Leases

6 Months Ended

Oct. 31, 2022

Note I – Leases

The Company leases office and warehouse space, vehicles and other equipment under non-cancellable operating leases with initial terms typically ranging from 1 to 5 years. At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease. The Company follows the guidance in Topic 842 “Leases” to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset is used throughout the period of use and if it controls the decision-making rights over the asset.

The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and includes such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.

The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.

At commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available when the lease commences to measure the present value of future payments.

Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.

Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s consolidated balance sheet. Finance leases are included in property, plant and equipment and current and long-term portion of finance lease obligations on the Company’s consolidated balance sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet as expense is recognized as incurred.

Note I – Leases – Continued

The following table presents lease assets and liabilities and their balance sheet classification:


			October 31,		April 30,
	Classification		2022		2022
Operating Leases:
Right-of-use Assets	Right-of-use assets	$	9,331,783	$	10,946,764
Operating lease current ‎liabilities	Current portion of operating lease ‎obligations		3,468,613		3,508,864
Operating lease noncurrent ‎liabilities	Operating lease obligations, less ‎current portion		6,276,154		7,903,898
Finance Leases:
Right-of-use Assets	Property, machinery and equipment		6,340,887		5,561,243
Finance lease current ‎liabilities	Current portion of finance lease ‎obligations		1,674,002		1,410,675
Finance lease noncurrent ‎liabilities	Finance lease obligations, less ‎current portion		3,376,887		2,805,135

The components of lease expense for the three and six month periods ended October 31, 2022 and 2021, are as follows:


		Three Months	Three Months	Six Months	Six Months
		Ended	Ended	Ended	Ended
	Expense	October 31,	October 31,	October 31,	October 31,
	Classification	2022	2021	2022	2021
Operating Leases:
Operating lease cost	Operating	629,094	589,654	1,252,905	1,181,058
Variable lease cost	Operating	54,816	97,354	109,631	194,708
Short term lease cost	Operating	2,250	1,800	4,500	3,600
Finance Leases:
Amortization of ‎right-of-use assets	Operating	658,149	540,118	1,229,252	1,134,221
Interest expense	Interest	122,219	71,578	185,833	137,982
Total		1,466,528	1,300,504	2,782,121	2,651,569

Note I – Leases – Continued

The weighted average lease term and discount rates for the quarters ended October 31, 2022 and 2021, are as follows:



	October 31,	October 31,
	2022	2021
Operating Leases:
Weighted average remaining lease term (months)	41.19	50.30
Weighted average discount rate	3.2%	3.1%
Finance Leases:
Weighted average remaining lease term (months)	36	32.21
Weighted average discount rate	9.7%	8.9%

Future payments due under leases reconciled to lease liabilities are as follows:


		Operating Leases		Finance Leases
For the remaining 6 months of the fiscal year ending April 30:
2023	$	1,815,098	$	1,132,572
For the fiscal years ending April 30:
2024		3,136,737		1,895,835
2025		2,476,375		1,674,988
2026		2,017,498		1,007,719
2027		445,298		177,773
2028		74,382		-
Thereafter		133,717		-
Total undiscounted lease payments		10,099,105		5,888,887
Present value discount, less interest		354,338		837,998
Lease liability	$	9,744,767	$	5,050,889

Note I – Leases – Continued

Supplemental disclosures of cash flow information related to leases for the six months ended October 31, 2022 and 2021 are as follows:



	Six Months Ended
	October 31,	October 31,
Other Information	2022	2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	185,833	137,982
Operating cash flows from operating leases	166,664	198,729
Financing cash flows from finance leases	764,377	952,597
Supplemental non-cash information on lease liabilities arising from ‎obtaining right-of-use assets:
Right-of-use assets obtained in exchange for ‎new finance lease liabilities	1,599,456	1,558,579
Right-of-use assets obtained in exchange for ‎operating lease liabilities	43,641	-