Note

Leases and other Commitments and Contingencies

(a)

Leases.

The Company has operating and finance leases for its corporate and sales offices, warehousing and packaging facilities and certain machinery and equipment, including office equipment. The Company’s leases have remaining terms of less than

year to less than

years.

The components of lease expense for the

three

months ended

March 31, 2020

and

2019,

were as follows:

	2020						2019
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals

Operating lease costs	$	142	$	24	$	166	$	141	$	23	$	164

Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	14	$	14	$	-	$	22	$	22
Interest on operating lease liabilities		-		3		3		-		5		5
Total finance lease cost	$	-	$	17	$	17	$	-	$	27	$	27

The components of lease expense for the

nine

months ended

March 31, 2020

and

2019,

were as follows:

	2020						2019
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals

Operating lease costs	$	425	$	80	$	505	$	423	$	72	$	495

Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	43	$	43	$	-	$	55	$	55
Interest on operating lease liabilities		-		11		11		-		12		12
Total finance lease cost	$	-	$	54	$	54	$	-	$	67	$	67

Operating

Lease

Liabilities

Related Party

Operating

ase

Liabilities

Warehouse and office facilities are leased from Vitamin Realty Associates, LLC (“Vitamin Realty”), which is

100%

owned by the Company’s chairman, and a major stockholder and certain of his family members, who are the Co-Chief Executive Officers and directors of the Company. On

January 5, 2012,

MDC entered into a

second

amendment of lease (the “Second Lease Amendment”) with Vitamin Realty for its office and warehouse space in New Jersey increasing its rentable square footage from an aggregate of

74,898

square feet to

76,161

square feet and extending the expiration date to

January 31, 2026.

This Second Lease Amendment provides for minimum annual rental payments of

$533,

plus increases in real estate taxes and building operating expenses. On

May 19, 2014,

AgroLabs entered into an amendment to the lease agreement entered into on

January 5, 2012,

with Vitamin Realty for an additional

2,700

square feet of warehouse space in New Jersey, the term of which was to expire on

January 31, 2019

to extend the expiration date to

June 1, 2024.

This additional lease provides for minimum lease payments of

$27

with annual increases plus the proportionate share of operating expenses.

Rent expense and lease amortization costs for the

three

months ended

March 31, 2020

and

2019

on these leases were

$216

and

$203,

respectively and

$647

and

$630

for the

nine

month periods ended

March 31, 2020

and

2019,

respectively and are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of

March 31, 2020

and

June 30, 2019,

the Company had outstanding current obligations to Vitamin Realty of

and

$67,

respectively, included in accounts payable in the accompanying Condensed Consolidated Balance Sheet. Additionally, the Company has operating lease obligations of

$2,908

and

$3,243

with Vitamin Realty as noted in the accompany Condensed Consolidated Balance Sheet as of

March 31, 2020

and

June 30, 2019,

respectively.

Other

Operating

Lease

Liabilities

The Company has entered into certain non-cancelable operating lease agreements expiring up through

March, 2025,

related to machinery and equipment and office equipment.

As of

March 31, 2020,

the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases were as follows:

	Right-of-use Assets		Current Portion of Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment

Vitamin Realty Leases	$	2,901	$	463	$	2,445	$	3,244
Machinery and equipment leases		18		11		7		19
Office equipment leases		24		10		13		25
	$	2,943	$	484	$	2,465	$	3,288

As of

June 30, 2019,

the Company’s ROU assets, lease obligations and remaining cash commitment on these leases were as follows:

	Right-of-use Assets		Current Portion Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment

Vitamin Realty Leases	$	3,236	$	450	$	2,793	$	3,668
Machinery and equipment leases		26		11		15		27
Office equipment leases		22		9		14		24
	$	3,284	$	470	$	2,822	$	3,719

As of

March 31, 2020

and

June 30, 2019,

the Company’s weighted average discount rate and remaining term on lease liabilities were approximately

3.75%

and

3.76%

and

5.6

years and

6.4

years, respectively.

Supplemental cash flows information related to leases for the

nine

months ended

March 31, 2020,

was as follows:

	Related Party - Vitamin Realty		Other Leases		Totals

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	424	$	75	$	499
Operating cash flows from finance leases		-		11		11
Financing cash flows from finance lease obligations		-		157		157

Supplemental cash flows information related to leases for the

nine

months ended

March 31, 2019,

was as follows:

	Related Party - Vitamin Realty		Other Leases		Totals

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	424	$	72	$	496
Operating cash flows from finance leases		-		12		12
Financing cash flows from finance lease obligations		-		174		174

In the

nine

months ended

March 31, 2020,

the Company renewed, for

one

year, an operating lease for office space with an annual commitment of

$25

and entered into a

five

-year lease agreement for the rental of office equipment with an annual commitment of

$2.

Maturities of operating lease liabilities as of

March 31, 2020

were as follows:

	Operating			Related Party			Capitalized
Year ending	Lease			Operating Lease			Lease
June 30,	Commitment			Commitment			Obligations			Total

2020, remaining	$	5		$	141		$	39		$	185
2021		23			565			77			605
2022		10			565			-			575
2023		2			565			-			567
2024		2			564			-			566
2025		1			533			-			534
Thereafter		-			311			-			311
Total minimum lease payments		43			3,244			116			3,403
Imputed interest		(2	)		(336	)		(3	)		(341	)
Total	$	41		$	2,908		$	113		$	3,062

Total rent expense, lease amortization costs and interest expense, including real estate taxes and maintenance charges, was approximately

$257

and

$249

and

$783

and

$756

for the

three

and

nine

months ended

March 31, 2020

and

2019,

respectively. Rent and lease amortization is included in cost of sales, selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

(

) Legal Proceedings.

The Company is subject, from time to time, to claims by

third

parties under various legal theories. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.