Leases

3 Months Ended

Feb. 29, 2020

Note 12– Leases

Effective December 1, 2019, the Company adopted ASU

2016-02,

Leases (Topic 842), using the modified retrospective approach and utilizing the effective date as its date of initial application. As a result, prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”). The Company has elected to apply the ‘package of practical expedients’ which allows the Company to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard.

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 in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as a

right-of-use

(ROU) assets and short-term and long-term lease liabilities, as applicable. The Company does not have any financing leases.

Operating lease liabilities and their corresponding

right-of-use

assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company believes it could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

The following table presents the

right-of-use

asset and short-term and long-term lease liabilities amounts recorded on the consolidated balance sheets as of February 29, 2020:


	February 29, 2020
Assets
Operating lease right-of-use asset	$	496,284

Liabilities
Current portion of operating lease liabilities	$	264,798
Operating lease long term liabilities		231,677

Total lease liability	$	496,475

The maturity of the Company’s lease liabilities at February 29, 2020 were as follows:


	Future Operating
Fiscal Year Ending November 30,	Lease Payments
2020 (remaining 9 months)	$	213,635
2021		284,846
2022		23,737
Less: Imputed interest		(25,743	)

Present value of lease liabilities	$	496,475

The remaining lease term and discount rates are as follows:


	February 29, 2020
Lease Term and Discount Rate
Remaining lease term (years)
Operating lease		1.8
Discount rate (percentage)
Operating lease		5.3	%

Supplemental cash flow information related to leases is as follows:


	Three Months Ended
	February 29, 2020
Operating cash outflows from operating leases	$	66,300