Note

– Right of Use Assets

and Liabilities

Effective

October 1,

2019,

the Company adopted ASU

2016

02,

and all subsequent ASUs that modified Topic

842.

For the Company, Topic

842

affected the accounting treatment for operating lease agreements in which the Company is the lessee by recognizing lease assets and liabilities on the balance sheet. The Company leases the premises for

two

New Jersey office facilities under operating lease agreements expiring in various years through

2023.

The Company is responsible to pay all insurance, utilities, maintenance and repairs on the office spaces. All of the Company’s leases are classified as operating leases.

October 1, 2019,

the Company recorded additional lease liabilities of approximately

$636,000

attributable to the Company’s operating leases based on the present value of the remaining minimum lease payments with an increase to right-of-use assets of approximately

$636,000.

The Company used

3.5%

as its incremental borrowing rate to calculate the net present value of its leases on

October 1, 2019.

As of

December 31, 2019,

the Company’s operating lease right-of-use assets and operating lease liabilities were approximately

$545,000

and

$540,000,

respectively.

The Company leases office space in Englewood Cliffs, New Jersey and subleases office space in Fort Lee, New Jersey under agreements classified as operating leases.

The lease agreement in Englewood Cliffs, New Jersey expires on

August 31, 2020

and does

not

include any renewal option. The lease agreement provides for an initial monthly base amount plus annual escalations through the term of the lease.

The sublease agreement in Fort Lee, New Jersey expires on

March 31, 2023

and does

not

include any renewal option. The lease agreement provides for an initial monthly base amount plus certain additional amounts pursuant to the leasing arrangement between the landlord and sublessor.

In adopting the new accounting guidance, the Company used the following practical expedients for transitional relief as provided for in ASU

2018

01:

●An entity need

not

reassess whether any expired or existing contracts are or contain leases.

●An entity need

not

reassess the lease classification for any expired or existing leases.

●An entity need

not

reassess initial direct costs for any existing leases.

●An entity

may

elect to apply hindsight to leases that existed during the period from the beginning of the earliest period presented in the financial statements until the effective date.

The Company also elected

not

to include short-term leases (i.e., leases with initial terms of

twelve

months or less) or insignificant equipment leases on the condensed consolidated balance sheet as provided for in the accounting guidance.

The following provides additional information about the Company’s operating leases:

As of

December 31,

2019:

Weighted average remaining lease term (in years)			2.40
Weighted average discount rate			3.5	%

As of

December 31,

2019,

the future minimum payments for the fiscal years are as follows:

2020	$	247,000
2021		122,000
2022		131,000
2023		65,000
Thereafter		–

Total lease payments		565,000
Less interest		(25,000	)
Operating lease liability	$	540,000

The Company leases its facilities in (i) Englewood Cliffs, New Jersey, and (ii) Fort Lee, New Jersey. Rent expense for the

three

months ended

December 31, 2019

and

2018

was

$0.1

million and

$0.1

million, respectively.