NOTE 6. LEASES

The Company has lease agreements on a continuing operations basis for office equipment that expire in fiscal year 2022. Lease expense included in continuing operations totaled $39,000 for the three months ended September 30, 2020, and 2019.

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 $30,000 for the three months ended September 30, 2019.

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:

	Three Months Ending
	September 30,
(dollars in thousands)	2020			2019
Operating lease cost	$	13		$	14
Short-term lease cost		26			25
Total lease cost	$	39		$	39

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

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

Weighted-average remaining lease term (in years)		1.58			2.58
Weighted-average discount rate		4.11	%		4.11	%

Maturities of lease liabilities from continuing operations as of September 30, 2020, are as follows:

(dollars in thousands)
Fiscal Year	Operating Leases
2021 (excluding the three months ended September 30, 2020)	$	39
2022		44
Total lease payments		83
Less imputed interest		(3	)
Total	$	80

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 months ending September 30, 2020, and 2019, was $23,000 and $17,000, respectively. The cost of obtaining lessor contracts, which is included in other assets on the Consolidated Balance Sheets, was $6,000 and $7,000 at September 30, 2020, and June 30, 2020, respectively.

A summary analysis of annual undiscounted cash flows to be received on leases as of September 30, 2020, is as follows:

(dollars in thousands)
Fiscal Year	Operating Leases
2021 (excluding the three months ended September 30, 2020)	$	73
2022		81
2023		34
Total lease payments	$	188

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.