XML 29 R19.htm IDEA: XBRL DOCUMENT v3.20.2
Note 13 - Fair Value Measurements
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
13.
Fair Value Measurements
 
Accounting standards define fair value, outline a framework for measuring fair value, and detail the required disclosures about fair value measurements. Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. Standards establish a hierarchy in determining the fair market value of an asset or liability. The fair value hierarchy has
three
levels of inputs, both observable and unobservable. Standards require the utilization of the highest possible level of input to determine fair value.
 
Level 
1
– inputs include quoted market prices in an active market for identical assets or liabilities.
 
Level 
2
– inputs are market data, other than Level 
1,
that are observable either directly or indirectly. Level 
2
inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.
 
Level 
3
– inputs are unobservable and corroborated by little or
no
market data.
 
 These tables present the carrying value and fair value, by fair value hierarchy, of our financial instruments, excluding cash and cash equivalents, accounts receivable and accounts payable, which approximate fair value due to their short-term nature, at
September 30
,
2020
and
December 31, 2019,
respectively (in thousands):
 
   
 
 
 
 
Fair Value Measurements at September 30, 2020
(In thousands)
 
   
Fair Value at
September 30,
2020
   
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
   
Significant Other
Observable Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
 
Recurring:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020/21 Notes Embedded Derivative Liability   $
29
    $
    $
    $
29
 
                                 
Nonrecurring
 
 
     
 
     
 
 
 
 
 
 
 
Corn and finished goods inventory
  $
599
    $
    $
599
    $
 
 
   
 
 
 
 
Fair Value Measurements at December 31, 2019
(In thousands)
 
   
Fair Value at
December 31,
2019
   
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
   
Significant Other
Observable Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
 
Recurring:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Warrant Liability
  $
8
    $
    $
    $
8
 
                                 
                                 
Nonrecurring
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corn and finished goods inventory
  $
940
    $
267
    $
673
    $
 
 
The following table provides changes to those fair value measurements using Level
3
inputs for the
three
months ende
d
September 30
,
2020
(in thousands):
 
   
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
 
                 
   
Derivative Warrant
Liability
   
2020/21 Notes Embedded
Derivative
 
                 
Balance, December 31, 2019
 
$
8
   
$
 
                 
Issue of 2020/21 Notes embedded derivative liability
   
     
2,848
 
Total (gains) included in earnings
   
(8
)    
(2,819
)
                 
Balance, September 30, 2020  
$
   
$
29
 
 
There were
no
transfers to or from Level
3
in the
three
months ended
September 30, 2020.
 
Inventories.
The Company records its corn inventory at fair value only when the Company's cost of corn purchased exceeds the market value for corn. The Company determines the market value of corn and dry distiller's grain based upon Level
1
inputs using quoted market prices. The Company records its ethanol, isobutanol and hydrocarbon inventory at market using Level
2
inputs.
 
2020/21
Notes Embedded Derivative
. The Company had estimated the fair value of the embedded derivative on a stand-alone basis to be
$0.03
 million at
September
30,
2020
 based upon Level
3
inputs. Changes in the fair value of the embedded derivative is recognized each reporting period as a “
Change in fair value of
2020/21
Notes embedded derivative
” in the consolidated Statements
of Operations and Statements of Cash Flows. See Note
7,
Embedded Derivatives
, for the fair value inputs used to estimate the fair value of the embedded derivative.
 
Derivative Warrant Liability
. The Company valued the Series F Warrants and Series K Warrants using a Monte-Carlo model (Level
3
) and other warrants using Black-Scholes models comprised of some inputs requiring the use of Monte-Carlo models (Level
3
). The Company has estimated the fair value of the derivative warrant liability to be
$0
 and
$.01
 million as of
September 30, 2020
and 
December 31, 2019,
respectively.
 
While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.