12. Lease Agreements

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 arising from the lease. The Company’s lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date to determine the appropriate discount rate by multiple asset classes. Variable lease payments that are not based on an index or that result from changes to an index subsequent to the initial measurement of the corresponding lease liability are not included in the measurement of lease ROU assets or liabilities and instead are recognized in earnings in the period in which the obligation for those payments is incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term. Rent expense, including related property taxes, was $1,346 and $1,317 for the three months ended June 30, 2026 and 2025, respectively. Rent expense, including related property taxes, was $2,743 and $2,756 for the six months ended June 30, 2026 and 2025, respectively. These amounts are included as a component of selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.

The components of the Company’s lease costs are classified on its condensed consolidated statements of operations and comprehensive loss as follows:

 Schedule of Lease Costs

The table below shows the cash and non-cash activity related to the Company’s lease liabilities during the period:

 Schedule of Cash Activity Related to the lease Liabilities

As of June 30, 2026, the maturities of the Company’s operating lease liabilities were as follows:

 Schedule of Future Minimum Payments under Operating Leases

As of June 30, 2026, the weighted average remaining lease term of the Company’s operating lease was 19.75 years, and the weighted average discount rate used to determine the lease liability for the operating lease was 14.24%.