4. Leases

3 Months Ended

Sep. 30, 2019

Lessee Disclosure [Abstract]

Leases

4. Leases

On July 1, 2019, the Company adopted Topic 842 and elected the available practical expedient to recognize the cumulative effect of initially adopting the standard as an adjustment to the opening balance sheet of the period of adoption (i.e., July 1, 2019). The Company also elected the other available practical expedients and will not separate lease components from non-lease components for office leases, or reassess historical lease classification, whether existing or expired contracts are or contain leases, or the initial direct costs for existing leases as of July 1, 2019. The condensed consolidated balance sheets and results from operations for reporting periods beginning after July 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under Topic 840.

Adoption of the standard resulted in the recording of net operating and financing lease ROU assets and corresponding operating and financing lease liabilities of $984,000 and $1,114,000, respectively on July 1, 2019. The adoption of the standard did not materially affect the condensed consolidated statements of operations and had no impact on cash flows.

The Company's leases include office buildings for its facilities worldwide and car leases in Germany, which are all classified as operating leases. The Company also has a financing lease related to R&D equipment in the United States.

The Company determines if an arrangement is a lease at inception. Certain leases include renewal options that are under the Company's sole discretion. The renewal options were included in the ROU asset and lease liability calculation if it is reasonably assured that the Company will exercise the option. As the Company's leases generally do not provide an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Components of lease expense and supplemental cash flow information:

	Three months ended September 30, 2019
	(In thousands)
Components of lease expense
Operating lease cost	$	306
Financing lease cost	$	2
Supplemental cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	$	246
Cash paid for amounts included in the measurement of financing lease liabilities	$	3
Right-of-use assets obtained in exchange for lease obligation	$	984

The weighted average remaining lease term is 1.7 years. The weighted average discount rate is 6.39 percent.

Maturities of lease liabilities as of September 30, 2019 were as follows:

	Operating			Financing
	(In thousands)
2020 (remainder of the year)	$	646		$	2
2021		430			–
2022		24			–
2023		4			–
Thereafter		–			–
Total remaining lease payments		1,104			2
less: imputed interest		49			–
Lease liability	$	1,055		$	2
Reported as:
Current liabilities	$	(830	)	$	(2	)
Long-term liabilities	$	(225	)	$	–

The lease liabilities and ROU assets as of September 30, 2019 include leases assumed in the acquisition of Maestro if the remaining lease term at the acquisition date was determined to exceed one year. Refer to Note 4 below for further information on the acquisition of Maestro. As of September 30, 2019, the ROU assets totaled $957,000 and were recorded in other assets in the unaudited condensed consolidated balance sheet.