LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

NOTE－13 LEASES

We adopted ASU No. 2016-02, - Leases, on January 1, 2019, the beginning of our fiscal 2019, using the modified retrospective approach. We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as we have elected the practical expedient. Some of our operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.

Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease's commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease's commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. We had no financing leases as of June 30, 2022 and December 31, 2022.

The Company used a weighted average incremental borrowing rate of 5.85% to determine the present value of the lease payments. The weighted average remaining life of the lease was 3.30 years.

During the year ended December 31, 2022, the Company enter into new lease arrangements, and accounted as per ASC Topic 842, the ROU asset and lease obligation of $1,762,350.

The Company excluded short-term leases (those with lease terms of less than one year at inception)from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense, as follows:

	Six months ended June 30,
	2023		2022
Operating lease expense (per ASC 842)	$	278,183	$	139,420
Short-term lease expense (other than ASC 842)		50,908		4,653
Total lease expense	$	329,091	$	144,073

As of June 30, 2023, right-of-use assets were $1,609,461 and lease liabilities were $1,620,852.

As of December 31, 2022, right-of-use assets were $1,537,670 and lease liabilities were $1,541,064.  

Components of Lease Expense

We recognize lease expense on a straight-line basis over the term of our operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.

Future Contractual Lease Payments as of June 30, 2023

The below table summarizes our (i)minimum lease payments over the next five years, (ii)lease arrangement implied interest, and (iii)present value of future lease payments for the next three years ending June 30:

Years ending June 30,	Operating lease amount
2024	$	630,729
2025		494,999
2026		322,300
2027		253,708
2028		72,784
Total		1,744,520
Less: interest		(153,668	)
Present value of lease liabilities	$	1,620,852
Less: non-current portion		(1,065,261	)
Present value of lease liabilities – current liability	$	555,591