Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.21.2
Leases
6 Months Ended
Jun. 30, 2021
Leases [Abstract]  
Leases

Note 11. Leases

At June 30, 2021, the Company had operating lease liabilities and right of use assets for its offices and data center hosting facilities, and for a ground lease at the Whinstone Facility that expires in December 2030, inclusive of extension options the Company is reasonably certain will be exercised. At December 31, 2020, the Company did not have any significant operating lease balances.

Rental expense for lease payments related to the Company’s operating leases is recognized on a straight-line basis over the remaining lease term. The Company currently does not hold any finance leases. The Company elected to use the practical expedient of not separating lease components for its real estate leases. The Company has elected the short-term lease exception provided, and therefore only recognizes right of use assets and lease liabilities for leases with a term greater than one year. Leases qualifying for the short-term lease exception were insignificant.

As of June 30, 2021 and December 31, 2020, the right of use assets were $6.4 million and zero, respectively, and the operating lease liabilities were $8.3 million and zero, respectively, in the accompanying unaudited condensed interim consolidated balance sheets related to our ground lease. The value of the right of use assets exceeds the value of the operating lease liabilities primarily due to certain office and other leases being abandoned. Operating lease right of use assets are included within other long-term assets on the condensed interim consolidated balance sheets.

The calculation of the right of use assets and lease liabilities include minimum lease payments over the remaining lease term. Variable lease payments are excluded from the amounts and are recognized in earnings in the period in which the obligation for those payments is incurred. To determine the present value of future minimum lease payments, the Company utilized its incremental borrowing rate adjusted for the remaining lease term and the form of underlying collateral. The discount rate implicit in the leases was not readily determinable.

The components of lease expense for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Lease cost

2021

2020

2021

2020

Operating lease cost

$

109

$

-

$

109

$

-

Variable lease cost(1)

-

8

-

Total rent expense

$

109

$

-

$

117

$

-

(1)

Amounts primarily include common area maintenance and utility charges not included in the measurement of right of use assets and operating lease liabilities.

Other Information

Operating cash flows from operating leases

$

140

Right of use assets exchanged for new operating lease liabilities

$

8,387

Weighted-average remaining lease term – operating leases

7.2

Weighted-average discount rate – operating leases

7.5

%

The following table represents our future minimum operating lease payments as of, and subsequent to, June 30, 2021 under ASC 842 (in thousands):

Ground lease

Office and other leases

Total

2021 (excluding the six months ended June 30, 2021)

$

533

$

444

$

977

2022

942

773

1,715

2023

970

775

1,745

2024

999

147

1,146

2025

1,029

-

1,029

Thereafter

4,433

-

4,433

Total undiscounted lease payments

8,906

2,139

11,045

Less present value discount

(2,480

)

(265

)

(2,745

)

Present value of lease liabilities

$

6,426

$

1,874

$

8,300

We recognize ground lease expense in cost of revenues, data center hosting, and office and other lease expense in selling, general and administrative expenses, respectively, in our in the accompanying unaudited condensed interim consolidated statements of operations.