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Leases

3 Months Ended

Jul. 31, 2023

(9) Leases

Lessor Information

As of April 30, 2023, the Company had three WAM-V’s leased to customers which have been classified as operating leases per accounting guidance contained within ASC Topic 842, “Leases”. The remaining term on these operating leases is less than 2 years.

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 on October 31, 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 right-of-use liabilities- long-term on the Company’s Consolidated Balance Sheets.

The Company also has a 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 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 for an office space located in Richmond, California for MAR. This lease commenced in April of 2023 and will continue for 62 months. The lease is classified as an operating lease and is included in right-of-use assets, right-of-use liabilities- current and right-of-use liabilities- long-term on the Company’s Consolidated Balance Sheets.

Variable lease expenses, if any, are recorded as incurred. The operating lease cash flow payments for the three months ended July 31, 2023 and 2022 were $177,000 and $100,000, respectively.

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

Schedule of Operating Lease Costs

	2023		2022
	Three months ended July 31,
	2023		2022
	(in thousands)
Operating lease cost	$	157	$	92
Short-term lease cost		20		8
Total lease cost	$	177	$	100

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

	July 31, 2023
	(in thousands)

Operating lease:
Operating right-of-use asset, net	$	1,616

Right-of-use liabilities- current	$	545
Right-of-use liabilities- long term		1,168
Total lease liability	$	1,713

Weighted average remaining lease term- operating leases		3.97 years
Weighted average discount rate- operating leases		8.5	%

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

	July 31, 2023
	(in thousands)

Remainder of fiscal year 2024	$	524
2025		494
2026		318
2027		325
2028		333
thereafter		28
Total future minimum lease payments	$	2,022
Less imputed interest		(309	)
Total	$	1,713