LEASES

9 Months Ended

Dec. 31, 2021

NOTE 12 –LEASES

Kokomo lease

On October 1, 2020, the Company, under its subsidiary ONE More Gym LLC, entered into a facilities lease (“Kokomo Lease”) for 25,000 square feet in Kokomo, Indiana. The initial lease term is for five years, and the lease commencement date is October 1, 2020. The monthly lease payments are $7,292 in year 1, $7,656 in year 2, $8,039 in year 3, and $8,441 in years 4 and 5.

Valparaiso Lease

The Company leases 11,676 square feet of office space located at 1805 E. Lincolnway, Valparaiso, Indiana 46383. The Company assumed the lease (“Valparaiso Lease”) when it acquired CFit Indiana Inc. on October 6, 2020. The monthly lease payments are $7,625 and the lease expires on December 31, 2023.

Merrill Lease

In connection with the acquisition of CFit Indiana Inc. on October 6, 2020, the Company acquired a facilities lease for 15,000 square feet at 6055N. Broadway Ave., Merrillville, Indiana. The monthly lease payments are $11,190 and the lease expires on February 28, 2026.

Tuscaloosa Lease

In connection with the acquisition of Hillcrest Fitness LLC on December 1, 2020, the Company acquired a facilities lease at 6551 Highway 69 South, Tuscaloosa, AL 35405. The monthly lease payments are $6,000 and the lease expires on March 6, 2024.

Birmingham Lease

In connection with the acquisition of Club Fitness LLC on April 1, 2021, the Company acquired a facilities lease at 2520 Moody Parkway, Mood, AL 35004. The monthly lease payments are $6,000 and the lease expires on April 30, 2026.

Valparaiso Additional Space Lease

On August 30, 2021, the Company entered into a facilities lease (“Valparaiso Additional Space”) for 6,380 square feet in Valparaiso, Indiana. The initial lease term is for five years, and the lease commencement date is August 30, 2021. The monthly lease payments are $4,250 plus Common Area Maintenance (“CAM”) in year 1, $5,317 plus (“CAM”) in year 2 and 3, and $6,380 plus (“CAM”) in year 4 and 5. The Company has the option to renew at a rental rate of $6,912 plus (“CAM”) for years 2029 through 2033.

On November 23, 2021 the Company terminated its lease for (‘Valparaiso Additional Space”). The results of this lease termination were to reduce the Operating Lease Right of Use Asset by $369,663 and decrease the Lease Liability by $375,883.

Tuscaloosa Additional Space Lease

On November 1, 2021, the Company entered into a facilities lease (“Tuscaloosa Additional Space”) in Tuscaloosa, Alabama. The initial lease term is for five years, and the lease commencement date is December 1, 2021. The monthly lease payments are fixed at $1,625 plus Common Area Maintenance of $125 per month for all five years.

Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other general and administrative expenses on the statements of operations.

Right-of-use asset is summarized below:

Summary of right-of-use asset
	December 31, 2021
	Kokomo Lease			Valparaiso Lease			Merrill Lease			Tuscaloosa Lease			Birmingham Lease			Tuscaloosa Additional Lease			Total
Office lease	$	375,483		$	374,360		$	701,404		$	222,087		$	284,745		$	77,119		$	2,035,198
Less: accumulated amortization		(77,434	)		(129,853	)		(94,697	)		(52,766	)		(30,289	)		(996	)		(386,035	)
Right-of-use asset, net	$	298,049		$	244,507		$	606,707		$	169,321		$	254,456		$	76,123		$	1,649,163

Operating lease liability is summarized below:

Summary of operating lease liability
	December 31, 2021
	Kokomo Lease			Valparaiso Lease			Merrill Lease			Tuscaloosa Lease			Birmingham Lease			Tuscaloosa Additional Lease			Total
Office lease	$	307,187		$	244,508		$	673,147		$	169,321		$	254,456		$	76,123		$	1,724,742
Less: current portion		(66,008	)		(116,171	)		(123,746	)		(58,292	)		(49,377	)		(12,618	)		(426,212	)
Long term portion	$	241,179		$	128,336		$	549,402		$	111,029		$	205,079		$	63,505		$	1,298,530

Maturity of the lease liability is as follows:


	December 31, 2021
	Kokomo Lease			Valparaiso Lease			Merrill Lease			Tuscaloosa Lease			Birmingham Lease			Tuscaloosa Additional Lease			Total
Fiscal year ending March 31, 2022	$	22,969		$	33,569		$	33,575		$	18,000		$	18,000		$	4,875		$	130,988
Fiscal year ending March 31, 2023		94,172			134,274			201,450			72,000			72,000			19,500			593,396
Fiscal year ending March 31, 2024		98,880			100,706			201,450			72,000			72,000			19,500			564,536
Fiscal year ending March 31, 2025		101,292			–			201,450			30,000			72,000			19,500			424,242
Fiscal year ending March 31, 2026		50,646			–			184,661			–			72,000			19,500			326,807
Fiscal year ending March 31, 2027		–			–			–			–			6,000			13,000			19,000
Present value discount		(60,772	)		(24,041	)		(149,439	)		(22,679	)		(57,544	)		(19,752	)		(334,227	)
Lease liability	$	307,187		$	244,508		$	673,147		$	169,321		$	254,456		$	76,123		$	1,724,742