5. Lease Commitments

The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 year and 5 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of the lease liability nor the right of use asset. The Company has certain leases that have terms that are a year or less and are accounted on a straight-line basis over the term of the lease. The Company recognized $24 thousand and $48 thousand of lease expense in the quarter and six months ended June 26, 2026, respectively, on these leases, as compared to $39 thousand and $78 thousand, respectively, for the same periods in 2025.

5. Lease Commitments (continued)

The weighted average remaining lease term is 2.1 years. The weighted average discount rate utilized is 6.0%. For the quarter and six months ended June 26, 2026, the Company paid $0.4 million and $0.7 million, respectively, from operating cash flows for its operating leases.

As of June 26, 2026, the Company does not have any additional material operating leases that have not yet commenced.