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Right-of-Use Assets and Lease Liabilities

12 Months Ended

Apr. 30, 2024

6. Right-of-Use Assets and Lease Liabilities

The Company’s leases primarily represent offices, warehouses, vehicles, manufacturing and R&D facilities which expire at various times through 2029 and are operating leases. Contractual arrangements are evaluated at inception to determine if the agreement contains a lease. The leases contain renewal options, early termination, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate. We include options to extend or terminate leases in the right-of-use (ROU) operating lease asset and liability when it is reasonably certain we will exercise these options. As of April 30, 2024, lease options were not included in the calculation of the ROU operating lease asset and liability. ROU assets and lease liabilities are recorded based on the present value of future lease payments which will factor in certain qualifying initial direct costs incurred as well as any lease incentives that may have been received. Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term.

The Company elected the practical expedient for short-term leases which allows leases with terms of twelve months or less to be recorded on a straight-line basis over the lease term without being recognized on the consolidated balance sheet. The Company has also elected the practical expedient to account for lease and non-lease components as a single component.

The table below presents ROU assets and lease liabilities recorded on the consolidated balance sheets as follows:

	Classification	April 30, 2024		April 30, 2023
		(In thousands)
Assets
Right-of-use assets - operating leases	Right-of-use assets leases	$	6,036	$	7,382

Liabilities
Operating lease liabilities, current portion	Lease liability, current		1,640		1,753
Operating lease liabilities, non-current portion	Lease liability, non-current		4,545		5,883
Total lease liabilities		$	6,185	$	7,636

Total operating lease expense was approximately $1.9 million, of which approximately $0.4 million was attributable to variable lease expenses, for both the fiscal years ended April 30, 2024 and 2023, the majority of which is included in cost of revenues and the remaining amount in selling and administrative expenses on the consolidated statements of operations. In addition, the Company made cash payments of $1.8 million and $1.9 million for operating leases during the fiscal years ended April 30, 2024 and 2023, respectively, which are included in cash flows from operating activities in our consolidated statements of cash flows. As of April 30, 2024, the Company had no operating lease liabilities that had not commenced.

The table below reconciles the undiscounted cash flows for each of the next five fiscal years and total of the remaining fiscal years to the operating lease liabilities recorded on the consolidated balance sheet as of April 30, 2024:

Fiscal Year Ending April 30,
(in thousands)

2025	$	1,687
2026		1,363
2027		964
2028		1,262
2029		1,389
Thereafter		587
Total lease payments		7,252
Less imputed interest		(1,067	)
Present value of future lease payments		6,185
Less current obligations under leases		(1,640	)
Long-term lease obligations	$	4,545

As of April 30, 2024 and 2023, the weighted-average remaining lease term for all operating leases was 4.9 years and 5.6 years, respectively. The Company does not generally have access to the rate implicit in the leases, therefore, we use a discount rate based on our incremental borrowing rate, which is determined using our credit rating and information available as of the commencement date. The weighted average discount rate for operating leases as of April 30, 2024 and 2023, was 6.31% and 6.23%, respectively.