NOTE

15.

LEASES

Operating Leases

We lease office space, warehouses and office equipment which we classify as operating leases. Operating leases with an initial term of

months or less and leases that include an option to terminate without material penalty are

not

recorded on the balance sheet. Most leases recorded on the balance sheet have an option to renew and do

not

have an option to terminate without a material penalty. We recognize lease expense for operating leases on a straight-line basis over the term of the lease. The exercise of the renewal options is at our sole discretion. For all our existing leases we are

not

reasonably certain we will exercise the renewal option. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Our operating lease agreements do

not

contain any residual value guarantees or restrictive covenants. As most of our operating leases contracts do

not

provide an implicit rate, we use the interest rate applicable under the Amended and Restated Credit Agreement based on the information available at commencement date in determining the present value of lease payments. We used the Amended and Restated Credit Agreement rate on

December 31, 2018

, for the initial measurement of all operating leases as of

January 1, 2019

that commenced on or prior to that date.

Finance Leases

We lease vehicles which we account for as finance leases using the effective interest method. Our finance lease agreements do

not

contain material restrictive covenants or material residual value guarantees. We use the rate implicit in the lease at the lease commencement date in determining the present value of lease payments for finance leases.

For the

years ended

December 31, 2019

and

2018

, we did

not

have any lease agreements with variable lease costs and short-term lease costs, excluding expenses relating to leases with a lease term of

one

month or less that were immaterial.

The following table discloses the operating and finance assets and liability balances recorded under ASC

842

as of

December 31, 2019

and ASC

840

as of

December 31, 2018

		As of December 31, 2019		As of December 31, 2018
		(ASC 842)		(ASC 840)
Leases (in thousands)	Classification
Assets
Operating leases	Operating lease assets(a)	$	11,543		N/A
Finance leases	Property and equipment, net(b)		1,815		1,344
Total leased assets, net		$	13,358	$	1,344

Liabilities
Current:
Operating leases	Accrued liabilities	$	2,175		N/A
Finance leases	Current maturities of long-term debt		651		408
Non-current:
Operating leases	Operating lease liabilities, long-term		11,284		N/A
Finance leases	Long-term debt		1,086		851
Total lease liability		$	15,196	$	1,259

(a)

Operating lease assets are recorded net of accumulated amortization of

$1.5

million as of

December 31, 2019

(b)

Finance lease assets are recorded net of accumulated amortization of

$0.7

million and

$0.4

million as of

December 31, 2019

and

2018

, respectively.

The table below discloses the costs for operating and finance leases for the year ended

December 31, 2019

and

2018:

		For the Year Ended December 31,
		2019		2018		2017
		(ASC 842)		(ASC 840)		(ASC 840)
Operating lease costs (in thousands)	Classification
Operating lease cost - office building	Selling, general and administrative	$	1,578		N/A		N/A
Operating lease cost - R&D	Research and development		312		N/A		N/A
Operating lease cost - warehouses	Cost of gaming operations (c)		500		N/A		N/A
Total Operating Lease cost:		$	2,390		N/A		N/A

Finance lease cost
Depreciation of leased assets	Depreciation and amortization	$	649	$	479	$	295
Interest on lease liabilities	Interest expense		42		23		19
Total Finance Lease cost:			691		502		314
Total Lease Cost		$	3,081	$	502	$	314

The table below sets forth the maturity of the operating and financing leases liabilities for

five

years and thereafter under ASC

842:

	Operating Leases (a)		Financing Leases		Total
Maturity of lease liabilities (in thousands)
2020	$	2,907	$	702	$	3,609
2021		2,486		625		3,111
2022		1,957		384		2,341
2023		1,825		86		1,911
2024		1,808		4		1,812
Thereafter		5,612		-		5,612
Total lease payments	$	16,595	$	1,801	$	18,396
Less: interest		3,136		64		3,200
Present value of lease liabilities	$	13,459	$	1,737	$	15,196

(a)

Operating leases payments exclude

$14.3

million of legally binding minimum lease payments for leases signed but

not

commenced as of

December 31, 2019

Future minimum lease payments under ASC

840

as of

December 31, 2018

were as follows:

	Total (in thousands)
For the year ended
December 31,
2019	$	2,817
2020		2,716
2021		2,212
2022		1,470
2023		1,121
Thereafter		5,260
Total	$	15,596

The following table sets forth the weighted average of the lease terms and discount rates for operating and finance leases as of

December 31, 2019

and

2018

	As of			As of
	December 31,			December 31,
	2019			2018
	(ASC 842)			(ASC 840)
Lease term and discount rate
Operating
Weighted average remaining lease term (years)		7.0			N/A
Weighted average discount rate		5.9	%		N/A
Finance Leases
Weighted average remaining lease term (years)		2.3			2.7
Weighted average discount rate		2.6	%		2.6	%

Other Information

The table below discloses cash paid for the amounts included in the measurement of lease liabilities for the year

ended

December 31, 2019

and

2018

	Year Ended December 31,
	2019		2018		2017
	(ASC 842)		(ASC 840)		(ASC 840)
Cash paid for amounts included in the measurement of lease liabilities (in thousands)
Operating cash flows from operating leases	$	2,613		N/A		N/A
Operating cash flows from finance leases	$	42	$	23	$	19
Financing cash flows from finance leases	$	630	$	436	$	280