Commitments

3 Months Ended

Jan. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments

4. NOTE 4 – COMMITMENTS

Lease Agreement

Our current operating lease right-of-use asset and operating lease liability represent our lease for office space used to conduct our business. As of January 31, 2021, the Company is not party to any finance leases. The lease has a remaining lease term of 7 years. The components of lease expense for the three months ended January 31, 2021 and 2020 were as follows:

	January 31,		January 31,
	2021		2020
Operating lease cost (cost resulting from lease payments)	$	18,133	$	6,731
Operating lease expense		30,821		8,929

The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the Small Business Administration (“SBA”) 7(a) loan incremental borrowing rates. The Company’s discount rate and lease term remaining on its lease liability is approximately 5.50% and 7 years, respectively. The Company had net operating cash flows from the operating lease of $9,039 and $264 related to the lease for the three months ended January 31, 2021 and 2020, respectively.

As of January 31, 2021 and 2020, the Company’s right-of-use assets are $592,211 and $144,237, respectively, which are reported in other long-term assets in the Company’s balance sheets. As of January 31, 2021 and 2020, the Company has outstanding lease obligations of $601,250 and $150,673 respectively, which are reported in long-term obligations in the Company’s balance sheets.

The Company has taken advantage of certain practical expedients offered to registrants at adoption of ASC 842. The Company does not apply the recognition requirements of ASC 842 to short-term leases and sub leases. Instead, those lease payments are recognized in profit or loss on a straight-line basis over the lease term. Further, as a practical expedient, all lease contracts are accounted for as one single lease component, as opposed to separating lease and non-lease components to allocate the consideration within a single lease contract.

Maturities of aggregate operating lease liabilities as of January 31, 2021 were as follows:

2021	$	106,000
2022		106,000
2023		106,000
2024		106,000
2025		106,000
Thereafter	$	221,000
Total minimum lease payments	$	751,000
Imputed interest	$	(152,000	)
Total	$	599,000

The Company previously entered into a 6-year lease agreement in Hauppauge, New York for executive offices of the Company. The Company will account for this lease as an operating lease under ASC 842. The lease commences November 15, 2018 and expires February 28, 2025. The lease requires an annual payment of approximately $34,659 for the first year, with rent commencing February 15, 2019 with increases 3% per year subsequent thereto plus any increases in real estate taxes over the base year, as defined. Subsequently the Company further entered into a Commencement Date Agreement with the landlord amending the lease commencement date to December 21, 2018.

During January 2021, the Company terminated its current lease for office space and as a result, relinquished the space and derecognized a right of use asset of $126,249, a lease liability of $133,477 and deferred rent of $7,184, resulting in a $14,412 operating lease termination gain.

The Company entered into a 7-year lease agreement with its current landlord for new, larger office space within the same business complex the Company is currently located at in Hauppauge, NY. The new space will be approximately 4,250 square feet and will now serve as the location for the Company’s new Corporate Headquarters, including office space, product demonstration space and meeting rooms used to conduct business and help advance operations. The Company will account for this lease as an operating lease under ASC 842. The original lease commenced June 2020 (subject to adjustment) and expired August 2027 (subject to adjustment). The lease requires an annual payment of approximately $93,500 for the first year, with rent payments originally commencing September 2020 (subject to adjustment) with stated rent increases per year subsequent thereto plus any increases in real estate taxes over the base year, as defined. Subsequently the Company further entered into a Commencement Date Agreement with the landlord January 2021, amending the actual lease commencement date to September 2020 with rent payments commencing December 2020. The Company is not required to pay a security deposit.

$30,821 and $8,929 in rental expense has been charged to operations for the three months ended January 31, 2021 and 2020, respectively. Rental expense is accounted for on the straight-line method.

Any excess of recognized rent expense over scheduled lease payments is included in accounts payable and accrued expenses.

Employment Agreements

In October 2018 the Company entered into an employment agreement with a key management individual. In accordance with the respective terms of the agreement, the Company is to issue equity compensation to this individual. As a result, 2,000,000 shares of common stock were issued.

In October 2018 the Company entered into various employment agreements with key management individuals. In accordance with the respective terms of these agreements, the Company is to issue equity compensation to those individuals. As a result, 60,000 shares of common stock in the aggregate are to be issued, were valued at $8,400 and recorded as a liability for stock to be issued. During December 2018 these common shares were issued in accordance with their respective agreements.

In October 2018 the Company entered into a Board of Director membership agreement with a key management individual. In accordance with the respective terms of this agreement, the Company is to issue equity compensation to this individual. As a result, 30,000 shares of common stock are to be issued, were valued at $4,200 and recorded as a liability for stock to be issued. During December 2018 these common shares were issued in accordance with the agreement.

Stock Purchase Agreements

During October 2018, the Company entered into a stock purchase agreement with a related party for the sale of shares of the Company’s common stock. As a result, 1,428,571 shares of common stock were issued. (See Note 7).

During January 2021, the Company entered into a stock purchase agreement with a related party for the sale of shares of the Company’s common stock. As a result, 100,000 shares of common stock are to be issued and recorded as a liability for common stock to be issued. (See Note 7).