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

March 31, 2019

and

2018

was as follows:

	March 31, 2019			March 31, 2018
Operating leases :
Operating lease right-of-use	$	1,930,932		$	-

Operating lease liabilities - current	$	459,528		$	-
Operating lease liabilities – long-term		1,504,328			-
Total operating lease liabilities	$	1,963,856		$	-

Finance leases :
Property and equipment, at cost	$	1,156,162		$	1,361,920
Accumulated depreciation		(1,149,571	)		1,348,054
Property and equipment, net	$	6,591		$	13,866

Finance lease liabilities - current	$	6,651		$	13,789
Finance lease liabilities – long-term		-			-
Total finance lease liabilities	$	6,651		$	13,789

Weighted average remaining lease term:
Operating leases		4.6			-
Finance lease		0.3			1.1

Weighted average discount rate:
Operating leases		7.1	%		-
Finance leases		9.0	%		7.3	%

Maturities of lease liabilities at March 31, 2019 were as follows:
	Operating lease			Finance lease
April 2019 – March 2020	$	583,776		$	6,769
April 2020 – March 2021		547,133			-
April 2021 – March 2022		363,370			-
April 2022 – March 2023		344,238			-
April 2023 – March 2024		332,280			-
Thereafter		137,204			-
Total payment under lease agreements		2,308,001			6,769
Less inputed interest		(344,145	)		(178	)
Total lease liability	$	1,963,856		$	6,591

As previously disclosed in our

2018

Form

-K under the prior guidance of ASC

840,

minimum payments under operating and finance lease agreements as of

December 31, 2018

were as follows:

Year ending December 31,	Operating lease		Finance lease
2019	$	712,250	$	14,654
2020		578,997		-
2021		402,584		-
2022		350,249		-
Thereafter		560,977		-
Total	$	2,605,057	$	14,654