NOTE 13 – LEASES

The Company has a lease that is accounted for under ASC 842. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred.

The Company entered into a lease agreement for office space located in Sarasota, Florida. The term of the lease is for a period of three years commencing on February 1, 2021 and ending on February 1, 2024. The rent is $6,530 per month for year 1, $6,726 per month for year 2 and $6,928 per month for year 3. The Company will account for the lease under ASC 842 whereby the operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date.

The Company’s operating lease does not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate used at the date closest to lease inception.

The Company’s weighted-average remaining lease term relating to its operating lease is 1.2 years, with a weighted-average discount rate of 10.00%.

The Company incurred lease expense for its operating lease of $85,986 and $78,821 which was included in “General and administrative expenses,” for the year ended December 31, 2022 and 2021, respectively.

The following table presents information about the amount and timing of liabilities arising from the Company’s operating lease as of December 31, 2022: 

At December 31, 2022, the operating lease right of use assets was $88,537. Supplemental balance sheet information related to the lease as of December 31, 2022 was: