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Note 20 - Leases

3 Months Ended

Sep. 30, 2021

20.

LEASES

Company as Lessor

Operating leases where we are lessor arise from the leasing of the Company’s commercial and residential 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 expenses relating to the property held as investments in operating leases was $18 and $17 for 3 months ended September 30, 2021, and September 30, 2020 respectively.

Future minimum rental income in China and Thailand to be received from fiscal year 2022 to fiscal year 2023 on noncancelable operating leases is contractually due as follows as of September 30, 2021:

Remainder of fiscal 2022	$	110
Fiscal 2023	$	12
	$	122

Fiscal 2022	$	145
Fiscal 2023	$	16
	$	161

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 3 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 cost 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	September 30,
	2021
Assets
Gross financial sales receivable	$	60
Unearned finance income		(6	)
Financed sales receivable	$	54

Net financed sales receivables due within one year	$	20
Net financed sales receivables due after one year	$	34

As of September 30, 2021, the financed sale receivables had a weighted average effective interest rate of 13.2% and weighted average remaining lease term of 2.5 years.

Company as Lessee

The Company (or an affiliate) is the lessee under operating leases for corporate offices and research and development facilities with remaining lease terms of 1 year to 3 years and finance leases for plant and equipment.

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

	September 30,
	2021
	(Unaudited)
Finance Leases (Plant and Equipment)
Plant and equipment, at cost		1,832
Accumulated depreciation		1,043
Plant and equipment, net		789

Current portion of finance leases		180
Net of current portion of finance leases		211
Total finance lease liabilities		391

Operating Leases (Corporate offices, Research and development facilities)
Operating lease right-of-use assets		2,901

Current portion of operating leases		869
Net of current portion of operating leases		2,033
Total operating lease liabilities		2,902

Lease Cost
Finance lease cost:
Interest on finance lease		6
Amortization of right-of -use asset		28
Total Finance Lease Cost		34

Operating Lease Costs		242

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

	September 30,
	2021
	(Unaudited)
Cash Paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases		(6	)
Operating cash flows from operating leases		(146	)
Finance cash flows from finance leases		(53	)
Right-of-use assets obtained in exchange for new operating lease liabilities		-

Weighted average remaining lease term:
Finance leases		2.72
Operating leases		3.64
Weighted average Discount Rate:
Finance leases		3.56	%
Operating leases		2.71	%

		June 30,
Components of Lease Balances	Classification	2021
Assets
Operating lease assets	Right-of-use asset - operating, net	$	1,876
Finance lease assets	Property, plant & equipment		1,413
Accumulated amortization			(1,199	)
Right-of-use asset
Assets	Property, plant & equipment	$	214
Total Leased Assets		$	2,090


Liabilities
Operating Lease Liabilities
Current portion	Current portion of lease liability - operating	$	672
Long-term portion	Lease liability - operating, net of current portion		1,204
Total Operating Lease Liabilities		$	1,876
Finance Lease Liabilities
Current portion of finance leases	Current portion of lease liability - finance	$	197
Net of current portion of finance leases	Lease liability - finance, net of current portion		253
Total Finance Lease Liabilities		$	450

Total Lease Liabilities		$	2,326


Lease Cost
Finance lease cost:
Interest on finance lease			7
Amortization of right-of -use asset			74
Total Finance Lease Cost			81

Operating Lease Costs			199

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

	June 30,
	2021

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(40	)
Operating cash flows from operating leases	$	(764	)
Right-of-use assets obtained in exchange for new operating lease liabilities	$	932

Weighted average remaining lease term (years):
Finance leases		2.72
Operating leases		3.09
Weighted average discount rate:
Finance leases		3.56
Operating leases		4.60

As of September 30, 2021, the maturities of the Company's operating and finance lease liabilities are as follow:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year	$			$
Remainder of 2022		763			195
2023		812			122
2024		559			97
2025		558			8
2026		438			-
Thereafter		72			-
Total future minimum lease payments		3,202			422
Less: amount representing interest		(300	)		(31	)
Present value of net minimum lease payments		2,902			391

Presentation on statement of financial position	$			$
Current		869			180
Noncurrent		2,033			211

As of June 30, 2021, future minimum lease payments under finance leases and noncancelable operating leases were as follows:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year	$			$
2022		748			218
2023		537			137
2024		313			111
2025		291			22
Thereafter		156			-
Total future minimum lease payments		2,045			488
Less: amount representing interest		(169	)		(38	)
Present value of net minimum lease payments		1,876			450

Presentation on statement of financial position	$			$
Current		672			197
Noncurrent		1,204			253