9. Leases

12 Months Ended

Dec. 31, 2022

Leases

9. Leases

9. Leases

The Company acquired ATHI on July 1, 2021, ATHI’s wholly owned subsidiary had entered into an operating lease agreement for certain real property located at 950 Evernia Street, West Palm Beach, Florida, with effect from February 1, 2019 for a period of three years, expiring on February 1, 2022. Under the terms of the lease agreement, the lease was extended during October 2021 for a further 5 year period until February 1, 2027.

To determine the present value of minimum future lease payments for operating leases at February 1, 2019, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the "incremental borrowing rate" or "IBR").

The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the average of (i) the five year ARM interest rate as quoted by Freddie Mac adjusted for a risk premium of 20%. The Company determined that 4.64% per annum was an appropriate incremental borrowing rate to apply to its real-estate operating lease.

 
Right of use assets are included in the consolidated balance sheet are as follows:

	December 31, 2022		December 31, 2021
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	38,079	$	49,268
Right-of-use assets - operating leases, net of amortization	$	1,393,071	$	1,653,816

Lease costs consists of the following: 

	Year ended December 31,
	2022		2021
Finance lease cost:
Amortization of right-of-use assets	$	11,190	$	6,681
Interest expense on finance lease liabilities		2,443		1,367
		13,633		8,048
Operating lease cost	$	400,207	$	178,679
Lease cost	$	413,840	$	186,727

Other lease information: 

	Year ended December 31,
	2022			2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(2,443	)	$	(1,367	)
Operating cash flows from operating leases		(380,545	)		(160,272	)
Financing cash flows from finance leases		(7,437	)		40,281
Cash paid for amounts included in the measurement of lease liabilities	$	(390,425	)	$	(121,358	)
Weighted average lease term – finance leases		3 years and ten months			4 years and ten months
Weighted average remaining lease term – operating leases		4 years and 1 months			5 years and 1 months
Discount rate – finance leases		6.60	%		6.61	%
Discount rate – operating leases		4.64	%		4.64	%

Maturity of Leases

Finance lease liability

The amount of future minimum lease payments under finance leases as of December 31, 2022 is as follows:

	Amount
2023	$	9,829
2024		9,829
2025		9,829
2026		6,195
2027		1,707
		37,389
Imputed interest		(4,546)
Total finance lease liability	$	32,843
Disclosed as:
Current portion	$	7,891
Non-Current portion		24,952
Lease liability	$	32,843

Operating lease liability

The amount of future minimum lease payments under operating leases are as follows:

Schedule of Operating lease liability
	Amount
2022	$	348,677
2023		366,110
2024		384,416
2025		403,637
2026		33,770
Total undiscounted minimum future lease payments		1,536,610
Imputed interest		(43,180	)
Total operating lease liability	$	1,493,430
Disclosed as:
Current portion	$	287,017
Non-Current portion		1,206,413
Lease liability	$	1,493,430