CPI AEROSTRUCTURES INC Leases Disclosure
| 9. | LEASES |
The Company leases manufacturing and office space under an agreement classified as an operating lease. The company entered into an amendment to the lease agreement for its operating facility on April 15, 2025 that extends the term of the lease until April 30, 2031. The lease agreement does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease. In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes and operating expenses during the lease terms. The result of the lease amendment was an increase of ROU assets and lease liabilities of $8,190,636.
The Company also leases office equipment in agreements classified as operating leases.
For the years ended December 31, 2025 and 2024, the Company’s operating lease expense was $2,379,916 and $2,137,830, respectively.
Future minimum lease payments under non-cancellable operating leases as of December 31, 2025 were as follows:
| Year ending December 31, | ||||
| 2026 | $2,304,533 | |||
| 2027 | $2,336,077 | |||
| 2028 | $2,300,990 | |||
| 2029 | $2,360,515 | |||
| 2030 | $2,431,331 | |||
| Thereafter | $ 818,389 | |||
| Total undiscounted operating lease payments | $12,551,835 | |||
| Less imputed interest | (2,764,330) | |||
| Present value of operating lease payments | $ | $9,787,505 | ||
The following table sets forth the ROU assets and operating lease liabilities as of December 31, 2025 and 2024:
| 2025 | 2024 | |||||||
| Assets | ||||||||
| ROU assets, net | $ | 9,515,207 | $ | 2,856,200 | ||||
| Liabilities | ||||||||
| Current operating lease liabilities | $ | 1,434,385 | $ | 2,162,154 | ||||
| Long-term operating lease liabilities | 8,353,120 | 938,418 | ||||||
| Total lease liabilities | $ | 9,787,505 | $ | 3,100,572 | ||||
The Company’s weighted average remaining lease term for its operating leases is 5.5 years as of December 31, 2025. The Company’s weighted average discount rate for its operating leases is 9.52% as of December 31, 2025. Cash paid for operating leases the year ended December 31, 2025 and 2024 was $2,283,354 and $2,228,784, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Apr 8, 2024 | |
| 2022 | Apr 14, 2023 | |
| 2021 | Aug 19, 2022 | |
| 2020 | Apr 15, 2021 | |
| 2019 | Aug 25, 2020 | |
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.