OPERATING LEASES
The Company leases office space in various locations in Alabama, Pennsylvania, and Mississippi. These leases have terms expiring from 2026 through 2029 but do contain optional extension terms. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense on a straight-line basis over the lease term.
Supplemental balance sheet information related to operating leases is as follows: | | | | | | | | | | | | | |
| (In thousands) | December 31, 2025 | | December 31, 2024 | | |
| Operating lease right-of-use assets: | | | | | |
| Operating lease right-of-use assets | $ | 2,010 | | | $ | 3,092 | | | |
| Operating lease liabilities: | | | | | |
| Other accrued liabilities | 772 | | | 944 | | | |
| Operating lease liabilities, net of current portion | 1,346 | | | 2,293 | | | |
| Total operating lease liabilities | $ | 2,118 | | | $ | 3,237 | | | |
| Weighted average remaining lease term in years | 2.90 | | 3.60 | | |
| Weighted average discount rate | 3.9% | | 4.1% | | |
Because our leases do not provide a readily determinable implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate is the estimated rate incurred to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. We used the incremental borrowing rate on January 1, 2019, for operating leases that commenced prior to that date.
The future minimum lease payments payable under these operating leases subsequent to December 31, 2025 are as follows: | | | | | |
| (In thousands) | |
| 2026 | $ | 840 | |
| 2027 | 709 | |
| 2028 | 462 | |
| 2029 | 231 | |
| 2030 | — | |
| Thereafter | — | |
| Total lease payments | 2,242 | |
| Less imputed interest | (124) | |
| Total | $ | 2,118 | |
Total rent expense for the years ended December 31, 2025, 2024, and 2023 was $1.1 million, $1.8 million, and $1.8 million, respectively, is included in operating expense in the consolidated statement of operations.
Total cash paid for amounts included in the measurement of lease liabilities within operating cash flows from operating leases for the years ended December 31, 2025, 2024, and 2023 was $1.1 million, $1.8 million, and $1.8 million, respectively.
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.