EASES

The Company has operating leases related to land, office space, warehouse space and equipment. All of the Company’s leases have been assessed to be operating leases. Renewal options are included in the lease term to the extent the Company is reasonably certain to exercise the option. The exercise of lease renewal options is at the Company’s sole discretion. The incremental borrowing rate represents the Company’s ability to borrow on a collateralized basis over a term similar to the lease term. The leases typically contain renewal options for periods ranging from

one

year to

ten

years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is

2068

assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are

not

subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.

Future minimum lease payments under non-cancellable operating leases as of

May 31, 2020

are as follows:

Fiscal Year:
2021	$	114
2022		90
2023		61
2024		61
2025		-
Thereafter		161
Total undiscounted operating lease payments		487
Less imputed interest		(100	)
Present value of operating lease payments	$	387

The above payment schedule includes renewal options that the Company is reasonably likely to exercise. Leases with an initial term of

months or less are

not

recorded on the Company’s balance sheet. The Company recognizes lease expense for these leases on a straight line basis over the terms of the leases. The above payment schedule does

not

include lease payments of

$136

2021

for the Company’s idle facility in Fullerton California that have been accrued on the condensed consolidated balance sheets in accrued liabilities.

For the

three

months ended

May 31, 2020,

the Company’s operating lease expense was

$40.

Cash payments of

$38,

pertaining to operating leases, are reflected in the cash flow statement under cash flows from operating activities.

The following table sets forth the right-of-use assets and operating lease liabilities as of

May 31, 2020:

Operating right-of-use assets	$	387

Operating lease liabilities	$	142
Long-term operating lease liabilities		245
Total operating lease liabilities	$	387

The Company’s weighted average remaining lease term for its operating leases is

5.9

years

December 2018,

the Company’s wholly-owned subsidiary Park Aerospace Technologies Corp. (“PATC”) entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas. Pursuant to this agreement, PATC agreed to construct and operate an additional manufacturing facility approximately

90,000

square feet in size for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. PATC further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a

five

-year period. In exchange for these agreements, the City and the County agreed to lease to PATC

three

acres of land at the Newton City/County Airport, in addition to the

eight

acres previously leased to PATC by the City and County. The City and the County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The Company estimates the total cost of the additional facility to be approximately

$18.0

million, and the Company expects to complete the construction of the additional facility in the

second

half of the

2020

calendar year. As of

May 31, 2020,

the Company had

$960

in equipment purchase obligations and

$9,968

of construction-in-progress related to the additional facility. On

July 16, 2019,

PATC was merged into the Company and ceased to exist, and the Company assumed the rights and obligations of PATC, including the rights and obligations of PATC under the Development Agreement.