Quarterly report pursuant to Section 13 or 15(d)

Leases

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Leases
3 Months Ended
Mar. 31, 2018
Leases [Abstract]  
Leases
Leases

We lease certain office space and equipment. As leases expire, it can be expected that they will be renewed or replaced in the normal course of business. Rent expense from continuing operations was $104,446 for the three months ended March 31, 2018 and $107,299 for the three months ended March 31, 2017.

Minimum future lease payments under non-cancelable operating leases as of March 31, 2018 are:
 
 
2018
$
352,985

2019
477,319

2020
405,606

2021
242,558

2022
163,283

Total
$
1,641,751



In April 2015, we entered into a five-year agreement to lease office space in Little Rock, Arkansas commencing October 1, 2015, to serve as our headquarters. The lease is for 12,245 square feet and will cost approximately $171,000 during its first year. Thereafter, the lease payment increases by 2%.

In June 2017, we entered into an agreement with Dell Financial Services to lease computer equipment for our data centers. The lease has a term of three years and will cost approximately $173,000 over the life of the lease.

In June 2017, we entered into an agreement to lease 4,801 square feet of office space in San Jose, CA commencing on July 17, 2017. The lease has a term of five years and will cost approximately $216,000 during its first year.  Thereafter, the lease payments increase by 3%.

As part of the 2017 asset acquisition, Inuvo assumed the office space lease and a lease obligation in Sunnyvale, CA. The lease was for 15,717 square feet and cost approximately $95,000 for the remaining term of the lease which expired in July 2017. In June 2017, we entered into an agreement to lease 4,801 square feet of office space in San Jose, CA commencing on July 17, 2017. The lease has a term of five years and will cost approximately $216,000 during its first year.  After the first year, the lease payment will increase by 3% per annum.

Capital lease obligations and future minimum lease payments under non-cancelable capital leases as of March 31, 2018 are:

 
Lease Payments
2018
$
180,202

2019
$
213,685

2020
$
82,404

Total payments under capital lease obligations
$
476,291

Less amount representing interest
(38,720
)
Present value of capital lease obligations
437,571

Current portion of capital lease obligations
(212,040
)
Capital lease obligations, net of current portion
$
225,531



Assets acquired under capital lease obligations are included in property and equipment in the accompanying consolidated balance sheets. Cost and related accumulated depreciation are as follows:
 
March 31, 2018
December 31, 2017
Equipment
$
707,264

$
707,264

Less accumulated depreciation
(296,873
)
(242,169
)
Equipment, net
$
410,391

$
465,095



Depreciation expense on assets under capital lease obligations was $54,703 and $18,241 for the three months ended March 31, 2018 and March 31, 2017, respectively and included in the consolidated statements of operations.

In February 2017, we acquired assets and certain liabilities including the capital lease for computer equipment with a remaining value at that time of $88,575.

In June 2017, we entered into an agreement with Dell Financial Services to lease computer equipment for our data centers. The lease has a term of three years and will cost approximately $516,000 over the life of the lease.