The Company leases warehouse, corporate office space, and equipment under certain operating lease agreements. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as operating lease liabilities in our consolidated balance sheets pursuant to ASC 842, Leases.

Operating ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

 SCHEDULE OF LEASE COST

 SCHEDULE OF OPERATING LEASES

 SCHEDULE OF PRESENT VALUE OF LEASE LIABILITIES

Subsequent to year end, the Company terminated operating leases for certain buildings and warehouses. See Note 22 for Subsequent Events.