RIGHT OF USE ASSETS AND LIABILITIES - OPERATING LEASES |
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| Lessee, Operating Leases [Text Block] |
NOTE 10 – 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 years ended May 31, 2023 and 2022 was entirely comprised of operating leases and amounted to $331,875 and $515,457, respectively. The Company’s right of use (“ROU”) asset amortization for the years ended May 31, 2023 and 2022 was $353,797 and $324,904, 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 May 31, 2023, resulting in gains in the amount of $28,511 during the year ended May 31, 2020 and $14,899 during the year ended May 31, 2021. During the year ended May 31, 2020, the Company entered into agreements to amend certain of its operating leases. The lease of the dispensary and administrative offices at 1800 Industrial Road was extended from June 30, 2023 to February 28, 2030, and the lease of the offices at 1718 Industrial Road was extended from August 31, 2020 to August 31, 2022. During the year ended May 31, 2021, the Company entered into an agreement to extend the lease of its cultivation and processing facility at 203 E. Mayflower Avenue through February 28, 2030.
On May 17, 2022, pursuant to the Quinn River Joint Venture Agreement (see note 4), 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 to use asset and operating lease liability under the Quinn River Lease was $221,469. During the year ended May 31, 2023, the Company recorded an impairment of the right of use asset under the Quinn River Lease in the amount of $205,888. See note 4.
Right to 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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