RIGHT OF USE ASSET AND LIABILITY

9 Months Ended

Sep. 30, 2022

NOTE 4 – RIGHT OF USE ASSET AND LIABILITY

We lease capital equipment in a suitable, compliant cannabis facility located in the city of Desert Hot Springs. In addition, we entered into this operating land lease agreement with Coachillin’ Holdings LLC on September 1, 2018 to rent approximately 2,268 square feet of leasable land area. The operating lease renews annually and has a base rent of $0.50 square foot of leasable area of the designated premise assigned by Coachillin’ Holdings LLC. We paid an initial non-refundable prepaid rent of $3,402 which was expensed during the three months following the signed agreement, and we will continue to pay $1,134 monthly.

The Company entered into a 18-month lease agreement for office space in July 2019 at $6,304 a month, with an approximate 3% increase annually.

The Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable. The Company used an estimated incremental borrowing rate of 10% to estimate the present value of the right of use liability.

The Company has right-of-use assets of $102,475, right-of-use liability of $102,475 as of September 30, 2022. Operating lease expense for the nine months ended September 30, 2022 was $72,180.

The following table provides the maturities of lease liabilities at September 30, 2022:


Maturity of Lease Liabilities
2022		22,316
2023		86,997
2024		-
2025		-
2026		-
2027 and thereafter		-
Total future undiscounted lease payments		109,313
Less: Interest		(6,838	)
Present value of lease liabilities	$	102,475

Grapefruit USA, Inc 10-Q