RIGHT-OF-USE ASSETS AND OPERATING AND FINANCE LEASE LIABILITIES

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

RIGHT-OF-USE ASSETS AND OPERATING AND FINANCE LEASE LIABILITIES

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

Operating Leases

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 the incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of the Company’s leases are not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term.

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 1, 2020 through July 31, 2023 with base month rents of $1,475 from July 1, 2020 to June 30, 2021, $1,519 from July 1, 2021 to June 30, 2022, $1,564 from July 1, 2022 to June 30, 2023 and $1,611 from July 1, 2023 to July 31, 2023. The Company entered into an amended lease agreement commencing on August 1, 2023 through July 31, 2025 with base month rents of $1,612 from August 1, 2023 to June 31, 2024 and $1,676 from August 1, 2024 to July 31, 2025. Under the terms of the lease there may be additional fees charged above the base monthly rental fee. During the three month periods ended September 30, 2023 and 2022, the Company recorded $4,601 as operating lease expense, which is included in rent expense on the unaudited condensed consolidated statements of operations. During the nine month periods ended September 30, 2023 and 2022, the Company recorded $9,202 as operating lease expense, which is included in rent expense on the unaudited condensed consolidated statements of operations.

On July 1, 2020, upon renewal of the lease, the Company recorded a right-of-use asset and lease liability of $48,957.

On August 1, 2023, upon renewal of the lease, the Company recorded a right-of-use asset and lease liability of $37,502.

Right-of-use assets at September 30, 2023 and December 31, 2022 are summarized below:

	September 30, 2023			December 31, 2022
Office lease	$	37,502		$	48,957
Less accumulated amortization		(2,849	)		(38,493	)
Right of use assets, net	$	34,653		$	10,464

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

Operating Lease liabilities are summarized below:

	September 30, 2023			December 31, 2022
Office lease	$	34,719		$	10,807
Less: current portion		(17,828	)		(10,807	)
Long term portion	$	16,891		$	-

Maturity of lease liabilities are as follows:

Year ended December 31, 2023	$	5,053
Year ended December 31, 2024		20,548
Year ended December 31, 2025		12,261
Total future minimum lease payments		37,862
Less: Present value discount		(3,143	)
Lease liability	$	34,719

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.

Finance Leases

Commencing during the nine months ended September 30, 2023, the Company entered into the following leases:

o Vehicle lease - monthly lease payments of $1,167 for 60 months amortized over 5 years at 12%

o Vessel lease - monthly lease payments of $1,557 for 60 months amortized over 5 years at 12%

o Sonar lease - monthly lease payments of $422 for 60 months amortized over 5 years at 12%

Finance right of use assets are summarized below:

	As of			As of
	September 30,			December 31,
	2023			2022
Vehicle lease	$	53,100		$	-
Vessel lease		70,849			-
Sonar lease		18,987			-
		142,936			-
Less accumulated amortization		(19,952	)		-
Finance right of use asset	$	122,984		$	-

Finance lease liabilities are summarized below:

	As of			As of
	September 30,			December 31,
	2023			2022
Vehicle lease	$	47,142		$	-
Vessel lease		62,969			-
Sonar lease		17,801			-
		127,702			-
Less: current portion		(23,281	)		-
Long term portion	$	104,421		$	-

Maturity of lease liabilities are as follows:

Year Ended December 31, 2023	$	9,438
Year Ended December 31, 2024		37,758
Year Ended December 31, 2025		37,758
Year Ended December 31, 2026		37,758
Year Ended December 31, 2027		37,758
Thereafter		4,414
Total future minimum lease payments		164,884
Less imputed interest		(37,182	)
PV of payments	$	127,702

Expenses incurred with respect to the Company’s finance leases during the three and nine months ended September 30, 2023 and 2022 which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations are set forth below.

	September 30,		September 30,
Three Month Ended	2023		2022
Finance lease amortization	$	7,073	$	-
Finance lease interest		3,898		-
Total finance lease expense	$	10,971	$	-

	September 30,		September 30,
Nine Month Ended	2023		2022
Finance lease amortization	$	19,952	$	-
Finance lease interest		11,395		-
Total finance lease expense	$	31,347	$	-

The weighted average remaining lease term and the weighted average discount rate on the finance leases at September 30, 2023 and 2022 are set forth below.

	September 30,		September 30,
	2023		2022
Weighted average remaining lease term		4.36 years		-
Weighted average discount rate		12%		-