Commitments and Contingencies

9 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 6 - COMMITMENTS AND CONTINGENCIES

INSURANCE CLAIM SETTLEMENT – DAMAGED GOODS INCIDENT

During the nine-months ended December 31, 2020, we have recovered approximately $2,336,000 from our cargo insurance coverage which settled approximately $1,268,000 in an insurance claim receivable with the remaining proceeds reflected in other income and (expenses) as a gain from damaged goods insurance claim in the condensed consolidated statements of operations. For the three and nine months ended December 31, 2020 the gain from damaged goods insurance claim was approximately $0 and $1,068,000, respectively. The insurance claim is now closed.

LEGAL MATTERS

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 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. On June 15, 2020 we executed a three-year lease extension which will expire on August 31, 2023. The renewal base rent payment is $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 December 31, 2020 and March 31, 2020, the remaining amounts due on these capital leasing arrangements was approximately $6,000 and $18,000, respectively.

Supplemental balance sheet information related to leases as of December 31, 2020 is as follows:

Assets:
Operating lease - right-of-use assets	$	2,269,108
Finance leases as a component of property and equipment, net of accumulated depreciation of $16,582		26,945
Liabilities
Current
Current portion of operating leases	$	779,905
Current portion of finance leases		6,336
Noncurrent
Operating lease liabilities, net of current portion	$	1,540,226
Finance leases, net of current portion		-

Supplemental statement of operations information related to leases for the three and nine months ended December 31, 2020 is as follows:

	Three Months Ended			Nine Months Ended
	December 31, 2020			December 31, 2020
Operating lease expense as a component of general and administrative expenses	$	232,646		$	558,069
Finance lease cost
Depreciation of leased assets as a component of depreciation	$	1,555		$	4,664
Interest on lease liabilities as a component of interest expense	$	52		$	315
Supplemental cash flow information related to leases for the nine months ended December 31, 2020 is as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow paid for operating leases				$	576,824
Financing cash flow paid for finance leases				$	11,167
Lease term and Discount Rate
Weighted average remaining lease term (months)
Operating leases		33.0
Finance leases		5.0
Weighted average discount rate
Operating leases		6.25	%
Finance leases		3.68	%

Scheduled maturities of operating and finance lease liabilities outstanding as of December 31, 2020 are as follows:

Year ended December 31,	Operating Leases		Finance Leases
2021	$	911,000	$	6,000
2022		932,000		-
2023		674,000		-
2024		31,000		-
Total Minimum Future Payments		2,548,000		6,000
Less: Imputed Interest		228,000		-
Present Value of Lease Liabilities	$	2,320,000	$	6,000