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Note E - Leases

9 Months Ended

Dec. 31, 2022

NOTE E — LEASES

The Company was assigned an operating lease associated with the real property and leasehold improvements for the Granite City, IL facility acquired from Plateplus pursuant to the Transaction disclosed in Note B. The current lease expires August 31, 2023 but contains a 20 year extension option in favor of the Company which the Company expects to exercise. The lease calls for quarterly rental payments of $18,832. The Company recognized an initial right-of-use ("ROU") asset and lease liability of $1,237,097 during the June 30, 2022 quarter related to this lease. The anticipated 20 year extension of this lease is included in the ROU asset and lease liability calculation. The Company’s lease of its office space in Longview, Texas is the only other operating lease included in the Company's ROU assets and lease liabilities. The lease calls for monthly rent payments of $4,878 and expires on April 30, 2024. The Company’s other operating leases for items such as IT equipment and storage space are either short-term in nature or immaterial.

In October 2019, the Company received a new heavy-duty forklift under a 5-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, 2022 and 2021 are as follows:

	*Three Months Ended*				*Nine Months Ended*
	*December 31,*				*December 31,*
	*2022*		*2021*		*2022*		*2021*
Finance lease – amortization of ROU asset	$	26,235	$	25,734	$	78,327	$	76,831
Finance lease – interest on lease liability		988		1,489		3,342		4,838
Operating lease expense		33,466		14,634		94,120		43,902
	$	60,689	$	41,857	$	175,789	$	125,571

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of December 31, 2022 and March 31, 2022:

	*December 31, 2022*		*March 31, 2022*		*Balance Sheet Classification*
Assets
Operating lease right-of-use asset	$	1,281,996	$	113,168	Operating lease right-of-use asset
Finance lease right-of-use asset		436,499		455,948	Property, plant & equipment
Total right-of-use assets	$	1,718,495	$	569,116
Liabilities
Operating lease liability, current	$	100,744	$	52,270	Accrued expenses
Finance lease liability, current		106,214		104,689	Current portion of finance lease
Operating lease liability, non-current		1,193,415		60,898	Other non-current liabilities
Finance lease liability, non-current		81,016		160,869	Other non-current liabilities
Total lease liabilities	$	1,481,389	$	378,726

As of December 31, 2022, the weighted-average remaining lease term was 19.6 years for operating leases and 1.7 years for finance leases. The weighted average discount rate was 2.7% for operating leases and 1.9% for finance leases.

Maturities of lease liabilities as of December 31, 2022 were as follows:

	*Operating Leases*			*Finance Leases*
Fiscal 2023 (remainder of fiscal year)		33,466			27,223
Fiscal 2024		133,863			108,892
Fiscal 2025		80,205			54,446
Fiscal 2026		75,327			—
Fiscal 2027 and beyond		1,311,941			—
Total undiscounted lease payments	$	1,634,802		$	190,561
Less: imputed interest		(340,643	)		(3,331	)
Present value of lease liability	$	1,294,159		$	187,230