Uploaded the app.py file which contains the logic

app.py

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+import gradio as gr
+import numpy as np
+
+
+def custom_composite(im):
+    # Get image dimensions and check the number of channels
+    h, w, c = im["background"].shape  # c could be 3 (RGB) or 4 (RGBA)
+
+    # Create a black background with 3 channels (RGB)
+    black_bg = np.zeros((h, w, 3), dtype=np.uint8)
+
+    # Extract layers, ensuring they have 3 channels (RGB)
+    def to_rgb(layer):
+        return (
+            layer[:, :, :3] if layer.shape[2] == 4 else layer
+        )  # Drop alpha if present
+
+    layer1 = to_rgb(im["layers"][0]) if len(im["layers"]) > 0 else black_bg
+    layer2 = to_rgb(im["layers"][1]) if len(im["layers"]) > 1 else black_bg
+
+    # Merge layers onto the black background
+    final_composite = np.where(layer1 > 0, layer1, black_bg)
+    final_composite = np.where(layer2 > 0, layer2, final_composite)
+
+    return final_composite
+
+
+with gr.Blocks() as demo:
+    with gr.Row():
+        im = gr.ImageEditor(
+            type="numpy", crop_size="1:1", brush=gr.Brush(default_color="white")
+        )
+        im_preview = gr.Image(format="png")
+
+    im.change(custom_composite, outputs=im_preview, inputs=im, show_progress="hidden")
+
+if __name__ == "__main__":
+    demo.launch()