NOTE 3. Summary of Significant Accounting Policies

Our significant accounting policies are detailed in “Note 2 - Summary of Significant Accounting Policies” of our Annual Report on Form 10‑K for the year ended September 30, 2019. Significant changes to our accounting policies as a result of adopting Topic 842 are discussed below:

The Company determines if an arrangement is a lease at its inception. Right-of-use (“ROU”) assets and operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised, and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in operating lease ROU assets, current operating lease liabilities, and non-current operating lease liabilities in the Company's condensed consolidated balance sheet.

The Company’s lease arrangements consist primarily of corporate, manufacturing and other facility agreements as well as various office equipment agreements. The leases expire at various dates through 2026, some of which include options to extend the lease term. The options with the longest potential total lease term consist of options for extension of up to three years following expiration of the original lease term.

During the three months ended December 31, 2019, the Company recorded $0.3 million of operating lease expense. During the three months ended December 31, 2018, the Company recorded $0.3 million of rent expense. The Company's finance leases and short-term leases are immaterial.

Maturities of operating lease liabilities as of December 31, 2019 were as follows:


		(In Thousands)
2020	$	951
2021		854
2022		841
2023		804
2024		658
Thereafter		1,183
Total lease payments		5,291
Less imputed interest		(586)
Total	$	4,705

The following is a schedule of future minimum lease payments as of September 30, 2019:


		Operating Leases
		(In thousands)
2020	$	988
2021		839
2022		824
2023		853
2024		655
Thereafter		1,350
Total lease payments	$	5,509

Weighted-average remaining lease term and discount rate related to operating leases are as follows



	December 31, 2019
Weighted average remaining lease term (years)	6.2
Weighted average discount rate	3.8	%

Disaggregation of Revenue - Revenue is classified based on the product line of business. For additional information on the disaggregated revenues by geographical region, see Note 15 - Geographical Information in the notes to the condensed consolidated financial statements.

Revenue is also classified by major product category and is presented below:


	For the three months ended December 31,
			% of				% of
(in thousands)	2019		Revenue		2018		Revenue
Navigation and Inertial Sensing	$	10,267	40	%		2,459	10	%
Defense Optoelectronics		3,437	13	%		1,681	7	%
CA TV Lasers and Transmitters		9,383	37	%		14,772	62	%
Chip Devices		1,555	6	%		4,215	18	%
Other		840	4	%		874	3	%
Total revenue	$	25,482	100	%	$	24,001	100	%