12. LEASES

The Company has various operating and finance leases for facilities and equipment. Facilities leases provide office, laboratory, warehouse, or land, the company uses to conduct its operations. Facilities leases range in duration from two to ten years, with either renewal options for additional terms as the initial lease term expires, or purchase options. Facilities leases are considered as either operating or financing leases.

Equipment leases provide for office equipment, laboratory equipment or services the company uses to conduct its operations. Equipment leases range in duration from 30 to 60 months, with either subsequent annual renewals, additional terms as the initial lease term expires, or purchase options.

Effective October 1, 2019 the Company adopted ASC 842 Leases using a modified retrospective transition approach which applies the standard to leases existing at the effective date with no restatement of prior periods. The Company’s operating leases have been included in operating lease right-of--use assets, current portion of operating lease liabilities and long-term portion of operating lease liabilities in the consolidated balance sheet. Right-of-use 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 leases.

The Company’s finance leases are included in property, plant and equipment and current portion of long-term debt.

The Company elected to apply the following practical expedients and accounting policy elections permitted by the standard at transition:

The Company has elected that it will not reassess contracts that have expired or existed at the date of adoption for 1) leases under the new definition of a lease, 2) lease classification, 3) whether previously capitalized initial direct costs would qualify for capitalization under the standard.

The Company elected not to separate lease and non-lease components.

The Company elected not to assess whether any land easements are, or contain, leases.

The Company elected to record leases with an initial term of 12 months or less directly in the condensed consolidated statement of operations.

Right-of-use lease assets and lease liabilities that are reported in the Company’s condensed consolidated balance sheets are as follows:


	As of
	June 30, 2020

Operating right-of-use assets, net	$	4,272

Current portion of operating lease liabilities		874
Long-term operating lease liabilities		3,733
Total operating lease liabilities	$	4,607

Finance right-of-use assets, net		4,628

Current portion of finance lease liabilities		4,557
Long-term finance lease liabilities		53
Total finance lease liabilities	$	4,610

During the three and nine months ended June 30, 2020, the Company had operating lease amortizations of $231 and $674, respectively, and had finance lease amortization of $40 and $115, respectively. Finance lease interest recorded in the three and nine months ended June 30, 2020 was $67 and $201, respectively.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense related to the Company’s lease for the three and nine months ended June 30, 2020 were:


		Three months ended	Nine months ended
	June 30, 2020		June 30, 2020
Operating lease costs:
Fixed operating lease costs	$	218	$	647
Short-term lease costs		7		28
Variable lease costs		—		2
Sublease income		(159)		(477)
Finance lease costs:
Amortization of right-of-use asset expense		40		115
Interest on finance lease liability		67		201
Total lease cost	$	173	$	516

The Company serves as lessor to a sublessee in one facility through the end of calendar year 2024. The gross rental income and underlying lease expense are presented gross in the Company’s statement of financial position. The Company received rental income of $159 and $477 for the three and nine months ended June 30, 2020, respectively.

Supplemental cash flow information related to leases was as follows:


	Three months Ended		Nine months Ended
	June 30, 2020		June 30,2020
Cash flows included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	74	$	212
Operating cash flows from finance leases		40		115
Finance cash flows from finance leases		51		130

Non-cash lease activity:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	448

The weighted average remaining lease term and discount rate for the Company’s operating and finance leases as of June 30, 2020 were:


	As of
	June 30, 2020
Weighted-average remaining lease term (in years)
Operating lease	4.95
Finance lease	0.14

Weighted-average discount rate (in percentages)
Operating lease	5.22	%
Finance lease	5.89	%

Lease duration was determined utilizing renewal options that the Company is reasonably certain to execute.

As of June 30, 2020, maturities of operating and finance lease liabilities for each of the following five years and a total thereafter were as follows:


	Operating Leases		Finance Leases

2020	$	890	$	4,573
2021		922		24
2022		989		13
2023		1,114		7
2024		1,027		—
Thereafter		374		—
Total minimum future lease payments		5,316		4,617
Less interest		(709)		(7)
Total lease liability		4,607		4,610