Leases

12 Months Ended

Jun. 30, 2022

Leases

Leases

6. Leases

A lease provides the lessee the right to control the use of an identified asset for a period in exchange for consideration. Operating lease right-of-use assets (“RoU assets”) are presented within the asset section of the Company’s Consolidated Balance Sheets, while lease liabilities are included within the liability section of the Company’s Consolidated Balance Sheets at June 30, 2022.

RoU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. RoU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The terms used to calculate the RoU assets for certain properties include the renewal options that the Company is reasonably certain to exercise.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company estimates a rate of 8.0% for the period ending June 30, 2022, based primarily on historical lending agreements. RoU assets include lease payments required to be made prior to commencement and exclude lease incentives. Both RoU assets and the related lease liability exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions, or covenants.

The Company occupies office facilities under lease agreements that expire at various dates, many of which don’t exceed a year in length. Total operating lease costs for the fiscal year ended June 30, 2022, were approximately $213,000. The Company does not have any finance leases as of June 30, 2022 and 2021.

As of June 30, 2022, short term lease liabilities of $99,005 are included in “Accounts payable and accrued expenses” on the consolidated balance sheets. The table below presents total operating lease RoU assets and lease liabilities at June 30:

	2022 $		2021 $
Operating lease right-of-use asset	$	244,203	$	-
Operating lease liabilities	$	274,794	$	-

The table below presents the maturities of operating lease liabilities as of June 30, 2022:

June 30, 2023	$	117,670
June 30, 2024		131,198
June 30, 2025		55,395
Total lease payments		304,263
Less: discount		(29,469	)
Total operating lease liabilities	$	274,794
Short-term operating lease liability	$	99,005
Long-term operating lease liability	$	175,789

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use asset as of June 30, 2022.

Weighted average lease term (years)	2.2
Weighted average discount rate	8.0	%