Leases

3 Months Ended

Sep. 30, 2022

Leases

Leases

27. Leases

On February 23, 2018, the Company entered into lease agreement for a new office space as part of the plan to expand operation, the lease commenced on March 1, 2018. The term of the lease is for five (5) years with 1 month free on the 1^st year of the term. The monthly rent on the 1st year will be $11,770 with a 3% increase for each subsequent year. Total commitment for the full term of the lease will be $737,367. As of the date of this filing, this property became the Company’s headquarters.

The Company’s warehouse along with ancillary office space is located at 20529 East Walnut Drive North, Diamond Bar, California, where we lease approximately 11,627 square feet of combined space. The lease term is for five (5) years and two (2) months ending on April 30, 2025. The current monthly rental payment for the facility is $13,022.

On February 1, 2021, the Company entered into lease agreement with Magnolia Extracts, LLC dba Nug Ave-Lynwood, a California limited liability company for a certain regulatory permit issued by the City of Lynwood authorizing commercial retailer non-storefront operations at 11118 Wright Road, Lynwood, CA 90262. The lease was set to commence on February 1, 2021. The lease payment shall equal $10,000 per month and the lease term is on month-by-month basis. Parties have agreed that the first month’s rent payment shall equal $7,000 and the Company owed the landlord a refundable security deposit of $20,000 within 10 days of the commencement date.

On June 3, 2021, the Company entered into lease agreement with William Chung, a related party of the Company for a 2021 Ford Transit Connect Van. The lease payment shall be $926 monthly on a month to month basis. The Company shall have the option to end its lease with a 30-day advanced notice or convert to lease to purchase and car will be sold at fair market value.

On June 3, 2021, the Company entered into lease agreement with William Chung, a related party of the Company for two 2021 Hyundai Accent. The lease payment shall be $612 monthly per vehicle on a month to month basis. The Company shall have the option to end its lease with a 30-day advanced notice or convert to lease to purchase and car will be sold at fair market value.

On June 3, 2021, the Company entered into lease agreement with William Chung, a related party of the Company for a 2021 Hyundai Accent. The lease payment shall be $616 monthly on a month to month basis. The Company shall have the option to end its lease with a 30-day advanced notice or convert to lease to purchase and car will be sold at fair market value.

As of September 30, 2022
Lease Cost
Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations)	$	77,231
Other Information
Cash paid for amounts included in the measurement of lease liabilities for the period ended September 30, 2022	$	64,697
Remaining lease term – operating leases (in years)		1.50
Average discount rate – operating leases		10	%
The supplemental balance sheet information related to leases for the periods are as follows:
Operating leases
Short-term right-of-use assets	$	188,145
Long-term right-of-use assets	$	233,412
Total operating lease assets	$	421,557
Short-term operating lease liabilities	$	200,258
Long-term operating lease liabilities	$	255,236
Total operating lease liabilities	$	455,494

Maturities of the Company’s lease liabilities are as follows:

Year Ended September 30, 2022	Operating Lease
2023	$	234,925
2024		173,745
2025		103,476
Total lease payments		512,146
Less: Imputed interest/present value discount		(56,653	)
Present value of lease liabilities	$	455,494