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LEASES

6 Months Ended

Jun. 30, 2025

8. LEASES

We determine if an arrangement is a lease at inception. We have operating leases for office and temporary living space as well as for some office equipment. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liability and non-current operating lease liability in our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. The Company does not have any finance leases.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rates, which are derived from information available at the lease commencement date, in determining the present value of lease payments. We give consideration to our bank financing arrangements, geographical location and collateralization of assets when calculating our incremental borrowing rates. We review our incremental borrowing rate on a quarterly basis.

Our lease terms include options to extend the lease when we believe that we may want the right to exercise that option. Leases with a term of less than 12 months are not recorded in the condensed consolidated balance sheets. Our lease agreements do not contain any residual value guarantees. For real estate leases, we account for the lease and non-lease components as a single lease component. Some leases include escalation clauses and termination options that are factored in the determination of the lease payments when appropriate. If a lease is modified after the effective date, the operating lease ROU asset and liability are re-measured using the current incremental borrowing rate.

Lease expense is included in direct operating costs, general and administrative expense, selling and marketing expense and research and development expense in the condensed consolidated statements of operations based on the nature of the expense. Our lease terms are determined taking into account lease renewal options, the Company’s anticipated operating plans and leases that are on a month-to-month basis. The Company also has some related party leases – see Note 10.

The components of lease expense were as follows:

SCHEDULE OF LEASE EXPENSE

	2025		2024		2025		2024
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	($ in thousands)
Operating lease cost	$	522	$	620	$	1,098	$	1,257
Short-term lease cost		-		-		5		4
Variable lease cost		4		7		11		12
Total - net lease cost	$	526	$	627	$	1,114	$	1,273

Short-term lease cost represents leases that were not capitalized as the lease term as of the later of January 1, 2025 or the beginning of the lease was less than 12 months. Variable lease costs include utilities, real estate taxes and common area maintenance costs.

Supplemental balance sheet information related to leases is as follows:

	June 30, 2025			December 31, 2024
	($ in thousands)
Operating leases:
Operating lease ROU assets, net	$	3,058		$	3,133

Current operating lease liabilities	$	1,294		$	1,287
Non-current operating lease liabilities		1,785			1,847
Total operating lease liabilities	$	3,079		$	3,134

Operating leases:
ROU assets	$	3,964		$	5,125
Asset lease expense		(901	)		(1,994	)
Foreign exchange (loss)/gain		(5	)		2
ROU assets, net	$	3,058		$	3,133
Operating lease ROU assets, net	$	3,058		$	3,133

Weighted average remaining lease term (in years):
Operating leases		4.8			5.0
Weighted average discount rate:
Operating leases		13.8	%		14.2	%
Weighted average discount rate operating leases		13.8	%		14.2	%

Supplemental cash flow and other information related to leases is as follows:

	2025		2024		2025		2024
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	($ in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	521	$	609	$	1,082	$	1,277

ROU assets obtained in exchange for lease liabilities:
Operating leases, excluding terminations	$	385	$	125	$	831	$	374

Maturities of lease liabilities are as follows:

Operating leases - Years ending December 31,	($ in thousands)
2025 (six months)	$	1,008
2026		968
2027		673
2028		397
2029		195
Thereafter		1,253
Total lease payments		4,494
Less: imputed interest		(1,415	)
Total lease obligations		3,079
Less: current obligations		1,294
Long-term lease obligations	$	1,785

The Company leases certain apartments which are subleased to others. The sublease agreements are currently on a month-to-month basis and are considered operating leases. For the three and six months ended June 30, 2025, the Company received approximately $3,000 and $13,000, respectively, in sublease income. For the three and six months ended June 30, 2024, the Company received sublease income of approximately $28,000 and $56,000, respectively.