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 April 30, 2022), 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. 

In March 2022, the Company served a Notice of Termination to its lessor for a portion of the Company's lease of certain land and buildings in Fujairah in the U.A.E. The partial termination will take effect in September 2022. The Company served the Notice of Termination in connection with the Company's intended relocation to a different facility under a new lease in Abu Dhabi. The Company is required to pay an additional amount equal to three months' rent after the partial termination to enable the lessor to prepare the assets for lease by another party. As a result of the partial termination, the Company has recognized adjustments to the amounts recorded in the consolidated financial statements as of April 30, 2022. The partial termination resulted in decreases of $0.3 million, $4.0 million and $3.6 million to operating lease liability short-term, operating lease liability long-term and operating lease right-of-use asset, respectively, in the consolidated balance sheets as of April 30, 2022. The partial termination also resulted in a decrease in rent expense of $0.8 million in the consolidated statement of operations for the three months ended April 30, 2022. The Company will continue to lease the remaining land and buildings under the Fujairah lease until 2032.

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 April 30, 2022, the Company had total operating lease liabilities of $8.6 million and operating ROU assets of $7.7 million, which are reflected in the consolidated balance sheets. At April 30, 2022, the Company also had total finance lease liabilities of $0.4 million included in current maturities of long-term debt and long-term debt less current maturities, and total finance ROU assets of $0.7 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): 

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

(1) Includes variable lease costs, which are immaterial

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

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

Maturities of lease liabilities as of April 30, 2022, are as follows (in thousands):

Rent expense on operating leases, which is recorded on straight-line basis, was $0.1 million for the three months ended  April 30, 2022 and 2021, respectively.