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Note 12 - Leases

6 Months Ended

Mar. 31, 2022

12. LEASES

The Company determines if an arrangement is a lease at inception. The guidance in ASC 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 is party to 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 ASC 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.

During the six months ended March 31, 2022, the Company added an additional operating lease ROU asset of $7 and operating lease liabilities of $7 for office equipment. The tables below show the operating lease ROU assets and liabilities as of September 30, 2021, and the balances as of March 31, 2022, including the changes during the periods.

	Operating lease ROU assets
Operating lease ROU assets as of September 30, 2021	$	4,862
Additional operating lease ROU assets		7
Less amortization of operating lease ROU assets		(360	)
Effect of exchange rate on operating lease ROU assets		(1	)
Operating lease ROU assets as of March 31, 2022	$	4,508

	Operating lease liabilities
Operating lease liabilities as of September 30, 2021	$	6,608
Additional operating lease liabilities		7
Less lease principal payments on operating lease liabilities		(442	)
Effect of exchange rate on operating lease liabilities		(1	)
Operating lease liabilities as of March 31, 2022		6,172
Less non-current portion		(5,276	)
Current portion as of March 31, 2022	$	896

As of March 31, 2022, the Company’s operating leases have a weighted-average remaining lease term of 6.21 years and a weighted-average discount rate of 4.14%. The maturities of the operating lease liabilities are as follows:

Fiscal year ending September 30,
2022 (remaining six months)	$	578
2023		1,090
2024		1,087
2025		1,058
2026		1,071
Thereafter		2,139
Total undiscounted operating lease payments		7,023
Less imputed interest		(851	)
Present value of operating lease liabilities	$	6,172

For the three months ended March 31, 2022 and 2021, total lease expense under operating leases was approximately $246 and $245, respectively. For the six months ended March 31, 2022 and 2021, total lease expense under operating leases was approximately $491 and $490, respectively. The Company did not have any short-term lease expense during the six months ended March 31, 2022 and 2021.