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Note 21 - Leases

3 Months Ended

Sep. 30, 2023

21. LEASES

Company as Lessor

Operating leases under which the Company is the lessor arise from leasing the Company’s commercial real estate investment property to third parties. Initial lease terms generally range from 12 to 60 months. Depreciation expense for assets subject to operating leases is taken into account primarily on the straight-line method over a period of 20 years in amounts necessary to reduce the carrying amount of the asset to its estimated residual value. Depreciation expense relating to the property held as investments in operating leases was $17 and $18 for the three months ended September 30, 2023, and September 30, 2022, respectively.

Future minimum rental income in China and Thailand to be received from Fiscal 2024 to the fiscal year ended June 30, 2027 (“Fiscal 2027”) on non-cancelable operating leases is contractually due as follows as of September 30, 2023:

Remainder of Fiscal 2024	$	115
2025		137
2026		45
2027		15
	$	312

Future minimum rental income in China and Thailand to be received from Fiscal 2024 to Fiscal 2027 on non-cancelable operating leases is contractually due as follows as of June 30, 2023:

2024	$	141
2025		141
2026		46
2027		16
	$	344

Sales-type leases under which the Company is the lessor arise from the lease of four units of chiller systems. The Company classifies its lease arrangements at inception of the arrangement. The lease term is three years, contains an automatic transfer of title at the end of the lease term and a guarantee of residual value at the end of the lease term. The customer is required to pay for executory cost such as taxes.

Financing receivables, consisting of net investment in sales-type leases and receivables from financed sales of 4 units of chiller systems are as follows:

Components of Lease Balances	Sept. 30,		June 30,
	2023		2023
	(Unaudited)
Assets
Gross financial sales receivable	$	11	$	17
Unearned finance income		-		(1	)
Financed sales receivable	$	11	$	16

Current portion of finance leases	$	11	$	16
Net of current portion of finance leases	$	-	$	-
		11		16

As of September 30, 2023, the financed sale receivables had a weighted average effective interest rate of 11.2% and weighted average remaining lease term of 0.5 years.

As of June 30, 2023, the financed sale receivables had a weighted average effective interest rate of 11.16% and weighted average remaining lease term of 0.75 years.

Company as Lessee

The Company is the lessee under operating leases for corporate offices and research and development facilities with remaining lease terms of one year to four years and finance leases for plant and equipment.

Supplemental balance sheet information related to leases was as follows (in thousands):

	Sept. 30,			June 30,
	2023			2023
	(Unaudited)
Finance Leases (Plant and Equipment)
Plant and equipment, at cost	$	1,685		$	1,734
Accumulated depreciation		(1,164	)		(1,075	)
Plant and Equipment, Net	$	521		$	659

Current portion of finance leases	$	97		$	107
Net of current portion of finance leases		24			42
Total Finance Lease Liabilities	$	121		$	149

Operating Leases (Corporate Offices, Research and Development Facilities)
Operating lease right-of-use assets	$	2,563		$	2,609
Operating lease right-of-use assets, Net	$	2,563		$	2,609

Current portion of operating leases		1,190			1,098
Net of current portion of operating leases		1,372			1,511
Total Operating Lease Liabilities	$	2,562		$	2,609

	Three Months Ended
	Sept. 30,		Sept. 30,
	2023		2022
	(Unaudited)		(Unaudited)
Lease Cost
Finance lease cost:
Interest on finance lease	$	13	$	16
Amortization of right-of-use assets		55		48
Total finance lease cost		68		64

Operating lease cost	$	*362*	$	380

Other information related to leases was as follows (in thousands except lease term and discount rate):

	Three Months Ended
	Sept. 30,			Sept. 30,
	2023			2022
	(Unaudited)			(Unaudited)
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flows from finance leases	$	(2	)	$	(3	)
Operating cash flows from operating leases		(346	)		(380	)
Finance cash flows from finance leases		(26	)		(36	)
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities

Weighted-Average Remaining Lease Term:
Finance leases		1.61			1.79
Operating leases		2.25			2.83
Weighted-Average Discount Rate:
Finance leases		2.99	%		3.23	%
Operating leases		5.61	%		5.52	%

As of September 30, 2023, the maturities of the Company’s operating and finance lease liabilities are as follow:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year
Remainder of Fiscal 2024		1,075			83
2025		944			33
2026		611			11
Thereafter		86			-
Total future minimum lease payments		2,716			127
Less: amount representing interest		(154	)		(6	)
Present value of net minimum lease payments		2,562			121

Presentation on statement of financial position
Current		1,190			97
Non-Current		1,372			24

As of June 30, 2023, future minimum lease payments under finance leases and noncancelable operating leases were as follows:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year
2024		1,321			112
2025		846			33
2026		570			12
Thereafter		64			-
Total future minimum lease payments		2,801			157
Less: amount representing interest		(192	)		(8	)
Present value of net minimum lease payments		2,609			149

Presentation on statement of financial position
Current		1,098			107
Non-Current		1,511			42