9. Leases

Corporate office and warehouse leases

At March 31, 2020, the Company had leases for its corporate office and a warehouse space in the State of New Jersey. The Company entered into a lease termination agreement for its corporate office lease on May 6, 2020. Refer to Note 13 for additional details on the corporate office lease termination and related accounting. The terminated corporate office lease had a maturity date in February 2028 with two five-year renewal options. The Company’s warehouse lease matures in September 2021.

Equipment leases

The Company has equipment leases, with terms between 12 and 36 months, recorded as finance leases. The equipment leases bear interest between 4.0% and 13.0%.

Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include minimum payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option. Lease expense is included in research and development or general and administrative based on the use of the lease asset.

The components of lease cost for the three and six months ended March 31, 2020 are as follows:


	Three months ended March 31,		Six months ended March 31,
	2020		2020
Finance lease cost:
Amortization of right-of-use assets	$	75,000	$	150,000
Interest on lease liabilities		361,033		733,256
Total finance lease cost		436,033		883,256
Operating lease cost		43,625		87,250
Total lease cost	$	479,658	$	970,506

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2020 were as follows:


	March 31, 2020
Operating leases:
Right-of-use asset	$	244,600
Operating lease liabilities		271,600
Finance leases:
Right-of-use asset	$	2,375,000
Financing lease liabilities		3,399,232
Weighted-average remaining lease term (years):
Operating leases		1.6
Finance leases		7.7
Weighted-average discount rate:
Operating leases		9.0%
Finance leases		43.0%

Other information related to leases for the six months ended March 31, 2020 are as follows:


	Six months ended March 31,
	2020
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from finance leases	$	713,364
Operating cash flows from operating leases		93,750
Financing cash flows from finance leases		178,757
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—
Finance leases		—

Future minimum lease payments under non-cancelable leases as of March 31, 2020 are as follows for the years ending September 30:


	Operating leases		Finance leases
2020 (remaining six months)	$	93,750	$	746,636
2021		195,000		1,492,390
2022		—		1,535,809
2023		—		1,564,028
2024		—		1,597,371
Thereafter		—		5,753,515
Total undiscounted lease payments	$	288,750	$	12,689,749
Less: Imputed interest		17,150		9,290,517
Total lease obligations	$	271,600	$	3,399,232

Future minimum rental payments under non-cancelable leases prior to adoption of ASC 842, Leases, as of September 30, 2019 were as follows:


	Operating leases		Finance leases
2020	$	187,500	$	1,608,067
2021		195,000		1,506,592
2022		—		1,535,809
2023		—		1,564,027
2024		—		1,593,291
Thereafter		—		5,691,492
Total undiscounted lease payments	$	382,500	$	13,499,278
Less: Imputed interest		—		9,941,198
Total lease obligations	$	382,500	$	3,558,080

Office and laboratory lease termination obligation

In August 2018, the Company entered into a lease termination agreement effective September 1, 2018, to terminate the lease for unutilized office and laboratory space in Cranbury, New Jersey. In consideration for the termination of the lease, the Company agreed to make payments to the landlord totaling up to $5.8 million, which includes (i) $287,615 upon execution of the termination agreement, (ii) $50,000 per month for up to 30 months, commencing September 1, 2018, and (iii) a $4.0 million payment, in any event, on or before February 1, 2021. The Company and landlord agreed that the $174,250 security deposit will be used to pay the 7th, 8th, 9th and a portion of the 10th monthly payments. The Company may pay the final $4.0 million payment at any time, whereupon the Company’s obligation to make the remaining monthly payments terminates.

At March 31, 2020, the lease termination obligation of $3,938,994 is included in accrued expenses on the consolidated balance sheets. A roll forward of the charges incurred to general and administrative expense for the six months ended March 31, 2020 is as follows:


	Balance		Expensed / Accrued		Cash		Balance
	October 1, 2019		Expense		Payments		March 31, 2020
Lease termination payments	$	3,909,448	$	329,546	$	(300,000)	$	3,938,994