Leases and Commitments

6 Months Ended

Jun. 30, 2023

Operating Leases — The Company leases office space in Atlanta, Georgia, which serves as its corporate headquarters, office space in Malta, which serves as its research and development facility, and vehicles in Malta that are considered operating lease arrangements under ASC 842 guidance. In addition. the Company contracts for month-to-month coworking arrangements in other office spaces in North Carolina, Denmark, Poland, and Rwanda to support its dispersed workforce. As of June 30, 2023, there were no minimum lease commitments related to month-to-month lease arrangements.

Initial lease terms are determined at commencement date, the date the Company takes possession of the property, and the commencement date is used to calculate straight-line expense for operating leases. Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s right-of-use assets and lease liabilities. The Company’s leases have remaining terms of 1 to 3 years. As the Company’s leases do not provide an implicit rate, the present value of future lease payments is determined using the Company’s incremental borrowing rate based on information available at the commencement date.


Lease term and discount rate	June 30, 2023
Weighted average remaining lease term	1.49 Years
Weighted average discount rate	5.0	%

During the six months ended June 30, 2023, the Company terminated four leases including two offices in Malta and two vehicles in Malta. The terminated leases were operating leases. As a result of the terminations, the Company incurred $11 thousand in lease termination fees and recorded a loss of $178 related to this lease termination for the six months ended June 30, 2023.


	June 30, 2023
Leases terminated	4
Lease termination fees	$	10,932
Right-of-use assets derecognized upon lease termination	$	82,095
Lease liabilities derecognized upon lease termination	$	77,648
Loss recognized upon lease termination	$	178

On April 28, 2023, the Company extended the Malta office lease agreement, which would have ended on July 28, 2023, for a term of one additional year. The lease extension increased the right-of-use asset by $82 thousand and the operating lease liability by $83 thousand. The Company classified the amended lease as an operating lease under ASC 842.

Balance sheet information related to leases as of June 30, 2023 and December 31, 2022 was as follows:


	June 30, 2023		December 31, 2022
Right-of-use assets
Operating lease right-of-use assets	$	205,976	$	315,765

Operating lease liabilities
Short-term operating lease liabilities	$	139,056	$	177,795
Long-term operating lease liabilities	41,978		102,407
Total operating lease liabilities	$	181,034	$	280,202

Future maturities of ASC 842 lease liabilities as of June 30, 2023 are as follows:


	Principal Payments		Imputed Interest Payments		Total Payments
2023	$	76,285	$	3,545	$	79,830
2024	81,243		2,418		83,661
2025	22,909		392		23,301
2026	598		—		598
Total future maturities	$	181,035	$	6,355	$	187,390

Total lease expense, under ASC 842, was included in selling, general, and administrative expenses in our consolidated statement of operations for the three and six months ended June 30, 2023 as follows:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Operating lease expense – fixed payments	$	46,402	$	—	$	129,436	$	—
Short term lease expense	15,620		—		37,552		—
Total lease expense	$	62,022	$	—	$	166,988	$	—

Supplemental cash flows information related to leases was as follow:


	Six Months Ended June 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(104,817)

During the six months ended June 30, 2023, the Company did not incur variable lease expense.

Financial Liability Obligation — As of June 30, 2023, the Company’s financial liability totaled $162 thousand for an executed agreement with a telecommunications company for acquiring mobile hardware. On March 3, 2023, the Company provided a 30-day termination notice to the telecommunications company which terminates the mobile hardware data service. Under the contract terms with the telecommunications company, upon termination of the data service the Company must pay the remaining financial liability during the final data service billing period. The remaining financial liability will be paid within the year ending December 31, 2023.

Litigation — The Company is not currently involved with and does not know of any pending or threatening litigation against the Company or any of its officers or directors in connection with its business.