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LEASES
 9 Months Ended
Sep. 30, 2022
Leases  
LEASES

NOTE 12 – LEASES

 

All of our leases are classified as operating leases. With the adoption of Topic 842, operating lease agreements are required to be recognized on the condensed consolidated balance sheet as Right of Use (“ROU”) assets and corresponding lease liabilities.

 

On January 19, 2022, we recognized additional ROU assets and lease liabilities of $226,942 from the True Digital Acquisition. We elected to not recognize ROU assets and lease liabilities arising from office leases with initial terms of 12 months or less (deemed immaterial) on the unaudited condensed consolidated balance sheets.

 

ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that we will exercise that option.

 

When measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using our estimated incremental borrowing rate at January 1, 2022. The weighted average incremental borrowing rate applied was 6.00%. As of September 30, 2022, our leases had a remaining weighted average term of 2.45 years.

 

 

Operating leases are included in the unaudited condensed consolidated balance sheets as follows:

 

   Classification  September 30, 2022   December 31, 2021 
Lease assets             
Operating lease cost ROU assets  Assets  $316,698   $277,578 
Total lease assets     $316,698   $277,578 
              
Lease liabilities             
Operating lease liabilities, current  Current liabilities  $163,233   $196,472 
Operating lease liabilities, non-current  Liabilities   167,462    88,040 
Total lease liabilities     $330,695   $284,512 

 

The components of lease costs, which are included in income from operations in our unaudited condensed consolidated statements of operations, were as follows:

 

   2022   2021 
   Nine Months Ended September 30, 
   2022   2021 
Leases costs          
Operating lease costs  $277,842   $54,376 
Total lease costs  $277,842   $54,376 

 

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the nine months ended September 30, 2022 were as follows:

 

     
Fiscal Year  Operating Leases 
2022 (remainder of)  $61,394 
2023   120,268 
2024   106,639 
2025   64,332 
Total future minimum lease payments   352,633 
Amount representing interest   (21,938)
Present value of net future minimum lease payments  $330,695