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 $38,000 and $76,000 for the three and six months ended December 31, 2019, and $46,000 and $96,000 for the three and six months ended December 31, 2018, respectively.

The Company’s subsidiary Galileo, which is classified as discontinued operations as described in Note 2, has lease agreements for office equipment that expire in fiscal years 2021 and 2024 and for office facilities that expire in fiscal 2023. Lease expense included in discontinued operations totaled $29,000 and $60,000 for the three and six months ended December 31, 2019, and $27,000 and $54,000 for the three and six months ended December 31, 2018, 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:

	Six Months Ended			Three Months Ended
	December 31,			December 31,
(dollars in thousands)	2019			2019
Operating lease cost	$	26		$	13
Short-term lease cost		50			25
Total lease cost	$	76		$	38

Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	26		$	13

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

Weighted-average remaining lease term (in years)		2.33
Weighted-average discount rate		4.11	%

Maturities of lease liabilities from continuing operations as of December 31, 2019, are as follows:

(dollars in thousands)
Fiscal Year	Operating Leases
2020 (excluding the six months ended December 31, 2019)	$	26
2021		53
2022		44
Total lease payments		123
Less imputed interest		(6	)
Total	$	117

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 six months ending December 31, 2019, was $24,000 and $41,000, respectively. The cost of obtaining lessor contracts, which is included in other assets on the Consolidated Balance Sheets, was $8,000 and $0 at December 31, 2019, and June 30, 2019, respectively.

A summary analysis of annual undiscounted cash flows to be received on leases as of December 31, 2019, is as follows:

(dollars in thousands)
Fiscal Year	Operating Leases
2020 (excluding the six months ended December 31, 2019)	$	32
2021		97
2022		81
2023		34
Total lease payments	$	244

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.