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Leases | 6 Months Ended
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Jul. 31, 2020
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 (collectively, the “New Lease Standard”). The New Lease Standard 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 New Lease Standard also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The New Lease Standard was effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11 provided additional relief in the comparative reporting requirements for initial adoption of the New Lease Standard. Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered after the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11 provided an additional transition method allowing entities to initially apply the New Lease 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 New Lease Standard effective February 1, 2019. We elected to apply the current period transition approach as introduced by ASU 2018-11 and we elected to apply the following practical expedients and accounting policy decisions. We elected a package of transition expedients, which must be elected together, that allowed us to forgo reassessing certain conclusions reached under ASC 840. All expedients in this package were applied together for all leases that commenced before the effective date, February 1, 2019, of the adoption of the New Lease Standard. As a result, in transitioning to the New Lease Standard, 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 non-lease components from the associated lease for all our leased asset classes, excluding 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 non-lease 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 Texas, Hungary, Singapore, Malaysia, Colombia, United Kingdom and Canada. Adoption of the New Lease Standard during first quarter of fiscal 2020 did have a material impact on our consolidated balance sheet as we recorded right-of-use assets and the corresponding lease liabilities related to our operating leases of approximately $3.0 million, each. 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. 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, 2020 was approximately $221,000 and $514,000, respectively, and was recorded as a component of operating loss. Included in these costs was short-term lease expense of approximately $10,000 and $10,000, respectively, for the three and six months ended July 31, 2020. Supplemental balance sheet information related to leases as of July 31, 2020 was as follows (in thousands):
Lease |  |  |  |  |  |  |  | July 31, 2020 |  | January 31, 2020 |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Operating lease assets |  |  |  |  |  |  |  | $ | 1,636 |  |  | $ | 2,300 |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Operating lease liabilities |  |  |  |  |  |  |  | $ | 1,636 |  |  | $ | 2,300 |  |  |
Classification of lease liabilities |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  | $ | 613 |  |  | $ | 1,339 |  |  |
Non-current liabilities |  |  |  |  |  |  |  | 1,023 |  |  | 961 |  |  |
Total Operating lease liabilities |  |  |  |  |  |  |  | $ | 1,636 |  |  | $ | 2,300 |  |  |
Lease-term and discount rate details as of July 31, 2020 were as follows:
Lease term and discount rate |  | July 31, 2020 |  | January 31, 2020
Weighted average remaining lease term (years) |  |  |  |
Operating leases |  | 1.57 |  | 1.76
Weighted average discount rate: |  |  |  |
Operating leases |  | 9.27 | % |  | 9.27 | %
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, 2020 |  | Six Months Ended July 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | (514) |  |  | $ | (568) |
Right-of-use assets obtained in exchange for lease liabilities: |  |  |  |
Operating leases |  | $ | 514 |  |  | $ | 592 |
Maturities of lease liabilities at July 31, 2020 were as follows (in thousands):
|  | July 31, 2020 |  |
2021 |  | $ | 613 |  |  |
2022 |  | 809 |  |  |
2023 |  | 218 |  |  |
2024 |  | 95 |  |  |
2025 |  | 50 |  |  |
Thereafter |  | 20 |  |  |
Total payments under lease agreements |  | $ | 1,805 |  |  |
Less: imputed interest |  | (169) |  |  |
Total lease liabilities |  | $ | 1,636 |  |  |

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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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