COMMITMENTS AND CONTINGENCIES	12 Months Ended
Oct. 31, 2019
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	15. COMMITMENTS AND CONTINGENCIES Corn Purchase Commitments At October 31, 2019, GFE had cash and basis contracts for forward corn purchase commitments for approximately 3,339,000 bushels for deliveries through December 2022. At October 31, 2019, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 2,740,000 bushels for deliveries through December 2021. Given the uncertainty of future ethanol and corn prices, the Company could incur a loss on the outstanding corn purchase contracts in future periods. Management has evaluated these forward contracts using the lower of cost or net realizable value evaluation, similar to the method used on its inventory, and has determined that an impairment loss existed at GFE of approximately $200,000, and at HLBE of approximately $323,000, at October 31, 2018, and no impairment losses existed at GFE or HLBE at October 31, 2019 and 2017. The impairment expense is recorded as a component of costs of goods sold. Swan Engineering Agrinatural had a management and operating agreement with Swan Engineering, Inc. (“SEI”). SEI, together with an unrelated third party owned Rural Energy Solutions, LLC (“RES”), the 27% minority owner of Agrinatural. Under the management and operating agreement, SEI provided Agrinatural with day-to-day management and operation of Agrinatural’s pipeline distribution business. In exchange for these services, Agrinatural paid SEI an aggregate management fee equal to the fixed monthly base fee plus the variable customer management fee based on the number of customers served on the pipeline less the agreed monthly fee reduction of $4,500. For the year ended October 31, 2019, the Company paid approximately $28,000 and $111,000 for the monthly base fee and variable customer management fee, respectively. For the year ended October 31, 2018, the Company paid approximately $38,000 and $161,000 for the monthly base fee and variable customer management fee, respectively. For the year ended October 31, 2017, the Company paid approximately $36,000 and $157,000 for the monthly base fee and variable customer management fee, respectively. The management and operating agreement with SEI expired July 1, 2019. Agrinatural entered into a new five-year management and operating agreement with a third party effective July 1, 2019. Agrinatural also had a project management agreement with SEI. Pursuant to the project management agreement, SEI supervised all of Agrinatural’s pipeline construction projects. These projects are constructed by unrelated third-party pipeline construction companies. Under the project management agreement, Agrinatural paid SEI a total of 10% of the actual capital expenditures for construction projects approved by Agrinatural’s Board of Directors, excluding capitalized marketing costs. For the year ended October 31, 2019, the Company incurred approximately $45,000 for project management and capital work fees. For the year ended October 31, 2018, the Company incurred approximately $77,000 for project management and capital work fees. For the year ended October 31, 2017, the Company incurred approximately $44,000 for project management and capital work fees. The project management with SEI expired June 30, 2019. Agrinatural entered into a new five-year management and operating agreement with a third party effective July 1, 2019. Ethanol Marketing Agreement GFE currently has an ethanol marketing agreement with Eco-Energy, Inc., an unrelated party (“Eco-Energy”). Pursuant to this marketing agreement, Eco-Energy purchases the entire ethanol output of GFE’s ethanol plant and arranges for the transportation of ethanol; however, GFE is responsible for securing all of the rail cars necessary for the transport of ethanol by rail except for 43 rail cars leased to GFE by Eco-Energy under the marketing agreement. GFE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to GFE. During the third quarter of 2016, GFE amended its marketing agreement. As of October 31, 2019, the term of the ethanol marketing agreement expires on December 31, 2020, with automatic renewals for additional consecutive terms of one year unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by GFE and payment terms based on prevailing market-rate conditions for comparable ethanol marketed services. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. HLBE has an ethanol marketing agreement with Eco-Energy, an unrelated party, for the sale of ethanol (“Eco Agreement”). Under this marketing agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at HLBE’s ethanol production facility and arranges for the transportation of ethanol. HLBE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to HLBE. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. The initial term of the Eco Agreement continued through December 31, 2016, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least three months prior to the end of the then current term. During the third fiscal quarter of 2016, HLBE amended the Eco Agreement. As of October 31, 2019, the term of the Eco Agreement expires on December 31, 2020, with automatic renewals for additional consecutive terms of one year unless either party provides written notice to the other at least 90 days prior to the end of the then-curent term. Additionally, the amended Eco Agreement provides for certain negotiated changes to the marketing fees payable to Eco-Energy and payment terms based on prevailing market-rate conditions for comparable ethanol marketing services. Total ethanol marketing fees and commissions of GFE and HLBE approximated $1,183,000, $1,181,000 and $1,159,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively, and are included net within revenues. Ethanol Contracts At October 31, 2019, GFE had fixed and basis contracts to sell approximately $14,946,000 of ethanol for various delivery periods through December 2019, which approximates 100% of its anticipated ethanol sales for this that period. At October 31, 2019, HLBE had fixed and basis contracts to sell approximately $13,490,000 of ethanol for various delivery periods through December 2019, which approximates 92% of its anticipated ethanol sales for this that period. Distillers Grain Marketing Agreement GFE has a distillers’ grains marketing agreement with RPMG, Inc. (“RPMG”), an unrelated party, for the purpose of marketing and selling all distillers’ grains produced by GFE. The contract commenced on February 1, 2011 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Distillers’ grains commissions to RPMG totaled approximately $287,000, $293,000 and $276,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively, and are included net within revenues. At October 31, 2019, GFE had forward contracts to sell approximately $972,000 of distillers’ grain for deliveries through November 2019, which approximates 40% of its anticipated distillers’ grain sales during that period. HLBE has a distillers’ grains off-take agreement with Gavilon Ingredients, LLC (“Gavilon”), an unrelated party. Under this agreement, Gavilon purchases all of the distillers’ grains produced at HLBE’s ethanol plant in exchange for a service fee. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. Distillers’ grains commissions to Gavilon totaled approximately $287,000, $252,000, and $268,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively. At October 31, 2019, HLBE had forward contracts to sell approximately $1,275,000 of distillers’ grains for delivery through January 2020, which approximates 21% of its anticipated distillers’ grains sales during that period. Corn Oil Marketing Agreement GFE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by GFE. The contract commenced on April 29, 2010 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. HLBE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by HLBE. The contract commenced on November 1, 2013 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Corn oil commissions totaled approximately $154,000, $173,000 and $176,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively, and are included net within revenues. At October 31, 2019, GFE had forward contracts to sell approximately $333,000 of corn oil for delivery through November 2019, which approximates 80% of its anticipated corn oil sales for that period. At October 31, 2019, HLBE had forward contracts to sell approximately $468,000 of corn oil for delivery through December 2019, which approximates 75% of its anticipated corn oil sales for that period. Contract for Natural Gas Pipeline to Plant GFE has an agreement with an unrelated company for the construction of and maintenance of 9.5 miles of natural gas pipeline that serves the GFE plant. The agreement requires the Company to receive a minimum of 1,400,000 DT of natural gas annually through the term of the agreement. The Company is charged a fee based on the amount of natural gas delivered through the pipeline. HLBE has a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the HLBE plant. Agrinatural was formed to own and operate the pipeline and transports gas to HLBE pursuant to a transportation agreement. HLBE also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC (“Constellation”). This agreement runs until March 31, 2022. Letter of Credit Promissory Note In September 2019, GFE entered into a letter of credit promissory note with AgCountry Farm Credit Services, PCA to allow GFE to open irrevocable letters of credit to secure payments for its natural gas obligations. Under the terms of the note, the Company may borrow, repay, and reborrow up to the aggregate principal commitment of $500,000 until its maturing on December 1, 2021. Amounts borrowed under the note bear interest at a variable weekly rate equal to 2.75% above the rate quoted by LIBOR Index rate, which was 4.52% at October 31, 2019. The aggregate principal amount available under the letter of credit promissory note was $500,000 at October 31, 2019. Water Agreements In September 2019, HLBE entered into an industrial water supply development and distribution agreement, effective as of February 1, 2019, with the City of Heron Lake for 10 years. HLBE has the exclusive rights to the first 600 gallons per minute of capacity that is available from the well. In consideration, HLBE will pay flow charges at a rate of $0.60 cents per thousand gallons of water, in addition to a fixed monthly charge of $1,500 per month. The flow charges are placed into a dedicated fund for operation and maintenance of the well, and are capped at $300,000 at the end of each year. HLBE is also responsible for paying 55% of operation and maintenance costs in excess of the $300,000 cap, in the first two years of the agreement. Thereafter, the percentage payable by HLBE is determined based on a two-year average of HLBE’s usage compared to the total amount of industrial water supplied to HLBE and a third-party customer of the City of Heron Lake. Under the previous industrial water supply development and distribution agreement with the City of Heron Lake, HLBE paid one half of the City of Heron Lake’s water well bond payments of $735,000, plus a 5% administrative fee, totaling approximately $594,000, and operating costs, relative to HLBE’s water usage, plus a 10% profit. HLBE recorded an assessment of approximately $367,000 with long-term debt as described in Note 9. HLBE paid operating and administrative expenses of approximately $12,000 per year. In May 2006, HLBE entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. HLBE will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, HLBE agreed to an assessment for a portion of the capital costs of the water treatment plant. HLBE recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 9. HLBE paid operating and maintenance expenses of approximately $52,000, $92,000, and $24,000 in fiscal 2019, 2018, and 2017, respectively. Rail Car Rehabilitation Costs GFE leases 75 hopper rail cars under a multi-year agreement, which ends November 2025. HLBE leases 50 hopper rail cars under a multi-year agreement which ends in May 2027. Under the agreements, the Company is required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of the car(s) at the termination of the lease. Prior to the year ending October 31, 2019, the Company believed ongoing repairs results in an insignificant future rehabilitation expense. During the year ending October 31, 2019, based on new information, we re-evaluated our assumptions and believe that it is probable that we may be assessed for damages incurred. Company management has estimated total costs to rehabilitate the cars at October 31, 2019, to be approximately $825,000 and $551,000, respectively. During the year ended October 31, 2019, GFE has recorded an expense in cost of goods and a corresponding estimated long-term liability totaling $825,000. HLBE has recorded an expense in cost of goods and a corresponding estimated long-term liability totaling $551,000. The Company accrues the estimated cost of rail car damages over the term of the leases as the damages are incurred.

15. COMMITMENTS AND CONTINGENCIES

Corn Purchase Commitments

At October 31, 2019, GFE had cash and basis contracts for forward corn purchase commitments for approximately 3,339,000 bushels for deliveries through December 2022.

At October 31, 2019, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 2,740,000 bushels for deliveries through December 2021.

Given the uncertainty of future ethanol and corn prices, the Company could incur a loss on the outstanding corn purchase contracts in future periods. Management has evaluated these forward contracts using the lower of cost or net realizable value evaluation, similar to the method used on its inventory, and has determined that an impairment loss existed at GFE of approximately $200,000, and at HLBE of approximately $323,000, at October 31, 2018, and no impairment losses existed at GFE or HLBE at October 31, 2019 and 2017. The impairment expense is recorded as a component of costs of goods sold.

Swan Engineering

Agrinatural had a management and operating agreement with Swan Engineering, Inc. (“SEI”). SEI, together with an unrelated third party owned Rural Energy Solutions, LLC (“RES”), the 27% minority owner of Agrinatural. Under the management and operating agreement, SEI provided Agrinatural with day-to-day management and operation of Agrinatural’s pipeline distribution business. In exchange for these services, Agrinatural paid SEI an aggregate management fee equal to the fixed monthly base fee plus the variable customer management fee based on the number of customers served on the pipeline less the agreed monthly fee reduction of $4,500. For the year ended October 31, 2019, the Company paid approximately $28,000 and $111,000 for the monthly base fee and variable customer management fee, respectively. For the year ended October 31, 2018, the Company paid approximately $38,000 and $161,000 for the monthly base fee and variable customer management fee, respectively. For the year ended October 31, 2017, the Company paid approximately $36,000 and $157,000 for the monthly base fee and variable customer management fee, respectively. The management and operating agreement with SEI expired July 1, 2019. Agrinatural entered into a new five-year management and operating agreement with a third party effective July 1, 2019.

Agrinatural also had a project management agreement with SEI. Pursuant to the project management agreement, SEI supervised all of Agrinatural’s pipeline construction projects. These projects are constructed by unrelated third-party pipeline construction companies. Under the project management agreement, Agrinatural paid SEI a total of 10% of the actual capital expenditures for construction projects approved by Agrinatural’s Board of Directors, excluding capitalized marketing costs. For the year ended October 31, 2019, the Company incurred approximately $45,000 for project management and capital work fees. For the year ended October 31, 2018, the Company incurred approximately $77,000 for project management and capital work fees. For the year ended October 31, 2017, the Company incurred approximately $44,000 for project management and capital work fees. The project management with SEI expired June 30, 2019. Agrinatural entered into a new five-year management and operating agreement with a third party effective July 1, 2019.

Ethanol Marketing Agreement

GFE currently has an ethanol marketing agreement with Eco-Energy, Inc., an unrelated party (“Eco-Energy”). Pursuant to this marketing agreement, Eco-Energy purchases the entire ethanol output of GFE’s ethanol plant and arranges for the transportation of ethanol; however, GFE is responsible for securing all of the rail cars necessary for the transport of ethanol by rail except for 43 rail cars leased to GFE by Eco-Energy under the marketing agreement. GFE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to GFE. During the third quarter of 2016, GFE amended its marketing agreement. As of October 31, 2019, the term of the ethanol marketing agreement expires on December 31, 2020, with automatic renewals for additional consecutive terms of one year unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by GFE and payment terms based on prevailing market-rate conditions for comparable ethanol marketed services. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services.

HLBE has an ethanol marketing agreement with Eco-Energy, an unrelated party, for the sale of ethanol (“Eco Agreement”). Under this marketing agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at HLBE’s ethanol production facility and arranges for the transportation of ethanol. HLBE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to HLBE. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. The initial term of the Eco Agreement continued through December 31, 2016, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least three months prior to the end of the then current term. During the third fiscal quarter of 2016, HLBE amended the Eco Agreement. As of October 31, 2019, the term of the Eco Agreement expires on December 31, 2020, with automatic renewals for additional consecutive terms of one year unless either party provides written notice to the other at least 90 days prior to the end of the then-curent term. Additionally, the amended Eco Agreement provides for certain negotiated changes to the marketing fees payable to Eco-Energy and payment terms based on prevailing market-rate conditions for comparable ethanol marketing services.

Total ethanol marketing fees and commissions of GFE and HLBE approximated $1,183,000, $1,181,000 and $1,159,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively, and are included net within revenues.

Ethanol Contracts

At October 31, 2019, GFE had fixed and basis contracts to sell approximately $14,946,000 of ethanol for various delivery periods through December 2019, which approximates 100% of its anticipated ethanol sales for this that period.

At October 31, 2019, HLBE had fixed and basis contracts to sell approximately $13,490,000 of ethanol for various delivery periods through December 2019, which approximates 92% of its anticipated ethanol sales for this that period.

Distillers Grain Marketing Agreement

GFE has a distillers’ grains marketing agreement with RPMG, Inc. (“RPMG”), an unrelated party, for the purpose of marketing and selling all distillers’ grains produced by GFE. The contract commenced on February 1, 2011 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Distillers’ grains commissions to RPMG totaled approximately $287,000, $293,000 and $276,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively, and are included net within revenues.

At October 31, 2019, GFE had forward contracts to sell approximately $972,000 of distillers’ grain for deliveries through November 2019, which approximates 40% of its anticipated distillers’ grain sales during that period.

HLBE has a distillers’ grains off-take agreement with Gavilon Ingredients, LLC (“Gavilon”), an unrelated party. Under this agreement, Gavilon purchases all of the distillers’ grains produced at HLBE’s ethanol plant in exchange for a service fee. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. Distillers’ grains commissions to Gavilon totaled approximately $287,000, $252,000, and $268,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively.

At October 31, 2019, HLBE had forward contracts to sell approximately $1,275,000 of distillers’ grains for delivery through January 2020, which approximates 21% of its anticipated distillers’ grains sales during that period.

Corn Oil Marketing Agreement

GFE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by GFE. The contract commenced on April 29, 2010 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party.

HLBE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by HLBE. The contract commenced on November 1, 2013 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party.

Corn oil commissions totaled approximately $154,000, $173,000 and $176,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively, and are included net within revenues.

At October 31, 2019, GFE had forward contracts to sell approximately $333,000 of corn oil for delivery through November 2019, which approximates 80% of its anticipated corn oil sales for that period.

At October 31, 2019, HLBE had forward contracts to sell approximately $468,000 of corn oil for delivery through December 2019, which approximates 75% of its anticipated corn oil sales for that period.

Contract for Natural Gas Pipeline to Plant

GFE has an agreement with an unrelated company for the construction of and maintenance of 9.5 miles of natural gas pipeline that serves the GFE plant. The agreement requires the Company to receive a minimum of 1,400,000 DT of natural gas annually through the term of the agreement. The Company is charged a fee based on the amount of natural gas delivered through the pipeline.

HLBE has a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the HLBE plant. Agrinatural was formed to own and operate the pipeline and transports gas to HLBE pursuant to a transportation agreement. HLBE also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC (“Constellation”). This agreement runs until March 31, 2022.

Letter of Credit Promissory Note

In September 2019, GFE entered into a letter of credit promissory note with AgCountry Farm Credit Services, PCA to allow GFE to open irrevocable letters of credit to secure payments for its natural gas obligations. Under the terms of the note, the Company may borrow, repay, and reborrow up to the aggregate principal commitment of $500,000 until its maturing on December 1, 2021. Amounts borrowed under the note bear interest at a variable weekly rate equal to 2.75% above the rate quoted by LIBOR Index rate, which was 4.52% at October 31, 2019. The aggregate principal amount available under the letter of credit promissory note was $500,000 at October 31, 2019.

Water Agreements

In September 2019, HLBE entered into an industrial water supply development and distribution agreement, effective as of February 1, 2019, with the City of Heron Lake for 10 years. HLBE has the exclusive rights to the first 600 gallons per minute of capacity that is available from the well. In consideration, HLBE will pay flow charges at a rate of $0.60 cents per thousand gallons of water, in addition to a fixed monthly charge of $1,500 per month. The flow charges are placed into a dedicated fund for operation and maintenance of the well, and are capped at $300,000 at the end of each year. HLBE is also responsible for paying 55% of operation and maintenance costs in excess of the $300,000 cap, in the first two years of the agreement. Thereafter, the percentage payable by HLBE is determined based on a two-year average of HLBE’s usage compared to the total amount of industrial water supplied to HLBE and a third-party customer of the City of Heron Lake.

Under the previous industrial water supply development and distribution agreement with the City of Heron Lake, HLBE paid one half of the City of Heron Lake’s water well bond payments of $735,000, plus a 5% administrative fee, totaling approximately $594,000, and operating costs, relative to HLBE’s water usage, plus a 10% profit. HLBE recorded an assessment of approximately $367,000 with long-term debt as described in Note 9. HLBE paid operating and administrative expenses of approximately $12,000 per year.

In May 2006, HLBE entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. HLBE will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, HLBE agreed to an assessment for a portion of the capital costs of the water treatment plant.

HLBE recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 9. HLBE paid operating and maintenance expenses of approximately $52,000, $92,000, and $24,000 in fiscal 2019, 2018, and 2017, respectively.

Rail Car Rehabilitation Costs

GFE leases 75 hopper rail cars under a multi-year agreement, which ends November 2025. HLBE leases 50 hopper rail cars under a multi-year agreement which ends in May 2027. Under the agreements, the Company is required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of the car(s) at the termination of the lease. Prior to the year ending October 31, 2019, the Company believed ongoing repairs results in an insignificant future rehabilitation expense. During the year ending October 31, 2019, based on new information, we re-evaluated our assumptions and believe that it is probable that we may be assessed for damages incurred. Company management has estimated total costs to rehabilitate the cars at October 31, 2019, to be approximately $825,000 and $551,000, respectively. During the year ended October 31, 2019, GFE has recorded an expense in cost of goods and a corresponding estimated long-term liability totaling $825,000. HLBE has recorded an expense in cost of goods and a corresponding estimated long-term liability totaling $551,000. The Company accrues the estimated cost of rail car damages over the term of the leases as the damages are incurred.