Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Note 10 – Leases

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding.

The Company leases its current facilities from Gold Team Inc., a company owned by the Company's CEO, which owns both the Canoga Park, CA and Milford, Ohio locations. The leases expire on April 30, 2020 and the Company expects to exercise a renewal option for an additional 12 months. Effective January 1, 2019, the Company adopted the provision of ASC 842 Leases.

The table below presents the lease related assets and liabilities recorded on the Company's consolidated balance sheets as of September 30, 2019: 

	Classification on Balance Sheet	September 30, 2019
Assets
Operating lease assets	Operating lease right of use assets	$	249,065
Total lease assets		$	249,065
Liabilities
Current liabilities
Operating lease liability	Current operating lease liability	$	153,627
Noncurrent liabilities
Operating lease liability	Long-term operating lease liability		95,438
Total lease liability		$	249,065

Lease obligations at September 30, 2019 consisted of the following:

Twelve months ending September 30,
2020	$	168,000
2021		98,000
Total payments		266,000
Amount representing interest		(16,935	)
Lease obligation, net		249,065
Less lease obligation, current portion		(153,627	)
Lease obligation, long-term portion	$	95,438

The lease expense for the nine months ended September 30, 2019 was $126,000 which consisted of amortization expense of $107,443 and interest expense of $18,557. The cash paid under operating leases during the nine months ended September 30, 2019 was $126,000. At September 30, 2019, the weighted average remaining lease terms were 1.6 years and the weighted average discount rate was 8%