Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

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

Real estate leases. Substantially all real estate leases have remaining terms of six (6) to nine (9) 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 one (1) to two (2) 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:

	YEARS ENDED
	DECEMBER 31,
	2020		2019
Operating lease expense	$	32,367	$	212,221
Finance lease expense:
Amortization of right of use assets	$	673,378	$	568,688
Interest on finance lease liabilities		293,493		285,978
Total finance lease expense	$	966,871	$	854,666

Supplemental cash flow information related to leases was as follows:

	YEARS ENDED
	DECEMBER 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	32,367	$	212,221
Operating cash flows from finance leases		293,493		285,978
Financing cash flows from finance leases		608,004		473,278

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

Supplemental balance sheet information related to leases was as follows:

	DECEMBER 31,
	2020			2019
Operating lease right of use assets, net	$	6,095,376		$	5,932,769
Current portion of operating lease liabilities		577,855			599,619
Operating lease liabilities, net of current portion		5,931,788			5,593,649
Weighted average remaining lease term
Operating leases		11.4			11.1
Finance leases		0.3			1.1
Weighted average discount rate
Operating leases		5	%		5	%
Finance leases		5	%		5	%

Maturities of lease liabilities as of December 31, 2020, were as follows:

	Operating Leases		Finance Leases
2021	$	832,365	$	6,215
2022		854,679		-
2023		811,538		-
2024		832,494		-
2025		740,253		-
Thereafter		4,179,979		-
Total undiscounted operating lease payments		8,251,308		6,215
Less: Imputed interest		1,747,828		52
Total operating lease liability	$	6,503,480	$	6,163

During the year ended December 31, 2020, the Company entered into a lease amendment, effective July 24, 2020, for additional office space and a one year extension of the original lease term. The Company accounted for the lease amendment under the lease modification guidance in ASC 842. As a result, the Company re-measured its lease liability and recognized an additional lease liability and corresponding right-of-use asset of $943,290. The lease liability was discounted using the Company’s incremental borrowing rate of 3.5%.