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:
Schedule of Lease-related Assets and Liabilities
|
|
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:
Schedule of Information Related to Lease Expense for Finance and Operating Leases
|
|
|
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:
Schedule of Supplemental Cash Flow Information
|
|
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:
Schedule of Future Minimum Rentals Under Right-to-use Operating and Finance Leases
|
|
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.
|