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Leases

6 Months Ended

Jun. 30, 2025

13. Leases.

The Company is party to leasing contracts in which the Company is the lessee. These lease contracts are classified as either operating or finance leases. The Company’s lease contracts include land, buildings, and equipment. Remaining lease terms range from 1 to 15 years with various term extension options available. The Company includes optional extension periods and early termination options in its lease term if it is reasonably likely that the Company will exercise an option to extend or terminate early.

ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term, at the later of the commencement date or business combination date. Because most of the Company’s leases do not provide an implicit rate of return, the discount rate is based on the collateralized borrowing rate of the Company, on a portfolio basis.

As of June 30, 2025, December 31, 2024 and 2023, the Company leased space from a related party under a non-cancelable operating lease for its corporate headquarters. The lease has monthly payments of $375 through September 30, 2025. The lease does not include a renewal option.

The weighted average remaining lease term and weighted average discount rate is as follows at:


	June 30, 2025		December 31, 2024
Weighted average remaining lease term (years)
Finance leases	5.8		4.2
Operating leases	13.4		13.9
Weighted average discount rate applied
Finance leases	8.1	%	5.5	%
Operating leases	8.2	%	8.2	%

The components of lease expense from continuing operations are as follows within our consolidated statements of operations and comprehensive income (loss):


	Six Months Ended		Year Ended
	June 30, 2025		December 31, 2024
Operating lease expense:
Operating lease cost	$	2,127,000	$	3,608,000
Short-term and variable lease cost		161,000		374,000
Finance lease expense:
Finance lease cost - amortization		50,000		8,000
Finance lease cost - interest		50,000		2,000
Total lease expense	$	2,388,000	$	3,992,000

The components of lease expense from discontinued operations are as follows within our consolidated statements of operations and comprehensive income (loss):


	Year Ended
	December 31, 2023
Operating lease expense:
Related party lease	$	3,000
Other		14,000
Total lease expense	$	17,000
Lease expense from discontinued operations	$	14,000

Supplemental cash flow information related to leases where the Company is the lessee is as follows:


	Six Months Ended		Year Ended
	June 30, 2025		December 31, 2024
Operating cash flows from operating leases	$	1,896,000	$	2,330,000
Operating cash flows from finance leases		50,000		2,000
Financing cash flows from finance leases		39,000		16,000
Leased assets obtained in exchange for operating lease liabilities		64,000		34,289,000
Leased assets obtained in exchange for finance lease liabilities		263,000		84,000

As of June 30, 2025, the maturities of the operating and finance lease liabilities are as follows:


	Operating Leases		Finance Leases
2026	$	3,834,000	$	95,000
2027		3,908,000		91,000
2028		3,906,000		91,000
2029		3,806,000		65,000
2030		3,870,000		31,000
Thereafter		36,129,000		24,000
Total lease payments		55,453,000		397,000
Less discount to present value		(22,373,000)		(72,000)
Lease liability balance	$	33,080,000	$	325,000