Note H - Right-of-Use Assets and Lease Liabilities

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE H - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

Operating leases

In

June 2015,

the Company entered into a lease agreement to lease certain office equipment with a lease term of

63

months. The lease contains a renewal option to extend the term for successive

one

year periods. The Company is

not

reasonably certain that it will renew the lease when it expires. Initial rent amount was

$1,079

per month, with increases each year

no

more than

3%.

In applying ASC

842,

the Company uses a lease term of

63

months and an incremental borrowing rate of

5.5%

which was the borrowing rate on the Company’s line of credit with a financial institution with all accounts and general intangibles.

In

February 2018,

the Company entered in a lease agreement to lease warehouse space with a lease term of

39

months. The Company pays

no

rent for the

first

three

months of the lease, pays

$2,936

per month for the next

12

months,

$3,024

per month for the next

8

months,

$3,019

per month for the next

4

months, and

$3,109

for the last

12

months. In applying ASC

842,

the Company uses a lease term of

39

months and an incremental borrowing rate of

5.5%

which was the borrowing rate on the Company’s line of credit with a financial institution with all accounts and general intangibles.

The following is information related to the Company’s right-of-use assets and liabilities for its operating leases:

ROU assets - operating leases obtained in exchange for lease liabilities - operating leases	$	73,719
Amortization of ROU assets for the 6 months ending December 31, 2019		(21,424	)
ROU assets - operating leases at December 31, 2019	$	52,295
Lease liabilities - operating leases on adoption date	$	80,659
Payments on lease liabilities		(23,017	)
Lease liabilities - operating leases on December 31, 2019		57,642
Lease liabilities - operating leases due in the 12 months ending December 31, 2020		45,343
Lease liabilities - operating leases due in the 12 months ending December 31, 2021	$	12,299

Variable lease expense was

$11,666,

for the

three

months ended

December 31, 2019,

respectively.

Weighted average remaining lease term was

1.23

years and weighted average discount rate was

5.5%

at

December 31, 2019.