Note

Leases and other Commitments and Contingencies

(a)

Leases.

The Company has operating and finance leases for its corporate and sales offices, warehousing and packaging facilities and certain machinery and equipment, including office equipment. The Company’s leases have remaining terms of less than

year to less than

years.

The components of lease expense for the

three

months ended

March 31, 2019

were as follows:

	Related Party - Vitamin Realty		Other Leases		Totals

Operating Lease Costs	$	141	$	23	$	164

Finance Lease Costs:
Amortization of right-of use assets	$	-	$	22	$	22
Interest on operating lease liabilities		-		5		5
Total Finance Lease Costs	$	-	$	27	$	27

The components of lease expense for the

nine

months ended

March 31, 2019

were as follows:

	Related Party - Vitamin Realty		Other Leases		Totals

Operating Lease Costs	$	423	$	72	$	495

Finance Lease Costs:
Amortization of right-of use assets	$	-	$	55	$	22
Interest on operating lease liabilities		-		12		12
Total Finance Lease Costs	$	-	$	67	$	67

Operating

Lease

Liabilities

Related Party

Operating

ase

Liabilities

Warehouse and office facilities are leased from Vitamin Realty, which is

100%

owned by the Company’s chairman, and a major stockholder and certain of his family members, who are also the Co-Chief Executive Officers and directors of the Company. On

January 5, 2012,

MDC entered into a

second

amendment of lease (the “Second Lease Amendment”) with Vitamin Realty for its office and warehouse space in New Jersey increasing its rentable square footage from an aggregate of

74,898

square feet to

76,161

square feet and extending the expiration date to

January 31, 2026.

This Second Lease Amendment provides for minimum annual rental payments of

$533,

plus increases in real estate taxes and building operating expenses. On

May 19, 2014,

AgroLabs entered into an amendment to the lease agreement entered into on

January 5, 2012,

with Vitamin Realty for an additional

2,700

square feet of warehouse space in New Jersey, the term of which was to expire on

January 31, 2019

to extend the expiration date to

June 1, 2024.

This additional lease provides for minimum lease payments of

$27

with annual increases plus the proportionate share of operating expenses.

Rent expense, lease amortization costs and interest expense on these related party leases were

$203

and

$204

for the

three

months ended

March 31, 2019

and

2018,

and

$630

and

$619

for the

nine

months ended

March 31, 2019

and

2018,

respectively, and are included in cost of sales, selling and administrative expenses and interest expense in the accompanying Condensed Consolidated Statements of Operations. As of

March 31, 2019

and

June 30, 2018,

the Company had outstanding current obligations to Vitamin Realty of

$761

and

$827,

respectively, included in accounts payable, accrued expenses and other liabilities and long term debt in the accompanying Condensed Consolidated Balance Sheet. Additionally, the Company has operating lease obligations of

$3,353

with Vitamin Realty as noted in the accompany Condensed Consolidated Balance Sheet.

Other

Operating

Lease

Liabilities

The Company has entered into certain non-cancelable operating lease agreements expiring up through

May, 2023,

related to machinery and equipment and office equipment.

As of

March 31, 2019,

the Company’s ROU assets, lease obligations and remaining cash commitment on these leases is as follows:

	Right-of-use Assets		Operating Lease Obligations		Remaining Cash Commitment

Vitamin Realty Leases	$	3,345	$	3,353	$	3,810
Machinery and equipment leases		29		29		30
Office equipment leases		25		25		26
	$	3,399	$	3,407	$	3,866

The Company’s weighted average discount rate and remaining term on lease liabilities is approximately

3.76%

and

6.6

years, respectively.

Supplemental cash flows information related to leases for the

nine

months ended

March 31, 2019

is as follows:

	Related Party - Vitamin Realty		Other Leases		Totals

Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows from operating leases	$	424	$	72	$	496
Operating cash flows from capital finance lease obligations		-		12		12
Financing cash flows from capital lease obligations		-		174		174

The Company entered into a sales/lease back commitment in the

nine

months ended

March 31, 2019

in the amount of

$233,

see Note

- Senior Credit Facility, Subordinated Convertible Note, net - CD Financial, LLC and other Long Term Debt.

Maturities of operating lease liabilities as of

March 31, 2019

were as follows:

Year ending June 30,	Operating Lease Commitment			Related Party Operating Lease Commitment			Capitalized Lease Obligations		Total

2019, remaining	$	12		$	142	$	65		$	219
2020		39			565		206			810
2021		22			565		77			664
2022		9			565		-			574
2023		-			565		-			565
2024		-			563		-			563
Thereafter		-			845		-			845
Total minimum lease payments		82			3,810		348			4,240
Imputed interest		(3	)		(457)		(20	)		(480	)
Total	$	79		$	3,353	$	328		$	3,760

Total

rent expense, including real estate taxes and maintenance charges, was approximately

$249

and

$245

and

$756

and

$741

for the

three

months and

nine

months ended

March 31, 2019

and

2018,

respectively. Rent and lease amortization and interest expense are included in cost of sales, selling and administrative expenses and interest expense in the accompanying Condensed Consolidated Statements of Operations.

(

) Legal Proceedings.

The Company is subject, from time to time, to claims by

third

parties under various legal theories. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.