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LEASES | 3 Months Ended
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Sep. 30, 2020
Leases [Abstract] |
LEASES | LEASES Lessee Accounting The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for office space, warehouses, automobiles and office equipment. USAT’s leases have lease terms of one year to eight years and some include options to extend and/or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants. Right-of-Use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is the collateralized rate of interest that we would pay to borrow over a similar term an amount equal to the lease payments, based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. USAT has lease agreements with lease and non-lease components. The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. At September 30, 2020, the Company has the following balances recorded in the balance sheet related to its lease arrangements:
($ in thousands) |  | Classification |  | As of September 30, 2020
Assets |  |  |  |
Operating leases |  | Operating lease ROU assets |  | $ | 5,417 |
Liabilities |  |  |  |
Current: |  |  |  |
Operating leases |  | Accrued expenses |  | 1,097 |
Non-current: |  |  |  |
Operating leases |  | Operating lease liabilities, non-current |  | $ | 4,469 |
Components of lease cost are as follows:
($ in thousands) | Three months ended September 30, 2020 |  | Three months ended September 30, 2019
Operating lease costs* | 529 |  |  | 701 |
* Includes short-term lease and variable lease costs, which are not material. Supplemental cash flow information and non-cash activity related to our leases are as follows:
($ in thousands) | Three months ended September 30, 2020 |  | Three months ended September 30, 2019
Supplemental cash flow information: |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 346 |  |  | $ | 495 |
Non-cash activity |  |  |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating lease liabilities | $ | — |  |  | $ | 3,071 |
Weighted-average remaining lease term and discount rate for our leases are as follows:
|  |  | Three months ended September 30, 2020
Weighted-average remaining lease term (years) |  |  |
Operating leases |  |  | 5.0
Weighted-average discount rate |  |  |
Operating leases |  |  | 6.8 | %
Maturities of lease liabilities by fiscal year for our leases are as follows:
($ in thousands) | Operating Leases
Remainder of 2021 | $ | 1,083 |
2022 | 1,461 |
2023 | 1,493 |
2024 | 1,030 |
2025 | 627 |
Thereafter | 893 |
Total lease payments | $ | 6,587 |
Less: Imputed interest | (1,021) |
Present value of lease liabilities | $ | 5,566 |
Lessor Accounting The Company offers its customers financing for the lease of our POS electronic payment devices. We account for these transactions as sales-type leases. Our sales-type leases generally have a non-cancellable term of 60 months. Certain leases contain an end-of-term purchase option that is generally insignificant and is reasonably certain to be exercised by the lessee. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases, which are typically our JumpStart program leases, which are agreements for renting POS electronic payment devices. JumpStart terms are typically 36 months and are cancellable with 30 to 60 days' written notice. The Company treats lease and non-lease components as a single component for those leases where the timing and pattern of transfer for the non-lease component and associated lease component are the same and the stand-alone lease component would be classified as an operating lease if accounted for separately. The combined component is then accounted for under Topic 606, Revenue from Contracts with Customers or Topic 842 depending on the predominant characteristic of the combined component, which was Topic 606 for the Company's operating leases. All QuickStart leases are sales-type and do not qualify for the election. Lessor consideration is allocated between lease components and the non-lease components using the requirements under Topic 606. Revenue from sales-type leases is recognized upon shipment to the customer and the interest portion is deferred and recognized as earned. The revenues related to the sales-type leases are included in Equipment sales in the Condensed Consolidated Statements of Operations and a portion of the lease payments as interest income. Revenue from operating leases is recognized ratably over the applicable service period with service fee revenue related to the leases included in License and transaction fees in the Condensed Consolidated Statements of Operations. Property and equipment used for the operating lease rental program consisted of the following:
($ in thousands) |  | September 30, 2020 |  | June 30, 2020
Cost |  | $ | 32,425 |  |  | 32,445 |
Accumulated depreciation |  | (28,088) |  |  | (27,745) |
Net |  | $ | 4,337 |  |  | $ | 4,700 |
The Company’s net investment in sales-type leases (carrying value of lease receivables) and the future minimum amounts to be collected on these lease receivables as of September 30, 2020 are disclosed within Note 5 - Finance Receivables.
LEASES | LEASES Lessee Accounting The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for office space, warehouses, automobiles and office equipment. USAT’s leases have lease terms of one year to eight years and some include options to extend and/or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants. Right-of-Use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is the collateralized rate of interest that we would pay to borrow over a similar term an amount equal to the lease payments, based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. USAT has lease agreements with lease and non-lease components. The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. At September 30, 2020, the Company has the following balances recorded in the balance sheet related to its lease arrangements:
($ in thousands) |  | Classification |  | As of September 30, 2020
Assets |  |  |  |
Operating leases |  | Operating lease ROU assets |  | $ | 5,417 |
Liabilities |  |  |  |
Current: |  |  |  |
Operating leases |  | Accrued expenses |  | 1,097 |
Non-current: |  |  |  |
Operating leases |  | Operating lease liabilities, non-current |  | $ | 4,469 |
Components of lease cost are as follows:
($ in thousands) | Three months ended September 30, 2020 |  | Three months ended September 30, 2019
Operating lease costs* | 529 |  |  | 701 |
* Includes short-term lease and variable lease costs, which are not material. Supplemental cash flow information and non-cash activity related to our leases are as follows:
($ in thousands) | Three months ended September 30, 2020 |  | Three months ended September 30, 2019
Supplemental cash flow information: |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 346 |  |  | $ | 495 |
Non-cash activity |  |  |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating lease liabilities | $ | — |  |  | $ | 3,071 |
Weighted-average remaining lease term and discount rate for our leases are as follows:
|  |  | Three months ended September 30, 2020
Weighted-average remaining lease term (years) |  |  |
Operating leases |  |  | 5.0
Weighted-average discount rate |  |  |
Operating leases |  |  | 6.8 | %
Maturities of lease liabilities by fiscal year for our leases are as follows:
($ in thousands) | Operating Leases
Remainder of 2021 | $ | 1,083 |
2022 | 1,461 |
2023 | 1,493 |
2024 | 1,030 |
2025 | 627 |
Thereafter | 893 |
Total lease payments | $ | 6,587 |
Less: Imputed interest | (1,021) |
Present value of lease liabilities | $ | 5,566 |
Lessor Accounting The Company offers its customers financing for the lease of our POS electronic payment devices. We account for these transactions as sales-type leases. Our sales-type leases generally have a non-cancellable term of 60 months. Certain leases contain an end-of-term purchase option that is generally insignificant and is reasonably certain to be exercised by the lessee. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases, which are typically our JumpStart program leases, which are agreements for renting POS electronic payment devices. JumpStart terms are typically 36 months and are cancellable with 30 to 60 days' written notice. The Company treats lease and non-lease components as a single component for those leases where the timing and pattern of transfer for the non-lease component and associated lease component are the same and the stand-alone lease component would be classified as an operating lease if accounted for separately. The combined component is then accounted for under Topic 606, Revenue from Contracts with Customers or Topic 842 depending on the predominant characteristic of the combined component, which was Topic 606 for the Company's operating leases. All QuickStart leases are sales-type and do not qualify for the election. Lessor consideration is allocated between lease components and the non-lease components using the requirements under Topic 606. Revenue from sales-type leases is recognized upon shipment to the customer and the interest portion is deferred and recognized as earned. The revenues related to the sales-type leases are included in Equipment sales in the Condensed Consolidated Statements of Operations and a portion of the lease payments as interest income. Revenue from operating leases is recognized ratably over the applicable service period with service fee revenue related to the leases included in License and transaction fees in the Condensed Consolidated Statements of Operations. Property and equipment used for the operating lease rental program consisted of the following:
($ in thousands) |  | September 30, 2020 |  | June 30, 2020
Cost |  | $ | 32,425 |  |  | 32,445 |
Accumulated depreciation |  | (28,088) |  |  | (27,745) |
Net |  | $ | 4,337 |  |  | $ | 4,700 |
The Company’s net investment in sales-type leases (carrying value of lease receivables) and the future minimum amounts to be collected on these lease receivables as of September 30, 2020 are disclosed within Note 5 - Finance Receivables.
LEASES | LEASES Lessee Accounting The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for office space, warehouses, automobiles and office equipment. USAT’s leases have lease terms of one year to eight years and some include options to extend and/or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants. Right-of-Use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is the collateralized rate of interest that we would pay to borrow over a similar term an amount equal to the lease payments, based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. USAT has lease agreements with lease and non-lease components. The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. At September 30, 2020, the Company has the following balances recorded in the balance sheet related to its lease arrangements:
($ in thousands) |  | Classification |  | As of September 30, 2020
Assets |  |  |  |
Operating leases |  | Operating lease ROU assets |  | $ | 5,417 |
Liabilities |  |  |  |
Current: |  |  |  |
Operating leases |  | Accrued expenses |  | 1,097 |
Non-current: |  |  |  |
Operating leases |  | Operating lease liabilities, non-current |  | $ | 4,469 |
Components of lease cost are as follows:
($ in thousands) | Three months ended September 30, 2020 |  | Three months ended September 30, 2019
Operating lease costs* | 529 |  |  | 701 |
* Includes short-term lease and variable lease costs, which are not material. Supplemental cash flow information and non-cash activity related to our leases are as follows:
($ in thousands) | Three months ended September 30, 2020 |  | Three months ended September 30, 2019
Supplemental cash flow information: |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 346 |  |  | $ | 495 |
Non-cash activity |  |  |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating lease liabilities | $ | — |  |  | $ | 3,071 |
Weighted-average remaining lease term and discount rate for our leases are as follows:
|  |  | Three months ended September 30, 2020
Weighted-average remaining lease term (years) |  |  |
Operating leases |  |  | 5.0
Weighted-average discount rate |  |  |
Operating leases |  |  | 6.8 | %
Maturities of lease liabilities by fiscal year for our leases are as follows:
($ in thousands) | Operating Leases
Remainder of 2021 | $ | 1,083 |
2022 | 1,461 |
2023 | 1,493 |
2024 | 1,030 |
2025 | 627 |
Thereafter | 893 |
Total lease payments | $ | 6,587 |
Less: Imputed interest | (1,021) |
Present value of lease liabilities | $ | 5,566 |
Lessor Accounting The Company offers its customers financing for the lease of our POS electronic payment devices. We account for these transactions as sales-type leases. Our sales-type leases generally have a non-cancellable term of 60 months. Certain leases contain an end-of-term purchase option that is generally insignificant and is reasonably certain to be exercised by the lessee. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases, which are typically our JumpStart program leases, which are agreements for renting POS electronic payment devices. JumpStart terms are typically 36 months and are cancellable with 30 to 60 days' written notice. The Company treats lease and non-lease components as a single component for those leases where the timing and pattern of transfer for the non-lease component and associated lease component are the same and the stand-alone lease component would be classified as an operating lease if accounted for separately. The combined component is then accounted for under Topic 606, Revenue from Contracts with Customers or Topic 842 depending on the predominant characteristic of the combined component, which was Topic 606 for the Company's operating leases. All QuickStart leases are sales-type and do not qualify for the election. Lessor consideration is allocated between lease components and the non-lease components using the requirements under Topic 606. Revenue from sales-type leases is recognized upon shipment to the customer and the interest portion is deferred and recognized as earned. The revenues related to the sales-type leases are included in Equipment sales in the Condensed Consolidated Statements of Operations and a portion of the lease payments as interest income. Revenue from operating leases is recognized ratably over the applicable service period with service fee revenue related to the leases included in License and transaction fees in the Condensed Consolidated Statements of Operations. Property and equipment used for the operating lease rental program consisted of the following:
($ in thousands) |  | September 30, 2020 |  | June 30, 2020
Cost |  | $ | 32,425 |  |  | 32,445 |
Accumulated depreciation |  | (28,088) |  |  | (27,745) |
Net |  | $ | 4,337 |  |  | $ | 4,700 |
The Company’s net investment in sales-type leases (carrying value of lease receivables) and the future minimum amounts to be collected on these lease receivables as of September 30, 2020 are disclosed within Note 5 - Finance Receivables.

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