12. Leases:

We lease datacenters, corporate offices, antenna towers and fiber-optic cables under operating leases. The Company does not have any leases classified as finance leases.

Our leases have remaining lease terms of 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense were as follows (Dollar amounts in thousands of U.S. dollars): 

Lease expense is presented in general and administrative expenses and direct cost of revenues within our Consolidated Statements of Operations and Comprehensive Income (Loss).

Variable lease payments are determined based on specific terms and conditions outlined in the lease agreements. These may include payments for utilities, which are based on actual usage, and maintenance costs, which are determined based on expenses incurred.

Information related to leases was as follows (Dollar amounts in thousands of U.S. dollars):

Maturity of lease liability as of  December 31, 2025 (Dollar amounts in thousands of U.S. dollars):

Operating lease payments include payments under the non-cancellable term, without any additional amounts related to options to extend lease terms that are not reasonably certain of being exercised.

We have agreements with several third-party network partners who construct and operate fiber networks used to deliver our internet services. Under these arrangements, the partners build and activate new serviceable addresses each month. The financial terms of these arrangements may include fixed fees, variable fees, or a combination of both. The partners control and manage the construction. We do not control the construction process and are therefore not considered the owner during buildout. The leases for these addresses will commence once the lessor makes the underlying assets available for our use, to deliver services to our customers.

During the second quarter of Fiscal 2025, the Company identified an immaterial error in the application of lease accounting for a long-term fiber network access agreement. Upon reassessment, the Company determined that only the initial three-year exclusive-use period under the agreement met the definition of a lease under ASC 842. The remaining term represents a service arrangement and should not have been included in the ROU asset or operating lease liability calculation. As a result, the Company recorded a cumulative adjustment in the second quarter of Fiscal 2025 to reduce previously recognized ROU assets and operating lease liabilities, and to recognize a catch-up lease expense totaling $3.0 million with a corresponding reduction in the ROU asset. The adjustment was recorded in the current period as the error was not material to previously issued financial statements.

As of December 31, 2025, we have not entered into any lease agreements that have not yet commenced, and therefore are not included in the lease liability.

Impairment of ROU asset

During the year ended December 31, 2025, the Company recognized an impairment loss of $0.7 million related to two warehouse-related ROU assets. The impairment was triggered by management’s decision to cease use of the two warehouses and to implement a plan of abandonment for those locations. 

In accordance with ASC 842 and the impairment guidance in ASC 360, the Company performed a recoverability assessment and determined that the carrying amounts of the ROU assets were not recoverable. The ROU assets were written down to their estimated fair value. In accordance with ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 

The impairment loss is recorded within “Impairment of property and equipment” in the Consolidated Statement of Operations and Comprehensive Income (Loss) and the related lease liabilities remain on the balance sheet and continue to be measured using the effective interest method.