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Lease Commitments

9 Months Ended

Mar. 31, 2018

Leases [Abstract]

Lease Commitments

We have operating leases for office space. At March 31, 2018, 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 five-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 $172,000 as of March 31, 2018. The deferred rent is being amortized as a reduction in lease expense over the term of the Orlando Lease.

Subsequent to March 31, 2018, we entered into a lease agreement for an additional 12,378 square feet in Orlando, Florida (the “Orlando Lease II”). The Orlando Lease II will provide additional manufacturing and office space near our corporate headquarters. The anticipated commencement date of the lease is August 1, 2018, with a four-year original term with one renewal option for a five-year term. The Orlando Lease II provides for a tenant improvement allowance of up to $309,450.

At March 31, 2018, 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 nine months ended March 31, 2018, the Shanghai Lease was renewed for an additional one-year term, and now expires in October 2018.

At March 31, 2018, we, through our wholly-owned subsidiary, LPOIZ, have two lease agreements for a manufacturing and office facility in Zhenjiang, China (collectively, the “Zhenjiang Leases”) for 39,000 square feet. The first Zhenjiang Lease is for 26,000 square feet, has a five-year original term with renewal options, and expires in March 2019. During the nine months ended March 31, 2018, 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 March 31, 2018, 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 March 31, 2018, 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, expire in December 2019.

Rent expense totaled approximately $779,000 and $530,000 during the nine months ended March 31, 2018 and 2017, respectively.

We currently have obligations under four capital lease agreements, entered into during fiscal years 2015, 2016, and 2017, with terms ranging from three to five years. The leases are for computer and manufacturing equipment, which are included as part of property and equipment. Assets under capital lease include approximately $1.0 million in manufacturing equipment, with accumulated amortization of approximately $541,000 as of March 31, 2018. 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 March 31, 2018 were as follows:

Fiscal year ending June 30,		Capital Leases				Operating Leases

2018		$	84,838			$	226,000
2019			212,435				769,000
2020			161,302				693,000
2021			86,657				446,000
2022			—				285,000
Total minimum payments			545,232			$	2,419,000
Less imputed interest			(54,369	)
Present value of minimum lease payments included in capital lease obligations			490,863
Less current portion			219,688
Non-current portion		$	271,175