Notes
to Condensed Consolidated Financial Statements (Unaudited)
September
30, 2022
NOTE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
and Nature of Operations
Superior
Drilling Products, Inc. (the “Company”, “SDPI”, “we”, “our” or “us”) is an
innovative drilling and completion tool technology company providing cost saving solutions that drive production efficiencies for the
oil and natural gas drilling industry. Our drilling solutions include the patented Drill-N-Ream® well bore conditioning tool (“Drill-N-Ream
tool”) and the patented Strider™ Drill String Oscillation System technology (“Strider technology” or “Strider”).
In addition, the Company is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill bits for a leading oil field
services company. We operate a state-of-the-art drill tool fabrication facility, where we manufacture solutions for the drilling industry,
as well as customers’ custom products. Our headquarters and manufacturing operations are located in Vernal, Utah.
Our
subsidiaries include (a) Superior Drilling Solutions, LLC (previously known as Superior Drilling Products, LLC), a Utah limited liability
company (“SDS”), together with its wholly owned subsidiary Superior Design and Fabrication, LLC, a Utah limited liability
company (“SDF”), (b) Extreme Technologies, LLC, a Utah limited liability company (“ET”), (c) Meier Properties
Series, LLC, a Utah limited liability company (“MPS”), (d) Meier Leasing, LLC, a Utah limited liability company (“ML”),
and (e) Hard Rock Solutions, LLC (“HR” or “Hard Rock”).
Basis
of Presentation
The
Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The consolidated financial statements include the accounts of Superior Drilling Products
Inc. and all of its wholly owned subsidiaries. All significant intercompany accounts have been eliminated in consolidation. The Company
does not have investments in any unconsolidated subsidiaries.
Unaudited
Interim Financial Presentation
These
unaudited interim consolidated condensed financial statements for the three and nine months ended September 30, 2022 and 2021, and the
related footnote disclosures included herein, are unaudited. However, in the opinion of management, these unaudited condensed consolidated
interim financial statements have been prepared on the same basis as the audited financial statements and reflect all adjustments necessary
to fairly state the results for such periods. The results of operations for the three and nine months ended September 30, 2022 are not
necessarily indicative of the results of operations expected for the year ended December 31, 2022. These unaudited interim consolidated
condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the
years ended December 31, 2021 and 2020 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”).
Segment
Reporting
We
operate as a single operating segment, which reflects how we manage our business. We operate in North America and the Middle East. See
note 9 for more on our geographical operational information.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject
to estimates and assumptions include the carrying amount and useful lives of property and equipment and intangible assets, impairment
assessments, share-based compensation expense, and valuation allowances for accounts receivable, inventories, and deferred tax assets.
Concentrations
of Credit Risk
The
Company has two significant customers that represented 89% and 86% of its revenue for the nine months ended September 30, 2022 and 2021,
respectively. These customers had approximately $2,741,000 and $1,081,000 in accounts receivable at September 30, 2022 and 2021, respectively.
The
Company had two vendors that represented 12% of its purchases for the nine months ended September 30, 2022. These vendors had approximately
$0 in accounts payable at September 30, 2022 and purchases in the nine months of 2022 from these vendors totaled approximately $966,000.
The Company had two vendors that represented 12% of its purchases for the nine months ended September 30, 2021. These vendors had approximately
$176,000 in accounts payable at September 30, 2021 and purchases in the nine months ended September 30, 2021 from these vendors totaled
approximately $546,000.
Restatement
of the Unaudited Condensed Consolidated Financial Statements
The
purpose of this restatement is to correct an error in the Company’s previously issued financial statements for the nine months
ended September 30, 2021 in connection with the classification of $513,558 of inventory converted to property, plant and equipment reported
within the Supplemental Information section of the Statement of Cash Flows. The $513,558 in inventory converted to property, plant and
equipment has now been re-classified to purchases of property, plant and equipment in the Cash Flows from Investing Activities section
of the Statement of Cash Flows.
In
accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality (“SAB 99”) and Staff Accounting
Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
(“SAB 108”), the Company has determined that the impact of adjustments relating to the correction of this accounting error
are not material to previously issued annual audited and unaudited interim financial statements.
The
effects of the restatement on the Company’s condensed consolidated statement of cash flows for the nine months ended September
30, 2021 are as follows:
SCHEDULE
OF RESTATEMENT OF CONSOLIDATED STATEMENT OF CASH FLOWS
| |
September 30, 2021 | |
| |
As Reported | | |
As Restated | |
-Net cash from operating activities | |
$ | 878,183 | | |
$ | 1,391,741 | |
-Net cash from investing activities | |
$ | (25,541 | ) | |
$ | (539,099 | ) |
There
was no impact to net cash provided from financing activities within our consolidated statement of cash flows nor was there an impact
on the net change in cash resulting from restatement. There was no effect from the restatement on the Company’s condensed consolidated
balance sheet, condensed consolidated statement of operations and condensed consolidated statement of shareholders’ equity for
the nine months ended September 30, 2021.
Uncertain
Tax Matters
The
Company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent
a reasonable provision for taxes ultimately expected to be paid; however, these liabilities may need to be adjusted as new information
becomes known and as tax examinations continue to progress, or as settlements or litigations occur.
Recent
Accounting Pronouncements
There
are no recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial
statements.
Income
Tax Expense
The
Company recorded income tax expense during the nine months ended September 30, 2022 and 2021 of $107,852 and $82,976, respectively with
income before income taxes of $ and a loss before income taxes of $, respectively. For the nine months ended September
30, 2021, the Company had income tax expense greater than income before income taxes due to taxable income in a foreign tax jurisdiction.
In the U.S. the Company is not subject to U.S. taxes due to having a taxable loss.
Accounting for Grant Received
The
Company applied for and received grant award of up to $750,000 from
the State of Utah’s Manufacturing Modernization Grant Program. The program helps develop manufacturing industry in the state.
Current GAAP has no specific authoritative guidance on the accounting for government assistance received by business entities.
However, Accounting Standard Codification (“ASC”) 105 describes the decision-making framework for determining the
guidance to apply when guidance is not specified by GAAP. ASC 105 points to IAS 20, Accounting for Government Grants and
Disclosure of Government Assistance, and ASC 958-605, Not-for-Profit Entities - Revenue Recognition, that require conditions of the
grant to be met in order to recognize the income.
During 2022, the Company met the conditions of the
grant by purchasing additional manufacturing equipment. The Company recorded the initial grant funding totaling $675,000 as deferred income
on the balance sheet as portions of the grant are approved by the State of Utah. Once all project requirements such as employee training
and installation of the equipment have been completed, the recognition of the income will be based on a straight-line amortization schedule
over the life of the asset.
NOTE
2. REVENUE
Our
revenue is derived from short-term contracts. Revenue is recognized when we satisfy a performance obligation by transferring control
of the promised goods or services to our customers at a point in time, in an amount that reflects the consideration the Company expects
to be entitled to in exchange for those goods or services. We also assess our customer’s ability and intention to pay, which is
based on a variety of factors including our customer’s historical payment experience and financial condition. Payment terms and
conditions vary, although terms generally include a requirement of payment within 30 days.
Revenue
generally does not include right of return or other significant post-delivery obligations. Revenue is recognized net of any taxes collected
from customers, which are subsequently remitted to governmental authorities. We elected to treat shipping and handling costs as a fulfillment
cost instead of as a separate performance obligation. We recognize the cost for shipping and handling when incurred as an expense in
cost of sales.
Disaggregation
of Revenue
Approximately
89% of our revenue is from North America and approximately 11% is from the Middle East for the three and nine months ended September
30, 2022.
Revenue
disaggregated by revenue source are as follows:
SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE
| |
| | | |
| | | |
| | | |
| | |
| |
Three months ended September 30, | | |
Nine months ended September 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
| | |
| | |
| | |
| |
Tool Revenue: | |
| | | |
| | | |
| | | |
| | |
Tool and product sales | |
$ | 892,300 | | |
$ | 315,000 | | |
$ | 2,183,800 | | |
$ | 1,470,000 | |
Tool rental | |
| 549,931 | | |
| 521,228 | | |
| 1,454,806 | | |
| 1,318,135 | |
Other related revenue | |
| 1,900,996 | | |
| 1,510,006 | | |
| 5,365,449 | | |
| 3,495,326 | |
Total Tool Revenue | |
| 3,343,227 | | |
| 2,346,234 | | |
| 9,004,055 | | |
| 6,283,461 | |
| |
| | | |
| | | |
| | | |
| | |
Contract Services | |
| 1,829,318 | | |
| 1,215,685 | | |
| 4,839,497 | | |
| 3,102,219 | |
| |
| | | |
| | | |
| | | |
| | |
Total Revenue | |
$ | 5,172,545 | | |
$ | 3,561,919 | | |
$ | 13,843,552 | | |
$ | 9,385,680 | |
Contract
Costs
We
do not incur any material costs of obtaining contracts.
Contract
Balances
Under
our sales contracts, we invoice customers after our performance obligations have been satisfied, at which point payment is unconditional.
Accordingly, our contracts do not give rise to contract assets or liabilities under Topic 606.
NOTE
3. INVENTORIES
Inventories
are comprised of the following:
SCHEDULE OF INVENTORIES
| |
| | | |
| | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Raw material | |
$ | 1,171,346 | | |
$ | 769,547 | |
Work in progress | |
| 73,861 | | |
| 65,945 | |
Finished goods | |
| 377,844 | | |
| 339,143 | |
Inventories, net | |
$ | 1,623,051 | | |
$ | 1,174,635 | |
NOTE
4. PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment are comprised of the following:
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
| |
| | | |
| | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Land | |
$ | 880,416 | | |
$ | 880,416 | |
Buildings | |
| 4,764,441 | | |
| 4,764,441 | |
Building improvements | |
| 755,039 | | |
| 755,039 | |
Machinery and equipment | |
| 14,267,498 | | |
| 12,207,497 | |
Office equipment, fixtures and software | |
| 628,358 | | |
| 628,358 | |
Transportation assets | |
| 265,760 | | |
| 265,760 | |
Property, plant and equipment, gross | |
| 21,561,512 | | |
| 19,501,511 | |
Accumulated depreciation | |
| (13,134,509 | ) | |
| (12,571,182 | ) |
Property, plant and
equipment, net | |
$ | 8,427,003 | | |
$ | 6,930,329 | |
Depreciation
expense related to property, plant and equipment for the three months ended September 30, 2022 and 2021 was $321,106 and $363,558, respectively,
and for the nine months ended September 30, 2022 and 2021 was $1,051,151 and $1,139,137, respectively.
The
Company purchased a Computerized Numerical Control (CNC) machining center in 2022. The value of the machine is approximately $1,100,000. The
Company has also contracted and issued a deposit to purchase a second CNC machining center.
NOTE
5. INTANGIBLE ASSETS
Intangible
assets are comprised of the following:
SCHEDULE OF INTANGIBLE ASSETS
| |
| | | |
| | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Developed technology | |
$ | 7,000,000 | | |
$ | 7,000,000 | |
Customer contracts | |
| 6,400,000 | | |
| 6,400,000 | |
Trademarks | |
| 1,500,000 | | |
| 1,500,000 | |
Intangible assets, gross | |
| 14,900,000 | | |
| 14,900,000 | |
Accumulated amortization | |
| (14,788,889 | ) | |
| (14,663,889 | ) |
Intangible assets,
net | |
$ | 111,111 | | |
$ | 236,111 | |
Amortization
expense related to intangible assets for the three months ended September 30, 2022 and 2021 was $41,667 and $41,667, respectively, and
for the nine months ended September 30, 2022 and 2021 was $125,000 and $541,667, respectively.
NOTE
6. RELATED PARTY NOTE RECEIVABLE
In
January 2014, we entered into a Note Purchase and Sale Agreement under which we agreed to purchase a loan made to Tronco Energy Corporation
in order to take over the legal position as Tronco’s senior secured lender. Tronco is an entity owned by Troy and Annette Meier.
Effective August 2017, the Company fully reserved the related party note receivable of $6,979,043,
which reduced the related party note receivable balance to $0.
The Company will record a recovery of the loan upon receiving repayment of the note or interest in other income. On July 7, 2020, the
Company entered into an amended and restated loan agreement and note with Tronco changing the payment terms on the note. As amended,
the interest rate on the note is fixed at 2%
per annum. All unpaid interest and principal is due on December 31, 2022, the maturity date, and the Company is actively negotiating
new terms for the Tronco note with the Meiers. The Tronco note balance, including accrued interest, as of September 30, 2022 was
approximately $6,850,000
and as of December 31, 2021 was approximately
$6,749,000.
The Company continues to hold 8,267,860
shares of the Company’s stock as collateral.
NOTE
7. LONG-TERM DEBT
Debt obligations are comprised of the following:
SCHEDULE OF DEBT OBLIGATIONS
| |
September 30, 2022 | | |
December 31, 2021 | |
Hard Rock Note | |
$ | 750,000 | | |
$ | 750,000 | |
Credit Agreement | |
| 1,076,081 | | |
| 1,312,194 | |
Machinery loans | |
| 919,835 | | |
| 357,963 | |
Transportation loans | |
| 23,149 | | |
| 32,277 | |
Insurance financing | |
| 234,700 | | |
| - | |
Long term debt, Total | |
| 3,003,765 | | |
| 2,452,434 | |
Less: | |
| | | |
| | |
Current portion, long-term debt | |
| (2,319,727 | ) | |
| (2,195,759 | ) |
Long-term debt, net | |
$ | 684,038 | | |
$ | 256,675 | |
A
new CNC machining center was purchased and a loan of $669,000 was received as partial funding. The term of the loan is 60 months with
a fixed interest rate of 5.5%.
Hard
Rock Note
In
2014, the Company purchased all of the interests of Hard Rock Solutions, LLC (“Hard Rock”). Consideration consisted of $12.5
million paid in cash at closing and a $12.5 million seller’s note (the “Hard Rock Note”). The Hard Rock Note and subsequent
amendments are secured by all of the patents, patents pending, other patent rights, and trademarks transferred to Hard Rock.
The
Hard Rock Note had a remaining balance of $750,000 as of September 30, 2022, which accrued interest at 8.00% per annum and was paid in
full on October 17, 2022.
Credit
Agreement
In
February 2019, the Company entered into a Loan and Security Agreement (the “Credit Agreement”) with Austin Financial Services,
Inc. (“AFS”). The Credit Agreement provides a $4,500,000 credit facility, which includes a $1,000,000 term loan (the “Term
Loan”) and a $3,500,000 line of credit (the “LOC”). The Credit Agreement matures on February 20, 2023, subject to early
termination pursuant to the terms of the agreement or extension as may be agreed by the parties.
As
of September 30, 2022, we had approximately $83,000 outstanding on the Term Loan and approximately $1,000,000 outstanding on the LOC.
Amounts outstanding under the LOC at any time may not exceed the sum of: (a) up to 85% of accounts receivable or such lesser percentage
as AFS in its sole discretion may deem appropriate if it determines that there has been a material adverse effect (less a dilution reserve
as determined by AFS in its sole good faith discretion), plus (b) the lesser of (i) up to 50% of inventory or such lesser percentage
as AFS in its sole discretion may deem appropriate if it determines that there has been a material adverse effect, or (ii) the inventory
sublimit, minus (c) the borrowing base reserve as may be determined from time to time by AFS.
The
Credit Agreement contains various restrictive covenants that, among other things, limit or restrict the ability of the borrowers to incur
additional indebtedness; incur additional liens; make dividends and other restricted payments; make investments; engage in mergers, acquisitions
and dispositions; make optional prepayments of other indebtedness; engage in transactions with affiliates; and enter into restrictive
agreements. The Credit Agreement does not include any financial covenants. If an event of default occurs, the lenders are entitled to
accelerate the advances made thereunder and exercise rights against the collateral. Borrowing under the LOC is classified as current
debt as a result of the required lockbox arrangement and the subjective acceleration clause. As of September 30, 2022, we were in compliance
with the covenants in the Credit Agreement.
The
interest rate for the Term Loan and the LOC is prime plus 2%. As of September 30, 2022, the interest rate for the Term Loan was 11.85%,
which includes a 3.6% management fee rate. Even if our borrowings under the LOC are less than $1,000,000, we still pay interest as if
we had borrowed $1,000,000. As of September 30, 2022, we had approximately $7,000 of accrued interest. The obligations of the Company
under the Credit Agreement are secured by a security interest in substantially all of the tangible and intangible assets of the Company,
other than any assets owned by the Company that constitute real property (and fixtures affixed to such real property), certain excluded
equipment or intellectual property. A collateral management fee is payable monthly on the used portion of the LOC and Term Loan.
NOTE
8. FINANCIAL OBLIGATION
On
December 7, 2020, the Company entered into a sale agreement (the “Sale Agreement”). Pursuant to the terms of the sale agreement,
the Company sold land and property related to the Company’s headquarters and manufacturing facility in Vernal, Utah (the “Property”)
for a purchase price of $4,448,500. Concurrent with the sale of the Property, the Company entered into a fifteen-year lease agreement
(the “Lease Agreement”), whereby the Company will lease back the Property at an annual rate of $311,395 with payments made
monthly, subject to annual rent increases of 1.5%. Under the Lease Agreement, the Company has an option to extend the term of the lease
and/or to repurchase the Property. Due to the repurchase option, the Company was unable to account for the transfer as a sale under ASC
Topic 842, Leases, and as such is a failed sale-leaseback that is accounted for as a financing transaction. The Company did not
record the transaction as a failed sale-leaseback.
As
a result of the agreement, the Company received cash of $1,622,106, retired real estate debt of $2,638,773 and recorded a financing obligation
liability of $4,260,879 related to the transaction. There was no gain recorded since sale accounting was precluded. The financing obligation
has an implied interest rate of 6.0%. At the conclusion of the fifteen-year lease period, the financing obligation residual is estimated
to be $2,188,710, which corresponds to the carrying value of the property. The balance of the financing obligation as of September 30,
2022 and December 31, 2021 was $4,129,881 and $4,178,336, respectively.
The
financing obligation is summarized below:
SCHEDULE OF FINANCING OBLIGATION
| |
September 30, 2022 | | |
December 31, 2021 | |
Finance obligations for sale-leaseback transactions | |
$ | 4,129,881 | | |
$ | 4,178,336 | |
Current principal portion of finance obligation | |
| (72,344 | ) | |
| (65,678 | ) |
Non-current portion of finance obligation | |
$ | 4,057,537 | | |
$ | 4,112,658 | |
NOTE
9. GEOGRAPHICAL OPERATIONS INFORMATION
The
following summarizes revenue by geographic location:
SCHEDULE OF REVENUE AND PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION
| |
| | | |
| | | |
| | | |
| | |
| |
Three months ended September 30, | | |
Nine months ended September 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
| | |
| | |
| | |
| |
Revenue: | |
| | | |
| | | |
| | | |
| | |
North America | |
$ | 4,622,614 | | |
$ | 3,040,691 | | |
$ | 12,388,746 | | |
$ | 8,073,945 | |
Middle East | |
$ | 549,931 | | |
$ | 521,228 | | |
$ | 1,454,806 | | |
$ | 1,311,735 | |
Revenues | |
$ | 5,172,545 | | |
$ | 3,561,919 | | |
$ | 13,843,552 | | |
$ | 9,385,680 | |
The
following summarizes net property, plant and equipment by geographic location:
SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION
| |
September 30, 2022 | | |
December 31, 2021 | |
Property, plant and equipment, net: | |
| | | |
| | |
North America | |
$ | 6,435,672 | | |
$ | 5,762,066 | |
Middle East | |
| 1,991,331 | | |
| 1,168,263 | |
Property, plant and equipment, net | |
$ | 8,427,003 | | |
$ | 6,930,329 | |
NOTE
10. COMMITMENTS AND CONTINGENCIES
We
are subject to litigation that arises from time to time in the ordinary course of our business activities. In February 2019, the Company
filed a patent infringement lawsuit in the United States District Court for the Western District of Louisiana, Lafayette Division, asserting
that Stabil Drill Specialties, LLC’s (“Stabil Drill”) Smoothbore Eccentric Reamer infringes the patents of Extreme
Technologies, LLC (one of our subsidiaries) on our patented Drill-N-Ream well bore conditioning tool. The lawsuit was subsequently moved
from Louisiana to the United States District Court for the Southern District of Texas, Houston Division. Additionally, on May 20, 2019,
Extreme Technologies, LLC sued Short Bit & Tool Co. and Lot William Short, Jr. (“Defendants”) in the Northern District
of Texas-Dallas Division for their work manufacturing the Smoothbore Eccentric Reamer for Stabil Drill. The Dallas lawsuit is stayed
pending resolution of the first-filed, Houston suit. On October 1, 2020, Superior Energy Services, Stabil Drill’s parent company,
filed for bankruptcy, which resulted in a brief, automatic stay of the litigation. Superior Energy Services announced on February 2,
2021, that it successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, but this bankruptcy did not
affect Extreme Technologies claims against Stabil Drill. On March 9, 2021, the Court lifted the automatic bankruptcy stay, and on May
12, 2021, the Court denied Stabil Drill’s motion for summary judgment of non-infringement. On May 23, 2022, the Court issued its
Order on Claim Construction of the patents, adopting Extreme Technologies’ proffered interpretation on the disputed claim terms.
The parties are preparing this case for trial and expect a jury trial setting in mid-2023.
NOTE
11. SHAREHOLDERS’ EQUITY
On
August 12, 2022, the Board of Directors granted 475,000
restricted stock units to Troy Meier, Chairman and Chief Executive Officer, granted 425,000
restricted stock units to Annette Meier, President and Chief Operating Officer, granted 300,000
restricted stock units to Chris Cashion, Chief Financial Officer, and 75,000
restricted stock units to each of the three independent members of the Board of Directors. Stock price is based on the average price
of the common stock on the date of the grant. The average price on the grant date was $1.00. These grants will vest at one-third
each year for three years. In addition, the Board of Directors authorized 75,000
stock options to be granted to employees of the Company other than Mr. and Mrs. Meier and Mr. Cashion. The fair value of stock
options issued to employees during 2022 will be estimated at the issuance date using the Black-Scholes option pricing model.
These options have not been issued as of September 30, 2022.
NOTE
12. LEASES
During
the nine months ended September 30, 2022, the Company entered into three operating leases and recorded the transactions in accordance
with ASC 842 (Topic 842) – Leases, which requires assets and liabilities that arise from all leases to be recognized on the balance
sheet for lessees. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and the lease
liability represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based
on the present value of the future minimum lease payments over the lease term at the commencement date. The interest rate implicit in
lease contracts is typically not readily determinable. As a result, the Company utilizes an estimate of its incremental borrowing rate
to discount the lease payments, which reflects the fixed rate at which the Company believes it could borrow on a collateralized basis
the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.
The
Company recorded right-of-use asset balance of $688,673
as of September 30, 2022. The current portion
of the lease liability is $45,259
and the long-term portion of the lease liability is $527,011
as of September 30, 2022. The weighted average
remaining lease term is 1.83
years, and the weighted average discount rate
is 7.25%.
The
aggregate future minimum lease payments by year:
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS
| | |
| | |
2022 | | |
$ | 16,800 |
2023 | | |
| 243,794 |
2024 | | |
| 243,794 | |
2025 | | |
| 60,000
| |
2026 | | |
| 60,000
| |
2027 | | |
| 40,000
| |
Total | | |
| 664,388 | |
Less: discount | | |
| (92,118 | ) |
Present value of lease payments | | |
$ | 572,270 | |