Capital Lease

6 Months Ended

Nov. 30, 2017

Leases [Abstract]

Capital Lease

Note 7. Capital Lease

Capital lease as of November 30, 2017 and May 31, 2017:

	November 30, 2017			May 31, 2017
Non-cancellable capital lease with private company, interest rate of 5%, due August 7, 2019	$	2,712,289		$	3,794,063
Less: Current portion		(2,194,217	)		(2,261,560	)
Non-cancellable capital lease, net of current portion	$	518,072		$	1,532,503

In August, 2016, Greystone entered into a three-year lease agreement with an unrelated private company to provide for certain production equipment with a total cost of approximately $5.4 million. The lease agreement includes a bargain purchase option to acquire the production equipment at the end of the lease term. Monthly lease payments, estimated at approximately $200,000 per month, are payable on a per invoice basis at the rate of $6.25 for each pallet produced by the leased production equipment and shipped to the private company. The lease bears an interest rate of 5%, has a three-year maturity and provides for minimum monthly lease rental payment based upon the total pallets sold in excess of a specified amount not to exceed the monthly productive capacity of the leased machines.

The production equipment under the non-cancelable capital lease has a gross carrying amount of $5,323,864 at November 30, 2017. Amortization of the carrying amount of approximately $266,000 and $111,000 was included in depreciation expense for the six months ended November 30, 2017 and 2016, respectively.

Future minimum lease payments under the non-cancelable capital lease as of November 30, 2017, are approximately:

Twelve months ended November 30, 2018	$	2,280,000
Twelve months ended November 30, 2019		521,607
Total lease payments		2,801,607
Imputed interest		89,318
Present value of minimum lease payments	$	2,712,289