ROU Assets and Leasing Liabilities

3 Months Ended

Mar. 31, 2026

3.	ROU Assets and Leasing Liabilities

The Company has operating and finance leases where it records the ROU assets, and a related lease liability as required under the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) 842. The lease liabilities are determined by the net present value of total lease payments and amortized over the life of the lease. The Company’s leases are for the following types of assets:

	·	Computer hardware and copy machines- The Company’s finance lease ROU assets consist of computer hardware and copy machines. These leases have two and three year lives and are in various stages of completion.

	·	Office space - The Company’s operating lease ROU assets include its rental agreements for its offices in Plano, Texas, and a data service center in Allen, Texas. The Plano offices operating lease expires on April 30, 2035. The data service center operating lease expires in October 2026.

In accordance with ASC 842, the Company has elected practical expedients to combine lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

As the implicit rate is not readily determinable for the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments.

For the three months ended March 31, 2026 and 2025, the Company had $0.1 million and $0.1 million, respectively, in lease payments related to operating leases and had $41 thousand and $0.1 million, respectively, in lease payments related to financing leases.

Schedule of Items Appearing on the Unaudited Condensed Consolidated Statements of Operations (in thousands):

Schedule of lease cost
	Three Months Ended
	March 31, 2026		March 31, 2025
Operating expense:
Amortization Expense – Finance ROU	$	29	$	172
Lease expense – Operating ROU		104		11
Other expense:
Interest Expense – Finance ROU		12		20
Total Lease Expense	$	145	$	203

Future minimum lease obligations consisted of the following as of March 31, 2026 (in thousands):


	Operating			Finance
Year ending December 31,	ROU Leases			ROU Leases			Total
Remaining 2026	$	264		$	148		$	412
2027		146			4			150
2028		223			3			226
2029		228			–			228
2030		234			–			234
Thereafter		1,075			–			1,075
	$	2,170		$	155		$	2,325
Less Interest*		(676	)		(23	)
	$	1,494		$	132

*	Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying unaudited condensed consolidated statements of operations.