16. COMMITMENTS AND CONTINGENCIES Legal proceedings On March 26, 2013, our South African operations received Notice of Motion filed in the Kwazulu-Natal High Court, Durban, Republic of South Africa, filed against Rolalor (PTY) LTD (Rolalor) and Labyrinth Trading 18 (PTY) LTD (Labyrinth) by Jennifer Catherine Mary Shaw (Shaw). It was requested that the Respondents, Rolalor and Labyrinth, be wound up in satisfaction of an alleged debt owed in the total amount of R4,082,636 (approximately $480,000). The outcome of the case resulted in the proposed liquidation of Rolalar in which the Company did not object as the entity has no assets. The Company does not expect there to be a material impact as a result of the proceedings, as the South African entities were sold, and the buyers retained any and all liabilities. No amounts have been accrued as of December 31, 2019 and December 31, 2018 in the accompanying consolidated balance sheets. From time to time, the Company may be involved in legal proceedings and claims that have arisen in the ordinary course of business are generally covered by insurance. As of December 31, 2019, the Company does not expect the amount of ultimate liability with respect to these matters to be material to the Companys financial condition, results of operations or cash flows. Leases The Companys leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Some of the Companys leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurants sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. The Companys lease agreements do not contain any material residual value guarantees or material restrictive covenants. As part of the lease agreements, the Company is also responsible for payments regarding non-lease components (common area maintenance, operating expenses, etc.) and percentage rent payments based on monthly or annual restaurant sales amounts which are considered variable costs and are not included as part of the lease liabilities. Related to the adoption of Leases Topic 842, our policy elections were as follows: Separation of lease and non-lease components The Company elected this expedient to account for lease and non-lease components as a single component for our entire population of operating lease assets. Short-term policy The Company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. Supplemental balance sheet information related to leases was as follows: Operating Leases Classification December 31, 2019 Right-of-use assets Operating lease assets $ 11,668,026 Current lease liabilities Current operating lease liabilities 3,299,309 Non-current lease liabilities Long-term operating lease liabilities 14,382,354 $ 17,681,663 Lease term and discount rate were as follows: December 31, 2019 Weighted average remaining lease term (years) 8.19 Weighted average discount rate 10 % The components of lease cost were as follows: Classification Year ended December 31, 2019 Operating lease cost Restaurant operating expenses and Restaurant pre-opening and closing expenses $ 3,806,745 Variable lease cost Restaurant operating expenses 656,254 $ 4,462,999 Supplemental disclosures of cash flow information related to leases were as follows: Year ended December 31, 2019 Cash paid for operating leases $ 3,946,783 Operating lease assets obtained in exchange for operating lease liabilities (1) 19,822,753 (1) Amounts for the twelve months ended December 31, 2019 include the transition adjustment for the adoption of Topic 842 discussed in Note 2 to the consolidated financial statements. Maturities of lease liabilities were as follows as of December 31, 2019: Operating Leases January 1, 2020 - December 31, 2020 $ 3,276,865 January 1, 2021 - December 31, 2021 3,231,537 January 1, 2022 - December 31, 2022 3,153,285 January 1, 2023 - December 31, 2023 2,836,188 January 1, 2024 - December 31, 2024 2,754,457 Thereafter 12,407,558 Total lease payments 27,659,890 Less: imputed interest 9,978,227 Present value of lease liabilities $ 17,681,663