MOVING iMAGE TECHNOLOGIES INC. Commitments Disclosure
NOTE 11— COMMITMENTS AND CONTINGENCIES
Operating Leases: The Company occupies an executive office and warehouse space in Fountain Valley and Whittier, CA, pursuant to separate lease agreements. Under ASC 842, at contract inception the Company determined whether the contract is or contains a lease and whether the lease should be classified as on operating or a financing lease. Operating leases are included in ROU (right-of-use) assets and operating lease liabilities in our consolidated balance sheet.
The Company’s executive office and warehouse lease agreements are classified as operating leases. The office lease agreement, as amended, expire on January 31, 2030, and does not include any renewal options. The Whittier, CA warehouse lease agreement commenced on February 1, 2025 expires on January 31, 2028, and does not include any renewal options.The agreements provide for initial monthly base amounts plus annual escalations through the term of the leases.
In addition to the monthly base amounts in the lease agreements, the Company is required to pay a portion of real estate taxes and common operating expenses during the lease terms. The aggregate rent expense was $361,000 and $287,000 for the year ended June 30, 2025 and 2024, respectively.
On June 4, 2024, the Company notified its Grace facility location landlord of its intent to vacate at the end of the current January 31, 2025 lease term.
On February 1, 2025, the Company entered into a warehouse lease in Whittier, CA.
The weighted average interest rate is 8.42% and the weighted average remaining term is 4.3 years.
Future minimum lease payments at June 30, 2025 under these arrangements are as follows:
| Operating leases | Total | |||
| ($ in Thousands) | Payments | |||
| 2026 | $ | 313 | ||
| 2027 | 326 | |||
| 2028 | 303 | |||
| 2029 | 266 | |||
| 2030 | 159 | |||
| Total future minimum lease payments | $ | 1,367 | ||
| Less imputed interest | (222 | ) | ||
| Present value of operating lease payments | $ | 1,145 | ||
The following table sets forth the ROU assets and operating lease liabilities as of June 30, 2025:
| Assets | (in thousands) | |||
| ROU assets-net | $ | 1,087 | ||
| Liabilities | ||||
| Current operating lease liabilities | $ | 228 | ||
| Long-term operating lease liabilities | 918 | |||
| Total ROU liabilities | $ | 1,146 |
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Legal Matters: From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.