LEASES

12 Months Ended

Dec. 31, 2023

Leases

LEASES

NOTE 18 – LEASES

The Company has two operating leases for corporate offices as of December 31, 2023. The following table outlines the details of the leases:

	Lease 1			Lease 2			Lease 3
Initial Lease Term		January 2021 to December 2021			October 2018 to November 2023			October 2023 to September 2026
New Initial Lease Term		January 2022 to December 2026			November 2023 to October 2028			-
Initial Recognition of Right of use assets at January 1, 2019	$	534,140		$	313,301			-
New Initial Recognition of Right of use Assets at December 31, 2021	$	977,220		$	-			-
New Initial Recognition of Right of use Assets at December 31, 2023								351,581
Incremental Borrowing Rate		10	%		10	%		10	%

The Company entered into a new corporate office lease (Lease 1) in January 2022. At inception, the Company determined that the new lease required remeasurement of the lease liability resulting in the increase of the right-of-use asset and the associated lease liability by $977,220. The Company and the Lessor agreed to terminate the lease and vacate the premises in November 2023. The termination resulted in the surrender of the Company’s security deposit of $38,500. The related right-of-use assets of $642,887 and lease liabilities of $664,992 were removed from the balance sheet as of December 31, 2023.

The Company entered into a lease agreement (Lease 2) for the period of October 2018 to November 2023. At inception, management had included the renewal period from November 2023 to November 2028 within the initial recognition of the related right of use assets and lease liabilities, as it was reasonably expected, at the time, that the renewal option would be exercised. The Company determined that the new lease required measurement and recognition of the lease liability and right-of-use assets of $313,301. The lease is classified as an operating lease. No incentives were included in the lease.

The Company entered into a new warehouse lease (Lease 3) October 2023. The Company determined that the new lease required measurement and recognition of the lease liability and right-of-use assets of $351,581. The lease is classified as an operating lease. No incentives were included in the lease.

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2023.

Future lease obligations
2024		187,935
2025		193,487
2026		163,146
2027		58,347
2028		48,612
Thereafter		-
Total minimum lease payments		651,527
Less: effect of discounting		(102,617	)
Present value of future minimum lease payments		548,910
Less: current obligations under leases		139,705
Long-term lease obligations	$	409,205

Weighted Average Discount Rate		10	%
Weighted Average Term Remaining		3.6 Years
Short-Term Lease Expense Remaining	$	187,361

For the years ended December 31, 2023, and 2022, total lease expense was $385,977 and $344,525, respectively.

For the years ended December 31, 2023, and 2022, amortization of right-of-use assets was $215,665 and $181,218, respectively.

For the years ended December 31, 2023, and 2022, net operating lease liabilities settled was $195,475 and $164,618, respectively.