Note 7 – Leases

The Company has an operating lease for our facility, which have an initial term of 5 years with an option to renew for 3 additional years. They also do not have an early termination clause included. Our operating lease agreements do not contain any material restrictive covenants. Per FASB’s ASU 2016-02, Leases (Topic 842), effective January 1, 2019, the company is required to report a right-of-use asset and corresponding liability to report the present value of the total least payments, with appropriate interest calculation. Per the terms of ASU 201-02, the company can use its implicit interest rate, if known, or applicable federal rate otherwise. Since the company’s implicit interest rate was not readily determinable, we utilized the applicable federal rate, which was 3.0% as of April 2019.

As of March 31, 2020, the Company's lease components included in the consolidated balance sheet were as follows:

Lease component	Classification	March 31, 2020
Assets
ROU assets - operating lease	Other assets	$	96,354

Total ROU assets		$	96,354

Liabilities
Current operating lease liability	Current liabilities	$	21,704

Long-term operating lease liability	Other liabilities		75,992

Total lease liabilities		$	97,696

Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following:

	Three months ended
	March 31, 2020
Operating lease costs	$	6,288

Total rent expense	$	6,288

Future minimum lease payments under non-cancellable leases were as follows:

	March 31, 2020
2020 - remaining nine months	$	18,239
2021		24,886
2022		25,633
2023		26,402
2024		8,886
2025 and beyond		-
Total future minimum lease payments	$	104,046
Less: Interest		6,350
Total operating lease liabilities	$	97,696

Current operating lease liability	$	21,704
Long-term operating lease liability		75,992
Total operating lease liabilities	$	97,696