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Commitments and Contingencies | 6 Months Ended
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Nov. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Leases As discussed in Note 2 above, the Company adopted ASU 2016-02, “Leases” on June 1, 2019, which require lessees to report on their balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases. The Company treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange for consideration, or if the Company directs the use of the asset and obtains substantially all the economic benefits of the asset. These leases are recorded as right-of-use (“ROU”) assets and lease obligation liabilities for leases with terms greater than 12 months. ROU assets represent the Company’s right to use an underlying asset for the entirety of the lease term. Lease liabilities represent the Company’s obligation to make payments over the life of the lease. A ROU asset and a lease liability are recognized at commencement of the lease based on the present value of the lease payments over the life of the lease. Initial direct costs are included as part of the ROU asset upon commencement of the lease. In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, the Company applies a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For variable costs that may change during the lifetime of the lease, the Company expenses as incurred. Since the interest rate implicit in a lease is generally not readily determinable for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease term to obtain an asset of similar value. The Company reviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets. The Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. Lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Variable payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result in a remeasurement of lease liabilities. During the six months ended November 30, 2024, the Company entered into two new lease agreements. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The Company’s lease agreements do not have an explicit renewal option, and the termination options are available in the event of material breaches. The expiration dates of the leases are on various dates between December 1, 2024 and January 31, 2029. The Company computed an initial lease liability of $767,269 for the two new lease agreements and an initial ROU asset in the same amount which was recorded on the books at the commencement of the leases. During the three months ended November 30, 2024 and 2023, the Company recorded operating lease costs in the amount of $49,080 and $18,659, respectively. During the six months ended November 30, 2024 and 2023, the Company recorded operating lease costs in the amount of $67,739 and $37,317, respectively. Operating lease and short-term lease expenses are included in General and administrative expenses on the accompanying Consolidated Statements of Operations. The weighted average remaining term and discount rate for the Company’s operating leases as of November 30, 2024 was 3.8 years and 13.0%, respectively. Supplemental balance sheet information related to leases was as follows:
Schedule of supplemental balance sheet information |  |  |  |  |  |  |  |
Assets |  | November 30, 2024 |  | May 31, 2024
Right of use assets |  | $ | 899,239 |  |  | $ | 131,970 |
Accumulated reduction |  |  | (161,988 | ) |  |  | (95,218 | )
Operating lease assets, net |  | $ | 737,251 |  |  | $ | 36,752 |
Liabilities |  |  |  |  |  |  |  |
Lease liability |  | $ | 899,239 |  |  | $ | 131,970 |
Accumulated reduction |  |  | (161,081 | ) |  |  | (95,218 | )
Total lease liability, net |  |  | 738,158 |  |  |  | 36,752 |
Current portion |  |  | (207,077 | ) |  |  | (36,752 | )
Non-current portion |  | $ | 531,081 |  |  | $ | — |
Maturities of operating lease liabilities were as follows as of November 30, 2024:
Schedule of maturities of operating lease liabilities |  |  |  |
Operating Lease (fiscal year-end) |  |
2025 (six months remaining) |  | $ | 94,651 |
2026 |  |  | 258,005 |
2027 |  |  | 269,437 |
2028 |  |  | 218,420 |
2029 |  |  | 128,040 |
Total |  | $ | 968,553 |
Less: Imputed interest |  |  | (230,395 | )
Present value of lease liabilities |  | $ | 738,158 |
Accounts Payable During the three months ended November 30, 2024, the Company renewed its relationship with an entity, and as a result of the agreement, $218,699 previously due in relation to royalties, was forgiven and included in Sales and marketing in the accompanying Consolidated Statements of Operations. Contingencies From time to time, we become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our financial statements. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters progress over time. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain, and there can be no assurance that any expense, liability, or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.

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