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LEASES
 9 Months Ended
Sep. 30, 2025
Leases  
LEASES

NOTE 6—LEASES

 

OmniMetrix leases office space and office equipment under operating lease agreements. The office lease, originally set to expire on September 30, 2025, was amended on June 20, 2025, to extend the lease term through November 30, 2030. The amendment also includes scheduled increases in monthly base rent and provides for conditional rent abatement for October and November 2025, as well as a tenant improvement allowance of up to $14,000 for qualifying alterations if completed by September 30, 2026. The Company concluded the amendment constitutes a modification event under ASC 842 and the Company reassessed and remeasured the lease. The Company remeasured the lease payments based on the updated lease term, incremental borrowing rate and adjusted the right of use asset and lease liability accordingly. The lease was determined to still represent an operating lease. The present value of future minimum lease payments on non-cancelable operating leases as of September 30, 2025 using a discount rate of 6.0% is $1,046,000. The 6.0% discount rate used is the estimated incremental borrowing rate when the lease was entered into, which, as defined in ASC 842: Leases, is the rate of interest that a lessee would have had to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments. Operating lease cost, net of sublease, for the nine-month periods ended September 30, 2025 and 2024 were $127,000 and $97,000, respectively. Operating lease cost for the three-month periods ended September 30, 2025 and 2024 were $59,000 and $33,000, respectively.

 

 

Supplemental cash flow information related to leases consisted of the following (in thousands):

 

  

For the Nine Months

Ending September 30,

 
   2025   2024 
Cash paid for operating lease liabilities  $99   $97 

 

Supplemental balance sheet information related to leases consisted of the following:

 

  

As of

September 30, 2025

 
Weighted average remaining lease terms for operating leases   5.2 

 

The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2025 (in thousands):

 

  

Year ended

September 30,

 
2026  $176 
2027   237 
2028   246 
2029   256 
2030   266 
Thereafter   46 
Total undiscounted cash flows   1,227 
Less: Imputed interest   (181)
Present value of operating lease liabilities (a)  $1,046 

 

  (a) Includes current portion of $116,000 for operating leases.

 

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in Buford, Georgia. The sublease was amended on August 15, 2025 to extend the term through September 30, 2028 and to provide for a monthly sublease payment of $3,374 (plus an annual escalator each year of 4%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. During each of the nine- and three-month periods ended September 30, 2025 and 2024, after the offset of the investment in leasehold improvements and other expenses related to the sublease, the Company paid its landlord $0 and $7,000, respectively. The Company has paid a total of $16,000 for its share of the sublease profit since the lease commencement. In addition to the $16,000 paid since inception, $9,000 in sublease profit due has been accrued at September 30, 2025. The sublease income is included in net lease costs in the accompanying unaudited condensed consolidated financial statements. Income from the sublease for the nine months ended September 30, 2025 and 2024 was $23,000 for both periods. Income from the sublease for the three months ended September 30, 2025 and 2024 was $9,000 and $8,000, respectively. Below are the future payments (in thousands) expected under the sublease:

 

   Year ended
September 30,		 
2026  $40 
2027   42 
2028   44 
Total undiscounted cash flows  $126