The Company determines if an arrangement is a lease at inception of the contract. The Company has operating leases for buildings, primarily for office space, R&D, manufacturing and warehousing. The Company has financing arrangement for manufacturing and distribution.

On December 24, 2024, the Company entered into an agreement to sell the manufacturing facilities in Queensbury, NY and Glens Falls, NY for a purchase price of $5.5 million and $1.2 million, respectively, and net proceeds of $5.2 million and $1.1 million, respectively. The Company simultaneously entered into lease agreements with future lease payments of $4.6 million over seven years for the Queensbury, NY facility and $0.4 million over three years for the Glens Falls, NY facility.

Based on certain criteria, the transaction was accounted for as a financing arrangement, as it did not meet the criteria for a sale-leaseback. As a result, the assets remain in "Property, plant and equipment, net" on the Consolidated Balance Sheets at their historical book value and are depreciated over the term of the lease agreements. A financing arrangement was recorded in the amount of the net proceeds received. The Company will recognize monthly rent as a reduction of the finance arrangement and interest expense, using the effective interest rate method. No gain or loss was recognized related to the financing arrangement for the three months ended August 31, 2026.

As of August 31, 2026, the carrying value of the financing arrangement was $5.7 million, of which $0.4 million was classified as "Other current liabilities" and $5.3 million was classified as "Other long-term liabilities" on the Consolidated Balance Sheets. Interest expense associated with the financing arrangement was $0.1 million for the three months ending August 31, 2026.

Remaining future cash payments related to the financing arrangement as of August 31, 2026 for each of the following fiscal years is:


(in thousands)	Aug 31, 2026
Remainder of 2027	$	603
2028	745
2029	660
2030	660
2031 and thereafter	1,045

Total minimum liability payments	$	3,713
Less: imputed interest	(1,501)
Total	$	2,212

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Many of the lease agreements contain renewal or termination clauses that are factored into the determination of the lease term if it is reasonably certain that these options would be exercised. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

In June 2025, the Company extended the lease for the corporate headquarters in Latham, NY through June 2031 and in August 2025, the Company increased its footprint for its research and development facility in Marlborough, MA through September 2030.

The following table presents supplemental balance sheet information related to leases:


(in thousands)	Balance Sheet Location	Aug 31, 2026		May 31, 2026
Assets
Operating lease ROU asset	Other assets	$	4,920	$	5,053
Liabilities
Current operating lease liabilities	Other current liabilities	1,404		1,296
Non-current operating lease liabilities	Other long-term liabilities	3,635		3,860
Total lease liabilities		$	5,039	$	5,156

The interest rate implicit in lease agreements is typically not readily determinable, and as such the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is defined as the interest the Company would pay to borrow on a collateralized basis, considering factors such as length of lease term. The following table presents the weighted average remaining lease term and discount rate:


	Aug 31, 2026
Weighted average remaining term (in years)	3.76
Weighted average discount rate	5.7	%

The maturities of the lease liabilities for each of the following fiscal years is:


(in thousands)	Aug 31, 2026
Remainder of 2027	$	1,238
2028	1,610
2029	1,288
2030	778
2031 and thereafter	697

Total lease payments	$	5,611
Less: imputed interest	572
Total lease obligations	$	5,039
Less: Current portion of lease obligations	1,404
Long-term lease obligations	$	3,635

During the three months ended August 31, 2026 and 2025, the Company recognized $0.6 million and $0.6 million of operating lease expense, respectively, which includes immaterial short-term leases. The expenses on the Consolidated Statement of Operations were classified as follows:


	Three Months Ended
(in thousands)	Aug 31, 2026		Aug 31, 2025
Cost of sales	$	164	$	201
Research and development	154		92
Sales and marketing	40		32
General and administrative	184		289
Acquisition, restructuring and other items, net	16		24
	$	558	$	638

The following table presents supplemental cash flow and other information related to leases:


	Three Months Ended
(in thousands)	Aug 31, 2026		Aug 31, 2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	403	$	497
ROU assets obtained in exchange for lease liabilities
Operating leases	$	232	$	—