We lease office space, buildings, land, vehicles and equipment. Lease agreements with an initial term of 12 months or less are not recorded on the balance sheet. Instead, we recognize the lease expense as incurred over the lease term.

Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to five years. The exercise of lease renewal options is at our sole discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We determine if a contract or arrangement is, or contains, a lease at inception. Balances related to operating leases are included in right-of-use (“ROU”) assets in our Condensed Consolidated Balance Sheets. Balances related to financing leases are immaterial and are included in property and equipment, other current liabilities, and long-term lease liability in our Condensed Consolidated Balance Sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset includes any prepaid lease payments and additional direct costs and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The following table provides information about the financial statement classification of our lease balances reported within the Condensed Consolidated Balance Sheets as of March 31, 2021 and September 30, 2020, in thousands:

	March 31, 2021		September 30, 2020
Assets
Operating lease assets	$	6,016	$	5,124
Finance lease assets		20		26
Total lease assets	$	6,036	$	5,150
Liabilities
Current
Operating lease liabilities	$	295	$	113
Finance lease liabilities		9		11
Non-current
Operating lease liabilities		5,791		5,048
Finance lease liabilities		12		16
Total lease liabilities	$	6,107	$	5,188

The following table provides information about the financial statement classification of our lease expenses reported in the Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2021 and 2020, in thousands:

		Three Months Ended March 31,				Six Months Ended March 31,
Lease cost	Classification	2021		2020		2021		2020
Operating lease cost	Cost of sales	$	13	$	24	$	84	$	87
Operating lease cost	Selling, general and administrative expenses		96		15		144		28
Finance lease cost	Cost of sales		2		6		4		11
Finance lease cost	Selling, general and administrative expenses		1		2		3		4
Short-term lease cost	Cost of sales		49		—		76		—
Total lease cost		$	161	$	47	$	311	$	130

Future minimum lease payments under non-cancelable leases, including leases that are executed but not yet effective, as of March 31, 2021 are as follows, in thousands:

	Operating leases		Finance Leases		Total
Remainder of 2021	$	402	$	6	$	408
2022		1,055		8		1,063
2023		1,048		6		1,054
2024		1,028		2		1,030
2025		1,015		—		1,015
Thereafter		9,695		—		9,695
Total lease payments		14,243		22		14,265
Less: Interest		5,432		1		5,433
Present value of lease liabilities		8,811		21	$	8,832

Operating lease payments include $6.4 million related to optional lease extension periods for multiple leases that are not yet exercisable but are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied as of March 31, 2021:

	March 31, 2021
Weighted average remaining lease term
Operating leases	17.35 years
Finance leases	2.50 years
Weighted average discount rate
Operating leases		4.17	%
Finance leases		4.17	%