Leases

3 Months Ended

Jan. 31, 2024

Leases

Leases

Note 6 – Leases

The Company capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize right-of-use (“ROU”) assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company does not have financing leases and only one operating lease for office space and inventory storage space with Just Pick, LLC (“Just Pick”), a related party owned and controlled by Nirajkumar Patel, the Chief Executive Officer and a director of the Company.   Certain of the Company’s leases, have and may in the future, include renewal options, which have been and might be in the future, included in the calculation of the lease liabilities and right of use assets when the Company is reasonably certain to exercise the option.

Office and Storage Space

On June 10, 2022, the Company entered into a Lease Agreement (the “2022 Lease”) with Just Pick for approximately 21,332 rentable square feet combined in the office building and warehouse located at 4460 Old Dixie Highway, Grant-Valkaria, Florida 32949 (the “Premises”), together with all improvements thereon. The Company must pay Just Pick base rent equal to $17,777 per month during the first year of the Lease Term with a five-year lease renewal option. Thereafter, the monthly base rent will be increased annually with a monthly base rent of $18,666 in the second year, $19,554 in the third year, $20,443 in the fourth year, $22,221 in the fifth year, $23,999 in the sixth year, and one twelfth (1/12th) of the market annual rent for the seventh through eleventh years, if applicable. In addition to the base rent, the Company must pay one hundred percent (100%) of operating expenses, insurance costs, and taxes for each calendar year during the Lease term. For both the ROU asset and ROU liability, the lease renewal option was considered in the calculation with an incremental borrowing rate of 4.5%. The Company had $48,834 and $46,949 in operating lease expenses for the three months ended January 31, 2024, and January 31, 2023, respectively.

Cash flow information related to leases was as follows:

	January 31, 2024			January 31, 2023
Other Lease Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(48,340	)	$	(46,949	)

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets as of January 31, 2024, and October 31, 2023:

Lease Position	January 31, 2024		October 31, 2023
Operating Leases
Operating lease right-of-use assets	$	959,594	$	1,008,428
Right of use liability operating lease current portion	$	189,329	$	184,568
Right of use liability operating lease long term		817,106		866,207
Total operating lease liabilities	$	1,006,435	$	1,050,775

The following table provides the maturities of lease liabilities on January 31, 2024:

	Operating Leases
Maturity of Lease Liabilities on January 31, 2024
2024		172,137
2025		238,800
2026		253,614
2027		274,946
2028 and thereafter		175,989
Total future undiscounted lease payments	$	1,115,486
Less: Interest		(109,051	)
Present value of lease liabilities	$	1,006,435

At January 31, 2024, the Company had no additional leases which had not yet commenced.