NOTE 6 - LEASES

12 Months Ended

Dec. 31, 2022

NOTE 6 – LEASES

As of December 31, 2022, the Company had signed 5 long-term leases:

·Champagne, Illinois: The Company entered into a lease for $2,516.67/month with a lease term of 3 years (1/1/2021 – 12/31/2023). After 3 years, the Company has an option to renew for $2,718/month with a lease term of an additional 3 years (1/1/2024 – 12/31/2027).

·Flushing, New York: The Company entered into a lease for $7,500/month with a lease term of 5 years (11/25/2020 – 11/15/2025).

·Columbus, Ohio: The Company entered into a lease for $3,370.83/month with a lease term of 5 years (6/4/2021 – 3/31/2028).

·Indianapolis, Indiana: The Company entered into a lease for $3,065.75/month with a lease term of 5 years (5/1/2021 – 4/30/2026).

·Indianapolis, Indiana: The Company entered into a lease for $4,200/month with a lease term of 6 years (6/1/2022 – 5/31/2028).

Accounting Principles

Under ASC 842, the determination of whether an arrangement is a lease is made at the lease’s inception and a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange

for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the implicit rate when it is readily determinable. Since most of the Company’s leases do not provide an implicit rate, to determine the present value of lease payments, management uses the Company’s incremental borrowing rate based on the information available at lease commencement. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option, with renewal options that can extend the lease from three to five years. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company has lease agreements with lease and non-lease components, for which it has made an accounting policy election to account for these as a single lease component.

Leases

The Company leases retail spaces under operating lease agreements that have term lengths of five to seven years and that have renewal options that range from three to five years. The Company pays certain variable lease costs such as real estate taxes, insurance, and common area maintenance charges. The Company accounts for lease and non-lease components as a single lease component.

Lease Cost

Operating lease cost	$	220,622
Short-term lease cost		3,854
Variable lease cost		27,166
Total lease cost	$	251,642

The weighted average remaining lease term for operating leases is 4.30 years and the weighted average discount rate for operating leases is 4%.

Maturities of Lease Liabilities as of December 31, 2022 were as follows:

	Operating
	Leases
2023	$	215,798
2024		212,833
2025		208,660
2026		103,114
2027		95,650
Thereafter		33,112
		869,167
Less imputed interest		70,124
Total	$	799,043

Operating cash flows from operating leases for the year ended December 31, 2022 was $197,187 and lease assets obtained in exchange for operating lease liabilities for the year ended December 31, 2022 of $693,230.

Yo-Health Inc. 10-K/A