CPS TECHNOLOGIES CORP/DE/ Leases Disclosure

(7) Leases

 

The Company had one real estate lease in 2024 expiring in February 2026. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these equipment leases have been capitalized as the Company elected an accounting policy for short-term leases, which allows lessees to avoid recognizing right-of-use assets and liabilities for leases with terms of 12 months or fewer.

 

The real estate lease expiring in 2026 (the “Norton facility lease’) is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability are based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at the commencement date of the lease. The Company does not separate lease components from non-lease components.  The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

The Norton facility lease comprises approximately 38 thousand square feet. The lease is a triple net lease wherein the Company is responsible for payment of all real estate taxes, operating costs and utilities.  The Company also has an option to buy the property and a first right of refusal during the term of the lease.  Annual rental payments are through maturity are reflected in the table below.

 

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating lease as of December 28, 2024:

 

		December 28, 2024
		Lease payments
Maturity of capitalized lease liability
2025			165,240
2026			27,540
Total undiscounted operating lease payments		$	192,780
Less: Imputed interest			(6,780	)
Present value of operating lease liability		$	186,000
Balance Sheet Classification
Current lease liability		$	160,000
Long-term lease liability			26,000
Total operating lease liability		$	186,000
Other Information
Weighted-average remaining lease term for capitalized operating leases (in months)			14
Weighted-average discount rate for capitalized operating leases			6.6	%

 

Operating Lease Costs and Cash Flows

 

Operating lease cost and cash paid was $165 thousand for the twelve months ended December 28, 2024 and $162 thousand during the year ended December 30, 2023. These costs are related to its long-term operating lease. All other short-term leases were immaterial.

 

Estimated monthly payments under the terms of the Norton facility lease, escalate from $13 thousand to $14 thousand over the lease term.