SOCIETY PASS INCORPORATED. Leases Disclosure

NOTE－12 LEASES

 

We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified plant and equipment explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as we have elected the practical expedient. Some of our operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.

 

Operating leases are included in the operating lease right-of-use assets, current and non-current operating lease liabilities on the Consolidated Balance Sheets. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. We had no financing leases as of December 31, 2024 and 2023.

 

As of December 31, 2024, the leases used a weighted average incremental borrowing rate of 5.63% to determine the present value of the lease payments. The weighted average remaining life of the lease was 2.32 years.

 

As of December 31, 2023, the leases used a weighted average incremental borrowing rate of 5.58% to determine the present value of the lease payments. The weighted average remaining life of the lease was 2.85 years.

 

During the year ended December 31, 2024, no new lease arrangements was entered, and accounted as per ASC Topic 842.

 

The Company excluded short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense, as follows:

 

		Years ended December 31,
		2024				2023
Operating lease expense (per ASC 842)		$	435,139			$	569,508
Short-term lease expense (other than ASC 842)			73,577				119,990
Total lease expense		$	508,716			$	689,497

 

As of December 31, 2024, right-of-use assets were $751,672 and lease liabilities were $753,375.

 

As of December 31, 2023, right-of-use assets were $1,407,956 and lease liabilities were $1,411,226.

 

Components of Lease Expense

 

We recognize lease expense on a straight-line basis over the term of our operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.

 

Future Contractual Lease Payments as of December 31, 2024

 

The below table summarizes our (i) minimum lease payments over the next three years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next three years ending December 31:

 

Years ended December 31,		Operating lease amount
2025		$	392,520
2026			239,507
2027			172,119
Total			804,146
Less: interest			(50,771	)
Present value of lease liabilities		$	753,375
Less: non-current portion			(392,754	)
Present value of lease liabilities – current liability		$	360,621