Leases

6 Months Ended

Jun. 30, 2024

Leases

Leases

4. Leases

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are then determined at the lease commencement date.

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities include primarily leases for office and warehouse spaces used to conduct our business. The Company’s operating leases also include a building with land utilized for our waste treatment operations which includes a purchase option (see “Note 15 – Subsequent Events” for a discussion of the purchase of this property by the Company in July 2024). Finance leases consist primarily of processing and transport equipment used by our facilities’ operations.

The components of lease cost for the Company’s leases for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Operating Leases:
Lease cost	$	149	$	156	$	292	$	313
Finance Leases:
Amortization of ROU assets		65		38		131		76
Interest on lease liability		21		7		43		13
		86		45		174		89
Short-term lease rent expense		2		1		2		1
Total lease cost		237		202		468		403

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2024, were:

	Operating Leases			Finance Leases
Weighted average remaining lease terms (years)		5.0			4.1
Weighted average discount rate		7.4	%		8.9	%

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2023, were:

	Operating Leases			Finance Leases
Weighted average remaining lease terms (years)		6.0			2.2
Weighted average discount rate		7.9	%		6.0	%

The following table reconciles the undiscounted cash flows for the operating and finance leases at June 30, 2024, to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

	Operating Leases			Finance Leases
2024	$	266		$	183
2025		595			345
2026		594			192
2027		567			157
2028		436			134
2029 and thereafter		407			102
Total undiscounted lease payments		2,865			1,113
Less: Imputed interest		(531	)		(191	)
Present value of lease payments	$	2,334		$	922
Current portion of operating lease obligations	$	378		$	—
Long-term operating lease obligations, less current portion	$	1,956		$	—
Current portion of finance lease obligations	$	—		$	286
Long-term finance lease obligations, less current portion	$	—		$	636

Supplemental cash flow and other information related to our leases were as follows for the three and six months ended June 30, 2024, and 2023 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow used in operating leases	$	149	$	146	$	296	$	290
Operating cash flow used in finance leases	$	21	$	7	$	43	$	13
Financing cash flow used in finance leases	$	71	$	40	$	146	$	81
ROU assets obtained in exchange for lease obligations for:
Finance liabilities	$	—	$	107	$	—	$	157
Operating liabilities	$	497	$	—	$	497	$	—

The addition of the ROU assets obtained in exchange for operating lease liabilities in the second quarter of 2024 resulted from extensions of the terms on two of the Company’s leases.