Note 7 - Leases

9 Months Ended

Jul. 31, 2021

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

(7) Leases

The Company has an operating lease agreement for approximately 34,000 square feet of office, manufacturing and warehouse space in Plano, Texas (near Dallas). The lease term expires on November 30, 2024.

The Company has an operating lease agreement for approximately 36,000 square feet of warehouse space in Roanoke, Virginia. The lease term expires on April 30, 2023.

The Company also leases certain equipment under operating leases with initial 60 month terms.

The Company’s lease contracts may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when such options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.

The Company includes contract lease components in its determination of lease payments, while non-lease components of the contracts, such as taxes, insurance, and common area maintenance, are expensed as incurred. At commencement, right-of-use assets and lease liabilities are measured at the present value of future lease payments over the lease term. The Company uses its incremental borrowing rate based on information available at the time of lease commencement to measure the present value of future payments.

Operating lease expense is recognized on a straight-line basis over the lease term. Short term leases with an initial term of 12 months or less are expensed as incurred. The Company’s short term leases have month-to-month terms.

Operating lease right-of-use assets of $1,117,247 and $1,265,194 were included in other assets at July 31, 2021 and October 31, 2020, respectively. Operating lease liabilities of $378,161 and $828,512, respectively, were included in accounts payable and accrued expenses, and other noncurrent liabilities at July 31, 2021. Operating lease liabilities of $332,329 and $946,653, respectively, were included in accounts payable and accrued expenses, and other noncurrent liabilities at October 31, 2020.

Operating lease expense recognized during the three months and nine months ended July 31, 2021 totaled $103,333 and $303,902, respectively. Operating lease expense recognized during the three months and nine months ended July 31, 2020 totaled $99,327 and $293,756, respectively.

The weighted average remaining lease term was 37.9 months and the weighted average discount rate was 5.0% as of July 31, 2021.

The Company’s future payments due under operating leases reconciled to the lease liability are as follows:

Fiscal Year	Future Payments
2021   (1)	$	106,182
2022		432,485
2023		382,716
2024		331,438
Thereafter		55,023
Total undiscounted lease payments		1,307,844
Present value discount		(101,171	)
Total operating lease liability	$	1,206,673

(1) Remaining three months of fiscal year 2021

For the three months and nine months ended July 31, 2021, cash paid for operating lease liabilities totaled $106,182 and $301,156, respectively. For the three months and nine months ended July 31, 2020, cash paid for operating lease liabilities totaled $96,681 and $286,131, respectively.

For the nine months ended July 31, 2021 and 2020, right-of-use assets obtained in exchange for new operating lease liabilities totaled $208,390 and $1,462,817, respectively.