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Leasing Arrangements

6 Months Ended

Jun. 30, 2025

Note 4- Leasing Arrangements

We have operating leases for our office and integration facilities in both Round Rock, Texas and Georgetown, Texas as well as for certain equipment. Our leases have remaining lease terms of 9 to 119 months. As of June 30, 2025, we have not entered into any lease arrangement classified as a finance lease.

We determine if an arrangement is a lease at its inception. Operating leases are included in the lease right-of-use assets, current lease liabilities and lease liabilities, non-current, on our consolidated balance sheets. We have elected an accounting policy to not recognize short-term leases (one year or less) on the balance sheet. We also elected the package of practical expedients which applies to leases that commenced before the adoption date. By electing the package of practical expedients, we did not need to reassess whether any existing contracts are or contain leases, the lease classification for any existing leases and initial direct costs for any existing leases.

Right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot be determined, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term, with variable lease expense recognized in the period in which the costs are incurred. Variable lease expense is comprised of common are maintenance (CAM), property taxes and property insurance. Components of lease expense and other information is as follows (in ‘000’s):

	Three Months Ended June 30, (unaudited)				Six Months Ended June 30, (unaudited)
	2025		2024		2025		2024
Operating lease cost:
Operating lease cost	$	973	$	236	$	1,964	$	457
Variable lease cost		202		114		324		227
Total operating lease cost	$	1,175	$	350	$	2,288	$	684

Cash paid for operating leases		420		136		656		265
New right-of-use assets – operating leases		-		-		-		-

The following presents information regarding the Company's operating leases as of June 30:

	2025			2024
Weighted average remaining lease term – operating leases (months)		109			56
Weighted average discount rate – operating leases		7	%		5	%

Future minimum lease payments under non-cancellable leases as of June 30, 2025 were as follows (in ‘000’s):

	Fiscal Year
2025	$	1,813
2026		3,662
2027		3,777
2028		3,905
2029		3,265
2030		1,538
Thereafter		16,678
Total minimum future lease payments		34,638
Less imputed interest		(10,099	)
Total	$	24,539

Reported as of June 30, 2025 (in ‘000’s) :
Current portion of lease liability	$	1,891
Non-current portion of lease liability		22,648
	$	24,539