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| Leases | Note 9. Leases
The Company conducts its operations in leased facilities under a non-cancelable operating lease expiring on December 31, 2027.
The Company entered into a second amendment to the operating lease agreement, effective June 1, 2025, relating to the leased facilities. The second amendment provides for an extension term to December 31, 2027, and for monthly rent payments of, initially, $7,147, escalating annually by 3.5%.
The Company has capitalized the present value of the minimum lease payments commencing June 1, 2025, using an estimated incremental borrowing rate of 6.5%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.
As of March 31, 2026 and December 31, 2025, the operating lease asset amounted to $142,300 and $161,300, respectively, and operating lease liability amounted to $149,300 and $168,900, respectively. There are no other material operating leases. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. The Company’s leases do not contain variable lease payments or residual value guarantees.
Total operating lease costs were $21,600 and $19,800 for the three months ended March 31, 2026 and 2025, respectively.
Undiscounted future minimum lease payments as of March 31, 2026, by year and in aggregate are as follows:
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