NOTE 8. LEASES

On August 11, 2021, the Company entered into a lease agreement, whereby the Company agreed to lease office space in Kissimmee, Florida expiring November 30, 2033. The lease commencement date was not identified until July 15, 2022 when the Company entered into the First Amendment to the original lease agreement, pursuant to which the commencement date would be July 1, 2022. The Company will owe monthly rental payments ranging from $6,512 to $50,039 over the term of the lease. The Company initially recorded right-to-use asset and lease liability of $3,889,565 using the Company’s incremental borrowing rate of 6.3% at December 31, 2022.

The Company also has a five-year lease in the UK for office space expiring December 16, 2026. The Company will owe monthly rental payments ranging from $3,092 to $3,401 over the term of the lease. The Company initially recorded right-to-use asset and lease liability of $161,057 using the Company’s incremental borrowing rate of 6.3% at December 31, 2022.

On March 23, 2023, the Company entered into a lease agreement, whereby the Company agreed to lease warehouse space in Kissimmee, Florida expiring March 31, 2026. The Company will owe monthly rental payments ranging from $5,844 to $6,171 over the term of the lease. The Company recorded right-to-use asset and lease liability of $196,796 using the Company’s incremental borrowing rate of 6.3% at December 31, 2022.

Pursuant to the agreement with One Drivers Club, the Company is currently paying $5,000 a month in short-term lease costs on a month-to-month basis until there is substantial completion of the Build-Out (See Note 14).

The Company’s commercial properties are subject to Common Are Maintenance (“CAM”) charges, which represent the tenant’s pro-rata share of the operating expenses incurred by the landlord in the operation of the buildings. These expenses include, but are not limited to, property taxes, insurance premiums, utilities for common areas, maintenance and service agreements and supplies and materials used in the operation and maintenance of the property, cost of repairs and enhancements to common areas, owner’s association fees, and cost of capital improvements or modifications only if the capital improvements reduce operating costs. The Company’s share of the CAM is paid by the Company as additional rent based on the landlord’s written estimate of the CAM for the following year. Within 150 days following the end of each calendar year the landlord provides a statement to the Company reconciling the estimated CAM expenses for the year to the actual costs incurred.

Quantitative information regarding the Company’s leases is as follows:

Maturity analysis under the lease agreement is as follows: