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LEASES

12 Months Ended

Sep. 30, 2022

NOTE 16 – LEASES

The Company has entered into various operating lease agreements for certain of its offices, manufacturing and warehouse facilities, and corporate jet. We implemented the provisions of ASC 842, on October 1, 2019. Operating leases are included in the right-of-use assets, and current and noncurrent portion of lease liabilities, as appropriate. These right-of-use assets also include any lease payments made and initial direct costs incurred at lease commencement and exclude lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements which require payments for both lease and non-lease components and have elected to account for these as a single lease component. Certain leases provide for annual increases to lease payment based on an index or rate. We calculate the present value of future lease payments based on the index or at the lease commencement date for new leases.

The table below presents information regarding our lease assets and liabilities.


	September 30, 2022			September 30, 2021
Assets:
Operating lease right-of-use assets	$	4,597,052		$	2,350,929
Liabilities:
Operating lease liabilities, current		(1,428,474)			(599,898)
Operating lease liabilities, non-current		(3,359,354)			(1,857,894)
Total lease liabilities	$	(4,787,828)		$	(2,457,792)
Weighted average remaining lease terms:
Operating leases		2.63 years			3.34 years
Weighted average discount rate:
Operating leases		28	%		28	%
Cash paid for amounts included in the measurement of lease liabilities for the fiscal year ended September 30, 2022, and 2021	$	1,751,680		$	1,057,438


Operating lease costs:	For the fiscal year ended September 30,
	2022		2021
Fixed lease cost	$	1,718,424	$	1,185,576
Variable lease cost		496,914		448,983
Short-term lease cost		164,690		401,526
Sublease income		(293,512)		(84,473)
Total operating lease costs	$	2,086,517	$	1,951,612

Operating Lease Commitments

Our leases primarily consist of land, land and building, or equipment leases. Our lease obligations are based upon contractual minimum rates. Most leases provide that we pay taxes, maintenance, insurance and operating expenses applicable to the premises. The initial term for most real property leases is typically 1 to 3 years, with renewal options of 1 to 5 years, and may include rent escalation clauses. For financing obligations, a portion of the periodic lease payments is recognized as interest expense and the remainder reduces the obligations. For operating leases, rent is recognized on a straight-line basis over the lease term, including scheduled rent increases and rent holidays.

On November 11, 2021, the Company cancelled its lease with Saleen Motors International LLC and purchased the property for $12,000,000. On June 29, 2022, the Company entered into a lease agreement with Lakeview Business Center LLC to lease general office space at 100 Technology Drive, Irvine, CA, Suite 100. The lease term is 36 months plus such additional days as may be required to cause this lease to expire on the final day of the calendar month. The monthly basic rent is $29,231.85 for the first 12 months of which there are two 2 full calendar months of abatement. On June 22, 2022, the Company and Alber K Karamanoukian Trust changed their agreements from month to month rent to a lease agreement for property addresses, 922 S. Myrtle Ave, Monrovia, CA 91016 and 133 - 135 E. Maple Ave. Monrovia, CA 91016 to 3 years. Base rent is $71,447 per month.

The following table reflects maturities of operating lease liabilities at September 30, 2022:


Years ending
September 30,
2023	$	2,820,060
2024		2,706,912
2025		2,082,614
2026		243,539
2027		15,173
Thereafter		—
Total lease payments	$	7,868,298
Less: Imputed interest		(3,080,470)
Present value of lease liabilities	$	4,787,828