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Leases | 9 Months Ended
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Sep. 30, 2022
Leases [Abstract] |
LEASES | 4. LEASES Refer to Note 3 to these consolidated financial statements for further information about the Company’s revenue generating activities as a lessor. All the Company’s customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases. Lease Commitments FlexShopper had a lease for retail store space in West Palm Beach, Florida. The term of the lease was to December 30, 2021. In March 2021, FlexShopper and the lessor agreed on the early termination of the lease for this property. The monthly rent for this space was approximately $2,300 per month. In January 2019, FlexShopper entered into a 108-month lease with an option for one additional five-year term for 21,622 square feet of office space in Boca Raton, FL to accommodate FlexShopper’s business and its employees. The monthly rent for this space is approximately $31,500 with annual three percent increases throughout the initial 108-month lease term beginning on the anniversary of the commencement date. In September 2021, FlexShopper entered into a 12-month lease for an office space for approximately 18 people at the Battery at SunTrust Park at Georgia, Atlanta mainly to expand the sales team. This lease was renewed for another twelve month period with a monthly rent of approximately $8,800. This lease is accounted for under the practical expedient for leases with initial terms for 12 months or less, and as such no related right of use asset or liability was recorded. The rental expense for the nine months ended September 30, 2022 and 2021 was approximately $531,000 and $492,000 respectively. At September 30, 2022, the future minimum annual lease payments are approximately as follows:
2022 |  | $ | 133,000 |
2023 |  |  | 506,000 |
2024 |  |  | 435,000 |
2025 |  |  | 443,000 |
2026 |  |  | 456,000 |
Thereafter |  |  | 774,000 |
|  | $ | 2,747,000 |
The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are included in the Company’s consolidated balance sheets beginning January 1, 2019. Supplemental balance sheet information related to leases is as follows:
|  | Balance Sheet Classification |  | September 30, 2022 |  |  | December 31, 2021 |
Assets |  |  |  |  |  |  |  |
Operating Lease Asset |  | Right of use asset, net |  | $ | 1,432,446 |  |  | $ | 1,534,512 |
Finance Lease Asset |  | Right of use asset, net |  |  | 12,713 |  |  |  | 18,818 |
Total Lease Assets |  |  |  | $ | 1,445,159 |  |  | $ | 1,553,330 |
Liabilities |  |  |  |  |  |  |  |  |  |
Operating Lease Liability – current portion |  | Current Lease Liabilities |  | $ | 190,140 |  |  | $ | 163,939 |
Finance Lease Liability – current portion |  | Current Lease Liabilities |  |  | 8,713 |  |  |  | 8,793 |
Operating Lease Liability – net of current portion |  | Long Term Lease Liabilities |  |  | 1,616,423 |  |  |  | 1,761,558 |
Finance Lease Liability – net of current portion |  | Long Term Lease Liabilities |  |  | 6,788 |  |  |  | 13,065 |
Total Lease Liabilities |  |  |  | $ | 1,822,064 |  |  | $ | 1,947,355 |
Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company uses its incremental borrowing rate as the discount rate for its leases, as the implicit rate in the lease is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company generally uses the base, non-cancelable, lease term when determining the lease assets and liabilities. Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement. Below is a summary of the weighted-average discount rate and weighted-average remaining lease term for the Company’s leases:
|  | Weighted Average Discount Rate |  |  | Weighted Average Remaining Lease Term (in years)
Operating Leases |  |  | 13.03 | % |  | 6
Finance Leases |  |  | 13.36 | % |  | 2
Operating lease expense is recognized on a straight-line basis over the lease term within operating expenses in the Company’s condensed consolidated statements of operations. Finance lease expense is recognized over the lease term within interest expense and amortization in the Company’s condensed consolidated statements of operations. The Company’s total operating and finance lease expense all relate to lease costs and amounted to $292,056 and $303,871 for the nine months ended September 30, 2022 and September 30, 2021, respectively. Supplemental cash flow information related to operating leases is as follows:
|  | Nine Months ended |
|  | September 30, |
|  | 2022 |  |  | 2021 |
Cash payments for operating leases |  | $ | 302,075 |  |  | $ | 300,415 |
Cash payments for finance leases |  |  | 8,388 |  |  |  | 8,388 |
Below is a summary of undiscounted operating lease liabilities as of September 30, 2022. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the operating lease liabilities included in the consolidated balance sheet.
|  | Operating Leases |
2022 |  | $ | 103,371 |
2023 |  |  | 417,606 |
2024 |  |  | 430,134 |
2025 |  |  | 443,038 |
2026 |  |  | 456,330 |
2027 and thereafter |  |  | 773,593 |
Total undiscounted cash flows |  |  | 2,624,072 |
Less: interest |  |  | (817,509 | )
Present value of lease liabilities |  | $ | 1,806,563 |
Below is a summary of undiscounted finance lease liabilities as of September 30, 2022. The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance lease liabilities included in the consolidated balance sheet.
|  | Finance Leases |
2022 |  | $ | 2,931 |
2023 |  |  | 9,699 |
2024 |  |  | 4,781 |
Total undiscounted cash flows |  |  | 17,411 |
Less: interest |  |  | (1,910 | )
Present value of lease liabilities |  | $ | 15,501 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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