LEASES

3 Months Ended

Mar. 31, 2022

Finance Leases

Finance lease right-of-use lease assets are included in assets held for sale, and finance lease liabilities are included in finance lease short-term liability on the unaudited consolidated balance sheets. The associated amortization expenses for the three months ended March 31, 2022 and 2021 were $0 and $1,086, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the three months ended March 31, 2022 and 2021 were $6,134 and $9,303, respectively, and are included in interest expense on the unaudited consolidated statements of operations. Please see “Note 6. Financing Arrangements” for more details.

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 months ended March 31, 2022 and 2021. Total operating lease costs for both the three months ended March 31, 2022 and 2021 were $240,000 and $207,000, respectively.

Cash Flows

Cash paid for amounts included in operating lease liabilities was $0.2 million and $0.2 million during the three months ended March 31, 2022 and 2021, and is included in operating cash flows. Cash paid for amounts included in finance lease was $39,101 and $67,382 during the three months ended March 31, 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 March 31, 2022:


March 31, 2022
	Facilities		Equipment		Plant		Total
Year 1	$	250,849	$	7,500	$	701,224	$	959,573
Year 2	142,660		7,500		701,224		851,384
Year 3	60,534		7,500		701,224		769,258
Year 4	16,000		625		701,224		717,849
Year 5	—		—		701,224		701,224
Thereafter	—		—		3,506,120		3,506,120
Total lease payments	$	470,043	$	23,125	$	7,012,240	$	7,505,408
Less: interest	(41,988)		(1,956)		(2,570,210)		(2,614,154)
Present value of operating lease liabilities	$	428,055	$	21,169	$	4,442,030	$	4,891,254

The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 31, 2022:


Remaining lease term and discount rate:	March 31, 2022
Weighted average remaining lease terms (years)
Lease facilities	1.87
Lease equipment	3.08
Lease plant	10.00

Weighted average discount rate
Lease facilities	8.00	%
Lease equipment	8.00	%
Lease plant	9.37	%

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