AGNT, Inc. Leases Disclosure
14. LEASES
The Company adopted ASU 2016-02 – Leases (Topic 842) effective January 1, 2019 using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2019 as a result of adoption. ASU 2018-11 – Leases (Topic 842) – Targeted Improvements permits an entity to apply the new leases standard at the date of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with ASC 840 – Leases.
Operating Leases
The Company’s lease portfolio consists of office leases with lease terms ranging from less than one year to seven years, with the weighted average lease term being three years.
Certain leases provide for increases in future lease payments once the term of the lease has expired, as defined in the lease agreements. These leases generally also include real estate taxes.
Information as Lessee under ASC 842
The Company reassessed all of our leases to determine whether any expired or existing contracts were or contained a lease under ASC 842. Expired or existing contracts previously considered leases under ASC 840 no longer meet the definition of a lease under ASC 842 and therefore, have been excluded from future lease payments.
The Company still maintains these agreements, along with other short-term leases that are not capitalized, and the expenses are recognized in the period incurred.
As of December 31, 2019, maturities of the operating lease liabilities by fiscal year were as follows:
|
|
|
|
|
|
Year ending December 31, |
|
|
|
|
2020 |
|
$ |
474,579 |
|
2021 |
|
|
377,930 |
|
2022 |
|
|
318,326 |
|
2023 |
|
|
182,269 |
|
2024 |
|
|
5,388 |
|
Thereafter |
|
|
6,286 |
|
Total lease payments |
|
$ |
1,364,778 |
|
Less: interest |
|
|
(100,309) |
|
Total operating lease liabilities |
|
$ |
1,264,469 |
Included below is other information regarding leases for the year ended December 31, 2019.
|
|
|
Year Ended |
|
|
|
|
|
December 31, 2019 |
|
|
|
Other information |
|
|
|
|
|
Operating lease expense |
|
$ |
249,208 |
|
|
Short-term lease expense |
|
$ |
26,852 |
|
|
Cash paid for operating leases |
|
$ |
249,462 |
|
|
Weighted-average remaining lease term (years)– operating leases (1) |
|
|
3 |
|
|
Weighted-average discount rate – operating leases |
|
|
4.85% |
|
|
|
|
|
|
|
|
(1) |
The Company’s lease terms include options to extend the lease when it is reasonably certain the Company will exercise its option. Additionally, the Company considered any historical and economic factors in determining if a lease renewal or termination option would be exercised. |
Rent expense is recorded in General and Administrative expense in the consolidated statements of operations.
Information as Lessee under ASC 840 -2018
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, future minimum lease payments under ASC 840 for operating leases were as follows:
|
Year ending December 31, |
|
|
|
|
2019 |
|
$ |
451,710 |
|
2020 |
|
|
420,518 |
|
2021 |
|
|
237,142 |
|
2022 |
|
|
42,532 |
|
2023 and thereafter |
|
|
4,134 |
|
Total |
|
$ |
1,156,036 |
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About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.