Leases (Tables)

9 Months Ended

Mar. 31, 2023

Leases

Schedule of leases

The table below summarized the Company’s leases for the nine months ended March 31, 2023 and 2022 (in thousands, except years and discount rate):

	Nine Months Ended March 31,
	2023			2022
Statements of Operations:
Operating lease costs	$	42		$	39
Variable lease costs		27			28
Total lease costs	$	69		$	67
Statements of Cash Flow:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	46		$	46
Other:
ROU assets obtained in exchange for new operating lease liabilities	$	212		$	—
Weighted average remaining lease term in years		3.42			0.67
Weighted average discount rate		6.44	%		5.15	%

The following table presents the Company’s ROU assets and lease liabilities (in thousands):

	March 31, 2023		June 30, 2022
Balance Sheets:
Operating lease ROU asset (included in other assets)	$	195	$	21
Accrued liabilities and other - current		59		26
Operating lease liability - long-term		137		—

Schedule of future minimum lease payments associated with the Company's non-cancellable operating lease for office space

Note 14. Leases

Operating leases are reflected as an operating lease right of use (“ROU”) asset included in “Other assets”, and as a ROU liability in “Accrued liabilities and other” and “Operating lease liability” on the Company’s unaudited condensed consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. In addition to the present value of lease payments, the operating lease ROU asset would also include any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred, if any. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and are presented as “General and administrative expenses” in the unaudited condensed consolidated statements of operations. Certain leases have payment terms that vary based on the usage of the underlying assets. Variable lease payments are not included in ROU assets and lease liabilities. For all operating leases, lease and non-lease components are accounted for as a single lease component.

As a non-operator and having adequate liquidity, the Company has generally not entered into lease transactions. The Company’s only operating lease is for corporate office space in Houston, Texas, effective May 1, 2019 and amended November 30, 2022 and set to expire September 30, 2026. The Company has no leases that meet the criteria for classification as a finance lease or a short-term lease.

The Company makes certain assumptions and judgments when evaluating a contract that meets the definition of a lease under ASC 842, Leases. As the Company’s operating lease did not provide an implicit rate, an incremental borrowing rate was calculated using information available at the commencement date of the lease. The incremental borrowing rate for a lease is the rate of interest for which the Company would pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The lease term was determined by considering any option available to extend or to early terminate the lease which the Company believed was reasonably certain to be exercised.

The table below summarized the Company’s leases for the nine months ended March 31, 2023 and 2022 (in thousands, except years and discount rate):

	Nine Months Ended March 31,
	2023			2022
Statements of Operations:
Operating lease costs	$	42		$	39
Variable lease costs		27			28
Total lease costs	$	69		$	67
Statements of Cash Flow:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	46		$	46
Other:
ROU assets obtained in exchange for new operating lease liabilities	$	212		$	—
Weighted average remaining lease term in years		3.42			0.67
Weighted average discount rate		6.44	%		5.15	%

The following table presents the Company’s ROU assets and lease liabilities (in thousands):

	March 31, 2023		June 30, 2022
Balance Sheets:
Operating lease ROU asset (included in other assets)	$	195	$	21
Accrued liabilities and other - current		59		26
Operating lease liability - long-term		137		—

As of March 31, 2023, the future minimum lease payments associated with the Company’s non-cancellable operating lease for office space are as follows (in thousands):

Fiscal Year	March 31, 2023
Remaining in 2023	$	15
2024		61
2025		62
2026		64
2027		16
Thereafter		—
Total operating lease payments		218
Less: discount to present value		(22)
Total operating lease liabilities		196
Less: current operating lease liabilities		59
Non current operating lease liabilities	$	137