Leases

6 Months Ended

Jul. 31, 2020

Leases

5. Leases

5. Leases

We lease real property, equipment and certain automobiles. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. All of the Company’s real estate leases are classified as operating leases.

Most of our real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional four to five years. The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.

Leases recorded on the consolidated balance sheet consist of the following (in $000’s):

	Classification	July 31, 2020		January 31, 2020
Assets
Operating lease assets	Operating lease right-of-use assets	$	2,064	$	2,244
Liabilities
Current
Operating	Current portion of operating lease liabilities		887		835
Noncurrent
Operating	Long-term portion of operating lease liabilities		1,145		1,414
Total Lease Obligations		$	2,032	$	2,249

                Lease cost

                The components of lease expense are included on the unaudited condensed consolidated statement of operations as follows (in 000’s):

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
Operating lease cost	$	267	$	580
Short-term lease cost	$	149	$	304

                  Maturity of Lease Liabilities

                 Maturity of lease liabilities as of July 31, 2020 was as follows (in $000’s):

For the 12 months ended July 31,	Operating Leases (a)
2021	$	976
2022		776
2023		318
2024		21
2025		18
Thereafter		108
Total lease payments	$	2,217
Less: Interest		(185	)
Present value of lease liability	$	2,032

(a) Operating lease payments include $72 related to options to extend lease terms that are reasonably certain of being exercised.

                 Weighted-average lease terms and discount rates are as follows:

Weighted-average remaining lease term (years)	July 31, 2020			January 31, 2020
Operating leases		2.93			3.14
Weighted-average discount rate
Operating leases		6.19	%		5.87	%

                 Supplemental cash flow information related to leases for the three months and six months ended July 31, 2020 were as follows (in 000’s):

Cash paid for amounts included in the measurement of lease liabilities:	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
Operating cash flows from operating leases	$	277	$	580
Leased assets obtained in exchange for new operating lease liabilities	$	74	$	289