LEASES

6 Months Ended

Nov. 30, 2022

Disclosure Text Block [Abstract]

Lessee, Operating Leases [Text Block]

NOTE 5:  LEASES

The Company leases its facilities. On November 30, 2022, the Company had approximately 22,000 square feet of floor space at its corporate headquarters at 17571 Von Karman Avenue in Irvine, California, which it has been leasing since 2009. The lease for its headquarters expired on August 31, 2016.  The Company had an option to extend the term of its lease for two additional sixty-month periods. On November 30, 2015, the Company exercised its option to extend its lease for an additional sixty-month period and entered into the First Amendment to Lease wherein it extended its lease until August 31, 2021. On April 9, 2021, the Company exercised its second option to extend its lease for an additional five years.  When the Company extended its lease in April 2021, it was also granted an additional five-year lease extension option. The current rent is approximately $26,000 per month. The security deposit is approximately $22,000. 

In November 2016, the Company’s Mexican subsidiary, Biomerica de Mexico, entered into a 10-year lease for approximately 8,100 square feet of manufacturing space. The Company has one 10-year option to renew at the end of the initial lease period. The current rent is approximately $3,600 per month. Biomerica de Mexico also leases a smaller unit on a month-to-month basis for use in one manufacturing process.

In addition, the Company leases a small office in Lindau, Germany on a month-to-month basis, as headquarters for BioEurope GmbH, its Germany subsidiary.

Total gross rent expense in the United States for the six months ended November 30, 2022 and 2021 was approximately $154,000 and $155,000, respectively.  Rent expense for the Mexico facility for the six months ended November 30, 2022 and 2021 was approximately $21,000 and $21,000, respectively.

For purposes of determining straight-line rent expense, the lease term is calculated from the date the Company first takes possession of the facility, including any periods of free rent and any renewal options periods that the Company is reasonably certain of exercising. The Company’s office and equipment leases generally have contractually specified minimum rent and annual rent increases are included in the measurement of the right-of-use asset and related lease liability.  Additionally, under these lease arrangements, the Company may be required to pay directly, or reimburse the lessors, for some maintenance and operating costs. Such amounts are generally variable and therefore not included in the measurement of the right-of-use asset and related lease liability but are instead recognized as variable lease expense when they are incurred.  

Supplemental cash flow information related to leases for the six months ended November 30, 2022:  

Operating cash flows from operating leases	$	174,322
Right-of-use assets obtained in exchange for     new operating lease liabilities	$	-
Weighted average remaining lease term (in years)		3.77
Weighted average discount rate		6.50%

The approximate maturity of lease liabilities as of November 30, 2022 are as follows:

Less than 1 year	$	357,000
1 to 2 years		368,000
2 to 3 years		379,000
3 to 4 years		298,000
4 to 5 years		0
Total undiscounted lease payments		1,402,000
Less imputed interest		154,000
Total operating lease liabilities	$	1,248,000

According to the terms of the lease in Irvine, the Company is also responsible for routine repairs of the building and for certain increases in property tax.

The Company also has various insignificant leases for office equipment.