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Note 20 - Leases

9 Months Ended

Mar. 31, 2023

20. LEASES

Company as Lessor

Operating leases under which the Company is the lessor arise from leasing the Company’s commercial real estate investment property to third parties. Initial lease terms generally range from 12 to 60 months. Depreciation expense for assets subject to operating leases is taken into account primarily on the straight-line method over a period of twenty years in amounts necessary to reduce the carrying amount of the asset to its estimated residual value. Depreciation expense relating to the property held as investments in operating leases were $54 and $58 for the nine months ended March 31, 2023 and March 31, 2022, respectively.

Future minimum rental income in China and Thailand to be received from Fiscal 2023 to the fiscal year ended June 30, 2027 (“Fiscal 2027”) on non-cancelable operating leases is contractually due as follows as of March 31, 2023:

Remainder of Fiscal 2023	$	36
Fiscal 2024		141
Fiscal 2025		141
Fiscal 2026		46
Fiscal 2027		16
	$	380

Future minimum rental income in China and Thailand to be received from Fiscal 2023 to Fiscal 2027 on non-cancelable operating leases is contractually due as follows as of June 30, 2022:

2023	$	6
2024		27
2025		28
2026		29
2027		10
	$	100

Sales-type leases under which the Company is the lessor arise from the lease of four units of chiller systems. The Company classifies its lease arrangements at inception of the arrangement. The lease term is three years, contains an automatic transfer of title at the end of the lease term and a guarantee of residual value at the end of the lease term. The customer is required to pay for executory costs such as taxes.

Financing receivables, consisting of net investment in sales-type leases and receivables from financed sales of four units of chiller systems are as follows:

Components of Lease Balances	Mar. 31,
	2023
Assets
Gross financial sales receivable	$	23
Unearned finance income		(1	)
Financed sales receivable	$	22

Net financed sales receivables due within one year	$	22
Net financed sales receivables due after one year	$	-

As of March 31, 2023, the financed sale receivables had a weighted average effective interest rate of 11.16% and weighted average remaining lease term of 1 year.

Company as Lessee

The Company is the lessee under operating leases for corporate offices and research and development facilities with remaining lease terms of one year to four years and finance leases for plant and equipment.

Supplemental balance sheet information related to leases was as follows (in thousands):

	Mar. 31,			Jun. 30,
	2023			2022
	(Unaudited)
Finance Leases (Plant and Equipment)
Plant and equipment, at cost	$	1,749		$	1,727
Accumulated depreciation		(1,214	)		(1,179	)
Plant and Equipment, Net	$	535		$	548

Current portion of finance leases	$	103		$	118
Net of current portion of finance leases		43			119
Total Finance Lease Liabilities	$	146		$	237

Operating Leases (Corporate Offices, Research and Development Facilities)
Operating lease right-of-use assets	$	3,059		$	3,152
Operating lease right-of-use assets, Net	$	3,059		$	3,152
Current portion of operating leases		1,361			1,218
Net of current portion of operating leases		1,698			1,934
Total Operating Lease Liabilities	$	3,059		$	3,152

	Three Months Ended				Nine Months Ended
	Mar. 31,		Mar. 31,		Mar. 31,		Mar. 31,
	2023		2022		2023		2022
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)

Lease Cost
Finance lease cost:
Interest on finance lease	$	2	$	9	$	8	$	20
Amortization of right-of-use assets		46		60		138		150
Total finance lease cost		48		69		146		170

Operating Lease Costs	$	384	$	331	$	1,133	$	801

Other information related to leases was as follows (in thousands except lease term and discount rate):

	Nine Months Ended
	Mar. 31,			Mar. 31,
	2023			2022
	(Unaudited)			(Unaudited)
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flows from finance leases	$	(8	)	$	(20	)
Operating cash flows from operating leases		(1,008	)		(801	)
Finance cash flows from finance leases		(92	)		(168	)
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities		932			132

Weighted-Average Remaining Lease Term:
Finance leases		1.59			3.62
Operating leases		2.58			3.23
Weighted-Average Discount Rate:
Finance leases		3.22	%		3.60	%
Operating leases		5.68	%		4.83	%

As of March 31, 2023, the maturities of the Company’s operating and finance lease liabilities are as follow:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year
Remainder of Fiscal 2023	$	449		$	27
2024		1,376			105
2025		876			21
2026		531			-
Thereafter		67			-
Total future minimum lease payments	$	3,299		$	153
Less: amount representing interest		(240	)		(7	)
Present value of net minimum lease payments	$	3,059		$	146

Presentation on statement of financial position
Current		1,361			103
Non-Current		1,698			43

As of June 30, 2022, future minimum lease payments under finance leases and noncancelable operating leases were as follows:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year
2023	$	1,357		$	129
2024		1,032			104
2025		554			20
2026		423			-
Thereafter		69			-
Total future minimum lease payments	$	3,435		$	253
Less: amount representing interest		(283	)		(16	)
Present value of net minimum lease payments	$	3,152		$	237

Presentation on statement of financial position
Current		1,218			118
Non-Current		1,934			119