LONG-TERM LIABILITIES – RELATED PARTY

6 Months Ended

Jun. 30, 2021

NOTE 8 – LONG-TERM LIABILITIES – RELATED PARTY

On October 1, 2017, the Company acquired from Gemini Southern, LLC a 2006 Ultra-Comp 53” NASCAR type vehicle transport hauler (the “Hauler”) to be used for promotional / advertising services. The purchase price of the Hauler was $165,000. The Company paid for the Hauler with a promissory note (the “Hauler Note”). The Hauler Note bears interest at 12% per annum and is payable as follows: (i) interest only from October 1, 2017 through February 28, 2018; (ii) $ $3,670 per month from March 1, 2018 through February 28, 2022; and $45,000 on February 1, 2022. The trailer is collateral for the promissory note. The balance of the loan was $83,679 as of December 31, 2020. On April 2, 2021, the Company sold the Hauler for $75,095 and paid Gemini Southern the balance of the loan. The book value of the Hauler was $49,580 resulting in a gain of $25,595.

On December 22, 2018, the Company leased a vehicle from the majority shareholder. The term of the lease is 84 months with payments of $423 per month. At the end of the lease the Company can purchase the vehicle for $2,500. As of June 30, 2021, it is reasonably expected that the Company will exercise the purchase option. The value of the asset and corresponding liability at the date of inception was $30,089, the net present value of the lease payments, including the purchase option, using an interest rate of 6.649% in accordance with the provisions of ASC 842. The balance of the lease liability at June 30, 2021 and December 31, 2020 was $21,850 and $23,042, respectively.

TEARDROPPERS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

For the Three and Six Months Ended June 30, 2021 and 2020

Future lease payments will be as follows:

Future lease payments
2021 (remainder of year)	$	3,385
2022		5,078
2023		5,078
2024		5,078
Thereafter		7,155
Total payments		25,774
Less deferred interest		(3,924	)
Total liability		21,850
Less current portion		(4,385	)
Long-term lease liability	$	17,465

There are no commitments or contingencies related to the long-term liabilities that are not disclosed above.

Teardroppers, Inc. 10-Q