What is the present value of lease liabilities for Learningrx as of September 30, 2024, after deducting interest?

According to Learningrx's 2025 Franchise Disclosure Document, the present value of lease liabilities as of September 30, 2024, is $218,958 after deducting interest of $21,042 from the total lease payments of $240,000. This figure represents the discounted value of Learningrx's future lease obligations, reflecting the amount the company is effectively liable for at that specific point in time.

For a prospective Learningrx franchisee, understanding the present value of lease liabilities is crucial because it provides a clear picture of the company's financial obligations related to its leases. This information can be useful when assessing the overall financial health and stability of the franchise system. It also gives insight into how Learningrx manages its lease agreements and financial planning.

Furthermore, the FDD states that Learningrx adopted FASB Topic 842, Leases, using the modified retrospective approach with October 1, 2021, as the date of initial adoption. This adoption required Learningrx to restate amounts as of October 1, 2021, resulting in an increase in operating lease ROU assets of $362,438 and an increase in operating lease liabilities of $362,438. This indicates a significant adjustment to how Learningrx accounts for its leases, bringing them in line with current accounting standards and providing more transparency for potential investors and franchisees.

In addition, the company rents real estate from a related company on a month-to-month lease with an option to renew annually. Rent expense was $60,000 for the year ended September 30, 2024. As of September 30, 2024, ROU assets were $218,958. This arrangement suggests a degree of flexibility in Learningrx's real estate strategy, but it also highlights the importance of understanding the terms and conditions of related-party transactions when evaluating the franchise opportunity.