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Note 7 - Leases

12 Months Ended

Jun. 30, 2026

NOTE 7. LEASES

The Company has lease agreements for office equipment that expire in the fiscal year 2029. Lease expense included in general and administrative expense on the Consolidated Statements of Operations totaled $105,000 and $100,000 for the years ended June 30, 2026, and 2025, respectively.

The following table presents the components of lease cost.

	*Year Ended June 30,*
(dollars in thousands)	*2026*		*2025*
Finance lease cost:
Amortization of right of use assets	$	34	$	32
Interest on lease liabilities		6		1
Total finance lease cost		40		33
Short-term lease cost		71		69
Total lease cost	$	111	$	102

Supplemental information related to the Company's leases follows.

	*Year Ended June 30,*
(dollars in thousands)	*2026*		*2025*
Operating cash flows from finance leases included in lease liabilities	$	5	$	1
Financing cash flows from finance leases included in lease liabilities	$	28	$	33
Lease liabilities obtained from new ROU assets - finance ¹	$	92	$	-

1. During fiscal year 2026, non-cash changes in lease liabilities included $92,000 of new right-of-use assets recognized in exchange for new lease liabilities and $6,000 of amortization of lease liabilities during rent-free periods. There were no non-cash changes in lease liabilities during fiscal year 2025.

Additional qualitative information concerning the Company's leases follows.

	*June 30,*
	*2026*			*2025*
Weighted-average remaining lease term - finance leases (years)		2.50			0.25
Weighted-average discount rate - finance leases		7.50	%		4.75	%

The following table presents the maturities of lease liabilities as of June 30, 2026.

(dollars in thousands)
Fiscal Year	*Finance Leases*
2027	$	32
2028		32
2029		16
Total lease payments		80
Less imputed interest		(7	)
Total	$	73

The Company is the lessor of certain areas of its owned office building under operating leases expiring in various months through fiscal year 2028. At the commencement of an operating 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 was $119,000 and $104,000 for fiscal years 2026 and 2025, respectively.

A summary analysis of annual undiscounted cash flows to be received on leases as of June 30, 2026, is as follows:

(dollars in thousands)
Fiscal Year	*Operating Leases*
2027	$	63
2028		34
Total lease payments	$	97

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. As of June 30, 2026, the cost of the building is $1.7 million, and the accumulated depreciation is $1.6 million. The building is depreciated using the straight-line method over 40 years.