LEASES

12 Months Ended

Sep. 30, 2021

LEASES

LEASES

6.    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 2016-02. The Company adopted ASU 2016-02, Leases, effective October 1, 2019, using a modified retrospective transition approach which applies the standard to leases existing at the effective date with no restatement of prior periods. 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 consolidated balance sheets are as follows:

	As of		As of
	September 30, 2021		September 30, 2020
Operating right-of-use assets, net	$	8,358	$	4,001
Current portion of operating lease liabilities		1,959		866
Long-term operating lease liabilities		6,554		3,344
Total operating lease liabilities	$	8,513	$	4,210
Finance right-of-use assets, net	$	60	$	4,778
Current portion of finance lease liabilities		24		4,728
Long-term finance lease liabilities		39		44
Total finance lease liabilities	$	63	$	4,772

The increase in right-of-use lease assets and lease liabilities in the twelve months ended September 30, 2021 is primarily attributable to the HistoTox Labs and Bolder BioPATH acquisitions as described in Note 12, partially offset by a decrease related to the St. Louis facility lease as the Company purchased the building in May 2021. During the twelve months ended September 30, 2021 and September 30, 2020, the Company had operating lease amortizations of $1,192 and $906, respectively, and finance lease amortization of $103 and $145, respectively. Finance lease interest recorded in the twelve months ended September 30, 2021 and September 30, 2020 was $184 and $283, 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 fiscal year 2021 and 2020 was $176 and $126, 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 twelve months ended September 30, 2021 were:

	Twelve months Ended		Twelve months Ended
	September 30, 2021		September 30, 2020
Operating lease costs:
Fixed operating lease costs	$	1,464	$	906
Short-term lease costs		76		42
Lease income		(657)		(636)
Finance lease costs:
Amortization of right-of-use asset expense		103		145
Interest on finance lease liability		184		283
Total lease cost	$	1,170	$	740

The Company serves as lessor to a lessee in one facility through the end of calendar year 2024 and serves as a sublessor to a sublessee in another portion of a facility through October 31, 2024. The gross rent receivable and underlying lease liability are presented gross in the Company’s consolidated balance sheets. The Company received total rental income of $657 and $636 for the twelve months ended September 30, 2021 and 2020, respectively.

Supplemental cash flow information related to leases was as follows:

	Twelve months ended		Twelve months ended
	September 30, 2021		September 30, 2020
Cash flows included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,389	$	948
Operating cash flows from finance leases		184		283
Finance cash flows from finance leases		286		145
Non-cash lease activity:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,285	$	448
Right-of-use assets obtained in exchange for new finance lease liabilities		17		—

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

	As of		As of
	September 30, 2021		September 30, 2020
Weighted-average remaining lease term (in years)
Operating lease	4.66		4.81
Finance lease	3.25		0.88
Weighted-average discount rate (in percentages)
Operating lease	4.45	%	5.23	%
Finance lease	4.86	%	5.87	%

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

As of September 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
2022	$	2,055	$	24
2023		2,057		18
2024		2,013		18
2025		1,506		7
2026		1,354		1
Thereafter		447		—
Total minimum future lease payments		9,432		68
Less interest		(919)		(5)
Total lease liability		8,513		63