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Leases | 6 Months Ended
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Jul. 31, 2019
Leases [Abstract] |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) which was modified by subsequently issued ASUs 2018-01, 2018-10, 2018-11 and 2018-20. The update requires organizations that lease assets ("lessees") to recognize the assets and liabilities of the rights and obligations created by leases with terms of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains dependent on its classification as a finance or operating lease. The criteria for determining whether a lease is a finance or operating lease was not significantly changed by this ASU. The ASU also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. This pronouncement was effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption was permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases: Targeted Improvements (Topic 842). ASU 2018-11 provided additional relief in the comparative reporting requirements for initial adoption of ASC 842. Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11 provided an additional transition method to the existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company adopted the standard effective February 1, 2019. We elected to apply the current period transition approach as introduced by ASU 2018-11 for our transition at February 1, 2019 and we elected to apply the following practical expedients and accounting policy decisions. We elected a package of transition expedients that allowed us to forgo reassessing certain conclusions reached under ASC 840 which must be elected together. All expedients in this package were applied together for all leases that commenced before the effective date, February 1, 2019, of ASC 842. As a result, in transitioning to ASC 842, for existing leases as of February 1, 2019, we continued to use judgments made under ASC 840 related to embedded leases, lease classification and accounting for initial direct costs. In addition, we have chosen, as an accounting policy election by class of underlying asset, not to separate nonlease components from the associated lease for all of our leased asset classes, except for Real Estate related leases. As a result, for classes of Automobiles, Office Equipment and Manufacturing Equipment, we account for each separate lease component and the nonlease components associated with that lease as a single lease component. The Company has certain non-cancelable operating lease agreements for office, production and warehouse space in The Woodlands, Texas, Budapest, Hungary, Singapore, Jahor, Malaysia, Bogota, Colombia, Shepton Mallet, United Kingdom and Calgary, Alberta. The new standard did have a material impact on our consolidated balance sheet related to recording right-of-use assets and the corresponding lease liabilities for our operating leases by approximately $3.0 million, each. The new standard did not have a material impact on our consolidated statements of operations or our statements of cash flows. Lease expense for the three and six months ended July 31, 2019 was approximately $290,000 and $590,000, respectively, and was recorded as a component of operating loss. Included in these costs was short-term lease expense of approximately $10,000 and $20,000, respectively for the three and six months ended July 31, 2019. The Company determined to treat lease costs with an original maturity of less than one year as short-term lease costs and did not record a right-of-use asset or related lease liability for these leases. Supplemental balance sheet information related to leases as of July 31, 2019 was as follows (in thousands):
Lease |  | July 31, 2019 |  | April 30, 2019 |  | Impact of ASC 842 Transition
Assets |  |  |  |  |  |
Operating Leases |  | $ | 2,738 |  |  | $ | 3,014 |  |  | $ | 2,710 |
Liabilities |  |  |  |  |  |
Operating lease liabilities |  | $ | 2,738 |  |  | $ | 3,014 |  |  | $ | 2,710 |
Classification of lease liabilities |  |  |  |  |  |
Current liabilities |  | $ | 720 |  |  | $ | 853 |  |  |
Non-current liabilities |  | 2,018 |  |  | 2,161 |  |  |
Total Operating lease liabilities |  | $ | 2,738 |  |  | $ | 3,014 |  |  |
Lease-term and discount rate details as of July 31, 2019 were as follows:
Lease term and discount rate |  | July 31, 2019
Weighted average remaining lease term (years) |  |
Operating leases |  | 2.2 |
Weighted average discount rate: |  |
Operating leases |  | 10.02 | %
The incremental borrowing rate was calculated using the Company's weighted average cost of capital. Supplemental cash flow information related to leases was as follows (in thousands) :
Lease |  | Six Months Ended July 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases |  | $ | 568 |
Right-of-use assets obtained in exchange for lease liabilities: |  |
Operating leases |  | $ | 592 |
Maturities of lease liabilities at July 31, 2019 were as follows (in thousands):
|  | July 31, 2019
2020 |  | $ | 720 |
2021 |  | 1,299 |
2022 |  | 749 |
2023 |  | 199 |
2024 |  | 101 |
Thereafter |  | 73 |
Total payments under lease agreements |  | $ | 3,141 |
Less: imputed interest |  | (403 | )
Total lease liabilities |  | $ | 2,738 |

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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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