Leases

3 Months Ended

Aug. 31, 2023

Leases [Abstract]

Leases

7. Leases

The Company leases the space for its offices in Hauppauge, New York and Edison, New Jersey. Under ASC 842, at contract inception we determine whether the contract is or contains a lease and whether the lease should be classified as an operating or finance lease. Operating leases are in right-of-use assets and operating lease liabilities are in our condensed consolidated balance sheets.

The Company’s leases for its offices are classified as operating leases.

The lease agreements for Hauppauge and New Jersey expire on December 31, 2026, and May 31, 2027, respectively, and do not include any renewal options.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay real estate taxes and operating expenses during the lease terms.

For the three months ended August 31, 2023 and 2022, the Company’s operating lease expense for these leases was $66,922 and $84,977, respectively. These expenses were all included in selling, general and administrative expenses.

As there are no explicit rates provided in our leases, the Company’s incremental borrowing rate was used based on the information available as of the commencement date in determining the present value of the future lease payments. Future minimum lease payments under non-cancellable operating leases as of August 31, 2023, are as follows:

Twelve Months Ending August 31,
2024	$	154,841
2025		124,614
2026		127,729
2027		97,582
Total undiscounted operating lease payments		504,766
Less imputed interest		59,148
Present value of operating lease payments	$	445,618

The following table sets forth the right-of-use assets and operating lease liabilities as of August 31, 2023:

Assets
Right-of-use assets, net	$	413,904
Liabilities
Current operating lease liabilities	$	128,475
Long-term operating lease liabilities		317,143
Total operating lease liabilities	$	445,618

The weighted average remaining lease term for the Company’s operating leases is 3.4 years. The weighted average incremental borrowing rate was 7%.