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Commitments and Contingencies | 6 Months Ended
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Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | NOTE 7 - COMMITMENTS AND CONTINGENCIES INSURANCE CLAIM SETTLEMENT – DAMAGED GOODS INCIDENT As of this filing we have we recovered approximately $2,336,000 from our cargo insurance coverage which settled approximately $1,268,000 in 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 statement of operations. For the three and six months ended September 30, 2020 the gain from damaged goods insurance claim was approximately $937,000 and $1,068,000, respectively. 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 September 30, 2020 and March 31, 2020, the remaining amounts due on these capital leasing arrangements was approximately $10,000 and $18,000, respectively. For the three months ended September 30, 2020 and 2019 the Company incurred interest expense of $109 and $239, respectively. For the six months ended September 30, 2020 and 2019 the Company incurred interest expense of $263 and $513, respectively. Supplemental balance sheet information related to leases as of September 30, 2020 is as follows:
Assets: |  |  |
Operating lease - right-of-use assets |  | $ | 2,460,942 |
Finance leases as a component of Property and equipment, net of accumulated depreciation of $15,027 |  |  | 28,499 |
Liabilities |  |  |  |
Current |  |  |  |
Current portion of operating leases |  | $ | 765,125 |
Current portion of finance leases |  |  | 10,091 |
Noncurrent |  |  |  |
Operating lease liabilities, net of current portion |  | $ | 1,743,033 |
Finance leases, net of current portion |  |  | - |
|  | Three Months Ended |  |  | Six Months Ended |
|  | September 30 2020 |  |  | September 30 2020 |
Supplemental statement of operations information related to leases for the three and six months ended September 30, 2020 is as follows: |  |  |  |  |  |  |  |
Operating lease expense as a component of general and administrative expenses |  | $ | 176,698 |  |  | $ | 325,423 |
Finance lease cost |  |  |  |  |  |  |  |
Depreciation of leased assets as a component of depreciation |  | $ | 1,554 |  |  | $ | 3,109 |
Interest on lease liabilities as a component of interest expense |  | $ | 109 |  |  | $ | 263 |
Supplemental cash flow information related to leases for the six months ended September 30, 2020 is as follows: |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flow paid for operating leases |  |  |  |  |  | $ | 343,177 |
Financing cash flow paid for finance leases |  |  |  |  |  | $ | 7,412 |
Lease term and Discount Rate |  |  |  |  |  |  |  |
Weighted average remaining lease term (months) |  |  |  |  |  |  |  |
Operating leases |  |  | 35.8 |  |  |  |  |
Finance leases |  |  | 9.0 |  |  |  |  |
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, 2020 are as follows:
Year |  | Operating Leases |  |  | Finance Leases |
2020, for the remaining 6 months |  | $ | 228,831 |  |  | $ | 3,837 |
2021 |  |  | 882,229 |  |  |  | 6,394 |
2022 |  |  | 931,079 |  |  |  | - |
2023 |  |  | 673,592 |  |  |  | - |
2024 |  |  | 61,479 |  |  |  | - |
Total Minimum Future Payments |  |  | 2,777,210 |  |  |  | 10,231 |
Less: Imputed Interest |  |  | 269,052 |  |  |  | 140 |
Present Value of Lease Liabilities |  | $ | 2,508,158 |  |  | $ | 10,091 |

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