LEASES

9 Months Ended

Sep. 30, 2024

NOTE 14 — LEASES

The Company determines if an arrangement is a lease and classifies as operating or finance lease at the lease commencement date. A lease is defined as a contract, or part of contract, that conveys the right to control the use of an asset for a time period in exchange for consideration. At September 30, 2024, the Company’s lease portfolio consists of operating leases related to office facilities in Estonia and Bulgaria. The lease terms for both leases are five years. Options to extend or terminate a lease are included in the lease term when it is reasonably certain that the Company will exercise such options. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation, or to be reset periodically to market rental rates or the periodic rent is fixed over the lease term. Lease payments for operating leases, consisting of fixed payments for base rent, is recognized on a straight-line basis over the lease term. The Company elected to record short-term lease costs on a straight-line basis over the term of the leases related to its shared work space facilities primarily in the United States and London, and incurred $92 and $66 for the three months ended September 30, 2024 and 2023, respectively, and $273 and $547 for the nine months ended September 30, 2024 and 2023, respectively.

Operating Leases - Lessee

The following table discloses the operating asset and liability balances at September 30, 2024 and December 31, 2023:

		As of
Leases	Classification	September 30, 2024		December 31, 2023
Assets
Total operating leased assets, net	Operating lease right-of-use assets⁽¹⁾	$	3,892	$	4,340

Liabilities
Current	Operating lease liabilities	$	965	$	804
Non-current	Operating lease liabilities – non-current		2,953		3,577
Total lease liabilities		$	3,918	$	4,381

⁽¹⁾	Operating lease right-of-use assets are recorded, net of accumulated amortization of $988 and $378, at September 30, 2024 and December 31, 2023, respectively.

The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The incremental borrowing rate is based on the Company’s credit rating based on its market valuation metrics and corporate yield curves observed for public companies with similar credit ratings.

Operating lease costs were $293 and $266 for the three months ended September 30, 2024 and 2023, respectively, and $861 and $523 for the nine months ended September 30, 2024 and 2023, respectively.

GAN LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except share and per share amounts)

Maturities of lease liabilities, including reconciliation to the lease liabilities, based on required contractual payments, are as follows:

	Operating Leases
Remainder of 2024	$	304
2025		1,220
2026		1,220
2027		1,220
2028		680
Total lease payments		4,644
Less: future interest costs		726
Present value of lease liabilities	$	3,918

Other information related to leases as of and for the nine months ended September 30, 2024 and 2023 was as follows:

	Nine Months Ended
	September 30,
	2024			2023
Operating lease weighted-average remaining lease term (years)		3.8			4.8
Operating lease weighted-average discount rate		9.0	%		9.0	%

Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	873		$	432

GAN Ltd 10-Q