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Note 13 - Leases

3 Months Ended

Dec. 31, 2022

NOTE 13 – LEASES

The Company has lease agreements for its corporate offices and warehouse with lease periods expiring between 2024 and 2026. ASC 842 requires the recognition of leasing arrangements on the consolidated balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets. The Company determines whether an arrangement is a lease at inception and classify it as finance or operating. All of the Company’s leases are classified as operating leases. The Company’s leases do not contain any residual value guarantees. During the June 2022 quarter, the Company exited its laboratory facility as all R&D is conducted in its corporate offices. This lease expired in December 2022, and as a result we incurred an exit fee of $80,000 tied to the landlord's right to holdover rent which was booked as an offset to gain on the sold assets for the quarter ending June 30, 2022.

Right-of-use lease assets and corresponding lease liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since the interest rate implicit in our lease arrangements is not readily determinable, the Company determined an incremental borrowing rate for each lease based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the lease commencement date to determine the present value of future lease payments. The Company’s lease terms may include options to extend or terminate the lease.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay real estate taxes, insurance and common area maintenance expenses during the lease terms.

Lease costs on operating leases are recognized on a straight-line basis over the lease term and included as a selling, general and administrative expense in the condensed consolidated statements of operations.

Components of operating lease costs are summarized as follows:

	*Three Months*		*Three Months*
	*Ended*		*Ended*
	*December 31,*		*December 31,*
	*2022*		*2021*
Total Operating Lease Costs	$	332,124	$	386,783

Supplemental cash flow information related to operating leases is summarized as follows:

	*Three Months*		*Three Months*
	*Ended*		*Ended*
	*December 31,*		*December 31,*
	*2022*		*2021*
Cash paid for amounts included in the measurement of operating lease liabilities	$	343,035	$	390,227

As of December 31, 2022, our operating leases had a weighted average remaining lease term of 4.38 years and a weighted average discount rate of 4.66%.

Future minimum aggregate lease payments under operating leases as of December 31, 2022 are summarized as follows:

For the year ended September 30,
2023	$	1,037,169
2024		1,421,610
2025		1,159,949
Thereafter		1,372,862
Total future lease payments		4,991,590
Less interest		(420,079	)
Total lease liabilities	$	4,571,511