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Leases
12 Months Ended
Aug. 31, 2024
Leases  
Leases

Note 13 – Leases

 

Operating leases

 

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

 

The Company leases its corporate office space and certain facilities under long-term operating leases expiring through fiscal year 2031.

 

 

The table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of August 31, 2024 and 2023:

 

      2024   2023 
   Classification on Balance Sheet          
Assets             
Operating lease assets  Operating lease right of use assets  $1,691,309   $1,983,898 
Total lease assets     $1,691,309   $1,983,898 
              
Liabilities             
Current liabilities             
Operating lease liability  Current operating lease liability  $403,291   $415,392 
Noncurrent liabilities             
Operating lease liability  Long-term operating lease liability   1,440,367    1,693,577 
Total lease liability     $1,843,658   $2,108,969 

 

Lease obligations at August 31, 2024 consisted of the following:

 

Years Ending August 31,    
2025  $547,571 
2026   547,393 
2027   510,676 
2028   293,723 
2029   173,588 
Thereafter   167,269 
Total payments   2,240,220 
Amount representing interest   (396,562)
Lease obligation, net   1,843,658 
Less lease obligation, current portion   (403,291)
Lease obligation, long-term portion  $1,440,367 

 

During the year ended August 31, 2024, the Company entered into new lease obligations of $157,973.

 

The lease expense for the years ended August 31, 2024 and 2023 was $616,799 and $797,515, respectively. The cash paid under operating leases during the years ended August 31, 2024 and 2023 was $589,138 and $772,655, respectively.

 

At August 31, 2024, the weighted average remaining lease terms were 3.75 years and the weighted average discount rate was 8.7%.

 

Finance leases

 

The Company leases certain equipment under lease contracts that are accounted for as finance leases. If the contracts meet the criteria for a finance lease, the related equipment underlying the lease contract is capitalized and amortized over its estimated useful life. If the cost of the equipment is not available, the Company calculates the cost by taking the present value of the lease payments using an implicit borrowing rate of 5% per annum.

 

The net book value of equipment under finance leases included in property and equipment on the accompanying balance sheet at August 31, 2024 is as follows:

 

     
Cost  $209,457 
Accumulated amortization   (209,457)
Net book value  $- 

 

 

Future minimum finance lease payments are as follows:

 

Years Ending August 31,    
2025  $4,420 
Total payments   4,420 
Amount representing interest   (66)
Lease obligation, net   4,354 
Less lease obligation, current portion   (4,354)
Lease obligation, long-term portion  $-