Operating Lease Right-Of-Use Assets and Operating Lease Liabilities

12 Months Ended

Dec. 31, 2019

Operating Lease And Right-of-use Assets And Operating Lease Liabilities

Operating Lease Right-Of-Use Assets and Operating Lease Liabilities

NOTE 4 – OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

The Company leases 823 square feet of office space located at 14497 North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The Company entered into an amended lease agreement commencing on July 20, 2017 through June 30, 2020 with base month rents of $1,252 from July 1, 2017 to June 30, 2018, $1,289 from July 1, 2018 to June 30, 2019, and $1,328 from July 1, 2019 to June 30, 2020. Under the terms of the lease there may be additional fees charged about the base monthly rental fee.

Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 6%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. During the years ended December 31, 2019 and 2018, the Company recorded $15,780 and $0, respectively, as operating lease expense which is included in rent expense on the statements of operations.

In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of twelve month or less. On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use assets and lease liabilities of $22,575.

Right-of- use assets are summarized below:

	December 31, 2019
Office lease (remaining lease term of 12 months)	$	22,575
Less accumulated amortization		(14,574	)
Right-of-use assets, net	$	8,001

Amortization on the right -of -use asset is included in rent expense on the statements of operations.

Operating Lease liabilities are summarized below:

	December 31, 2019
Office lease	$	8,079
Less: current portion		(8,079	)
Long term portion		-

Maturity of lease liabilities are as follows:

Year ending 2020	$	7,968
		7,968
Plus: Present value discount		111
Lease liability	$	8,079

The Company also has an operating lease for a house located in Palm Bay, Florida that it leases on a month-to-month basis for $1,300 per month. The Company uses the house to store equipment and gear and to provide temporary work-related living quarters for its divers, personnel, consultants and independent contractors involved in its exploration and recovery operations. The Company also pays a rental fee for a space in a park on an as needed basis. Total rent expense was $21,615 for the year ended December 31, 2019 on these rentals. Due to the short term nature of these leases, they do not fall under the scope of ASC 842.