11. LEASES

 

Lawrenceville, New Jersey Lease - In August 2023, the Company renewed its Lawrenceville office lease for a 24-month agreement for 9,850 square feet with monthly rent payments of approximately $22,983 to $23,394. In April 2025, the Company renewed its Lawrenceville office lease until November 30, 2028 for 4,359 square feet (to be reduced to 4,011 following July 1, 2026) with monthly rent payments of approximately $10,361 to $10,863.

 

Huntsville, Alabama Lease - In January 2023, the Company renewed its Huntsville facility lease for a 60-month lease agreement for 11,420 square feet with monthly rent payments of approximately $28,550 to $30,903.

 

The following is a table of the lease payments and maturity of the Company’s operating lease liabilities as of December 31, 2025:

 

  

For the year ending

December 31,

 
2026  $488,822 
2027   498,086 
2028   149,896 
Subtotal future lease payments   1,136,804 
Less imputed interest   (128,039)
Total lease liabilities  $1,008,765 
      
Weighted average remaining life   2.4 years  
      
Weighted average discount rate   9.98%

 

The discount rate used was the Company’s incremental borrowing rate, which is 9.98%, as the Company could not determine the rate implicit in the lease.

 

For 2025, operating lease expense was $521,457 and cash paid for operating leases included in operating cash flows was $519,296. For 2024, operating lease expense was $634,848 and cash paid for operating leases included in operating cash flows was $626,323. Amortization expense was approximately $407,000 and $478,000 for the years ended December 31, 2025 and 2024, respectively.

 

Historical Timeline

Fiscal YearFiled
2025Mar 31, 2026Showing above
2024Feb 27, 2025
2023Mar 28, 2024
2022Mar 30, 2023
2021Mar 31, 2022
2020Mar 19, 2021
2019Mar 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.