Leases

3 Months Ended

May 31, 2021

Leases [Abstract]

Leases

Note 6. – Leases

Operating 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.

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

	May 31, 2021
Assets
Operating lease right-of-use assets	$	996
Liabilities
Current portion of operating lease liabilities	$	573
Noncurrent portion of operating lease liabilities		457
Total operating lease liabilities	$	1,030

Operating lease costs are included in Cost of goods sold in the Company’s condensed consolidated statements of operations and totaled approximately $149 thousand for the three months ended May 31, 2021 and $157 thousand for the three months ended May 31, 2020.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $145 thousand for the three months ended May 31, 2021 and $143 thousand for the three months ended May 31, 2020. The Company did not modify any existing leases or execute any new leases during the three months ended May 31, 2021.

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

	May 31, 2021
Weighted average remaining lease term		1.8 years
Weighted average discount rate		6	%

The following table summarizes the maturity of the Company’s operating lease liabilities as of May 31, 2021 (in thousands):

FY2022	$	432
FY2023		263
FY2024		190
FY2025		185
Total operating lease payments		1,070
Less imputed interest		(40	)
Total operating lease liabilities	$	1,030

Included above are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by the Company’s 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 May 31, 2021. Lease costs were also $97 thousand for the three months ended May 31, 2020.

The Company subleases certain of its warehousing space in its Tucker and Kentucky locations. The Tucker sublease expires concurrently with the head lease in March 2022 and the Kentucky lease expires November 30, 2021.

Sublease income and lease income are included in Other, net in the Company’s condensed consolidated statements of operations and totaled approximately $51,000 for the three months ended May 31, 2021 and $90,000 for the three months ended May 31, 2020. Future remaining lease payments expected to be received as of May 31, 2021 are as follows (in thousands):

FY2022	$	138
FY2023		12
Total	$	150

Financing Leases

The Company has one financing lease entered into on November 23, 2020 for Tempest testing equipment for $277,000. The lease expires on December 1, 2023 and the incremental borrowing rate on the lease is 12.5%.

Balance sheet information related to financing lease is as follows (in thousands):

	May 31, 2021
Financing lease right-of-use assets	$	237
Current portion of financing lease liabilities	$	98
Noncurrent portion of financing lease liabilities		124
Total financing lease liabilities	$	222

The following table summarizes the maturity of the Company’s finance lease liabilities as of May 31, 2021 (in thousands):

Fiscal Year	Amount
2022	$	78
2023		104
2024		78
Total finance lease payments	$	260
Less imputed interest		(38	)
Total finance lease liabilities	$	222