10. LEASES

We lease our office space under lease arrangements with expiration dates on or before March 31, 2024. We recognize lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. We combine lease and non-lease components for new and reassessed leases. We apply discount rates to operating leases using a portfolio approach.

On January 31, 2022, we entered into an agreement to lease a 1,390 square feet of office space in Aventura, Florida (“Aventura Lease”). We use this facility as our principal executive offices and for general administrative functions. This lease commenced in the first quarter of 2022 and expired in March 2024.

On April 4, 2024, we entered into an amendment of the Aventura Lease. The lease amendment commenced in April 2024 and expires at the end of the first quarter of 2026. We accounted for this lease as an operating lease in accordance with the provisions of ASC 842 Leases (“ASC 842”). We expect to record a lease liability of $0.1 million, which represents the present value of the lease payments using an estimated incremental borrowing rate of 4.72%. We also recognized a right of use (“ROU”) asset of $0.1 million which represents our right to use an underlying asset for the lease term.

Below is a summary of our ROU assets and lease liabilities (in thousands):

	Balance Sheets Classification		March 31, 2024		December 31, 2023
Assets
Right-of-use assets	Other assets	$	—	$	36
Liabilities
Operating lease liabilities - current	Other current liabilities		—		39
Operating lease liabilities - long-term	Other long-term liabilities		—		—
Total lease liabilities		$	—	$	39

The table below provides supplemental information related to operating leases during the three months ended March 31, 2024 and 2023 (in thousands except for lease term):

		Three Months Ended March 31,
		2024		2023
Cash paid within operating cash flow	$	39	$	282
Weighted average lease terms (in years)		0.00		0.69
Weighted average discount rates		N/A		N/A

We recognize operating lease expense and lease payments from the sublease, on a straight-line basis, in our Condensed Consolidated Statements of Income and Comprehensive Income over the lease terms. During the three months ended March 31, 2024 and 2023, our net operating lease expenses were as follows (in thousands):

		Three Months Ended March 31,
		2024		2023
Operating lease cost	$	39	$	318
Variable lease payments		1		128
Sublease income		—		(257	)
Total lease cost	$	40	$	189

As of March 31, 2024, we have no future lease obligation.