Note 19 - Leases

As discussed in Note 1, effective January 1, 2019, the Company adopted Topic 842. At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.

The Company has made certain accounting policy elections whereby it does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less). All of the Company’s existing leases as of March 31, 2019 were classified as operating leases. As of March 31, 2019, the Company had operating leases for land and office with remaining terms expiring from 2022 through 2037 and a weighted average remaining lease term of 18.01 years. Weighted average discount rate used in the calculation of the lease liabilities was 6.7%. The discount rate reflects the estimated incremental borrowing rate, which includes an assessment of the credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to the lease payments in a similar economic environment.

Lease cost for the three-month period ended March 31, 2019 is as follows:

	Three-Month Period Ended March 31,
	2019
	US$
Operating lease cost		423,571
Short-term lease cost		179,195
Total lease cost		602,766

As of March 31, 2019, the maturities of the operating lease liabilities are as follows:

	Remaining Lease Payments US$
2019		1,036,925
2020		1,385,329
2021		1,407,790
2022		1,408,148
2023		1,423,965
Thereafter		22,010,068
Total remaining lease payments		28,672,225
Less: imputed interest		(11,700,822	)
Total operating lease liabilities		16,971,403
Less: current portion		(2,304,598	)
Non-current operating lease liabilities		14,666,805
Weighted-average remaining lease term	18 years
Weighted-average discount rate		6.7	%

Supplemental cash flow information related to leases is as follows:

	Three-Month Period Ended March 31,
Supplemental disclosure of cash flow information:	2019
Cash paid for amounts included in the measurement of lease liabilities:	US$
Operating cash flows from operating leases		128,517
Right-of-use assets obtained in exchange for new lease liabilities:
Operating lease		16,075,213

As previously disclosed in the consolidated financial statement for the year ended December 31, 2018 and under the previous lease standard (Topic 840), future minimum annual lease payments for the years subsequent to December 31, 2018 and in aggregate are as follows:

	US$
Years ended December 31,
2019		2,174,439
2020		1,486,007
2021		1,486,007
2022		1,446,251
2023		1,482,593
Thereafter		21,176,139

Rental expenses incurred for operating leases of plant and equipment and office spaces were US$2,455,509 in 2018.