Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

14. Leases

Operating Leases

The Company is obligated to make rental payments under non-cancellable operating leases for office, dispatch station space, and transportation equipment, expiring at various dates through 2029. Under the terms of the leases, the Company is also obligated for its proportionate share of real estate taxes, insurance and maintenance costs of the property. The Company is required to hold certain funds in restricted cash and cash equivalents accounts under some of these agreements.

Certain leases for property and transportation equipment contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the right-of-use (ROU) asset and lease obligations for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROU asset and lease obligation. In making such judgment, the Company considers all relevant economic factors that would require whether to exercise or not exercise the option.

The Company’s lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates, which were used to discount its real estate lease liabilities. The Company used estimated borrowing rates of 6% on January 1, 2019, for all leases that commenced prior to that date, for office spaces and transportation equipment.

Lease Costs

The table below comprise lease expenses for the periods ended March 31, 2023 and 2022:

Components of total lease cost:	March 31, 2023		March 31, 2022
Operating lease expense	$	756,245	$	462,625
Short-term lease expense		336,318		255,096
Total lease cost	$	1,092,563	$	717,721

Lease Position as of March 31, 2023

Right-of-use lease assets and lease liabilities for the Company’s operating leases were recorded in the unaudited Condensed Consolidated Balance Sheets

	March 31, 2023		December 31, 2022
Assets
Lease right-of-use assets	$	9,375,132	$	9,074,277
Total lease assets	$	9,375,132	$	9,074,277
Liabilities
Current liabilities:
Lease liability - current portion	$	2,353,383	$	2,325,024
Noncurrent liabilities:
Lease liability, net of current portion		7,315,226		7,040,982
Total lease liability	$	9,668,609	$	9,366,006

Lease Terms and Discount Rate

Weighted average remaining lease term (in years) - operating leases	4.86
Weighted average discount rate - operating leases	5.99	%

Undiscounted Cash Flows

Future minimum lease payments under the operating leases as of March 31, 2023 were as follows:

	Operating Leases
2023, remaining	$	2,170,565
2024		2,601,033
2025		2,592,944
2026		1,901,778
2027 and thereafter		1,692,393
Total future minimum lease payments		10,958,713
Less effects of discounting	$	(1,290,104	)
Present value of future minimum lease payments	$	9,668,609

Operating lease expenses were approximately $756,245 and $462,625 for the three months ended March 31, 2023 and 2022, respectively.

For the quarter ended March 31, 2023, the Company made $756,245 of fixed cash payments related to operating leases and $744,030 related to finance leases.

Finance Leases

The Company leases vehicles under a non-cancelable finance lease agreements with a liability of $8,834,857 and $8,646,803 for the quarter ended March 31, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $8,717,048 and $7,906,966 as of March 31, 2023 and December 31, 2022, respectively.

Depreciation expenses for the vehicles under non-cancelable lease agreements amounted to $801,083 and $855,781 for the quarter ended March 31, 2023 and 2022, respectively.

Gain on Lease Remeasurement

In June 2022, the Company reassessed its finance lease estimates relating to vehicle mileage and residual value. As a result, the Company determined to purchase the vehicles at the end of the leases which resulted in a gain of $1.4 million recorded as gains from lease accounting in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

Lease Payments

The table below presents lease payments for the periods ended March 31, 2023 and 2022:

Components of total lease payment:	March 31, 2023		March 31, 2022
Finance lease payment	$	744,030	$	622,575
Short-term lease payment		-		-
Total lease payments	$	744,030	$	622,575

Lease Position as of March 31, 2023

Right-of-use lease assets and lease liabilities for the Company’s finance leases were recorded in the unaudited Consolidated Balance Sheet as follows:

	March 31, 2023		December 31, 2022
Assets
Lease right-of-use assets	$	9,170,429	$	9,039,663
Total lease assets	$	9,170,429	$	9,039,663
Liabilities
Current liabilities:
Lease liability - current portion	$	2,773,029	$	2,732,639
Noncurrent liabilities:
Lease liability, net of current portion		6,061,828		5,914,164
Total lease liability	$	8,834,857	$	8,646,803

Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of March 31, 2023:

Weighted average remaining lease term (in years) - finance leases	3.66
Weighted average discount rate - finance leases	5.95	%

Undiscounted Cash Flows

Future minimum lease payments under the finance leases as of March 31, 2023 were as follows:

	Finance Leases
2023, remaining		2,483,279
2024		2,678,787
2025		2,399,085
2026		1,617,995
2027 and thereafter		613,905
Total future minimum lease payments		9,793,051
Less effects of discounting		(958,194	)
Present value of future minimum lease payments	$	8,834,857