DIRECT FINANCING LEASE

6 Months Ended

Jun. 30, 2016

Capital Leases of Lessor [Abstract]

DIRECT FINANCING LEASE

NOTE 11 – DIRECT FINANCING LEASE

In September 2015, the Company and an entity in Colombia entered into a rental contract for the rental of 78 kiosks to provide cash collection and fare services at transportation stations. The lease term began in May 2016, when the kiosks were installed and operational. The term of the rental contract is ten years at an approximate monthly rate of $11,856. The lessee has the option at the end of the lease term to purchase each unit for approximately $40. The term of the lease approximates the economic life of the kiosks. The lease was accounted for as a direct-financing lease.

The Company has recorded the transaction at its net investment in the lease and will receive monthly payments of $11,856 before estimated executory costs, or $142,272 annually, to reduce the investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 per month and initial direct costs are not considered significant. The transaction resulted in incremental revenue for the three and six months ended June 30, 2016 of approximately $13,000.

The equipment subject to the direct financing lease is valued at approximately $748,000. At inception of the lease term, the aggregate minimum future lease payments to be received is approximately $1,423,000 before executory costs. Unearned income recorded at the inception of this lease was approximately $474,000 and will be recorded over the term of the lease using the effective interest rate method. Future minimum lease payments to be received under this lease for the next five years and thereafter are as follows:

Year Ending December 31,
2016	$	61,074
2017		122,148
2018		122,148
2019		122,148
2020		122,148
2021		122,148
Thereafter		529,308
		1,201,122
Less deferred income		(460,221	)
Net investment in lease	$	740,901