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OPERATING AND FINANCE LEASES
 12 Months Ended
Jun. 30, 2025
Operating And Finance Leases  
OPERATING AND FINANCE LEASES

NOTE 6 – OPERATING AND FINANCE LEASES

 

The Company accounts for its various operating leases in accordance with Accounting Standards Codification (‘ASC’) 842 – Lease, as updated by ASU 2016-02. At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured at present value of future lease payments on its balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. Our most common initial term varies in length from 2 to 19 years. Including renewal options negotiated with the landlord, we have a total span of 2 to 16 years at the facilities we lease. The Company reviewed its contracts with vendors and customers, determining that its right-to-use lease assets consisted of only office space operating leases. In determining the right-to-use lease assets and liabilities, the Company did recognize lease extension options which the Company feels would be reasonably exercised. Our incremental borrowing rate (“IBR”) used to discount the stream of operating lease payments is closely related to the interest rates available to the Company. A reconciliation of operating and finance lease payments undiscounted cash flows to lease liabilities recognized as of June 30, 2025 is as follows:

 

           
Year Ending June 30,  Operating Lease Payments  Finance Lease Payments
2026   $5,753,674   $244,343 
2027    5,718,999    142,534 
2028    5,629,193    — 
2029    5,240,019    — 
2030    5,120,717    — 
Thereafter    25,496,885    — 
Present value discount    (14,427,905)   (117)
Total lease liability   $38,531,582   $386,760 

 

Weighted Average Remaining Lease Term

 

               
    As of June 30,
    2025   2024
Operating leases - years     10.2       11.0  
Finance lease - years     1.6       2.6  
Weighted Average Discount Rate                
Operating leases     6.5 %     6.4 %
Finance lease     3.6 %     3.6 %

 

The components of lease expense were as follows:

 

               
Components of lease expense        
    For Year Ended June 30,
    2025   2024
Operating lease cost   $ 6,110,496     $ 5,685,008  
Finance lease cost:                
Depreciation of leased equipment   $ 198,881     $ 198,881  
Interest on lease liabilities     16,812       26,534  
Total finance lease cost   $ 215,693     $ 225,415  

 

Supplemental cash flow information related to leases was as follows:

 

               
Supplemental cash flow information related to leases        
    For Year Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities:   2025   2024
Operating cash flows from operating leases   $ 5,729,571     $ 6,363,561  
Financing cash flows from finance leases   $ 264,705     $ 244,344  
Right-of-use and equipment assets obtained in exchange for lease obligations:                
Operating leases   $ 2,319,913     $ 3,715,138  

 

The Company rents its operating facilities and certain equipment, pursuant to operating lease agreements expiring at various dates through November 2033. The leases for certain facilities contain escalation clauses relating to increases in real property taxes as well as certain maintenance costs.

 

Rent expense for operating leases approximated $6,110,000 and $5,685,000, for the years ended June 30, 2025 and 2024, respectively.

 

Rent expense for the finance lease approximated $216,000 and $225,000 for the years ended June 30, 2025 and 2024, respectively.