RIGHT-OF-USE ASSETS

12 Months Ended

Dec. 31, 2024

Right-of-use Assets

RIGHT-OF-USE ASSETS

NOTE－13 RIGHT-OF-USE ASSETS

The Company adopted ASU No. 2016-02, Leases, on January 1, 2019, the beginning of the fiscal 2019, using the modified retrospective approach. The Company determines whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient. Some of the operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.

Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, the incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term.

The Company adopts 3.00% as weighted average incremental borrowing rate to determine the present value of the lease payments. The weighted average remaining life of the lease was 3 years.

The table below presents the lease-related assets and liabilities recorded on the balance sheet.

	As of December 31,
	2024		2023
	US$’000		US$’000
Assets
Finance lease, right-of-use asset, net (classified under property and equipment, net)		507		1,006
Operating lease, right-of-use asset, net		774		1,592
Total right-of-use asset		1,281		2,598
Liabilities
Current:
Finance lease liabilities		4,017		2,674
Operating lease liabilities		564		808
		4,581		3,482
Non-current:
Finance lease liabilities		4,460		3,470
Operating lease liabilities		226		795
Lease liabilities non-current		4,686		4,265
Total lease liabilities		9,267		7,747

The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense for the financial years.

	Financial Years ended December 31,
	2024		2023		2022
	US$’000		US$’000		US$’000
Finance lease cost:
Interest on lease liabilities (per ASC 842)		36		97		66
Operating lease cost:
Operating lease expense (per ASC 842)		812		866		828
Short-term lease expense (other than ASC 842)		444		44		20
Total lease expense		1,256		910		848

Components of Lease Expense

We recognize lease expense on a straight-line basis over the term of the operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.

Future Contractual Lease Payments as of December 31, 2024

The below table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next three years ending December 31:

Financial Years ending December 31,	Operating and finance lease amount
	US$’000
2025	4,904
2026		5,233
Less: interest		(870	)
Present value of lease liabilities		9,267
Representing:
Current liabilities		4,581
Non-current liabilities		4,686
		9,267