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Leases

9 Months Ended

Jan. 31, 2023

(9) Leases

Lessee Information

Right-of-use asset and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot be determined, the Company uses the incremental borrowing rate based on the information available at the effective date to determine the present value of future payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The renewal options have not been included in the lease term as they are not reasonably certain of exercise. The Company’s operating leases consist of leases for office facilities and warehouse space. Lease expense for minimum lease payments is recognized on a straight- line basis over the lease term and consists of interest on the lease liability and the amortization of the right of use asset.

The Company has a lease for its facility located in Monroe Township, New Jersey that is used as warehouse/production space and the Company’s principal offices and corporate headquarters. The lease includes an initial lease term of seven years which is set to expire in November of 2024, and contains an option to extend the lease for another five years. The lease is classified as an operating lease and is included in right-of-use assets, right-of-use liabilities current and lease liabilities-long-term on the Company’s Consolidated Balance Sheets.

The Company also signed a new lease located in Houston, Texas for office space for our local employees. The lease term is for 1 year and is set to expire in January of 2024. ASC 842 allows a company an accounting policy election to recognize lease payments within the Consolidated Statement of Operations on a straight-line basis if the lease term is equal to or less than 12 months and not recognize a right-of use asset and lease liability. The accounting policy election is made on the commencement date of the lease. The Company has chosen this election for the Houston lease and classified it as a short-term lease.

The Company also has a lease with the University of California Berkeley in Richmond, California that was assumed as part of the MAR acquisition. The lease is currently a month-to-month lease in accordance with the lease agreement. In accordance with ASC 842, since the remaining lease term at the time of the acquisition of MAR was less than 12 months, the lease was not recognized as a right-of-use asset.

Subsequent to January 31, 2023 (see Note 18) the Company entered into a new lease for facility located in Oakland, California with a commencement date to be determined upon completion of work to be performed by the landlord. The term of the lease is for 62 months from the commencement date with an option of the Company to terminate the lease after 39 months if certain conditions are met. The rent will be approximately $25,000 per month and the facility will be utilized for our MAR business.

The operating lease cash flow payments for the three months ended January 31, 2023 and 2022 were $110,000 and $111,000, respectively. The operating lease cash flow payments for the nine months ended January 31, 2023 and 2022 were $326,000 and $315,000, respectively.

The components of lease expense in the Consolidated Statement of Operations for the three and nine months ended January 31, 2023 and 2022 were as follows:

Schedule of Operating Lease Costs


	Three months ended January 31,				Nine months ended January 31,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Operating lease cost	$	92	$	92	$	276	$	276
Short-term lease cost		8		12		24		22
Total lease cost	$	100	$	104	$	300	$	298

Information related to the Company’s right-of use assets and lease liabilities as of January 31, 2023 was as follows:

	January 31, 2023
		(in thousands)

Operating lease:
Operating right-of-use asset, net	$	522

Right-of-use liability- current	$	320
Right-of-use liability- long term		282
Total lease liability	$	602

Weighted average remaining lease term- operating leases		1.69 years
Weighted average discount rate- operating leases		8.5	%

Total remaining lease payments under the Company’s operating leases are as follows:

	January 31, 2023
		(in thousands)

Remainder of fiscal year 2023	$	106
2024		398
2025		184
Total future minimum lease payments	$	688
Less imputed interest		(86	)
Total	$	602