Note 6 - Leases

6 Months Ended

Jun. 30, 2021

Notes

Note 6 - Leases

NOTE 6 - LEASES

On September 23, 2020, the Company signed a new two-year lease for its facilities.  The base lease is $3,162 and $3,267 per month for years one and two, respectively. There is a leasehold tax applied to the base lease at 12.84%.  The Company has the right to terminate the lease with 90 days’ notice. There is no renewal clause contained in the current lease.  Upon signing the lease, the Company recognized a lease liability and right of use asset of $74,005 based on the two-year payment stream discounted using an estimated incremental borrowing rate of 4.0%. At June 30, 2021, the remaining lease term is fifteen months.

Prior to the new lease on September 23, 2020, the Company’s lease for its facilities was for $5,639 per month.

For the three month and six-month periods ended June 30, 2021 and 2020, lease expenses of $10,862 and $16,918, and $21,724 and $33,836 respectively, are included in the following expense classifications on the statement of operations:

	For the three-month period ending June 30,
	2021			2020
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Base rent pursuant to lease agreement	$ 5,396	$   4,248	$ 9,644	$ 2,998	$   11,995	$ 14,993
Variable lease costs	682	536	1,218	385	1,540	1,925
Total lease costs	$ 6,078	$   4,784	$ 10,862	$ 3,383	$   13,535	$ 16,918

	For the six-month period ending June 30,
	2021			2020
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Base rent pursuant to lease agreement	$ 10,793	$   8,495	$ 19,288	$ 5,996	$   23,990	$ 29,986
Variable lease costs	1,363	1,073	2,436	770	3,080	3,850
Total lease costs	$ 12,156	$   9,568	$ 21,724	$ 6,766	$   27,070	$ 33,836

As of June 30, 2021, total future lease payments are as follows:

For the 12 months ending June 30, 2022 and 2023
2022	$	38,893
2023		10,277
Total		49,170
Less imputed interest		(1,281)
Net lease liability		47,889
Current portion		38,439
Long-term portion	$	9,450