The NAV People, Inc. & Subsidiary
CONSOLIDATED FINANCIAL STATEMENTS AND
INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
FOR THE 9 MONTHS ENDED
SEPTEMBER 30, 2021
The NAV People, Inc. & Subsidiary
TABLE OF CONTENTS
September 30, 2021
| 1 |
|
|
September 30, 2021 |
|
|
Assets |
|
|
|
Current Assets |
|
|
|
Cash |
$ |
531,723 |
|
Accounts receivable, net of allowance of $435,430 |
961,140 |
|
|
Prepaid expenses and other current assets |
266,826 |
|
|
Total Current Assets |
1,759,689 |
|
|
|
|
|
|
Non-Current Assets |
|
|
|
Property and equipment, net |
92,437 |
|
|
Intangible assets, net |
1,362,710 |
|
|
Deposits |
11,361 |
|
|
Total Non-Current Assets |
1,466,508 |
|
|
Total Assets |
$ |
3,226,197 |
|
Liabilities and Stockholders’ Deficit |
|
|
|
Current Liabilities |
|
|
|
Convertible note payable |
$ |
1,520,000 |
|
Accounts Payable |
384,697 |
|
|
Accrued Expenses |
500,185 |
|
|
Deferred revenue |
2,448,982 |
|
|
Total Current Liabilities |
4,853,864 |
|
|
Long Term Liabilities |
|
|
|
Stockholder notes payable |
3,496,759 |
|
|
Notes payable |
148,817 |
|
|
Total Long-Term Liabilities |
3,645,576 |
|
|
Total Liabilities |
8,499,440 |
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
Common stock, $1 par value, 10,000 shares authorized, 5,000 shares issued and outstanding |
5,000 |
|
|
Additional paid-in capital |
2,000 |
|
|
Accumulated other comprehensive loss |
(11,410) |
|
|
Accumulated deficit |
(5,268,833) |
|
|
Total Stockholders’ Deficit |
(5,273,243) |
|
|
Total Liabilities and Stockholders’ Deficit |
$ |
3,226,197 |
See accompanying Notes to the Consolidated Financial Statements
| 2 |
The NAV People, Inc. & Subsidiary
|
|
|
|
|
|
For the Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
Revenue |
|
|
|
Recurring revenue |
$ |
4,397,990 |
|
Services revenue |
2,071,250 |
|
|
Other revenue |
685,213 |
|
|
Total revenue |
7,154,453 |
|
|
Cost of revenue |
1,913,331 |
|
|
Gross profit |
5,241,122 |
|
|
|
|
|
|
Operating Expenses |
|
|
|
Operations and support |
4,584,170 |
|
|
Sales and marketing |
35,213 |
|
|
General and administrative |
543,784 |
|
|
Bad debt expense |
286,094 |
|
|
Depreciation and amortization |
189,664 |
|
|
Acquisition Costs |
172,550 |
|
|
Total Operating Expenses |
5,811,475 |
|
|
Loss From Operations |
(570,353) |
|
|
|
|
|
|
Other loss |
(19,586) |
|
|
Gain on PPP loan forgiveness |
954,984 |
|
|
Interest expense |
(161,029) |
|
|
Total other Income |
774,369 |
|
|
|
|
|
|
Net Income before provision for income taxes |
204,016 |
|
|
Federal and State Income Tax |
(5,250) |
|
|
Net Income |
198,766 |
|
|
Foreign currency translation adjustment |
(45) |
|
|
Comprehensive Income |
$ |
198,721 |
See accompanying Notes to the Consolidated Financial Statements
| 3 |
|
|
|
|
||||||||||
|
|
Shares |
Par |
Additional Paid-In Capital |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||
|
Balance as of January 1, 2021 |
5,000 |
$ |
5,000 |
$ |
2,000 |
$ |
(11,365) |
$ |
(5,467,599) |
$ |
(5,471,964) |
|
|
Net Income |
- |
- |
- |
- |
198,766 |
198,766 |
||||||
|
Foreign currency translation adjustment |
- |
- |
- |
(45) |
- |
(45) |
||||||
|
Balance as of September 30, 2021 |
5,000 |
$ |
5,000 |
$ |
2,000 |
$ |
(11,410) |
$ |
(5,268,833) |
$ |
(5,273,243) |
|
See accompanying Notes to the Consolidated Financial Statements
| 4 |
The NAV People, Inc. & Subsidiary
|
|
For the Nine months ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
198,766 |
|
Adjustment to reconcile net income to net cash provided by operating activities |
|
|
|
Gain on PPP loan forgiveness |
(954,984) |
|
|
Bad debt |
286,093 |
|
|
Depreciation and amortization |
189,664 |
|
|
Change in assets and liabilities: |
|
|
|
Accounts receivable |
(190,370) |
|
|
Prepaid expenses and other current assets |
(97,590) |
|
|
Accounts payable and accrued expenses |
327,837 |
|
|
Deferred revenue |
661,491 |
|
|
Net cash provided by operating activities |
420,907 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Developed software additions |
(304,607) |
|
|
Purchases of property and equipment |
(14,241) |
|
|
Net cash used in investing activities |
(318,848) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Proceeds from debt issuances |
170,000 |
|
|
Payments of principal amounts of debt |
(1,182) |
|
|
Net cash provided by financing activities |
168,818 |
|
|
Effect of exchange rates on cash |
(5,717) |
|
|
Net change in cash |
265,160 |
|
|
Beginning Balance |
266,563 |
|
|
Ending Balance |
$ |
531,723 |
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
Cash paid for interest |
$ |
137,151 |
See accompanying Notes to the Consolidated Financial Statements
| 5 |
The NAV People, Inc. & Subsidiary
Description of the Business
The NAV People, Inc. (“The NAV People” or the “Company”) provides software for highly regulated retailers in the legal cannabis space. Founded in 2016 and headquartered in Las Vegas, Nevada, the NAV People services a client base comprised of U.S.-based multi-state operators and single-state operators and Canadian LPs, in addition to global cannabis clients outside North America. The NAV People have over 85 customers.
Basis of Presentation and Consolidation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”) for consolidated financial information.
The accompanying consolidated financial statements include the accounts of The NAV People and its wholly-owned subsidiary, Dynamics 365 People Software and Services, Ltd. All intercompany balances have been eliminated in consolidation.
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions, which affect the reported amounts in the financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions which management believes are reasonable under circumstances. The Company has used estimates related to several financial statement amounts including useful lives of property and equipment, and internal use software. These estimates are inherently subject to judgement and actual results could differ from those estimates.
Concentrations of Credit Risk
Cash and cash equivalents and accounts receivable are potentially subject to credit risk concentration. We have not experienced any material losses related to these concentrations during the periods presented. Cash is deposited with financial institutions that the Company believes are of high credit quality. These deposits are typically in excess of insured limits.
The Company derives a portion of its revenue from several large customers, as well as a large number of individual small businesses. If the financial condition or results of any one of the large customers deteriorates substantially, the Company’s operating results could be adversely affected. The Company does not require collateral and maintains an allowance for estimated credit losses on customer accounts when considered necessary.
There were two customers which represented 15% of consolidated revenue for the nine months ended September 30, 2021. The Company has not experienced any losses related to these concentrations during the period presented.
The Company relies on a third party to provide payment processing services ("payment service provider") to collect amounts due from end-users. Payment service providers are financial institutions or credit card companies that the Company believes are of high credit quality.
| 6 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Certain Significant Risks and Uncertainties
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. COVID-19 has rapidly impacted market and economic conditions globally. In an attempt to limit the spread of the virus, various governmental restrictions have been implemented, including business activities and travel restrictions, and “shelter-at-home” orders, that have had an adverse impact on our business and operations by reducing demand for transportation. In light of the evolving nature of COVID-19 and the uncertainty it has produced, it is not possible to predict the COVID-19 pandemics cumulative and ultimate impact on our future consolidated business operations, results of operations, financial position, liquidity, and cash flows. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the United States, including whether there will be further resurgences of COVID-19 in various regions, the distribution of the vaccines in various regions, the impact on capital, and financial markets, governmental or regulatory orders that impact our business and whether the impacts may result in permanent changes to our end-users’ behavior, all of which are highly uncertain and cannot be predicted. Also, see Note 10, Commitments and Contingencies.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity from the date of purchase of three months or less to be cash equivalents. As of September 30, 2021, there were no cash equivalents. We continually monitor our positions with, and the credit quality of, the financial institutions with which we invest.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company reviews customer receivables and collections to evaluate and estimate a reserve for doubtful accounts, including the periodic write off of uncollectible receivables. The Company determines the allowance based on analysis of historical bad debts, customer concentrations, customer creditworthiness, and current economic trends. The methodology used to calculate the reserve for receivables is supported by the historical information and is applied appropriately to all receivable balances.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over their estimated useful lives of the assets See Note 3. When assets are retired or otherwise disposed of, the cost, accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated statement of operations and comprehensive income in the period realized. Maintenance and repairs that do not enhance or extend the asset’s useful life are charged to operating expenses as incurred.
Intangible Assets
The Company capitalizes certain costs, such as compensation costs incurred in developing internal-use software once planning has been completed, management has authorized and committed project funding, and it is probable that the project will be completed, and the software will function as intended. Amortization of such costs occurs on a straight-line basis over the estimated useful life of the related asset and begins once the asset is ready for its intended use. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred.
| 7 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Evaluation of Long-Lived Assets for Impairment
The Company evaluates its held-and-used long-lived assets for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset or asset group (collectively, the “asset group”) may not be recoverable. The Company measures the recoverability of the asset group by comparing the carrying amount of such asset groups to the future undiscounted cash flows it expects the asset group to generate. If the Company considers the asset group to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset group exceeds its fair value. No such impairments have been identified as of September 30, 2021.
Deferred Revenue
Deferred revenue primarily consists of billings or payments received in advance of revenue recognition and is recognized as the revenue recognition criteria are met. All deferred revenue is expected to be recognized during the succeeding 12-month period and is recorded as a current liability.
Research and Development
Research and development costs are charged to operations as incurred.
Foreign Currency Translation
The functional currency of the Company's non-U.S. operations is the local currency. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenue and expenses are translated into U.S. dollars using the average rates of exchange prevailing during the period. Translation gains or losses are included as a component of accumulated other comprehensive loss in stockholders' equity. Gains and losses resulting from foreign currency transactions are recognized in operating expenses.
Income Taxes
The Company accounts for income taxes in accordance with the asset and liability approach method. Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense. We are subject to income taxes in the United States and Canada.
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. As of September 30, 2021, we have significant federal and state income tax net operating loss (“NOL”) carryforwards. We believe that it is more likely than not that the benefit from federal and state NOL carryforwards will not be realized. In recognition of this risk, we have provided a full valuation allowance on the deferred tax assets related to these NOL carryforwards.
| 8 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Recently Issued Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued ASC Topic 842, Leases. This standard requires all entities that leased assets under leases with terms of more than 12 months to capitalize the assets and related lease liabilities on the consolidated balance sheet. The new standard will become effective for us beginning January 1, 2022; however, early adoption is permitted. While we continue to assess all potential impacts of this new standard, we anticipate this standard will have a material impact on our consolidated financial position as we will be required to recognize right-of-use assets and lease liabilities on our consolidated balance sheet. However, we do not expect the adoption to have a significant impact on our consolidated results of operations or cash flows.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” to require the measurement of expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance also amends the impairment model for available for sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on such debt security is a credit loss. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. All other entities, ASU No. 2016-13 is effective for fiscal years beginning after Dec. 15, 2022. Early adoption is permitted. The Company will adopt the new standard on January 1, 2022. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements. We are still evaluating the impact on our consolidated financial statements.
The Company adopted ASC 606 under the modified retrospective transition method with an effective date of January 1, 2019 and applied this guidance to those contracts which were not completed at the date of adoption. The standard requires entities to recognize revenue upon transfer of goods or services to customers in amounts that reflect the consideration that the entities expect to receive in exchange for those goods or services.
We recognize revenue when or as we satisfy our obligations. We derive our revenues from recurring revenue (subscription sales, support, hosting, and enhancement), services revenue (packages and projects), and other revenue (perpetual licenses and hardware).
The Company determines revenue recognition under ASC 606 through the following steps:
| 9 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company has the following revenue streams:
The Company offers its software under a cloud-based delivery model, where it provides access to its software on a hosted basis as a service and customers do not have the contractual right to take possession of the software. Revenue is recognized when control of the promised services is transferred to the Company's customers at an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The majority of customer contracts have performance obligations that the Company satisfies over time and revenue is recognized by consistently applying a method of measuring progress toward satisfaction of that performance obligation.
The Company’s recurring revenue is comprised of subscription sales, support, hosting and enhancement revenue. Revenue is recognized ratably over the contract term based on the commencement date of the contract, which is the date our cloud-based software is made available to customers.
Revenue from the Company’s service for project and packages revenue are recorded as the services are performed. Once the contract is signed, invoices are generated for professional services on a time and material basis, although the Company occasionally engage in fixed-price service engagements and invoices for those based upon agreed milestone payments. Revenue is recognized as services are performed for time and material engagements and on a proportional performance method as the services are performed for fixed-fee engagements. Training revenue is recognized as the services are performed.
Perpetual software is recognized when delivered, which is typically within a day of receipt of the order. Hardware is recognized when invoiced and usually ships within a few days after receipt of order.
Any of the above agreements would be a complete contract. Each party’s rights regarding the services to be transferred, pricing, and payment terms are listed in the contract. These factors indicate that the contract has commercial substance. Risk, timing, or the Company’s future cash flows are expected to change as a result of a contract. Risk includes non-performance risk, non-payment risk, and mis-usage risk. Payments are generally due within 15-45, days upon receipt of an invoice.
The Company considered the guidance of ASC 606-10-55-3A regarding the collection probability. At contract inception, the Company deems it is probable that the Company will collect substantially all of the consideration to which it will be entitled to in exchange for the services that will be transferred to the customer, based on historical experience with customers. The Company also periodically completes an assessment of collectability from new customers. This assessment includes reviewing publicly available financial information and inquiring of customer’s financial creditability. Arrangements for which collection of fees is not deemed probable are recognized upon cash collection.
The Company considered the terms of the contract to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract may include fixed amounts, variable amounts, or both. The Company’s contracts typically have either (1) annual; (2) monthly; (3) variable based on completion of performance obligation. Therefore, the Company’s contracts have both fixed (e.g., stated annual, monthly, etc. fee) and variable components (e.g., per hour, time and material).
| 10 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred Commissions
The Company capitalizes sales commission expenses and associated payroll taxes paid to internal sales personnel that are incremental to obtaining customer contracts. These costs are deferred and then amortized over the expected period of benefit. Commissions for existing customer renewals are deferred and amortized over twelve months. We have determined the period of benefit taking into consideration several factors including the expected subscription term and expected renewals of our customer contracts, the duration of our relationships with our customers, and the life of our technology. Amortization expense is included in sales and marketing in the accompanying consolidated statement of operations and comprehensive income.
Variable consideration
At the end of the reporting period, the Company knows the amount of time and material to invoice the customer in order to recognize revenue. Therefore, no estimation of variable consideration is necessary.
Principal vs. Agent Considerations
Judgment is required in determining whether we are the principal or agent in its transactions with the customers. We evaluate the presentation of revenue on a gross or net basis based on whether we control the service provided to the end-user and are the principal (i.e. “gross”), or we arrange for other parties to provide the service to the end-user and are an agent (i.e. “net”).
The following tables present our revenues disaggregated by offering. This level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
There are several practical expedients and exemptions allowed under Topic 606 that impact timing of revenue recognition and the Company’s disclosures. Below is a list of practical expedients the Company applied in the adoption and application of Topic 606:
Application Practical Expedients
| 11 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For contract modifications, the Company reflected the aggregate effect of all modifications that occurred prior to the adoption date when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to satisfied and unsatisfied performance obligations for the modified contract at transition.
Note 3 – Property and Equipment
Depreciation and amortization is calculated using the straight-line method over the estimated useful life of the assets. Estimated useful lives of major classes of depreciable assets are as follows:
|
Property and Equipment |
Estimated Useful Life |
|
Computers and Peripherals |
3 |
|
Furniture and Fixtures |
5 |
|
Leasehold Improvements |
5 |
Property and equipment consist of the following as of September 30, 2021:
|
|
|
|
|
Computers and Peripherals |
$ |
132,490 |
|
Furniture and Fixtures |
40,694 |
|
|
Leasehold Improvements |
24,110 |
|
|
Total Depreciable Assets |
$ |
197,294 |
|
Less: accumulated depreciation and amortization |
104,857 |
|
|
Property and equipment, net |
$ |
92,437 |
Depreciation expense amounted to $31,778 for the nine months ended September 30, 2021.
| 12 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 4 – Intangible Assets
Intangible assets is comprised entirely of capitalized software for which amortization is calculated using the straight-line method over a 5 year estimated useful life.
Intangible assets consist of the following at September 30, 2021:
|
|
|
|
|
Software development costs |
$ |
1,849,781 |
|
Less: accumulated amortization |
(487,071) |
|
|
Total |
$ |
1,362,710 |
Amortization expense amounted to $157,886 for the nine months ended September 30, 2021.
Based on our net amortizable intangible asset balance of $1,362,710 at September 30, 2021, we expect that amortization expense will be as follows for the next five years and thereafter:
|
2021 |
$ |
165,955 |
|
2022 |
366,947 |
|
|
2023 |
365,352 |
|
|
2024 |
316,225 |
|
|
2025 |
129,296 |
|
|
2026 |
18,935 |
|
|
Total |
$ |
1,362,710 |
Note 5 – Debt
Debt consists of the following as of September 30, 2021:
|
Stockholder notes payable |
$ |
3,496,759 |
|
Convertible note payable |
1,520,000 |
|
|
SBA Disaster Loan |
148,817 |
|
|
Total |
$ |
5,165,576 |
Interest expense for the nine months ended September 30, 2021 was $161,029.
Stockholder notes payable
In June 2017, the Company entered into a $2,000,000 note payable agreement with a stockholder. The note has a 0% stated interest rate, and the entire principal balance is due upon maturity of June 13, 2022.
In June 2018, the Company entered into a $1,326,759 note payable agreement with a second stockholder. The note has a 0% stated interest rate, and the entire principal balance is due upon maturity of June 20, 2023.
Convertible note payable
In June 2017, the Company entered into a convertible note payable agreement with a stockholder.
| 13 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Effective December 23, 2020, this note was assigned to an affiliate of the stockholder. The note allows for up to $1,750,000 to be borrowed at 12% per annum. Interest is paid monthly, and the entire principal balance is due upon maturity of June 13, 2022.
The note is convertible into common stock of the Company at the option of the lender or upon a change in control event, as defined in the agreement.
The note agreement contains certain financial covenants, and the Company was not in compliance as of September 30, 2021, and therefore the entire outstanding principal balance of $1,520,000 is shown as current on the accompanying consolidated balance sheet.
Paycheck Protection Program (“PPP”) Loan
On April 29, 2020, the Company received a loan in the amount of $954,984 under the Paycheck Protection Program administered by the United States Small Business Administration (the “SBA”). According to the Coronavirus Aid, Relief, and Economic Security Act (the “Cares Act”), PPP loan provides for forgiveness of up to the full principal amount and accrued interest if the funds are used for payroll costs, interest on mortgages, rent, and utilities. However, at least 60% of the forgiven amount must have been used for payroll. The loan bears interest at a rate of 1.00% per annum.
The entire loan (principal and accrued interest) was forgiven on June 30, 2021 and the $954,984 was recorded as a gain on the statement of operations and comprehensive income.
SBA Disaster Loan
In April 2020, the Company received a $2,000,000 loan under the Disaster Loan Assistance Program administered by the SBA, which was repaid in full in May 2020. Then, in July 2020, the Company received a loan in the amount of $150,000 under the same program. The loan bears interest at a rate of 3.75% per annum and is a 30 year loan.
The future principal payments for the Company’s debt are as follows:
|
Year ending December 31 |
|
|
|
2021 |
$ |
1,521,283 |
|
2022 |
2,173,037 |
|
|
2023 |
1,331,891 |
|
|
2024 |
5,132 |
|
|
2025 |
134,233 |
|
|
Total |
$ |
5,165,576 |
| 14 |
The NAV People, Inc. & Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Operating Lease
The Company leases one office facility under an operating lease arrangement which expires on April 30, 2024. Rent expense related to the Company’s operating leases was $194,514 for the nine months ended September 30, 2021. Future minimum payments, by year and in the aggregate, under operating leases at September 30, 2021, are as follows:
|
|
Future Minimum Payments |
|
|
2021 |
$ |
61,743 |
|
2022 |
254,376 |
|
|
2023 |
262,008 |
|
|
2024 |
89,956 |
|
|
Total future minimum lease payments |
$ |
668,083 |
Litigation
From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. As of September 30, 2021, and through the date these financial statements were available to be issued, there were no legal proceedings requiring recognition or disclosure in the financial statements.
Contingencies
As of the date of this report, there are no known contingent liabilities for the nine months ended September 30, 2021.
The Company has evaluated all subsequent events through December 13, 2021, which is the date the financial statements were available to be issued.
On October 1, 2021, the Company was acquired by Akerna Corp. (NASDAQ: KERN) for approximately $17 million, comprised of approximately $5 million in cash and $12 million in common stock of Akerna Corp.
| 15 |