Right of Use Assets and Liabilities

As of December 31, 2025, the Company had operating type leases for real estate and no finance type leases. The Company’s leases have remaining lease terms of up to 14.67 years, including options to extend certain leases for up to ten years. Operating lease expense totaled $1.3 million for the year ended December 31, 2025, $0.4 million for the eight months ended December 31, 2024, and $0.4 million for the year ended April 30, 2024, respectively.

During the year ended December 31, 2025, the Company entered into four new operating leases, which resulted in right-of-use assets and lease liabilities of $10.3 million. The Company also amended an existing lease to expand its office space, which increased right-of-use assets and lease liabilities by $2.0 million. These transactions represent non-cash additions to right-of-use assets and lease liabilities.

Supplemental information related to operating leases for the year ended December 31, 2025 was:


Operating cash paid to settle lease liabilities (in thousands)	$	985
Weighted average remaining lease term (in years)	9.04
Weighted average discount rate	12		%

Future lease payments at December 31, 2025 were as follows (in thousands):


Fiscal Year Ended:
2026	$	2,554
2027	2,743
2028	2,709
2029	2,695
2030	2,561
Thereafter	10,009
Total	23,271
Imputed interest	(9,704)
Total liability	$	13,567

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.

Red Cat Holdings, Inc. Leases Disclosure

About Leases Disclosures

Other Available Disclosures