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Leases | 3 Months Ended
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Mar. 31, 2024
Leases |
Leases | 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 balances for operating and finance leases where the Company is the lessee are presented as follows within the condensed consolidated balance sheets:
|  | March 31, |
|  | 2024 |
Operating lease: |  |  |
Operating lease right-of-use assets, net |  | $ | 34,060,000 |
Current portion of operating lease obligations |  |  | 958,000 |
Operating lease obligations, net of current portion |  |  | 33,245,000 |
Total operating lease liabilities |  | $ | 34,203,000 |
Finance lease: |  |  |  |
Finance lease right-of-use assets, net |  | $ | 22,000 |
Current portion of finance lease obligations |  |  | 13,000 |
Finance lease obligations, net of current portion |  |  | 7,000 |
Total finance lease liabilities |  | $ | 20,000 |
The Company is party to an operating lease agreement with Horti-Group for land and greenhouses in King George, Virginia, United States. The lease commenced on July 1, 2021 and, including a renewal option the Company expects to exercise, ends on December 31, 2038. The Company recognized the following related party balances in the condensed consolidated balance sheets:
|  | March 31, |
|  | 2024 |
Operating lease right-of-use assets, net |  | $ | 33,292,000 |
Current portion of operating lease obligations |  |  | 789,000 |
Operating lease obligations, net of current portion |  |  | 32,640,000 |
Total operating lease liabilities |  | $ | 33,429,000 |
The components of lease expense are as follows within our condensed consolidated statements of operations and comprehensive income (loss):
|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2023 |
Operating lease expense: |  |  |  |  |  |
Operating lease cost |  | $ | 449,000 |  |  | $ | 1,000 |
Short-term and variable lease cost |  |  | 86,000 |  |  |  | - |
Finance lease expense: |  |  |  |  |  |  |  |
Amortization of leased assets |  |  | 1,000 |  |  |  | - |
Total lease expense |  | $ | 536,000 |  |  | $ | 1,000 |
The weighted average remaining lease term and weighted average discount rate is as follows:
|  | March 31, |
|  | 2024 |
Weighted average remaining lease term (years) |  |  |
Finance leases |  |  | 1.61 |
Operating leases |  |  | 14.60 |
Weighted average discount rate applied |  |  |  |
Finance leases |  |  | 3.95 | %
Operating leases |  |  | 8.22 | %
Supplemental cash flow information related to leases where the Company is the lessee is as follows:
|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2023 |
Operating cash outflows from operating leases |  | $ | 306,000 |  |  | $ | 1,000 |
Financing cash outflows from finance leases |  |  | 1,000 |  |  |  | - |
Leased assets obtained in excha nge for operating lease liabilities |  |  | 34,289,000 |  |  |  | - |
Leased assets obtained in exchange for finance lease liabilities |  |  | 22,000 |  |  |  | - |
As of March 31, 2024, the maturities of the operating and finance lease liabilities are as follows:
|  | Operating |  |  | Finance |
|  | Leases |  |  | Leases |
Remainder of 2024 |  | $ | 922,000 |  |  | $ | 4,000 |
2025 |  |  | 3,723,000 |  |  |  | 14,000 |
2026 |  |  | 3,796,000 |  |  |  | 5,000 |
2027 |  |  | 3,872,000 |  |  |  | - |
2028 |  |  | 3,876,000 |  |  |  | - |
2029 |  |  | 3,798,000 |  |  |  | - |
Thereafter |  |  | 39,994,000 |  |  |  | - |
Total minimum lease payments |  | $ | 59,981,000 |  |  | $ | 23,000 |
Less: imputed interest |  |  | (25,778,000 | ) |  |  | (3,000 | )
Total: present value of lease liabilities |  | $ | 34,203,000 |  |  | $ | 20,000 |
Less: current portion |  |  | (958,000 | ) |  |  | (13,000 | )
Long-term portion of lease liabilities |  | $ | 33,245,000 |  |  | $ | 7,000 |

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Topic 840 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//840/tableOfContent + Details
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