Leases |
12 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Leases [Abstract] | |
| Leases | Note 12 – Leases The Company has operating leases for its office, manufacturing and warehouse space, and office equipment. The Company has a finance lease for office equipment, furniture, and fixtures. Corporate Headquarters On June 20, 2019, the Company executed a lease for its corporate headquarters in Miami, Florida. Under the terms of the lease, which was amended on August 13, 2019, the Company is leasing approximately 4,640 square feet of office space for a 30-month term commencing on September 1, 2019 and ending on February 27, 2022. Annual base rent payments are $33.00 per square foot and are subject to a 2.9% annual escalation on September 1 of each subsequent year. Based on the terms of the lease agreement, the Company paid a security deposit of approximately $12,000. The lease included a finance lease for office equipment, furniture, and fixtures. In June 2021, the Company executed a lease for its new corporate headquarters in Miami, Florida. The Company will be leasing approximately 12,000 square feet of office space for an eight year term commencing on the later of March 1, 2022 or the date the landlord substantially completes tenant improvements. The space will replace the Company’s current corporate headquarters in Miami, Florida when the existing lease terminates at the end of February 2022. Annual base rent payments will be $58.00 per square foot and are subject to a 3% annual escalation. Based on the terms of the lease agreement, the Company paid a security deposit of approximately $117,000, which is included in other assets on the accompanying consolidated balance sheet as of September 30, 2021. Chicago Lease The Company leases approximately 6,600 square feet of office space located in Chicago, Illinois. The Company executed the lease for this office in May 2016, for a seven-year period commencing on November 1, 2016 and ending on October 31, 2023. The lease granted the Company a seven-month lease holiday beginning November 1, 2016, a five-month lease abatement beginning June 1, 2017, and provided a tenant improvement allowance. Annual base rent payments were $14.00 per square foot in year one and increase on an annual basis to $17 per square foot in the final year of the lease. The lease also requires payment of related expenses, including real estate taxes, common area maintenance, utilities and insurance expenses from June 1, 2017 to October 31, 2023. Based on the terms of the lease agreement, the Company paid a security deposit of $55,000. Effective September 1, 2017, the Company entered into a sublease for this office space through October 31, 2023. Monthly sublease payments of approximately $15,200 commenced in January 2018 and will end in August 2023. The monthly sublease payment is subject to annual increases in September of each year and will increase to approximately $17,300 per month in the final year of the sublease. Sublease income is recognized as a reduction to operating lease costs as the sublease is outside of the Company’s normal business operations. This is consistent with the Company’s recognition of sublease income prior to the adoption of FASB ASC Topic 842. The tenant under the sublease provided a security deposit of $30,000 to the Company. The Company continues to be responsible for performance under the lease until it expires on October 31, 2023. International Leases The Company leases approximately 6,400 square feet of office space located in London, England. The Company executed this lease in June 2010, for a ten-year term, which ended in June 2020 and was extended through August 2020. The lease required quarterly payments of approximately $24,100. Based on the terms of the lease agreement, the Company paid a security deposit of approximately $58,000. The lease was renewed effective August 2020 with a five year term and a tenant’s option to cancel after three years with no penalty to the Company. It is reasonably certain that the Company will exercise that option. The renewed lease requires quarterly payments of approximately $41,100. The security deposit under the original lease did not change. The Company leases 45,800 square feet of manufacturing and warehouse space in Selangor D.E., Malaysia. The Company executed the lease for this space in August 2019, for a three-year term commencing September 1, 2019 and ending August 31, 2022. The Company has an option to extend the term of the lease for a period of three years and it is reasonably certain that the Company will exercise that option. The lease requires monthly payments of approximately $15,400. Based on the terms of the lease agreement, the Company maintains a security deposit of approximately $46,000. Certain of our lease agreements include variable lease payments for common area maintenance, real estate taxes, and insurance or based on usage for the office equipment leases. The components of the Company’s lease cost were as follows for the year ended September 30, 2021: 2021 2020Finance lease cost: Amortization of right-of-use assets$ 8,731 $ 8,713Interest on lease liabilities 2,765 5,189Operating lease cost 542,751 496,803Short-term lease cost 44,347 7,452Variable lease cost 178,527 153,852Sublease income (179,378) (179,915)Total lease cost$ 597,743 $ 492,094 The Company paid cash of $650,000 and $479,000 for amounts included in the measurement of operating lease liabilities during the year ended September 30, 2021 and 2020, respectively. The Company’s operating lease ROU assets and related lease liabilities are presented as separate line items on the accompanying consolidated balance sheet as of September 30, 2021 and 2020. The Company’s finance lease ROU asset was $25,000 and $34,000 as of September 30, 2021 and 2020, respectively, and is included in property and equipment, net on the accompanying consolidated balance sheet. The current finance lease liability as of September 30, 2021 was $9,000 and the current and long-term finance lease liabilities were $21,000 and $8,000, respectively, and are included in accrued expenses and other current liabilities and other liabilities, respectively, on the accompanying consolidated balance sheet as of September 30, 2020. Other information related to the Company’s leases as of September 30, 2021 and 2020 was as follows: 2021 2020Operating Leases Weighted-average remaining lease term2.9 3.6Weighted-average discount rate11.5% 11.5%Finance Leases Weighted-average remaining lease term0.4 1.4Weighted average discount rate13.9% 13.9% The Company’s lease agreements do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate based on information available at lease commencement in order to discount lease payments to present value. As of September 30, 2021, maturities of lease liabilities were as follows: Operating Finance Sublease Leases Leases IncomeFiscal year ended September 30, 2022$ 527,213 $ 9,496 $ 203,5842023 417,345 — 190,7492024 196,005 — —2025 168,579 — —2026 — — —Thereafter — — —Total lease payments 1,309,142 9,496 $ 394,333Less imputed interest (201,318) (403) Total lease liabilities$ 1,107,824 $ 9,093 As of September 30, 2021, we have additional operating lease commitments that have not yet commenced of approximately $5.9 million for our new corporate headquarters with a lease term of 8 years. The lease liabilities presented above do not include variable lease payments for common area maintenance, real estate taxes, and insurance or based on usage for the office equipment leases. These amounts are not fixed and can fluctuate from year to year. |