Note 4.   Lease Obligations

On December 30, 2016, 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 value of the lease assets and liability at the inception of the lease was $463,000 using a discount rate of 3.75%. During the six months ended December 31, 2019, the Company made payments of $62,998 towards the lease liability. As of December 31, 2019 and June 30, 2019, lease liability amounted to $145,515 and $208,513, 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 six months ended December 31, 2019 and 2018 was $83,324 and $72,688, respectively. The right of use asset at June 30, 2019 was $192,245. During the six months ended December 31, 2019, the Company reflected amortization of right of use asset of $59,332 related to this lease, resulting in a net asset balance of $132,913 as of December 31, 2019.

On October 8, 2019, the Company entered into an agreement to sublease its office facilities from November 1, 2019 through January 31, 2021, the end of the lease term, for $8,094 per month with one month of abated rent. The Company recorded rent income of $3,507 during the six months ended December 31, 2019, included in general and administrative expenses in the accompanying statements of operations.