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LEASES | 3 Months Ended
--- | ---
Mar. 31, 2023
Leases [Abstract] |
LEASES | LEASES The Company has the following lease balances recorded on the condensed consolidated balance sheets as follows:
Lease Assets and Liabilities | Classification | March 31, 2023 | December 31, 2022
Finance lease right-of-use asset | Assets held for sale | $ | 15,709,039 |  | $ | 15,709,039 |
Finance lease right-of-use asset | Finance lease - right to use asset, net | 2,900,965 |  | 2,911,458 |
Operating lease right-of-use asset | Other current assets | 40,774 |  | 42,061 |
Total right of use assets |  | $ | 18,650,778 |  | $ | 18,662,558 |
Operating lease liability - current | Accrued expenses and other liabilities | $ | 5,431 |  | $ | 5,211 |
Operating lease liability - long-term | Other liabilities | 38,735 |  | 40,193 |
Finance lease liability | Liabilities - held for sale | 11,899,360 |  | 12,021,566 |
Finance lease liability, current portion | Finance lease - Right of use lease liability | 389,294 |  | 409,143 |
Finance lease liability | Finance lease - Right of use lease liability, long term portion | 417,750 |  | 406,968 |
Total lease liabilities |  | $ | 12,750,570 |  | $ | 12,883,081 |
The Company has the following lease costs recorded in the condensed consolidated statements of operations as follows:
| Three months ended |  |
| March 31, 2023 | March 31, 2022 |  |  |  |
Finance lease cost: |  |  |  |  |  |
Amortization of right-of-use assets | $ | 10,493 |  | $ | 125,275 |  |  |  |  |
Interest on lease liabilities | 195,712 |  | 195,611 |  |  |  |  |
Operating lease cost | 2,525 |  | 2,525 |  |  |  |  |
Total lease cost | $ | 208,730 |  | $ | 323,411 |  |  |  |  |
Other information |  |  |  |  |  |
Operating cash flows from operating leases | $ | 2,475 |  | $ | 9,350 |  |  |  |  |
Financing cash flows from finance leases | $ | — |  | $ | 8,389 |  |  |  |  |
The Company has the following weighted average remaining lease terms and discount rates for our finance and operating leases:
| March 31, 2023 | March 31, 2022
Weighted-average remaining lease term - finance leases | 1.08 | 0.50
Weighted-average remaining lease term - operating leases | 5.51 | 6.50
Weighted-average discount rate - finance leases | 6.0 | % | 6.0 | %
Weighted-average discount rate - operating leases | 11.0 | % | 11.0 | %
Finance Lease AQMS Lease LINICO, a majority-owned subsidiary of the Company, has a finance lease, as lessee, with Aqua Metals Reno Inc., a subsidiary of AQMS, for an industrial lease, including the land, buildings and related improvements (the “Facility”). AQMS is the non-controlling interest holder for LINICO and a related party. The Facility was being leased pursuant to an agreement that permitted the Company to purchase the Facility for a purchase price of $15.25 million ($3.25 million of which, was previously paid) if LINICO elects not to or is unable to purchase the Facility. On March 30, 2023, the Company delivered AQMS a notice of its irrevocable intent to exercise the option and purchase the Facility for $12,000,000 as provided by the agreement. Assets Held for Sale In December 2022, the Company committed a plan to sell certain land, buildings and related improvements under the AQMS lease. As of March 31, 2023 and December 31, 2022, the AQMS lease assets and other assets associated with the AQMS lease with a net carrying value of $20,460,978 and $21,684,865, respectively, and liabilities of $21,940,904 and $12,021,566, respectively, that met the criteria to be classified as held for sale. Proceeds from the sale of these assets are required to be used to satisfy obligations due under the terms of the AQMS. On March 1, 2023, LINICO and American Battery Technology Company ("ABTC") entered into an asset purchase agreement in which LINICO sold equipment of the 2500 Peru building for $6 million which was received by the Company and recorded a gain of $178,193 and the remaining $5,041,544 deferred until the sale of the building expected to be completed in the second quarter of 2023. On March 30, 2023, the Company gave notice to Aqua Metals of the Company’s intent to directly purchase the 2500 Peru building. On April 26, 2023, the Company closed on the purchase of the Facility from Aqua Metals, paying the remaining $12 million due on the Facility and taking full ownership. On March 31, 2023, LINICO and ABTC amended the purchase and sale agreements, and the Company agreed to take certain action previously contemplated by LINICO. On March 31, 2023, the Company received non-refundable consideration of $5 million in cash from ABTC. On April 6, 2023, LINICO and ABTC amended and restated the purchase and sale agreements, and the Company received 10 million shares of restricted shares of ABTC stock. The Company will receive additional cash and/or shares, if and to the extent, the proceeds from such shares are less than $6.6 million. The Company received an additional $7 million in cash on April 21, 2023, and is entitled to an additional $3 million in cash on or before May 12, 2023. The Company expects to net over $14.0 million in cash from this transaction. The total estimated gain on sale of the Facility and the related assets is estimated at approximately $4.9 million, of which, approximately $0.2 million was recognized during the first quarter of 2023, as the gain on the portion of the sale of associated with the equipment. The Company also recorded a deferred liability balance of $5.0 million, included in Liabilities Held for Sale, for proceeds received through March 31, 2023, but not yet realized as the sale is not yet finalized. Assets held for sale at March 31, 2023 and December 31, 2022 include:
| March 31, 2023 | December 31, 2022
Right of use lease asset, net of amortization | $ | 15,709,039 |  | $ | 15,709,039 |
Lease intangible, net of amortization | 3,501,939 |  | 3,501,939 |
Deposits | 1,250,000 |  | 1,250,000 |
Property, plant and equipment | — |  | 710,563 |
Construction in progress | — |  | 513,324 |
Total assets held for sale | $ | 20,460,978 |  | $ | 21,684,865 |
Liabilities held for sale at March 31, 2023 and December 31, 2022 include:
| March 31, 2023 | December 31, 2022
Deferred unrealized gain on sale | $ | 10,041,544 |  | $ | — |
Right of use lease liability | 11,899,360 |  | 12,021,566 |
Total liabilities held for sale | $ | 21,940,904 |  | $ | 12,021,566 |
AST Asset Purchase Agreement On April 16, 2021, the Company entered into three license agreements and an asset purchase agreement with AST. The license agreements provided for full use of the facility and all machinery and equipment located therein until April 30, 2022 (see Note 5, Intangible Assets and Goodwill). Under the Asset Purchase Agreement, the Company agreed to acquire substantially all of AST’s assets in exchange for $3,920,000, payable $35,000 per month from May 1, 2022 to April 30, 2023, $1,750,000 on April 30, 2023, and $1,750,000 on April 30, 2024. Beginning May 1, 2022, the Asset Purchase Agreement provides for full access and use of the AST assets until all payments are made and title transfers to the Company. Under this agreement, payment associated with the machinery and equipment acquired was $79,935 for the three months ended March 31, 2023 which is classified as research and development expense on the condensed consolidated statement of operations. Haywood Quarry Acquisition and Lease Agreement On April 7, 2022, the Company contracted to purchase Haywood quarry and industrial property (“Haywood”) from Decommissioning Services LLC (“Decommissioning Services”) for $2.1 million, payable in $50,000 of cash and 1,500,000 common shares of Comstock with a value of $2,295,000. The Haywood property represents approximately 190 industrial acres in Lyon County, Nevada, and part of one of the larger industrial parks in Lyon County. The property has power, water and direct highway access. The Company plans to employ a portion of the property for used lithium-ion battery storage, supporting LINICO's battery metal recycling. The closing and purchase of the asset is contingent on liquidation of the shares and receipt of the full purchase price by the seller. The Company agreed to make up any shortfall if the proceeds from the sale of the shares plus the deposit are less than $2.1 million, and the seller agreed to refund any excess proceeds. This shortfall has been recorded as a derivative asset on the consolidated balance sheets in connection with the Haywood acquisition and lease from Decommissioning Services (See Note 11, Fair Value Measurements) During the period between execution of the agreement and closing, the property is leased to us for no additional consideration, providing exclusive rights to access, use or sublease portions of the property, to obtain permits and prepare the property for its intended purpose, including improvements. If the conditions for closing are not satisfied by April 7, 2024, the agreement will terminate and Decommissioning Services will retain a total of $200,000 in rental fees for use of the property. We agreed to pay Decommissioning Services a 2% royalty of the sales price of any gravel, aggregate, or rock products produced and sold from Haywood, excluding the removal of materials that have been pledged to a third-party for improvements made. Operating Lease Minimum lease payments to be paid by the Company by fiscal year for the Company's operating and finance leases are as follows:
| Operating Leases |  | Finance Leases
For the remainder of 2023 | $ | 7,425 |  |  | $ | 426,105 |
2024 | 10,250 |  |  | 417,750 |
2025 | 10,550 |  |  | — |
2026 | 10,850 |  |  | — |
2027 | 11,150 |  |  | — |
Thereafter | 9,550 |  |  | — |
Total lease payments | 59,775 |  |  | 843,855 |
Less: imputed interest at 11% | (15,609) |  |  | (36,811) |
Present value of lease liabilities | $ | 44,166 |  |  | $ | 807,044 |
Operating Lease Income Revenues from operating leases on our land and building leased to others totaled $30,750 and $54,625 for the three months ended March 31, 2023 and 2022, respectively. Minimum lease payments for operating leases to be received from others are as follows:
For the remainder of 2023 | $ | 68,175 |
2024 | 94,725 |
2025 | 96,000 |
2026 | 96,000 |
2027 | 96,000 |
Thereafter | 192,000 |
Total Minimum Lease Income | $ | 642,900 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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