LEASES

9 Months Ended

Sep. 30, 2024

Leases

LEASES

NOTE 5 – LEASES

In March 2022 we entered into a three-year lease agreement commencing April 15, 2022 through April 30, 2025 at an initial annual rate of $57,400 paid in monthly installments of $4,800. We have an option to extend for an additional five-year period. Annual increases are tied to the U.S. Consumer Price Index of the Bureau of Labor Statistics of the Department of Labor for all Urban Consumers for San Francisco-Oakland-San Jose area. Based on the aforementioned consumer price index, the annual increase to rent beginning May 1, 2023 was $375 bringing monthly installments to $5,175 and the annual rate to $62,100. On June 1, 2024, the monthly increase was $380 bringing monthly installments to $5,555 and the annual rate to $66,660.

We account for our leases under ASC 842, Leases, which requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. We elected the expedients permitted under the transition guidance that retained lease classification and initial direct costs for any leases that existed prior to adoption of the standard.

We categorized leases with terms longer than twelve months as either operating or finance. Finance leases are generally those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. We did not have any finance leases as of September 30, 2024. Our lease for property is for three years. We elected the accounting policy to include both the lease and non-lease components of our agreements as a single component and account for them as a lease.

Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the lease. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Leasehold improvements are capitalized at cost over the lesser of their expected useful life or the lease term. When we have options to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Costs associated with the operating lease are recognized on a straight-line basis within operating expenses over the term of the lease.

The following table presents the lease-related asset and liability recorded on the balance sheets:

	September 30, 2024
Assets
Leasehold improvement, net	$	3,661
Operating lease asset	$	38,213
Liabilities
Current
Operating lease liabilities	$	38,213
Noncurrent
Operating lease liabilities	$	-

Supplemental cash flow information related to leases were as follows:

	Nine Months Ended September 30, 2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	41,587

The table below presents the remaining lease terms and discount rates for operating lease.

	September 30, 2024
Weighted-average remaining lease term
Operating lease		0.58 years
Weighted-average discount rate
Operating lease		5.25	%

Maturities of lease liabilities as of September 30, 2024, were as follows:

	Operating Lease
2024 (three months remaining)		16,665
2025		22,220
Thereafter		-
Total lease payments		38,885
Less: amount of lease payments representing interest		(672	)
Present value future minimum lease payments	$	38,213
Less: current obligations under lease		(38,213	)
Non-current obligations	$	-