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LEASES
 12 Months Ended
Dec. 31, 2024
Leases  
LEASES

 

Other Commitments:

 

The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments. Since inception, the Company entered into agreements to act as a reseller for certain vendors; joint development contracts with third parties; referral agreements where the Company would pay a referral fee to the referrer for business generated; sales agent agreements whereby sales agents would receive a fee equal to a percentage of revenues generated by the agent; business development agreements and strategic alliance agreements where both parties agree to cooperate and provide business opportunities to each other and in some instances, provide for a right of first refusal with respect to certain projects of the other parties; agreements with vendors where the vendor may provide marketing, investor relations, public relations, software licenses, technical consulting or subcontractor services, vendor arrangements with non-binding minimum purchasing provisions, and financial advisory agreements where the financial advisor would receive a fee and/or commission for raising capital for the Company.

 

11. LEASES

 

On September 1, 2020, the Company entered into a five-year operating lease for their headquarters building in San Diego, California, with two one-year options to extend the term of the lease. At this time, it is not reasonably certain that the Company will extend the term of the lease and, therefore, the renewal periods have been excluded from the right-of-use (“ROU”) asset.

 

As part of the All Cell acquisition, the Company assumed a facility lease located in Broadview, Illinois, and recorded $0.2 million in right-of-use asset and lease liability. The lease term ended on August 31, 2023 and contains clauses for annual rent escalation. The present values of the lease payment streams were calculated using an effective borrowing rate of 10%. The Company remained in the facility on a month-to-month lease and then entered into a five-year lease extension effective February 1, 2024 and recorded $1.4 million in right-of-use asset and lease liability.

 

As part of the acquisitions in Serbia, the Company assumed a lease for a small office and a few minimal leases in Belgrade, Serbia, which have an indefinite term and may be terminated at any time with 30 day’s notice. Because of the short term and small value, these leases were not capitalized.

 

During the twelve months ended December 31, 2024 and 2023, cash paid for amounts included in the measurement of operating lease liabilities were $1.1 million and $0.8 million, respectively. Operating lease costs for the twelve months ended December 31, 2024 and 2023 were $1.0 million and $0.8 million, respectively.

 

The table below summarizes the Company's lease-related assets and liabilities as of December 31, 2024 and 2023 (in thousands):

Schedule of lease assets and liabilities          
   Year Ended 
   December 31, 
   2024   2023 
Lease assets  $1,893   $1,026 
           
Lease liabilities          
Current operating lease liabilities, included in current liabilities  $696   $615 
Noncurrent operating lease liabilities, included in long-term liabilities   971    455 
Total Lease liabilities  $1,667   $1,070 

 

Supplemental cash flow information related to the lease is as follows:

               
   Year Ended 
   December 31, 
   2024   2023 
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows from operating leases  $1,098   $628 
Right-of-use assets obtained in exchange for lease obligations:          
Operating leases  $1,697   $– 
Weighted Average Remaining Lease Term:          
Operating leases   3.22    3.77 
Weighted Average Discount Rate:          
Operating leases   10%    10% 

 

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to discount the lease payments to present value. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The future minimum rental commitments for our operating leases is as follows (in thousands):

    
2025   820 
2026   364 
2027   377 
2028   390 
Total undiscounted future minimum payments   1,951 
Less imputed interest   (284)
Total lease liability  $1,667