Right of Use Assets and Liabilities – Operating Leases |
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| Lessee, Operating Leases [Text Block] |
Note 9 – Right of Use Assets and Liabilities – Operating Leases
The Company has operating leases for offices and warehouses. The Company’s leases have remaining lease terms of 1 year to 10.5 years, some of which include options to extend.
The Company’s lease expense for the three months ended February 28, 2023 and 2022 was entirely comprised of operating leases and amounted to $82,858 and $73,874, respectively. The Company’s lease expense for the nine months ended February 28, 2023 and 2022 was entirely comprised of operating leases and amounted to $244,021 and $323,218, respectively. The Company’s right of use (“ROU”) asset amortization for the three months ended February 28, 2023 and 2022 was $88,997 and $82,479, respectively. The Company’s right of use (“ROU”) asset amortization for the three months ended February 28, 2023 and 2022 was $216,319 and $240,736, respectively. The difference between the lease expense and the associated ROU asset amortization consists of interest.
The Company has recorded total right of use assets of $4,159,621 and liabilities in the amount of $4,116,221 through February 28, 2022. During the nine months ended February 28, 2023, the Company entered into an agreement to extend the lease term of its property located at 1718 Industrial Road from August 31, 2022 to August 31, 2024, resulting in an increase in right of use assets and lease liabilities in the amount of $46,745.
On May 17, 2022, pursuant to the Quinn River Joint Venture Agreement (see note 4 for details), the Company, through CLS Nevada, Inc., entered into an agreement (the “Quinn River Lease”) to use approximately 20 acres of land for purposes of building and operating a facility to grow cannabis. The lease has a term of 9 years, with two-year renewal options. Rent is $3,500 per quarter. The initial amount of the right of use asset and operating lease liability under the Quinn River Lease was $221,469.
Right of use assets – operating leases are summarized below:
Operating lease liabilities are summarized below:
Maturity analysis under these lease agreements is as follows:
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