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Leases

6 Months Ended

Jun. 30, 2024

10. Leases.

The Company is party to leasing contracts in which the Company is the lessee. These lease contracts are classified as either operating or finance leases. The Company’s lease contracts include land, buildings, and equipment. Remaining lease terms range from 1 to 15 years with various term extension options available. The Company includes optional extension periods and early termination options in its lease term if it is reasonably likely that the Company will exercise an option to extend or terminate early.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term, at the later of the commencement date or business combination date. Because most of the Company’s leases do not provide an implicit rate of return, the discount rate is based on the collateralized borrowing rate of the Company, on a portfolio basis.

The weighted average remaining lease term and weighted average discount rate is as follows:

	June 30,
	2024
Weighted average remaining lease term (years)
Finance leases		1.35
Operating leases		14.36
Weighted average discount rate applied
Finance leases		3.95	%
Operating leases		8.22	%

The components of lease expense from continuing operations are as follows within our condensed consolidated statements of operations and comprehensive income (loss):

	Three months ended June 30, 2024		Six months ended June 30, 2024
Operating lease expense:
Operating lease cost	$	1,055,000	$	1,504,000
Short-term and variable lease cost		258,000		344,000
Finance lease expense:
Finance lease cost - depreciation		3,000		3,000
Total lease expense	$	1,316,000	$	1,851,000

	Three months ended June 30, 2023		Six months ended June 30, 2023
Operating lease expense:
Operating lease cost	$	10,000	$	25,000
Short-term and variable lease cost		12,000		20,000
Total lease expense	$	22,000	$	45,000

Lease expense from discontinued operations	$	22,000	$	45,000

Supplemental cash flow information related to leases where the Company is the lessee is as follows:

	Three months ended June 30, 2024		Six months ended June 30, 2024
Operating cash flows from operating leases	$	909,000	$	1,228,000
Financing cash flows from finance leases		3,000		3,000
Leased assets obtained in exchange for operating lease liabilities		-		34,289,000
Leased assets obtained in exchange for finance lease liabilities		-		22,000

Operating cash flows from operating leases during the three and six months ended June 30, 2023 were $0 and $10,000, respectively.

As of June 30, 2024, the maturities of the operating and finance lease liabilities are as follows:

Year ending December 31,	Operating Leases			Finance Leases
remainder of 2024	$	1,843,000		$	9,000
2025		3,758,000			11,000
2026		3,833,000			-
2027		3,909,000			-
2028		3,806,000			-
2029		3,827,000			-
Thereafter		38,081,000			-
Total Lease Payments		59,057,000			20,000

Less discount to PV		(25,086,000	)		(1,000	)
Liability balance	$	33,971,000		$	19,000