. LEASE

OBLIGATIONS

In accordance with ASC

842,

Leases, the Company's leases with terms longer than

twelve

months are recorded on the consolidated balance sheets. The Company leases certain office and warehouse space, as well as production and office equipment.

The Company determines if an arrangement is a lease at contract inception. The lease term begins upon lease commencement, which is when the Company takes possession of the asset, and

may

include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. As its lease agreements typically do

not

provide an implicit rate, the Company primarily uses an incremental borrowing rate based upon the information available at lease commencement. In determining the incremental borrowing rate, the Company considers its current borrowing rate, the term of the lease, and the economic environments where the lease activity is concentrated.

The components of lease expense for the years ended

June 30

were as follows:

	2020			2019
Finance lease cost:
Amortization of right-of-use assets	$	188		$	27
Interest on lease liabilities		56			8
Operating lease cost		3,137			3,348
Short-term lease cost		64			40
Variable lease cost		58			37
Total lease cost		3,503			3,460
Less: Sublease income		(212	)		(222	)
Net lease cost	$	3,291		$	3,238

Other information related to leases was as follows:

	2020			2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,141		$	3,338
Operating cash flows from finance leases		167			18
Financing cash flows from finance leases		56			9
Right-of-use-assets obtained in exchange for lease obligations:
Operating leases		2,757			13,875
Finance leases		592			553
Weighted average remaining lease term (years):
Operating leases		10.7			11.1
Finance lease		4.0			4.8
Weighted average discount rate:
Operating leases		7.4	%		7.7	%
Finance leases		6.2	%		7.3	%

Approximate future minimum rental commitments under non-cancellable leases as of

June 30, 2020

were as follows:

	Operating Leases			Finance Leases
2021	$	2,724		$	284
2022		2,233			284
2023		1,988			275
2024		1,793			234
2025		1,567			31
Thereafter		10,930			-
Total future lease payments		21,235			1,108
Less: Amount representing interest		(6,773	)		(118	)
Present value of future payments	$	14,462		$	990

The following table provides a summary of leases recorded on the consolidated balance sheet at

June 30.

	Balance Sheet Location	2020		2019
Lease Assets
Operating lease right-of-use assets	Property, plant and equipment, net	$	14,448	$	14,138
Finance lease right-of-use assets	Property, plant and equipment, net		959		545

Lease Liabilities
Operating lease liabilities	Accrued liabilities	$	1,724	$	1,933
Operating lease liabilities	Lease obligations		12,738		12,197
Finance lease liabilities	Accrued liabilities		233		104
Finance lease liabilities	Lease obligations		757		449

Subsequent Event:

July 31, 2020,

the Company finalized an agreement to lease a manufacturing, assembly and office facility in Lufkin, Texas. The lease was entered into with the local government as part of the city's economic development program. The new lease has an initial term of

years and a base rent of

$427

per year. The Company will record

$4,500

in finance lease right-of-use assets and

$4,500

in finance lease liabilities. In addition to the lease, the Company has certain leasehold improvements which were made to the facility amounting to

$1,041.