RIGHT-OF-USE ASSETS AND OPERATING AND FINANCE LEASE LIABILITIES

6 Months Ended

Jun. 30, 2025

RIGHT-OF-USE ASSETS AND OPERATING AND FINANCE LEASE LIABILITIES

NOTE 4 – RIGHT-OF-USE ASSETS AND OPERATING AND FINANCE LEASE LIABILITIES

Operating Leases

Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is the incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of the Company’s leases are not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company leases 823 square feet of office space located at 14497 North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The Company entered into an amended lease agreement commencing on July 1, 2020 through July 31, 2023 with base month rents of $1,475 from July 1, 2020 to June 30, 2021, $1,519 from July 1, 2021 to June 30, 2022, $1,564 from July 1, 2022 to June 30, 2023 and $1,611 from July 1, 2023 to July 31, 2023. The Company entered into an amended lease agreement commencing on August 1, 2023 through July 31, 2025 with base month rents of $1,612 from August 1, 2023 to June 31, 2024 and $1,676 from August 1, 2024 to July 31, 2025. The lease expired on July 31, 2025. Under the terms of the lease there may be additional fees charged above the base monthly rental fee. During the six months ended June 30, 2025 and 2024, the Company recorded $10,590 and $10,308 as operating lease expense, respectively, which is included in rent expense on the unaudited condensed consolidated statements of operations.

On August 1, 2023, upon renewal of the lease, the Company recorded a right-of-use asset and lease liability of $37,502.

Right-of-use assets at June 30, 2025 and December 31, 2024 are summarized below:

Schedule of right-of- use assets

	June 30, 2025			December 31, 2024
Office lease	$	37,502		$	37,502
Less accumulated amortization		(35,783	)		(25,762	)
Right of use assets, net	$	1,719		$	11,740

Amortization on the right -of -use asset is included in rent expense on the unaudited condensed consolidated statements of operations.

Operating Lease liabilities are summarized below:

	June 30, 2025			December 31, 2024
Office lease	$	1,753		$	11,976
Less: current portion		(1,753	)		(11,976	)
Long term portion	$	-		$	-

Maturity of lease liabilities are as follows:


Year ended December 31, 2025	$	1,753
Total future minimum lease payments		1,753
Less: Present value discount		-
Lease liability	$	1,753

Finance Leases

Commencing during the year ended December 31, 2023, the Company entered into the following leases:

	○	Vehicle lease - monthly lease payments of $1,167 for 60 months amortized over 5 years at 12%

	○	Vessel lease - monthly lease payments of $1,557 for 60 months amortized over 5 years at 12%

	○	Sonar lease - monthly lease payments of $422 for 60 months amortized over 5 years at 12%

Finance right of use assets are summarized below:

Schedule of Finance Right-Of-Use Assets

	June 30, 2025			December 31, 2024
Vehicle lease	$	53,100		$	53,100
Vessel lease		70,849			70,849
Sonar lease		18,987			18,987
		142,936			142,936
Less accumulated amortization		(69,186	)		(55,096	)
Finance right of use asset	$	73,750		$	87,840

Finance lease liabilities are summarized below:

Schedule of Finance Lease Liabilities

	June 30, 2025			December 31, 2024
Vehicle lease	$	30,976		$	35,944
Vessel lease		41,328			47,957
Sonar lease		12,122			13,868
Total Lease Liabilities		84,426			97,769
Less: current portion		(27,921	)		(26,304	)
Long term portion	$	56,505		$	71,465

Maturity of lease liabilities are as follows:


Year Ended December 31, 2025	$	18,879
Year Ended December 31, 2026		37,758
Year Ended December 31, 2027		37,758
Thereafter		4,414
Total future minimum lease payments		98,809
Less imputed interest		(14,383	)
PV of payments	$	84,426

Expenses incurred with respect to the Company’s finance leases during the six months ended June 30, 2025 and 2024 which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations are set forth below.

	June 30, 2025		June 30, 2024
Finance lease amortization	$	14,090	$	14,091
Finance lease interest		5,537		7,038
Total finance lease expense	$	19,627	$	21,129

Expenses incurred with respect to the Company’s finance leases during the three months ended June 30, 2025 and 2024 which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations are set forth below.

	June 30, 2025		June 30, 2024
Finance lease amortization	$	7,045	$	7,045
Finance lease interest		2,668		3,686
Total finance lease expense	$	9,713	$	10,731

The weighted average remaining lease term and the weighted average discount rate on the finance leases at June 30, 2025 and December 31, 2024 are set forth below.

	June 30,	December 31,
	2025	2024
Weighted average remaining lease term	2.62 years	3.11 years
Weighted average discount rate	12%	12%

SEAFARER EXPLORATION CORP 10-Q/A