| RIGHT OF USE ASSETS – FINANCING LEASES |
10. RIGHT OF USE ASSETS – FINANCING
LEASES
The Company has financing leases for vehicles
and warehouse equipment. Right of use asset – financing leases are summarized below:
| | |
March 31,
2026 | | |
December 31,
2025 | |
| | |
(unaudited) | | |
| |
| Vehicles | |
$ | 214,405 | | |
$ | 404,858 | |
| Warehouse equipment | |
| - | | |
| 200,097 | |
| Total before accumulated depreciation | |
| 214,405 | | |
| 604,955 | |
| Less: accumulated depreciation | |
| (162,694 | ) | |
| (399,615 | ) |
| Total | |
$ | 51,711 | | |
$ | 205,340 | |
Depreciation expense related to right of use
assets for the three months ended March 31, 2026 and 2025 was $5,954 and $24,915, respectively.
The weighted-average interest rate for financing
leases was 5.4% and 5.77% at March 31, 2026 and December 31, 2025, respectively. The weighted-average remaining lease term of financing
leases was .92 and 2.80 years at March 31, 2026 and December 31, 2025, respectively. Financing lease liabilities are summarized below:
| | | March 31,
2026 | | | December 31,
2025 | | | | | (unaudited) | | | | | | Financing lease obligation under a lease agreement for a truck dated March 31, 2020 in the original amount of $152,548 payable in eighty-four monthly installments of $2,188 including interest at the rate of 5.44%. During the three months ended March 31, 2026, the Company made principal and interest payments on this lease obligation in the amounts of $6,189 and $375, respectively. During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amount of $5,862 and $702, respectively. | | $ | 23,427 | | | $ | 29,616 | | | | | | | | | | | | | Financing lease obligation under a lease agreement for a truck dated August 23, 2019 in the original amount of $80,413 payable in eighty-four monthly installments of $1,148 including interest at the rate of 5.0%. During the three months ended March 31, 2026, the Company concluded the obligation was fully paid off. Accordingly, there were no principal or interest payments made and the balance is zero as of March 31, 2026. During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $3,196 and $248, respectively. | | $ | - | | | $ | 7,904 | | | | | | | | | | | | | Financing lease obligation under a lease agreement for warehouse equipment dated September 12, 2024 in the original amount of $180,740 payable in sixty monthly payments in the minimum amount of $2,846 including interest at the rate of 6.01%. The amount of the monthly payments is based upon the amount of supplies and materials the Company purchases from the lessor each month. During the three months ended March 31, 2026, the Company made principal and interest payments on this lease obligation in the amount of $0 and capitalized interest in the amount of $813. During the three months ended March 31, 2025, the Company made principal and interest payments on this lease obligation in the amounts of $50,828 and $2,154, respectively. On March 18, 2026, this lease was assumed by a third party for a payment to the Company in the amount of $10,000. A loss of $79,599 was recorded on this transaction. | | $ | - | | | | 64,029 | | | | | | | | | | | | | Total | | $ | 23,427 | | | $ | 101,549 | | | | | | | | | | | | | Current portion | | $ | 23,427 | | | $ | 48,866 | | | Long-term maturities | | | - | | | | 52,683 | | | Total | | $ | 23,427 | | | $ | 101,549 | |
There was no accrued interest on financing leases
at March 31, 2026 and December 31, 2025.
Aggregate maturities of lease liabilities –
financing leases:
| For the period ended December 31, | |
| |
| 2026 | |
$ | 23,427 | |
| 2027 | |
| - | |
| 2028 | |
| - | |
| 2029 | |
| - | |
| 2030 | |
| - | |
| Total | |
$ | 23,427 | |
|