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Note 6 - Leases
6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Leases Disclosure [Text Block]

Note 6 - Leases

 

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment, and finance lease agreements for certain equipment. These leases have original lease periods expiring between fiscal 2024 and fiscal 2029. Most leases include one or more options to renew, and the exercise of a lease renewal option typically occurs at the discretion of both parties. Certain leases also include options to purchase the leased property. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

 

In May 2023, the Company entered into a lease agreement to relocate its principal office. The space was made available to the Company in September 2023 (lease commencement) with an initial term of five and a half years. The Company recorded an operating lease right-of-use (“ROU”) asset of $0.7 million and a lease liability of $0.7 million at lease commencement. The ROU asset and lease liability were recorded at present value using an incremental borrowing rate of 10.3%. The Company utilized the practical expedient to not separate lease and non-lease components upon recognition.

 

The components of lease expenses are as follows:

 

  

Three Months Ended

  

Six Months Ended

  
  

December 31,

  

December 31,

  
  

2023

  

2022

  

2023

  

2022

 

Statement of Operations Classification

  

(in thousands)

  

Lease cost:

                 

Operating lease cost

 $381  $359  $741  $716 

Operating expenses

Short-term lease cost

  21   19   44   44 

Operating expenses

Finance lease cost:

                 

Amortization of leased assets

  15   19   29   37 

Cost of sales

Interest on lease liabilities

  1   2   2   5 

Other expense, net

Total net lease cost

 $418  $399  $816  $802  

 

Supplemental balance sheet information related to leases is as follows:

 

  

December 31,

  

June 30,

  
  2023  2023 

Balance Sheet Classification

  

(in thousands)

  

Assets:

         

Operating lease assets

 $2,133  $2,054 

Operating lease right-of-use assets

Finance lease assets

     159 

Property and equipment, net

Total lease assets

 $2,133  $2,213  

Liabilities:

         

Current:

         

Operating leases

 $1,369  $1,258 

Other current liabilities

Finance leases

  39   85 

Current portion of debt

Non-current:

         

Operating leases

  845   832 

Other non-current liabilities

Total lease liabilities

 $2,253  $2,175  

 

Remaining lease term and discount rate used are as follows:

 

  

December 31,

  

June 30,

 
  

2023

  

2023

 

Weighted-average remaining lease term (years):

        

Operating lease assets

  2.62   1.72 

Finance lease assets

  0.37   0.87 

Weighted-average discount rate:

        

Operating lease assets

  8.85%  7.78%

Finance lease assets

  6.54%  6.54%

 

Supplemental cash flow information related to lease is as follows:

 

  

Six Months Ended

 
  

December 31,

 
  

2023

  

2022

 
  

(in thousands)

 

Cash flow classification of lease payments:

        

Operating cash flows from operating leases

 $697  $716 

Operating cash flows from finance leases

 $2  $5 

Financing cash flows from finance leases

 $46  $52 

 

As of December 31, 2023, the maturities of the Company’s future minimum lease payments were as follows:

 

  

Operating

  

Finance

 
  

(in thousands)

 

2024 (remaining 6 months)

 $735  $40 

2025

  938    

2026

  282    

2027

  241    

2028

  199    

Thereafter

  151    

Total lease payments

  2,546   40 

Less: imputed interest

  (332)  (1)

Lease liabilities

 $2,214  $39