Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Leases

The Company determines if an arrangement is a lease at its inception. ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering

the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised, and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in operating lease ROU assets, current operating lease liabilities, and non-current operating lease liabilities in the Company's condensed consolidated balance sheet.

The Company’s lease arrangements consist primarily of corporate, manufacturing and other facility agreements as well as various office equipment agreements. The leases expire at various dates through 2035, some of which include options to extend the lease term. The options with the longest potential total lease term consist of options for extension of up to five years following expiration of the original lease term.

During the three and nine months ended June 30, 2020, the Company recorded $0.6 million and $1.3 million of operating lease expense, respectively. During the three and nine months ended June 30, 2019, the Company recorded $0.3 million and $1.0 million of rent expense, respectively. The Company's finance leases and short-term leases are immaterial.

Supplemental cash information and non-cash activities related to operating leases are as follows (in thousands):

	Nine Months Ended
	June 30, 2020
Operating cash outflows from operating leases	$	1,111
Operating lease assets obtained in exchange for new lease liabilities	$	10,791

Maturities of operating lease liabilities as of June 30, 2020 were as follows (in thousands):

	Amount
2020	$	1,788
2021		1,830
2022		1,849
2023		1,730
2024		1,719
Thereafter		12,802
Total lease payments		21,718
Less imputed interest		(6,717)
Total	$	15,001

The following is a schedule of future minimum operating lease payments as of September 30, 2019 (in thousands):

	Amount
2020	$	988
2021		839
2022		824
2023		853
2024		655
Thereafter		1,350
Total lease payments	$	5,509

Weighted-average remaining lease term and discount rate related to operating leases are as follows:

	June 30, 2020
Weighted average remaining lease term (years)	14.7
Weighted average discount rate	6.1	%

Disaggregation of Revenue

Disaggregation of Revenue - Revenue is classified based on the product line of business. For additional information on the disaggregated revenues by geographical region, see Note 15 - Geographical Information in the notes to the condensed consolidated financial statements.

Revenue is also classified by major product category and is presented below:

	For the three months ended June 30,								For the nine months ended June 30,
			% of				% of				% of				% of
(in thousands)	2020		Revenue		2019		Revenue		2020		Revenue		2019		Revenue
Navigation and Inertial Sensing	$	9,861	36	%		5,604	32	%	$	28,970	38	%		12,157	19	%
Defense Optoelectronics		4,164	16	%		2,514	15	%		11,772	15	%		6,974	11	%
CATV Lasers and Transmitters		10,905	40	%		6,849	40	%		29,070	38	%		32,383	52	%
Chip Devices		1,443	5	%		1,854	11	%		4,033	5	%		9,570	15	%
Other		893	3	%		398	2	%		2,753	4	%		1,881	3	%
Total revenue	$	27,266	100	%	$	17,219	100	%	$	76,598	100	%	$	62,965	100	%

Fair Value Accounting

ASC Topic 820 (“ASC 820”), Fair Value Measurements, establishes a valuation hierarchy for disclosure of the inputs to valuation techniques used to measure fair value. This standard describes a fair value hierarchy based on three levels of

inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

● Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

● Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly, through market corroboration, for substantially the full term of the financial instrument.

● Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets or liabilities at fair value.

Classification of an asset or liability within this hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs.

Cash and Cash Equivalents, Unrestricted Cash and Cash Equivalents

Cash consists primarily of bank deposits or highly liquid short-term investments with a maturity of three months or less at the time of purchase.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents

Restricted cash represents temporarily restricted deposits held as compensating balances against short-term borrowing arrangements.

Legal Costs

Professional legal fees are expensed when incurred. We accrue for contingent losses when such losses are probable and reasonably estimable.

Segment Reporting

The reportable segments reported below are the Company’s segments for which separate financial information is available and upon which operating results are evaluated by the chief operating decision maker to assess performance and to allocate resources. As a result of organizational changes effective in the beginning of fiscal year 2020, the Company has reassessed its reportable segments and determined that it has two reportable segments, (i) Aerospace and Defense and (ii) Broadband. All prior-period amounts have been adjusted retrospectively to reflect our reportable segment changes.

The Company’s Chief Executive Officer is the chief operating decision maker and he assesses the performance of the operating segments and allocates resources based on segment profits. We do not allocate sales and marketing or general and administrative expenses to our segments, because management does not include the information in its measurement of the performance of the operating segments. Also, interest expense and interest income are not presented by segment because management does not include this information in its measurement of the performance of the operating segments.