14.

Leases

April 1, 2019,

the Company adopted ASU

2016

02,

Leases (Topic

842

)

("ASC

842"

), using the modified retrospective approach. The Company elected the package of practical expedients available in the standard and as a result, did

not

reassess the lease classification of existing contracts or leases or the initial direct costs associated with existing leases. The Company did

not

elect the hindsight practical expedient and evaluated lease terms for existing leases. The Company has also elected the practical expedient to

not

separate lease components and non-lease components and will account for the leases as a single lease component for all classes of leases.

As a result of the adoption of ASC

842,

the Company recognized lease right-of-use assets of

$3.8

million, and operating lease liabilities of

$3.8

million. There was

impact to the condensed consolidated statements of operations or stockholders' equity for the adoption of ASC

842.

impairment was recognized on the right-of-use asset upon adoption. These adjustments are detailed as follows:

	March 31, 2019		ASC 842 Adjustment		April 1, 2019
Operating Leases:
Right of use asset	$	—	$	3,795	$	3,795
Total operating lease right-of-use asset		—		3,795		3,795

Operating lease liabilities – ST	$	—	$	309	$	309
Operating lease liabilities – LT		—		3,512		3,512
Total operating lease liabilities		—		3,821		3,821

Weighted-average remaining lease term					7.69 years
Weighted-average discount rate						7.06	%

All significant lease arrangements are recognized at lease commencement. Operating lease right–of-use assets and lease liabilities are recognized at commencement. The operating lease right-of-use asset includes any lease payments related to initial direct cost and prepayments and excludes any lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company enters into a variety of operating lease agreements through the normal course of its business, but primarily real estate leases to support its operations. The agreements generally provide for fixed minimum rental payments and the payment of real estate taxes and insurance. Many of these leases have

one

or more renewal options that allow the Company, at its discretion, to renew the lease for varying periods up to

five

years or to terminate the lease. Only renewal options or termination rights that the Company believed were likely to be exercised were included in the lease calculations.

The Company also enters into leases for vehicles, IT equipment and service agreements, and other leases related to its manufacturing operations that are also included in the right-of-use asset and lease liability accounts if they are for a term of longer than

twelve

months. However, many of these leases are either short-term in nature or immaterial. The Company has made the policy election to exclude short term leases from the balance sheet.

The discount rate was calculated using an incremental borrowing rate based on an assessment prepared by the Company through the use of Company credit ratings, consideration of its lease populations potential risk to its total capital structure, and a market rate for a collateralized loan for its risk profile, calculated by a

third

party. The Company elected to apply the discount rate using the remaining lease term at the date of adoption.

The Company did

not

identify any leases that are classified as financing leases.

Supplemental balance sheet information related to leases at

December 31, 2019

are as follows:

	December 31, 2019
Operating Leases:
Right-of-use assets	$	3,495
Total right-of-use assets		3,495

Lease liabilities - ST	$	436
Lease liabilities - LT		3,128
Total operating lease liabilities		3,564

Weighted-average remaining lease term		7.1 years
Weighted-average discount rate		7.07	%

The costs related to the Company's leases for the

three

and

nine

months ended

December 31, 2019

are as follows:

	Three Months Ended		Nine Months Ended
	December 31, 2019		December 31, 2019
Operating Lease:
Operating lease costs - fixed	$	179	$	535
Operating lease costs - variable		27		73
Short-term lease costs		164		378
Total lease costs		370		986

The Company’s estimated minimum future lease obligations under the Company's leases are as follows:

	Operating Leases
Year ended March 31,
2020	$	167
2021		672
2022		651
2023		624
2024		562
Thereafter		1,896
Total minimum lease payments		4,572
Less: interest		(1,008	)
Present value of lease liabilities		3,564