Lease Commitments

3 Months Ended

Sep. 30, 2017

Leases [Abstract]

Lease Commitments

12. Lease Commitments

We have operating leases for office space. At September 30, 2017, we have a lease agreement for our manufacturing and office facility in Orlando, Florida (the “Orlando Lease”). The Orlando Lease, which is for a seven-year original term with renewal options, expires April 2022 and expanded our space to 25,847 square feet, including space added in July 2014. Minimum rental rates for the extension term were established based on annual increases of two and one half percent starting in the third year of the extension period. Additionally, there is one 5-year extension option exercisable by us. The minimum rental rates for such additional extension options will be determined at the time an option is exercised and will be based on a “fair market rental rate” as determined in accordance with the Orlando Lease, as amended.

We received approximately $420,000 in a leasehold improvement allowance in fiscal 2015. The improvements were recorded as property and equipment and deferred rent on the consolidated balance sheets. Amortization of leasehold improvements was approximately $142,000 as of September 30, 2017. The deferred rent is being amortized as a reduction in lease expense over the term of the Orlando Lease.

At September 30, 2017, we, through our wholly-owned subsidiary, LPOI, have a lease agreement for an office facility in Shanghai, China (the “Shanghai Lease”) for 1,900 square feet. The Shanghai Lease commenced in October 2015 and expires October 2017. During the three months ended September 30, 2017, the Shanghai Lease was renewed for an additional one year term, and now expires October 2018.

At September 30, 2017, we, through our wholly-owned subsidiary, LPOIZ, have a lease agreement for a manufacturing and office facility in Zhenjiang, China (the “Zhenjiang Lease”) for 26,000 square feet. The Zhenjiang Lease, which is for a five-year original term with renewal options, expires March 2019. During the three months ended September 30, 2017, another lease was executed for 13,000 additional square feet in this same facility. This new lease has a 54-month term, and expires in December 2021. 

At September 30, 2017, we, through our wholly-owned subsidiary ISP, have a lease agreement for a manufacturing and office facility in New York (the “ISP Lease”) for 13,000 square feet. The ISP Lease, which is for a five-year original term with renewal options, expires September 2020.

At September 30, 2017, we, through ISP’s wholly-owned subsidiary ISP Latvia, have two lease agreements for a manufacturing and office facility in Riga, Latvia (the “Riga Leases”) for 23,000 square feet. The Riga Leases, each of which is for a five-year original term with renewal options, expires December 2019.

During fiscal 2014, 2015 and 2016, we entered into five capital lease agreements, with terms ranging from three to five years, for computer and manufacturing equipment, which are included as part of property and equipment. Assets under capital lease include approximately $749,000 in computer equipment and software and manufacturing equipment, with accumulated amortization of approximately $419,000 as of September 30, 2017. Amortization related to capital lease assets is included in depreciation and amortization expense.

Rent expense totaled approximately $258,000 and $121,000 during the three months ended September 30, 2017 and 2016, respectively.

The approximate future minimum lease payments under capital and operating leases at September 30, 2017 were as follows:

Fiscal year ending June 30,	Capital Leases			Operating Leases
2018	$	180,798		$	610,000
2019		113,391			762,000
2020		62,258			691,000
2021		—			445,000
2022		—			285,000
Total minimum payments		356,447		$	2,793,000
Less imputed interest		(28,114	)
Present value of minimum lease payments included in capital lease obligations		328,333
Less current portion		238,683
Non-current portion	$	89,650