NOTE

- LEASES

The Company leases certain vehicles, real property and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes. The majority of our operating leases are non-cancelable operating leases for production and office space in Copenhagen and White Bear Lake, Minnesota.

January 1, 2019,

the Company adopted Topic

842

requiring organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The Company elected to use the transition method of adoption, under which the new standards were applied prospectively rather than restating the prior periods presented. As a result of the modified retrospective transition method of adoption, certain accounts lack a comparable value for the same period of

2018,

specifically accounts and values associated with operating leases and ROU assets.

Supplemental balance sheet information related to leases as of

June 30, 2019

and

2018

was as follows:

	June 30, 2019			December 31 , 2018
Operating leases :
Operating lease right-of-use	$	1,925,645		$	-

Operating lease liabilities - current	$	603,152		$	-
Operating lease liabilities – long-term		1,352,749			-
Total operating lease liabilities	$	1,955,901		$	-

Finance leases :
Property and equipment, at cost	$	1,171,295		$	1,171,295
Accumulated depreciation		(1,166,115	)		(1,162,256	)
Property and equipment, net	$	5,180		$	9,039

Finance lease liabilities - current	$	5,201		$	13,789
Finance lease liabilities – long-term		-			-
Total finance lease liabilities	$	5,201		$	13,789

Weighted average remaining lease term:
Operating leases		4.4			-
Finance lease		0.1			0.8

Weighted average discount rate:
Operating leases		7.0	%		-
Finance leases		9.0	%		7.3	%

Maturities of lease liabilities at June 30, 2019 were as follows:
	Operating lease			Finance lease
July 2019 – June 2020	$	624,358		$	5,240
July 2020 – June 2021		531,629			-
July 2021 – June 2022		370,864			-
July 2022 – June 2023		342,510			-
July 2023 – June 2024		335,706			-
Thereafter		27,801			-
Total payment under lease agreements		2,232,868			5,240
Less imputed interest		(276,967	)		(39	)
Total lease liability	$	1,955,901		$	5,201

As previously disclosed in our

2018

Form

-K under the prior guidance of ASC

842,

minimum payments under operating lease agreements as of

December 31, 2018

were as follows:

Year ending December 31,	Operating lease
2019	$	712,250
2020		578,997
2021		402,584
2022		350,249
Thereafter		560,977
Total	$	2,605,057