NOTE 8: - LEASES

 

Towards the termination of the previous facility operating lease agreement, the Company signed, in December 2021, an addendum to its facility operating lease agreement with the lessor, which extended the lease period to December 2026. In addition, the Company has the option to extend the term of the lease, or the Extension Option, for an additional period of five years until December 2031. The Company reflected the Extension Option during the evaluation of the lease liability and ROU asset. The monthly lease payments are approximately NIS 292,000 (or $80), which are linked to the consumer price index and will increase by 10% in the event the Company exercises its Extension Option. In addition, the Company has operating leases for vehicles that expire through fiscal year 2028.

 

In October 2024, Ever After Foods signed a facility operating lease agreement with a lessor. The lease period began on March 1, 2025, for a term of five years until February 28, 2030. Ever After Foods has the option to terminate the lease after a period of 36 months or to extend the term of the lease for an additional period of five years, or the Extension Option. The average monthly lease payment, including the Extension Option, is approximately NIS 55,000 (or $15), which is linked to the consumer price index. The monthly lease payments will increase by 5% in the event that Ever After Foods exercises its Extension Option.

 

Below is a summary of the Company’s operating ROU assets and operating lease liabilities:

 

   June 30, 
   2025   2024 
Operating ROU assets  $6,900   $6,558 
           
Operating lease liabilities, current   659    559 
Operating lease liabilities long-term   6,102    5,026 
Total operating lease liabilities  $6,761   $5,585 

Maturities of operating lease liabilities as of June 30, 2025 are as follows:

 

   June 30,
2025
 
2026  $1,389 
2027   1,385 
2028   1,428 
2029   1,349 
2030 and thereafter   4,084 
Total undiscounted lease payments  $9,635 
Less: interest   (2,874)
Present value of lease liabilities  $6,761 

 

All of the leased facilities are located in Israel.

 

The components of lease expense and supplemental cash flow information related to leases for the years ended June 30, 2025 and 2024 are as follows:

 

   Year ended June 30, 
   2025   2024 
Components of lease expense        
Fixed payments and variable payments that depend on an index or rate  $1,321   $1,250 
Sublease income  $30   $50 
Supplemental cash flow information          
Cash paid for amounts included in the measurement of lease liabilities  $1,224   $1,178 

 

As of June 30, 2025, the weighted average remaining lease term is 6.4 years, and the weighted average discount rate is 9%. As of June 30, 2024, the weighted average remaining lease term is 7.4 years, and the weighted average discount rate is 9%. The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.

 

For vehicles, the lease period is usually 3 years.

 

As of June 30, 2025, the remaining lease term for Ever After Foods is 9.7 years, and the discount rate is 14%. The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.

Historical Timeline

Fiscal YearFiled
2025Sep 17, 2025Showing above
2024Sep 18, 2024
2023Sep 12, 2023
2022Sep 21, 2022
2021Sep 13, 2021
2020Sep 10, 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.