Leases

9 Months Ended

Nov. 30, 2019

Note 6. – Leases

The Company leases its office space and manufacturing facilities under operating lease agreements. The base lease terms expire at various dates from 2022 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company does not have any finance leases.

Balance sheet information related to operating leases is as follows (in thousands):


	November 30, 2019
Assets
Operating lease right-of-use assets	$	1,753

Liabilities
Current portion of operating lease liabilities	$	557
Noncurrent portion of operating lease liabilities		1,209

Total operating lease liabilities	$	1,766

Operating lease costs are included in Cost of goods sold in the Company’s condensed consolidated statements of operations and totaled approximately $147 thousand for the three months ended November 30, 2019 and $440 thousand for the nine months ended November 30, 2019. The Company did not have any variable lease costs or short term lease costs for the three and nine months ended November 30, 2019. Operating lease cost were $146 thousand for the three months ended November 30, 2018 and $475 thousand for the nine months ended November 30, 2018.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $143 thousand during the three months ended November 30, 2019 and $429 thousand for the nine months ended November 30, 2019. The Company did not modify any existing leases or execute any new leases during the nine months ended November 30, 2019.

Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:


	November 30, 2019
Weighted average remaining lease term		3.6 years
Weighted average discount rate		6	%

The following table summarizes the maturity of the Company’s operating lease liabilities as of November 30, 2019 (in thousands):


FY2020	$	143
FY2021		573
FY2022		618
FY2023		263
FY2024		190
Thereafter		185

Total operating lease payments		1,972
Less imputed interest		(206	)

Total operating lease liabilities	$	1,766

Included above are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by our chief executive officer) under operating leases expiring at various dates through 2025. Lease costs under these leases totaled approximately $97 thousand for the three months ended November 30, 2019 and $292 thousand for the nine months ended November 30, 2019 (which is included in the total lease costs noted above).

The Company subleases certain of its warehousing space and also leases a building that it owns in Pennsylvania. Sublease income and lease income are included in Other income, net in the Company’s condensed consolidated statements of operations and totaled approximately $

90,000

for the three months ended November 30, 2019 and $

270,000

for the nine months ended November 30, 2019.

Future lease payments expected to be received as of November 30, 2019 are as follows (in thousands):


FY2020	$	90
FY2021		364
FY2022		370
FY2023		238
FY2024		113

Total	$	1,175