Leases

6 Months Ended

Apr. 30, 2022

Leases

Leases

Note 4 – Leases

The Company capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize right-of-use (“ROU”) assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company adopted the standard in the fourth quarter of fiscal year 2020. The adoption of Topic 842 did not have any impact on the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. The Company does not have financing leases and only one operating lease for office space, with a related party. Certain of the Company’s leases include renewal options and have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain to exercise the option.

Office Space

On August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease agreement is with a related party, Just Pick. The Company’s Chief Executive Officer is an officer of Just Pick. Prior to this, the Company utilized the home office space and warehouse of its management at no cost through July 31, 2020. The operating lease is for a term of five years, beginning August 1, 2020, with rent of $1,000 payable monthly. As the operating lease does not provide for an implicit interest rate, we estimated a current borrowing rate of 4.5% in determining the present value of the lease.

As of April 30, 2022 and October 31, 2021, the ROU lease asset, net of accumulated amortization, was approximately $48,299 and $55,604, respectively. The initial recognition of the ROU operating lease was approximately $73,749 for both the ROU asset and ROU liability. The amortization expense for ROU asset for the twelve months ended October 31, 2021 was approximately $14,529 and no payments were made on the ROU liability. The amortization expense for the ROU asset for the six months ended April 30, 2022 was approximately $7,305 and resulted in a change in the ROU liability. At October 31, 2021, short-term ROU lease liability was approximately $13,020 and long-term liability was approximately $46,185, totaling approximately $59,205. At April 30, 2022, short-term ROU lease liability was approximately $13,680 and long-term liability was approximately $39,180 totaling approximately $52,860.

	2022		2023		2024		2025		Total
Lease payments	$	13,400	$	15,000	$	18,000	$	15,000	$	61,400
Less discount imputed interest										(8,540	)
Present value of future payments										52,860
Less current obligations										(13,680	)
Long term lease obligations									$	39,180

Storage Space

On November 1, 2021, the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana, to store product inventory at this satellite location. The Company made seven payments on this lease, totaling approximately $15,451, during the six months ended April 30, 2022. On November 11, 2021, the Company entered into a month-to-month lease agreement with FFE Solutions Group, located in Salt Lake City Utah, to store additional product inventory at this satellite location. The Company made five payments in the amount of approximately $19,108 for the rent on this lease during the six months ended April 30, 2022. The Company terminated the lease with FFE Solutions Group on April 29, 2022 after returning all inventory previously stored at this location.

For additional information regarding leases as of the date these unaudited consolidated financial statements were issued, please see Note 8, Subsequent Events.