Annual report pursuant to section 13 and 15(d)

Operating Leases

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Operating Leases
12 Months Ended
Dec. 31, 2013
Operating Leases
12. OPERATING LEASES:

Lumificient has an operating lease with Schany Family Limited Partnership for approximately 13,200 square feet of office and warehouse space. The Company acquired Lumificient on April 30, 2008. Base rent under the lease at April 30, 2008 was $5,202 per month and increases 2% annually each July. In addition to base rent, Lumificient is required to pay its pro rata share of the property’s operating expenses, including property taxes, insurance and non-structural repairs. The lease originally terminated on February 28, 2010. On December 28, 2009, Lumificient entered into a new three year lease with Schany Family Limited Partnership through February 28, 2013. The lease includes an option for an additional two year extension through February 28, 2015. Monthly base rent under the lease at March 1, 2010 is $5,412 and increases 2% annually each March. In 2012, Lumificient exercised its option to extend the lease for the additional two year period.

 

On July 29, 2009, Seesmart entered into an operating lease agreement expiring on October 31, 2012 with Westpac Insurance Services, Inc. for approximately 12,200 square feet of office and warehouse space in Simi Valley, California. An officer of Seesmart personally guarantees the lease. During 2012, Seesmart extended the lease through October 31, 2015. Base rent under the agreement beginning November 1, 2012 is $15,810 and increases 2% annually each November. Seesmart is also responsible for maintaining certain minimum insurance requirements as well as Seesmart’s portion of certain common area maintenance charges and property taxes.

On February 23, 2009, Seesmart entered into an operating lease agreement expiring June 1, 2014 with Gallant Investments, LLC for approximately 10,000 square feet of office space in Crystal Lake, Illinois. Base rent under the lease at December 20, 2012 is $6,147 per month and the base rent increases 3% annually on July 1, 2013. Seesmart is responsible for maintaining certain minimum insurance requirements as well as Seesmart’s portion of certain common area maintenance charges, property taxes and utilities.

On October 30, 2012, Progress 44, Inc., a company affiliated with Seesmart’s President Raymond Sjolseth, entered into an operating lease agreement expiring March 31, 2015 with Stamp Factory, LLC for approximately 1,500 square feet of office space in Evanston, Illinois. Base rent under the lease at December 20, 2012 is $1,825 per month and the base rent increases to $1,880 per month beginning in January 2014. The lessee is responsible for maintaining certain minimum insurance requirements as well as the lessee’s portion of certain common area maintenance charges, property taxes and utilities. Pursuant to the December 20, 2012 acquisition of Seesmart, the Company assumed the lease and agreed to reimburse Progress 44, Inc. for any lease payments made subsequent to the acquisition date.

The Company subleases approximately 6,626 square feet from L-1 Investment Partners, LLC (L-1), a company affiliated with Aston and RVL, on a month to month basis, for its Corporate Headquarters. The Company pays L-1 $21,355 monthly, representing its proportionate share of the space under the underlying lease, which expires on March 31, 2015. Consistent with the underlying lease, base rent increases to $22,087 per month beginning in April 2014. The lessee in the underlying lease is also responsible for a portion of the building maintenance charges, property taxes and utilities and a proportionate amount is allocated to the Company.

On August 5, 2013, Lighting Integration Technologies, LLC entered into an operating lease agreement expiring April 30, 2015 with 4500 PGA BLVD Joint Venture, LLP for approximately 3,011 square feet of office space in Palm Beach Gardens, Florida. Base rent under the lease is $4,517 per month and the base rent increases 3% annually on September 1, 2014. LIT is responsible for maintaining certain minimum insurance requirements as well as LIT’s portion of certain common area maintenance charges, property taxes and utilities in the amount of $1,847 per month.

On March 30, 2012, Relume Technologies, Inc. entered into an operating lease agreement expiring July 31, 2017 with Balt Properties, LLC for approximately 44,922 square feet of warehouse space and 1,500 square feet of office space at 1795 N. Lapper Road and 1785 N. Lapeer Road, Oxford Township, Michigan, respectively. Base rent under the lease at is $15,000 per month. Relume is responsible for monthly estimates, paid in advance, of property taxes, which will not be assessed until the second year of the lease and insurance of $450 per month.

On April 5, 2010, Tri-State LED, Inc. entered into an operating lease agreement expiring March 31, 2015 with Mill Beech, LLC for approximately 5,230 square feet of business space in Greenwich, CT. Base rent under the lease is $5,230 per month and the base rent increases 3% annually on April 1, 2012. The lessee is responsible for maintaining certain minimum insurance requirements as well as the lessee’s portion of certain common area maintenance charges, property taxes and utilities.

The following schedule shows the total rent expense for operating leases:

 

(in thousands)

   Year Ended December 31,  
   2013     2012     2011  

Rent expense

   $ 577      $ 301      $ 480   

Less sublease rentals

     (47     (35     (142
  

 

 

   

 

 

   

 

 

 

Total rent expense

   $ 530      $ 266      $ 338   
  

 

 

   

 

 

   

 

 

 

The future minimum payment obligations as of December 31, 2013 under the operating leases described above are as follows:

 

2014

   $ 681   

2015

     493   

2016

     276   

2017

     115   

2018

     3   
  

 

 

 

Total future payment obligations

   $ 1,568