Leases

9 Months Ended

Mar. 31, 2025

12. Leases

Our leases primarily consist of operating leases related to our facilities located in Orlando, Florida; Plano, Texas; Hudson, New Hampshire; Riga, Latvia; and Zhenjiang, China, and finance leases related to certain equipment located in Orlando, Florida and Riga, Latvia. The operating leases for facilities are non-cancelable operating leases, with terms at various times through 2034. We typically include options to renew (or terminate) in our lease term, and as part of our right-of-use (“ROU”) assets and lease liabilities, when it is reasonably certain that we will exercise such options. We currently have fourteen finance lease agreements entered into during fiscal years 2023, 2024 and 2025 with terms ranging from three to five years. The finance leases are for computer and manufacturing equipment.

Our operating lease ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. One of our operating leases includes renewal options, which were not included in the measurement of the operating lease ROU assets and related lease liabilities. The lease on the premises comprising our primary facility in Orlando, Florida (the “Orlando Facility”) was amended in April 2021, and again in September 2021, to expand the space from approximately 26,000 square feet to approximately 58,500 square feet. The lease term was extended from April 30, 2022, to that certain date that is one hundred twenty-seven (127) months after the date the landlord completes certain work to be done at the leased premises. The landlord’s work was completed in August 2023, and accordingly the lease expires on March 31, 2034. Effective in January 2022, the terms of our leases in Zhenjiang, China and Riga, Latvia were extended to December 31, 2024 and 2030, respectively. It is our intention to renew the lease on the reduced space in Zhenjiang for at least a one-year term. The operating lease for G5 Infrared’s facility in New Hampshire expires in December 2026.

We received tenant improvement allowances for the lease of our Orlando Facility. These allowances were used to construct improvements and are included in leasehold improvements and operating lease liabilities. The balance is being amortized over the corresponding lease term. In August 2023, we completed the construction of additional tenant improvements within the premises subject to our continuing lease for our Orlando Facility, of which the landlord provided $2.4 million in tenant improvement allowances. We funded the balance of the tenant improvement costs of approximately $3.7 million.

The components of lease expense for the three and nine months ended March 31, 2025 and 2024 were as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025		2024
Operating lease cost	$	265,245	$	238,051	$	803,725	$	681,726
Finance lease cost:
Depreciation of lease assets		45,466		23,971		126,198		57,868
Interest on lease liabilities		18,105		9,712		49,194		25,104
Total finance lease cost		63,571		33,683		175,392		82,972
Total lease cost	$	328,816	$	271,734	$	979,117	$	764,698

Supplemental balance sheet information related to the leases as of March 31, 2025 and June 30, 2024 was as follows:

	Classification	March 31, 2025		June 30, 2024
Assets:
Operating lease assets	Operating lease assets	$	6,457,530	$	6,741,549
Finance lease assets	Property and equipment, net⁽¹⁾		928,661		1,063,768
Total lease assets		$	7,386,191	$	7,805,317

Liabilities:
Current:
Operating leases	Operating lease liabilities, current	$	1,271,740	$	1,059,998
Finance leases	Finance lease liabilities, current		203,954		177,148

Noncurrent:
Operating leases	Operating lease liabilities, less current portion		7,518,766		8,058,502
Finance leases	Finance lease liabilities, less current portion		457,441		528,753
Total lease liabilities		$	9,451,901	$	9,824,401

(1)

Finance lease assets were recorded net of accumulated depreciation of approximately $236,000 and $109,000 as of March 31, 2025 and June 30, 2024, respectively.

Lease term and discount rate information related to leases was as follows:

Lease Term and Discount Rate	March 31, 2025
Weighted Average Remaining Lease Term (in years)
Operating leases		8.4
Finance leases		2.9

Weighted Average Discount Rate
Operating leases		2.8	%
Finance leases		7.1	%

Supplemental cash flow information was as follows for the nine months ended March 31, 2025 and 2024:

	Nine Months Ended March 31,
	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	887,180	$	634,033
Operating cash used for finance leases	$	49,194	$	25,105
Financing cash used for finance leases	$	142,523	$	87,610

Future maturities of lease liabilities were as follows as of March 31, 2025:

Fiscal year ending:	Finance Leases			Operating Leases
June 30, 2025 (remaining three months)	$	82,061		$	344,553
June 30, 2026		243,229			1,409,059
June 30, 2027		216,580			1,281,635
June 30, 2028		173,283			1,157,748
June 30, 2029		57,642			1,187,989
Thereafter		—			5,571,134
Total future minimum payments		772,795			10,952,118
Less imputed interest		(111,400	)		(2,161,612	)
Present value of lease liabilities	$	661,395		$	8,790,506