Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

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Commitments and Contingencies
12 Months Ended
Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases 7,100 square feet of office space, located in Santa Monica, California, at a cost of $3.80 per square foot with annual increases in cost of 3%. The term of this lease expires on April 30, 2017. At the end of this lease, the Company plans to relocate its corporate headquarters to El Segundo, California. In fiscal 2017, the Company leased 9,000 square feet of office space in El Segundo, California at a cost of $3.60 per square foot with annual increases in cost of 3%. The term of the El Segundo lease expires on March 31, 2026.
The Company leases 2,100 square feet of office space, located in Vienna, Austria, at a cost of $2.20 per square foot. The term of this lease expires on September 30, 2016, and there are no annual increases in the cost. At the end of the lease, the Company plans to relocate its office in Vienna, Austria. In fiscal 2017, the Company leased 248 square feet of office space in Vienna, Austria at a cost of approximately $10.66 per square foot. The lease lease term is for less than one year and contains renewal options.
The Company leases approximately 17,600 square feet of warehouse space in Las Vegas, Nevada at a cost of approximately $1.50 per square foot per month. The term of the lease is 5.0 years with increases in costs of 3.0% per annum and expires on April 30, 2016.
Expenses related to leases were $0.7 million, and $0.4 million, respectively, for the years ended June 30, 2016 and 2015. Future minimum lease payments under the Company's lease arrangements with noncancelable lease terms in excess of one year as of June 30, 2016 are as follows:
(in thousands)
Years ending June 30,
 
Amount
2017
 
$
605

2018
 
337

2019
 
347

2020
 
297

2021
 

Thereafter
 

Total
 
$
1,586


Employment and Non-Compete Agreements
The Company has entered into employment agreements and non-compete and/or non-solicitation agreements with Greg Roberts, its CEO, and Thor Gjerdrum, its President. The employment agreements provide for minimum salary levels, incentive compensation and severance benefits, among other items.
Employee Benefit Plan
The Company maintains an employee savings plan for United States employees under the Internal Revenue Code section 401(k). Employees are eligible to participate in the plan after three complete calendar months of service and all contributions are immediately vested. Employees' contributions are discretionary to a maximum of 90% of compensation. For all plan members, the Company contributes 30% of the eligible employees' contributions on the first 60% of the participants' compensation to the IRS maximum annual contribution. The Company's matching 401(k) contributions totaled $0.1 million and $0.1 million for the years ended June 30, 2016 and 2015, respectively.
Litigation, Claims and Contingencies
On October 25, 2015, the Company received notification from the City of Santa Monica that the City was challenging the Company's classification as an "agent/broker" for purposes of computing the business license fee due to the City. The matter has since been resolved in the Company's favor resulting in no change to the Company's prior filings.
In the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our business.  The outcome of such legal actions and the timing of ultimate resolution are inherently difficult to predict. In the opinion of management, based upon information currently available to us, any resulting liability, would not have a material adverse effect on the Company's financial position, cash flows, or operations.
SGI IRS and State Tax Audits
SGI is currently in appeals with the IRS for the years ended June 30, 2008 through 2013 and in examination with other taxing jurisdictions on certain tax matters, including challenges to certain positions the Former Parent has taken on the consolidated returns, in which the Company was a member of the consolidated tax returns. The Company is under examination by the IRS for the year ended June 30, 2015. The Company is unable to determine the outcome of these audits at this time. 
In general, the majority of state and local examinations have been completed by the tax authorities for the respective jurisdictions through the years ended June 30, 2007. Further, some jurisdictions’ statute of limitations has expired for U.S. federal, state, and local income tax returns filed by the Former Parent for the years through years ended June 30, 2007.