Note 7 - Lease Commitments and Contingencies

3 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 7 — LEASE COMMITMENTS AND CONTINGENCIES

Operating Leases:  The Company occupies an executive office and warehouse space in Fountain Valley and Whittier, CA, pursuant to separate lease agreements. Under ASC 842, at contract inception the Company determined whether the contract is or contains a lease and whether the lease should be classified as on operating or a financing lease. Operating leases are included in ROU (right-of-use) assets and operating lease liabilities in our consolidated balance sheet.

The Company’s executive office and warehouse lease agreements are classified as operating leases. The office lease agreement, as amended, expire on January 31, 2030, and does not include any renewal options. The Whittier, CA warehouse lease agreement commenced on February 1, 2025 expires on  January 31, 2028, and does not include any renewal options. The agreements provide for initial monthly base amounts plus annual escalations through the term of the leases.  The monthly rent payable for the first year of the extended term will be $6,299 and increases by 4% on each anniversary date.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay a portion of real estate taxes and common operating expenses during the lease terms. 

The Company’s operating lease expense was $79,000 and $86,000 for the three months ended September 30, 2025 and 2024, respectively. 

Future minimum lease payments at September 30, 2025 under these arrangements are as follows:

Operating leases	Total
($ in Thousands)	Payments
2026, balance of the fiscal year	$	236
2027		326
2028		303
2029		266
2030		159
Total future minimum lease payments		1,290
Less imputed interest (at 8%)		(198	)
Present value of operating lease payments	$	1,092

The following table sets forth the ROU assets and operating lease liabilities as of September 30, 2025:

Assets	(in thousands)
ROU assets-net	$	1,031
Liabilities
Current operating lease liabilities	$	235
Long-term operating lease liabilities		857
Total ROU liabilities	$	1,092

The Company’s weighted average remaining lease term for its operating leases is 4.02 years using a weighted average discount rate of 8.42%.

Legal Matters: From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no significant legal proceedings pending to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.