LEASES

9 Months Ended

Feb. 28, 2022

LEASES

LEASES

11. LEASES

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 1 year 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 1.7 years at February 28, 2022 and the weighted-average discount rate was 5.4%.

The Company’s operating lease cost was $191,000 and $576,000 for the three and nine months ended February 28, 2022, respectively. For the three and nine months ended February 28, 2021, operating lease cost was $193,000 and $568,000, respectively.

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

	Nine Months Ended
	February 28,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	612	$	579
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 February 28, 2022 (in thousands):

Fiscal year	Operating Leases
2022 (remaining three months of 2022)	$	202
2023		829
2024		168
2025		31
2026		19
Total future minimum operating lease payments	$	1,249
Less: imputed interest		(56	)
Present value of operating lease liabilities	$	1,193