XML 28 R17.htm IDEA: XBRL DOCUMENT

Note 10 - Leases

9 Months Ended

Oct. 31, 2021

Lessee, Operating and Finance Leases [Text Block]

Note 10 - Leases

Operating Leases. In August 2020, the Company entered into a new lease in Abu Dhabi for land upon which the Company intends to build a facility. The annual payments are initially expected to be approximately 1.2 million U.A.E. Dirhams (approximately $0.3 million at October 31, 2020), inclusive of rent and common charges, with escalation clauses in the agreement. Rent payments are deferred until August 2022. The lease expires in August 2050.

Finance Leases. In 2019, the Company obtained two finance leases for a total of CAD 1.1 million (approximately $0.8 million at the prevailing exchange rates on the transaction dates) to finance vehicle equipment. The interest rates for these finance leases were 8.0% per annum with monthly principal and interest payments of less than $0.1 million. These leases mature in August 2023. In 2017, the Company obtained three finance leases for a total of CAD 1.1 million (approximately $0.8 million at the prevailing exchange rates on the transaction dates) to finance vehicle equipment. The interest rates for these finance leases range from 4.0% to 7.8% per annum with monthly principal and interest payments of less than $0.1 million. Two of these leases matured in April 2021 and new leases have been entered into in May 2021 to replace the matured leases. The remaining lease matures in September 2022.

The Company has several significant operating lease agreements, with lease terms of one to 30 years, which consist of real estate, vehicles and office equipment leases. These leases do not require any contingent rental payments, impose any financial restrictions or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and right-of-use ("ROU") assets as the Company is not reasonably certain to exercise the options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses. The Company does not have any arrangements where it acts as a lessor, other than one sub-lease arrangement.

At October 31, 2021, the Company had total operating lease liabilities of $13.0 million and total operating ROU assets of $11.5 million, which are reflected in the consolidated balance sheets. At October 31, 2021, the Company also had total finance lease liabilities of $0.6 million included in current maturities of long-term debt and long-term debt less current maturities, and total finance ROU assets of $0.8 million which were included in property plant and equipment, net of accumulated depreciation in the consolidated balance sheets.

Supplemental balance sheet information related to leases is as follows (in thousands):

*Operating and Finance leases:*	*October 31, 2021*			*January 31, 2021*
Finance leases assets:
Property and Equipment - gross	$	1,254		$	879
Accumulated depreciation and amortization		(438	)		(96	)
Property and Equipment - net	$	816		$	783

Finance lease liabilities:
Finance lease liability short-term	$	368		$	300
Finance lease liability long-term		266			401
Total finance lease liabilities	$	634		$	701

Operating lease assets:
Operating lease ROU assets	$	11,515		$	13,384

Operating lease liabilities:
Operating lease liability short-term	$	1,427		$	1,402
Operating lease liability long-term		11,586			13,174
Total operating lease liabilities	$	13,013		$	14,576

Total lease costs consist of the following (in thousands):

Lease costs	*Consolidated Statements of Operations Classification*	*Three Months Ended October 31, 2021*			*Three Months Ended October 31, 2020*			*Nine Months Ended October 31, 2021*			*Nine Months Ended October 31, 2020*
Finance Lease Costs
Amortization of ROU assets	Cost of sales	$	65		$	50		$	184		$	151
Interest on lease liabilities	Interest expense		13			17			42			54
Operating lease costs	Cost of sales, SG&A expenses		620			682			1,890			1,904
Short-term lease costs (1)	Cost of sales, SG&A expenses		255			53			454			289
Sub-lease income	SG&A expenses		(20	)		(21	)		(61	)		(61	)
*Total Lease costs*		$	933		$	781		$	2,509		$	2,337

(1) Includes variable lease costs, which are immaterial

Supplemental cash flow information related to leases is as follows (in thousands):

	*Nine Months Ended October 31, 2021*		*Nine Months Ended October 31, 2020*
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash outflows from finance leases	$	203	$	291
Operating cash outflows from finance leases		28		42
Operating cash outflows from operating leases		985		1,470

	*Nine Months Ended October 31, 2021*		*Nine Months Ended October 31, 2020*
ROU Assets obtained in exchange for new lease obligations:
Finance leases liabilities	$	201	$	-
Operating leases liabilities		89		3,255

Weighted-average lease terms and discount rates are as follows:

	*October 31, 2021*
Weighted-average remaining lease terms (in years):
Finance leases		1.7
Operating leases		13.5

Weighted-average discount rates:
Finance leases		8.9	%
Operating leases		7.4	%

Maturities of lease liabilities as of October 31, 2021, are as follows (in thousands):

Year:	*Operating Leases*			*Finance Leases*
For the three months ended January 31, 2022	$	737		$	102
For the year ended January 31, 2023		2,313			396
For the year ended January 31, 2024		2,299			182
For the year ended January 31, 2025		1,528			-
For the year ended January 31, 2026		1,326			-
For the year ended January 31, 2027		1,333			-

Thereafter		12,322			-
Total lease payments		21,858			680
Less: amount representing interest		(8,845	)		(46	)
Total lease liabilities at October 31, 2021	$	13,013		$	634

Rent expense on operating leases, which is recorded on straight-line basis, was $0.9 million for the three months ended October 31, 2021 and 2020, respectively.