3 Months Ended
Mar. 31, 2019
Leases [Abstract]  





The Operating Company leases warehouses, retail stores, regional offices, and machinery and equipment. Lease terms are generally three years to seven years for warehouses, office space and retail store locations, and up to seven years for other leased equipment and property.


The Operating Company adopted ASC Topic 842, Leases ("ASC 842") utilizing the modified retrospective adoption method with an effective date of January 1, 2019. The Operating Company made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, a lessee may recognize the lease payments in profit or loss on a straight-line basis over the lease term. The Operating Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset. The Operating Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.


Right-of-use assets represent the Operating Company's right to use an underlying asset for the lease term and lease liabilities represent the Operating Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Operating Company uses the rate implicit in the lease to discount lease payments to present value. However, the Operating Company does have leases that do not provide a readily determinable implicit rate. For such leases, the Operating Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Operating Company uses instruments with similar characteristics when calculating its incremental borrowing rates. The Operating Company lease agreements do not contain any residual value guarantees. The Operating Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.


As of March 31, 2019, the Operating Company had 10 facilities financed under operating leases (consisting of warehouses, regional offices, and retail stores), with lease term expirations between 2019 and 2026.


Rent expense consists of monthly lease rents for warehouses, regional offices, and retail stores under the terms of the Operating Company's lease agreements recognized on a straight-line basis.


The following table provides details of the Operating Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Operating Company's condensed consolidated balance sheets as of March 31, 2019. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.


    Total Finance and
Remainder of 2019   $ 107,880     $ 546,946     $ 654,826  
2020     110,162       706,111       816,273  
2021     87,174       418,540       505,714  
2022     29,321       420,551       449,872  
2023     3,193       371,085       374,278  
Thereafter     -       222,021       222,021  
Total minimum lease payments   $ 337,730     $ 2,685,254     $ 3,022,984  
Less amount representing interest     36,257       283,495       319,752  
Present value of minimum lease payments   $ 301,473     $ 2,401,759     $ 2,703,232  
Less current portion     100,831       641,596       742,427  
Long-term portion   $ 200,642     $ 1,760,163     $ 1,960,805  


The majority of the Operating Company's finance lease obligations relate to leased warehouse equipment. Payments under the Operating Company's finance lease agreements are fixed for terms ranging from three to five years. Accounting for finance leases is substantially unchanged under Topic 842. Finance lease assets are recorded within property and equipment and the related liabilities are recorded as current portion of finance leases and in finance leases, less current portion, in the Operating Company's condensed consolidated balance sheets. The table below presents information related to the Operating Company's finance and operating leases:


    Three Months Ended
March 31, 2019
Finance lease cost      
Amortization of leased assets   $ 28,613  
Interest of lease liabilities     6,139  
Operating lease costs        
Operating lease cost (a)     114,307  
Variance lease cost (a)     65,077  
Total lease cost   $ 214,136  


(a) Expenses are classified within general and administrative expenses within the Operating Company's condensed consolidated statement of operations.


The table below presents lease-related terms and discount rates as of March 31, 2019:


    March 31,
Weighted average remaining lease terms      
Operating leases     3.4 years  
Finance leases     3.4 years  
Weighted average discount rate        
Operating leases     4.9 %
Finance leases     7.8 %




The Operating Company has five operating leases for office space leased to third-party tenants in its corporate headquarters building in Boca Raton, Florida (acquired in October 2018). For the three months ended March 31, 2019, the Operating Company had approximately $193,000 in rental income related to these operating leases, which is included in the "Other income, net" line item in the condensed consolidated statement of operations. The Operating Company did not have any rental income for the three months ended March 31, 2018.


The following table represents the maturity analysis of undiscounted cash flows related to lease payments which the Operating Company expects to receive from its existing operating lease agreements with tenants:


Rental Income

Remainder of 2019   $ 491,322  
2020     619,432  
2021     585,319  
2022     75,883  
2023     -  
Thereafter     -  
Total   $ 1,771,956