CLS Holdings USA, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Right of Use Assets and Liabilities ??? Operating Leases

Right of Use Assets and Liabilities – Operating Leases

3 Months Ended

Aug. 31, 2024

Note 7: Right of Use Assets and Liabilities – Operating Leases

The Company has operating leases for offices and warehouses. The Company’s leases have remaining lease terms of 1 year to 10.5 years, some of which include options to extend.

The Company’s lease expense for the three months ended August 31, 2024 and 2023 was entirely comprised of operating leases and amounted to $103,191 and $123,408, respectively.

The Company’s right of use (“ROU”) asset amortization for the three months ended August 31, 2024 and 2023 was $103,500 and $89,736, respectively.

The Company has recorded total right of use assets of $4,384,520 and liabilities in the amount of $4,341,120 through August 31, 2024.

Right of use assets – operating leases are summarized below:

	August 31, 2024
Amount at inception of leases	$	4,384,520
Amount amortized		(2,686,380	)
Prior Period Impairment of Quinn River Lease		(205,888	)
Balance – August 31, 2024	$	1,492,252

Operating lease liabilities are summarized below:

Amount at inception of leases	$	4,461,521
Amount amortized		(2,682,200	)
Balance – August 31, 2024	$	1,779,321

Warehouse and offices	$	1,569,437
Land		205,888
Office equipment		3,996
Balance – August 31, 2024	$	1,779,321

Lease liability	$	1,779,321
Less: current portion		(470,850	)
Lease liability, non-current	$	1,308,471

Maturity analysis under these lease agreements is as follows:

Twelve months ended August 31, 2025	$	651,838
Twelve months ended August 31, 2026		469,903
Twelve months ended August 31, 2027		319,791
Twelve months ended August 31, 2028		332,016
Twelve months ended August 31, 2029		275,681
Thereafter		226,703
Total	$	2,275,932
Less: Present value discount		(496,611	)
Lease liability	$	1,779,321