Profire Energy, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LEASES (Notes)

LEASES (Notes)

6 Months Ended

Jun. 30, 2019

We have leases for office equipment and office space. The leases for office equipment are classified as financing leases and the typical term is 36 months. We have the option to extend most office equipment leases, but we do not intend to do so. Accordingly, no extensions have been recognized in the right-of-use asset or lease liability. The office equipment lease payments are not variable and the lease agreements do not include any non-lease components, residual value guarantees, or restrictions. There are no interest rates implicit in the office equipment lease agreements, so we used our incremental borrowing rate as the discount rate. Our weighted average discount rate is 4.50% and the weighted average remaining lease term is 27.4 months.

The following table shows the components of financing lease cost:


Financing Lease Cost	For the Three Months Ended June 30, 2019		For the Six Months Ended June 30, 2019
Amortization of right-of-use assets	$	19,280	$	35,641
Interest on lease liabilities	1,421		2,832
Total financing lease cost	$	20,701	$	38,473

The following table reconciles future minimum lease payments to the discounted finance lease liability:


Years ending December 31,	Amount
2019	$	43,694
2020	62,995
2021	40,921
2022	13,599
2023	—
Thereafter	—
Total future minimum lease payments	$	161,209
Less: Amount representing interest	8,268
Present value of future payments	$	152,941
Current portion	$	76,559
Long-term portion	$	76,382

Because our office space leases are short-term, we have elected not to recognize them on our balance sheet under the short-term recognition exemption. During the three and six months ended June 30, 2019, we recognized $13,411 and $22,318, respectively in short-term lease costs associated with office space leases.