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LEASES

6 Months Ended

Nov. 30, 2021

The Company has only operating leases for real estate including corporate offices, warehouse space and certain equipment. A lease with an initial term of 12 months or less is generally not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset, or renew the arrangement that the Company is reasonably certain to exercise (short-term leases). The Company recognizes lease expense on a straight-line basis over the lease term for short-term leases that the Company does not record on its balance sheet. The Company’s operating leases have remaining lease terms of 2 months to 4 years.

The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of the arrangement. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The weighted-average remaining lease term for the Company’s operating leases was 1.9 years at November 30, 2021 and the weighted-average discount rate was 5.43%.

The Company’s operating lease cost was $192,000 and $385,000 for the three and six months ended November 30, 2021, respectively. The Company’s operating lease cost was $190,000 and $375,000 for the three and six months ended November 30, 2020, respectively.

The following table presents supplemental cash flow information related to the Company’s operating leases (in thousands):

	Six Months Ended November 30,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating lease	$	408	$	382
Right-of-use assets obtained in exchange for operating lease liabilities		-		-

The following table presents the maturities of the Company’s operating lease liabilities as of November 30, 2021 (in thousands):

Fiscal year	Operating Leases
2022 (excluding the first six months of 2022)	$	406
2023		829
2024		168
2025		31
2026		19
Thereafter		-
Total future minimum operating lease payments	$	1,453
Less: imputed interest		(74	)
Present value of operating lease liabilities	$	1,379