(9) Leases

12 Months Ended

Jun. 30, 2017

Notes

(9) Leases

(9)     Leases

Operating Leases

The Company leases vehicles under non-cancelable operating lease agreements. Lease expense for the years ended June 30, 2017 and 2016, was $8,001 and $14,430, respectively. Future minimum lease payments required under non-cancelable operating leases that have initial or remaining lease terms in excess of one year as of June 30, 2017 is as follows: 2018, $8,001 and 2019, $6,001.

The Company rents office, manufacturing, warehouse and storage space and office equipment under agreements which run one year or more in duration. Rent expense for the years ended June 30, 2017 and 2016 was $289,323 and $186,882, respectively. Future minimum rental payments required under operating leases that have a duration of one year or more as of June 30, 2017 are as follows: 2018, $402,888; 2019, $407,744; 2020, $39,000 and 2021, $32,500.

During fiscal year 2017, the office, manufacturing and warehouse facilities in Detroit, Michigan, Hopkins, Minnesota and Northvale, New Jersey were leased on an annual/monthly basis from employees/stockholders; or entities controlled by stockholders, who were previously principals of businesses acquired by the Company. The leases are related-party transactions. The expense associated with these related-party transactions totaled $160,800 and $70,800 for the fiscal years ended June 30, 2017 and 2016, respectively.

Capital Lease

On August 8, 2014, the Company sold the property that houses its operations in Utah and leased back the premises for a term of 15 years. The sale price was $3.8 million.  Proceeds from the sale were primarily used to reduce debt obligations of the Company.

The building lease is recorded as a capital lease obligation in the accompanying consolidated balance sheets.  The capital lease asset is included in Property and Equipment (See Note 4).  The balance of the capital lease obligation was as follows as of June 30: 

		2017		2016
Balance of capital lease obligation	$	3,281,547	$	3,464,849
Less current portion		(193,818)		(183,302)
	$	3,087,729	$	3,281,547

Future minimum gross lease payments required under the capital lease are as follows for the fiscal years ending June 30: 2018, $341,648; 2019, $348,478; 2020, $355,450; 2021, $362,566; 2022, $369,816 and $2,875,310 thereafter. Included in the future lease payments are $1,249,136 of imputed interest and $122,585 of deferred rent.