NOTE B - COMMITMENTS

12 Months Ended

Dec. 31, 2023

Notes

NOTE B - COMMITMENTS

NOTE B – COMMITMENTS

Operating Leases

Under the new lease guidance (Topic 842), we recorded a ROU Lease Asset and associated Lease Liability for the Original Lease which as of December 31, 2019, had balances of $930,588 and $946,895, respectively. In recording the initial ROU Lease Asset and associated Lease Liability, we assumed that it would extend the lease for an additional five-year term at a rate per square foot which increased annually during the term. This lease was for 13,046 square feet at $17.00 per square foot and we assumed that the square footage would remain the same and the rate would increase by $.50 per square foot per year during the 5-year renewal period for purposes of calculating the ROU Lease Asset and associated Lease Liability.

We leased our offices and data center in the BOK Plaza Building on a lease originally executed on December 2, 1999 and expiring on December 31, 2019, with all additional options to renew having been previously exercised (the “Original Lease”). We subsequently negotiated and executed two new leases on November 22, 2019,

covering our offices and data center which are effective January 1, 2020. One lease is an addendum to the Original Lease and covers only the office space (the “FN Lease”) and the other lease covers our data center and is with FullWeb, Inc., a wholly owned subsidiary (the “FW Lease”).

The combined square footage for the FN & FW Leases is 8,699 square feet, a reduction from the Original Lease of 4,347 square feet or approximately 33%. This reduction occurred in the office space with the data center space remaining the same. In addition, both leases are at the rate of $17.50 per square foot for 5 years and both contain two 5-year options to renew at the then fair market rate per square foot. Of not, the FW Lease contains the right for us to opt-out of the FW Lease without penalty at each annual anniversary.

We consider the execution of the two new leases to be a lease modification and have re-evaluated the effect of the lease modification on our conclusions under ASC 842 and determined that the leases should still be classified as operating leases.

As a result of the lease modification and the associated remeasurement of the lease liability, we used the same incremental borrowing rate of 8.5% as it used for the original lease calculations based on the fact that the nature of the underlying asset and our financial condition had not materially changed since the original lease calculation.

Amortization of the ROU Asset and payments of the associated Lease Liability for the year-ended December 31, 2023 was $133,637 and $133,637, respectively, leaving a year-end December 31, 2023 balance of $145,449 for both the ROU Asset and the associated Lease Liability.

Future minimum lease payments required at December 31, 2023, under non-cancelable operating leases that have initial lease terms exceeding one year are presented in the following table:

Year ending December 31
2024	152,234
Total	152,234
Present value of discount	(6,785)
Current portion lease liability	(145,449)
Long-term lease liability	$-

Rental expense for all operating leases for the years ended December 31, 2023 and 2022, was approximately $152,232 and $152,232, respectively.