Commitments and Contingencies

6 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 7 - COMMITMENTS AND CONTINGENCIES

LEASES

Operating Leases

We have operating lease agreements for offices and a warehouse facility in Florida, California and Hong Kong expiring in various years through 2024.

We entered into an operating lease agreement, effective October 1, 2017, for the corporate headquarters located in Fort Lauderdale, Florida where we lease approximately 6,500 square feet of office space. The lease expires on March 31, 2024. The base rent payment is approximately $8,800 per month, subject to annual adjustments.

We entered into an operating lease agreement, effective June 1, 2013, for 86,000 square feet of warehouse space in Ontario, California for our logistics operations. The lease expires on August 31, 2020 (original lease term of 87 months). The base rent payment is approximately $43,700 per month for the remaining term of the lease. The lease provides for a renewal option to extend the lease term for 5 years at the fair market value at the time of renewal.

We entered into an operating lease agreement, effective May 1, 2018, for 424 square feet of office space in Macau, Hong Kong. The rent is fixed at approximately $1,600 per month for the duration of the lease which expires on April 30, 2021. The lease provides for a renewal option to extend the lease.

Lease expense for our operating leases is recognized on a straight-line basis over the lease terms.

Finance Leases

On May 25, 2018 and June 4, 2018, we entered into two long-term capital leasing arrangements with Wells Fargo Equipment Finance (“Wells Fargo”) to finance the leasing of two used forklift vehicles in the amount of approximately $44,000. The leases require monthly payments in the amount of $1,279 per month over a total lease term of 36 months which commenced on June 1, 2018. The agreement has an effective interest rate of 4.5% and the Company has the option to purchase the equipment at the end of the lease term for one dollar.

Supplemental balance sheet information related to leases as of September 30, 2019 is as follows:
Assets:
Operating lease - right-of-use assets	$	845,703
Finance leases as a component of Property and equipment, net of accumulated depreciation of $8,809		34,717
Liabilities
Current
Current portion of operating leases	$	567,340
Current portion of finance leases		14,681
Noncurrent
Operating lease liabilities, net of current portion	$	377,066
Finance leases, net of current portion		10,096

Supplemental statement of operations information related to leases for the three and six months ended September 30, 2019 is as follows:
	Three Months Ended		Six Months Ended
	September 30 2019		September 30 2019
Operating lease expense as a component of general and administrative expenses	$	148,724	$	297,448
Finance lease cost
Depreciation of leased assets as a component of depreciation	$	1,555	$	3,110
Interest on lease liabilities as a component of interest expense	$	250	$	533

Supplemental cash flow information related to leases for the six months ended September 30, 2019 is as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow paid for operating leases			$	324,783
Financing cash flow paid for finance leases			$	7,136
Lease term and Discount Rate
Weighted average remaining lease term (months)	31.7
Operating leases	20.0
Finance leases
Weighted average discount rate
Operating leases	6.25	%
Finance leases	3.68	%

Scheduled maturities of operating and finance lease liabilities outstanding as of September 30, 2019 are as follows:

Year	Operating Leases		Finance Leases
2020, for the remaining 6 months	$	326,374	$	7,673
2021		348,562	$	15,347
2022		115,814		2,558
2023		117,638		-
2024		121,167		-
Total Minimum Future Payments		1,029,555		25,578
Less: Imputed Interest		85,149		801
Present Value of Lease Liabilities	$	944,406	$	24,777

Installment Note

On June 18, 2019, the Company entered into a financing arrangement with Dimension Funding, LLC (“Dimension”) to finance a new Enterprise Resource Planning (“ERP”) System project over a term of 60 months at a cost of approximately $375,000. Dimension has a 100% security interest in the licensed software being financed. We estimate the system to be placed in service on April 1, 2020. Upon approval by Company management, Dimension will release progress payments directly to the project consultants as specific project milestones are met. Total progress payments will be made to the vendor over a period of approximately nine months and the Company will be charged financing costs on the amounts preapproved for the project. Payments advanced by Dimension to the project consultant during the three and six months ended September 30, 2019 totaled approximately $176,000. This amount was converted to an installment note which calls for estimated monthly installment payments of approximately $3,530 (including principal and interest) over a 60 month period and bears interest of approximately 7.58%. The initial installment payment was due on October 1, 2019. Total financing charges on the financing arrangement was approximately $7,000 for the three and six months ended September 30, 2019.

LEGAL MATTERS

Management is not aware of any legal proceedings other than matters that arise in the ordinary course of business.