13.

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 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 operating 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 operating 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 operating 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 operating ROU asset. A

10%

increase in the index would increase the total lease liability approximately

$19.

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

$7,815

of operating lease liabilities, and approximately

$5,824

of corresponding operating ROU assets, net of tenant improvement allowances. There was

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.

During the

six

months ended

March 31, 2021,

the Company added an additional operating ROU asset of

$259

and operating lease liabilities of

$259

for office space. The tables below show the operating ROU assets and liabilities as of

September 30, 2020

and the balances as of

March 31, 2021,

including the changes during the periods.

	Operating ROU assets
Operating lease right of use asset at September 30, 2020	$	5,285
Additional operating lease right of use assets		259
Less amortization of operating lease right-of-use assets		(343	)
Effect of exchange rate on operating lease right of use assets		15
Operating lease right of use asset at March 31, 2021	$	5,216

	Operating lease liabilities
Operating lease liabilities at September 30, 2020	$	7,166
Additional operating lease liabilities		259
Less lease principal payments on operating lease liabilities		(409	)
Effect of exchange rate on operating lease liabilities		15
Operating lease liabilities at March 31, 2021		7,031
Less non-current portion		(6,172	)
Current portion at March 31, 2021	$	859

As of

March 31, 2021,

the Company's operating leases have a weighted-average remaining lease term of

7.11

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, 2021 (remaining six months)	$	569
2022		1,141
2023		1,090
2024		1,085
2025		1,162
Thereafter		3,104
Total undiscounted operating lease payments		8,151
Less imputed interest		(1,120	)
Present value of operating lease liabilities	$	7,031

For the

three

months ended

March 31, 2021

and

2020,

total lease expense under operating leases was approximately

$245

and

$224,

respectively. For the

six

months ended

March 31, 2021

and

2020,

total lease expense under operating leases was approximately

$490

and

$448,

respectively. For the

three

and

six

months ended

March 31, 2021

total short-term lease expense was

There was

short-term lease expense during the

three

and

six

months ended

March 31, 2020.