note 15 — Leases

In January 2024, the Company entered into a lease for office space and car parking bays in Malta. The term of the lease is for six years, although the Company may terminate the lease at any time after three years. The monthly rent payment for the office is approximately $15 thousand for the first year, with a 3% annual increase.

Right-of-use assets for these administrative office leases as of June 30, 2025, and December 31, 2024, are summarized as follows:

The Company has no other material operating or financing leases with terms greater than 12 months.

Lease expense for operating leases recorded in the balance sheet is included in operating costs and expenses and is based on the future minimum lease payments recognized on a straight- line basis over the term of the lease plus any variable lease costs. Operating lease expenses, inclusive of short-term and variable lease expenses, included in the Company's unaudited condensed consolidated statements of operations for the three months ended  June 30, 2025 and 2024, were $60 thousand and $81 thousand, respectively. Operating lease expenses, inclusive of short-term and variable lease expenses, included in the Company’s unaudited condensed consolidated statements of operations for the six months ended June 30, 2025 and 2024, were $117 thousand and $136 thousand, respectively.

Annual maturities analysis under the Malta lease agreement at June 30, 2025, is as follows:

Operating lease obligations are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate on the date of adoption of ASU 2016-02, Leases. As of June 30, 2025, the weighted average remaining lease term is 4.5 years and the weighted average discount rate used to determine the operation lease liability was 4.5%.