Leases

6 Months Ended

Mar. 31, 2024

Leases

Leases

8. Leases

The Company accounts for leases in accordance with ASU 2016-02 and records “right-of-use” assets and corresponding lease liabilities on the balance sheet for most leases with an initial term of greater than one year. Consistent with previous accounting guidance, we will recognize payments for leases with a term of less than one year in the statement of operations on a straight-line basis over the lease term.

We lease real estate and equipment under various operating leases. A lease exists when a contract or part of a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In determining whether a lease exists, we consider whether a contract provides us with both: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset and (b) the right to direct the use of the identified asset.

Some of our leases include base rental periods coupled with options to renew or terminate the lease, generally at our discretion. In evaluating the lease term, we consider whether we are reasonably certain to exercise such options. To the extent a significant economic incentive exists to exercise an option, that option is included within the lease term. However, based on the nature of our lease arrangements, options generally do not provide us with a significant economic incentive and are therefore excluded from the lease term for the majority of our arrangements.

Our leases typically include a combination of fixed and variable payments. Fixed payments are generally included when measuring the right-of-use asset and lease liability. Variable payments, which primarily represent payments based on usage of the underlying asset, are generally excluded from such measurement and expensed as incurred. In addition, certain of our lease arrangements may contain a lease coupled with an arrangement to provide other services, such as maintenance, or may require us to make other payments on behalf of the lessor related to the leased asset, such as payments for taxes or insurance. As permitted by ASU 2016-02, we have elected to account for these non-lease components together with the associated lease component if included in the lease payments. This election has been made for each of our asset classes.

The measurement of “right-of-use” assets and lease liabilities requires us to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such a rate is utilized. However, based on information available at lease commencement for our leases, the rate implicit in the lease is not known. In these instances, we utilize an incremental borrowing rate, which represents the rate of interest that we would pay to borrow on a collateralized basis over a similar term.

The following table presents the lease-related assets and liabilities reported in the Condensed Consolidated Balance Sheet as of March 31, 2024:

Classification on the Consolidated Balance Sheet on March 31, 2024
Assets
Operating leases	Other assets	$	8,503
Liabilities
Operating leases - current	Accrued expenses	$	8,503
Operating leases - noncurrent	Other liabilities	$	—
Total lease liabilities		$	8,503

Rent expense and cash paid for various operating leases in aggregate are $7,338 for the six-month period ended March 31, 2024. The weighted average remaining lease term is 0.7 years and the weighted average discount rate is 5.0% as of March 31, 2024.

Future minimum lease payments under operating leases are as follows at March 31, 2024:

	Twelve Months
	Ending	Operating
	March 31,	Leases
	2025		9,784
Total minimum lease payments		$	9,784
Amount representing interest			(1,281)
Present value of minimum lease payments		$	8,503
Current portion			8,503
Long-term portion of lease obligations		$	—