XML 27 R17.htm IDEA: XBRL DOCUMENT v3.22.4
COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 11. COMMITMENTS AND CONTINGENCIES

 

Lease Costs

 

The Company made cash payments for all operating leases for the six months ended December 31, 2022, of approximately $0.28 million, which was included in cash flows from operating activities within the consolidated statements of cash flows. As of December 31, 2022, the Company’s operating leases have a weighted average remaining lease term of 1.8 years and weighted average discount rate of 7.9%.

 

The Company made cash payments for all operating leases for the six months ended December 31, 2021, of approximately $0.18 million, which was included in cash flows from operating activities within the consolidated statements of cash flows.

 

The total rent expense for all operating leases for the three and six months ended December 31, 2022, was approximately $0.14 million and $0.27 million, respectively, with short-term leases making up an immaterial portion of such expenses.

 

The total rent expense for all operating leases for the three and six months ended December 31, 2021, was approximately $0.09 million and $0.18 million, respectively, with short-term leases making up an immaterial portion of such expenses.

 

Lease Commitments

 

The Company has various operating leases for its offices. These existing leases have remaining lease terms ranging from 1 to 4 years. Certain lease agreements contain options to renew, with renewal terms that generally extend the lease terms by 1 to 3 years for each option. The Company determined that none of its current leases are reasonably certain to renew.

 

Future approximate undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its operating lease liabilities at December 31, 2022 are as follows:

SCHEDULE OF UNDISCOUNTED LEASE PAYMENTS 

Years Ended June 30,    
2023 (six months)  $223,000 
2024   447,000 
2025   319,000 
2026   96,000 
Total future minimum lease commitments, including short-term leases   1,085,000 
Less: future minimum lease payments of short -term leases   (1,000)
Less: imputed interest   (124,000)
Present value of future minimum lease payments, excluding short term leases  $960,000 
      
Current portion of operating lease liabilities  $442,000 
Non-current portion of operating lease liabilities   518,000 
Total operating lease liability  $960,000 

 

Contingent Consideration for Acquisitions

 

Contingent consideration for acquisitions, consists of the following as of December 31 and June 30, 2022 respectively:

  

   As of December 31,   As of June 30, 
   2022   2022 
S5D, current portion  $623,300   $1,397,600 
BLI, current portion (see Note 4)   970,400    - 
AUGGD   -    568,571 
Subtotal current portion   1,593,700    1,966,171 
S5D, net of current portion   4,870,500    5,340,800 
BLI, net of current portion (see Note 4)   3,590,600    - 
Total contingent consideration for acquisitions  $10,054,800   $7,306,971 

 

AUGGD

 

In August 2021, the Company, through its wholly owned subsidiary company, AUGGD, completed an acquisition of certain assets, as defined, from ARI.

 

In June 2022, AUGGD achieved its initial revenue threshold as defined in the asset acquisition agreement, and was issued shares of Company stock in July 2022 reflecting the payment of additional asset acquisition consideration. The share issuance was done inclusive of netting the outstanding balance of a $0.25 million note receivable due the Company by ARI (see Note 10). This additional consideration of approximately $0.57 million was included in contingent consideration for acquisitions, current portion, in the consolidated balance sheet at June 30, 2022. As of December 31, 2022, it is not anticipated that AUGGD will meet any future consideration thresholds as defined in the asset acquisition agreement.

 

Potential Future Distributions Upon Divestiture or Sale

 

Upon a divestiture or sale of a subsidiary company, the Company is contractually obligated to distribute up to 10% of the net proceeds from such divestiture or sale to the senior management team of the divested subsidiary company. Currently, there were no active discussions pertaining to a potential divestiture or sale of any of the Company’s subsidiaries.

 

COVID-19

 

The COVID-19 pandemic caused significant business and financial markets disruption worldwide and there was significant uncertainty around the duration of this disruption and its ongoing effects on our business. This has primarily manifested itself in prolonged sales cycles.

 

We continue to monitor the situation and the effects on our business and operations. While some level of potential uncertainty remains, given the current state of the pandemic, our expected revenue growth and current cash balance, we do not expect the impact of COVID-19 to be material to our business and operations.