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LEASES

3 Months Ended

Mar. 31, 2023

NOTE 13 – LEASES

The Company has various operating and finance lease agreements with terms up to 10 years, for various types of property and equipment (such as office space and vehicles) etc. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

The assets and liabilities from operating and finance leases are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate, which is determined using the average interest rate of our long-term debt on the date of inception.

Operating Leases

The Company’s weighted-average remaining lease term relating to its operating leases is 5.23 years, with a weighted-average discount rate of 6.74%.

The Company incurred lease expense, due to amortization of operating lease right-of-use assets, of $55,354 and $54,124 which was included in “General and administrative expenses,” for the three months ended March 31, 2023 and 2022, respectively.

The following table presents information about the amount and timing of cash flows arising from the Company’s operating leases as of March 31, 2023:

Maturity of Operating Lease Liability:
2023	$	197,540
2024		264,035
2025		190,379
2026		153,712
Thereafter		581,964
Total undiscounted operating lease payments	$	1,387,630
Less: Imputed interest		(272,107	)
Present value of operating lease liabilities		1,115,523

Finance leases

The Company’s weighted-average remaining lease term relating to its finance leases is 3.34 years, with a weighted-average discount rate of 6.74%, based on the interest rate implicit in the lease.

The following table presents information about the amount and timing of cash flows arising from the Company’s finance leases as of March 31, 2023:

Maturity of Finance Lease Liability
2023	$	112,406
2024		133,861
2025		103,586
2026		77,014
Thereafter		23,474
Total undiscounted finance lease payments	$	450,341
Less: Imputed interest		(47,400	)
Present value of finance lease liabilities	$	402,941

The Company incurred interest expense on its finance leases of $6,219 and $3,507 which was included in “Interest expense”, on the accompanying condensed statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, respectively. The Company incurred amortization expense on its finance leases of $30,710 and $19,580, which was included in “Depreciation and amortization expense”, on the accompanying condensed statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, respectively. The total cash used for the Company’s finance leases for the three months ended March 31, 2023 and March 31, 2022 amounted to $35,596 and $22,622 respectively and is solely related to lease payments.