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

6 Months Ended

Jun. 30, 2024

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 six months ended June 30, 2024 and 2023, the Company recorded $10,308 and $9,202 as operating lease expense, respectively, which is included in rent expense on the unaudited condensed consolidated statements of operations. During the three months ended June 30, 2024 and 2023, the Company recorded $5,154 and $4,601 as operating lease expense, respectively, which is included in rent expense on the unaudited condensed consolidated statements of operations.

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 June 30, 2024 and December 31, 2023 are summarized below: 

	June 30, 2024			December 31, 2023
Office lease	$	37,502		$	37,502
Less accumulated amortization		(16,268	)		(7,212	)
Right of use assets, net	$	21,234		$	30,290

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:

	June 30, 2024			December 31, 2023
Office lease	$	21,609		$	30,457
Less: current portion		(19,856	)		(18,483	)
Long term portion	$	1,753		$	11,974

Maturity of lease liabilities are as follows: 

Year ended December 31, 2024	$	10,442
Year ended December 31, 2025		12,262
Total future minimum lease payments		22,704
Less: Present value discount		(1,095	)
Lease liability	$	21,609

Finance Leases

Commencing during the year ended December 31, 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
	June 30,			December 31,
	2024			2023
Vehicle lease	$	53,100		$	53,100
Vessel lease		70,849			70,849
Sonar lease		18,987			18,987
		142,936			142,936
Less accumulated amortization		(41,005	)		(26,915	)
Finance right of use asset	$	101,931		$	116,021

Finance lease liabilities are summarized below: 

	As of			As of
	June 30,			December 31,
	2024			2023
Vehicle lease	$	40,625		$	45,034
Vessel lease		54,202			60,085
Sonar lease		15,511			17,061
		110,338			122,180
Less: current portion		(25,149	)		(22,263	)
Long term portion	$	85,189		$	99,917

Maturity of lease liabilities are as follows:

Year Ended December 31, 2024	$	18,879
Year Ended December 31, 2025		37,758
Year Ended December 31, 2026		37,758
Year Ended December 31, 2027		37,758
Thereafter		4,413
Total future minimum lease payments		136,566
Less imputed interest		(26,228	)
PV of payments	$	110,338

Expenses incurred with respect to the Company’s finance leases during the three and six months ended June 30, 2024 and 2023 which are included in rent expense on the unaudited condensed consolidated statements of operations are set forth below.

	Three Months Ended
	June 30,		June 30,
	2024		2023
Finance lease amortization	$	7,045	$	6,729
Finance lease interest		3,431		3,973
Total finance lease expense	$	10,476	$	10,702

	Six Months Ended
	June 30,		June 30,
	2024		2023
Finance lease amortization	$	14,091	$	11,559
Finance lease interest		7,038		7,589
Total finance lease expense	$	21,129	$	19,148

The weighted average remaining lease term and the weighted average discount rate on the finance leases at June 30, 2024 and December 31, 2023 are set forth below. 

	June 30,		December 31,
	2024		2023
Weighted average remaining lease term		3.67 years		4.17 years
Weighted average discount rate		12%		12%