NOTE

LEASES

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, accrued expenses, and long-term operating lease liabilities in the Unaudited Condensed Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received. The Company’s lease terms

may

include options to extend or

not

terminate the lease when it is reasonably certain that it will exercise any such options. For the majority of its leases, the Company concluded that it is

not

reasonably certain that any renewal options would be exercised, and, therefore, the amounts are

not

recognized as part of operating lease right-of-use assets nor operating lease liabilities. Leases with an initial term of

months or less, and certain office equipment leases which are deemed insignificant, are

not

recorded on the balance sheet and expensed as incurred and included within rent expense under general and administrative expense. Lease expense is recognized on a straight-line basis over the expected lease term.

The Company’s most significant leases are real estate leases of office, warehouse and production facilities. The remaining operating leases are primarily comprised of leases of printers and other equipment which are deemed insignificant. For all operating leases, the Company has elected the practical expedient permitted under Topic

842

to combine lease and non-lease components. As a result, non-lease components, such as common area or equipment maintenance charges, are accounted for as a single lease element. The Company does

not

have any finance leases.

Fixed lease expense payments are recognized on a straight-line basis over the lease term. Variable lease payments vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance. Variable payments are deemed immaterial, expensed as incurred, and included within rent expense under general and administrative expense.

The Company leases various facilities and offices throughout the world including the following subsidiary locations:

Gourmet Foods has operating leases for its office, factory and warehouse facilities located in Tauranga, New Zealand, as well as for certain equipment including printers and copiers. These leases are generally for

three

-year terms, with some options to renew for an additional term. The leases mature between

August 2021

and

September 2022,

and require monthly rental payments of approximately

US$8,663

(GST

not

included) translated to U.S. currency as of

December 31, 2019

. Brigadier leases office and storage facilities in Regina, Saskatchewan. The minimum lease obligations for the Regina facility require monthly payments of approximately

US$2,541

translated to U.S. currency as of

December 31, 2019

. Original Sprout currently leases office and warehouse space in San Clemente, CA under a

three

-year lease agreement expiring or renewing at

March 1, 2021.

Minimum monthly lease payments are approximately

$7,837

with increases annually. Wainwright leases office space in Walnut Creek, California under an operating lease which expires in

December 2024.

Minimum monthly lease payments are approximately

$12,000

with increases annually.

For the

three

and

six

months ended

December 31, 2019

the combined lease payments of the Company and its subsidiaries totaled

$100,689

and

$197,219,

respectively, as compared to

$120,950

and

$217,739

for the

three

and

six

months ended

December 31, 2018

, and recorded under general and administrative expense in the Condensed Consolidated Statements of Operations. As of

December 31, 2019

the Condensed Consolidated Balance Sheets included operating lease right-of-use assets totaling

$928,964,

recorded net of

$37,884

in deferred rent, and

$966,848

in total Operating lease liabilities.

Future minimum consolidated lease payments for Concierge and its subsidiaries are as follows:

Year Ended June 30,	Lease Amount
2020	$	192,947
2021		356,763
2022		233,320
2023		203,192
2024		109,198
Total minimum lease payments		1,095,420
Less: present value discount		(128,572	)
Total operating lease liabilities	$	966,848

The weighted average remaining lease term for the Company's operating leases was

years as of

December 31, 2019

and a weighted-average discount rate of

5.8%

was used to determine the total operating lease liabilities.