LEASES

3 Months Ended

Jun. 30, 2022

Leases

LEASES

NOTE 12 – LEASES

Tuscaloosa Lease

In connection with the acquisition of Hillcrest Fitness LLC on December 1, 2021, 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.

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 operating expenses on the statements of operations.

Birmingham Lease

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

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 operating expenses on the statements of operations.

Right-of-use asset is summarized below:  

		June 30, 2022
	Tuscaloosa Additional Lease
Office lease	$	77,119
Less: accumulated amortization		(7,148	)
Right-of-use asset, net	$	69,971

Operating lease liability is summarized below:  

	June 30, 2022
	Tuscaloosa Lease			Birmingham Lease			Tuscaloosa Additional Lease			Total
Office lease	$	140,901		$	230,382		$	69,971		$	441,254
Less: current portion		(61,268	)		(51,898	)		(13,262	)		(126,428	)
Long term portion	$	79,633		$	178,484		$	56,709		$	314,826

Maturity of the lease liability is as follows:  

	June 30, 2022
	Tuscaloosa Lease			Birmingham Lease			Tuscaloosa Additional Lease			Total
Fiscal year ending March 31, 2023	$	54,000		$	54,000		$	14,625		$	122,625
Fiscal year ending March 31, 2024		72,000			72,000			19,500			163,500
Fiscal year ending March 31, 2025		30,000			72,000			19,500			121,500
Fiscal year ending March 31, 2026		–			72,000			19,500			91,500
Fiscal year ending March 31, 2027		–			6,000			13,000			19,000
Present value discount		(15,099	)		(45,618	)		(16,154	)		(76,871	)
Lease liability	$	140,901		$	230,382		$	69,971		$	441,254