Leases

12 Months Ended

Dec. 31, 2022

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,
	2022		2021
Operating lease expense	$	16,351	$	15,043
Finance lease expense:
Amortization of right of use assets	$	682,102	$	703,530
Interest on finance lease liabilities		241,444		273,224
Total finance lease expense	$	923,546	$	976,754

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,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from leases	$	257,795	$	288,267
Financing cash flows from leases		600,438		572,083

Supplemental balance sheet information related to leases was as follows:

	DECEMBER 31,
	2022			2021
Lease right of use assets, net	$	4,723,899		$	6,273,211
Current portion of lease liabilities		596,529			794,175
Lease liabilities, net of current portion		4,745,909			6,025,691
Weighted average remaining lease term
Operating leases		11.0			10.9
Weighted average discount rate
Operating leases		3.5	%		3.5	%
Finance leases		-			3.5	%

Maturities of lease liabilities as of December 31, 2022, were as follows:

2022	$	809,072
2023		830,028
2024		737,787
2025		627,236
2026		633,663
Thereafter		2,924,061
Total undiscounted operating lease payments		6,561,847
Less: Imputed interest		1,219,409
Total lease liability	$	5,342,438

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 was 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 $876,300 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%. On January 1, 2022, the Company entered into an amendment to its lease agreement for its Tampa office to amend the term and the extension option. The amendment updated the term of the lease from sixty (60) calendar months ending December 31, 2026 to terminate the lease on June 30, 2022. As a result of the amendment, on January 1, 2022 the Company removed the lease right of use asset and lease liability for its Tampa office from its consolidated balance sheet. The Company accounted for the lease as month to month and recorded the monthly rent expense in its consolidated statement of operations.