Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.2.2
Leases
6 Months Ended
Jun. 30, 2022
Leases [Abstract]  
LEASES

NOTE 8 – LEASES

 

Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as an ROU asset and a corresponding lease liability. The new guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.

 

Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

 

We recognized a $617,036 right-of-use asset and $619,717 in a related lease liability as of June 30, 2022 for our operating lease. For our operating lease, the asset is included in other long-term assets on the balance sheet and is amortized within operating income over the lease term. The long-term component of the lease liability is included in other long-term liabilities, net, and the current component is included in other current liabilities.

 

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term.

 

The company incurred rent expense, which is included as part of selling, general and administrative expenses, of $127,281 and $138,712 for the six months ended June 30, 2022 and 2021.

 

The tables below present financial information associated with our lease.

 

    Balance Sheet   June 30,     December 31,  
    Classification   2022     2021  
                 
Right-of-use assets   Other long-term assets   $ 617,036     $        0  
Current lease liabilities   Other current liabilities     87,527       0  
Non-current lease liabilities   Other long-term liabilities     532,190       0  

 

As of June 30, 2022, our maturities of our lease liability are as follows:

 

    30-Jun-22  
Maturity of lease liabilities   Operating
Leases
 
2023   $ 174,701  
2024     179,942  
2025     185,340  
2026     190,900  
2027     146,372  
Total lease payments   $ 877,255  
Less: Imputed interest     (257,538 )
Present value of lease liabilities   $ 619,717