Note 6. Leases

Leases recorded on the balance sheets consist of the following:

			June 30, 2025		June 30, 2024
Lease Assets	Classification on the Balance Sheet
Operating lease assets	Operating lease assets, net	$	3,195,211	$	2,831,417
Finance lease assets	Property and equipment, net		1,097,333		1,365,860

Lease Liabilities
Current
Operating	Current portion of operating lease liability	$	1,018,696	$	1,004,808
Finance	Current portion of finance lease liability		320,423		302,998
Noncurrent
Operating	Operating lease liability, net of current portion	$	2,185,998	$	1,829,608
Finance	Finance lease liability, net of current portion		1,108,448		1,428,870

Other information related to lease term and discount rate is as follows:

	June 30, 2025	June 30, 2024
Weighted Average Remaining Lease Term
Operating leases	2.9 years	3.3 years
Finance leases	2.9 years	4.4 years
Weighted Average Discount Rate
Operating leases	9.4%	9.2%
Finance leases	4.0%	4.8%

The components of lease expense are as follows:

			Year Ended June 30, 2025		Year Ended June 30, 2024
Operating lease cost	Classification on the Statement of Operations
Operating lease cost	Cost of sales	$	847,367	$	433,065
Operating lease cost	Selling, general, and administrative expenses		491,241		582,772
Short term lease cost	Selling, general, and administrative expenses		2,468		3,079

Finance lease cost
Amortization of finance lease assets	Cost of sales		125,967		125,967
Amortization of finance lease assets	Selling, general, and administrative expenses		142,560		140,674
Interest on finance lease liabilities	Interest expense, net		89,282		105,591
Total lease cost		$	1,698,885	$	1,391,148

Future minimum lease payments as of June 30, 2025, are summarized as follows:

		Operating Lease			Finance Lease
Year ending June 30
2026	$	1,246,926		$	420,188
2027		1,282,187			428,200
2028		1,117,540			428,080
2029		-			424,800
2030		-			71,032
Total future minimum lease payments		3,646,653			1,772,300
Less imputed interest		(478,387	)		(343,429	)
Total present value of lease liabilities	$	3,168,266		$	1,428,871

The Company has exercised the option to extend the term of the New Jersey facility operating lease by five years through March 31, 2028. For the Minnesota facility operating lease, the Company exercised an extension for six months through December 2025, and subsequently the building was sold to a non-related party to which the Company entered into a new lease in April 2025 through June 2028. The annual minimum lease payments for the New Jersey and Minnesota facilities are approximately $747,000 and $556,000, respectively.

The Company leases office, manufacturing and warehouse facilities in Northvale, New Jersey from employees, shareholders, and entities controlled by shareholders; who were previously principals of businesses acquired by the Company. Prior to April 2025, the Company also leased office, manufacturing and warehouse facilities in Eagan, Minnesota from employees, shareholders, and entities by shareholders who were previously principals of businesses acquired by the Company; however, as of April 2025, the Minnesota facility is no longer associated with related parties. The combined expenses associated with these related-party transactions totaled $1,222,948 and $1,339,252 for the years ended June 30, 2025 and 2024, respectively.