12. Leases

For operating leases, the Company records right-of-use assets and corresponding lease liabilities in the balance sheets for all leases with terms longer than twelve months. The Company has one operating lease, with no variable lease costs, and no finance leases as of June 30, 2026 and December 31, 2025.

On July 1, 2022, the Company executed a lease for new office space in the Dallas, Texas metropolitan area. The space was occupied on December 20, 2022. The lease has a term of 91 months and began when we took control of the space on December 20, 2022 and ends on July 20, 2030, without an option to extend. The initial base rent was $12.6 thousand per month, after 7 months of free rent. The lease provides for annual increases. The base rent for the lease in the final year is $13.9 thousand per month.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company’s uses the implicit rate in its lease calculations when it is readily determinable. Since the Company’s leases do not provide implicit rates, to determine the present value of lease payments, management uses the Company’s estimated incremental borrowing rate for a fully collateralized loan with a similar term of the lease that is based on the information available at the inception of the lease.

Schedule of Operating Lease Cost 

Future payments due under operating leases as of June 30, 2026, are as follows (in thousands):

Schedule of Future payments Due Under Operating Lease