Leases

9 Months Ended

Feb. 28, 2022

Leases [Abstract]

Leases

7. Leases

The Company leases the space for its three offices in New York City, Hauppauge and New Jersey. Under ASC 842, at contract inception we determine whether the contract is or contains a lease and whether the lease should be classified as an operating or finance lease. Operating leases are in right-of-use assets and operating lease liabilities are in our condensed consolidated balance sheets.

The Company’s leases for its three offices are classified as operating leases.

The lease agreements for New York City, Hauppauge and New Jersey expire on August 31, 2022, December 31, 2023 and May 31, 2027, respectively, and do not include any renewal options. During the fiscal year ended May 31, 2021, the Company extended its lease in Hauppauge, entered into a lease in a new location for its New Jersey office expiring May 31, 2027 and entered into an agreement to sublease the space in New York City expiring August 31, 2022. Due to the fact that the future sublease cash inflows will be less than the carrying value of the corresponding right-of-use asset, the Company recorded a right-of-use asset impairment charge of $136,599 in the quarter ended November 30, 2020.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay real estate taxes and operating expenses during the lease terms.

For the nine months ended February 28, 2022 and 2021, the Company’s operating lease expense for these leases was $240,000 and $352,000, respectively.

Future minimum lease payments under non-cancellable operating leases as of February 28, 2022 were as follows:

Twelve Months Ending February 28,
2023	$	295,519
2024		203,248
2025		123,085
2026		126,162
2027		129,316
Thereafter		32,527
Total undiscounted operating lease payments		909,857
Less imputed interest		122,471
Present value of operating lease payments	$	787,386

The following table sets forth the right-of-use assets and operating lease liabilities as of February 28, 2022:

Assets
Right-of-use assets, net	$	713,413
Liabilities
Current operating lease liabilities	$	249,688
Long-term operating lease liabilities		537,698
Total operating lease liabilities	$	787,386

The weighted average remaining lease term for the Company’s operating leases is 2.9 years.