Leases

12 Months Ended

Oct. 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 October 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.

On August 1, 2020, we began leasing office space consisting of 1,595 square feet as our main corporate office in Grant, Florida for $1,000 per month. The five-year lease agreement is with a related party, Just Pick, LLC (“Just Pick”). Nirajkumar Patel, our Chief Science and Regulatory Officer and director, is also an officer of Just Pick. We believe our office space is sufficient to meet our current needs.

On November 1, 2021 the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana, to store product inventory at this satellite location. The Company made payments on this lease in the amount of $19,959. The lease was terminated in June 2022.

On November 11, 2021 the Company entered into a month- to-month lease agreement with FFE Solutions Group, located in Salt Lake City Utah, to store additional product inventory at this satellite location. The Company made payments on this lease in the amount of $19,108 . This lease was terminated in April 2022.

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. 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 Company has $118,633 and $11,708 in operating lease expense for the years ended October 31, 2022 and 2021, respectively.

Cash flow information related to leases was as follows:

	October 31, 2022			October 31, 2021
Other Lease Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(118,633	)	$	(11,708	)

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets on October 31, 2022, and 2021:

Lease Position	October 31, 2022		October 31, 2021
Operating Leases
Operating lease right-of-use assets	$	1,198,969	$	55,604
Right of use liability operating lease, current portion	$	166,051	$	13,020
Right of use liability operating lease, long term		1,050,776		46,185
Total operating lease liabilities	$	1,216,827	$	59,205

The following table provides the future minimum operating lease payments as of October 31, 2022:

	Operating
	Leases
Future minimum operating lease liabilities on October 31, 2022
2023	$	217,468
2024		228,134
2025		238,800
2026		253,614
2027 and thereafter		450,934
Total future undiscounted lease payments	$	1,388,950
Less: Imputed interest		(172,123	)
Present value of lease liabilities	$	1,216,827

As of October 31, 2022, the Company had no additional leases which had not yet commenced.