Leases

12 Months Ended

May 31, 2023

Leases [Abstract]

Leases

LEASES

The Company determines if an arrangement is a lease at inception of the contract. The Company has operating leases for buildings, primarily for office space, R&D, manufacturing and warehousing.

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Many of the lease agreements contain renewal or termination clauses that are factored into the determination of the lease term if it is reasonably certain that these options would be exercised. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company elected the three practical expedients that permit an entity to (a) not reassess whether expired or existing contracts contain leases, (b) not reassess lease classification for existing or expired leases, and (c) not consider whether previously capitalized initial direct costs would be appropriate under the new standard. Further, the Company has elected to not recognize leases with terms of 12 months or less on the balance sheet, and elected to account for lease and non-lease components as a single component for certain classes of assets.

The following table presents supplemental balance sheet information related to leases:

(in thousands)	Balance Sheet Location	May 31, 2023		May 31, 2022
Assets
Operating lease ROU assets	Other assets	$	5,113	$	6,974
Liabilities
Current operating lease liabilities	Other current liabilities	1,922		2,560
Non-current operating lease liabilities	Other long-term liabilities	3,316		4,703
Total lease liabilities		$	5,238	$	7,263

The interest rate implicit in lease agreements is typically not readily determinable, and as such the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is defined as the interest the Company would pay to borrow on a collateralized basis, considering factors such as length of lease term. The following table presents the weighted average remaining lease term and discount rate:

	May 31, 2023		May 31, 2022
Weighted average remaining term (in years)	3.05		3.25
Weighted average discount rate	4.1	%	3.8	%

The maturities of the lease liabilities for each of the following fiscal years is:

(in thousands)	May 31, 2023
2024	$	2,097
2025	1,621
2026	1,329
2027	375
2028 and thereafter	174
Total lease payments	$	5,596
Less: Imputed Interest	358
Total lease obligations	$	5,238
Less: Current portion of lease obligations	1,922
Long-term lease obligations	$	3,316

During the years ended May 31, 2023 and May 31, 2022, the Company recognized operating lease expense, which includes immaterial short-term leases, of $2.7 million and $2.8 million, respectively. The expenses on the Consolidated Statement of Operations were classified as follows:

(in thousands)	May 31, 2023		May 31, 2022
Cost of sales	$	881	$	890
Research and development	193		257
Sales and marketing	162		160
General and administrative	1,458		1,495
	$	2,694	$	2,802

8

The following table presents supplemental cash flow and other information related to leases:

(in thousands)	May 31, 2023		May 31, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,742	$	2,723
ROU assets obtained in exchange for lease liabilities
Operating leases	840		36