Leases

3 Months Ended

Jan. 31, 2023

Leases

Leases

Note 10. Leases

The Company enters into operating and finance lease agreements for the use of real estate, vehicles, information technology equipment, and certain other equipment. We determine if an arrangement contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. Operating leases are included in Operating lease right-of-use assets, net, Operating lease liabilities, and Long-term operating lease liabilities in the Company’s Consolidated Balance Sheets. Finance leases are not considered significant to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. Finance lease right-of-use (“ROU”) assets of $0.1 million at January 31, 2023 and October 31, 2022 are included in Property, plant and equipment, net in the Company’s Consolidated Balance Sheets. Finance lease liabilities of $0.1 million at January 2023 and October 31, 2022 are included in Current portion of long-term debt and Long-term debt and other liabilities in the Company’s Consolidated Balance Sheets.

On January 5, 2023, the Company’s wholly-owned subsidiary, Versa Power Systems Ltd. (“Versa Ltd.”), entered in to a lease expansion, extension and amending agreement to an existing building lease that was originally entered into on May 20, 2005. The lease expansion, extension and amending agreement extended the term of the lease through September 30, 2028 and expanded the space to be leased by Versa Ltd. in Calgary, Alberta, Canada to include approximately 48,000 square feet of additional space. A ROU asset and operating lease liability was recorded for this lease as of January 31, 2023 for CAD $2.7 million ($2.0 million USD).

Operating lease expense for each of the three months ended January 31, 2023 and 2022 was $0.3 million and $0.4 million, respectively. As of January 31, 2023, the weighted average remaining lease term (in years) was approximately 17 years and the weighted average discount rate was 6.9%. Lease payments made during the three months ended January 31, 2023 and 2022 were $0.3 million and $0.4 million, respectively.

Undiscounted maturities of operating lease and finance lease liabilities as of January 31, 2023 were as follows:

	Operating Leases		Finance Leases
Due Year 1	$	1,126	$	49
Due Year 2		1,278		4
Due Year 3		1,268		—
Due Year 4		1,295		—
Due Year 5		1,316		—
Thereafter		13,261		—
Total undiscounted lease payments		19,544		53
Less imputed interest		(9,484)		(7)
Total discounted lease payments	$	10,060	$	46