Commitments and Contingencies

3 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 8 - COMMITMENTS AND CONTINGENCIES

LEGAL MATTERS

As of August 19, 2020 management is not aware of any legal proceedings other than matters that arise in the ordinary course of business.

LEASES

Operating Leases

We have operating lease agreements for offices and a warehouse facility in Florida, California and Macau 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. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. The renewal base rent payment will be $65,300 with a 3% increase every 12 months for the remaining term of the extension.

We entered into an operating lease agreement, effective May 1, 2018, for 424 square feet of office space in Macau. 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. As of June 30, 2020 and March 31, 2020 the remaining amounts due on these capital leasing arrangements was approximately $14,000 and $18,000, respectively. For the three months ended June 30, 2020 and 2019 the Company incurred interest expense of $154 and $274, respectively.

Supplemental balance sheet information related to leases as of June 30, 2020 is as follows:

Assets
Operating lease - Right-of-use assets	$	2,618,513
Finance leases as a component of Property and equipment, net of accumulated depreciation of $13,472		30,054
Liabilities
Current
Current portion of operating leases	$	758,910
Current portion of finance leases		13,812
Noncurrent
Operating lease liabilities, net of current portion	$	1,914,921

Supplemental statement of income information related to leases for the three months ended June 30, 2020 is as follows:

Operating lease expense as a component of general and administrative expenses	$	148,724
Finance lease cost
Depreciation of leased assets as a component of Depreciation	$	1,555
Interest on lease liabilities as a component of Interest Expense		154

Supplemental cash flow information related to leases for the three months ended June 30, 2020 is as follows:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow paid for operating leases	$	163,187
Financing cash flow paid for finance leases		3,691

Lease term and Discount Rate

Weighted average remaining lease term (months)
Operating leases	36.1
Finance leases	11.0
Weighted average discount rate
Operating leases	6.66	%
Finance leases	3.68	%

Scheduled maturities of operating and finance lease liabilities outstanding as of June 30, 2020 are as follows:

Year	Operating Leases		Finance Leases
2020, for the remaining 6 months	$	413,620	$	7,673
2021		911,204		6,394
2022		931,949		-
2023		674,488		-
2024		30,739		-
Total Minimum Future Payments		2,962,000		14,067
Less: Imputed Interest		288,169		255
Present Value of Lease Liabilities	$	2,673,831	$	13,812