LEASES

12 Months Ended

Feb. 28, 2021

Disclosure Text Block [Abstract]

Lessor, Operating Leases [Text Block]

7.        LEASES

We have both lessee and lessor arrangements. Our leases are evaluated at inception or at any subsequent modification. Depending on the terms, leases are classified as either operating or finance leases if we are the lessee, or as operating, sales-type or direct financing leases if we are the lessor, as appropriate under Accounting Standards Codification (“ASC”) 842 - Leases.  Our lessee arrangement includes a rental agreement where we have the exclusive use of dedicated office space in San Diego, California, and qualifies as an operating lease. Our lessor arrangements include three rental agreements for warehouse and office space in Tulsa, Oklahoma, and each qualifies as an operating lease under ASC 842.

In accordance with ASC 842, we have made an accounting policy election to not apply the new standard to lessee arrangements with a term of one year or less and no purchase option that is reasonably certain of exercise. We will continue to account for these short-term arrangements by recognizing payments and expenses as incurred, without recording a lease liability and right-of-use asset.

We have also made an accounting policy election for both our lessee and lessor arrangements to combine lease and non-lease components. This election is applied to all of our lease arrangements as our non-lease components are not material and do not result in significant timing differences in the recognition of rental expenses or income.

Operating Leases – Lessee

We recognize a lease liability, reported in other liabilities on the balance sheets, for each lease based on the present value of remaining minimum fixed rental payments (which includes payments under any renewal option that we are reasonably certain to exercise), using a discount rate that approximates the rate of interest we would have to pay to borrow on a collateralized basis over a similar term. We also recognize a right-of-use asset, reported in other assets on the balance sheets, for each lease, valued at the lease liability, adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The lease liability and right-of-use asset are reduced over the term of the lease as payments are made and the assets are used.

	February 28 (29),
	2021			2020
Operating lease assets:
Right-of-use asset	$	34,100		$	45,200
Operating lease liabilities:
Current lease liability	$	13,700		$	13,500
Long-term lease liability	$	20,400		$	31,700
Remaining lease term (months)		31			43
Discount Rate		4.60	%		4.60	%

Minimum fixed rental payments are recognized on a straight-line basis over the life of the lease as costs and expenses in our statements of earnings. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.

	February 28 (29),
	2021		2020
Fixed lease cost	$	13,200	$	12,700

Future minimum rental payments under operating leases with initial terms greater than one year as of February 28, 2021, are as follows:

Years ending February 28 (29),
2022	$	13,700
2023		14,200
2024		8,400
Total future minimum rental payments		36,300
Present value discount		(2,200	)
Total operating lease liability	$	34,100

The following table provides further information about our operating leases reported in our financial statements: 

	February 28 (29),
	2021		2020
Operating cash flows – operating lease	$	13,200	$	12,700

Operating Leases – Lessor

In connection with the 2015 purchase of our 400,000 square-foot facility on 40-acres, we entered into a 15-year lease with the seller, a non-related third party, who leases 181,300 square feet, or 45.3% of the facility. The lessee pays $116,800 per month, through the lease anniversary date of December 2021, with a 2.0% annual increase adjustment on each anniversary date thereafter.  The lease terms allow for one five-year extension, which is not a bargain renewal option, at the expiration of the 15-year term.  Revenues associated with the lease are being recorded on a straight-line basis over the initial lease term and are reported in other income in the statements of earnings. We recognize variable rental payments as revenue in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

Future minimum payments receivable under operating leases with terms greater than one year are estimated as follows:

Years ending February 28 (29),
2022	$	1,542,100
2023		1,573,200
2024		1,577,900
2025		1,547,100
2026		1,524,300
Thereafter		8,091,000
Total	$	15,855,600

The cost of the leased space was approximately $10,826,400 and $10,789,500 as of February 28, 2021 and February 29, 2020, respectively.  The accumulated depreciation associated with the leased assets was $2,216,700 and $1,828,900 as of February 28, 2021 and February 29, 2020, respectively.  Both the leased assets and accumulated depreciation are included in property, plant and equipment-net on the balance sheets.