Annual report pursuant to Section 13 and 15(d)

Leases

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Leases
12 Months Ended
Dec. 31, 2021
Leases  
Leases

Note 9 – Leases

The components of lease expense for the period were as follows (in thousands):

December 31, 

December 31, 

2021

2020

Lease cost

Operating lease cost

 

$

13,602

 

$

11,613

Variable lease cost

7,400

2,001

Short-term lease cost

684

479

Sublease income

(493)

Total lease cost

 

$

21,686

 

$

13,600

Weighted average remaining lease term – operating leases

13 years

12 years

Weighted average discount rate – operating leases

8.43

%

8.09

%

Due to the negative effects of COVID-19, the Company implemented measures to reduce its costs, including negotiations with landlords regarding rent concessions. As the rent concessions received and currently being contemplated do not result in a significant increase in cash payments, the Company has elected to account for these concessions as a variable lease payment in accordance with ASC Topic 842. The Company’s right-of-use assets and operating lease liabilities have not been remeasured for lease concessions received. Variable lease cost is comprised of percentage rent and common area maintenance, offset by rent concessions received as a result of COVID-19.

The Company has entered into an operating lease for a future Kona Grill restaurant in Riverton, Utah that had not commenced as of December 31, 2021. The present value of the aggregate future commitment related to this lease totals $0.9 million. The Company expects this lease, which has an initial lease term of 10 years and two five-year options, to commence within the next twelve months.

Supplemental cash flow information related to leases for the period was as follows (in thousands):

December 31, 

 

December 31, 

2021

 

2020

Cash paid for amounts included in the measurement of operating lease liabilities

 

$

12,644

$

8,491

Right-of-use assets obtained in exchange for operating lease obligations

 

$

8,068

$

4,968

As of December 31, 2021, maturities of the Company’s operating lease liabilities are as follows (in thousands):

2022

$

11,364

2023

14,758

2024

14,250

2025

13,285

2026

13,209

Thereafter

122,827

Total lease payments

189,693

Less: imputed interest

(80,681)

Present value of operating lease liabilities

 

$

109,012