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Note 20 - Leases

9 Months Ended

Mar. 31, 2022

20. LEASES

Company as Lessor

Operating leases where we are lessor arise from the leasing of the Company’s commercial and residential real estate investment property. 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 twenty years in amounts necessary to reduce the carrying amount of the asset to its estimated residual value. Depreciation expenses relating to the property held as investments in operating leases was $56 for and $52 for both the 9 months ended March 31, 2022, and March 31, 2021.

Future minimum rental income in China and Thailand to be received from fiscal year 2022 to fiscal year 2023 on noncancelable operating leases is contractually due as follows as of March 31, 2022:

Remainder of fiscal 2022	$	39
Fiscal 2023		8
	$	47

Fiscal 2022	$	145
Fiscal 2023		16
	$	161

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 3 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 costs such as taxes.

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

Components of Lease Balances	March 31,
	2022
Assets
Gross financial sales receivable	$	48
Unearned finance income		(4	)
Financed sales receivable	$	44

Net financed sales receivables due within one year	$	21
Net financed sales receivables due after one year	$	23

As of March 31, 2022, the financed sale receivables had a weighted average effective interest rate of 11.2% and weighted average remaining lease term of 2.0 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 three years and finance leases for plant and equipment.

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

	Mar. 31, 2022 (Unaudited)			June 30, 2021

Finance Leases (Plant and Equipment)
Plant and equipment, at cost		1,819			1,413
Accumulated depreciation		(1,182	)		(1,199	)
Plant and Equipment, Net		637			214
Current portion of finance leases		136			197
Net of current portion of finance leases		152			253
Total Finance Lease Liabilities		288			450

Operating Leases (Corporate Offices, Research and Development Facilities)
Operating lease right-of-use assets		2,602			1,876
Current portion of operating leases		758			672
Net of current portion of operating leases		1,844			1,204
Total Operating Lease Liabilities		2,602			1,876

	Three Months Ended				Nine Months Ended
	Mar. 31,		Mar. 31,		Mar. 31,		Mar. 31,
	2022		2021		2022		2021
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)

Lease Cost
Finance lease cost:
Interest on finance lease	$	9	$	15	$	20	$	35
Amortization of right-of-use assets		60		135		150		260
Total finance lease cost		69		150		170		295

Operating Lease Costs	$	331	$	191	$	801	$	566

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

	Nine months ended			Nine months ended
	Mar. 31,			Mar. 31,
	2022			2021
	(Unaudited)			(Unaudited)
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flows from finance leases	$	(20	)	$	(32	)
Operating cash flows from operating leases		(801	)		(565	)
Finance cash flows from finance leases		(168	)		(192	)
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities		132			2,070

Weighted-Average Remaining Lease Term:
Finance leases		3.62			2.85
Operating leases		3.23			3.36
Weighted-Average Discount Rate:
Finance leases		3.60	%		3.35	%
Operating leases		4.83	%		4.83	%

As of March 31, 2022, the maturities of the Company's operating and finance lease liabilities are as follow:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year	$			$
Remainder of 2022		309			42
2023		841			136
2024		595			109
2025		581			22
2026		446			-
Thereafter		73			-
Total future minimum lease payments		2,845			309
Less: amount representing interest		(243	)		(21	)
Present value of net minimum lease payments		2,602			288

Presentation on statement of financial position	$			$
Current		758			136
Noncurrent		1,844			152

As of June 30, 2021, future minimum lease payments under finance leases and noncancelable operating leases were as follows:

	Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year	$			$
2022		748			218
2023		537			137
2024		313			111
2025		291			22
Thereafter		156			-
Total future minimum lease payments		2,045			488
Less: amount representing interest		(169	)		(38	)
Present value of net minimum lease payments		1,876			450

Presentation on statement of financial position	$			$
Current		672			197
Noncurrent		1,204			253