Commitments and Contingencies
|3 Months Ended|
Mar. 31, 2019
|Commitments and Contingencies Disclosure [Abstract]|
|Commitments and Contingencies Disclosure [Text Block]||
Note 8 — Commitments and Contingencies
The Company has entered into non-cancellable operating leases for office, warehouse, and distribution facilities, with original lease periods expiring through 2021. In addition to minimum rent, certain of the leases require payment of real estate taxes, insurance, common area maintenance charges, and other executory costs. Differences between rent expense and rent paid are recognized as adjustments to operating lease right-of-use assets on the consolidated balance sheets.
As of March 31, 2019, the Company recorded operating lease liabilities of $877,341 and right of use assets for operating leases of $873,110. During the three months ended March 31, 2019, operating cash outflows relating to operating lease liabilities was $73,473 and the expense for right of use assets for operating leases was $77,704. As of March 31, 2019, the Company’s operating leases had a weighted-average remaining term of 3.7 years and weighted-average discount rate of 4.5%. Excluded from the measurement of operating lease liabilities and operating lease right-of-use assets were certain office, warehouse and distribution contracts that either qualify for the short-term lease recognition exception.
On August 8, 2016, SRM entered into a lease for office space in Kowloon, Hong Kong.
On August 8, 2018, SRM extended its lease for office space in Kowloon, Hong Kong so that the lease will now expire on August 7, 2020.
Monthly lease payments are approximately $6,400 for a total of approximately $154,000 for the total term of the lease.
Total rent expense for the three months ended March 31, 2019 and 2018
was $144,433 and $64,026, respectively. Rent expense is included in general and administrative expense on the consolidated statements of operations.
The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Condensed Consolidated Balance Sheets as of March 31, 2019:
Fergco leases a portion of the building located in Washington, New Jersey that it owns under a month to month lease. Total rental income related to the leased space for both the three months ended March 31, 2019 and 2018 was $25,704, respectively, and is included in other income on the consolidated statements of operations.
The Company is involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which are not covered by insurance. For certain pending matters, accruals have not been established because such matters have not progressed sufficiently through discovery, and/or development of important factual information and legal information is insufficient to enable the Company to estimate a range of possible loss, if any. An adverse determination in one or more of these pending matters could have an adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
We are, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef