NOTE 11 LEASES

(a)          Lessee leases:

The Company has operating leases for office space that include fixed base rent payments, as well as variable rent payments to reimburse the landlord for operating expenses and taxes. The Company’s variable lease payments do not depend on a published index or rate, and therefore, are expensed as incurred. The Company includes only fixed payments for lease components in the measurement of the right-of-use asset and lease liability. There are no residual value guarantees. The Company also leases certain equipment under a finance lease.

The following table summarizes the operating and finance lease amounts included in the Company's consolidated balance sheets as of  June 30, 2026 and December 31, 2025:

Operating lease costs, variable lease costs and short-term lease costs included in selling, general and administrative expenses for the three and six months ended June 30, 2026 and June 30, 2025 were as follows:

Finance lease costs were immaterial for the three and six months ended June 30, 2026.  At December 31, 2025, the Company had no finance lease obligations.

The annual maturities of lease liabilities as of June 30, 2026 were as follows:

The weighted-average remaining lease term for our operating leases was 7.16 years and 7.47 years as of June 30, 2026 and  December 31, 2025, respectively.  The weighted-average discount rate of our operating leases was 6.92% and 6.86% as of June 30, 2026 and  December 31, 2025, respectively.   Cash paid for amounts included in the measurement of operating lease liabilities was $0.7 million and $0.4 million for the six months ended June 30, 2026 and June 30, 2025, respectively.

The remaining lease term for our finance lease is 4.90 years and the discount rate is 6.25% as of June 30, 2026. Cash paid for amounts included in the measurement of finance lease liabilities was less than $0.1 million for the six months ended June 30, 2026.

(b)          Lessor leases:

The Company enters into contracts with third-parties to lease equipment to its customers. In certain of these contracts, the Company has the option to purchase the equipment back from such third-party at the end of the lease term with the end customer. In these cases, the Company determined that these contracts represent a lease, and the Company is a lessor under these contracts. The sum of the lease payments received by the Company exceed the cost of the equipment. Therefore, these leases are determined to be sales-type leases.  The Company receives the full lease payment for the equipment upfront when the equipment is delivered to the customer and installation is complete. Therefore the Company does not record a receivable or interest income related to these leases.  The Company recognizes all revenue and costs associated with the sales-type lease within revenue, and cost of services, respectively, upon delivery and installation of the equipment to the customer. For the three months ended June 30, 2026 and June 30, 2025, total revenue recognized from sales-type leases was $0.4 million and $0.4 million, respectively ($1.0 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively).