| Lease Commitments |
Note
11 – 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 September 30, 2026 and June 30, 2026, the balance
of the finance liability was $73,539 and $151,421, respectively.
The
present value of future minimum lease payments due at September 30, 2026 was as follows:
Schedule
of Future Minimum Finance Lease Payments
| | |
| | |
| 2027 | |
$ | - | |
| 2028 | |
| 81,459 | |
| Total minimum payments | |
| 81,459 | |
| Less: amount representing interest | |
| (7,920 | ) |
| Present value of minimum payments | |
$ | 73,539 | |
| Less: current portion | |
| (73,539 | ) |
| Long term portion | |
$ | - | |
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 $8,501 and $8,501 in the three months ended September 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 September 30, 2026, the weighted average incremental borrowing rate used by the Company was
approximately 6.45%, and the weighted average remaining years left on outstanding leases was 6.68 years.
The
present value of future minimum lease payments due at September 30, 2026 was as follows:
Schedule
of Future Minimum Operating Lease Payments
| | |
| | |
| 2027 | |
$ | 2,788,911 | |
| 2028 | |
| 3,588,461 | |
| 2029 | |
| 3,288,045 | |
| 2030 | |
| 3,462,566 | |
| 2031 | |
| 3,455,261 | |
| After 2031 | |
| 11,378,187 | |
| Total future minimum operating lease payments | |
| 27,961,431 | |
| Less: imputed interest | |
| (6,253,953 | ) |
| Total | |
| 21,707,478 | |
| Current portion of operating lease | |
| 2,570,725 | |
| Long term portion of operating lease | |
$ | 19,136,753 | |
Total
rent expense and related taxes and operating expenses under operating leases for the three months ended September 30, 2026 and 2025 were
$1,745,967 and $1,335,350, respectively.
Supplemental
balance sheet information related to leases was as follows:
Schedule
of Balance Sheet Information Related to Leases
| | |
September 30, 2026 | | |
June 30, 2026 | |
| | |
| | |
| |
| Operating lease right-of-use assets | |
$ | 21,315,135 | | |
$ | 14,988,329 | |
| Operating lease liability - current | |
$ | 2,570,725 | | |
$ | 2,023,088 | |
| Operating lease liability – non-current | |
| 19,136,753 | | |
| 13,312,606 | |
| Total operating lease liability | |
$ | 21,707,478 | | |
$ | 15,335,694 | |
Other
supplemental information:
Schedule
of Other Supplemental Information
| | |
2026 | | |
2025 | |
| | |
For the three months ended September 30, | |
| | |
2026 | | |
2025 | |
| Cash paid for operating lease | |
$ | 988,633 | | |
$ | 832,580 | |
Tenant
improvement allowance:
| (1) | Under
the Company’s lease at 35450 Inland Valley Drive, Wildomar, California, the landlord
has agreed to provide a tenant improvement allowance of $ per rentable square foot,
or approximately $1,062,520 in the aggregate across the three phases of the lease. |
| (2) | On
September 14, 2026, CCC entered into a lease agreement for approximately 28,218 rentable
square feet in Houston, Texas for its planned new campus. Under the Company’s lease
the landlord will provide a tenant improvement allowance. |
A
summary of the information related to tenant improvement allowance is as follows:
Schedule
of Tenant Improvement Allowance
| Location | |
Commencement Date | |
September 30, 2026 | | |
June 30, 2026 | |
| 35450 Inland Valley Drive, Wildomar, California: | |
| |
| | | |
| | |
| Phase 1: approximately 5,173 rentable square feet | |
April 1, 2026 | |
$ | 103,460 | | |
$ | 103,460 | |
| Phase 2: approximately 31,057 rentable square feet | |
July 1, 2026 | |
| 281,931 | | |
| 140,772 | |
| Phase 3: approximately 16,896 rentable square feet | |
estimate January 1, 2028 | |
| - | | |
| - | |
| Subtotal | |
| |
| 385,391 | | |
| 244,232 | |
| | |
| |
| | | |
| | |
| 10496 Old Katy Road, Houston Texas | |
estimate before December 31, 2026 | |
| 45,172 | | |
| - | |
| | |
| |
| | | |
| | |
| Total | |
| |
$ | 430,563 | | |
$ | 244,232 | |
The
allowance is accounted for as a lease incentive. The allowance attributable to the lease 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
and $621,140 allowance for first and second phase, respectively. The remaining $337,920 relates to the third phase, which had not commenced
as of September 30, 2026, and no amount has been recognized in respect of that phase.
Uncommenced
lease.
| (1) | Estimated
on January 1, 2028, the Company will commence the third phase of its building lease at 35450
Inland Valley Drive, Wildomar, California, which provides an additional 16,896 square feet
of rentable space. The Company is obligated to make lease payments of approximately $251,750
during the fiscal year ending June 30, 2028 of the third phase, increasing over the 10-year
lease term to approximately $581,730 in the final year, and totaling approximately $4.8 million.
Because the third phase had not commenced as of September 30, 2026, no right-of-use asset
or lease liability related to the third phase was recognized in the accompanying consolidated
financial statements. |
| (2) | Estimated
before December 31, 2026, the Company will commence the lease in Houston, Texas for its planned new
campus, which provides approximately 28,218 rentable square feet. The lease has an initial
term of 130 months following the commencement date defined in the lease, which is the earlier
of the substantial completion of tenant improvements to the premises or the date CCC opens
for business in the entire premises. Base rent and CCC’s pro rata share of the building’s
operating expenses are abated for the first ten months of the lease term, and total base
rent over the initial lease term is approximately $6.9 million. Because the lease had not
commenced as of September 30, 2026, no right-of-use asset or lease liability related to this
lease was recognized in the accompanying consolidated financial statements. |
|