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LEASES | 9 Months Ended
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Sep. 30, 2021
LEASES |
NOTE 13 - LEASES | NOTE 13 — LEASES In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease agreement. ASC 842 requires us to use the interest rate that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. If we cannot readily determine the discount rate implicit in lease agreements, we utilize our incremental borrowing rate. The Company has six operating leases as of September 30, 2021—five in the Dallas/Fort Worth Metroplex and one in Charleston, South Carolina. In anticipation of the expiration of the new lease for DGSE’s flagship store at 13022 Preston Road, Dallas, Texas on October 31, 2021, a new lease has been executed and will commence on November 1, 2021. The new lease will expire on January 31, 2027, with an option for DGSE to extend the lease for an additional five years, at market rate as determined by the prevailing market rate for comparable space in comparable buildings in the vicinity. The lease for DGSE’s Grand Prairie, Texas location expires June 30, 2022, and has no current renewal options. The lease for DGSE’s Mt Pleasant, South Carolina location expires April 30, 2025, with no additional renewal options. The lease for DGSE’s Euless, Texas location expires June 30, 2025, with an option for an additional five years. ECHG’s Echo, located on W. Belt Line Road, in Carrollton, Texas, renewed their lease starting January 1, 2021 for 61 months, expiring January 31, 2026. ECHG’s lease for ITAD USA’s location on McKenzie Drive in Carrollton, Texas expired July 31, 2021 and was not renewed. ITAD USA moved its operations to the new CEX location on Realty Road in Carrollton, Texas, the lease for which was assigned to CEX effective June 8, 2021 as part of the CExchange Transaction and under which ITAD USA is permitted to utilize the space. The lease expires December 31, 2021, and this location is under review as to whether to pursue a lease renewal. Pursuant to the assignment of the CExchange lease to CEX, the lease is considered short-term and therefore does not fall under the rules to be reported as a Right of Use asset. As such, it will be reported as an operating lease. All of the Company’s seven leases as of September 30, 2021 are triple net, for which it pays its proportionate share of common area maintenance, property taxes and property insurance. Leasing costs for the three months ended September 30, 2021 and 2020 were $620,829 and $421,790, respectively. Leasing costs for the nine months ended September 30, 2021 and 2020 were $1,516,262 and $1,071,066, respectively, comprised of a combination of minimum lease payments and variable lease costs. As of September 30, 2021, the weighted average remaining lease term and weighted average discount rate for operating leases was 3.5 years and 5.5%, respectively. For the three months ended September 30, 2021 and 2020, the Company’s cash paid for operating lease liabilities was $619,584 and $428,241 respectively. For the nine months ended September 30, 2021 and 2020, the Company’s cash paid for operating lease liabilities was $1,496,524 and $1,100,280, respectively. Future annual minimum lease payments as of September 30, 2021:
|  | Operating |
|  | Leases |
DGSE |  |  |
2021 (excluding the nini months ending September 30, 2021) |  | $ | 133,407 |
2022 |  |  | 516,458 |
2023 |  |  | 499,984 |
2024 |  |  | 507,414 |
2025 |  |  | 364,269 |
2026 and thereafter |  |  | 333,114 |
Total minimum lease payments |  |  | 2,354,646 |
Less imputed interest |  |  | (223,086 | )
DGSE Subtotal |  |  | 2,131,560 |
ECHG |  |  |  |
2021 (excluding the nine months ending September 30, 2021) |  |  | 192,649 |
2022 |  |  | 784,599 |
2023 |  |  | 806,175 |
2024 |  |  | 828,345 |
2025 |  |  | 851,125 |
2026 and thereafter |  |  | 72,878 |
Total minimum lease payments |  |  | 3,535,771 |
Less imputed interest |  |  | (334,728 | )
ECHG Subtotal |  |  | 3,201,043 |
Total |  |  | 5,332,603 |
Less current portion |  |  | (1,092,996 | )
Long-term operating lease liability |  | $ | 4,239,607 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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