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Lease Commitments

6 Months Ended

Dec. 31, 2017

Leases [Abstract]

Lease Commitments

12. Lease Commitments

We have operating leases for office space. At December 31, 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 in 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 $157,000 as of December 31, 2017. The deferred rent is being amortized as a reduction in lease expense over the term of the Orlando Lease.

At December 31, 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 was set to expire in October 2017. During the six months ended December 31, 2017, the Shanghai Lease was renewed for an additional one-year term, and now expires in October 2018.

At December 31, 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 December 31, 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 December 31, 2017, we, through our wholly-owned subsidiary ISP, have a lease agreement for a manufacturing and office facility in Irvington, 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 in September 2020.

At December 31, 2017, we, through ISP’s wholly-owned subsidiary ISP Latvia, have two lease agreements for a manufacturing and office facility in Riga, Latvia (collectively, 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 in December 2019.

Rent expense totaled approximately $522,000 and $287,000 during the six months ended December 31, 2017 and 2016, respectively.

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. In November 2017, we entered into an additional capital lease agreement with a three and a half year term for manufacturing equipment, which is included as part of property and equipment. Assets under capital lease include approximately $1.0 million in manufacturing equipment, with accumulated amortization of approximately $461,000 as of December 31, 2017. Amortization related to capital lease assets is included in depreciation and amortization expense.

The approximate future minimum lease payments under capital and operating leases at December 31, 2017 were as follows:

Fiscal year ending June 30,		Capital Leases				Operating Leases
2018		$	169,676			$	420,000
2019			212,435				765,000
2020			161,302				692,000
2021			86,657				445,000
2022			—				285,000
Total minimum payments			630,070			$	2,607,000
Less imputed interest			(61,841	)

Present value of minimum lease payments included in capital lease obligations			568,229
Less current portion			320,057
Non-current portion		$	248,172