Operating Lease

12 Months Ended

Jun. 30, 2023

Operating Lease

Operating Lease

Note 4 – Operating Lease

The Company leases certain warehouse and corporate office space under an operating lease agreement. We determine if an arrangement is a lease at inception. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets.

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

	June 30,		June 30,
	2023		2022
Lease costs:
Operating lease (included in general and administrative in the Company’s consolidated statement of operations)	$	76,000	$	78,000
Other information:
Cash paid for amounts included in the measurement of lease liabilities	$	72,000	$	72,000
Weighted average remaining lease term – operating leases (in years)		1.6		2.6
Average discount rate – operating leases		4%		4%
The supplemental balance sheet information related to leases for the period is as follows:
Long-term right-of-use assets	$	113,000	$	180,000
Short-term operating lease liabilities	$	68,000	$	63,000
Long-term operating lease liabilities		53,000		127,000
Total operating lease liabilities	$	121,000	$	190,000

Supplemental cash flow information related to the lease liabilities are as follows:

	Operating
Year Ending June 30:	Lease
2024	$	78,000
2025		53,000
Total lease payments		131,000
Less: Imputed interest/present value		(10,000	)
Present value of lease liabilities	$	121,000