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Leases | 3 Months Ended
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Mar. 31, 2024
Leases [Abstract] |
Leases | NOTE 12. LEASES Combined Luminant Lease Agreement The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 and August 23, 2023 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values. The Company’s management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Financing for use of the land and substation is provided by Luminant affiliates. On July 11, 2023, the Company entered into an amendment of the payment schedule to the Luminant Purchase and Sale Agreement, reflecting monthly installments of principal and interest totaling $19.7 million on an undiscounted basis, due over the remaining four-year period starting in July 2023. On August 23, 2023, the Company entered into a second amendment of the Luminant Lease Agreement, the terms of which included confirming the initial term will end on July 31, 2027. These amendments did not have a material impact on the Company’s unaudited condensed consolidated financial statements. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market. Office headquarters lease The Company entered into an operating lease for office space located in New York. The lease has an initial term of 64 months and commenced on February 1, 2022. The lease does not provide the Company with renewal options. Additional lease information Components of the Company’s lease expenses are as follows (in thousands):
|  | Three months ended March 31, |
|  | 2024 |  |  | 2023 |
Finance leases: |  |  |  |  |  |
Amortization of ROU assets (1) |  | $ | 761 |  |  | $ | 789 |
Interest on lease liability |  |  | 392 |  |  |  | 401 |
Total finance lease expense |  |  | 1,153 |  |  |  | 1,190 |
Operating leases: |  |  |  |  |  |
Operating lease expense |  |  | 439 |  |  |  | 371 |
Short-term lease rent expense |  |  | - |  |  |  | 83 |
Total operating lease expense |  |  | 439 |  |  |  | 454 |
Total lease expense |  | $ | 1,592 |  |  | $ | 1,644 |
__________ (1) Amortization of finance lease ROU assets is included within depreciation expense. The Company did no t incur any variable lease costs during any of the periods presented. Other information related to the Company’s leases is shown below (dollar amounts in thousands):
|  | Three months ended March 31, |
|  | 2024 |  |  | 2023 |
Operating cash flows - operating lease |  | $ | 401 |  |  | $ | 395 |
|  | March 31, 2024 |  |  | December 31, 2023 |
Weighted-average remaining lease term – finance lease (in years) |  |  | 3.4 |  |  |  | 3.7 |
Weighted-average remaining lease term – operating lease (in years) |  |  | 5.7 |  |  |  | 5.8 |
Weighted-average discount rate – finance lease |  |  | 11.0 | % |  |  | 11.0 | %
Weighted-average discount rate – operating lease |  |  | 9.9 | % |  |  | 10.0 | %
Finance lease ROU assets (1) |  | $ | 10,399 |  |  | $ | 11,160 |
__________ (1) As of March 31, 2024 and December 31, 2023, the Company had recorded accumulated amortization of approximately $2.0 million and $1.3 million, respectively, for the finance lease ROU assets. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets. As of March 31, 2024, future minimum lease payments during the next five years are as follows (in thousands):
|  | Finance Lease |  |  | Operating Lease |  |  | Total |
Year Ended December 31, 2024 |  | $ | 3,626 |  |  | $ | 1,428 |  |  | $ | 5,054 |
Year Ended December 31, 2025 |  |  | 4,834 |  |  |  | 3,383 |  |  |  | 8,217 |
Year Ended December 31, 2026 |  |  | 4,834 |  |  |  | 1,668 |  |  |  | 6,502 |
Year Ended December 31, 2027 |  |  | 3,223 |  |  |  | 699 |  |  |  | 3,922 |
Year Ended December 31, 2028 |  |  | - |  |  |  | - |  |  |  | - |
Thereafter |  |  | - |  |  |  | 2,520 |  |  |  | 2,520 |
Total lease payments |  |  | 16,517 |  |  |  | 9,698 |  |  |  | 26,215 |
Less present value discount |  |  | (2,801 | ) |  |  | (2,469 | ) |  |  | (5,270 | )
Total |  | $ | 13,716 |  |  | $ | 7,229 |  |  | $ | 20,945 |

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