LEASES

12 Months Ended

Dec. 31, 2025

8. LEASES

The Company leases office and factory space under various operating leases. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company gives consideration to instruments with similar characteristics when calculating its incremental borrowing rate. The Company’s operating leases have remaining lease terms of 1 year to 8 years. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

The weighted average remaining lease term and weighted average discount rate at December 31, 2025, was six years (2024 - eight years) and 6.8% (2024 – 7.1%), respectively.

The Company entered into a sublease arrangement for part of the Phoenix Facility during the second quarter of 2022, commencing July 1, 2022. The Company entered in to an additional sublease arrangement for the remaining part of the Phoenix Facility during the third quarter of 2024, commencing October 1, 2024, which was terminated in the fourth quarter of 2025 resulting in $0.5 million of bad debt expense. The Company is actively pursuing options to sublease this area. Additionally, the Company entered into a sublease agreement for the Plano, DXC to one of our Construction Partners in that region, in which the subtenant has assumed responsibility for all monthly rent, utilities, maintenance, taxes and other costs as of April 1, 2023, through December 31, 2024. The Plano sublease agreement was extended for an additional four years, through October 31, 2028.

In May 2025, the Company entered into a leasing agreement for a Houston DXC. Undiscounted cash flows associated with this lease are $1.4 million. The rent obligations have been discounted at a rate of 6.05% to determine the lease liability.

On December 30, 2025, the Company entered an early termination agreement for its Rock Hill Facility lease (refer to Note 5). As a result of this termination, the lease liability and ROU asset associated with this lease have been derecognized. Undiscounted cash

flows associated with this modification were $10.5 million. The termination of the lease resulted in a $1.0 million fee paid for the termination and a $0.9 million gain on disposal.

In November 2025, the Company modified and existing agreement for a Calgary manufacturing facility to extend the leasing term for an additional three years. Undiscounted cash flows associated with this modification are C$3.5 million. ($2.6 million). The rent obligations have been discounted at a rate of 5.15% to determine the lease liability.

In the fourth quarter of 2025, we determined that the Phoenix Facility (which was closed in 2022) was impaired. The Company determined that there were no impairment indicators for the facilities in use.

The following table includes ROU assets included on the balance sheet at December 31, 2025 and 2024:


	ROU Assets
	Cost			Accumulated depreciation			Net book value
At January 1, 2024		49,856			(20,043	)		29,813
Disposals		(958	)		958			-
Modifications		572			-			572
Depreciation expense		-			(3,945	)		(3,945	)
Exchange differences		(2,113	)		1,042			(1,071	)
At December 31, 2024		47,357			(21,988	)		25,369
Additions		1,168			-			1,168
Termination of Rock Hill Facility lease		(7,868	)		2,151			(5,717	)
Disposals		(3,170	)		2,547			(623	)
Modifications		2,234			-			2,234
Depreciation expense		-			(4,085	)		(4,085	)
Exchange differences		1,215			(661	)		554
At December 31, 2025		40,936			(22,036	)		18,900

The components of the lease cost for the years ended December 31, 2025, 2024 and 2023 were as follows:


	For the year ended December 31,
	2025			2024			2023
Operating lease cost (1)
Fixed lease cost		6,084			6,069			6,688
Sublease income		(1,975	)		(1,908	)		(1,393	)
Total operating lease cost		4,109			4,161			5,295

(1) The lease costs, net of sublease income, are reflected in the Consolidated Statements of Operations and Comprehensive (Loss) Income as follows:
	For the year ended December 31,
	2025			2024			2023
Cost of goods sold		3,880			4,183			4,427
Selling and marketing		333			269			793
General and administrative		(117	)		(304	)		(113	)
Technology and development		13			13			188
Total operating lease cost		4,109			4,161			5,295

The following table includes lease liabilities included on the balance sheet at December 31, 2025 and 2024:


	Lease Liability
	2025			2024
At January 1,		29,681			33,456
Additions		1,168			-
Termination of Rock Hill Facility lease		(7,575	)		-
Modifications		2,234			572
Accretion		1,999			2,129
Repayment of lease liabilities		(5,893	)		(5,339	)
Exchange differences		603			(1,137	)
At December 31,		22,217			29,681
Current lease liabilities		5,215			5,619
Long-term lease liabilities		17,002			24,062

The following table includes maturities of operating lease liabilities at December 31, 2025:


2026			5,403
2027			4,549
2028			4,360
2029			3,181
2030			2,976
Thereafter			7,369
Total			27,838
Total lease liability			22,217
Difference between undiscounted cash flows and lease liability			5,621