The Company recognizes assets and liabilities for the rights and obligations created by leases that extend more than twelve months from the date of the balance sheet. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term, while lease liabilities represent our obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. Because the rate implicit in each individual lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

In 2022, the Company entered into operating leases for two office locations, including one in Hawaii in April 2022 and one in New York in November 2022 upon the acquisition of SUNation NY. In 2022, the Company had also entered into an operating lease for its corporate offices in Minnesota that commenced on January 1, 2023. In March 2023, the Company entered into an operating lease for an additional office location in Florida.

Effective September 30, 2024, the Company entered into a lease termination agreement with our Minnesota office landlord, pursuant to which the Company paid a termination fee totaling $189,000 to be paid at $13,500 per month for a period of fourteen (14) months from entry into the lease termination, as well as the Company waiving its right to its original security deposit provided at entry into the original lease in the amount of $35,434. The lease termination resulted is a decrease to the Company’s operating lease right of use assets totaling $415,674 and operating lease liabilities totaling $424,694, which along with the termination fee and write off the security deposit resulted in a loss on the termination of the lease totaling $215,415 recorded in operating expenses in the consolidated statements of operations for the year ended December 31, 2024. There is no remaining liability as December 31, 2025.

During the third quarter of 2025, the Company terminated its Florida office operating lease and incurred $12,873 in additional expense related to a termination fee, forfeiture of the security deposit, and other fees. The lease termination resulted in a decrease to the Company’s operating lease right of use assets totaling $37,544 and operating lease liabilities totaling $39,104, which along with the additional expenses, resulted in a loss on the termination of the lease totaling $11,313, recorded in operating expenses in the consolidated statements of operations for the year ended December 31, 2025.

These remaining leases have remaining lease terms of 6 to 10 years. One lease includes a 3% rent adjustment on each anniversary of the lease and the other includes a fixed annual rent adjustment of $6,840. As of December 31, 2025, total ROU assets and operating lease liabilities were $3,315,411 and $3,450,718, respectively. All operating lease expense is recognized on a straight-line basis over the lease term. In the years ended December 31, 2025 and 2024, the Company recognized $566,745 and $696,141 in lease expense, respectively.

Information related to the Company’s ROU assets and related lease liabilities were as follows:

Maturities of lease liabilities as of December 31, 2025 were as follows: