OPERATING LEASE

6 Months Ended

Jun. 30, 2022

Operating Lease

OPERATING LEASE

NOTE 13: OPERATING LEASE

The Company has adopted ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019 and will account for their lease in terms of the right of use assets and offsetting lease liability obligations for this new lease under this pronouncement. In accordance with ASC 842 - Leases, effective January 1, 2019, the Company up until May 16, 2019 did not have any long-term lease commitments. On May 17, 2019 with the Company’s acquisition of TRAQ Pvt Ltd., recorded a lease right of use asset and a lease liability at present value of $576,566 and $585,207, respectively. The Company is recording this amount at present value, in accordance with the standard, using an incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads and lease specific adjustments for the effects of collateral. The right of use asset will be composed of the sum of all lease payments plus any initial direct cost and will be straight line amortized over the life of the expected lease term. For the expected term of the lease the Company will use the term of the nine-year lease. This lease will be treated as an operating lease under the standard.

The Company has chosen to implement this standard using the modified retrospective model approach with a cumulative-effect adjustment, which does not require the Company to adjust the comparative periods presented when transitioning to the new guidance on January 1, 2019. The Company has also elected to utilize the transition related practical expedients permitted by the new standard. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a modified retrospective approach.

In February 2022, the Company entered into a new lease with a right of use asset and lease liability value of $331,154.

As of June 30, 2022, the value of the unamortized lease right of use asset is $282,778. As of June 30, 2022, the Company’s lease liability was $287,696.

Remaining Lease Obligation at June 30 (undiscounted cash flows)
2023	$	54,536
2024		54,536
2025		56,990
2026		61,080
2027		61,080
Thereafter		229,152
Total lease payments		517,374
Less: Imputed interest		229,678
Present value of lease liabilities	$	287,696

For the six months ended June 30, 2022 and 2021 the Company recorded rent expense of $16,498 and $15,511.