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LEASES

9 Months Ended

Sep. 30, 2021

NOTE 8 – LEASES

The Company elected the practical expedient under Accounting Standards Update (ASU) 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019, but without retrospective application. In addition, the Company elected the optional practical expedient permitted under the transition guidance which allows the Company to carry forward the historical accounting treatment for existing leases upon adoption. No impact was recorded to the beginning retained earnings for Topic 842. The Company has two operating leases for corporate offices. The following table outlines the details:

SCHEDULE OF OPERATING LEASES

	Lease 1			Lease 2
Initial Lease Term		December 2017 to December 2021			November 2018 to November 2023
Renewal Term		January 2021 to December 2024			November 2023 to November 2028
Initial Recognition of right-of-use assets at January 1, 2019	$	534,140		$	313,301
Incremental Borrowing Rate		10	%		10	%

The Company decided not to renew the corporate office lease (Lease 1) in January 2021; however, the parties subsequently negotiated a one-year lease at the same location. The Company determined that the decision to not renew Lease 1 changed the corresponding lease term which required remeasurement of the lease liability resulting in the reduction of the right-of-use asset and the associated lease liability by $384,110. The reassessment of the lease term did not change the existing classification and the lease is still classified as an operating lease.

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the operating lease liabilities recorded in the Consolidated Balance Sheet as of September 30, 2021.

Amounts due within twelve months of September 30
2021	$	88,000
2022		50,196
2023		51,704
2024		53,255
2025		54,853
Thereafter		119,553
Total minimum lease payments		417,561
Less: effect of discounting		(112,056	)
Present value of future minimum lease payments		305,505
Less: current obligations under leases		63,560
Long-term lease obligations	$	241,945

For the nine months ended September 30, 2021, and 2020, amortization of Right of Use Assets was $97,436 and $60,600, respectively.

For the nine months ended September 30, 2021, and 2020, amortization of Lease Liability was $96,954 and $64,522, respectively.