Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

The Company entered into operating leases for corporate and operational facilities (“real estate leases”), computer hardware for datacenters and automobiles (“all other leases”).

Real estate leases. Substantially all real estate operating leases have remaining terms of seven (7) to ten (10) years, with additional five (5) year extensions available. All of these leases require a fixed lease payment that contains an annual lease payment escalation provision ranging from 3% to 4% per year. Certain finance leases contain early termination provisions that would require payment of unamortized tenant improvements, real estate broker commissions paid, and up to six (6) months of rent to compensate the landlord for early termination. The cost to exist a lease would be significant and potentially range $0.2 million to $0.8 million. The earliest any lease termination provisions could be exercised would be in 2023.

All other leases. Non-real estate operating leases have remaining terms of two (2) to three (3) years. All of these leases require a fixed lease payment over the entire lease term with no escalation provision. There are no early termination provisions under such arrangements.

The components of lease expense were as follows:

	THREE MONTHS ENDED
	MARCH 31,
	2019
	(Unaudited)
Operating lease expense	$	59,000
Finance lease expense:
Amortization of right of use assets	$	139,035
Interest on finance lease liabilities		69,735
Total finance lease expense	$	208,770

Operating lease expense is included in general and administrative expenses in the condensed consolidated statement of operations. Amortization of right of use assets is included in depreciation and amortization in the condensed consolidated statement of operations.

Supplemental cash flow information related to leases was as follows:

	THREE MONTHS ENDED
	MARCH 31,
	2019
	(Unaudited)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	47,573
Operating cash flows from finance leases		69,735
Financing cash flows from finance leases		122,300

Supplemental balance sheet information related to leases was as follows:

	MARCH 31,
	2019
	(Unaudited)
Operating lease right of use assets, net	$	5,969,894
Current portion of finance leases		481,562
Finance leases, net of current portion		5,594,671
Weighted average remaining lease term
Operating leases		12.3
Finance leases		1.8
Weighted average discount rate
Operating leases		5	%
Finance leases		5	%

Maturities of lease liabilities as of March 31, 2019, were as follows:

	Operating Leases		Finance Leases
2019	$	681,960	$	97,417
2020		650,944		121,934
2021		694,063		-
2022		680,233		-
2023		665,728		-
Thereafter		4,605,847		-
Total undiscounted operating lease payments		7,978,775		171,710
Less: Imputed interest		2,106,613		15,280
Total finance lease liability	$	5,872,162	$	204,071

During the three month period ended March 31, 2019, there were no new material operating leases or modifications to existing operating leases.