Leases

9 Months Ended

Mar. 31, 2022

Leases [Abstract]

LEASES

Note 13. LEASES

The Company determines if a contract contains a lease at inception which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All of the Company’s leases are classified as operating leases.

The Company has several vehicle lease agreements and office lease agreements with lease terms ranging from two to three years. Upon adoption of ASU 2016-02, the Company recognized lease liabilities of approximately $1.2 million, with corresponding ROU assets of approximately the same amount based on the present value of the future minimum rental payments of leases, using a weighted average discount rate of approximately 10.69%. As of March 31, 2022, ROU assets and lease liabilities amounted to $1,443,837 and $1,468,854 (including $512,359 from lease liabilities current portion and $956,495 from lease liabilities non-current portion), respectively and weighted average discount rate was approximately 10.94%.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the time of expiration and the weighted average remaining lease terms are 3.96 years.

For the three months ended March 31, 2022 and 2021, rent expense amounted to approximately $102,000 and $67,000, respectively. For the nine months ended March 31, 2022 and 2021, rent expense amounted to approximately $358,000 and $224,000, respectively.

The five-year maturity of the Company’s lease obligations is presented below:

Twelve Months Ending March 31,	Operating Lease Amount
2023	$	645,791
2024		572,672
2025		300,771
2026		167,771
2027		42,898
Thereafter		-
Total lease payments		1,729,903
Less: Interest		(261,049	)
Present value of lease liabilities	$	1,468,854