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Note 6 - Leases, Right-to-use Assets and Related Liabilities
 6 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]
6.
Leases, Right-to-Use Assets and Related Liabilities
 
The Company previously adopted the FASB issued ASU
2016
-
02,
“Leases (Topic
842
)” as of
July 1, 2019.
With the adoption of ASU
2016
-
02,
the Company recorded an operating right-of-use asset and an operating lease liability on its balance sheet associated with the lease of its corporate headquarters. The right-of-use asset represents the Company's right to use the underlying asset for the lease term, and the lease obligation represents the Company's commitment to make the lease payments arising from the lease. Right-of-use lease assets and obligations were recognized at the later of the commencement date or
July 1, 2019;
the date of adoption of Topic
842;
based on the present value of remaining lease payments over the lease term. As the Company's lease does
not
provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. Rent expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. The lease liability is classified as current or long-term on the balance sheet.
 
As of
December 31, 2020
, the maturities of the Company's future minimum lease payments were as follows:
 
 
   
Operating
    
Finance
  
2021 (remaining 6 months)
   $
37,000
     $
61,000
  
2022
    
18,000
      
124,000
  
2023
    
-
      
127,000
  
2024
    
-
      
35,000
  
2025
    
-
      
3,000
  
Total lease payments
    
55,000
      
350,000
  
Less: Imputed interest
    
 
      
(39,000
 )
Lease liabilities
    
 
     $
311,000
  
 
Cash paid for amounts included in the measurement of finance lease liabilities for the
six
 months ended
December 31, 2020
and
2019
was
$147,000
and
$63,000,
respectively, and was included in net cash used in operating activities in the consolidated statements of cash flows.
 
As of
December 31, 2020
, the weighted average remaining lease term is
2.28
 years, and the weighted average discount rate used to determine operating lease liabilities was
8.0%.
Rent expense for the
three
-months ended
December 31, 2020
and
2019
totaled
$90,000
and
$30,000.
Rent expense for the
six
-months ended
December 31, 2020
and
2019
totaled
$160,000
and
$63,000,
respectively.
 
On
August 28, 2020,
the Company's Innovus subsidiary signed a lease termination agreement with its lessor to terminate its lease effective
September 30, 2020.
The original lease termination date was
April 30, 2023.
As part of the agreement, Innovus agreed to make a cash payment to the landlord the equivalent of
two
additional months' rent aggregating to
$44,306
plus
$125,000
less the security deposit of
$20,881.
The fair value of the lease liability related to this facility lease was approximately
$0.7
million as of
June 30, 2020
. The Company recognized a gain of approximately
$343,000
during the
six
 months ended
December 31, 2020
.
       
       On
October 1, 2020,
the Company's Innovus subsidiary entered into a short-term lease for warehouse space in Carlsbad, CA. The lease term is for
one
-year with an option to terminate after
six
months with
ninety
days' notice. This lease is accounted for as a short-term lease and is
not
included as a component of the Company's right-to-use assets and related liability.