LEASES

12 Months Ended

Dec. 31, 2023

Leases

LEASES

3. LEASES

Leases are 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-long term 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 years ended December 31, 2023 and 2022:

Right of Use Assets
Balance at December 31, 2021	$	217,267
Depreciation		(50,045	)
Balance at December 31, 2022	$	167,222
Depreciation		(51,929	)
Balance at December 31, 2023	$	115,293
Lease Liability
Balance at December 31, 2021	$	217,267
Lease interest expense		8,566
Payments		(58,611	)
Balance at December 31, 2022	$	167,222
Lease interest expense		6,151
Payments		(58,080	)
Balance at December 31, 2023	$	115,293
Short-term portion	$	59,520
Long-term portion		55,773
Total	$	115,293

Undiscounted rent payments are as follows:

2024		59,520
2025		61,020
Total	$	120,540
Impact of discounting		(5,247	)
Lease liability, December 31, 2023	$	115,293