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LEASES

6 Months Ended

May 31, 2020

10.	LEASES

	In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02”), to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted ASU 2016-02 on December 1, 2019, or the effective date, and used the effective date as its date of initial application.

	At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as prepaid rent. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

	In accordance with the guidance in ASU 2016-02, components of a lease should be separated into three categories: lease components (e.g., building), non-lease components (e.g., common area maintenance), and non-components (e.g., property taxes and insurance). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components.

	Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

	The Company has operating leases for real estate in the US and South Africa, and does not have any finance leases.

	In 2019, the Company had entered into a real estate lease for office space in Wilmington/Andover, Massachusetts. The Company is involved in the construction and design of the space and anticipates that it will incur construction costs, subject to an allowance for tenant improvements of up to $210,490. The lease expiration date is August 31, 2026. The base rent is $114,180 per year, subject to an annual upward adjustment. The lease commencement date, for accounting purposes, was reached in April 2020 when the Company was granted access to the premises and therefore the lease is included in the Company’s operating lease right-of-use asset and operating lease liabilities as of May 31, 2020.

Certain of the Company’s leases contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s balance sheet are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to not exercise.

As of May 31, 2020, right-of-use assets of $821,856, current lease liabilities of $161,838, and non-current lease liabilities of $559,183 are reflected on the balance sheet. The elements of lease expense were as follows:

	Three Months Ended		Six Months Ended
	May 31, 2020		May 31, 2020
Lease Cost:
Operating lease cost	$	34,356	$	46,642
Short-term lease cost		4,887		9,824
Variable lease cost		3,406		8,696
Total lease cost	$	42,649	$	65,162

Other Information:
Cash paid for amounts included in the measurement of operating lease liabilities			$	144,259
Operating lease liabilities arising from obtaining right-of-use assets			$	848,312

Operating Leases:
Weighted-average remaining lease term (in years)				5.8 years
Weighted-average discount rate				8.9	%

Future lease payments under non-cancelable operating leases as of May 31, 2020 were as follows:

Fiscal Year Ended November 30,
2020 (six months)	$	122,051
2021		186,473
2022		125,618
2023		120,979
2024		123,986
Thereafter		224,242
Total lease payments		903,349
Less: imputed interest		(182,328	)
Total lease liabilities	$	721,021

	ASC 840 Comparative Disclosures

	The Company had the following lease commitments by fiscal year at November 30, 2019:

Location	2020		2021		2022		2023		2024		2025 and beyond
Wilmington/Andover, MA	$	24,987	$	115,371	$	117,972	$	120,979	$	123,986	$	300,660
Fort Wayne, IN		30,357		30,585		7,646		—		—		—
South Africa*		13,098		2,217		—		—		—		—
Total	$	68,442	$	148,173	$	125,618	$	120,979	$	123,986	$	300,660
(USD based on November 30, 2019 exchange rate)*

	The above lease commitments reflect annual escalation.