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Note 12 - Leases | 9 Months Ended
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Jun. 30, 2020
Notes to Financial Statements |
Lessee, Operating Leases [Text Block] | 1 2 . LEASES The Company determines if an arrangement is a lease at inception. The guidance in Topic 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Operating lease ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. The Company's leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, the portfolio approach is used in determining the discount rate used to present value lease payments. The ROU asset includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company entered into operating leases for office and production facilities and equipment under agreements that expire at various dates through 2028. The Company elected the package of practical expedients permitted under the new lease standard. In electing the practical expedient package, the Company is not required to reassess whether an existing or expired contract is or contains a lease, reassess the lease classification for expired or existing leases nor reassess the initial direct costs for leases that commenced before the adoption of Topic 842. The Company also elected the short-term lease exemption such that the new lease standard was applied to leases greater than one year in duration. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For leases beginning on or after October 1, 2019, lease components are accounted for separately from non-lease components for all asset classes. Certain of the Company's leases contain renewal provisions and escalating rental clauses and generally require the Company to pay utilities, insurance, taxes and other operating expenses. The renewal provisions of existing lease agreements were not included in the determination of the operating lease liabilities and the ROU assets. Variable payments such as excess usage fees on existing equipment leases were not included in the determination of the lease liabilities and the ROU assets as the achievement of the specified target that triggers the variable lease payment is not considered probable. In addition, the Company's facility lease in Spain has an escalating lease clause based on a consumer price index which is considered a variable lease payment and is not included in the determination of the lease liability and ROU asset. A 10% increase in the index would increase the total lease liability approximately $19,000. The Company's leases do not contain any residual value guarantees or material restrictive covenants. Upon adoption of Topic 842 as of October 1, 2019, the Company recognized on its consolidated balance sheet an initial measurement of approximately $7,814,701 of operating lease liabilities, and approximately $5,823,972 of corresponding operating ROU assets, net of tenant improvement allowances. There was no cumulative effect adjustment to retained earnings as a result of the transition to Topic 842. The adoption of Topic 842 did not have a material impact on the Company's consolidated statement of operations. The tables below show the initial measurement of the operating lease ROU assets and liabilities as of October 1, 2019 and the balances as of June 30, 2020, including the changes during the periods.
|  | Operating right-of-use asset |
Initial measurement at October 1, 2019 |  | $ | 7,814,701 |
Less lease incentives and tenant improvement allowance |  |  | (1,990,729 | )
Net operating lease right of use assets at October 1, 2019 |  |  | 5,823,972 |
Additional operating lease right of use assets |  |  | 42,660 |
Less amortization of operating lease right-of-use assets |  |  | (445,692 | )
Effect of exchange rate on operating lease right of use assets |  |  | 7,228 |
Operating lease right of use asset at June 30, 2020 |  | $ | 5,428,168 |
|  | Operating lease liabilities |
Initial measurement at October 1, 2019 |  | $ | 7,814,701 |
Additional operating lease liabilities |  |  | 42,660 |
Less lease principal payments on operating lease liabilities |  |  | (526,022 | )
Effect of exchange rate on operating lease liabilities |  |  | 7,228 |
Operating lease liabilities at June 30, 2020 |  |  | 7,338,567 |
Less non-current portion |  |  | (6,586,196 | )
Current portion at June 30, 2020 |  | $ | 752,371 |
As of June 30, 2020, the Company's operating leases have a weighted-average remaining lease term of 7.9 years and a weighted-average discount rate of 4.13%. The maturities of the operating lease liabilities are as follows:
Fiscal year ending September 30, 2020 (remaining three months) |  | $ | 255,632 |
2021 |  |  | 1,042,699 |
2022 |  |  | 1,069,677 |
2023 |  |  | 1,021,173 |
2024 |  |  | 1,017,196 |
Thereafter |  |  | 4,248,721 |
Total undiscounted operating lease payments |  |  | 8,655,098 |
Less imputed interest |  |  | (1,316,531 | )
Present value of operating lease liabilities |  |  | 7,338,567 |
Less lease liability, noncurrent |  |  | (6,586,196 | )
Lease liability, current portion |  | $ | 752,371 |
For the three months ended June 30, 2020 and 2019, total lease expense under operating leases was approximately $226,083 and $224,407 respectively. For the nine months ended June 30, 2020 and 2019, total lease expense under operating leases was approximately $674,108 and $663,500, respectively. The Company did not have any short-term lease expense during the three and nine months ended June 30, 2020.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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