| 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 June 30, 2023 (unaudited) and December 31, 2022:
Schedule of Lease-related Assets and Liabilities
| |
|
Balance Sheet Classification |
|
June 30, 2023
|
|
|
December 31, 2022
|
|
| |
|
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
| Operating leases |
|
Right-of-use operating lease assets |
|
$ |
440,310 |
|
|
$ |
574,256 |
|
| Finance lease |
|
Property and equipment, net |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total lease assets |
|
|
|
$ |
440,310 |
|
|
$ |
574,256 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
| Current: |
|
|
|
|
|
|
|
|
|
|
| Operating leases |
|
Right-of-use operating lease obligations |
|
$ |
168,761 |
|
|
$ |
215,063 |
|
| Finance lease |
|
Finance lease obligation |
|
|
220,461 |
|
|
|
220,461 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Long-term |
|
Right-of-use operating lease obligations |
|
|
271,549 |
|
|
|
359,193 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total lease liabilities |
|
|
|
$ |
660,771 |
|
|
$ |
794,717 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Weighted-average remaining term: |
|
|
|
|
|
|
|
|
|
|
| Operating leases |
|
|
|
|
2.33 years |
|
|
|
2.59 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 six months ended
June 30, 2023 and 2022 (unaudited):
Schedule
of Lease Expense
| |
|
Three Months Ended June 30, 2023 |
|
|
Three Months Ended June 30, 2022 |
|
|
Six Months Ended June 30, 2023 |
|
|
Six Months Ended June 30, 2022 |
|
| Finance lease expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation/amortization of leased assets |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Interest on lease liabilities |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Operating leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term lease expense (2) |
|
|
82,347 |
|
|
|
97,681 |
|
|
|
174,915 |
|
|
|
165,039 |
|
| Short-term lease expense (2)
|
|
|
82,347 |
|
|
|
97,681 |
|
|
|
174,915 |
|
|
|
165,039 |
|
| Total lease expense |
|
$ |
82,347 |
|
|
$ |
97,681 |
|
|
$ |
174,915 |
|
|
$ |
165,039 |
|
Other
Information
The
following table presents supplemental cash flow information for the six months ended June 30, 2023 and 2022 (unaudited):
Schedule of Lease Supplemental Cash Flow Information
| |
|
Six Months
Ended June 30, 2023
|
|
|
Six Months
Ended June 30, 2022
|
|
| Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
| Operating cash flows for operating leases |
|
$ |
175,460 |
|
|
$ |
162,539 |
|
| Operating cash flows for finance lease |
|
$ |
- |
|
|
$ |
- |
|
| Financing cash flows for finance lease payments |
|
$ |
- |
|
|
$ |
- |
|
| (1) |
As
of June 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 June 30: |
|
|
|
|
|
|
|
|
| 2024 |
|
$ |
216,239 |
|
|
$ |
224,252 |
|
| 2025 |
|
|
222,712 |
|
|
|
- |
|
| 2026 |
|
|
74,598 |
|
|
|
- |
|
| 2027 |
|
|
- |
|
|
|
- |
|
| 2028 |
|
|
- |
|
|
|
- |
|
| Thereafter |
|
|
- |
|
|
|
- |
|
| Total |
|
|
513,549 |
|
|
|
224,252 |
|
| |
|
|
|
|
|
|
|
|
| Less interest |
|
|
(73,239 |
) |
|
|
(3,791 |
) |
| Present value of minimum lease payments |
|
|
440,310 |
|
|
|
220,461 |
|
| |
|
|
|
|
|
|
|
|
| Less current portion of lease obligations |
|
|
(168,761 |
) |
|
|
(220,461 |
) |
| Lease obligations, net of current portion |
|
$ |
271,549 |
|
|
$ |
- |
|
|