LEASES

3 Months Ended

Aug. 31, 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 11 months to 3 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 1.2 years at August 31, 2022 and the weighted-average discount rate was 5.40%.

The Company’s operating lease cost was $189,000 and $192,000 for the three months ended August 31, 2022 and 2021, respectively.

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

	Three Months Ended
	August 31,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows for operating leases	$	206	$	203

The following table presents the maturities of the Company’s operating lease liabilities as of August 31, 2022 (in thousands):

Fiscal year	Operating Leases
2023 (excluding the first three months of 2023)	$	623
2024		168
2025		32
2026		19
Thereafter		-
Total future minimum operating lease payments		842
Less: imputed interest		(28	)
Present value of operating lease liabilities	$	814