NOTE 2 - LEASES

The Company has operating leases for office facilities in various locations throughout the United States. Additionally, the Company has financing leases for vehicles it uses for its operations throughout the United States. The Company’s leases have remaining terms of one to eight years. Certain of the Company’s leases include options to extend the term of the lease or to terminate the lease prior to the end of the initial term. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining total future lease payments.

During the first quarter of 2025, the Company entered into a lease amendment that modified the timing of contractual lease payments related to its lease in Columbia, Maryland. Based on the Company's evaluation, the amendment qualified as a lease modification under ASC 842. As a result of the modification, the Company recognized a decrease of $1,344,000 in both its operating lease liability and the corresponding operating lease right-of-use asset ("ROU asset").

In December 2025, the Company determined that the operations of its wholly owned subsidiary, Waycare Technologies LTD ("Waycare"), located in Tel Aviv, Israel, were no longer sustainable given the entity's operating cost structure. The Company initiated a plan to wind down the Tel Aviv operations and consolidate all engineering functions into its U.S. facilities. The closure was announced to employees on February 23, 2026, and Tel Aviv operations ceased on February 24, 2026. 

As a result of the decision to close the Tel Aviv office, the Company identified a triggering event requiring an impairment assessment of the related long-lived assets, including the operating lease ROU asset associated with the Tel Aviv office lease. The Company determined that the undiscounted future cash flows expected from the use and eventual disposition of the operating lease ROU asset were less than its carrying amount and, accordingly, the asset was written down to its estimated fair value. The Company estimated the fair value of the operating lease ROU asset to be approximately $0, based on the expected abandonment of the asset with no material residual or sublease value (a Level 3 fair value measurement). As a result, the Company recognized an impairment charge of $2,708,000 related to the operating lease ROU asset associated with the Tel Aviv facility during the year ended December 31, 2025. This impairment charge was included in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2025. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding the wind-down of operations in Tel Aviv. No impairment charges related to the Company's right-of-use assets were recognized during the three months ended March 31, 2026.

In January 2026, the Company entered into an amendment to the lease for its corporate headquarters in Columbia, Maryland that revised the timing of monthly base rent payments through the remaining lease term. The Company accounted for the amendment as a lease modification that is not a separate contract under ASC 842. As a result of the modification, the Company recognized a decrease of approximately $224,000 in both its operating lease liability and the corresponding ROU asset. The modification did not result in a gain or loss.

During the three months ended March 31, 2026, the Company exercised its option to terminate its lease for office space in Plano, Texas, effective December 31, 2026. The Company recognized a loss on lease termination of approximately $117,000, which is included in general and administrative expenses in the condensed consolidated statements of operations. As a result of the lease termination, the Company recognized a $50,000 early termination liability, reduced its operating lease liability by approximately $77,000, and reduced the corresponding right-of-use asset by approximately $144,000.

Lease cost recognized in our unaudited condensed consolidated statements of operations is summarized as follows (dollars in thousands):

Other information about lease amounts recognized in our condensed consolidated financial statements is as follows: 

Maturities of operating and financing lease liabilities for continuing operations on March 31, 2026 were as follows (dollars in thousands):