The Company leases certain office space, construction and office equipment, vehicles and temporary housing generally under non-cancelable operating leases. Leases with an initial term of one year or less are not recorded on the balance sheet, and the Company generally recognizes lease expense for these leases on a straight-line basis over the lease term. As of March 31, 2022, the Company’s operating leases have remaining lease terms ranging from less than one year to three years, some of which include options to renew the leases. The exercise of lease renewal options is generally at the Company’s sole discretion. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is a lease at inception. Operating lease ROU assets and current and long-term operating lease liabilities are separately stated on the Consolidated Balance Sheet as of March 31, 2022. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The present value of future lease payments are discounted using either the implicit rate in the lease, if known, or the Company’s incremental borrowing rate for the specific lease as of the lease commencement date. The ROU asset is also adjusted for any prepayments made or incentives received. The lease terms include options to extend or terminate the lease only to the extent it is reasonably certain any of those options will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company accounts for lease components (e.g., fixed payments) separate from the non-lease components (e.g., common-area maintenance costs). The Company does not have any material financing leases

The Company’s office lease began July 15, 2019 and was due to expire on July 31, 2022. During the three months ended March 31, 2022 the Company exercised its option to extend its office lease to July 31, 2025. Due to the lease extension, the Company remeasured the lease liability and ROU asset associated with the lease. The Company accounted for the lease extension as a lease modification under ASC 842. At the effective date of modification, the Company recorded an adjustment to the right-of-use asset and lease liability in the amount of $300,787 based on the net present value of lease payments discounted using an estimated borrowing rate of 7.5%.

A related party has a sub-lease for approximately $4,900 per month plus operating expenses.

The Company shares this space and the related costs associated with this operating lease with a related party (see Note 2) that also performs legal services associated with the collection of delinquent assessments. Net rent expense recognized for the Three Months ended March 31, 2022 and 2021 were approximately $23,400 and $24,900, respectively.

The following table presents supplemental balance sheet information related to operating leases as of March 31, 2022 and December 31, 2021:

	Balance Sheet Line Item	March 31, 2022			December 31, 2021
Assets
ROU assets	Right of use asset, net	$	337,413		$	59,969
Total lease assets		$	337,413		$	59,969

Liabilities
Current lease liabilities	Lease liability	$	90,072		$	68,002
Long-term lease liabilities	Lease liability		248,475			-
Total lease liabilities		$	338,547		$	68,002

Weighted-average remaining lease term (in years)			3.36			0.60
Weighted-average discount rate			7.49	%		6.55	%

The following table presents supplemental cash flow information and non-cash activity related to operating leases for the Three Months ended March 31, 2022 and 2021:

	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
Operating cash flow information
'Cash paid for amounts included in the measurement of lease liabilities	$	(30,242	)	$	(24,971	)
Non-cashflow information
ROU assets and operating lease obligation recognized	$	300,787		$	-

The following table presents maturities of operating lease liabilities on an undiscounted basis as of March 31, 2022:


	Operating Leases
2022 (excluding the three months ended March 31, 2022)	$	68,328
2023		90,823
2024		103,805
2025		75,591

	$	338,547

Except as described below, we are not currently a party to material pending or known threatened litigation proceedings. However, we frequently become party to litigation in the ordinary course of business, including either the prosecution or defense of claims arising from contracts by and between us and client Associations. Regardless of the outcome, litigation can have an adverse impact on us because of prosecution, defense, and settlement costs, diversion of management resources and other factors.

The Company accrues for contingent obligations, including estimated legal costs, when the obligation is probable and the amount is reasonably estimable. As facts concerning contingencies become known, the Company reassesses its position and makes appropriate adjustments to the consolidated financial statements. Estimates that are particularly sensitive to future changes include those related to tax, legal, and other regulatory matters.

On March 9, 2022, legal counsel to a purported stockholder of the Company threatened to file a direct and derivative complaint alleging breaches of fiduciary duty by the Company’s officers and directors, primarily with respect to (i) the Amended and Restated Employment Agreements entered into by the Company with each of Mr. Rodgers and Mr. Russell in October 2021; (ii) the approval of actions taken at our 2021 annual meeting of stockholders in December 2021; (iii) payments made to Business Law Group, P.A. in exchange for services provided pursuant to the Services Agreement between the Company and Business Law Group; and (iv) strategic advisory agreements entered into by us in connection with our planned cryptocurrency mining business. As of the date of filing of this quarterly report on Form 10-Q, the Company and the purported stockholder have agreed in principle to a settlement of the stockholder’s alleged claims under which the Company would be required to seek a new independent director to replace Joel Rodgers, would be required to engage a compensation consultant to review certain sections of the Company’s executive employment agreements and to make changes in response to the consultant’s recommendation, and to pay certain attorney fees in an amount to be agreed upon. There is no assurance that the agreement in principle will result in a final settlement.