LEASES

9 Months Ended

Jun. 30, 2021

LEASES

LEASES

13.         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
	June 30, 2021		September 30, 2020
Operating right-of-use assets, net	$	8,695	$	4,001
Current portion of operating lease liabilities		1,916		866
Long-term operating lease liabilities		6,884		3,344
Total operating lease liabilities	$	8,800	$	4,210
Finance right-of-use assets, net	$	66	$	4,778
Current portion of finance lease liabilities		29		4,728
Long-term finance lease liabilities		39		44
Total finance lease liabilities	$	68	$	4,772

During the three and nine months ended June 30, 2021, the Company had operating lease amortizations of $292 and $736, respectively, and had finance lease amortization of $25 and $97, respectively. Finance lease interest recorded in the three and nine months ended June 30, 2021 was $46 and $183, 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 nine months ended June 30, 2021 were $31 and $177, 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 leases for the three and nine months ended June 30, 2021 were:

	Three months ended		Nine months ended
	June 30, 2021		June 30, 2021
Operating lease costs:
Fixed operating lease costs	$	292	$	736
Short-term lease costs		32		66
Lease income		(159)		(477)
Finance lease costs:
Amortization of right-of-use asset expense		25		97
Interest on finance lease liability		46		183
Total lease cost	$	236	$	605

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 sheets. The Company received rental income of $159 and $477 for the three and nine months ended June 30, 2021, respectively.

Supplemental cash flow information related to leases was as follows:

	Three months ended		Nine months ended
	June 30, 2021		June 30, 2021
Cash flows included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	346	$	867
Operating cash flows from finance leases		45		183
Finance cash flows from finance leases		71		277
Non-cash lease activity:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	4,990	$	6,165
Right-of-use assets obtained in exchange for new finance lease liabilities		8		17

The weighted average remaining lease term and discount rate for the Company’s operating and finance leases as of June 30, 2021 were:

	As of
	June 30, 2021
Weighted-average remaining lease term (in years)
Operating lease	4.91
Finance lease	3.43
Weighted-average discount rate (in percentages)
Operating lease	4.46	%
Finance lease	4.86	%

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

As of June 30, 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)	$	496	$	6
2022		2,001		24
2023		2,022		18
2024		1,998		18
2025		1,494		7
Thereafter		1,800		1
Total minimum future lease payments		9,811		74
Less interest		(1,011)		(6)
Total lease liability		8,800		68