Leases

6 Months Ended

Jun. 30, 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 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 exit 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		SIX MONTHS ENDED
	JUNE 30,		JUNE 30,
	2019		2019
	(Unaudited)
Operating lease expense	$	60,641	$	119,641
Finance lease expense:
Amortization of right of use assets	$	138,234	$	277,269
Interest on finance lease liabilities		69,603		139,338
Total finance lease expense	$	207,837	$	416,607

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

Supplemental cash flow information related to leases was as follows:

	SIX MONTHS ENDED
	JUNE 30,
	2019
	(Unaudited)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	119,641
Operating cash flows from finance leases		139,338
Financing cash flows from finance leases		238,675

Supplemental balance sheet information related to leases was as follows:

	JUNE 30,
	2019
	(Unaudited)
Operating lease right of use assets, net	$	5,827,822
Current portion of operating lease liabilities		420,932
Operating lease liabilities, net of current portion		5,534,028
Weighted average remaining lease term
Operating leases		12.1
Finance leases		1.6
Weighted average discount rate
Operating leases		5	%
Finance leases		5	%

Maturities of lease liabilities as of June 30, 2019, were as follows:

	Operating Leases		Finance Leases
2019	$	660,669	$	121,332
2020		678,849		66,456
2021		697,578		-
2022		715,729		-
2023		735,573		-
Thereafter		4,325,486		-
Total undiscounted operating lease payments		7,813,884		187,788
Less: Imputed interest		2,035,299		11,413
Total finance lease liability	$	5,778,585	$	176,375

During the six month period ended June 30, 2019, there were no new material operating leases or modifications to existing operating leases.