Leases

12 Months Ended

Dec. 31, 2021

Leases

Leases

9. Leases

The Company entered into 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.

The components of lease expense were as follows:

	YEARS ENDED
	DECEMBER 31,
	2021		2020
Operating lease expense	$	15,043	$	32,367
Finance lease expense:
Amortization of right of use assets	$	703,530	$	673,378
Interest on finance lease liabilities		273,224		293,493
Total finance lease expense	$	976,754	$	966,871

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

Supplemental cash flow information related to leases was as follows:

	YEARS ENDED
	DECEMBER 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from leases	$	288,267	$	325,860
Financing cash flows from leases		572,083		608,004

Supplemental balance sheet information related to leases was as follows:

	DECEMBER 31,
	2021			2020
Lease right of use assets, net	$	6,273,211		$	6,095,376
Current portion of lease liabilities		794,175			577,855
Lease liabilities, net of current portion		6,025,691			5,931,788
Weighted average remaining lease term
Operating leases		10.9			11.4
Finance leases		-			0.3
Weighted average discount rate
Operating leases		3.5	%		5	%
Finance leases		3.5	%		5	%

Maturities of lease liabilities as of December 31, 2021, were as follows:

2022	$	1,033,506
2023		995,765
2024		1,022,289
2025		935,772
2026		823,282
Thereafter		3,557,724
Total undiscounted operating lease payments		8,368,337
Less: Imputed interest		1,548,471
Total lease liability	$	6,819,866

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%.

During the year ended December 31, 2021, the Company entered into a lease agreement, with a related party, for 4,410 square feet of office space in Tampa, Florida. The lease commenced on December 15, 2021 and is for a term of five years, with a monthly rent obligation of $15,000, subject to annual rent increases of 3% per year. The Company recorded approximately $861,300 of right of use assets and lease-related liabilities, respectively. The lease liability was discounted using the Company’s incremental borrowing rate of 3.5%. Subsequent to December 31, 2021, the Company entered into a lease amendment to terminate the lease on June 30, 2022. See Note 21 to the consolidated financial statements for additional information about subsequent events.