Lease Obligations

9 Months Ended

Mar. 31, 2018

Note 4.

Lease Obligations

During the period ended March 31, 2017, the Company entered into a 48 month non-cancellable lease for its office facilities that will require monthly payments ranging from $10,350 to $11,475 through January 2021. In accounting for the lease, the Company adopted ASU 2016-02, Leases which requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. The Company classified the lease as an operating lease and determined that the fair value of the lease liability at the inception of the lease was $463,000 using a discount rate of 3.75%. During the nine months ended March 31, 2018, the Company made payments of $82,124 towards the lease liability. As of March 31, 2018 and June 30, 2017, lease liability amounted to $357,062 and $439,187, respectively.

ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Rent expense, including real estate taxes, for the nine months ended March 31, 2018 and 2017 was $94,320 and $70,937, respectively. The right of use asset at June 30, 2017 was $417,917. During the nine months ended March 31, 2018, the Company reflected amortization of right of use asset of $82,537 related to this lease resulting in a net asset balance of $335,380 at March 31, 2018.