Leases

9 Months Ended

Feb. 29, 2024

Leases [Abstract]

Leases

7. Leases

The Company leases the space for its offices in Hauppauge, New York and Edison, 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 offices are classified as operating leases.

The lease agreements for Hauppauge, New York and Edison, New Jersey expire on December 31, 2026 and May 31, 2027, respectively, and do not include any renewal options.

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 three months ended February 29, 2024 and February 28, 2023, the Company’s operating lease expense for these leases was $67,776 and $64,963, respectively. For the nine months ended February 29, 2024 and February 28, 2023, the Company’s operating lease expense for these leases was $204,684 and $213,845, respectively.

As there are no explicit rates provided in our leases, the Company’s incremental borrowing rate was used based on the information available as of the commencement date in determining the present value of the future lease payments. Future minimum lease payments under non-cancellable operating leases as of February 29, 2024 are as follows:

Twelve Months Ending February 29,
2025	$	236,122
2026		242,590
2027		228,753
2028		32,527
Total undiscounted operating lease payments		739,992
Less imputed interest		89,922
Present value of operating lease payments	$	650,070

The following table sets forth the right-of-use assets and operating lease liabilities as of February 29, 2024:

Assets
Right-of-use assets, net	$	620,391
Liabilities
Current operating lease liabilities	$	188,592
Long-term operating lease liabilities		461,478
Total operating lease liabilities	$	650,070

The weighted average remaining lease term for the Company’s operating leases is 3.1 years. The weighted average incremental borrowing rate was 8.42%