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LEASES | 9 Months Ended
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Mar. 31, 2024
Leases |
LEASES | NOTE 7 — LEASES Operating Leases — On November 13, 2017, Renovaro entered into a Lease Agreement for a term of five years and two months from November 1, 2017, with Plaza Medical Office Building, LLC, a California limited liability company, as landlord, (the “Landlord”) pursuant to which the Company agreed to lease from the Landlord approximately 2,325 rentable square feet. The base rent increased by 3% each year and ranged from approximately $8,719 per month for the first year to $10,107 per month for the two months of the sixth year. The lease was terminated early without penalties or additional costs as of September 30, 2022, that released an accrual of $70,800 related to leasehold improvements that was not utilized. On June 19, 2018, Renovaro entered into a Lease Agreement for a term of ten years from September 1, 2018, with Century City Medical Plaza Land Co., Inc., pursuant to which the Company agreed to lease approximately 2,453 rentable square feet. On February 20, 2019, Renovaro entered into an Addendum to the original Lease Agreement with an effective date of December 1, 2019, where it expanded the lease area to include another 1,101 square feet for a total rentable 3,554 square feet. The base rent increases by 3% each year, and ranges from $17,770 per month for the first year to $23,186 per month for the tenth year. The equalized monthly lease payment for the term of the lease is $20,050. Renovaro subleased the space as of June 25, 2022 through April 30, 2023. (See subsection below “Sublease Agreement” for details.) Renovaro Cube leases an office facility in Amsterdam, Netherlands, under a 30-month operating lease agreement commencing on September 1, 2023, with a maturity date of February 28, 2026. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. The Company identified and assessed the following significant assumptions in recognizing the right-of-use asset and corresponding liabilities: Expected lease term — The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. The Company’s leases have a remaining lease term of 41 and 23 months. As of March 31, 2024, the weighted-average remaining term is 2.77 years. Incremental borrowing rate — The Company’s lease agreements do not provide an implicit rate. As the Company does not have any external borrowings for comparable terms of its leases, the Company estimated the incremental borrowing rate based on the U.S. Treasury Yield Curve rate that corresponds to the length of each lease. This rate is an estimate of what the Company would have to pay if borrowing on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. As of March 31, 2024, the weighted-average discount rate is 5.16%. Lease and non-lease components — In certain cases the Company is required to pay for certain additional charges for operating costs, including insurance, maintenance, taxes, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage. The Company determined that these costs are non-lease components, and they are not included in the calculation of the lease liabilities because they are variable. Payments for these variable, non-lease components are considered variable lease costs and are recognized in the period in which the costs are incurred. Below are the lease commitments for the next 5 years:
| Schedule of lease commitments |  |  |  |  |
Year Ending June 30th |  | Lease Expense
| 2024 |  |  |  | 286,252 |
| 2025 |  |  |  | 557,851 |
| 2026 |  |  |  | 349,204 |
| 2027 |  |  |  | 309,491 |
| 2028 |  |  |  | 59,439 |
| Sub-total |  |  |  | 1,562,237 |
| Less imputed interest |  |  |  | (108,658 | )
| Total |  |  | $ | 1,453,579 |
Sublease Agreement On June 20, 2022, the Company entered into a sublease Agreement with One Health Labs (the “Subtenant”), whereby the Subtenant agreed to lease 3,554 square feet of space currently rented by the Company in Century City Medical Plaza as of June 25, 2022, for a period of 3.5 years with an option to renew for the remaining term of the lease that ends as of June 19, 2028. The base rent was $17,770 per month plus $750 towards utility fees that are part of the original lease agreement and would increase by 3% each year over the term of the sublease. The Company received a total of $57,022 on July 1, 2022 after execution of the sublease to cover the first month rent, utility fee and deposit. The first sublease payment began on August 1, 2022. In accordance with ASC Topic 842, the Company treated the sublease as a separate lease, as the Company was not relieved of the primary obligation under the original lease. The Company continues to account for the Century City Medical Plaza lease as a lessee and in the same manner as prior to the commencement date of the sublease. The Company accounted for the sublease as a lessor of the lease. The sublease was classified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease. On April 18, 2023, the Company entered into a sublease termination agreement with the Subtenant, whereby the Subtenant and the Company agreed to terminate the sublease effective as of April 30, 2023. The Subtenant agreed to pay the Company $139,460 along with the security deposit of $35,540 for a total termination fee of $175,000, to permit early termination of the sublease. The Company recognized operating income from the sublease on a straight-line basis in its statements of operations over the sublease term. During the three and nine months ended March 31, 2024 and 2023, the net operating lease expenses were as follows:
Schedule of net operating lease expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | For the Three Months Ended |  | For the Nine Months Ended
|  | March 31, |  | March 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Operating Lease Expense |  | $ | 106,790 |  |  | $ | 99,099 |  |  | $ | 236,455 |  |  | $ | 239,759 |
Sub lease Income |  |  | — |  |  |  | (53,310 | ) |  |  | — |  |  |  | (159,930 | )
Total Net Lease Expense |  | $ | 106,790 |  |  | $ | 45,789 |  |  | $ | 236,455 |  |  | $ | 79,829 |
Lease expense charged to general and administrative expenses for the three and nine months ended March 31, 2024, amounted to $106,790 and $236,455, respectively. Lease expense charged to general and administrative expenses for the three and nine months ended March 31, 2023, amounted to $45,789 and $79,829, respectively. During the three and nine months ended March 31, 2024, the Company paid $108,441 and $232,237 under operating leases, respectively. During the three and nine months ended March 31, 2023, the Company paid $98,950 and $339,993 under operating leases, respectively. The difference between the operating lease expense for the nine months ended March 31, 2023 in the amount of $79,829 and the cash paid of $339,993, is primarily made up of the release of an accrual of $77,242 related to the termination of the Plaza Medical Office Building, LLC lease.

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- Definition The entire disclosure for lessor's operating leases. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-30/tableOfContent + Details
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