Note 7: Leased Right-of-Use Assets, net

Leased right-of-use assets consisted of the following (in thousands):

As of June 30, 2025, the weighted-average lease term for the Company’s operating leases was 69 months and the weighted-average discount rate was 11.2%. As of December 31, 2024, the weighted-average lease term for operating leases was 73 months and the weighted-average discount rate was 11.1%.

Effective April 1, 2025, the Company executed a lease reassignment agreement with the landlord for its Ontario office, resulting in the reassignment of one of its suites to a new tenant. The Company continues to lease and occupy remaining space under the original terms of the lease agreement. The reassignment reduced the Company’s leased space from 570 square feet to 74 square feet, and associated rent obligations, but did not change any other conditions of the lease. The modification was accounted for as a partial termination of the lease under ASC 842. Accordingly, the Company remeasured the lease liability as of the effective date of the modification using the discount rate based on the remaining lease term and payments. Based on the modified lease payment terms, the discount rate was determined to be 8.96%, and the remeasured lease liability was $16,042. This represented a reduction of $0.1 million compared to the pre-modification lease liability. The Company adjusted the right-of-use asset based on the proportion of the reduction in the remeasured lease liability, resulting in a reduction of $0.1 million. The Company recognized a gain on lease modification of $4,253 in the consolidated statements of operations. The remaining lease costs of $16,770 will be recognized on a straight-line basis over the remaining lease term.

Operating lease costs during the three months ended June 30, 2025 and 2024 were $0.4 million and $0.7 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statements of operations. Operating lease costs during the six months ended June 30, 2025 and 2024 were $0.7 million and $0.8 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statements of operations.

During the three and six months ended June 30, 2025, the Company recorded finance lease costs of $0.1 million and $0.2 million respectively, primarily comprised of ROU amortization of $0.1 million and $0.2 million respectively. During the three and six months ended June 30, 2024, the Company recorded finance lease costs of $0.3 million and $0.7 million, respectively, primarily comprised of ROU amortization of $0.3 million and $0.6 million, respectively. ROU amortization is recorded within General and Administrative Expenses and accretion of interest expense is recorded within Other Expense, net on the Company’s condensed consolidated statements of operations.