NOTE E — LEASES

The Company adopted ASU

2016

02,

Leases (“ASC

842”

) on

April 1, 2019

using the optional transition method under which the new standard is applied only to the most current period presented and the cumulative effect of applying the new standard to existing lease agreements is recognized at the date of initial application. Under this adoption method, reporting periods beginning after

April 1, 2019

are presented under the new standard, while prior period amounts are

not

adjusted and continue to be reported under the accounting standards in effect for the prior period. The adoption of ASC

842

resulted in the recording of initial ROU asset and lease liabilities of approximately

$63,000

April 1, 2019.

The Company's lease of its office space in Longview, Texas is the only operating lease included in the ROU asset and lease liability. The lease calls for monthly rent payments of

$4,878

and expires on

April 30, 2021.

The Company's other operating leases for items such as IT equipment and storage space are either short-term in nature or immaterial.

October 2019,

the Company received a new heavy-duty forklift under a

-year finance lease arrangement with a financed amount of

$518,616

and a monthly payment of

$9,074.

The components of expense related to leases for the

three

and

nine

months ended

December 31, 2020

and

2019

are as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Finance lease – amortization of ROU asset	$	25,243	$	8,644	$	75,364	$	8,644
Finance lease – interest on lease liability		1,981		2,463		6,306		2,463
Operating lease expense		14,634		8,184		41,652		24,552
	$	41,858	$	19,291	$	123,322	$	35,659

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of

December 31, 2020

	December 31, 2020		Balance Sheet Classification
Assets
Operating lease right-of-use asset	$	19,231	Other assets
Finance lease right-of-use asset		488,363	Property, plant & equipment
Total right-of-use assets	$	507,594
Liabilities
Operating lease liability, current	$	19,231	Accrued expenses
Finance lease liability, current		102,196	Current portion of finance lease
Finance lease liability, non-current		291,417	Other non-current liabilities
Total lease liabilities	$	412,844

As of

December 31, 2020

, the weighted-average remaining lease term was

0.3

year for operating leases and

3.7

years for finance leases. The weighted average discount rate was

for operating leases and

1.9%

for finance leases.

Maturities of lease liabilities as of

December 31, 2020

were as follows:

	Operating Leases			Finance Leases
Fiscal 2021 (remainder of fiscal year)		14,634			27,222
Fiscal 2022		4,878			108,888
Fiscal 2023		—			108,888
Fiscal 2024		—			108,888
Fiscal 2025		—			54,444
Total undiscounted lease payments	$	19,512		$	408,330
Less: imputed interest		(281	)		(14,717	)
Present value of lease liability	$	19,231		$	393,613