LEASES

9 Months Ended

Sep. 30, 2022

Finance Leases

The Company's finance leases liabilities consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):


Creditor	Loan Type	Balance on September 30, 2022		Balance on December 31, 2021
AVT Equipment Lease-HH	Finance Lease	$	—	$	302
AVT Equipment Lease-Ohio	Finance Lease	—		296
VRA Finance Lease	Finance Lease	45,494		—
		$	45,494	$	598

Future maturities of finance lease obligations, as of September 30, 2022 are summarized as follows (in thousands):


Period Ended September 30,	Amount Due
2023	$	1,155
2024	1,301
2025	1,466
2026	1,652
2027	1,862
Thereafter	38,058
Total	$	45,494

On April 1, 2022, the Company entered into one finance lease. Base payments are $0.4 million per month for the first six months, increasing to $0.5 million per month for the next 180 months. The amount of the right of use assets is $43.6 million at September 30, 2022, and the finance lease obligation is $45.5 million at September 30, 2022. The associated amortization expenses for the three months ended September 30, 2022 and 2021 were $0.7 million and $28.7 thousand, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the three months ended September 30, 2022 and 2021 were $1.4 million and $19.4 thousand, respectively, and are included in interest expense on the unaudited consolidated statements of operations. The associated amortization expenses for the nine months ended September 30, 2022 and 2021 were $0.7 million and $86.0 thousand, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the nine months ended September 30, 2022 and 2021 were $2.7 million and $37 thousand, respectively, and are included in interest expense on the unaudited consolidated statements of operations.

Operating Leases

Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the unaudited consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three and nine months ended September 30, 2022 and 2021. Total operating lease costs for both the three months ended September 30, 2022 and 2021 were $1.5 million and $1.4 million, respectively. Total operating lease costs for both the nine months ended September 30, 2022 and 2021 were $4.4 million and $4.2 million, respectively.

Cash Flows

Cash paid for amounts included in operating lease liabilities was $4.4 million and $4.2 million during the nine months ended September 30, 2022 and 2021, respectively, and is included in operating cash flows. Cash paid for amounts included in finance lease was $201 thousand and $409 thousand during the nine months ended September 30, 2022 and 2021, respectively, and is included in financing cash flows.

Maturities of our lease liabilities for all operating leases are as follows as of September 30, 2022 (in thousands):


September 30, 2022
	Facilities		Equipment		Plant		Railcar		Total
Year 1	$	715	$	262	$	4,111	$	1,333	$	6,421
Year 2	495		262		4,111		1,437		6,305
Year 3	394		259		4,111		489		5,253
Year 4	306		259		4,111		305		4,981
Year 5	300		234		4,111		181		4,826
Thereafter	1,550		—		22,482		—		24,032
Total lease payments	3,760		1,276		43,037		3,745		51,818
Less: interest	(1,139)		(218)		(15,728)		(773)		(17,858)
Present value of operating lease liabilities	$	2,621	$	1,058	$	27,309	$	2,972	$	33,960

The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of September 30, 2022:


Remaining lease term and discount rate:	September 30, 2022
Weighted average remaining lease terms (years)
Lease facilities	4.79
Lease equipment	10.69
Lease plant	10.47
Lease railcar	3.22
Weighted average discount rate
Lease facilities	9.13	%
Lease equipment	7.97	%
Lease plant	9.37	%
Lease railcar	8.00	%

The plant lease has multiple 5-year extension options for a total of 20 years. The extension option has been included in the lease right-of-use asset and lease obligation.

The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so.

LEASES