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14. LEASES

6 Months Ended

Mar. 31, 2021

NOTE 14 LEASES

The Company’s operating leases are primarily for corporate, sales and administrative office space. Total operating lease expense was $152,000 and $304,000 for the three and six months ended March 31, 2021, respectively, and $122,000 and $255,000 for the three and six months ended March 31, 2020, respectively, and is recorded in general and administrative expenses on the condensed consolidated statements of operations.

The Company leases certain computer equipment through various finance lease agreements expiring through July 2022. The net book value of assets under finance leases was $18,000 and $23,000 at March 31, 2021 and September 30, 2020, respectively.

In March 2021, the Company signed a renewal to extend the term of its lease in Minnesota for an additional 60 months. The renewal of this operating lease commences July 1, 2021 and payments under it escalate 2.75% per year. The monthly rent payment is $10,000 per month, which includes taxes and operating expenses as defined in the agreement.

Additional information related to operating and finance leases at March 31, 2021 and September 30, 2020 is as follows:

	March 31,		September 30,
	2021		2020
Weighted Average Remaining Lease Term (Yrs):
Operating leases		10.5		10.9
Finance leases		0.9		0.9

Weighted Average Discount Rate:
Operating leases		5.7%		5.7%
Finance leases		5.8%		5.8%

At March 31, 2021, future minimum payments under non-cancellable operating and finance leases were as follows:

	Operating Leases			Finance Leases
Remainder of Fiscal 2021	$	232,000		$	5,000
Fiscal 2022		430,000			10,000
Fiscal 2023		426,000			–
Fiscal 2024		433,000			–
Fiscal 2025		395,000			–
Thereafter		2,805,000			–
Total future minimum lease payments		4,721,000			15,000
Less imputed interest		(1,227,000	)		(3,000	)
Present value of lease liabilities	$	3,494,000		$	12,000