Quarterly report pursuant to Section 13 or 15(d)

Finance and Operating Lease Obligations

v3.21.2
Finance and Operating Lease Obligations
6 Months Ended
Jun. 30, 2021
Finance And Operating Lease Obligations  
Finance and Operating Lease Obligations

Note 9 – Finance and Operating Lease Obligations

 

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related right-of-use assets and right-of-use obligations at the present value of lease payments over the term. We do not separate lease and non-lease components of contracts.

 

Generally, we use our most recent agreed upon borrowing interest rate at lease commencement as our interest rate, as most of our operating leases do not provide a readily determinable implicit interest rate.

 

 

The following table presents our lease-related assets and liabilities at June 30, 2021 and December 31, 2020:

 

    Balance Sheet Classification  

June 30,

2021

   

December 31,

2020

 
                 
Assets:                    
Operating leases   Right-of-use operating lease assets   $ 910,541     $ 1,000,272  
Finance leases   Property and equipment, net     249,985       249,985  
                     
Total lease assets       $ 1,160,526     $ 1,250,257  
                     
Liabilities:                    
Current:                    
Operating leases   Right-of-use operating lease obligations   $ 217,937     $ 172,952  
Finance leases   Current liabilities     249,985       249,985  
Noncurrent:                    
Operating leases   Right-of-use operating lease obligations     692,604       827,320  
                     
Total lease liabilities       $ 1,160,526     $ 1,250,257  
                     
Weighted-average remaining term:                    
Operating leases         3.92 years       4.17 years  
Finance leases         0 years       0 years  
Weighted-average discount rate:                    
Operating leases         13.0 %     13.0 %
Finance leases         4.9 %     4.9 %

 

The following table presents certain information related to lease expense for finance and operating leases for the three months and six months ended June 30, 2021 and 2020:

 

      Three Months Ended June 30, 2021       Three Months Ended June 30, 2020       Six Months Ended June 30, 2021       Six Months Ended June 30, 2020  
Finance lease expense:                              
Finance lease expense: Depreciation/amortization of leased assets   $ -     $ 10,539     $ -     $ 26,349  
Finance lease expense: Interest on lease liabilities     -       46,503       -       93,012  
Operating leases:                                
Operating leases: Short-term lease expense (1)     34,033       69,235       106,583       169,942  
                                 
Total lease expense   $ 34,033     $ 126,277     $ 106,693     $ 289,303  

 

(1) Expenses are included in general and administrative expenses in the consolidated statements of operations.

 

Other Information

 

The following table presents supplemental cash flow information for the six months ended June 30, 2021 and 2020:

 

    Six Months Ended
June 30, 2021
    Six Months Ended
June 30, 2020
 
Cash paid for amounts included in the measurement of lease liabilities:                
Operating cash flows for operating leases   $ 102,152     $ 73,812  
Operating cash flows for finance leases     -       9,455  
Financing cash flows for finance leases payments   -     100,707  

 

 

Aggregate future minimum lease payments under right-of-use operating and finance leases are as follows:

 

    Right-of-Use Operating Leases     Finance Leases  
Twelve months ended June 30, 2022   $ 314,807     $ 253,776  
Twelve months ended June 30, 2023     339,024       -  
Twelve months ended June 30, 2024     216,239       -  
Twelve months ended June 30, 2025     222,712       -  
Twelve months ended June 30, 2026     74,598       -  
Thereafter     -       -  
Total     1,167,380       253,776  
                 
Less interest     (256,839 )     (3,791 )
Present value of minimum lease payments   $ 910,541     $ 249,985  
                 
Less current portion of lease obligations     (217,937 )     (249,985 )
Lease obligations, net of current portion   $ 692,604     $ -  

 

As of June 30, 2021, the Company was in default under its finance lease obligations, therefore, the aggregate future minimum lease payments and accrued interest under this finance lease totaling approximately $0.2 million is deemed to be immediately due.