Leases

12 Months Ended

Oct. 31, 2021

Leases [Abstract]

Leases

LEASES

The Company leases rail cars for its facility to transport dried distillers grains to its end customers. We classified these identified assets as operating leases after assessing the terms of the leases under lease classification guidance.

The Company has a contract for use of a natural gas pipeline which transports natural gas from the Northern Natural Gas pipeline to the Company’s facility. This natural gas line has no alternate use and is specifically for the benefit of the Company. The contract has minimum volume requirements as well as a fixed monthly fee. This contract meets the definition of a lease

and is classified as a finance lease. Right of use assets and lease liabilities are recognized based on the present value of lease payments over the lease term.

The discount rate used in determining the lease liability for each individual lease is the Company's estimated incremental borrowing rate. An incremental borrowing rate of 5.5% was utilized for each of the Company's leases.

The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s operating and finance leases have remaining lease terms of approximately 3 years and 9 years, respectively. These leases include options to extend the lease. When it is reasonably certain the Company will exercise those options, the Company will update the remaining terms of the leases. The Company does not have lease arrangements with residual value guarantees, sale leaseback terms or material restrictive covenants.

The following tables summarizes the remaining maturities of the Company's operating and financing lease liabilities as of October 31, 2021:

For the Period Ending October 31,	Operating Leases		Finance Leases
2022	$	168,480	$	178,800
2023	168,480		178,800
2024	112,320		178,800
2025	—		178,800
2026	—		178,800
Thereafter	—		536,400
Totals	449,280		1,430,400
Amount representing interest	(32,279)		(275,300)
Lease liability	$	417,001	$	1,155,100

Lease Cost	October 31, 2021
Operating lease cost	$	168,480
Short term lease cost	73,195
Finance lease cost
Amortization of leased assets	143,267
Interest on lease liabilities	66,893
Net lease cost	$	451,835

Leases

LEASES

The Company leases rail cars for its facility to transport dried distillers grains to its end customers. We classified these identified assets as operating leases after assessing the terms of the leases under lease classification guidance.

The Company has a contract for use of a natural gas pipeline which transports natural gas from the Northern Natural Gas pipeline to the Company’s facility. This natural gas line has no alternate use and is specifically for the benefit of the Company. The contract has minimum volume requirements as well as a fixed monthly fee. This contract meets the definition of a lease

and is classified as a finance lease. Right of use assets and lease liabilities are recognized based on the present value of lease payments over the lease term.

The discount rate used in determining the lease liability for each individual lease is the Company's estimated incremental borrowing rate. An incremental borrowing rate of 5.5% was utilized for each of the Company's leases.

The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s operating and finance leases have remaining lease terms of approximately 3 years and 9 years, respectively. These leases include options to extend the lease. When it is reasonably certain the Company will exercise those options, the Company will update the remaining terms of the leases. The Company does not have lease arrangements with residual value guarantees, sale leaseback terms or material restrictive covenants.

The following tables summarizes the remaining maturities of the Company's operating and financing lease liabilities as of October 31, 2021:

For the Period Ending October 31,	Operating Leases		Finance Leases
2022	$	168,480	$	178,800
2023	168,480		178,800
2024	112,320		178,800
2025	—		178,800
2026	—		178,800
Thereafter	—		536,400
Totals	449,280		1,430,400
Amount representing interest	(32,279)		(275,300)
Lease liability	$	417,001	$	1,155,100

Lease Cost	October 31, 2021
Operating lease cost	$	168,480
Short term lease cost	73,195
Finance lease cost
Amortization of leased assets	143,267
Interest on lease liabilities	66,893
Net lease cost	$	451,835