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Note 6 - Leases

9 Months Ended

Mar. 31, 2024

Note 6 - Leases

The Company has entered into various operating lease agreements for certain of its offices, manufacturing facilities and equipment, and finance lease agreements for certain equipment. These leases have original lease periods expiring between fiscal 2024 and fiscal 2029. Most leases include one or more options to renew, and the exercise of a lease renewal option typically occurs at the discretion of both parties. Certain leases also include options to purchase the leased property. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

In May 2023, the Company entered into a lease agreement to relocate its principal office. The space was made available to the Company in September 2023 (lease commencement) with an initial term of five and a half years. The Company recorded an operating lease right-of-use (“ROU”) asset of $0.7 million and a lease liability of $0.7 million at lease commencement. The ROU asset and lease liability were recorded at present value using an incremental borrowing rate of 10.3%. The Company utilized the practical expedient to not separate lease and non-lease components upon recognition.

The components of lease cost are as follows:

	*Three Months Ended*				*Nine Months Ended*
	*March 31,*				*March 31,*
	*2024*		*2023*		*2024*		*2023*		*Statement of Operations Classification*
	(in thousands)
Lease cost:
Operating lease cost	$	388	$	360	$	1,129	$	1,076	Operating expenses
Short-term lease cost		25		27		69		71	Operating expenses
Finance lease cost:
Amortization of leased assets		14		14		43		51	Cost of sales
Interest on lease liabilities		1		2		3		7	Other expense, net
Total lease cost	$	428	$	403	$	1,244	$	1,205

Supplemental balance sheet information related to leases is as follows:

	*March 31,*		*June 30,*
	*2024*		*2023*		*Balance Sheet Classification*
	(in thousands)
Assets:
Operating lease assets	$	1,795	$	2,054	Operating lease right-of-use assets
Finance lease assets		—		159	Property and equipment, net
Total lease assets	$	1,795	$	2,213
Liabilities:
Current:
Operating leases	$	1,133	$	1,258	Other current liabilities
Finance leases		16		85	Current portion of debt
Non-current:
Operating leases		783		832	Other non-current liabilities
Total lease liabilities	$	1,932	$	2,175

The remaining weighted-average lease term and discount rate used are as follows:

	*March 31,*			*June 30,*
	*2024*			*2023*
Weighted-average remaining lease term (years):
Operating lease assets		2.65			1.72
Finance lease assets		0.12			0.87
Weighted-average discount rate:
Operating lease assets		9.18	%		7.78	%
Finance lease assets		6.54	%		6.54	%

Supplemental cash flow information related to leases is as follows:

	*Nine Months Ended*
	*March 31,*
	*2024*		*2023*
	(in thousands)
Cash flow classification of lease payments:
Operating cash flows from operating leases	$	1,034	$	1,076
Operating cash flows from finance leases	$	3	$	7
Financing cash flows from finance leases	$	69	$	73

As of March 31, 2024, the Company’s future minimum lease payments were as follows:

	*Operating*			*Finance*
	(in thousands)
2024 (remaining 3 months)	$	391		$	16
2025		938			—
2026		282			—
2027		241			—
2028		199			—
2029		151			—
Total lease payments		2,202			16
Less: imputed interest		(286	)		—
Lease liabilities	$	1,916		$	16