Finance and Operating Lease Obligations |
Note
8 – 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 September 30, 2022 (unaudited) and December 31, 2021:
Schedule of Lease-related Assets and Liabilities
|
|
Balance Sheet Classification |
|
September 30, 2022
|
|
|
December 31, 2021
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
Right-of-use operating lease assets |
|
$ |
640,386 |
|
|
$ |
821,274 |
|
Finance lease |
|
Property and equipment, net |
|
|
220,461 |
|
|
|
220,461 |
|
|
|
|
|
|
|
|
|
|
|
|
Total lease assets |
|
|
|
$ |
860,847 |
|
|
$ |
1,041,735 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
Right-of-use operating lease obligations |
|
$ |
239,449 |
|
|
$ |
247,017 |
|
Finance lease |
|
Current liabilities |
|
|
220,461 |
|
|
|
220,461 |
|
Noncurrent: |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
Right-of-use operating lease obligations |
|
|
400,937 |
|
|
|
574,257 |
|
|
|
|
|
|
|
|
|
|
|
|
Total lease liabilities |
|
|
|
$ |
860,847 |
|
|
$ |
1,041,735 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average remaining term: |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
2.68 years |
|
|
|
3.57
years |
|
Finance lease (1) |
|
|
|
|
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 and nine months
ended September 30, 2022 and 2021 (unaudited):
Schedule of Lease Expense
|
|
Three
Months Ended
September 30, 2022 |
|
|
Three
Months Ended
September 30, 2021 |
|
|
Nine
Months Ended
September 30, 2022 |
|
|
Nine
Months Ended
September 30, 2021 |
|
Finance lease
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation/amortization
of lease assets |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Interest on lease liabilities |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Operating leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
lease expense (2) |
|
|
83,211 |
|
|
|
44,342 |
|
|
|
248,250 |
|
|
|
151,025 |
|
Total
lease expense |
|
$ |
83,211 |
|
|
$ |
44,342 |
|
|
$ |
248,250 |
|
|
$ |
151,025 |
|
|
(1) |
As
of September 30, 2022 and December 31, 2021, the Company was in default under its finance lease obligation, therefore, the aggregate
future minimum lease payments and accrued interest under this finance lease in the amount of $0.2 million are deemed to be immediately
due. |
|
|
|
|
(2) |
Expenses
are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. |
Other
Information
The
following table presents supplemental cash flow information for the nine months ended September 30, 2022 and 2021 (unaudited):
Schedule
of Lease Supplemental Cash Flow Information
|
|
Nine Months Ended
September 30, 2022 |
|
|
Nine Months Ended
September 30, 2021 |
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
Operating cash flows for operating leases obligations |
|
$ |
218,846 |
|
|
$ |
168,923 |
|
Operating cash flows for finance lease |
|
$ |
- |
|
|
$ |
- |
|
Financing cash flows for finance lease payments |
|
$ |
- |
|
|
$ |
29,524 |
|
Aggregate
future minimum lease payments under right-of-use operating and finance leases are as follows (unaudited):
Schedule of Future Minimum Rentals Under Right-of-use Operating and Finance Leases
|
|
Right-of-Use Operating Leases |
|
|
Finance Lease |
|
Twelve months ending September 30: |
|
|
|
|
|
|
|
|
2023 |
|
$ |
307,082 |
|
|
$ |
224,252 |
|
2024 |
|
|
217,839 |
|
|
|
- |
|
2025 |
|
|
223,795 |
|
|
|
- |
|
2026 |
|
|
18,650 |
|
|
|
- |
|
2027 |
|
|
- |
|
|
|
- |
|
Thereafter |
|
|
- |
|
|
|
- |
|
Total |
|
|
767,366 |
|
|
|
224,252 |
|
|
|
|
|
|
|
|
|
|
Less interest |
|
|
(126,980 |
) |
|
|
(3,791 |
) |
Present value of minimum lease payments |
|
|
640,386 |
|
|
|
220,461 |
|
|
|
|
|
|
|
|
|
|
Less current portion of lease obligations |
|
|
(239,449 |
) |
|
|
(220,461 |
) |
Lease obligations, net of current portion |
|
$ |
400,937 |
|
|
$ |
- |
|
|