Finance and Operating Lease Obligations

6 Months Ended

Jun. 30, 2021

Finance And Operating Lease Obligations

Finance and Operating Lease Obligations

Note 9 – 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 June 30, 2021 and December 31, 2020:

	Balance Sheet Classification	June 30, 2021			December 31, 2020
Assets:
Operating leases	Right-of-use operating lease assets	$	910,541		$	1,000,272
Finance leases	Property and equipment, net		249,985			249,985
Total lease assets		$	1,160,526		$	1,250,257
Liabilities:
Current:
Operating leases	Right-of-use operating lease obligations	$	217,937		$	172,952
Finance leases	Current liabilities		249,985			249,985
Noncurrent:
Operating leases	Right-of-use operating lease obligations		692,604			827,320
Total lease liabilities		$	1,160,526		$	1,250,257
Weighted-average remaining term:
Operating leases			3.92 years			4.17 years
Finance leases			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 months and six months ended June 30, 2021 and 2020:

		Three Months Ended June 30, 2021		Three Months Ended June 30, 2020		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
Finance lease expense:
Depreciation/amortization of leased assets	$	-	$	10,539	$	-	$	26,349
Interest on lease liabilities		-		46,503		-		93,012
Operating leases:
Short-term lease expense (1)		34,033		69,235		106,583		169,942
Total lease expense	$	34,033	$	126,277	$	106,693	$	289,303

(1) Expenses are included in general and administrative expenses in the consolidated statements of operations.

Other Information

The following table presents supplemental cash flow information for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	102,152	$	73,812
Operating cash flows for finance leases		-		9,455
Financing cash flows for finance leases payments		-		100,707

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

	Right-of-Use Operating Leases			Finance Leases
Twelve months ended June 30, 2022	$	314,807		$	253,776
Twelve months ended June 30, 2023		339,024			-
Twelve months ended June 30, 2024		216,239			-
Twelve months ended June 30, 2025		222,712			-
Twelve months ended June 30, 2026		74,598			-
Thereafter		-			-
Total		1,167,380			253,776
Less interest		(256,839	)		(3,791	)
Present value of minimum lease payments	$	910,541		$	249,985
Less current portion of lease obligations		(217,937	)		(249,985	)
Lease obligations, net of current portion	$	692,604		$	-

As of June 30, 2021, the Company was in default under its finance lease obligations, therefore, the aggregate future minimum lease payments and accrued interest under this finance lease totaling approximately $0.2 million is deemed to be immediately due.