Leases

12 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

7. Leases

The Company’s operating leases are for its offices, manufacturing facilities and equipment, and its finance leases are for equipment. These leases have original lease periods expiring between 2022 and 2027. Most leases include option provisions under which the parties may extend the lease term. Certain non-real estate 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 connection with the Neos Acquisition, Aytu assumed an operating lease ROU asset and lease liability of $3.5 million, which represented the present value of the remaining lease payments as of the acquisition date, for the office space and manufacturing facilities at Grand Prairie, Texas. As the lease agreement does not provide an implicit rate, a borrowing rate of 6.7% was used to determine the present value of future lease payments. The finance leases are related to equipment finance leases with fixed contract terms and an implicit interest rate of approximately 5.9%.

In the fiscal years ended June 30, 2021 and June 30, 2022, the Company entered into a lease agreements for which the Company recorded operating lease and lease lia3bilities, together with related ROU assets of $0.5 million.

The components of lease expenses are as follows;

	Year Ended
	June 30,
	2022		2021		Statement of Operations Classification
	(In thousands)
Lease cost:
Operating lease cost	$	1,299	$	476	Operating expenses
Short-term lease cost		152		109	Operating expenses
Finance lease cost:
Amortization of leased assets		73		21	Cost of sales
Interest on lease liabilities		14		6	Other (expense), net
Total net lease cost	$	1,538	$	612

Supplemental balance sheet information related to leases is as follows:

	June 30,		June 30,		Balance Sheet Classification
	2022		2021
	(In thousands)
Assets:
Operating lease assets	$	3,271	$	3,563	Operating lease right-of-use asset
Finance lease assets		256		329	Property and equipment, net
Total leased assets	$	3,527	$	3,892
Liabilities:
Current:
Operating leases	$	1,227	$	940	Other current liabilities
Finance leases		96		102	Current portion of debt
Non-current
Operating leases		2,090		2,624	Other liabilities
Finance leases		84		180	Debt, net of current portion
Total lease liabilities	$	3,497	$	3,846

Remaining lease terms and discount rates used are as follows;

	June 30,			June 30,
	2022			2021
Weighted-Average Remaining Lease Term (years)
Operating lease assets		2.63			3.42
Finance lease assets		1.73			2.72
Weighted-Average Discount Rate
Operating lease assets		7.48	%		6.62	%
Finance lease assets		6.43	%		6.41	%

Supplemental cash flow information related to leases is as follows:

	Year Ended
	June 30,
	2022		2021
	(In thousands)
Cash flow classification of lease payments:
Operating cash flows from operating leases	$	1,016	$	467
Operating cash flows from finance leases	$	15	$	5
Financing cash flows from finance leases	$	102	$	25

As of June 30, 2022, the maturities of the Company’s future minimum lease payments were as follows:

	Operating		Finance
	(In thousands)
2023	$	1,436	$	105
2024		1,378		87
2025		749		—
2026		90		—
2027		46		—
Total lease payments		3,699		192
Less: Imputed interest		(382)		(12)
Lease liabilities	$	3,317	$	180