Leases

3 Months Ended

Jan. 31, 2023

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 Just Pick, LLC (“Just Pick”), a related party owned and controlled by Nirajkumar Patel, the Chief Science and Regulatory Officer and a director of the Company, as of January 31, 2023, and 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.

Office and Storage Space

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. 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 had $46,949 and $3,649 in operating lease expense for the three months ended January 31, 2023, and January 31, 2022, respectively.

Cash flow information related to leases was as follows:

	January 31, 2023			January 31, 2022
Other Lease Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(46,949	)	$	(3,649	)

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets as of January 31, 2023, and October 31, 2022:

Lease Position	January 31, 2023		October 31, 2022
Operating Leases
Operating lease right-of-use assets	$	1,152,020	$	1,198,969
Right of use liability operating lease current portion	$	170,603	$	166,051
Right of use liability operating lease long term		1,006,435		1,050,776
Total operating lease liabilities	$	1,177,038	$	1,216,827

The following table provides the maturities of lease liabilities at  January 31, 2023:

	Operating Leases
Maturity of Lease Liabilities on January 31, 2023
2023	$	164,139
2024		228,134
2025		238,800
2026		253,614
2027 and thereafter		450,934
Total future undiscounted lease payments	$	1,335,621
Less: Interest		(158,583	)
Present value of lease liabilities	$	1,177,038

At January 31, 2023, the Company had no additional leases which had not yet commenced.