NOTE 7 – LEASES

We lease office space in Scottsdale, AZ and Atlanta, GA under contracts we classify as operating leases. None of our leases are financing leases. The Scottsdale lease extension is effective until 2029 and does not include a renewal option.

On September 17, 2025, we signed a lease for 2,660 square feet of mixed-use warehouse space in Marietta, GA. The lease commenced on October 1, 2025 and expires in October 2028.

Lease expense for the year ended March 31, 2026 was $605,804 including $564,866 of operating lease expense and $40,938 of other lease associated expenses such as association dues, taxes, utilities, and other month to month rentals. Consolidated lease expense for the year ended March 31, 2025 was $656,674 including $653,420 of operating lease expense and $3,255 of other lease associated expenses such as association dues, taxes, utilities, and other month to month rentals.

Lease Impairment

During the year ended March 31, 2026, we vacated our Scottsdale office. As we have been unable to sublease the property, we are working to negotiate a termination with the landlord. As a result, we recognized a write-down of the right-of-use asset of $0.7 million, which is reported in corporate general and administrative expense on the consolidated statements of operations.

Lease Disclosures

The weighted average remaining lease term and weighted average discount rate for operating leases were 1.69 years and 10.0%, respectively, at March 31, 2026 and were 3.1 years and 10.0%, respectively, at March 31, 2025.

Future minimum lease payments under non-cancellable leases as of March 31, 2026 were as follows:

Years Ended March 31,

 

 

 

2027

 

$

605,412

 

2028

 

 

402,823

 

2029

 

 

268,256

 

Total Lease Payments

 

 

1,276,491

 

Less: Amount Representing Interest

 

 

(144,008

)

Present value of lease liabilities

 

$

1,132,483

 

 

The following table presents supplemental information related to our leases.

 

 

Year Ended March 31,

 

 

 

2026

 

 

2025

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

433,795

 

 

$

366,221

 

 

 

 

 

 

 

 

ROU Assets obtained in exchange for new lease obligations:

 

 

 

 

 

 

Operating leases

 

$

108,741

 

 

$

 

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Historical Timeline

Fiscal YearFiled
2026Jun 22, 2026Showing above
2025Jun 16, 2025
2024Jun 13, 2024
2023Jun 14, 2023
2022Jun 29, 2022
2021Jun 29, 2021
2020Aug 19, 2020
2019Jul 1, 2019
2017Apr 11, 2018

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.