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Note 3 - Net Investment in Sales Type Lease

3 Months Ended

Mar. 31, 2023

3.	Net Investment in Sales Type Lease –

In January 2021, the Company entered into a five year lease with a customer for hardware which had an implied interest rate of 6%.

At inception, the Company recorded $210,782 in "Net investment in sales type leases" and derecognized $139,521 from “Inventory" on its condensed balance sheet. The Company recognized $6,794 and $9,622 in profit from sales type leases in its condensed statements of operations for the three months ended March 31, 2023 and 2022, respectively, as a result of the transaction. For the three months ended March 31, 2023 and 2022 the Company recognized $2,809 and $2,603, respectively, of interest income in the Company's condensed statements of operations.

In December 2022, the Company entered into a five year lease with a customer for hardware which had an implied interest rate of 6%.

At inception, the Company recorded a total $98,279 in "Net investment in sales type leases" and derecognized $46,533 from “Inventory" on its balance sheet. The Company recognized $4,247 in profit from sales type leases in its statement of operations for the three months ended March 31, 2023 as a result of the transaction. For the three months ended March 31, 2023 the Company recognized $1,453 of interest income in the Company's condensed statements of operations.

The future minimum lease payments receivable for sales type leases are as follows:

	Amount
2023 (remainder)		53,775
2024		71,700
2025		71,700
2026		26,875
2027		22,800
Total undiscounted cash flows		246,850
Present value discount		22,274
Net investment in lease as of March 31, 2023	$	224,576

The current portion of $63,487 and $59,173 is included in Current Assets on the condensed balance sheet as of March 31, 2023 and December 31, 2022, respectively, and the long term portion of $161,089 and $176,444 is included in Long-Term Assets on the condensed balance sheet as of March 31, 2023 and December 31, 2022, respectively. The lease contains a purchase option at the conclusion of the lease, which the Company has determined does not meet the probability criterion. The Company has not recorded an unguaranteed residual asset.