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Leases

6 Months Ended

Jun. 30, 2023

6. Leases

The Company accounts for leases in accordance with ASC Topic 842. The Company used its incremental borrowing rate of 5.25% for all operating leases as of June 30, 2023 and December 31, 2022. In September 2022, the Company renewed its secure facility lease as described below. In September 2022, the Company also entered into a new lease agreement for computer hardware as described below.

Office lease – On March 1, 2021, the Company entered into a two (2) year lease for an office facility located in Miami Florida with an entity controlled by our CEO and related parties. The lease has a one-time renewal option for one year which management is reasonably certain will be exercised. The lease is $7,048 per month and expires in February 2024, including the renewal option (see Note 13).

Secure facility lease – On September 11, 2017, the Company entered into a five (5) year lease for a secure facility located in Miami Florida. The lease had no renewal option. The lease was $1,233 per month and expired in August 2022. On September 26, 2022, the Company entered into a three (3) year lease for a secure facility located in Miami, Florida. The lease has no renewal option. The lease is $1,418 per month, with payment increases of 4% annually, and expires in September 2025. The right-of-use asset and operating lease liability at the execution of this lease totaled $48,979.

Copier lease – On October 14, 2019 the Company entered into a copier lease. The right to use asset and lease liability at inception of the copier lease was $68,799. The Company used its incremental borrowing rate of 5.25% to determine the present value of the lease payment. The cost of the copier lease is $1,116 per month and expires October 14, 2024 with a one-year renewal option which the Company expects to exercise.

Hardware lease – On September 30, 2022, the Company entered into a three-year lease for computer hardware. The lease has no renewal option. The lease is $664 per month and expires in September 2025. The right-of-use asset and operating lease liability at the execution of this lease totaled $22,059.

Server lease – On December 7, 2021, the Company entered into a five-year lease for a computer server. The lease contains a bargain purchase option, which the Company intends to exercise. The Company recorded this lease as a finance lease. The fixed asset and lease liability at inception of the lease was $66,281 and $65,801, respectively. The Company used its incremental borrowing rate of 5.25% to determine the present value of the lease payment. The lease payments are $1,249 per month through December 2026.

The weighted-average remaining lease term was 2.09 years and 2.40 years as of June 30, 2023 and December 31, 2022, respectively. For the three months ended June 30, 2023 and 2022, the total lease cost was $31,382 and $28,194, respectively. For the six months ended June 30, 2023 and 2022, the total lease cost was $61,438 and $56,387, respectively.


Leases	Classification	June 30, 2023 (unaudited)		December 31, 2022

Right-of-use assets	Operating lease assets	$	139,465	$	196,407
Server lease	Finance lease assets		45,292		51,920
Total lease assets		$	184,757	$	248,327

Current operating lease liability	Current operating lease liabilities	$	90,597	$	122,554
Non-current operating lease liability	Long-term operating lease liabilities		48,868		73,853
Total operating lease liabilities		$	139,465	$	196,407

Current finance lease liability	Current finance lease liabilities	$	12,826	$	12,494
Non-current finance lease liability	Long-term finance lease liabilities		34,062		40,559
Total finance lease liabilities		$	46,888	$	53,053