COMMITMENTS AND CONTINGENCIES

9 Months Ended

Nov. 30, 2021

COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

Finance lease:

During fiscal 2021, the Company entered into a 36-month finance lease for $27,000 of computer equipment. The Company does not consider the lease to be material to the Company’s financial statements.  As of November 30, 2021, and February 28, 2021, the carrying value of the asset was $15,000 and $22,000, respectively, and was included in Property, plant and equipment on the balance sheet.

Operating lease:

On October 1, 2014, the Company extended its current lease with its landlord, CF EB REO II LLC, for the occupancy and use of its 47,000 square foot facility located at 3301 Electronics Way, West Palm Beach, Florida 33407 (the “Lease”). The property subsequently was sold to La Boheme Properties, Inc., a Florida corporation, which is the current landlord as the Lease was assigned to them. The term of the Lease was scheduled to end on December 31, 2021. The base rent provided in the Lease is $31,555 per month, excluding sales tax. The Company had the option to extend the term of the Lease for an additional five years beginning on January 1, 2022 and ending on December 31, 2026. The Company did not exercise its option.

On November 5, 2021, the Company entered into the Second Amendment to the Lease, which extended the Lease portion over a portion of the leased premises until February 28, 2022 and extended the Lease term over a portion through March 31, 2022. On November 19, 2021, the Company entered into a replacement of the Second Amendment, which extended the Lease over the whole facility by one month and the aforementioned extensions by one month, respectively.  The Company does not consider the Lease extension to be material to the Company’s financial statements and has not adjusted the balance sheet classification.

The balance sheet classification of operating lease assets and liabilities as of November 30, 2021 are as follows:

Balance Sheet Classification	November 30, 2021
Assets
Operating lease right-of-use assets, March 1, 2021	$	340,000
Amortization for the nine months ended November 30, 2021		(305,000	)
Total operating lease right-of-use asset, November 30, 2021	$	35,000
Liabilities
Current
Operating lease liability, short-term	$	39,000
Non-current
Operating lease liability, long-term		-
Total lease liabilities	$	39,000

Future minimum operating lease payments, excluding Florida sales tax, as of November 30, 2021 under non-cancelable operating leases are as follows:

Fiscal Year Ending February 28	Amount
2022		39,000
Total Future Undiscounted Cash Flows	$	39,000
Less Imputed Interest to be recognized in lease expense		-
Operating Lease Liabilities, as reported	$	39,000

The balance sheet classification of lease assets and liabilities as of February 28, 2021 was as follows:

Balance Sheet Classification	February 28, 2021
Assets
Operating lease right-of-use assets, March 1, 2020	$	723,000
Amortization for the fiscal year ended February 28, 2021		(383,000	)
Total operating lease right-of-use asset, February 28, 2021	$	340,000
Liabilities
Current
Operating lease liability, short-term	$	377,000
Non-current
Operating lease liability, long-term		-
Total lease liabilities	$	377,000

Future minimum operating lease payments, excluding Florida sales tax, as of February 28, 2021 under non-cancelable operating leases was as follows:

Fiscal Year Ending February 28	Amount
2022		388,000
Total Future Undiscounted Cash Flows	$	388,000
Less Imputed Interest to be recognized in lease expense		11,000
Operating Lease Liabilities, as reported	$	377,000