LEASES

6 Months Ended

Nov. 30, 2021

Disclosure Text Block [Abstract]

Lessee, Operating Leases [Text Block]

NOTE 5:  LEASES

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ended August 31, 2016.  On November 30, 2015, the Company entered into the First Amendment to Lease wherein it exercised its option to extend its lease until August 31, 2021. The initial base rent for the lease extension was $21,000 per month, increasing to $23,637 through August 31, 2021. On April 9, 2021, the Company exercised its second option to extend its lease for an additional five years through August 2026.  The Company was also granted an additional five years lease extension option through August 2031. The rent is currently $25,970 per month and will increase by 3% each year at the beginning of September. The security deposit of $22,080 remains the same. 

In November 2016, the Company’s subsidiary, Biomerica de Mexico, entered into a ten-year lease for approximately 8,104 square feet at a monthly rent of $2,926. The Company has one 10-year option to renew at the end of the initial lease period. The yearly rate is subject to an annual adjustment for inflation according to the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers. The monthly rate is currently $3,262.  Biomerica, Inc. is not a guarantor of such lease.  Biomerica de Mexico also leases a smaller unit on a month-to-month basis for use in one manufacturing process.

In addition, the Company leases a small office in Lindau, Germany on a month-to-month basis, as headquarters for BioEurope GmbH, its Germany subsidiary.

Rent expense in the U.S. for the six months ended November 30, 2021 and 2020 was approximately $155,000 and $152,000, respectively.  Rent expense for the Mexico facility for the six months ended November 30, 2021 and 2020 was approximately $21,000 and $22,000, respectively.

For purposes of determining straight-line rent expense, the lease term is calculated from the date the Company first takes possession of the facility, including any periods of free rent and any renewal option periods that the Company is reasonably certain of exercising. The Company’s office and equipment leases generally have contractually specified minimum rent and annual rent increases are included in the measurement of the right-of-use asset and related lease liability.  Additionally, under these lease arrangements, the Company may be required to pay directly, or reimburse the lessors, for some maintenance and operating costs. Such amounts are generally variable and therefore not included in the measurement of the right-of-use asset and related lease liability but are instead recognized as variable lease expense in the Consolidated Statements of Operations and Comprehensive Loss when they are incurred.

Supplemental cash flow information related to leases for the six months ended November 30, 2021:

Operating cash flows from operating leases	$	166,216
Right-of-use assets obtained in exchange for
new operating lease liabilities	$	-
Weighted average remaining lease term (in years)		4.77
Weighted average discount rate		6.50%

The approximate maturity of lease liabilities as of November 30, 2021 are as follows:

Less than 1 year	$	345,000
1 to 2 years		355,000
2 to 3 years		366,000
3 to 4 years		377,000
4 to 5 years		298,000
Total undiscounted lease payments		1,741,000
Less imputed interest		239,000
Total operating lease liabilities	$	1,502,000

According to the terms of the lease in Irvine, the Company is also responsible for routine repairs of the building and for certain increases in property tax.

The Company also has various insignificant leases for office equipment.