6. Operating Lease

 

The Company leases office space under an operating lease. In December 2021, the Company entered into a lease agreement for 2,367 square feet of office space commencing December 1, 2021. The initial lease term was for two years, and there was an option to extend the lease for an additional year. On March 3, 2023, the Company expanded its leased space through a lease amendment by an additional 2,456 square feet commencing March 15, 2023. The term of the amended lease is for three years with an option to extend the lease for three additional years. On June 28, 2024, the Company further expanded its leased space through a lease amendment by an additional 2,581 square feet commencing July 15, 2024. The term of the amended lease unifies with the current expiration of the lease which is March 31, 2026. 

 

The lease amendment represents a modification of the original lease, and the Company evaluated the new agreement under ASC 842, Leases. The Company classified the lease as an operating lease and, on July 15, 2024, determined that the present value of the lease was approximately $1.0 million using an estimated incremental borrowing rate of 10%. During the years ended December 31, 2024 and December 31, 2025, the Company reflected amortization of right-of-use asset of approximately $0.4 million and $0.5 million, respectively, resulting in a right-of-use asset balance of approximately $0.1 million at December 31, 2025.

 

During the years ended December 31, 2024 and December 31, 2025, the Company made cash payments on the lease of $0.5 million and $0.6 million, respectively towards the lease liabilities. As of December 31, 2025, the total lease liability was approximately $0.1 million

 

As of December 31, 2025, maturities of the Company’s lease liabilities are as follows (in thousands):

 

   Operating Lease 
     
Year ending December 31, 2026  $118 
Total lease payments   118 
Less imputed interest rate / present value discount   (1)
Present value of lease liability   117 
Less current portion   (117)
Long term portion  $
-
 

 

In November 2025, the Company entered into a lease agreement for 10,734 square feet of office space commencing on February 1, 2026. The initial lease term is for one and a half years, and there is an option to extend the lease for an additional year. The Company is evaluating the new agreement under ASC 842, Leases.

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Historical Timeline

Fiscal YearFiled
2025Mar 30, 2026Showing above
2024Mar 31, 2025
2023Mar 28, 2024
2022Mar 31, 2023
2021Mar 31, 2022

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.