NOTE 7. LEASES

The Company has lease agreements on a continuing operations basis for office equipment and real estate in Canada that expire between fiscal years 2020 and 2023. Lease expense included in continuing operations totaled $39,000 and $115,000 for the three and nine months ended March 31, 2020, and $36,000 and $132,000 for the three and nine months ended March 31, 2019, respectively.

The Company’s former subsidiary Galileo, which is classified as discontinued operations as described in Note 2, had lease agreements for office equipment and for office facilities. Lease expense included in discontinued operations totaled $14,000 and $74,000 for the three and nine months ended March 31, 2020, and $27,000 and $81,000 for the three and nine months ended March 31, 2019, respectively.

For continuing operations, the components of lease expense included in general and administrative expense on the Consolidated Statements of Operations and qualitative information concerning the Company’s operating leases were as follows:

	Nine Months Ended			Three Months Ended
	March 31,			March 31,
(dollars in thousands)	2020			2020
Operating lease cost	$	39		$	13
Short-term lease cost		76			26
Total lease cost	$	115		$	39

Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	39		$	13

Right-of-use assets obtained in exchanged for:
Net operating lease liabilities	$	141		$	-

Weighted-average remaining lease term (in years)		2.08
Weighted-average discount rate		4.11	%

Maturities of lease liabilities from continuing operations as of March 31, 2020, are as follows:

(dollars in thousands)
Fiscal Year	Operating Leases
2020 (excluding the nine months ended March 31, 2020)	$	13
2021		53
2022		44
Total lease payments		110
Less imputed interest		(5	)
Total	$	105

The Company is the lessor of certain areas of its owned office building under operating leases expiring in various years through fiscal year 2023. At the commencement of an operation lease, no income is recognized; subsequently, lease payments received are recognized on a straight-line basis. Lease income included in other income on the Consolidated Statements of Operations for the three and nine months ending March 31, 2020, was $23,000 and $64,000, respectively. The cost of obtaining lessor contracts, which is included in other assets on the Consolidated Balance Sheets, was $8,000 and $0 at March 31, 2020, and June 30, 2019, respectively.

A summary analysis of annual undiscounted cash flows to be received on leases as of March 31, 2020, is as follows:

(dollars in thousands)
Fiscal Year	Operating Leases
2020 (excluding the nine months ended March 31, 2020)	$	24
2021		97
2022		81
2023		34
Total lease payments	$	236

The Company may terminate the building leases with one hundred eighty days written notice if it sells the property. If the Company terminates the lease, the Company will pay the tenant a termination fee of the lesser of six months of the base monthly rent or the base monthly rent times the number of months remaining in the initial term.