COMMITMENTS AND CONTINGENCIES

9 Months Ended

May 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Leases

We lease approximately 9,255 square feet of office space in Lancaster, California, where our corporate headquarters are located. The lease term extends to January 31, 2026, and the base rent is $17 thousand per month. The lease agreement gives the Company the right, upon 180 days’ prior notice, to opt out of all or part of the last four years of the term, with no penalty.

We lease approximately 4,317 square feet of office space in Buffalo, New York. The lease term extends to November 30, 2026, and the base rent is $7 thousand per month with an annual 2% increase. The lease agreement provides the Company with two five-year renewal options and the right to terminate the lease with one year’s prior written notice with certain penalties. We previously leased approximately 12,623 square feet of office space at a different location in Buffalo, New York. That lease term extended to November 2021 and the base rent was $16 thousand per month.

We lease approximately 3,386 square feet of office space in Durham, North Carolina. The lease term extends to September 30, 2023, and the base rent is $8 thousand per month with an annual 3% increase.

We lease approximately 2,300 square feet of office space in Paris, France. The lease term extends to November 2024 and the rent is $5 thousand per month and adjusted each December based on a consumer price index.

We lease approximately 64 square feet consisting of 3 server cabinets in a data center colocation space in Buffalo, New York. The lease term extends to November 30, 2026 and the rent is $4 thousand per month with an annual 3% increase.

Rent expense, including common area maintenance fees for the three months ended May 31 2022 and 2021, was $138 thousand and $167 thousand, respectively, and $414 thousand and $499 thousand for the nine months ended May 31, 2022 and 2021, respectively.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of May 31, 2022:


(in thousands)
Years Ending May 31,
2023	$	509
2024	438
2025	363
2026	269
2027	50
Total undiscounted liabilities	1,629
Less: imputed interest	(101)
Total operating lease liabilities (including current portion)	$	1,528

Line of Credit

On March 31, 2020, we entered into a Credit Agreement with Wells Fargo Bank, N.A. The Credit Agreement provided us with a credit facility of $3.5 million through April 15, 2022 (the “Termination Date”), on which date the Credit Agreement terminated in accordance with its terms. As a result, we can no longer draw down against the line of credit. We chose not to renew or pursue an alternative credit facility as we do not foresee a need to utilize such credit facility within the next twelve months. As of the Termination Date, there were no amounts drawn against the line of credit.

Employment Agreements

In the normal course of business, we have entered into employment agreements with certain of our key management personnel that may require compensation payments upon termination.

Income Taxes

We follow guidance issued by the FASB with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position, and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to income tax expense. We file income tax returns with the IRS and various state jurisdictions as well as with the countries of India and France. Our federal income tax returns for fiscal years 2018 through 2021 are open for audit, and our state tax returns for fiscal years 2017 through 2021 remain open for audit.

Our review of prior year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations.

Litigation

We are not a party to any legal proceedings and are not aware of any pending, threatened, or unasserted legal proceedings of any kind.