Note 12 – Lease Commitments

Finance Leases

In July 2023, the Company entered into an equipment lease for $340,048. The related finance liability has an implied interest rate of 11.16% per annum and requires 5 equal annual payments due on September 1 of each year. As of June 30, 2026 and June 30, 2025, the balance of the finance liability was $151,421 and $215,409, respectively.

The present value of future minimum lease payments due at June 30, 2026 was as follows:

Schedule of Future Minimum Finance Lease Payments 

The Company has determined to amortize the lease over the useful life of the equipment, or ten years, and put the equipment into service in September 2024. The Company recorded amortization of $34,005 and $28,337 in the years ended June 30, 2026 and 2025, respectively.

Operating Leases

The Company leases its instructional facilities under non-cancelable operating leases expiring at various dates through 2036. In most cases, the facility leases require the Company to pay various operating expenses of the facilities in addition to base monthly lease payments. In certain cases, the Company has options available under its leases to renew, and certain leases contain ordinary rental escalations on the space. Operating lease cost, including the effect of rent escalation clauses, is recognized on a straight-line basis over the lease term.

The Company uses its incremental borrowing rate based on the information available at the commencement to determine the present value of lease payments over the lease term. As of June 30, 2026, the weighted average incremental borrowing rate used by the Company was approximately 6.59%, and the weighted average remaining years left on outstanding leases was 6.03 years.

The present value of future minimum lease payments due at June 30, 2026 was as follows:

Schedule of Future Minimum Operating Lease Payments 

Total rent expense and related taxes and operating expenses under operating leases for the years ended June 30, 2026 and 2025 were $5,396,086 and $4,483,574, respectively.

Supplemental balance sheet information related to leases was as follows:

Schedule of Balance Sheet Information Related to Leases 

Other supplemental information:

Schedule of Other supplemental Information 

Tenant improvement allowance. Under the Company’s lease at 35450 Inland Valley Drive, Wildomar, California, the landlord has agreed to provide a tenant improvement allowance of $20.00 per rentable square foot, or approximately $1,062,520 in the aggregate across the three phases of the lease. The allowance is accounted for as a lease incentive. The $103,460 portion of the allowance attributable to the first phase of the lease, which commenced on April 1, 2026, had not been received as of the commencement date and is therefore included as a reduction of the lease payments used to measure the related lease liability and right-of-use asset. Accordingly, the 2027 amount in the table of future minimum operating lease payments above is presented net of the $103,460 allowance. The remaining $959,060 relates to the second and third phases, which had not commenced as of June 30, 2026, and no amount has been recognized in respect of those phases.

Uncommenced lease. On July 1, 2026, the Company commenced the second phase of its building lease at 35450 Inland Valley Drive, Wildomar, California, which provides an additional 31,057 square feet of rentable space. The Company is obligated to make lease payments of approximately $894,000 during the first year of the second phase, increasing over the 10-year lease term to approximately $1,167,000 in the final year, and totaling approximately $10.3 million. Because the second phase had not commenced as of June 30, 2026, no right-of-use asset or lease liability related to the second phase was recognized in the accompanying consolidated financial statements.