Leases

6 Months Ended

Dec. 31, 2023

Our right-of-use operating lease assets are recorded at the present value of future minimum lease payments, net of amortization. We have an operating lease for our El Paso, Texas finished goods and service parts distribution warehouse. This lease has a current lease term through December 2028 and does not include any options to extend the lease term beyond such timeframe. We have two operating leases for office space at our Korean branch office. Both of these leases have a lease term through June 2024 with automatic renewal. For purposes of calculating operating lease obligations, we included an extension of four years after June 2024 as it is reasonably certain that we will exercise such automatic renewals. Our leases do not contain material residual value guarantees or restrictive covenants. Operating lease expense is recognized on a straight-line basis over the lease term.

As the leases do not provide an implicit rate, we used our incremental borrowing rate at lease commencement to determine the present value of our lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest we would pay to borrow over a similar term with similar payments. The operating lease asset and obligation related to our operating leases included in the accompanying Condensed Consolidated Balance Sheets are presented below (in thousands):


	December 31, 2023
Right-of use asset under operating lease:
Other long-term assets	$	4,162
Lease obligation under operating lease:
Current liabilities: Accrued liabilities: other	$	737
Other long-term liabilities		3,742
	$	4,479

Future minimum lease payments, by our fiscal year, including options to extend that are reasonably certain to be exercised, under these non-cancelable leases are as follows as of December 31, 2023 (in thousands):


2024 (for the remaining six months)	$	478
2025		979
2026		1,026
2027		1,075
2028		1,127
Thereafter		558
Total future minimum lease payments		5,243
Less: Imputed interest		(764	)
Total lease obligations	$	4,479

Cash flow information related to the operating lease is shown below (in thousands):


	Six Months Ended
	December 31, 2023		January 1, 2023
Operating cash flows:
Cash paid related to operating lease obligation	$	291	$	247

The weighted average lease term and discount rate for our operating leases are shown below:


	December 31, 2023
Weighted average remaining lease term (in years)		5.0
Weighted average discount rate		6.2	%

Operating lease expense was as follows for the periods presented below (in thousands):


	Three Months Ended				Six Months Ended
	December 31, 2023		January 1, 2023		December 31, 2023		January 1, 2023
Operating lease expense	$	248	$	125	$	495	$	247