Finance and Operating Lease Obligations

3 Months Ended

Mar. 31, 2022

Finance And Operating Lease Obligations

Finance and Operating Lease Obligations

Note 8 – 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 March 31, 2022 (unaudited) and December 31, 2021:

	Balance Sheet Classification	March 31, 2022			December 31, 2021
Assets:
Operating leases	Right-of-use operating lease assets	$	793,862		$	821,274
Finance lease	Property and equipment, net		220,461			220,461
Total lease assets		$	1,014,323		$	1,041,735
Liabilities:
Current:
Operating leases	Right-of-use operating lease obligations	$	247,017		$	247,017
Finance lease	Current liabilities		220,461			220,461
Noncurrent:
Operating leases	Right-of-use operating lease obligations		546,845			574,257
Total lease liabilities		$	1,014,323		$	1,041,735
Weighted-average remaining term:
Operating leases			3.62 years			3.57 years
Finance lease (1)			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 ended March 31, 2022 and 2021 (unaudited):

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Finance lease expense:
Depreciation/amortization of leased assets	$	-	$	-
Interest on lease liabilities		-		-
Operating leases:
Short-term lease expense (2)		49,182		72,650
Total lease expense	$	49,182	$	72,650

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

Other Information

The following table presents supplemental cash flow information for the three months ended March 31, 2022 and 2021 (unaudited):

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases obligations	$	56,208	$	34,861
Operating cash flows for finance lease	$	-	$	-
Financing cash flows for finance lease payments	$	-	$	-

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 March 31:
2023	$	341,718			224,252
2024		243,270			-
2025		221,088			-
2026		130,547			-
Thereafter		-			-
Total		936,623			224,252
Less interest		(142,761	)		(3,791	)
Present value of minimum lease payments		793,862			220,461
Less current portion of lease obligations		(247,017	)		(220,461	)
Lease obligations, net of current portion	$	546,845			-