Leases

3 Months Ended

Oct. 31, 2019

Leases [Abstract]

LEASES

NOTE 8 - LEASES

Effective August 1, 2019, the Company adopted ASC 842, "Leases" ("ASC 842") on a modified retrospective basis. Accordingly, information presented for periods prior to FY2019 have not been recast. In addition, the Company elected the optional practical expedient permitted under the transition guidance which allows the Company to carry forward the historical accounting treatment for existing lease upon adoption. No impact was recorded to the income statement or beginning retained earnings for Topic 842.

The leased properties have a remaining lease term of eleven to forty-six months as of August 1, 2019. At the option of the Company it can elect to extend the term of the leases.

Beginning August 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments, including annual rent increases, over the lease term at commencement date. Operating leases in effect prior to August 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of August 1, 2019. Because neither of our leases included an implicit rate of return, we used our incremental secured borrowing rate based on lease term information available as of the adoption date or lease commencement date in determining the present value of lease payments. The incremental borrowing rate on the leases is 8.0%.

The Company has not entered into any sale and leaseback transactions during the three-month period ended October 31, 2019.

The impact of ASU No. 2016-02 ("Leases (Topic 842)" on our consolidated balance sheet beginning August 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at August 1, 2019 and October 31, 2019 for operating leases are as follows:

ROU Asset	August 1, 2019	$	372,651
Amortization		$	(89,949	)
ROU Asset	October 31, 2019	$	282,702
Lease Liability	August 1, 2019	$	372,651
Amortization		$	(89,949	)
Lease Liability	October 31, 2019	$	282,702
Lease Liability	Short term	$	138,481
Lease Liability	Long term	$	144,221
Lease Liability	Total:	$	282,702

For the three-months ended October 31, 2019 amortization of assets was $89,949.

For the three-months ended October 31, 2019, amortization of liabilities was $89,949.

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of October 31, 2019:

	Operating
Amounts due within 12 months of October 31,	Lease
2020	$	161,602
2021		81,831
2022		50,425
2023		17,808
2024		-
Total minimum lease payments	$	311,667
Less: effect of discounting		(28,965	)
Present Value of future minimum lease payments	$	282,702
Less: current obligation under leases		(138,481	)
Long-term lease obligation	$	282,702