Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2022
Operating Leases  



On May 27, 2021, the Company entered into a sixty-three month lease for its corporate office at $5,955 per month commencing June 15, 2021 maturing September 30, 2026. The Company accounts for this lease in accordance with ASC 842. Adoption of the standard resulted in the initial recognition of operating lease ROU asset of $290,827 and operating lease liability of $290,827 as of June 15, 2021.


Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.


We have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.


The components of lease expense and supplemental cash flow information related to leases for the period are as follows:



In accordance with ASC 842, the components of lease expense were as follows:


    2022     2021     2022     2021  

Nine Months ended

September 30,

    Three Months ended September 30,  
    2022     2021     2022     2021  
Operating lease expense   $ 53,757     $ 24,094     $ 17,919     $ 18,070  
Short term lease cost   $ -     $ -     $ -     $ -  
Total lease expense   $ 53,757     $ 24,094     $ 17,919     $ 18,070  


In accordance with ASC 842, other information related to leases was as follows:


Nine Months Ended September 30   2022     2021  
Operating cash flows from operating leases   $ 54,312     $ 9,131  
Cash paid for amounts included in the measurement of lease liabilities   $ 54,312     $ 9,131  
Weighted-average remaining lease term—operating leases      3.92 years        4.92 years  
Weighted-average discount rate—operating leases     10 %     10 %


In accordance with ASC 842, maturities of operating lease liabilities as of September 30, 2022 were as follows:


Year ending:   Lease  
2022 (remaining 3 months)   $ 18,402  
2023     74,895  
2024     77,142  
2025     79,456  
2026     54,224  
Total undiscounted cash flows   $ 304,119  
Reconciliation of lease liabilities:        
Weighted-average remaining lease terms      3.92 years  
Weighted-average discount rate     10 %
Present values   $ 264,691  
Lease liabilities—current     51,351  
Lease liabilities—long-term     201,457  
Lease liabilities—total   $ 252,808  
Difference between undiscounted and discounted cash flows   $ 51,311  


Operating lease cost was $17,919 and $53,757 and $18,070 and $24,094 for the three and nine months ended September 30, 2022 and 2021, respectively.