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Note 7 - Leases

9 Months Ended

Jul. 31, 2025

Lessee, Operating and Finance Leases Disclosure [Text Block]

(7)

Leases

The Company has an operating lease agreement for approximately 34,000 square feet of office, manufacturing and warehouse space in Plano, Texas (near Dallas). The lease term expires on November 30, 2029.

The Company has an operating lease agreement for approximately 36,000 square feet of warehouse space in Roanoke, Virginia. The lease term expires on April 30, 2026.

The Company also leases certain office equipment under an operating lease with an initial 60-month term. The lease term expires in November 2029.

The Company leases printers that are used in the Roanoke, Virginia manufacturing facility. The lease term expires on August 22, 2026. The right-of-use asset is being amortized on a straight-line basis over seven years. When the lease term ends, title of the printers will transfer to the Company and the remaining net book value of the right-of-use asset will be classified as property and equipment.

The Company leases test equipment that is used in the Asheville, North Carolina manufacturing facility. The lease term expires on June 26, 2030. The right-of-use asset is being amortized on a straight-line basis over five years. When the lease term ends, title of the test equipment will transfer to the Company and the remaining net book value of the right-of-use asset will be classified as property and equipment.

The Company’s lease contracts may include options to extend or terminate the leases. The Company exercises judgment to determine the term of those leases when such options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.

The Company includes contract lease components in its determination of lease payments, while non-lease components of the contracts, such as taxes, insurance, and common area maintenance, are expensed as incurred. At commencement, right-of-use assets and lease liabilities are measured at the present value of future lease payments over the lease term. The Company uses either the rate implicit in the lease, where available, or its incremental borrowing rate based on information available at the time of lease commencement to measure the present value of future payments.

Operating lease expense is recognized on a straight-line basis over the lease term. Short-term leases with an initial term of 12 months or less are expensed as incurred. The Company’s short-term leases have month-to-month terms.

Operating lease right-of-use assets of $1,795,891 and $1,872,206 were included in other assets at July 31, 2025 and October 31, 2024, respectively. Operating lease liabilities of $411,273 and $1,444,593 were included in accounts payable and accrued expenses, and other noncurrent liabilities, respectively, at July 31, 2025. Operating lease liabilities of $376,965 and $1,525,423 were included in accounts payable and accrued expenses, and other noncurrent liabilities, respectively, at October 31, 2024. Operating lease expense recognized during the three months and nine months ended July 31, 2025 totaled $153,107 and $462,766, respectively. Operating lease expense recognized during the three months and nine months ended July 31, 2024 totaled $109,143 and $327,431, respectively.

The weighted average remaining lease term for the operating leases was 49.9 months and the weighted average discount rate was 9.5% as of July 31, 2025.

For the three months and nine months ended July 31, 2025, cash paid for operating lease liabilities totaled $147,390 and $432,529, respectively. For the three months and nine months ended July 31, 2024, cash paid for operating lease liabilities totaled $112,670 and $335,628, respectively. For the three months ended July 31, 2025, there were no right-of-use assets obtained in exchange for new operating lease liabilities. For the nine months ended July 31, 2025, right-of-use assets obtained in exchange for new operating lease liabilities totaled $266,141 and there was a reduction in right-of-use assets for terminated lease liabilities totaling $21,344. For the three months and nine months ended July 31, 2024, there were no right-of-use assets obtained in exchange for new operating lease liabilities.

For the three months and nine months ended July 31, 2025, right-of-use assets obtained in exchange for new finance lease liabilities totaled $188,185. For the three months and nine months ended July 31, 2024, there were no right-of-use assets obtained in exchange for new finance lease liabilities.

Finance lease right-of-use assets of $274,770 and $111,844 were included in other assets at July 31, 2025 and October 31, 2024, respectively. Finance lease liabilities of $72,903 and $176,879 were included in accounts payable and accrued expenses, and other noncurrent liabilities, respectively, at July 31, 2025. Finance lease liabilities of $39,277 and $54,174 were included in accounts payable and accrued expenses, and other noncurrent liabilities, respectively, at October 31, 2024. Interest expense related to the finance leases totaled $2,070 and $4,098, respectively, for the three months and nine months ended July 31, 2025. Interest expense related to the finance lease totaled $1,297 and $4,224, respectively, for the three months and nine months ended July 31, 2024. For the three months and nine months ended July 31, 2025, amortization expense related to the finance leases totaled $10,511 and $25,260, respectively. For the three months and nine months ended July 31, 2024, amortization expense related to the finance lease totaled $7,374 and $22,123.

The weighted average remaining lease term for the finance leases was 47.2 months and the weighted average discount rate was 7.1% as of July 31, 2025.

For the three months ended July 31, 2025, cash paid for the finance lease liabilities totaled $2,070 for interest and $12,449 for principal. For the nine months ended July 31, 2025, cash paid for the finance lease liabilities totaled $4,098 for interest and $31,854 for principal. For the three months ended July 31, 2024, cash paid for the finance lease liability totaled $1,297 for interest and $9,419 for principal. For the nine months ended July 31, 2024, cash paid for the finance lease liability totaled $4,224 for interest and $27,927 for principal.

The Company’s future payments due under leases reconciled to the lease liabilities are as follows:

Fiscal Year	Operating leases			Finance leases
2025 ⁽¹⁾	$	147,390		$	22,121
2026		540,420			101,330
2027		493,180			45,616
2028		510,241			45,616
2029		527,981			45,616
Thereafter		44,122			30,411
Total undiscounted lease payments		2,263,334			290,710
Present value discount		(407,468	)		(40,928	)
Total lease liability	$	1,855,866		$	249,782

(1) Remaining three months of fiscal year 2025.