Leases

The Company leases certain facilities, property, and equipment under noncancelable operating leases. A determination is made if an arrangement is a lease at its inception, and leases with an initial term of twelve months or less are not recorded on the balance sheet.

The Company adopted FASB ASU 2016-02 for lease accounting on January 1, 2019, and recognized a lease liability of $532 thousand and a corresponding right-of-use asset of $512 thousand. Management calculated the lease liability based on the net present value of the remaining lease payments on the date of adoption using a weighted average discount rate of 8%. As most of the Company’s leases did not provide an implicit interest rate, management used an estimated incremental borrowing rate. The adoption did not result in any cumulative-effect adjustment to beginning retained earnings.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For operating leases, expense is recognized on a straight-line basis over the lease term.

The Company has agreements with lease (e.g., minimum rent payments) and non-lease components (e.g., maintenance), which are generally accounted for separately. The Company has not elected the practical expedient to account for lease and non-lease components as one lease component.

Lease expense for the three months ended March 31, 2019, amounted to $65,153. The weighted average remaining lease term of the Company’s operating leases was 22.30 years as of March 31, 2019. Lease payments included in operating cash flows totaled $65,548 for the three months ended March 31, 2019.

The table below summarizes the Company’s lease obligations and remaining payments at March 31, 2019:



				March 31, 2019						January 1, 2019
	Lease Type	End Date	Remaining Years	Remaining Payments			Lease Liability			Remaining Payments			Lease Liability
Maynard Office Lease	Operating	Mar 2023	4.00	$	262,847		$	222,931		$	278,414		$	234,685
Panama Farm Lease	Operating	Apr 2019	0.08	15,000			14,901			60,000			59,013
Indiana Auto Lease	Operating	Feb 2021	1.92	9,631			8,838			10,842			9,897
Indiana Well Lease	Operating	Dec 2048	29.78	713,650			227,442			717,420			228,844
Total leases				$	1,001,128		$	474,112		$	1,066,676		$	532,439
Less: current portion				(98,338		)	(74,177		)	(142,780		)	(117,345		)
Long-term leases				$	902,790		$	399,935		$	923,896		$	415,094

Remaining payments under leases are as follows at March 31, 2019:



Year	Office		Farm		Auto		Well		Amount
2019	$	47,292	$	15,000	$	3,632	$	11,310	$	77,234
2020	64,637		—		4,842		15,532		85,011
2021	66,416		—		1,157		15,998		83,571
2022	67,602		—		—		16,478		84,080
2023	16,900		—		—		16,972		33,872
Thereafter	—		—		—		637,360		637,360
Total Lease Payments	$	262,847	$	15,000	$	9,631	$	713,650	$	1,001,128