LEASES

12 Months Ended

May 31, 2023

The Company has entered into leases for hosting equipment, office space, and land. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company presents operating and finance right of use assets and liabilities separately on the balance sheet as their own captions. The liabilities are split between current and long-term, respectively.

The Company presents lease costs as follows:


(in thousands)		Fiscal Year Ended
Lease Type	Consolidated Statements of Operations Presentation	May 31, 2023		May 31, 2022
Operating lease cost:
Operating lease expense	Selling, General and Administrative	$	347	$	328
Short-term lease expense	Selling, General and Administrative	187		126
Sublease Income	Selling, General and Administrative	(103)		(159)
Total operating lease cost		$	431	$	295
Finance lease expense:
Amortization of ROU assets related to revenue production	Cost of Sales	554		85
Amortization of ROU assets not related to revenue production	Depreciation and Amortization Expense	2,782		26
Interest on finance leases	Interest Expense	773		50
Variable finance lease expense	Selling, General and Administrative	3		—
Total finance lease cost		$	4,112	$	161
Total Lease Cost		$	4,543	$	456

The following table represents the Company’s future minimum lease payments as of May 31, 2023:


(in thousands)
Year	Operating Leases		Finance Leases		Total
FY24	$	445	$	6,687	$	7,132
FY25	482		5,429		5,911
FY26	495		348		844
FY27	158		188		346
FY28	—		180		180
Beyond	—		87,145		87,145
Total	$	1,580	$	99,977	$	101,557
Present value of lease liabilities	$	(255)	$	(85,921)	$	(86,176)
Less: Current portion of lease liability	$	320	$	5,722	$	6,042
Long-term portion of lease liability	$	1,005	$	8,334	$	9,339

Supplemental cash flow and other information related to leases is as follows:


	Fiscal Year Ended
	May 31, 2023		May 31, 2022
Weighted-average years remaining (in years)
Finance leases	22		57
Operating leases	3		4

Weighted-average discount rate
Finance leases	8	%	8	%
Operating leases	11	%	13	%

The Company has entered into operating leases signed but not yet commenced with total minimum payments of approximately $83.1 million to support the Company's AI Cloud service business. The payments are expected to be made over a total of 84 months.

The Company has entered into finance leases signed but not yet commenced with total minimum payments of approximately $8.5 million. The payments are expected to be made over a total of 30 months.

LEASES

The Company presents lease costs as follows:


(in thousands)		Fiscal Year Ended
Lease Type	Consolidated Statements of Operations Presentation	May 31, 2023		May 31, 2022
Operating lease cost:
Operating lease expense	Selling, General and Administrative	$	347	$	328
Short-term lease expense	Selling, General and Administrative	187		126
Sublease Income	Selling, General and Administrative	(103)		(159)
Total operating lease cost		$	431	$	295
Finance lease expense:
Amortization of ROU assets related to revenue production	Cost of Sales	554		85
Amortization of ROU assets not related to revenue production	Depreciation and Amortization Expense	2,782		26
Interest on finance leases	Interest Expense	773		50
Variable finance lease expense	Selling, General and Administrative	3		—
Total finance lease cost		$	4,112	$	161
Total Lease Cost		$	4,543	$	456

The following table represents the Company’s future minimum lease payments as of May 31, 2023:


(in thousands)
Year	Operating Leases		Finance Leases		Total
FY24	$	445	$	6,687	$	7,132
FY25	482		5,429		5,911
FY26	495		348		844
FY27	158		188		346
FY28	—		180		180
Beyond	—		87,145		87,145
Total	$	1,580	$	99,977	$	101,557
Present value of lease liabilities	$	(255)	$	(85,921)	$	(86,176)
Less: Current portion of lease liability	$	320	$	5,722	$	6,042
Long-term portion of lease liability	$	1,005	$	8,334	$	9,339

Supplemental cash flow and other information related to leases is as follows:


	Fiscal Year Ended
	May 31, 2023		May 31, 2022
Weighted-average years remaining (in years)
Finance leases	22		57
Operating leases	3		4

Weighted-average discount rate
Finance leases	8	%	8	%
Operating leases	11	%	13	%

The Company has entered into finance leases signed but not yet commenced with total minimum payments of approximately $8.5 million. The payments are expected to be made over a total of 30 months.