RCM TECHNOLOGIES, INC. Commitments Disclosure

18.

LEASES

 

Leases are recorded in accordance with FASB ASC 842, Leases which requires lessees to recognize a right of use (“ROU”) asset and an operating right of use liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases.

 

The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The right of use asset also consists of any lease incentives received. The lease terms used to calculate the right of use asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. The Company has lease agreements which require payments for lease and non-lease components. The Company has elected to account for these as a single lease component with the exception of its real estate leases.

 

The components of lease expense were as follows:

 

		Fiscal Years Ended
		January 3, 2026				December 28, 2024
Operating lease cost		$1,411				$1,356
Finance lease cost
Amortization of right of use assets		$	835			$	594
Interest on lease liabilities			70				46
Total finance lease cost		$	905			$	640

 

 

Supplemental Cash Flow information related to leases was as follows:

 

		January 3, 2026				December 28, 2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	1,423			$	1,214
Operating cash flows from finance leases		$	41			$	25
Financing cash flows from finance leases		$	850			$	595
Right of use assets obtained in exchange for lease obligations
Operating leases		$	745			$	3,407
Finance leases		$	222			$	2,172

 

Supplemental Balance Sheet information as of January 3, 2026 and December 28, 2024 related to leases was as follows:

 

		January 3, 2026				December 28, 2024
Operating leases
Operating lease right of use assets		$	4,832			$	5,174
Operating right of use liability - current		$	(1,209	)		$	(1,046	)
Operating right of use liability - non-current			(3,813	)			(4,355	)
Total operating lease liabilities		$	(5,022	)		$	(5,401	)
Finance leases
Property and equipment - (right of use assets)		$	2,394			$	2,172
Accumulated depreciation			(1,197	)			(362	)
Property and equipment, net		$	1,197			$	1,810
Finance lease liability - current		$	(843	)		$	(698	)
Finance lease liability - non-current			(380	)			(1,112	)
Total finance lease liabilities		$	(1,223	)		$	(1,810	)
Weighted average remaining lease term in years
Operating leases			3.48				4.41
Finance leases			1.41				2.50
Weighted average discount rate
Operating leases			6.36	%			6.36	%
Finance leases			4.82	%			4.88	%

 

 

Maturities of lease liabilities are as follows:

 

Fiscal Year		Operating Leases				Finance Leases
2026		$	1,447			$	886
2027			1,254				387
2028			1,124				-
2029			726				-
2030			181				-
Thereafter			1,022				-
Total lease payments			5,754				1,273
Less: imputed interest			(732	)			(50	)
Total		$	5,022			$	1,223