XML 29 R19.htm IDEA: XBRL DOCUMENT

Note 12 - Commitments

9 Months Ended

Jul. 31, 2022

Notes to Financial Statements

Commitments Disclosure [Text Block]

Note 12 – Commitments

We have operating leases for corporate offices, manufacturing facilities, and certain storage units. Our leases have remaining lease terms of 1 year to 10 years, some of which include options to extend the leases for up to 5 years. A portion of our operating leases are leased from K&K Unlimited, a company controlled by Darren Clark, the former owner and current President of Cables Unlimited, to whom we make rent payments totaling $16,000 per month.

We also have other operating leases for certain equipment. The components of our facilities and equipment operating lease expenses for the period ended July 31, 2022 were as follows (in thousands):

		Three Months Ended				Nine Months Ended
		July 31, 2022				July 31, 2022
Operating lease cost		$	477			$	1,048
Short-term lease cost			-				1

Other information related to leases was as follows (in thousands):

		July 31, 2022				October 31, 2021
Supplemental Cash Flows Information
ROU assets obtained in exchange for lease obligations:
Operating leases		$	13,967			$	1,453

Weighted Average Remaining Lease Term
Operating leases (in months)			116.40				25.26

Weighted Average Discount Rate
Operating leases			3.75	%			3.54	%

Future minimum lease payments under non-cancellable leases as of July 31, 2022 were as follows:

Year ending October 31,		Operating Leases

2022 (excluding nine months ended July 31, 2022)		$	267
2023			2,286
2024			1,991
2025			1,796
2026			1,835
Thereafter			12,123
Total future minimum lease payments			20,298
Less imputed interest			(3,459	)
Total		$	16,839

Reported as of July 31, 2022		Operating Leases
Other current liabilities		$	1,576
Operating lease liabilities			15,263
Finance lease liabilities			-
Total		$	16,839

As of July 31, 2022, operating lease ROU asset was $14 million and operating lease liability totaled $16.8 million, of which $1.6 million is classified as current. There were no finance leases as of July 31, 2022.

The Cables and Connectors facilities, consisting of four buildings for a total of 21,908 square feet, are leased by RF Industries, Ltd. We renewed the lease effective as of effective August 1, 2022, for 6 month term expiring on January 31, 2023. The monthly rental payment under the new lease currently is $33,957.40 per month.

The Cables and Connectors and C Enterprises facilities will relocate and consolidate into one building consisting of a total86,952 square feet, which is leased by RF Industries, Ltd. The lease will commence December 1, 2022, for a 120-month term expiring November 30, 2032. The monthly rental payments under the lease will be $139,123 per month for the first year and will increase annually. During the three months ended July 31, 2022, the Company obtained possession of the building to begin construction and renovation, which resulted in a lease liability of $15.6 million ($14.9 million in long-term and $726,000 in current lease liability), a right of use asset of $12.8 million and other receivables related to tenant improvement allowance of $2.7 million being recorded. The discount rate used to calculate the lease liability was 3.76%. Further, as a result of the early possession, the Company recognized additional rent expense of $135,000 for the three months ended July 31, 2022.