Leases

9 Months Ended

Sep. 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 previously included the lease of a building with land where its Oak Ridge Environmental Waste Operations (“EWOC”) facility conducts its waste treatment operations. In July 2024, the Company completed the purchase of the EWOC property under the lease purchase option (see “Note 8 – Long Term Debt” for a discussion of the purchase of this property by the Company). Finance leases consist primarily of processing equipment and vehicles/trucks used by our facilities’ operations.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Operating Leases:
Lease cost	$	129	$	157	$	420	$	470
Finance Leases:
Amortization of ROU assets		65		39		196		115
Interest on lease liability		20		9		63		22
		85		48		259		137
Short-term lease rent expense		1		—		3		1
Total lease cost	$	215	$	205	$	682	$	608

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

	Operating Leases			Finance Leases
Weighted average remaining lease terms (years)		4.9			3.9
Weighted average discount rate		7.7	%		9.0	%

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

	Operating Leases			Finance Leases
Weighted average remaining lease terms (years)		5.7			3.2
Weighted average discount rate		7.5	%		7.0	%

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

	Operating Leases			Finance Leases
2024	$	108		$	91
2025		486			345
2026		479			192
2027		447			157
2028		343			134
2029 and thereafter		407			102
Total undiscounted lease payments		2,270			1,021
Less: Imputed interest		(429	)		(172	)
Present value of lease payments	$	1,841		$	849
Current portion of operating lease obligations	$	320		$	—
Long-term operating lease obligations, less current portion	$	1,521		$	—
Current portion of finance lease obligations	$	—		$	285
Long-term finance lease obligations, less current portion	$	—		$	564

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow used in operating leases	$	119	$	145	$	415	$	435
Operating cash flow used in finance leases	$	20	$	9	$	63	$	22
Financing cash flow used in finance leases	$	72	$	54	$	218	$	135
ROU assets obtained in exchange for lease obligations for:
Finance liabilities	$	—	$	154	$	—	$	311
Operating liabilities	$	—		484	$	497	$	484
Reduction to ROU assets resulting from purchase of underlying asset:
Operating liabilities		404		—		404		—

The reduction in ROU resulted from the purchase of the Company’s property as discussed above (see “Note 8 – Long Term Debt” for a discussion of this purchase).