:
Operating leases		4.56	%		4.59	%

The components of lease costs were as follows:


	Three Months Ended March 31,
	2020		2019
Operating lease costs	$	243,892	$	221,131
Short-term lease costs		4,116		3,957
Total lease costs	$	248,008	$	225,088

Supplemental cash flow information related to leases is as follows:

Future lease payments relating to the Company’s operating lease liabilities as of March 31, 2020 were as follows:


Years ending December 31,	Total
Remainder of 2020	$	718,069
2021		627,269
2022		496,328
2023		495,188
2024		275,135
Thereafter		2,868,204
Total future lease payments		5,480,193
Less: Imputed interest		(1,552,177)
Total lease obligations		3,928,016
Less: Current obligations		(761,540)
Noncurrent lease obligations	$	3,166,476

Three Months Ended March 31,

Cash paid for amounts included in measurement of liabilities:

Cash payments for operating leases