| Finance and Operating Lease Obligations |
Note
8 – 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 September 30, 2023 (unaudited) and December 31, 2022:
Schedule of Lease-related Assets and Liabilities
| |
|
Balance
Sheet Classification |
|
September
30, 2023
|
|
|
December
31, 2022
|
|
| |
|
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
| Operating
leases |
|
Right-of-use
operating lease assets |
|
$ |
400,937 |
|
|
$ |
574,256 |
|
| Finance
lease |
|
Property
and equipment, net |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total
lease assets |
|
|
|
$ |
400,937 |
|
|
$ |
574,256 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
| Current: |
|
|
|
|
|
|
|
|
|
|
| Operating
leases |
|
Right-of-use
operating lease obligations |
|
$ |
175,923 |
|
|
$ |
215,063 |
|
| Finance
lease |
|
Finance
lease obligation |
|
|
220,461 |
|
|
|
220,461 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Long-term |
|
Right-of-use
operating lease obligations |
|
|
225,014 |
|
|
|
359,193 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total
lease liabilities |
|
|
|
$ |
621,398 |
|
|
$ |
794,717 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Weighted
average remaining term: |
|
|
|
|
|
|
|
|
|
|
| Operating
leases |
|
|
|
|
2.1
years |
|
|
|
2.6
years |
|
| Finance
lease (1) |
|
|
|
|
N/a |
|
|
|
N/a |
|
| 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 three and nine months
ended September 30, 2023 and 2022 (unaudited):
Schedule
of Lease Expense
| |
|
Three
Months
Ended
September 30,
2023 |
|
|
Three
Months
Ended
September 30,
2022 |
|
|
Nine
Months
Ended
September 30,
2023 |
|
|
Nine
Months
Ended
September 30,
2022 |
|
| Finance
lease expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation/amortization
of leased assets |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Interest
on lease liabilities |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Operating
leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
lease expense (2)
|
|
|
82,347 |
|
|
|
83,211 |
|
|
|
257,262 |
|
|
|
248,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
lease expense |
|
$ |
82,347 |
|
|
$ |
83,211 |
|
|
$ |
257,262 |
|
|
$ |
248,250 |
|
Other
Information
The
following table presents supplemental cash flow information for the nine months ended September 30, 2023 and 2022 (unaudited):
Schedule of Lease Supplemental Cash Flow Information
| |
|
Nine
Months
Ended September
30,
2023
|
|
|
Nine
Months
Ended September
30,
2022
|
|
| Cash
paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
| Operating
cash flows for operating leases |
|
$ |
220,365 |
|
|
$ |
218,846 |
|
| Operating
cash flows for finance lease |
|
$ |
- |
|
|
$ |
- |
|
| Financing
cash flows for finance lease payments |
|
$ |
- |
|
|
$ |
- |
|
| (1) |
As
of September 30, 2023 and December 31, 2022, 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. |
Aggregate
future minimum lease payments under right-of-use operating and finance leases are as follows:
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: |
|
|
|
|
|
|
|
|
| 2024 |
|
$ |
217,839 |
|
|
$ |
224,252 |
|
| 2025 |
|
|
223,795 |
|
|
|
- |
|
| 2026 |
|
|
18,650 |
|
|
|
- |
|
| 2027 |
|
|
- |
|
|
|
- |
|
| 2028 |
|
|
- |
|
|
|
- |
|
| Thereafter |
|
|
- |
|
|
|
- |
|
| Total |
|
|
460,284 |
|
|
|
224,252 |
|
| |
|
|
|
|
|
|
|
|
| Less
interest |
|
|
(59,347 |
) |
|
|
(3,791 |
) |
| Present
value of minimum lease payments |
|
|
400,937 |
|
|
|
220,461 |
|
| |
|
|
|
|
|
|
|
|
| Less
current portion of lease obligations |
|
|
(175,923 |
) |
|
|
(220,461 |
) |
| Lease
obligations, net of current portion |
|
$ |
225,014 |
|
|
$ |
- |
|
|