F. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Oct. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

F. COMMITMENTS AND CONTINGENCIES

Capitalized lease obligations - The Company leases a vehicle under a non-cancelable finance lease agreement with a cost of $86,000 for the years ended October 31, 2020 and 2019 (accumulated amortization of $28,667 and $11,467 as of October 31, 2020 and 2019, respectively). Amortization expense for the vehicle under non-cancelable lease agreements amounted to $17,200 and $11,467 for the years ended October 31, 2020 and 2019, respectively.

The following is a schedule, by year, of future minimum lease payments under the finance leases together with the present value of the net minimum lease payments at October 31, 2020:

Twelve months ending October 31,	Amount
2021	$	14,908
2022		14,908
2023		14,908
2024		31,181
Total future minimum lease payments		75,905
Less: Amount of imputed interest		(8,826	)
Present value of future minimum lease payments		67,079
Current portion of obligation under finance leases		(11,640	)
Long-term portion	$	55,439

Operating facilities - The Company conducts its administrative operations in office facilities which are leased under two different rental agreements.

In July 2016, with effective date January 1st, 2016, the Company renegotiated a lease agreement with an affiliate of our past Chairman of the Board, for the headquarters and laboratory testing facilities in Dorado, Puerto Rico. The renegotiated lease incorporates additional space for the laboratory testing facility expansion. The lease agreement is for a five-year term, with a renewal option of five years, and monthly rental payments of $30,316 for the term of the lease agreement and renewal option. The lease agreement also requires the payment of utilities, property taxes, insurance and expenses incurred by the affiliate in connection with the maintenance of common areas. As part of the Laboratory Assets transaction (see Note B), this lease was amended to (i) allow the Company to sublease to the Laboratory Assets purchaser (the “Subtenant”) the laboratory leased space area, and (ii) if Subtenant defaults under the Sublease or terminates the Sublease, the Company shall have the option to either (a) terminate the Sublease and re-occupy the Subleased Premises pursuant to the terms of the Lease, or (b) modify the Lease to terminate the Lease for the portion of the Premises that is the Subleased Premises only, without penalty. On January 1, 2019, a second amendment to the lease agreement was made to add a small storage area, increasing the monthly rental payments by $1,088.

Simultaneously with the Laboratory Assets sale closing transaction the Company and Subtenant entered into a sublease agreement (the “Sublease”) with an initial term commencing at Sales Closing Date through December 31, 2019. The Sublease contains a one-year renewal option, followed by a second renewal option of five years. Provided a six months’ notice of termination, Subtenant may terminate without penalty the Sublease within the term of the second renewal option of five years. The Sublease calls for monthly rental payments of $17,950 each, and a 5% annual rent increase beginning on the second lease year and thereafter until the expiration of the Sublease initial term or the first renewal option. No rent increase will apply to the five-year term renewal option if exercised. The Sublease requires the payment of utilities, property taxes, insurance and common area expenses incurred and/or allocated to Subtenant. In September 2020, Subtenant exercised the second renewal option for the additional five-year term. Accordingly in September 2020, the Company exercised its lease renewal option for an additional five-year term.

The Company maintains an office facility in Madrid, Spain. The facility is under a month-to-month lease with monthly payments of approximately $1,000. The Company also has a virtual office in Greensboro, Georgia. The virtual office monthly fee is $750, which is cancellable at the anniversary date of the agreement upon a 6-month notification provision.

The Company leases certain apartments as dwellings for employees. The leases are under short-term lease agreements and usually are cancelable upon 30-day notification.

Minimum future rental payments under non-cancelable operating leases (net of extinguishable lease payments) having remaining terms in excess of one year as of October 31, 2020 are as follows:

Twelve months ending October 31,	Amount
2021	$	187,850
2022		187,850
2023		187,850
2024		187,850
2025		187,850
Thereafter		31,309
Total future minimum operating lease payments		970,559
Less: Amount of imputed interest		(177,663	)
Present value of future minimum operating lease payments		792,896
Current operating lease liabilities		(162,917	)
Long term operating lease liabilities	$	629,979

Total minimum future rental payments were reduced by approximately $1,168,545 of sublease rentals to be received in the future under non-cancelable subleases.

Rent expense for the years ended October 31, 2020 and 2019 was approximately $402,000 and $386,000, respectively.

Contingencies - In the ordinary course of business, the Company may be a party to legal proceedings incidental to the business. These proceedings are not expected to have a material adverse effect on the Company’s business or financial condition.