Note 4 - Lease

3 Months Ended

Jun. 30, 2019

Disclosure Text Block [Abstract]

Note 4 - Lease

Note 4 – Leases

The Company determines if an arrangement is a lease at inception and has lease agreements for warehouses, office facilities, and equipment. These commitments have remaining non-cancelable lease terms, with lease expirations which range from 2021 to 2032.

As a result of the adoption of ASC 842, certain real estate and equipment operating leases have been recorded on the balance sheet with a lease liability and right-of-use asset ("ROU"). Application of this standard resulted in the recognition of ROU assets of $182,624, net of accumulated amortization, and a corresponding lease liability of $190,173 at the April 1, 2019, date of adoption. Accounting for finance leases is substantially unchanged.

Operating leases are included in operating lease ROU assets, operating lease obligations, current, and operating lease obligations, long term on the condensed consolidated balance sheets. Finance leases are included in property and equipment, finance lease obligations, short term, and finance lease obligations, long term, on the condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is calculated using the incremental borrowing rate at lease commencement, which takes into consideration recent debt issuances as well as other applicable market data available. The rates used to discount finance leases previously recorded as capital leases range from 10.2% to 11.5%. Operating leases were discounted at a rate of 17.0%.

Lease terms include options to extend when it is reasonably certain that the option will be exercised. Leases with a term of 12 months or less are not recorded on the consolidated balance sheet.

During the three months ended June 30, 2019, finance least costs recorded in the consolidated financial statements were $238,805 of which $133,478 represents interest expense and $105,327 represents amortization of the right-of-use assets. Operating lease costs were $20,781, of which $7,956 represents interest expense and $12,826 represents amortization of the right-of-use assets.

Amortization of lease assets is included in general and administrative expenses. The future minimum lease payments of lease liabilities as of June 30, 2019, are as follows:

	Year Ending March 31,	Finance Leases	Operating Leases
	2020 (9 months)	616,035	55,065
	2021	835,499	75,748
	2022	851,352	75,339
	2023	890,712	38,101
	2024	915,208	3,927
	Thereafter	7,331,562	-
Total undiscounted lease payments		11,440,368	248,180
Less: Amount representing interest		(5,332,465)	(58,636)
Present value of lease payments		6,107,903	189,544
Less: Current maturities of lease obligations		(156,540)	(42,176)
Long-term lease obligations		5,951,363	147,368