DIRECT FINANCING LEASE

9 Months Ended

Sep. 30, 2016

Direct Financing Lease

DIRECT FINANCING LEASE

NOTES 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 $11,900. 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 kiosks were installed and operational in the second quarter of 2016; which is when the lease commenced.

The Company has recorded the transaction at its net investment in the lease and will receive monthly payments of $11,856, or $142,272 annually, to reduce the receivable and record income associated with the related amount due. The transaction resulted in incremental revenue for the nine months ended September 30, 2016 of $33,050.

The equipment under capital lease is valued at approximately $748,000. The aggregate minimum future lease payments to be received is approximately $1,422,000. Unearned income recorded in connection with this lease is approximately $474,000 and will be recorded over the term of the lease using the effective interest method. Future minimum lease payments to be received under this lease are as follows;

Year Ending December 31,
2016	$	30,537
2017		122,145
2018		122,145
2019		122,145
2020		122,145
2021		122,145
Thereafter		529,323
		1,170,585
Less Deferred income		(440,486	)
Net investment lease	$	730,099