12. LEASES

The Company records a right-of-use (“ROU”) asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASU 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for the leases on a straight-line basis over the lease term. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.

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.

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


	As of		As of
	March 31, 2021		September 30, 2020

Operating right-of-use assets, net	$	4,105	$	4,001

Current portion of operating lease liabilities		1,004		866
Long-term operating lease liabilities		3,278		3,344
Total operating lease liabilities	$	4,282	$	4,210
Finance right-of-use assets, net	$	4,710	$	4,778

Current portion of finance lease liabilities		4,664		4,728
Long-term finance lease liabilities		42		44
Total finance lease liabilities	$	4,706	$	4,772

During the three and six months ended March 31, 2021, the Company had operating lease amortizations of $242 and $474, respectively, and had finance lease amortization of $35 and $72, respectively. Finance lease interest recorded in the three and six months ended March 31, 2021 was $68 and $137, respectively.

One of the operating leases contains a variable lease component based on revenue for one component of the Company. The total variable payments for this lease for the three and six months ended March 31, 2021was $69 and $145.

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 leases for the three and six months ended March 31, 2021 were:


	Three months ended		Six months ended
	March 31, 2021		March 31, 2021
Operating lease costs:
Fixed operating lease costs	$	242	$	474
Short-term lease costs		42		52
Lease income		(159)		(318)
Finance lease costs:
Amortization of right-of-use asset expense		35		72
Interest on finance lease liability		68		137
Total lease cost	$	228	$	417

The Company serves as lessor to a lessee 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 condensed consolidated balance sheet. The Company received rental income of $159 and $318 for the three and six months ended March 31, 2021, respectively.

Supplemental cash flow information related to leases was as follows:


	Three months Ended		Six months Ended
	March 31, 2021		March 31, 2021
Cash flows included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	240	$	469
Operating cash flows from finance leases		68		137
Finance cash flows from finance leases		103		206

Non-cash lease activity:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	772	$	1,175
Right-of-use assets obtained in exchange for new finance lease liabilities		9		—

The weighted average remaining lease term and discount rate for the Company’s operating and finance leases as of March 31, 2021 were:


	As of
	March 31, 2021
Weighted-average remaining lease term (in years)
Operating lease	4.49
Finance lease	0.37

Weighted-average discount rate (in percentages)
Operating lease	5.24	%
Finance lease	5.82	%

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

As of March 31, 2021, 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
2021 (remainder of fiscal year)	$	522	$	4,777
2022		1,069		22
2023		1,113		16
2024		1,231		16
2025		393		5
Thereafter		494		—
Total minimum future lease payments		4,822		4,836
Less interest		(540)		(130)
Total lease liability		4,282		4,706