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Lease Commitments
 12 Months Ended
Jun. 30, 2014
Lease Commitments  
Lease Commitments

12.    Lease Commitments

 

The Company has operating leases for office space. At June 30, 2014, the Company has a lease agreement for a 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 expands our space to 26,077 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 are two three year extension options exercisable by the Company. 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 sixth lease amendment.

 

As of June 30, 2014, the Company, through its wholly-owned subsidiary, has a lease agreement for a manufacturing and office facility in Shanghai, China (the “China Lease”). The China Lease, which was for a two year extension on the five-year original term, expires April 2016.

 

As of June 30, 2014, the Company, through its wholly-owned subsidiary, has a lease agreement for a manufacturing and office facility in Zhenjiang, China (the “Zhenjiang Lease”). The Zhenjiang Lease, which is for a five-year original term with renewal options, expires March 2019.

 

During fiscal 2013 and 2014, the Company entered into three-year capital lease agreements for computer equipment and is included as part of Property and Equipment. Assets under capital lease are included in computer equipment and software for $23,000, with accumulated amortization as of June 30, 2014 of $10,800. Amortization related to capital leases will be included in depreciation expense.

 

Rent expense totaled $440,576 and $434,930 during the years ended June 30, 2014 and 2013, respectively.

 

The approximate future minimum lease payments under capital and operating leases at June 30, 2014 were as follows:

 

Fiscal year ending June 30,   Capital Lease     Operating Lease
             
2015     7,349      334,255
2016     3,406      361,206
2017     3,406      364,698
2018      —      381,729
2019 and beyond      —     1,455,449
Total Minimum Payments         14,161     2,897,337
             
   Less Imputed Interest    (1,695)          
Present value of minimum lease payments included in long term debt   12,466          
Less short term portion     6,196          
Long term portion   $  6,270          

 

We negotiated a new lease on our Orlando facility in July 2014 which increased our space from 22,000 square feet to 26,100 square feet, or by 20%, and reduced our expense by 25%. The term was extended to April 2022. The payments above include this new lease.