Commitments and Contingencies

12 Months Ended

Feb. 28, 2021

Note 9. Commitments and Contingencies

Operating Leases

The Company leases its office space and manufacturing facilities and equipment under operating lease agreements. The base lease terms expire at various dates from 2022 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company has one finance lease.

Balance sheet information related to operating leases is as follows (in thousands):


	February 28, 2021
Operating lease right-of-use assets	$	1,127

Current portion of operating lease liabilities	$	601
Noncurrent portion of operating lease liabilities		556

Total operating lease liabilities	$	1,157

Rent expense is included in Cost of goods sold in the Company’s consolidated statements of operations and totaled approximately

$0.6 million for both fiscal 2021 and fiscal 2020. The Company did not have any variable lease costs or short-term lease costs for the year ended February 28, 2021.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $0.6

for both fiscal 2021 and fiscal 2020. The Company did not modify any existing operating leases or execute any new operating leases during the fiscal year ended February 28, 2021.

Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:


	February 28, 2021
Weighted average remaining lease term		2.0 years
Weighted average discount rate		6	%

The following table summarizes the maturity of the Company’s operating lease liabilities as of February 28, 2021 (in thousands):


Fiscal Year	Amount
2022	$	576
2023		276
2024		190
2025		190
Total operating lease payments	$	1,232
Less imputed interest		(75	)

Total operating lease liabilities	$	1,157

The Company subleases certain of its warehousing space and also leased a building that it owned in Pennsylvania until it was sold in September 2020 for net proceeds of $2,028 thousand which resulted in a gain on sale of assets in the amount of $1,724 thousand as recorded on the consolidated statements of operations. The remaining sublease expires concurrently with the operating lease in March 2022. Sublease income and lease income are included in Other income, net in the Company’s consolidated statements of operations and totaled approximately

$0.3 million for the year ended February 28, 2021. Lease payments to be received as of February 28, 2021 are as follows (in thousands):


Fiscal Year	Amount
2022	$	144
2023		12

	$	156

Financing Leases

The Company has one financing lease entered into on November 23, 2020 for Tempest testing equipment for $277,000. The lease expires on December 1, 2023 and the incremental borrowing rate on the lease is 12.5%.

Balance sheet information related to financing lease is as follows (in thousands):


	February 28, 2021
Financing lease right-of-use assets	$	257

Current portion of financing lease liabilities	$	142
Noncurrent portion of financing lease liabilities		98

Total financing lease liabilities	$	240

The following table summarizes the maturity of the Company’s finance lease liabilities as of February 28, 2021 (in thousands):


Fiscal Year	Amount
2022	$	104
2023		104
2024		78

Total finance lease payments	$	286
Less imputed interest		(46	)

Total finance lease liabilities	$	240

Related Party Leases

Included in the operating lease section above are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by the Company’s chief executive officer) under operating leases expiring at various dates through

2025. Rent expense under these leases totaled approximately $0.

million in fiscal 2021 and in fiscal 2020.

Future minimum rental payments due under leases with related parties are as follows (in thousands):


Fiscal Year	Amount
2022	$	390
2023		256
2024		190
2025		190

	$	1,026

Legal Proceedings

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business.