Annual report pursuant to Section 13 and 15(d)

Finance and Operating Lease Obligations

v3.23.1
Finance and Operating Lease Obligations
12 Months Ended
Dec. 31, 2022
Finance And Operating Lease Obligations  
Finance and Operating Lease Obligations

Note 10 – Finance and Operating Lease Obligations

 

We lease property and equipment under finance and operating leases. For operating 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 December 31, 2022 and 2021:

  

    Balance Sheet Classification  

December 31,

2022

   

December 31,

2021

 
                 
Assets:                    
Operating leases   Right-of-use operating lease assets   $ 574,256     $ 821,274  
Finance lease   Property and equipment, net     -       220,461  
                     
Total lease assets       $ 574,256     $ 1,041,735  
                     
Liabilities:                    
Current:                    
Operating leases   Right-of-use operating lease obligations   $ 215,063     $ 247,017  
Finance lease   Current liabilities     220,461       220,461  
Noncurrent:                    
Operating leases   Right-of-use operating lease obligations     359,193       574,257  
                     
Total lease liabilities       $ 794,717     $ 1,041,735  
                     
Weighted-average remaining term:                    
Operating leases         2.59 years       3.57 years  
Finance lease (1)         0 years       0 years  
Weighted-average discount rate:                    
Operating leases         13.0 %     13.0 %
Finance lease         4.9 %     4.9 %

 

 

The following table presents certain information related to lease expense for finance and operating leases for the years ended December 31, 2022 and 2021:

   

    Year Ended
December 31,
2022
    Year Ended
December 31,
2021
 
 
Finance lease expense:                
Depreciation/amortization of leased assets   $ -     $ -  
Interest on lease liabilities     -       -  
Operating leases:                
Short-term lease expense (2)     323,506         198,187  
Total lease expense   $ 323,506       $ 198,187  

 

Other Information

 

The following table presents supplemental cash flow information for the years ended December 31, 2022 and 2021:

  

   

Year Ended

December 31,

2022

   

Year Ended

December 31,

2021

 
Cash paid for amounts included in the measurement of lease liabilities:                
Operating cash flows for operating leases   $ 323,961     $ 277,278  
Operating cash flows for finance lease   $ -     $ -  
Financing cash flows for finance lease payments   $ -     $ 29,524  

 

(1) As of December 31, 2022 and 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 consolidated statements of operations.

 

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

  

    Right-of-Use Operating Leases     Finance Lease  
Twelve months ending December 31:                
2023   $ 275,176     $ 224,252  
2024     219,463       -  
2025     186,496       -  
2026     -       -  
2027     -       -  
Thereafter     -       -  
Total     681,135       224,252  
                 
Less interest     (106,879 )     (3,791 )
Present value of minimum lease payments     574,256       220,461  
                 
Less current portion of lease obligations     (215,063 )     (220,461 )
Lease obligations, net of current portion   $ 359,193     $ -