Note 3 - Net Investment in Sales Type Lease

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Lessor, Sales-type Leases [Text Block]

NOTE 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 a total $210,782 in "Net investment in sales type leases" and derecognized $139,521 from “Inventory" on its balance sheet. The Company recognized $41,797 and $39,369 in profit from sales type leases in its statements of operations for the years ended  December 31, 2023 and 2022, respectively, as a result of the transaction. For the years ended December 31, 2023 and 2022, the Company recognized $7,103 and $9,531, respectively, of interest income in the Company's 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 $15,588 and $51,746 in profit from sales type leases in its statements of operations for the years ended  December 31, 2023 and 2022, respectively, as a result of the transaction. For the years ended December 31, 2023 and 2022, the Company recognized $5,012 and $11,673, respectively. of interest income in the Company's statements of operations.

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

	Amount
2024		71,700
2025		71,700
2026		26,875
2027		22,800
Total undiscounted cash flows		193,075
Present value discount		15,144
Net investment in lease as of December 31, 2023	$	177,931

The current portion of $64,310 is included in Current Assets on the balance sheet as of  December 31, 2023, and the long term portion of $113,621 is included in Long-Term Assets on the balance sheet as of December 31, 2023.  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.