LEASES
The Company has operating and finance leases for office, manufacturing and warehouse facilities and automobiles. The Company’s leases have remaining lease terms of one to ten years. Options to renew or extend leases beyond their initial term have been excluded from measurement of the ROU assets and lease liabilities as exercise is not reasonably certain.
The weighted average remaining lease term and the discount rate for the reporting periods are as follows:
| | | | | | | | | | | | | | | | | |
| As of | | As of | | As of |
| December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Operating Leases | | | | | |
| Weighted average remaining lease term (years) | 5.1 | | 4.4 | | 4.8 |
| Weighted average discount rate | 7.0 % | | 6.9 % | | 5.8 % |
| | | | | |
| Finance Leases | | | | | |
| Weighted average remaining lease term (years) | 4.7 | | 5.7 | | 6.7 |
| Weighted average discount rate | 7.0 % | | 7.0 % | | 6.9 % |
A letter of credit for $1,250 was issued to the lessor of the Company's corporate headquarters building at inception of the lease and is renewed annually and remains outstanding as of December 31, 2025.
The components of lease expense are as follows:
| | | | | | | | | | | | | | | | | |
| | Year Ended | | Year Ended | | Year Ended |
| | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Operating lease cost | $ | 1,981 | | | $ | 1,614 | | | $ | 1,284 | |
| | | | | | |
| Finance lease cost: | | | | | |
| Amortization of right-of-use assets | 1,047 | | | 1,047 | | | 1,020 | |
| Interest on lease liabilities | 557 | | | 626 | | | 673 | |
| Total finance lease cost | $ | 1,604 | | | $ | 1,673 | | | $ | 1,693 | |
Short term lease expense was not significant for the years ended December 31, 2025, 2024 and 2023.
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended | | Year Ended | | Year Ended |
| December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | |
| Operating cash flows for operating leases | $ | 2,053 | | | $ | 1,486 | | | $ | 1,235 | |
| Operating cash flows for finance leases | 557 | | | 626 | | | 673 | |
| Financing cash flows for finance leases | 1,186 | | | 1,056 | | | 992 | |
| | | | | |
| Right-of-use assets obtained in exchange for lease obligations: | | | | | |
| Operating Leases | 2,474 | | | 2,765 | | | 1,509 | |
| Finance Leases | — | | | 421 | | | — | |
| | | | | |
| | | | | |
Supplemental balance sheet information related to leases was as follows:
| | | | | | | | | | | |
| As of December 31, 2025 | | As of December 31, 2024 |
| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 6,868 | | | $ | 5,727 | |
| | | |
Current lease liabilities | 1,734 | | | 1,619 | |
| Operating lease liabilities | 5,541 | | | 4,579 | |
| Total operating lease liabilities | $ | 7,275 | | | $ | 6,198 | |
| | | |
| Finance Leases | | | |
| Property and equipment, at cost | $ | 14,765 | | | $ | 14,765 | |
| Accumulated depreciation | (9,922) | | | (8,875) | |
| Property and equipment, net | $ | 4,843 | | | $ | 5,890 | |
| | | |
Current lease liabilities | $ | 1,306 | | | $ | 1,186 | |
| Finance lease liabilities | 5,975 | | | 7,281 | |
| Total finance lease liabilities | $ | 7,281 | | | $ | 8,467 | |
Maturities of lease liabilities as of December 31, 2025 were as follows:
| | | | | | | | | | | |
| Operating Leases | | Finance Leases |
| 2026 | $ | 1,957 | | | $ | 1,775 | |
| 2027 | 1,905 | | | 1,808 | |
| 2028 | 1,475 | | | 1,842 | |
| 2029 | 1,072 | | | 1,818 | |
| 2030 | 683 | | | 1,339 | |
2031 and thereafter | 1,748 | | | — | |
| Total payments | $ | 8,840 | | | $ | 8,582 | |
| Less imputed interest | (1,565) | | | (1,301) | |
| Total lease liabilities | $ | 7,275 | | | $ | 7,281 | |
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.