LEASES

12 Months Ended

Jun. 30, 2021

The Company adopted Accounting Standards Codification 842, Leases "ASC 842" on July 1, 2019. The Company has leased buildings, manufacturing equipment and autos that are classified as Right of Use assets "ROU" and operating lease liabilities beginning in fiscal 2020 in the Company's Consolidated Balance Sheets. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement.

The Company has implemented internal controls such as updated accounting policies and expanded data gathering procedures to comply with the additional disclosure requirements. The adoption had a material impact on the Company’s Consolidated Balance Sheets, but did not have a material impact on our Consolidated Statements of Operations or Consolidated Statements of Cash Flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.


	Right-of-Use Assets		Operating Lease Obligations		Remaining Cash Commitment
Operating leases	$	4,298	$	4,384	$	5,107

The Company’s weighted average discount rate and remaining term on lease liabilities is approximately 9.0% and 3.7 years. As of June 30, 2021, the Company’s financing leases are de minimis. The foreign exchange impact affecting the operating leases are de minimis. The Company has other operating lease agreements with commitments of less than one year or that are not significant. The Company elected the practical expedient option and as such, these lease payments are expensed as incurred.

The Company entered into $1.5 million in operating lease commitments in the twelve months ended June 30, 2021. The Company expects to enter into a new lease for a facility in China during fiscal year 2022. At June 30, 2021, the Company had the following fiscal year minimum operating lease commitments (in thousands):


	Operating Lease Commitments
2022	$	1,960
2023	1,100
2024	942
2025	576
2026	410
Thereafter	120
Subtotal	$	5,107
Imputed Interest	(723)
Total	$	4,384