BUDA JUICE, INC. Leases Disclosure
| 8. | LEASES |
The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company leases its corporate office and warehouse facilities under a non-cancellable operating lease agreement. The lease commenced on February 7, 2020, for a facility located at Dallas, Texas, comprising approximately 21,476 square feet. Leases with an initial term of 12 months or less are not included on the balance sheets.
On February 2, 2025, the Company entered into a First Amendment to its existing lease agreement for its corporate headquarters and production plant located in Dallas, Texas. The amendment extends the lease term for an additional 60 months beginning August 1, 2025 and adds approximately 16,380 square feet of adjacent space, bringing the total leased premises to approximately 37,856 square feet. The amendment includes annual base rent increases ranging, in thousands, from $16 to $18 per month over the extended term and provides for two additional 60-month renewal options.
In accordance with ASC 842, the Company recognizes a right-of-use (ROU) asset and corresponding lease liability for its operating lease based on the present value of future lease payments over the lease term, discounted using the Company’s incremental borrowing rate. At lease commencement, the applicable discount rate was 7.60%. Lease expense is recognized on a straight-line basis over the lease term. The lease terminates in July 2030.
| December 31, 2025 | December 31, 2024 | |||||||
| Weighted-average remaining lease term | 55 months | 7 months | ||||||
| Weighted-average discount rate | 7.60 | % | 3.25 | % | ||||
As of December 31, 2025, and 2024 operating lease liabilities pertaining to its office and warehouse facility totaled $782 and $68, respectively.
As of December 31, 2025 and 2024, the Company recognized the following related to its operating lease:
| Description | December 31, 2025 | December 31, 2024 | ||||||
| (in thousands) | ||||||||
| Lease expense | $ | 254 | $ | 172 | ||||
| ROU asset – gross | 833 | 550 | ||||||
| Less: Accumulated amortization | (58 | ) | (485 | ) | ||||
| ROU asset – net | $ | 775 | $ | 65 | ||||
| Lease liability - current | 135 | 68 | ||||||
| Lease liability – non-current | 647 | |||||||
Amortization of right-of-use assets for the years ended December 31, 2025, and 2024 as $123 and $108, respectively.
Future minimum lease payments under the non-cancellable operating lease as of December 31, 2025 and 2024, are as follows:
| Year | December 31, 2025 | December 31, 2024 | ||||||
| (in thousands) | ||||||||
| 2026 | $ | 190 | $ | 69 | ||||
| 2027 | 197 | |||||||
| 2028 | 205 | |||||||
| 2029 | 213 | |||||||
| 2030 | 128 | |||||||
| Total lease payments | 933 | 69 | ||||||
| Less: imputed interest | (151 | ) | (1 | ) | ||||
| Present value of lease liability | $ | 782 | $ | 68 | ||||
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.