LEASES

9 Months Ended

Sep. 30, 2021

Leases

LEASES

3. LEASES

Accounting and reporting guidance for leases requires that leases be evaluated and classified as either operating or finance leases by the lessee and as either operating, sales-type or direct financing leases by the lessor. For leases with terms greater than 12 months, the Company records the related right-of-use (“ROU”) asset and lease obligation at the present value of lease payments over the term. Leases may include fixed rental escalation clauses, renewal options and / or termination options that are factored into the determination of lease payments when appropriate. The Company’s operating leases are included in ROU assets, lease liabilities-current portion and lease liability-less current portion in the accompanying consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. The Company’s leases do not usually provide a readily determinable implicit rate; therefore, an estimate of the Company’s incremental borrowing rate is used to discount the lease payments based on information available at the lease commencement date. The discount rate used was 5.5%.

The table below summarizes the right-of-use asset and lease liability for the nine months ended September 30, 2021:

	September 30, 2021
Right of Use Assets
Balance at December 31, 2020	$	483,113
Depreciation		(230,046	)
Balance at September 30, 2021	$	253,067
Lease Liability
Balance at December 31, 2020	$	483,113
Lease interest expense		19,164
Payments		(249,210	)
Balance at September 30, 2021	$	253,067
Short-term portion	$	96,695
Long-term portion		156,372
Total	$	253,067

Undiscounted rent payments for the next five years are as follows:

2021	$	38,690
2022		67,320
2023		66,180
2024		59,520
2025		61,020
Total	$	292,730
Impact of discounting		(39,663	)
Lease liability, September 30, 2021	$	253,067