Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.1
Leases
 3 Months Ended
Mar. 31, 2022
Leases  
Leases

Note 9 – Leases

 

The Company leases its 12,400 square foot extraction facility under a non-cancelable real property lease agreement that commenced on January 1, 2022 and expires on December 31, 2027, with successive five-year options to extend, at a monthly lease term of $15,290 USD, with approximately a 3% annual escalation of lease payments commencing January 1, 2023, subject to the ASU 2016-02.

 

The Company also leases a residential premise under a non-cancelable real property lease agreement that commenced on September 1, 2021 and expires on August 31, 2024, at a monthly lease term of $1,013 USD, with approximately a 3% annual escalation of lease payments commencing September 1, 2022, subject to the ASU 2016-02.

 

In addition, the Company leases its corporate offices and operational facility in Colombia under short-term non-cancelable real property lease agreements that expire within a year. The Company doesn’t have any other office or equipment leases subject to the recently adopted ASU 2016-02. The extraction facility and office leases contain provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The extraction facility lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

The components of lease expense were as follows:

 

    For the Three  
    Months Ended  
    March 31,  
    2022  
Operating lease costs:        
Amortization of assets   $ 33,431  
Interest on lease liabilities     26,463  
Lease payments on short term leases     12,590  
Total lease cost   $ 72,484  

 

Supplemental balance sheet information related to leases was as follows:

 

    March 31,  
    2022  
Operating leases:        
Operating lease assets   $ 1,502,276  
         
Current portion of operating lease liabilities   $ 98,326  
Noncurrent operating lease liabilities     1,410,883  
Total operating lease liabilities   $ 1,509,209  
         
Weighted average remaining lease term:        
Operating leases     8.75 years  
         
Weighted average discount rate:        
Operating leases     6.75 %

 

Supplemental cash flow and other information related to leases was as follows:

 Schedule of Supplemental Cash Flow Related to Leases

    For the Three  
    Months Ended  
    March 31,  
    2022  
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows used for operating leases   $ 26,497  
         
Leased assets obtained in exchange for lease liabilities:        
Total operating lease liabilities   $ 1,535,706  

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Future minimum annual lease commitments under non-cancelable operating leases are as follows at March 31, 2022:

 

    Operating  
    Leases  
       
2022 (for the nine months remaining)   $ 146,851  
2023     201,640  
2024     203,264  
2025     200,496  
2026 and thereafter     1,335,816  
Total minimum lease payments     2,088,067  
Less interest     578,858  
Present value of lease liabilities     1,509,209  
Less current portion     98,326  
Long-term lease liabilities   $ 1,410,883