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LEASES
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
LEASES LEASES        
The Company has the following lease balances recorded on the consolidated balance sheets as follows:

Lease Assets and LiabilitiesClassificationDecember 31, 2022December 31, 2021
Finance lease right-of-use assetAsset, held for sale$15,709,039 $— 
Finance lease right-of-use assetFinance lease - right to use asset, net2,911,458 15,033,000 
Operating lease right-of-use assetOther current assets42,061 46,897 
Total right of use assets$18,662,558 $15,079,897 
Operating lease liability - currentAccrued expenses and other liabilities$5,211 $4,388 
Operating lease liability - long-termOther liabilities40,193 45,403 
Finance lease liabilityLease liability - held for sale12,021,566 — 
Finance lease liability, current portionFinance lease - Right of use lease liability409,143 13,043,499 
Finance lease liabilityFinance lease - Right of use lease liability, long term portion406,968 — 
Total lease liabilities$12,883,081 $13,093,290 

The Company has the following lease costs recorded in the consolidated statements of operations as follows:
Year Ended December 31,
20222021
Finance lease cost:
Amortization of right-of-use assets$539,115 $— 
Interest on lease liabilities829,924 — 
Operating lease cost10,099 10,099 
Total lease cost$1,379,138 $10,099 
Other information
Operating cash flows from operating leases9,650 9,350 
Financing cash flows from finance leases3,062,360 — 
Right-of-use assets and finance lease liabilities acquired with LINICO transaction (Note 2)— 15,033,000 
Non-cash modification of AQMS lease1,147,669 — 
Right-of-use asset and lease acquired (AST)839,439 — 
Right-of-use acquired with shares of common stock (Haywood)2,100,000 — 

The Company has the following weighted average remaining lease terms and discount rates for our finance and operating leases:

20222021
Weighted-average remaining lease term - finance leases1.330.75
Weighted-average remaining lease term - operating leases5.756.75
Weighted-average discount rate - finance leases%%
Weighted-average discount rate - operating leases11 %11 %

Finance Lease

AQMS Lease

LINICO 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 “Battery Recycling Facility”). AQMS is the non-controlling interest holder for LINICO and a related party. LINICO did not exercise the purchase option on October 1, 2022, and paid an additional $2,000,000 on October 25, 2022, effectively extending the option until March 31, 2023. The lease amendment in October 2022 increased the lease term from 16 to 19 months with an annual discount rate of 6% and expected future lease payments resulted in a $1,147,669 increase to the lease liability and right of use asset. In March 2023, the Company sold the related building, land and equipment for $27,000,000 (See Note 20, Subsequent Events).

Assets Held for Sale

The Company committed a plan to sell certain land, buildings and related improvements under the AQMS lease. As of December 31, 2022, the AQMS lease assets and other assets associate with the AQMS lease with a net carrying value of $21,684,865 and liabilities of $12,021,566 that met the criteria to be classified as assets 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 lease in which LINICO has a finance lease, as lessee, with Aqua Metals Reno Inc., a subsidiary of AQMS.

Assets held for sale at December 31, 2022 include:
12/31/22
Right of use lease asset, net of amortization$15,709,039 
Lease intangible, net of amortization3,501,939 
Deposits1,250,000 
Property, plant and equipment710,563 
Construction in progress513,324 
Total assets held for sale$21,684,865 

Liabilities held for sale at December 31, 2022 include:

12/31/22
Right of use lease liability$12,021,566 
Total liabilities held for sale$12,021,566 

LINICO Construction in Progress

At December 31, 2022, the construction in progress assets were classified as assets held for sale of $513,324. During the year ended December 31, 2022, we recognized $1,586,481 of which had been previously classified as construction in progress as research and development expenses. The Company did not recognize research and development expenses for LINICO for the year ended December 31, 2021.

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 6, Intangible Assets and Goodwill). Under the Asset Purchase Agreement ("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.

All of the assets purchased under the agreement are being used for research and development activities. The machinery and equipment acquired was built for a specific purpose and is being used in testing for development of the technology required to process woody biomass into intermediate materials that can be converted into paper products and fuels. These assets have no alternative future use. The facility purchased is an industrial property located in Wausau, Wisconsin with an alternative use.

The asset purchase agreement was accounted for as a finance lease with a purchase option which we are reasonably certain will be exercised. The consideration in the contract was allocated to the separate lease and non-lease components of the contract based on their relative standalone estimated fair values. The total of the lease payments was first allocated to the building, which has an observable price, and the remainder was allocated to the machinery and equipment.

The initial measurement of the right-of-use asset and lease liability was $839,439 using the allocated consideration in the contract of $935,759 for the building discounted using the Company’s incremental borrowing rate at lease commencement of 7.87% because there is no rate implicit in the lease contract. The incremental borrowing rate was determined based on debt acquired by the Company at the end of 2021, adjusted for increases in the risk-free rate. The building is being depreciated over a 20-year useful life and the lease liability will be amortized over the two-year lease term. Under this agreement, payment associated with the machinery and equipment acquired were $213,160 which is classified as research and development expense on the 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 13, Fair Value Measurements)

During the period between execution of the agreement and closing, the property is leased to us for no additional compensation, 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 within 12 months of signing, 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.

Daney Ranch

In September 2020, the Company, as lessor, leased real property and improvements located at 25 Daney Canyon Road, Dayton, Nevada (“Daney Ranch”) under a 36-month lease agreement commencing September 1, 2020, subject to early termination upon exercise of a purchase option. The option allowed the lessee to purchase the property for $2,700,000 less all rental payments made in the first 24 months if exercised within the first two years of the agreement. At lease inception, it was not reasonably certain the lessee would exercise the purchase option and the lease was classified as an operating lease. All lease payments were recognized as rental income and the property was classified as assets held for use in property, plant and equipment during the term of the lease. In August 2022, the lessee exercised the option and completed the purchase of the Daney Ranch property, which resulted in lease termination and derecognition of the underlying assets (see Note 3, Notes Receivable and Note 4, Property, Plant and Equipment, Net and Mineral Rights).

Operating Leases

The Company has an operating lease, as lessee, with Sutro as lessor, for a property located adjacent to the Gold Hill Hotel, which is primarily used as a room rental. The lease runs from 2018 until 2028. The monthly rent is $750 with automatic annual increases of $25 per month every November, beginning in 2020. The operating lease is sub-leased to Crown Point Management LLC, the operators of the Gold Hill Hotel, and not separately valued within the Gold Hill Hotel lease. For the years ended December 31, 2022 and 2021, the fixed operating lease expense was $10,099 and $10,099, respectively with a remaining term of 5.76 years.

Minimum lease payments to be paid by the Company by fiscal year for the Company's operating and finance leases are as follows:

Operating LeasesFinance Leases
2023$9,950 $451,169 
202410,250 417,750 
202510,550 — 
202610,850 — 
202711,150 — 
Thereafter9,500 — 
Total lease payments62,250 868,919 
Less: imputed interest (16,846)(52,808)
Present value of lease liabilities45,404 816,111 
Operating Lease Income

Revenues from operating leases on our land and building leased to others totaled $169,100 and $228,123 for the years ended December 31, 2022 and 2021, respectively.

Minimum lease payments for operating leases to be received from others are as follows:

2023$86,325 
202494,725 
202596,000 
202696,000 
202796,000 
Thereafter192,000 
Total Minimum Lease Income$661,050