Leases

9 Months Ended

Jul. 31, 2022

Leases

Leases

Note 4 – Leases

The Company capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize right-of-use (“ROU”) assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company does not have financing leases and only one operating lease for office space and inventory storage space with a related party, as of July 31, 2022. Certain of the Company’s leases, have and may in the future, include renewal options, which have been and might be in the future, included in the calculation of the lease liabilities and right of use assets when the Company is reasonably certain to exercise the option.

Office and Storage Space

On June 10, 2022, the Company entered into a Lease Agreement (the “2022 Lease”) with Just Pick for approximately 21,332 rentable square feet combined in the office building and warehouse located at 4460 Old Dixie Highway, Grant Valkaria, Florida 32949 (the “Premises”), together with all improvements thereon. Just Pick is considered a related party to the Company because the Company’s Chief Science and Regulatory Officer and director, Mr. Nirajkumar Patel, owns and controls Just Pick.

The Company must pay Just Pick base rent equal to $17,776.67 per month during the first year of the Lease Term with a five-year lease renewal option. Thereafter, the monthly base rent will be increased annually with a monthly base rent of $18,665.50 in the second year, $19,554.33 in the third year, $20,443.17 in the fourth year, $22,220.83 in the fifth year, $23,998.50 in the sixth year, and one twelfth (1/12th) of the market annual rent for the seventh through eleventh years, if applicable. In addition to the base rent, the Company must pay one hundred percent (100%) of operating expenses, insurance costs, and taxes for each calendar year during the Lease term.

As of July 31, 2022 and October 31, 2021, the ROU lease asset, net of accumulated amortization, was $1,245,474 and $55,604, respectively. The initial recognition of the ROU operating lease was approximately $1,276,300 for both the ROU asset and ROU liability, the lease renewal option was considered in the calculation with an incremental borrowing rate of 4.5%. The amortization expense for ROU asset for the twelve months ended October 31, 2021 was $14,529 and no payments were made on the ROU liability. The amortization expense for the ROU asset for the nine months ended July 31, 2022 was $86,385. At October 31, 2021, short-term ROU lease liability was $13,020 and long-term liability was $46,185, totaling $59,205. At July 31, 2022, short-term ROU lease liability was $161,550 and long-term liability was $1,094,622 totaling $1,256,172.

	2022		2023		2024		2025		2026		Thereafter		Total
Lease payments	$	53,330	$	217,467	$	228,134	$	238,800	$	253,614	$	450,935	$	1,442,280
Less discount imputed interest														(186,108	)
Present value of future payments														1,256,172
Less current obligations														(161,550	)
Long term lease obligations													$	1,094,622