Rank One Computing Corp Leases Disclosure

Note 6 – Leases 

 

Operating Leases 

 

The Company’s significant operating leases include the following at December 31, 2025: 

 

The Company leases approximately 6,600 square feet of office space in Morgantown, West Virginia. The lease requires payments of $799,956 over the five-year term. The lease expires in November 2029, subject to extension. 

 

The Company leases approximately 5,892 square feet of office space in Denver, Colorado. The lease requires payments of $1,221,363 over the eight-year term. The lease expires in June 2029, subject to extension. 

 

The Company leases approximately 1,546 square feet of office space in Grand Rapids, Michigan. The lease requires payments of $98,558 over the three year term. The lease expires in February 2027, subject to extension. 

 

The Company’s lease agreements do not contain material variable lease payments, residual value guarantees, or restrictive covenants. Renewal and termination options are not included in the lease term unless the Company is reasonably certain to exercise such options. As of December 31, 2025, the Company had no renewal or termination options that were reasonably certain to be exercised, and therefore none are reflected in the lease term or related lease liabilities.

 

The Company determines if an arrangement is a lease at inception. An arrangement is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If a lease is identified, classification is determined at lease commencement. Operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The Company’s leases do not provide an implicit interest rate and therefore the Company estimates its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the interest rate that the Company would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term. Operating lease right-of-use (“ROU”) assets are based on the corresponding lease liability adjusted for any lease payments made at or before commencement, initial direct costs, and lease incentives. Renewals or early terminations are not accounted for unless the Company is reasonably certain to exercise these options. Operating lease expense is recognized, and the ROU asset is amortized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for separately. For short-term leases, defined as leases with a term of twelve months or less, the Company elected the practical expedient to not recognize an associated lease liability and ROU asset. Lease payments for short-term leases are expensed on a straight-line basis over the lease term. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the Company’s consolidated balance sheets. The Company has not entered into any Finance leases.

Operating lease expense, including short term leases, is included within selling, general and administrative expense in the consolidated statements of income. The components of lease expense for the years ended December 31, 2025 and 2024 were as follows:

 

		Year Ended December 31, 2025				Year  Ended December 31, 2024
Operating lease:
Fixed lease cost		$	350,850			$	231,277
Short-term lease cost			57,192				26,934
Total operating lease cost		$	408,042			$	258,211
Supplemental balance sheet information related to leases was as follows:
Operating Leases:
Operating lease right-of-use asset		$	1,088,181			$	1,363,956
Current operating lease liabilities		$	306,113			$	268,508
Noncurrent operating lease liabilities			912,229				1,201,803
Total operating lease liabilities		$	1,218,342			$	1,470,311

 

Supplemental cash flow and other information related to leases were as follows:

 

		Year Ended December 31, 2025				Year Ended December 31, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases		$	255,030			$	178,932
Weighted average remaining lease term (in years):
Operating leases			3.63				4.34
Weighted average discount rate:
Operating leases			5.94	%			6.99	%

 

Long-term obligations under the operating leases at December 31, 2025, mature as follows:

 

Future Minimum Lease Payments		December 31, 2025
2026		$	367,849
2027			354,991
2028			363,640
2029			267,346
2030			-
Total lease payments			1,353,826
Less: Amounts representing interest			(135,484	)
Total lease obligations			1,218,342
Less: short-term obligations			(306,113	)
Total long-term		$	912,229

 

As of December 31, 2025, the Company had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the years ended December 31, 2025, and 2024 was $408,003 and $258,211, respectively.