Leases

9 Months Ended

May 31, 2025

Leases

Leases

Note 5.     Leases

The Company leases its facilities and automobiles under operating lease agreements (one distribution facility, located in Glendale Heights, IL, is leased from the Trust, which is beneficially owned and controlled by Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder). Our operating lease agreements expire on various dates through September 2027 and require minimum rental payments ranging from $1,000 to $27,000 per month. Certain of the leases contain options for renewal under varying terms.

On October 20, 2023, the Company completed the purchase of the Hunter Property, which was leased by the Company, from the Trust for a purchase price of $31,000,000. See Note 6 of the Notes to Consolidated Financial Statements of this report for further explanation.

	May 31,			August 31,
	2025			2024
Operating lease assets:
Right-of-use assets	$	6,739,000		$	7,513,000
Operating lease liabilities:
Current lease liabilities	$	2,674,000		$	2,708,000
Long-term lease liabilities	$	4,222,000		$	4,892,000
Weighted average remaining lease terms		2.9 years			3.1 years
Incremental borrowing rate		7.50	%		7.47	%

The discount rate used on the operating ROU assets represented the Company’s incremental borrowing rate at lease inception.

Minimum future rental payments under operating leases are as follows:

Years Ending:
2025 (remaining three months)	$	846,000
2026		2,942,000
2027		2,078,000
2028		1,085,000
2029		674,000
Thereafter		135,000
Future minimum lease payments	$	7,760,000
Less interest		(864,000)
Present value of minimum lease payments	$	6,896,000

Operating lease costs under these leases were approximately $2,508,000 and $2,118,000 for the nine months ended May 31, 2025 and 2024, respectively.