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Leases

6 Months Ended

Mar. 31, 2021

NOTE 10 – LEASES

ASC 842, “Leases”, requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at either the effective date (the “effective date method”) or the beginning of the earliest period presented (the “comparative method”) using a modified retrospective approach. Under the effective date method, the Company’s comparative period reporting is unchanged. In contrast, under the comparative method, the Company’s date of initial application is the beginning of the earliest comparative period presented, and the Topic 842 transition guidance is then applied to all comparative periods presented. Further, under either transition method, the standard includes certain practical expedients intended to ease the burden of adoption. The Company adopted ASC 842 October 1, 2019, using the effective date method and elected certain practical expedients allowing the Company not to reassess:

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whether expired or existing contracts contain leases under the new definition of a lease;

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lease classification for expired or existing leases; and

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whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company entered into a financing lease for a single vehicle in the Industrial services segment with a term of 3 years. The Company enters into operating leases for its facilities in New York, United Kingdom, and India, as well as for vehicles for use in our Industrial Services segment. The operating lease terms range from 2 to 7 years. The Company excluded the renewal option on its applicable facility leases from the calculation of its right-of-use assets and lease liabilities.

Finance and operating lease liabilities consist of the following:

	March 31, 2021		September 30, 2020
Lease liabilities - current
Finance leases	$	8,501	$	20,061
Operating leases		755,607		700,975
		764,108		721,036

Lease liabilities - net of current portion
Finance leases	$	-	$	-
Operating leases		2,106,545		2,027,406
	$	2,106,545	$	2,027,406

A reconciliation of undiscounted cash flows to finance and operating lease liabilities recognized in the condensed consolidated balance sheet at March 31, 2021, is set forth below:

	Finance leases			Operating Leases			Total
Years ending September 30,
2021		8,528			404,419			412,947
2022		-			799,784			799,784
2023		-			616,607			616,607
2024		-			480,881			480,881
2025		-			457,078			457,078
2026 & Thereafter		-			573,198			573,198
Undiscounted lease payments		8,528			3,331,967			3,340,495
Amount representing interest		(27	)		(469,815	)		(469,842	)
Discounted lease payments	$	8,501		$	2,862,152		$	2,870,653

Additional disclosures of lease data are set forth below:

	Six months ended
	March 31, 2021			March 31, 2020
Lease costs:
Finance lease costs:
Depreciation of finance lease assets	$	11,456		$	11,456
Interest on lease liabilities		61			416

Operating lease costs:
Amortization of right-of-use assets		438,539			275,822
Interest on lease liabilities		34,613			20,375
Total lease cost	$	484,669		$	308,069

Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases	$	450,102		$	11,872
Finance leases		20,034			398,580
	$	470,136		$	410,452

Weighted-average remaining lease term - finance leases (months)		3			16
Weighted-average remaining lease term - operating leases (months)		72			28

Weighted-average discount rate - finance leases		3.63	%		3.63	%
Weighted-average discount rate - operating leases		6.85	%		6.57	%

The Company used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease payments.