Note 6 - Leases

12 Months Ended

May 31, 2024

Notes to Financial Statements

Lessee, Leases [Text Block]

Note 6.    LEASES

Financing Leases

Financing leases consist of the following as of May 31:

	2024			2023
Non-cancelable financing leases	$	23,143		$	60,485
Less: Current portion of financing leases		(19,171	)		(31,981	)
Non-cancelable financing leases, net of current portion	$	3,972		$	28,504

Greystone and an unrelated private company entered into three lease agreements for certain production equipment with a total cost of approximately $6.9 million which were effective February 24, 2018, August 2, 2018 and December 21, 2018, respectively, with five-year terms and an effective interest rate of 7.40%. Effective October 17, 2022, Greystone and the private company entered into an agreement for Greystone to pay off the leases and acquire the equipment at the unamortized principal balance of the leases for a total of $1,527,293.

Effective December 29, 2022, Greystone exercised its option under a lease agreement dated December 28, 2017, with Yorktown to purchase the production equipment therein for $10,000.

The production equipment under the non-cancelable financing leases as of May 31, 2024 and 2023 was as follows:

	2024			2023
Production equipment under financing leases	$	176,565		$	176,565
Less: Accumulated amortization		(119,759	)		(95,447	)
Production equipment under financing leases, net	$	56,806		$	81,118

Amortization of the carrying amount of the assets was $24,312 and $197,626 for the years ended May 31, 2024 and 2023, respectively. The amortization was included in depreciation expense.

Operating Leases

Greystone has four non-cancellable operating leases for (i) equipment with a fifty-two month term and a forty-eight month term and a discount rate of 5.40%, (ii) two buildings on a ten year lease with a five year renewal option and a discount rate of 6.00%, and (iii) office space on a six year lease and a discount rate of 8.50%. The leases are single-term with defined constant monthly rental rates.

Effective August 1, 2022, Greystone and GRE entered into a non-cancellable ten-year lease agreement with a five-year extension for which Greystone recorded a right-of-use asset and liability based on the present value of the lease payments in the amount of $5,516,006, using a term of one hundred eighty (180) months and a discount rate of 6.00%.

Effective January 1, 2024, Greystone and a related party entered into a non-cancellable six-year lease agreement with one five-year extension for which Greystone recorded a right-of-use asset and liability based on the present value of the lease payments in the amount of $354,041, using a term of seventy two (72) months and a discount rate of 8.50%.

The outstanding liability for right to use assets under operating leases as of May 31, 2024 and 2023 is as follows:

	2024			2023
Liability under operating leases	$	5,453,234		$	5,360,034
Less: Current portion		(286,221	)		(240,346	)
Long-term portion of liability under operating leases	$	5,167,013		$	5,119,688

Lease Summary Information

For the years ended May 31, 2024 and 2023, a summary of lease activity follows:

	2024			2023
Lease Expense
Financing lease expense -
Amortization of right-of-use assets	$	24,312		$	197,626
Interest on lease liabilities		1,719			24,927
Operating lease expense		609,976			501,712
Short-term lease expense		1,512,438			1,532,005
Total	$	2,296,978		$	2,256,270
Other Information
Cash paid for amounts included in the measurement of lease liabilities for finance leases -
Operating cash flows	$	26,031		$	24927
Financing cash flows	$	37,342		$	578,151
Cash paid for amounts included in the measurement of lease liabilities for operating leases -
Operating cash flows	$	583,807		$	478,881
Right-of-use assets obtained in exchange for lease liability – operating lease	$	354,041		$	5,516,006
Weighted-average remaining lease term (in years) -
Financing leases		1.2			1.7
Operating leases		12.7			14.1
Weighted-average discount rate -
Financing leases		4.0	%		4.4	%
Operating leases		6.1	%		6.0	%

Future minimum lease payments under non-cancelable operating and financing leases as of May 31, 2024, are approximately:

	Operating Leases			Financing Leases
Year ending May 31, 2025	$	610,291		$	19,171
Year ending May 31, 2026		609,000			4,514
Year ending May 31, 2027		609,000			-
Year ending May 31, 2028		631,300			-
Year ending May 31, 2029		635,760			-
Thereafter		4,763,090			-
Total lease payments		7,858,441			23,685
Less: Imputed interest		(2,405,207	)		(542	)
Present value of minimum lease payments	$	5,453,234		$	23,143