CLS Holdings USA, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Right of Use Assets and Liabilities ??? Operating Leases

Right of Use Assets and Liabilities – Operating Leases

3 Months Ended

Aug. 31, 2023

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 August 31, 2023 and 2022 was entirely comprised of operating leases and amounted to $123,408 and $124,388, respectively. The Company’s right of use (“ROU”) asset amortization for the three months ended August 31, 2023 and 2022 was $89,736 and $86,749, respectively.

The Company has recorded total right of use assets of $4,159,621 and liabilities in the amount of $4,116,221 through August 31, 2023.

Right of use assets – operating leases are summarized below:

	August 31, 2023
Amount at inception of leases	$	4,159,621
Amount amortized		(2,401,892	)
Prior Period Impairment of Quinn River Lease		(205,888	)
Balance – August 31, 2023	$	1,551,841

Operating lease liabilities are summarized below:

Amount at inception of leases	$	4,116,221
Amount amortized		(2,284,853	)
Balance – August 31, 2023	$	1,831,368

Warehouse and offices	$	1,619,629
Land		205,888
Office equipment		5,851
Balance – August 31, 2023	$	1,831,368


Lease liability	$	1,831,368
Less: current portion		(404,889	)
Lease liability, non-current	$	1,426,479

Maturity analysis under these lease agreements is as follows:

Twelve months ended August 31, 2024	$	529,435
Twelve months ended August 31, 2025		519,444
Twelve months ended August 31, 2026		376,797
Twelve months ended August 31, 2027		227,999
Twelve months ended August 31, 2028		233,362
Thereafter		461,229
Total	$	2,348,266
Less: Present value discount		(516,898	)
Lease liability	$	1,831,368