UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended:
OR
For the transition period from to
Commission File Number:
AEMETIS, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction | (I.R.S. Employer |
| of incorporation or organization) | Identification No.) |
(Address of Principal Executive Offices, including zip code)
(
(Registrant’s telephone number, including area code)
| Title of each class of registered securities | Trading Symbol | Name of each exchange on which registered | ||
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares outstanding of the registrant’s Common Stock on October 31, 2022 was
FORM 10-Q
Quarterly Period Ended September 30, 2022
SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS
On one or more occasions, we may make forward-looking statements in this Quarterly Report on Form 10-Q, including statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events or other statements that are not historical facts. Forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding management’s plans; trends in market conditions with respect to prices for inputs for our products versus prices for our products; our ability to leverage approved feedstock pathways; our ability to leverage our location and infrastructure; our ability to incorporate lower-cost, non-food advanced biofuels feedstock at the Keyes plant; our ability to adopt value-add by-product processing systems; our ability to expand into alternative markets for biodiesel and its by-products, including continuing to expand our sales into international markets; our ability to maintain and expand strategic relationships with suppliers; our ability to continue to develop new and to maintain and protect new and existing intellectual property rights; our ability to adopt, develop and commercialize new technologies; our ability to extend or refinance our senior debt on terms reasonably acceptable to us or at all; our ability to continue to fund operations and our future sources of liquidity and capital resources; our ability to fund, develop, build, maintain and operate digesters, facilities and pipelines for our Dairy Renewable Natural Gas segment; our ability to fund, develop and operate our CCS projects, including obtaining required permits; our ability to receive awarded grants by meeting all of the required conditions, including meeting the minimum contributions; our ability to sell additional notes under our EB-5 note program and our expectations regarding the release of funds from escrow under our EB-5 note program; our ability to improve margins; and our ability to raise additional capital. Words or phrases such as “anticipates,” “may,” “will,” “should,” “could,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current assumptions and predictions and are subject to numerous markets and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain factors, including, without limitation, the risks set forth under the caption “Risk Factors” below, which are incorporated herein by reference, as well as those business risks and factors described elsewhere in this report and in our other filings with the Securities and Exchange Commission (the “SEC”), including without limitation, our most recent Annual Report on Form 10-K.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements.
AEMETIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, In thousands except for par value)
| September 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents ($ and $ respectively from VIE) | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $ and $ as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Inventories, net of allowance for excess and obsolete inventory of $ as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Prepaid expenses ($ and $ respectively from VIE) | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net ($ and $ respectively from VIE) | ||||||||
| Operating lease right-of-use assets ($ and $ respectively from VIE) | ||||||||
| Other assets ($ and $ respectively from VIE) | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable ($ and $ respectively from VIE) | $ | $ | ||||||
| Current portion of long term debt | ||||||||
| Short term borrowings ($ and $ respectively from VIE) | ||||||||
| Mandatorily redeemable Series B convertible preferred stock | ||||||||
| Accrued property taxes ($ and $ respectively from VIE) | ||||||||
| Accrued contingent litigation fees | ||||||||
| Current portion of operating lease liability ($ and $ respectively from VIE) | ||||||||
| Current portion of Series A preferred units ($ and $ respectively from VIE) | ||||||||
| Other current liabilities ($ and $ respectively from VIE) | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Senior secured notes and revolving notes | ||||||||
| EB-5 notes | ||||||||
| Other long term debt ($ and $ respectively from VIE) | ||||||||
| Series A preferred units ($ and $ respectively from VIE) | ||||||||
| Operating lease liability | ||||||||
| Other long term liabilities | ||||||||
| Total long term liabilities | ||||||||
| Stockholders' deficit: | ||||||||
| Series B convertible preferred stock, $ par value; authorized; and shares issued and outstanding each period, respectively (aggregate liquidation preference of $ and $ respectively) | ||||||||
| Common stock, $ par value; authorized; and shares issued and outstanding each period, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
The accompanying notes are an integral part of the financial statements.
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
(Unaudited, in thousands except for loss per share)
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Revenues |
$ | $ | $ | $ | ||||||||||||
| Cost of goods sold |
||||||||||||||||
| Gross profit (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Research and development expenses |
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| Selling, general and administrative expenses |
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| Other operating (income) |
( |
) | ( |
) | ||||||||||||
| Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other expense (income): |
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| Interest expense |
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| Interest rate expense |
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| Debt related fees and amortization expense |
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| Accretion and other expenses of Series A preferred units |
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| Loss (gain) on debt extinguishment |
( |
) | ||||||||||||||
| Gain on litigation |
( |
) | ||||||||||||||
| Other (income) expense |
( |
) | ( |
) | ( |
) | ||||||||||
| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense |
||||||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Other comprehensive loss |
||||||||||||||||
| Foreign currency translation loss |
( |
) | ( |
) | ( |
) | ||||||||||
| Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per common share |
||||||||||||||||
| Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average shares outstanding |
||||||||||||||||
| Basic |
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| Diluted |
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The accompanying notes are an integral part of the financial statements.
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| For the nine months ended September 30, |
||||||||
| 2022 |
2021 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Share-based compensation |
||||||||
| Depreciation |
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| Debt related fees and amortization expense |
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| Intangibles and other amortization expense |
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| Accretion and other expenses of Series A preferred units |
||||||||
| Loss on asset disposals |
||||||||
| Loss (gain) on debt extinguishment |
( |
) | ||||||
| Gain on litigation |
( |
) | ||||||
| Loss on lease termination |
||||||||
| Provision for bad debts |
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| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Prepaid expenses |
( |
) | ||||||
| Other assets |
( |
) | ||||||
| Accounts payable |
( |
) | ||||||
| Accrued interest expense and fees |
||||||||
| Other liabilities |
( |
) | ||||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Investing activities: |
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| Capital expenditures |
( |
) | ( |
) | ||||
| Grant proceeds and other reimbursements received for capital expenditures |
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| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Financing activities: |
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| Proceeds from borrowings |
||||||||
| Repayments of borrowings |
( |
) | ( |
) | ||||
| Lender debt renewal and waiver fee payments |
( |
) | ( |
) | ||||
| Grant proceeds received for capital expenditures |
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| Payments on finance leases |
( |
) | ( |
) | ||||
| Proceeds from issuance of common stock in equity offering |
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| Proceeds from the exercise of stock options |
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| Proceeds from Series A preferred units financing |
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| Series A preferred financing redemption |
( |
) | ||||||
| Net cash provided by financing activities |
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| Effect of exchange rate changes on cash and cash equivalents |
( |
) | ( |
) | ||||
| Net change in cash and cash equivalents for period |
( |
) | ||||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information, cash paid: |
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| Cash paid for interest |
$ | $ | ||||||
| Income taxes paid |
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| Supplemental disclosures of cash flow information, non-cash transactions: |
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| Subordinated debt extension fees added to debt |
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| Debt fees added to revolving lines |
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| Fair value of warrants issued to subordinated debt holders |
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| Fair value of warrants issued for guarantee fees |
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| Fair value of warrants issued to lender for debt issuance costs |
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| Fair value of stock issued to lender |
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| Lender debt extension, waiver, and other fees added to debt |
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| Capital expenditures in accounts payable |
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| Payment of debt added to revolving lines |
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| Financing lease liabilities arising from obtaining right of use assets |
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| Capital expenditures purchased on financing |
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| Issuance of equity to pay off accounts payable |
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The accompanying notes are an integral part of the financial statements.
AEMETIS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited, in thousands)
| For the nine months ended September 30, 2022 |
||||||||||||||||||||||||||||||||
| Series B Preferred Stock |
Common Stock |
Additional |
Accumulated Other |
Total |
||||||||||||||||||||||||||||
| Paid-in |
Accumulated |
Comprehensive |
Stockholders' |
|||||||||||||||||||||||||||||
| Description |
Shares |
Dollars |
Shares |
Dollars |
Capital |
Deficit |
Loss |
deficit |
||||||||||||||||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Series B conversion to common stock |
( |
) | ||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at March 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at June 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation gain |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at September 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| For the nine months ended September 30, 2021 |
||||||||||||||||||||||||||||||||
| Series B Preferred Stock |
Common Stock |
Additional |
Accumulated Other |
Total |
||||||||||||||||||||||||||||
| Paid-in |
Accumulated |
Comprehensive |
Stockholders' |
|||||||||||||||||||||||||||||
| Description |
Shares |
Dollars |
Shares |
Dollars |
Capital |
Deficit |
Loss |
deficit |
||||||||||||||||||||||||
| Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at March 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Series B conversion to common stock |
( |
) | ||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation gain |
- | - | ||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at September 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
The accompanying notes are an integral part of the financial statements.
1. Nature of Activities and Summary of Significant Accounting Policies
Nature of Activities. Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis, “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas, and renewable fuels company focused on the acquisition, development and commercialization of innovative negative carbon intensity products and technologies that replace traditional petroleum-based products. We operate in reportable segments “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel”. We have other operating segments determined not to be reportable segments and are collectively represented by the “All Other” category. At Aemetis, our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this through leading the low-carbon fuels industry by building a circular bioeconomy utilizing agricultural waste to produce advanced renewable fuels that produce less greenhouse gas emissions and thereby improve air quality.
We own and operate a
Aemetis Biogas, LLC (“ABGL”) was formed to construct bio-methane anaerobic digesters at local dairies near the Keyes Plant, many of whom also purchase WDG produced at the Keyes Plant. The digesters are connected via an underground private pipeline owned by ABGL to a gas cleanup and compression unit being built at the Keyes Plant to produce dairy renewable natural gas (“RNG”). Upon receiving the bio-methane from the dairies, impurities are removed, and the bio-methane is converted to negative carbon intensity RNG that will either be injected into the statewide PG&E gas utility pipeline, supplied as compressed RNG that will service local trucking fleets, or used as renewable process energy at the Keyes Plant.
Our Carbon Zero biofuels production plants are designed to produce biofuels, including sustainable aviation fuel (“SAF”) and diesel fuel utilizing renewable hydrogen and non-edible renewable oils sourced from existing Aemetis biofuels plants and other sources. The first plant to be built in Riverbank, California, is expected to utilize hydroelectric and other renewable power available onsite to produce 90 million gallons per year of SAF, renewable diesel, and other byproducts. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels to reduce GHG emissions and other pollutants associated with conventional petroleum-based fuels. By producing ultra-low carbon renewable fuels, the Company expects to capture higher value D3 Renewable Identification Numbers (“RINs”) and California’s LCFS credits. D3 RINs have a higher value in the marketplace than D6 RINs due to D3 RINs’ relative scarcity and mandated pricing formula from the United States Environmental Protection Agency (“EPA”).
Aemetis Carbon Capture, Inc. was formed to build Carbon Capture and Sequestration ("CCS") projects to generate LCFS and IRS 45Q credits by injecting CO₂ into wells which are monitored for emissions to ensure the long-term sequestration of carbon underground. The CCS projects are expected to capture and sequester up to two million metric tons per year of CO₂ at the two Aemetis biofuels plant sites in Keyes and Riverbank, California. In July 2022, Aemetis purchased 24 acres, on the Riverbank Industrial Complex site in Riverbank, California, to develop a CCS injection well. The Company plans to construct a characterization well to obtain both the data and well design information required for the EPA Class VI CO₂ injection well permit application. The well is expected to sequester up to one million metric tons per year of CO₂.
We also own and operate a production facility on the East Coast of India (the “Kakinada Plant”) with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meet international product standards. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive and other industries.
Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis. Additionally, we consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, an enterprise must consolidate a variable interest entity (“VIE”) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. ABGL was assessed to be a VIE and through the Company’s ownership interest in all of the outstanding common stock, the Company has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company.
All intercompany balances and transactions have been eliminated in consolidation.
The accompanying consolidated condensed balance sheet as of September 30, 2022, the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021, the consolidated condensed statements of cash flows for the nine months ended September 30, 2022 and 2021, and the consolidated condensed statements of stockholders’ deficit for the three and nine months ended September 30, 2022 and 2021 are unaudited. The consolidated condensed balance sheet as of December 31, 2021 was derived from the 2021 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of Company’s management, the unaudited interim consolidated condensed financial statements as of and for the three and nine months ended September 30, 2022 and 2021 have been prepared on the same basis as the audited consolidated statements as of and for the year ended December 31, 2021 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.
Revenue Recognition. We derive revenue primarily from sales of ethanol and related co-products in North America, and biodiesel and refined glycerin in India pursuant to supply agreements and purchase order contracts. We assessed the following criteria under the Accounting Standards Codification (“ASC”) 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations.
California Ethanol: Until May 13, 2020, we sold all our ethanol to J.D. Heiskell & Co. (“J.D. Heiskell”) under the Working Capital and Purchasing Agreement (the “J.D. Heiskell Purchasing Agreement”). On May 13, 2020, we entered into an amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell (the “Corn Procurement and Working Capital”), under the terms of which we buy all corn from J.D. Heiskell and sell all WDG and corn oil we produce to J.D. Heiskell. Following May 13, 2020 and until October, 2021, we sold the majority of our fuel ethanol production to one customer, Kinergy Marketing, LLC (“Kinergy”), through individual sales transactions. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex LLC (“Murex”), in which we sell all our ethanol to Murex. Given the similarity of the individual sales transactions with Kinergy and Murex, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to one of our customer’s contracted trucking companies. Upon delivery, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy and Murex for ethanol and by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation.
The below table shows our sales in our California Ethanol segment by product category:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Ethanol and high-grade alcohol sales | $ | $ | $ | $ | ||||||||||||
| Wet distiller's grains sales | ||||||||||||||||
| Other sales | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.
We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in certain contractual agreements.
For our California Ethanol segment, we buy corn as feedstock for the production of ethanol, from our working capital partner J.D. Heiskell. Prior to May 13, 2020, we sold all our ethanol, WDG, and corn oil to J.D. Heiskell and we bought all our corn to process into ethanol from J.D. Heiskell. After May 13, 2020, we sold most of our fuel ethanol to one customer, Kinergy, and sold all WDG and corn oil to J.D. Heiskell. During the second quarter of 2021, we signed a biofuels offtake agreement with Murex, and beginning on October 1, 2021 we sold all our fuel ethanol to Murex. We only have customer relationships with Kinergy and Murex, hence the principal and agent criteria are not applied. However, we are still buying corn and selling WDG and corn oil to J.D.Heiskell. We analyzed the principal versus agent relationship criteria below.
We consider the purchase of corn as a cost of goods sold and the sale of WDG and, corn oil, upon trucks leaving the Keyes Plant, as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have legal title to the goods during the processing time. The pricing for both WDG and corn oil is set independently. Revenues from WDG and corn oil are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. We have elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized in cost of goods sold and selling, general and administrative expenses, respectively, when revenue is recognized. Revenues are recorded at the gross invoiced amount. Hence, we are the principal in California Ethanol segment where our customer and vendor may be the same.
Dairy Renewable Natural Gas: All of our Dairy Renewable Natural Gas segment revenues during the three and nine months ended September 30, 2022 and 2021 were from sales of biogas to the Keyes Plant for use in boilers. This resulted in lowering the carbon intensity of the Keyes Plant and increased revenues on ethanol sold through the California Ethanol segment. These revenues have been eliminated once consolidated. Refer to Note 10 Segment Information for the unconsolidated revenue of our Dairy Renewable Natural Gas segment.
India Biodiesel: We sell products pursuant to purchase orders (written or verbal) or by contract with governmental or international parties, in which performance is satisfied by delivery and acceptance of the physical product. Given that the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined daily based on reference market prices for biodiesel, refined glycerin, and palm fatty acid distillate net of taxes. Transaction price is allocated to one performance obligation.
The below table shows our sales in our India Biodiesel Segment by product category:
| For the three months ended September 30, | For the nine months ended September 30, 2022 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Biodiesel sales | $ | $ | $ | $ | ||||||||||||
| Other sales | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
In India, we also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those same customers in certain contractual agreements. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel according to agreements when we enter into in these situations. Hence, we are the principal in India sales scenarios where our customer and vendor may be the same.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at various financial institutions domestically and abroad. The Federal Deposit Insurance Corporation insures domestic cash accounts. The Company’s accounts at these institutions may at times exceed federally insured limits. The Company has not experienced any losses in such accounts.
Accounts Receivable. The Company sells ethanol and WDG through third-party marketing arrangements generally without requiring collateral and high-grade alcohol directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO is marketed and sold to A.L. Gilbert and other customers under the J.D. Heiskell Purchasing Agreement. The Company sells CDS directly to customers on standard 30 day payment terms. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30-days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts.
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivables are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We reserved $
Property, Plant and Equipment. Property, plant, and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of plant and buildings, furniture, machinery, equipment, land, and biogas dairy digesters. Capital expenses for in-process project are accumulated in construction in progress and will be capitalized and depreciated once the capital projects are finished and are in service. The Company’s plant in Goodland, Kansas (the ”Goodland Plant”) is partially completed and is not ready for operation. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.
The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment—Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value. The Company has not recorded any impairment during the three and nine months ended September 30, 2022 and 2021.
California Department of Food and Agriculture Dairy Digester Research and Development Grant. In 2019, the Company was awarded $
In October 2020, the Company was awarded $
.
California Energy Commission Grant for Solar Microgrid, DSC and Battery Backup System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded an $
Basic and Diluted Net Loss per Share. Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and nine months ended September 30, 2022 and 2021, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.
The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of September 30, 2022 and 2021:
| As of | ||||||||
| September 30, 2022 | September 30, 2021 | |||||||
| Series B preferred (post split basis) | ||||||||
| Common stock options and warrants | ||||||||
| Debt with conversion feature at $ per share of common stock | ||||||||
| Total number of potentially dilutive shares excluded from the diluted net (loss) per share calculation | ||||||||
Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company further evaluates its operating segments to determine its reportable segments. Aemetis recognizes three reportable segments “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel.”
The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year Keyes plant and the adjacent land leased for the production of CO₂.
The “Dairy Renewable Natural Gas” reportable segment include, the dairy digesters, pipeline and gas condition hub for the production of biogas from dairies near Keyes, California.
The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly.
The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant in Kansas and the research and development facility in Minnesota. Refer to the “All Other” category.
Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt–Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.
For a complete summary of the Company’s significant accounting policies, please refer to the Company’s audited financial statements and notes thereto for the years ended December 31, 2021 and 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2022.
2. Inventories
Inventories consist of the following:
| As of | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
As of September 30, 2022, and December 31, 2021, the Company recognized a lower of cost or net realizable value impairment of $
3. Property, Plant and Equipment
Property, plant and equipment consist of the following:
| As of | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
| Land | $ | $ | ||||||
| Plant and buildings | ||||||||
| Furniture and fixtures | ||||||||
| Machinery and equipment | ||||||||
| Tenant improvements | ||||||||
| Construction in progress | ||||||||
| Property held for development | ||||||||
| Finance lease right of use assets | ||||||||
| Total gross property, plant & equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Total net property, plant & equipment | $ | $ | ||||||
For the three months ended September 30, 2022 and 2021, interest capitalized in property, plant, and equipment was $
Construction in progress includes costs for the biogas construction projects (dairy digesters and pipeline), Riverbank projects (sustainable aviation fuel and renewable diesel plant as well as carbon capture characterization well), and energy efficiency projects at the Keyes Plant. Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:
| Years | ||||
| Plant and buildings | ||||
| Machinery and equipment | ||||
| Furniture and fixtures | ||||
For the three months ended September 30, 2022 and 2021, the Company recorded depreciation expense of $
4. Debt
Debt consists of the following:
| September 30, 2022 | December 31, 2021 | |||||||
| Third Eye Capital term notes | $ | $ | ||||||
| Third Eye Capital revolving credit facility | ||||||||
| Third Eye Capital revenue participation term notes | ||||||||
| Third Eye Capital acquisition term notes | ||||||||
| Third Eye Capital Fuels Revolving Line | ||||||||
| Third Eye Capital Carbon Revolving Line | ||||||||
| Cilion shareholder seller notes payable | ||||||||
| Subordinated notes | ||||||||
| EB-5 promissory notes | ||||||||
| Term loans on capital expenditures | ||||||||
| Working capital loans | ||||||||
| Total debt | ||||||||
| Less current portion of debt | ||||||||
| Total long term debt | $ | $ | ||||||
Third Eye Capital Note Purchase Agreement
On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement (the “Note Purchase Agreement”) with Third Eye Capital Corporation (“Third Eye Capital”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $
On February 27, 2019, a promissory note (the “February 2019 Note”, together with the Original Third Eye Capital Notes, the “Third Eye Capital Notes”) for $
On March 14, 2021, Third Eye Capital agreed to Limited Waiver and Amendment No. 19 to the Note Purchase Agreement (“Amendment No. 19”), to (i) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended December 31, 2021, (ii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through March 31, 2021. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $
On August 9, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 20 to the Note Purchase Agreement (“Amendment No. 20”) to: (i) provide that, upon written notice to Third Eye Capital, the maturity date may be further extended to April 1, 2023 in exchange for an extension fee equal to
On November 5, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 21 to the Note Purchase Agreement (“Amendment No. 21”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by August 31, 2021 and (ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $
On March 8, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 22 to the Note Purchase Agreement (“Amendment No. 22”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by December 31, 2021, (ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender, and (iii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through December 31, 2021. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $
On May 11, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 23 to the Note Purchase Agreement (“Amendment No. 23”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by March 31, 2022, (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended March 31, 2023 and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended March 31, 2022 in which the Company exceeded the $
On August 8th, 2022, Third Eye Capital agreed to Limited Waiver and Amendment No. 24 to the Note Purchase Agreement ("Amendment No. 24") to: (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2024 in exchange for an extension fee equal to
Amendments No. 19 through No. 24 waived certain covenants for the periods between September 30, 2022 and March 31, 2023. According to ASC 470-10-45 Debt–Other Presentation Matters, if it is probable that the Company will not be able to cure the default at measurement dates within the next 12 months, the related debt needs to be classified as current. To assess this guidance, the Company performed ratio and cash flow analysis using its cash flow forecast and debt levels. The Company forecasted sufficient cash flows over the next 12 months to reduce debt levels of Third Eye Capital and meet operations of the Company. Based on this analysis, the Company believes that it is reasonably possible that through a combination of cash flows from operations, sales from EB-5 investments, and proceeds from the sale of common stock, it will be able to meet the ratio of the note indebtedness covenant over the next 12 months. As such, the notes are classified as long-term debt.
On March 6, 2020, we and a subsidiary entered into a one-year reserve liquidity facility governed by a promissory note, payable to Third Eye Capital, in the principal amount of $
Terms of Third Eye Capital Notes
| A. | Term Notes. As of September 30, 2022, the Company had $ |
| B. | Revolving Credit Facility. The Revolving Credit Facility accrues interest at the prime rate plus |
| C. | Revenue Participation Term Notes. The Revenue Participation Term Note bears interest at |
| D. | Acquisition Term Notes. The Acquisition Term Notes accrue interest at the prime rate plus |
| E. | Reserve Liquidity Notes. The Reserve Liquidity Notes, with available borrowing capacity in the amount of $ |
| * | The note maturity date can be extended by the Company to April 2024. As a condition to any such extension, the Company would be required to pay a fee of |
The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Third Eye Capital Notes allow the lender to accelerate the maturity in the occurrence of any event that could reasonably be expected to have a material adverse effect on the Company, such as any change in the business, operations, or financial condition. The Company has evaluated the likelihood of such an acceleration event and determined such an event to not be probable in the next twelve months. The terms of the notes allow interest to be capitalized.
The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from the Company’s North American subsidiaries. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $
GAFI Term Loan and Revolving Loan. On July 10, 2017, GAFI entered into a Note Purchase Agreement (“Note Purchase Agreement”) with Third Eye Capital. See further discussion regarding GAFI in Note 6. Pursuant to the Note Purchase Agreement, Third Eye Capital agreed, subject to the terms and conditions of the Note Purchase Agreement and relying on each of the representations and warranties set forth therein, to make (i) a single term loan to GAFI in an aggregate amount of $
Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, GAFI and Aemetis Carbon Capture, Inc. (“ACCI”) entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital , as administrative agent and collateral agent, and the lender party thereto (the “New Credit Facility”). The New Credit Facility provides for two credit facilities with aggregate availability of up to $
As of September 30, 2022, GAFI had $
Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc. (“Cilion”), on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The liability bears interest at
Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $
On January 1, 2022, the maturity on two Subordinated Notes’ was extended until the earlier of (i) June 30, 2022; (ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $
On July 1, 2022, the maturity on two Subordinated Notes’ was extended until the earlier of (i) December 31, 2022; (ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $
The Company evaluated the January 1, 2022 and July 1 2022 amendments and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.
At September 30, 2022 and December 31, 2021, the Company had, in aggregate, the amount of $
EB-5 promissory notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 (as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a “Regional Center” to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB-5 Notes”) bearing interest at 2-3%. Each note was issued in the principal amount of $
The Company has sold an aggregate principal amount of $
On October 16, 2016, the Company launched its EB-5 Phase II funding (the “EB-5 Phase II Funding”), with plans to issue $50.0 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under the Company’s EB-5 Phase I funding, to refinance indebtedness and capital expenditures of Aemetis, Inc. and Goodland Advanced Fuels Inc., (“GAFI”). On November 21, 2019, the minimum investment was raised from $
The Company has sold an aggregate principal amount of $
Secunderabad Oils Operating Agreement. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad Oils”). The 2008 agreement provided the working capital and had the first priority lien on assets in return for
Working capital loans. On July 26, 2022, the Company entered into a short-term loan with Secunderabad Oils Limited in an amount not to exceed $
Construction Loan Agreement. On October 4, 2022, the Company entered into a Construction Loan Agreement (“Loan Agreement”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the Loan Agreement, the lender has made available an aggregate principal amount not to exceed $
Financing Agreement for capital expenditures. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase ZEBREXTM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company also entered into a financing agreement with Mitsubishi for $
Scheduled debt repayments for the Company’s loan obligations by year are as follows:
| Twelve Months ended September 30, | Debt Repayments | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| There after | ||||
| Total debt | ||||
| Debt issuance costs | ( | ) | ||
| Total debt, net of debt issuance costs | $ | |||
5. Commitments and Contingencies
Leases
We have identified assets as the corporate office, warehouse, monitoring equipment and laboratory facilities over which we have control and obtain economic benefits fully. We classified these identified assets as operating leases after assessing the terms under classification guidance. We have entered into several leases for trailers and carbon units with purchase option at the end of the term. We have concluded that it is reasonably certain that we would exercise the purchase option at the end of the term, hence the leases were classified as finance leases. All of our leases have remaining term of less than a year to
We made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses.
When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and measure lease liabilities and right-of-use (“ROU”) assets. The incremental borrowing rate used by the Company was based on weighted average baseline rates commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period, when there is a new lease initiated, the rates established for that quarter will be used.
On December 14, 2021, we entered into a real estate purchase agreements and lease disposition and development agreement with the City of Riverbank. We plan to utilize the purchased and leased properties, located at 5300 Claus Road in the city of Riverbank, California, for the construction of the Carbon Zero 1 Facility. The lease commenced on April 1, 2022. The Company evaluated the lease in accordance with ASC 842 – Lease Accounting and classified the lease as a finance lease.
The components of lease expense and sublease income were as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating lease cost | ||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Short term lease expense | ||||||||||||||||
| Variable lease expense | ||||||||||||||||
| Total operating lease cost | $ | $ | $ | $ | ||||||||||||
| Finance lease cost | ||||||||||||||||
| Amortization of right-of-use assets | $ | $ | $ | $ | ||||||||||||
| Interest on lease liabilities | ||||||||||||||||
| Total finance lease cost | $ | $ | $ | $ | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating cash flows used in operating leases | $ | $ | $ | $ | ||||||||||||
| Operating cash flows used in finance leases | ||||||||||||||||
| Financing cash flows used in finance leases | $ | $ | $ | $ | ||||||||||||
Supplemental non-cash flow information related to ROU asset and lease liabilities was as follows for the three and nine months ended September 30, 2022 and 2021:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating leases | ||||||||||||||||
| Accretion of the lease liability | $ | $ | $ | $ | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||||||
| Weighted Average Remaining Lease Term | ||||||||||||||||
| Operating leases (in years) | ||||||||||||||||
| Finance leases (in years) | ||||||||||||||||
| Weighted Average Discount Rate | ||||||||||||||||
| Operating leases | % | |||||||||||||||
| Finance leases | % | |||||||||||||||
Supplemental balance sheet information related to leases was as follows:
| September 30, 2022 | December 31, 2021 | |||||||
| Operating leases | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Current portion of operating lease liability | ||||||||
| Long term operating lease liability | ||||||||
| Total operating lease liabilities | ||||||||
| Finance leases | ||||||||
| Property and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
| Other current liability | ||||||||
| Other long term liabilities | ||||||||
| Total finance lease liabilities | ||||||||
Maturities of operating lease liabilities were as follows:
| Twelve months ended September 30, | Operating leases | Finance leases | ||||||
| 2023 | $ | $ | ||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| There after | ||||||||
| Total lease payments | ||||||||
| Less imputed interest | ( | ) | ( | ) | ||||
| Total lease liability | $ | $ | ||||||
The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on a gross basis on the consolidated financial statements. This was recorded in the other operating income section of the Consolidated Statements of Operations and Comprehensive Loss.
The components of lease income for the three and nine months ended September 30, 2022 and September 30, 2021 were as follows:
| September 30, 2022 | September 30, 2021 | |||||||
| Lease income | $ | $ | ||||||
Future lease commitments to be received by the Company as of September 30, 2022 were as follows:
| Twelve months ended September 30, | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| There after | ||||
| Total future lease commitments | $ |
Property taxes
On March 3, 2022, the Company paid $
Legal Proceedings
On August 31, 2016, the Company filed a lawsuit in Santa Clara County Superior Court against defendant EdenIQ, Inc. (“EdenIQ”). The lawsuit was based on EdenIQ’s wrongful termination of a merger agreement that would have effectuated the merger of EdenIQ into a new entity that would be primarily owned by Aemetis. On July 24, 2019, the court awarded EdenIQ a portion of the fees and costs it had sought in the amount of approximately $
6. Aemetis Biogas LLC – Series A Preferred Financing and Variable Interest Entity
On December 20, 2018, ABGL entered into a Series A Preferred Unit Purchase Agreement for the sale of Series A Preferred Units to Protair-X Americas, Inc., with Third Eye Capital acting as an agent.
ABGL is authorized to issue
The Preferred Unit Agreement includes (i) preference payments of $
Triggering events occur upon ABGL’s failure to redeem units, comply with covenants, any other defaults or cross defaults, or to perform representations or warranties. Upon a triggering event: (i) the obligation of the Purchaser to purchase additional Series A Preferred Units is terminated, (ii) cash flow payments for redemption payments increases from
On August 8th, 2022, ABGL, Protair-X America, Inc. (“Protair”), and Third Eye Capital entered into a Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Amendment") which amends that certain Series A Preferred Unit Purchase Agreement (“PUPA”) dated as of December 20, 2018. The PUPA Amendment provides for: (i) a waiver of certain covenants prohibiting the internal reorganization of ABGL subsidiaries and the incurrence of indebtedness by ABGL and its subsidiaries pursuant to a USDA loan, provided that, among other things, Third Eye Capital shall have received a repayment of at least $
From inception of the agreement to date, ABGL issued
In the three months ended March 31, 2021, ABGL issued
The Company recorded Series A Preferred Unit liabilities, net of unit issuance costs and inclusive of accretive preference pursuant to this agreement, and accrued preference payments, classified as current portion of Series A Preferred Units, of $
Variable interest entity assessment
After consideration of ABGL’s operations and the above agreement, we concluded that ABGL did not have enough equity to finance its activities without additional subordinated financial support. ABGL is capitalized with Series A Preferred Units that are recorded as liabilities under U.S. GAAP. Hence, we concluded that ABGL is a VIE. Through the Company's ownership interest in all of the outstanding common stock, its current ability to control the board of directors, the management fee paid to Aemetis and control of subordinated financing decisions, Aemetis has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company. Total assets, before intercompany eliminations, of ABGL as of September 30, 2022 were $
7. Stock-Based Compensation
2019 Stock Plan
On April 29, 2019, the Aemetis 2019 Stock Plan (the “2019 Stock Plan”) was approved by stockholders of the Company. This plan permits the grant of Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine in its discretion. The 2019 Stock Plan’s term is
With the approval of the 2019 Stock Plan, the Zymetis 2006 Stock Plan, and Amended and Restated 2007 Stock Plan (collectively, the “Stock Plans” ) are terminated for granting any options under either plan. However, any options granted before the 2019 Stock Plan approved will remain outstanding and can be exercised, and any expired options will be available to grant under the 2019 Stock Plan.
During the year ended December 31, 2021,
During the nine months ended September 2022, the company issued
Common Stock Reserved for Issuance
The following is a summary of awards granted under the Stock Plans:
| Shares Available for Grant | Number of Shares Outstanding | Weighted-Average Exercise Price | ||||||||||
| Balance as of December 31, 2021 | $ | |||||||||||
| Authorized | - | - | ||||||||||
| Options Granted | ( | ) | ||||||||||
| RSAs Granted | ( | ) | - | - | ||||||||
| Exercised | - | ( | ) | |||||||||
| Forfeited/expired | ( | ) | ||||||||||
| Balance as of September 30, 2022 | $ | |||||||||||
As of September 30, 2022, there were
Stock-based compensation for employees
Stock-based compensation is accounted for in accordance with the provisions of ASC 718 Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.
Valuation and Expense Information
All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. Under ASU 2016-09 Improvements to Employee Share-Based Payments Accounting, we have elected to recognize forfeitures as they occur. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants.
During the three months ended September 30, 2022 and 2021, the company granted
| For the nine months ended September 30, 2022 | ||||||||
| Description | 2022 | 2021 | ||||||
| Dividend-yield | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected life (years) | ||||||||
| Market value per share on grant date | $ | $ | ||||||
| Fair value per option on grant date | $ | $ | ||||||
As of September 30, 2022, the Company had $
8. Outstanding Warrants
The weighted average fair value calculations for warrants granted are based on the following weighted average assumptions:
| For the nine months ended September 30, 2022 | ||||||||
| Description | 2022 | 2021 | ||||||
| Dividend-yield | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected life (years) | ||||||||
| Exercise price per warrant | $ | $ | ||||||
| Market value per share on grant date | $ | $ | ||||||
| Fair value per warrant on grant date | $ | $ | ||||||
A summary of historical warrant activity follows:
| Warrants Outstanding & Exercisable | Weighted - Average Exercise Price | Average Remaining Term in Years | ||||||||||
| Outstanding December 31, 2020 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Outstanding December 31, 2021 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Outstanding September 30, 2022 | $ | |||||||||||
All of the above outstanding warrants are vested and exercisable as of September 30, 2022. As of September 30, 2022 and 2021, the Company had no unrecognized compensation expense related to warrants, respectively.
9. Agreements
Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2022 and the term can be automatically renewed for additional one-year terms. WDG continues to be sold to A.L.Gilbert and DCO is sold to other customers under the J.D.Heiskell Purchase Agreement. The Company’s relationships with J.D. Heiskell, and A.L. Gilbert are well established, and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. These agreements are ordinary purchase and sale agency agreements for the Keyes Plant. On May 13, 2020, J.D. Heiskell and the Company entered into Amendment No.1 to the J.D. Heiskell Purchasing Agreement to remove J.D. Heiskell’s obligations to purchase ethanol from the Company under the J.D. Heiskell Purchasing Agreement.
As of September 30, 2022 and December 31, 2021, Aemetis had prepayments to J.D. Heiskell of $
The J.D. Heiskell sales and purchases activity associated with the J.D. Heiskell Purchase Agreement and J.D. Heiskell Procurement Agreement during the three and nine months ended September 30, 2022 and 2021 were as follows:
| As of and for the three months ended September 30, | As of and for the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Wet distiller's grains sales | $ | $ | $ | $ | ||||||||||||
| Corn oil sales | ||||||||||||||||
| Corn purchases | ||||||||||||||||
| Accounts receivable | ||||||||||||||||
| Accounts payable | ||||||||||||||||
Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy and a Wet Distillers Grains Marketing Agreement with A.L. Gilbert. Under the terms of the agreements the Wet Distillers Grains Marketing Agreement matures on December 31, 2022, with automatic one-year renewals thereafter. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex. Under the terms of the agreement, the initial term matures on October 31, 2023, with automatic one-year renewals thereafter.
Accounts receivable associated with our marketing partners was $
For the three months ended September 30, 2022 and 2021, the Company expensed marketing costs of $
Supply Trade Agreement. On July 1, 2022, the Company entered into an operating agreement with Gemini Edibles and Fats India Private Limited (“Gemini”). Under this agreement, Gemini agreed to provide the Company with a supply of feedstock up to a credit limit of $
As of September 30, 2022 and 2021, the Company has
10. Segment Information
Aemetis recognizes
The “California Ethanol” reportable segment includes the Company’s
The “Dairy Renewable Natural Gas” reportable segment includes, the dairy digesters, pipeline and gas condition hub for the production of biogas from dairies near Keyes, California.
The “India Biodiesel” reportable segment includes the Company’s
The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant, and the research and development facility in Minnesota. Refer to the “All Other” category.
Summarized financial information by reportable segment for the three months ended September 30, 2022 and 2021 follows:
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| California Ethanol | Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest expense | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Total Assets | ||||||||||||||||||||
| For the three months ended September 30, 2021 | ||||||||||||||||||||
| California Ethanol | Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Total Assets | ||||||||||||||||||||
A reconciliation of reportable segment revenues to total consolidated revenue for the three months ended September 30, 2022 and 2021 follows:
| 2022 | 2021 | |||||||
| Total revenues for reportable segments | $ | $ | ||||||
| Elimination of intersegment revenues | ( | ) | ( | ) | ||||
| Total consolidated revenues | $ | $ | ||||||
Summarized financial information by reportable segment for the nine months ended September 30, 2022 and 2021 follows:
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| California Ethanol | Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest expense | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Total Assets | ||||||||||||||||||||
| For the nine months ended September 30, 2021 | ||||||||||||||||||||
| California Ethanol | Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest expense | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Total Assets | ||||||||||||||||||||
A reconciliation of reportable segment revenues to total consolidated revenues for the nine months ended September 30, 2022 and 2021 follow:
| 2022 | 2021 | |||||||
| Total revenues for reportable segments | $ | $ | ||||||
| Elimination of intersegment revenues | ( | ) | ( | ) | ||||
| Total consolidated revenues | $ | $ | ||||||
California Ethanol: The Company amended the Corn Procurement and Working Capital Agreement and the J.D. Heiskell Purchasing Agreement to procure corn from J.D. Heiskell and sell all WDG and corn oil the Company produces to J.D. Heiskell. Sales of ethanol, WDG, corn oil to customers accounted for
Dairy Renewable Natural Gas: Substantially all of our Dairy Renewable Natural Gas segment revenues during the three and nine months ended September 30, 2022 and 2021 were from sales of biogas to the Keyes Plant for use in boilers, which allowed qualification of carbon credits for the ethanol produced in the Keyes Plant.
India Biodiesel: Three biodiesel customers sales customers accounted for
11. Related Party Transactions
The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital LLC (“McAfee Capital”), owned by Eric McAfee, $
On November 4, 2021, the Audit Committee of the Company approved a guarantee fee of $
The Company owes various members of the Board amounts totaling $
12. Subsequent Events
Construction Loan Agreement
On October 4, 2022, the Company entered into a Construction Loan Agreement (“Loan Agreement”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the Loan Agreement, the lender has made available an aggregate principal amount not to exceed $
13. Management’s Plan
The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. As a result of negative capital and negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the Company will need to either refinance the Company’s debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the Company’s ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we plan to operate the plant and continue to improve financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction or revenue enhancements, execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement.
For Aemetis Biogas we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the higher carbon credits available in California. Funding for continued construction is based upon obtaining government guaranteed loans and executing on existing and new state grant programs.
For the Riverbank project, we plan to raise the funds necessary to construct and operate the Carbon Zero 1 plant using loan guarantees and public financings based upon the licensed technology that generate federal and state carbon credits available for ultra-low carbon fuels utilizing lower cost, non-food advanced feedstocks to significantly increase margins.
For the Kakinada Plant, we plan to develop sales channels for domestic products as the costs of feedstock normalize against the price of diesel, as recently announced governmental incentives take effect to promote the blending of biodiesel, and as feedstocks such as refined animal tallow are used domestically and exported. Additionally, we are in the process of obtaining approval to export refined animal tallow and biodiesel produced using animal tallow into international markets as the use of refined animal tallow received approval from the Pollution Control Board of India for production of biodiesel.
In addition to the above we plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, selling bonds in the taxable and tax-exempt markets, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, or by vendor financing arrangements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated condensed financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
| ● |
Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A. |
| ● |
Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2022 and 2021. |
| ● |
Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition. |
| ● |
Critical Accounting Policies and Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
The following discussion should be read in conjunction with our consolidated condensed financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly under “Part II, Item 1A. Risk Factors,” and in other reports we file with the SEC. All references to years relate to the calendar year ended December 31 of the particular year.
Overview
Founded in 2006 and headquartered in Cupertino, California, we are an international renewable natural gas, and renewable fuels company focused on the acquisition, development and commercialization of innovative negative carbon intensity products and technologies that replace traditional petroleum-based products. We operate in three reportable segments “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel”. We have other operating segments determined not to be reportable segments and are collectively represented by the “All Other” category. At Aemetis, our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this through leading the low-carbon fuels industry by building a circular bioeconomy utilizing agricultural waste to produce advanced renewable fuels that produce less greenhouse gas emissions and thereby improve air quality.
Our California Ethanol segment consists of a 65 million gallon per year ethanol production facility located in Keyes, California (the “Keyes Plant”) that we own and operate. In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to local dairies and feedlots. In the third quarter of 2022, a Zebrex ethanol dehydration system was commissioned, a key first step in the electrification of the Keyes Plant, which will significantly reduce the use of petroleum based natural gas as process energy. The electrification, along with the future installation of a two-megawatt zero carbon intensity solar microgrid system and a mechanical vapor recompression (MVR) system will greatly reduce GHG emissions and decreases the carbon intensity of fuel produced at the Keyes Plant, allowing us to realize a higher price for the ethanol produced and sold.
Our Dairy Renewable Natural Gas segment consists of our subsidiary, Aemetis Biogas, LLC (“ABGL”), which was formed to construct bio-methane anaerobic digesters at local dairies near the Keyes Plant, many of whom also purchase WDG produced at the Keyes Plant. The digesters are connected via an underground private pipeline owned by ABGL to a gas cleanup and compression unit being built at the Keyes Plant to produce RNG. Upon receiving the bio-methane from the dairies, impurities are removed, and the bio-methane is converted to negative carbon intensity RNG where it will be either injected into the statewide PG&E gas utility pipeline, supplied as compressed RNG that will service local trucking fleets, or used as renewable process energy at the Keyes Plant. ABGL has completed 35 miles of our California biogas digester network and pipeline system that converts waste dairy methane gas into RNG, including two operational dairies.
During the second quarter of 2022, Aemetis completed construction and is in the process of commissioning a third dairy digester and centralized gas cleanup facility and utility gas interconnect located at the Keyes Plant where dairy biogas will be upgraded to RNG and injected into the utility pipeline. Upon receiving pathway certification from the California Air Resources Board (CARB), the fuel is expected to be delivered into the Northern California gas delivery system. ABGL is also in the process of constructing several additional dairy digesters.
Our Carbon Zero biofuels production plants are designed to produce biofuels, including sustainable aviation fuel (“SAF”) and diesel fuel utilizing renewable hydrogen and non-edible renewable oils sourced from existing Aemetis biofuels plants and other sources. The first plant to be built in Riverbank, California, is expected to utilize hydroelectric and other renewable power available onsite to produce 90 million gallons per year of SAF, renewable diesel, and other byproducts. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels to reduce GHG emissions and other pollutants associated with conventional petroleum-based fuels. By producing ultra-low carbon renewable fuels, the Company expects to capture higher value D3 Renewable Identification Numbers (“RINs”) and California’s LCFS credits. D3 RINs have a higher value in the marketplace than D6 RINs due to D3 RINs’ relative scarcity and mandated pricing formula from the United States Environmental Protection Agency (“EPA”).
Aemetis Carbon Capture, Inc. was established to build Carbon Capture and Sequestration (CCS) projects that generate LCFS and IRS 45Q credits by injecting CO₂ into wells which are monitored for emissions to ensure the long-term sequestration of carbon underground. California’s Central Valley has been identified as the state’s most favorable region for large-scale CO₂ injection projects due to the subsurface geologic formation that absorbs and retains gases. The CCS projects are expected to capture and sequester up to two million metric tons per year of CO₂ at the two Aemetis biofuels plant sites in Keyes and Riverbank, California. In July 2022, Aemetis purchased 24 acres, on the Riverbank Industrial Complex site in Riverbank, California, to develop a CCS injection well. The Company plans to construct a characterization well to obtain both the data and well design information required for the EPA Class VI CO₂ injection well permit application. The well is expected to sequester up to one million metric tons per year of CO₂.
Our India Biodiesel segment consist of the Kakinada Plant with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. We believe the Kakinada Plant is one of the largest biodiesel production facilities in India on a nameplate capacity basis. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meet international product standards. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive and other industries.
California Ethanol Revenue
Our revenue development strategy for our California Ethanol segment relies upon supplying ethanol into the transportation fuel market in Northern California and supplying feed products to dairy and other animal feed operations in Northern California. We are actively seeking higher value for our ethanol in an effort to improve our overall margins and to add incremental income to the California Ethanol segment, including, the implementation of the Solar Microgrid System, the installation of the Zebrex ethanol dehydration system and other energy efficiency technologies. We are also actively working with local dairy and feed potential customers to promote the value of our WDG product in an effort to strengthen demand for this product.
During the third quarter of 2022, we produced five products at the Keyes Plant: denatured fuel ethanol, WDG, DCO, CO₂, and CDS. During the first quarter of 2020, we transitioned from selling the ethanol we produce to J.D. Heiskell pursuant to the J.D. Heiskell Purchase Agreement, to a model where the ethanol is sold directly to our fuel marketing customers. We own the ethanol stored in our finished goods tank. WDG continues to be sold to A.L. Gilbert and DCO is sold to other customers under the J.D. Heiskell Purchase Agreement. Smaller amounts of CDS were sold to various local third parties. We began selling CO₂ to Messer Gas in the second quarter of 2020.
California Ethanol revenue is dependent on the price of ethanol, WDG, high-grade alcohol, and DCO. Ethanol pricing is influenced by local and national inventory levels, local and national ethanol production, imported ethanol, corn prices and gasoline demand, and is determined pursuant to a marketing agreement with a single fuel marketing customer and is generally based on daily and monthly pricing for ethanol delivered to the San Francisco Bay Area, California, as published by Oil Price Information Service (“OPIS”), as well as quarterly contracts negotiated by our marketing customer with local fuel blenders. The price for WDG is influenced by the price of corn, the supply and price of distillers dried grains, and demand from the local dairy and feed markets and determined monthly pursuant to a marketing agreement with A.L. Gilbert and is generally determined in reference to the local price of dried distillers’ grains and other comparable feed products. Our revenue is further influenced by the price of natural gas, our decision to operate the Keyes Plant at various capacity levels, conduct required maintenance, and respond to biological processes affecting output.
Dairy Renewable Natural Gas Revenue
In December 2018, we utilized our relationships with California’s Central Valley dairy farmers by signing leases and raising funds to construct dairy digesters, a 40 mile pipeline, and a biogas-to-RNG facility to initially use biogas to power our Keyes Plant and later deliver fuels for sale to utility gas pipeline. We are currently producing RNG from two digesters connected to 35 miles of pipeline, then flowing this gas to our RNG cleanup and compression hub at the Keyes Plant. The RNG upgrade unit at the Keyes Plant is designed to enable the production and delivery of utility-grade RNG for sale as transportation fuel to California customers via pipeline delivery.
In addition to the existing and operating dairy digesters, we currently have three additional dairy digesters that are under construction. We have 24 signed agreements with additional dairies to construct dairy digesters. Our revenue development strategy for the Dairy Renewable Natural Gas segment relies upon continuing to collect bio-methane gas from the existing dairy digesters, continuing to build out the network of dairy digesters, extending the pipeline in Northern California to grow the supply of RNG available for sale and utilizing the biogas-to-RNG upgrade unit to distribute utility-grade RNG to customers statewide. We plan to store the RNG until the LCFS credit pathway for each dairy has been established, after which we will sell the stored gas by delivering it into the utility gas pipeline.
India Biodiesel Revenue
Our revenue strategy in India is based on continuing to sell biodiesel to our bulk fuel customers, fuel station customers, mining customers, industrial customers and tender offers placed by Government Oil Marketing Companies (“OMCs”) for bulk purchases of fuels. Recently, the government of India updated the national biofuels policy and adopted a new tax on diesel to promote biodiesel blending. As a result, the OMCs are pricing the tenders at economically viable levels, allowing for biodiesel producers in India to begin production.
During the third quarter, we received an OMC's tender offer for 26,000 metric tons which will be fulfilled by October 2022. We are pursuing future tenders which may be announced in November 2022.
Other Income
During the second quarter of 2022, a grant in the amount of $14.2 million was received from the USDA’s Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic.
Results of Operations
Three Months Ended September 30, 2022, Compared to Three Months Ended September 30, 2021
Revenues
Our revenues are derived primarily from sales of ethanol and WDG for our California Ethanol segment, renewable natural gas for our Dairy Renewable Natural Gas segment, biodiesel and refined glycerin for our India Biodiesel, and sublease rental income from All Other.
Three Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 60,908 | $ | 49,832 | $ | 11,076 | 22.2 | % | ||||||||
| Dairy Renewable Natural Gas* |
308 | 355 | (47 | ) | (13.2 | )% | ||||||||||
| India Biodiesel |
10,923 | 63 | 10,860 | 17238.1 | % | |||||||||||
| All other |
- | - | - | 0.0 | % | |||||||||||
| Eliminations |
(308 | ) | (355 | ) | 47 | (13.2 | )% | |||||||||
| Total |
$ | 71,831 | $ | 49,895 | $ | 21,936 | 44.0 | % | ||||||||
*All Dairy Renewable Natural Gas revenue is intercompany.
California Ethanol. For the three months ended September 30, 2022, the Company generated 73% of revenue from sales of ethanol, 21% from sales of WDG, and 5% from sales of corn oil, CDS, CO₂, and other sales. Plant production averaged 114% of the 55 million gallon per year nameplate capacity. The increase in revenues was due to the increase in volume of ethanol gallons sold to 15.7 million for the three months ended September 30, 2022, compared to 13.8 million for the same period ended September 30, 2021, while the price of ethanol per gallon increased slightly to $2.86 per gallon from $2.84 per gallon. The average price of WDG increased by 33% to $127 per ton for the three months ended September 30, 2022 while WDG sales volume increased by 10% to 102 thousand tons in the three months ended September 30, 2022 compared to 93 thousand tons in the three months ended September 30, 2021.
Dairy Renewable Natural Gas. During the three months ended September 30, 2022 and 2021, we recognized revenue of $308 thousand and $355 thousand, respectively, to an intercompany party. The decrease in the three months ended September 30, 2022 revenue compared to the three months ended September 30, 2021 was due to LCFS pathway being approved in the second quarter of 2021, which applied retroactively since the inception of the first two dairy digesters. For revenue on a comparable basis the dairy digesters produced and sold MMBTU of 16.8 thousand and 15.8 thousand in the three months ended September 30, 2022 and 2021.
India Biodiesel. For the three months ended September 30, 2022, we generated 99% of our revenues from the sale of biodiesel, and 1% of our sales from other sales compared to 100% of our sales from other sales for the three months ended September 30, 2021. The increase in revenues was primarily attributable to the Kakinada Plant obtaining and executing on the Indian government tenders. Biodiesel sales volume increased by 100% to 6,990 metric tons in the three months ended September 30, 2022compared to 0 metric tons in the three months ended September 30, 2021.
Cost of Goods Sold
Three Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 64,671 | $ | 54,245 | $ | 10,426 | 19.2 | % | ||||||||
| Dairy Renewable Natural Gas |
487 | 752 | (265 | ) | (35.2 | )% | ||||||||||
| India Biodiesel |
8,082 | 16 | 8,066 | 50412.5 | % | |||||||||||
| All other |
3 | 22 | (19 | ) | (86.4 | )% | ||||||||||
| Eliminations |
(308 | ) | (355 | ) | 47 | (13.2 | )% | |||||||||
| Total |
$ | 72,935 | $ | 54,680 | $ | 18,255 | 33.4 | % | ||||||||
California Ethanol. We ground 5.5 million and 4.8 million bushels of corn in the three months ended September 30, 2022 and 2021, respectively. Our average cost of feedstock per bushel increased to $9.59 per bushel during the three months ended September 30, 2022 compared to $7.99 per bushel for the three months ended September 30, 2021. In addition, for the three months ended September 30, 2022, we incurred $1.3 million more in natural gas costs, $0.1 million more in chemical and denaturant costs, and $1.0 million more in transportation costs compared to the same period in 2021.
Dairy Renewable Natural Gas. Cost of Goods Sold expenses relate to dairy manure payments, maintenance on the dairy digesters, production bonuses, and depreciation.
India Biodiesel. The increase in costs of goods sold was attributable to the increase in production of biodiesel to meet the India government's tender offer. In the three months ended September 30, 2022 biodiesel feedstock volume was 9,401 metric tons, compared to 0 metric tons in the same period as 2021. During the three months ended September 30, 2022 the average price per biodiesel metric ton was $889 compared to $0 in the same period as 2021.
Gross profit (loss)
Three Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | (3,763 | ) | $ | (4,413 | ) | $ | 650 | (14.7 | )% | ||||||
| Dairy Renewable Natural Gas |
(179 | ) | (397 | ) | 218 | (54.9 | )% | |||||||||
| India Biodiesel |
2,841 | 47 | 2,794 | 5944.7 | % | |||||||||||
| All other |
(3 | ) | (22 | ) | 19 | (86.4 | )% | |||||||||
| Total |
$ | (1,104 | ) | $ | (4,785 | ) | $ | 3,681 | (76.9 | )% | ||||||
California Ethanol. Gross loss decreased by 15% in the three months ended September 30, 2022 primarily due to increases in sales volume of ethanol and WDG, partially offset by the increases in the prices of corn, natural gas and transportation costs.
Dairy Renewable Natural Gas. The decrease in gross loss in the three months ended September 30, 2022 relates to a decrease in taxes and payments to dairies in the prior period.
India Biodiesel. The increase in gross profit was attributable to the increase in sales and production of biodiesel to fulfill the government's tender offer.
Operating (income)/expense and non-operating (income)/expense
Substantially all of our research and development expenses were related to research and development activities in Minnesota.
Selling, general, and administrative (“SG&A”) expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, other corporate expenses, and related facilities expenses.
Other operating income consists of sublease rental income.
Other expense (income) expense consists primarily of interest and amortization expense attributable to our debt facilities and those of our subsidiaries and accretion of our Series A preferred units. The debt facilities include stock or warrants issued as fees. The fair value of stock and warrants are amortized as amortization expense, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense.
Three Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| Research and development expenses |
$ | 52 | $ | 22 | $ | 30 | 136.4 | % | ||||||||
| Selling, general and administrative expenses |
6,867 | 5,087 | 1,780 | 35.0 | % | |||||||||||
| Other operating income |
(428 | ) | - | (428 | ) | 0.0 | % | |||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
$ | 5,456 | $ | 4,408 | $ | 1,048 | 23.8 | % | ||||||||
| Debt related fees and amortization expense |
1,633 | 1,140 | 493 | 43.2 | % | |||||||||||
| Accretion and other expenses of Series A preferred units |
2,774 | 2,185 | 589 | 27.0 | % | |||||||||||
| Loss on debt extinguishment |
49,386 | - | 49,386 | 0.0 | % | |||||||||||
| Other expense (income) |
(2 | ) | (30 | ) | 28 | (93.3 | )% | |||||||||
The increase in SG&A expenses for the three months ended September 30, 2022 was principally due to increases in stock compensation and salaries and wages of $1.7 million, as part of the development of our ultra-low carbon initiatives. SG&A expenses as a percentage of revenue increased in the three months ended September 30, 2022 to 10% compared to the comparable period in 2021 at 10%.
Other operating income is related to Riverbank sublease rental income.
Interest expense increased in the three months ended September 30, 2022 due to obtaining and drawing on the Revolving Loans. Debt related fees and amortization increased due to debt issuance costs and extension fees being incurred in 2022 related to extending the Third Eye Capital debt and obtaining the Revolving Loans. The increase in accretion and other expenses of the Series A Preferred Units was due to accelerated accretion due to the PUPA Amendment. The loss on debt extinguishment was related to the PUPA Amendment.
Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
Revenues
Nine Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 178,840 | $ | 146,890 | $ | 31,950 | 21.8 | % | ||||||||
| Dairy Renewable Natural Gas* |
940 | 1,090 | (150 | ) | (13.8 | )% | ||||||||||
| India Biodiesel |
10,941 | 696 | 10,245 | 1472.0 | % | |||||||||||
| All other |
- | - | - | 0.0 | % | |||||||||||
| Eliminations |
(940 | ) | (1,090 | ) | 150 | (13.8 | )% | |||||||||
| Total |
$ | 189,781 | $ | 147,586 | $ | 42,195 | 28.6 | % | ||||||||
*All Dairy Renewable Natural Gas revenue is intercompany.
California Ethanol. For the nine months ended September 30, 2022, the Company generated 73% of revenue from sales of ethanol, 22% from sales of WDG, and 5% from sales of corn oil, CDS, CO₂, and other sales. Plant production averaged 110% of the 55 million gallon per year nameplate capacity. The increase in revenues was due to an increase in price of ethanol to $2.86 per gallon for the nine months ended September 30, 2022, compared to $2.49 per gallon for the same period ended September 30, 2021, and due to an increase in volume of ethanol gallons sold from 44.6 million gallons for the nine months ended September 30, 2021 to 45.5 million gallons for the nine months ended September 30, 2022. The average price of WDG increased by 26% to $129 per ton for the nine months ended September 30, 2022 while WDG sales volume increased to 307 thousand tons in the nine months ended September 30, 2022 compared to 299 thousand tons in the nine months ended September 30, 2021.
Dairy Renewable Natural Gas. During the nine months ended September 30, 2022 and 2021, we recognized revenue of $940 thousand and $1.1 million, respectively to an intercompany party. The decrease was due to a drop in carbon intensity prices.
India Biodiesel. For the nine months ended September 30, 2022, we generated 99% of our revenues from the sale of biodiesel, and 1% from other sales, compared to 67% of our revenues from the sale of biodiesel, and 33% of our sales from other sales for the nine months ended September 30, 2021. The increase in revenues was primarily attributable to the Kakinada Plant receiving orders from the Indian government in September of 2022. Biodiesel sales volume increased to 6,990 metric tons in the nine months ended September 30, 2022 compared to 455 metric tons in the nine months ended September 30, 2021.
Cost of Goods Sold
Nine Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 185,635 | $ | 151,062 | $ | 34,573 | 22.9 | % | ||||||||
| Dairy Renewable Natural Gas |
1,394 | 1,572 | (178 | ) | (11.3 | )% | ||||||||||
| India Biodiesel |
8,082 | 719 | 7,363 | 1024.1 | % | |||||||||||
| All other |
13 | 70 | (57 | ) | (81.4 | )% | ||||||||||
| Eliminations |
(940 | ) | (1,090 | ) | 150 | (13.8 | )% | |||||||||
| Total |
$ | 194,184 | $ | 152,333 | $ | 41,851 | 27.5 | % | ||||||||
California Ethanol. We ground 15.9 million and 15.6 million bushels of corn in the nine months ended September 30, 2022 and 2021, respectively. Our average cost of feedstock per bushel increased to $9.53 per bushel during the nine months ended September 30, 2022 compared to $7.62 per bushel for the nine months ended September 30, 2021. In addition, for the nine months ended September 30, 2022, we incurred $3.6 million more in natural gas costs, $1.0 million more in chemical and denaturant costs, and $1.8 million more in transportation costs.
Dairy Renewable Natural Gas. Cost of Goods Sold expenses relate to dairy manure payments, maintenance on the dairy digesters, production bonuses, and depreciation.
India Biodiesel. The increase in costs of goods sold was attributable to the increase in biodiesel production to fulfill the Indian government's tender offers. In the nine months ended September 30, 2022 biodiesel feedstock volume was 9,401 metric tons, compared to 465 metric tons in the same period as 2021. During the nine months ended September 30, 2022, the average price of biodiesel feedstock was $889 per metric ton compared to $619 per metric ton in the same period as 2021.
Gross profit (loss)
Nine Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | (6,795 | ) | $ | (4,172 | ) | $ | (2,623 | ) | 62.9 | % | |||||
| Dairy Renewable Natural Gas |
(454 | ) | (482 | ) | 28 | (5.8 | )% | |||||||||
| India Biodiesel |
2,859 | (23 | ) | 2,882 | (12530.4 | )% | ||||||||||
| All other |
(13 | ) | (70 | ) | 57 | (81.4 | )% | |||||||||
| Total |
$ | (4,403 | ) | $ | (4,747 | ) | $ | 344 | (7.2 | )% | ||||||
California Ethanol. Gross loss increased in the nine months ended September 30, 2022 primarily due to increases in the prices of corn, natural gas, chemical costs, and transportation costs.
Dairy Renewable Natural Gas. The gross loss decrease in the nine months ended September 30, 2022, is related to slightly higher payments to dairies in the prior period.
India Biodiesel. The increase in gross profit was attributable to the increase in sales and production of biodiesel to fulfill the government's tender offer. During the nine months ended September 30, 2022, India Biodiesel did not participate in the government's tenders as the COVID-19 shutdown caused higher feedstock costs making conversion to biodiesel unviable.
Operating (income)/expense and non-operating (income)/expense
Nine Months Ended September 30, (in thousands)
| 2022 |
2021 |
Inc/(dec) |
% change |
|||||||||||||
| Research and development expenses |
$ | 139 | $ | 66 | $ | 73 | 110.6 | % | ||||||||
| Selling, general and administrative expenses |
21,234 | 16,222 | 5,012 | 30.9 | % | |||||||||||
| Other operating income |
(68 | ) | - | (68 | ) | 0.0 | % | |||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
$ | 14,819 | $ | 14,902 | $ | (83 | ) | (0.6 | )% | |||||||
| Debt related fees and amortization expense |
5,199 | 3,045 | 2,154 | 70.7 | % | |||||||||||
| Accretion and other expenses of Series A preferred units |
5,920 | 7,928 | (2,008 | ) | (25.3 | )% | ||||||||||
| Loss (gain) on debt extinguishment |
49,386 | (1,134 | ) | 50,520 | (4455.0 | )% | ||||||||||
| Gain on litigation |
(1,400 | ) | - | (1,400 | ) | 0.0 | % | |||||||||
| Other expense (income) |
(14,297 | ) | 483 | (14,780 | ) | (3060.0 | )% | |||||||||
The increase in SG&A expenses for the nine months ended September 30, 2022 was due to increases in stock compensation and salaries and wages as of $4.4 million, as two stock option grants occurred during the year and due to an increase in taxes, insurance, rent and utilities, of $0.5 million. SG&A expenses as a percentage of revenue in the nine months ended September 30, 2022 stayed consistent at 11% compared to the corresponding period of 2021.
Other operating income is related to Riverbank sublease rental income, partially offset by a loss on lease termination caused by the termination of two finance leases.
Interest expense decreased in the nine months ended September 30, 2022 due to principal debt payments made to Third Eye Capital in the first and second quarter of 2022, coupled with capitalizing interest on our capital projects. Debt related fees and amortization increased due to debt issuance costs and extension fees being incurred in 2022 related to extending the Third Eye Capital debt and obtaining the Revolving Loans. The decrease in accretion and other expenses of the Series A Preferred Units was due to capitalized interest related to the ABGL project increasing and offsetting accretion. For the nine months ended September 30, 2022 and 2021 capitalized interest was $7.7 million and $2.9 million, respectively. The Gain on debt extinguishment was related to the PPP loan being forgiven in the 2021. Gain on litigation arose from the settlement of the EdenIQ lawsuit in the second quarter. Other expense (income) change is related to a grant in the amount of $14.2 million received from the USDA's Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic.
Liquidity and Capital Resources
Cash and Cash Equivalents
Cash and cash equivalents were $0.3 million at September 30, 2022, of which $0.2 million was held in North America and the rest was held at our Indian subsidiary. Our current ratio at September 30, 2022 was 0.13, compared to a current ratio of 0.32 at December 31, 2021. We expect that our future available liquidity resources will consist primarily of cash generated from operations, remaining cash balances, borrowings available, if any, under our senior debt facilities and our subordinated debt facilities, and any additional funds raised through sales of equity. The use of proceeds from all equity raises and debt financings are subject to approval by our senior lender.
Liquidity
Cash and cash equivalents, current assets, current liabilities and debt at the end of each period were as follows (in thousands):
| As of |
||||||||
| September 30, 2022 |
December 31, 2021 |
|||||||
| Cash and cash equivalents |
$ | 251 | $ | 7,751 | ||||
| Current assets (including cash, cash equivalents, and deposits) |
24,051 | 20,693 | ||||||
| Current and long-term liabilities (excluding all debt) |
160,783 | 92,302 | ||||||
| Current & long-term debt |
222,982 | 188,767 | ||||||
Our principal sources of liquidity have been cash provided by the sale of equity, operations, and borrowings under various debt arrangements.
We launched an EB-5 Phase II funding in 2016, under which we expect to issue $50.8 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under our EB-5 Phase I funding. On November 21, 2019, the minimum investment amount was raised from $0.5 million per investor to $0.9 million per investor. As of September 30, 2022, EB-5 Phase II funding in the amount of $4.0 million had been released from escrow to us. Our principal uses of cash have been to refinance indebtedness, fund operations, and for capital expenditures. We anticipate these uses will continue to be our principal uses of cash in the future. Global financial and credit markets have been volatile in recent years, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost, or at all.
We operate in a volatile market in which we have limited control over the major components of input costs and product revenues and are making investments in future facilities and facility upgrades that improve the overall margin while lessening the impact of these volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil and natural gas. To the extent that we experience periods in which the spread between ethanol prices, and corn and energy costs narrow or the spread between biodiesel prices and waste fats and oils or palm oil and energy costs narrow, we may require additional working capital to fund operations.
As a result of negative capital and negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the company will need to either refinance the company's debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the company's ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we plan to operate the plant and continue to improve financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction or revenue enhancements, execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement.
For the ABGL project, we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the higher carbon credits available in California. Funding for continued construction is based upon, obtaining government guaranteed loans and executing on existing and new state grant programs.
For the Riverbank project, we plan to raise the funds necessary to construct and operate the Carbon Zero 1 plant using loan guarantees and public financings based upon the licensed technology that generate federal and state carbon credits available for ultra-low carbon fuels utilizing lower cost, non-food advanced feedstocks to significantly increase margins.
For the Kakinada Plant, we plan to develop sales channels for domestic products as the costs of feedstock normalize against the price of diesel, as recently announced governmental incentives take effect to promote the blending of biodiesel, and as feedstocks such as refined animal tallow are used domestically and exported. Additionally, we are in the process of obtaining approval to export refined animal tallow and biodiesel produced using animal tallow into international markets as the use of refined animal tallow received approval from the Pollution Control Board of India for production of biodiesel.
In addition to the above we plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, selling bonds in the taxable and tax-exempt markets, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, or by vendor financing arrangements.
At September 30, 2022, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes equaled $151 million. The maturity dates for the Third Eye Capital financing arrangements are April 1, 2023, for $104 million with the ability to extend to April 1, 2024, March 1, 2025, for $25 million and March 1, 2026, for $22 million.
As of the date of this report, the Company has $40.0 million additional borrowing capacity to fund future cash flow requirements under the Reserve Liquidity Notes due on April 1, 2023.
We also rely on our working capital lines with Gemini and Secunderabad Oils in India to fund our commercial arrangements for the acquisitions of feedstock. We currently provide our own working capital for the Keyes Plant; Gemini and Secunderabad Oils currently provide us with working capital for the Kakinada Plant. The ability of Gemini, and Secunderabad Oils to continue to provide us with working capital depends in part on both of their respective financial strength and banking relationships.
Change in Working Capital and Cash Flows
The below table (in thousands) describes the changes in current and long-term debt during the nine months ended September 30, 2022:
| Increases to debt: |
||||||||
| Accrued interest |
$ | 15,759 | ||||||
| Maturity date extension fee and other fees added to senior debt |
2,337 | |||||||
| Sub debt extension fees |
680 | |||||||
| Fuels Revolving Line draw |
26,500 | |||||||
| Carbon Revolving Line draw |
27,600 | |||||||
| Working capital loan draw |
2,723 | |||||||
| Financing for equipment term loan |
290 | |||||||
| Total increases to debt |
$ | 75,889 | ||||||
| Decreases to debt: |
||||||||
| Principal, fees, and interest payments to senior lender |
$ | (36,026 | ) | |||||
| Principal and interest payments to EB-5 investors |
(160 | ) | ||||||
| Change in debt issuance costs, net of amortization |
(5,420 | ) | ||||||
| Term loan payments |
(7 | ) | ||||||
| Working capital loan payments |
(61 | ) | ||||||
| Total decreases to debt |
$ | (41,674 | ) | |||||
| Change in total debt |
$ | 34,215 |
Working capital changes resulted in (i) a $5.3 million increase in inventories, and a (ii) a $7.6 million increase in accounts receivable due to an increase in India Biodiesel revenue, partially offset by (iii) a $1.9 million decrease in prepaid expenses mainly due to the use of a J.D. Heiskell pre-payment, partially offset by an increase in prepaid guarantee fees, (iv) a decrease in other current assets of $0.1 million, and (v) a $7.5 million decrease in cash.
Net cash used in operating activities during the nine months ended September 30, 2022, was $16.3 million, consisting of non-cash charges of $68.9 million, net cash provided by operating assets and liabilities of $0.1 million, and net loss of $85.3 million. The non-cash charges consisted of: (i) $5.2 million in amortization of debt issuance costs and other intangible assets, (ii) $4.0 million in depreciation expenses, (iii) $4.9 million in stock-based compensation expense, (iv) $5.9 million in preferred unit accretion and other expenses of Series A preferred units, (v) a loss on lease termination of $0.7 million, (vi) a loss on debt extinguishment of $49.4 million, and (vii) a gain on litigation of $1.4 million. Net changes in operating assets and liabilities consisted primarily of (i) an increase in accrued interest of $12.8 million, (ii) prepaid expenses decrease of $2.8 million, and (iii) an increase in accounts payable of $8.8 million. This was partially offset by an increase in (i) inventories of $5.6 million, (ii) an increase in accounts receivable of $8.0 million, (iii) an increase in other assets of $0.5 million, and (iv) a decrease in other liabilities of $10.1 million.
Cash used by investing activities was $21.5 million, of which $28.9 million were used by capital projects, partially offset by grant proceeds and other reimbursements of $7.4 million.
Cash provided by financing activities was $30.4 million, consisting primarily of $0.2 million from exercises of stock options, $8.0 million from issuance of common stock and $39.9 million from proceeds from borrowings, partially offset by repayments of borrowings of $16.2 million, debt renewal and waiver fee payments of $1.2 million, and payments on finance leases of $0.3 million.
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. We believe that of our most significant accounting policies and estimates, defined as those policies and estimates that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain are: revenue recognition; recoverability of long-lived assets, Series A Preferred unit liability, and debt modification and extinguishment accounting. These significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Issued Accounting Pronouncements
None reported beyond those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Off Balance Sheet Arrangements
We had no off-balance sheet arrangements during the three months ended September 30, 2022.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
Management (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our CEO and CFO concluded that, although remediation plans were initiated to address the material weaknesses over financial reporting as identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, the disclosure controls and procedures along with the related internal controls over financial reporting were not effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is compiled and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
As discussed in greater detail under Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2021, we initiated a remediation plan to address the material weaknesses in our internal control over financial reporting identified as of the fiscal year then ended. Our efforts to improve our internal controls are ongoing.
For a more comprehensive discussion of the material weaknesses in internal control over financial reporting identified by management as of December 31, 2021, and the remedial measures undertaken to address these material weaknesses, investors are encouraged to review Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2021.
The Company has been named in, various lawsuits or threatened actions that are incidental to our ordinary business. For additional information regarding such matters, see “Part I, Item 1. Financial Statements – Note 5. Commitments and Contingencies - Legal Proceedings.”
Except as described below, there are no material changes to the risk factors since the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 10, 2022. We urge you to read the risk factors contained therein.
Inflation, including as a result of commodity price inflation or supply chain constraints due to the war in Ukraine, may adversely impact our results of operations.
We have experienced inflationary impacts on key production inputs, feedstock, wages and other costs of labor, equipment, services, and other business expenses. Commodity prices and transportation costs in particular have risen significantly over the past year. Inflation and its negative impacts could escalate in future periods. In addition, inflation is often accompanied by higher interest rates.
Ukraine is the third largest exporter of grain in the world. Russia is one of the largest producers of natural gas and oil. The commodity price impact of the war in Ukraine has been a sharp rise in grain and energy prices, including corn and natural gas, two of our primary production input commodities. In addition, the war in Ukraine has and may continue to adversely affect global supply chains resulting in further commodity price inflation for our production inputs. Also, given high global grain prices, U.S. farmers may prefer to lock in prices and export additional volumes, reducing domestic grain supplies and resulting in further inflationary pressures.
In an inflationary environment, such as the current economic environment, depending on other economic conditions, we may be unable to raise prices of our fuels or products to keep up with the rate of inflation, which would reduce our profit margins. As a result, inflation may have a material adverse effect on our results of operations and financial condition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the third quarter of 2022, we issued 113 thousand shares of our common stock to certain subordinated promissory note holders pursuant to the note holders’ warrant exercise at an exercise price of $0.01 per share.
The above issuance was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as sales of securities not involving any public offering.
Item 3. Defaults Upon Senior Securities.
No unresolved defaults on senior securities occurred during the nine months ended September 30, 2022.
Item 4. Mine Safety Disclosures.
None.
None.
| 31.1 |
|
| 31.2 |
|
| 32.1 |
|
| 32.2 |
|
| 101.INS * |
Inline XBRL Instance Document |
| 101.SCH * |
Inline XBRL Taxonomy Extension Schema |
| 101.CAL * |
Inline XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF * |
Inline XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB * |
Inline XBRL Taxonomy Extension Label Linkbase |
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AEMETIS, INC. |
||
|
|
||
| By: |
/s/ Eric A. McAfee |
|
| Eric A. McAfee Chief Executive Officer (Principal Executive Officer) |
||
Date: November 7, 2022
| By: |
/s/ Todd Waltz |
|
| Todd Waltz Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
||
Date: November 7, 2022
EXHIBIT 31.1
CERTIFICATIONS
I, Eric McAfee, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2022 of Aemetis, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
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(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, for external purposes in accordance with generally accepted accounting principles; |
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(c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 7, 2022
| By: | /s/ Eric A. McAfee | |
|
Eric A. McAfee Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, Todd Waltz, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2022 of Aemetis, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
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(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, for external purposes in accordance with generally accepted accounting principles; |
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(c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 7, 2022
| By: | /s/ Todd Waltz | |
|
Todd Waltz Executive Vice President and Chief Financial Office |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aemetis, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eric A. McAfee, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Eric A. McAfee | |
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Eric A. McAfee Chief Executive Officer |
Date: November 7, 2022
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aemetis, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Todd Waltz, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ Todd Waltz | |
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Todd Waltz Executive Vice President and Chief Financial Officer |
Date: November 7, 2022
Consolidated Condensed Statements of Operations and Comprehensive (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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| Revenues | $ 71,831 | $ 49,895 | $ 189,781 | $ 147,586 |
| Cost of goods sold | 72,935 | 54,680 | 194,184 | 152,333 |
| Gross profit (loss) | (1,104) | (4,785) | (4,403) | (4,747) |
| Research and development expenses | 52 | 22 | 139 | 66 |
| Selling, general and administrative expenses | 6,867 | 5,087 | 21,234 | 16,222 |
| Other operating (income) | (428) | 0 | (68) | 0 |
| Operating loss | (7,595) | (9,894) | (25,708) | (21,035) |
| Interest expense | ||||
| Interest rate expense | 5,456 | 4,408 | 14,819 | 14,902 |
| Debt related fees and amortization expense | 1,633 | 1,140 | 5,199 | 3,045 |
| Accretion and other expenses of Series A preferred units | 2,774 | 2,185 | 5,920 | 7,928 |
| Loss (gain) on debt extinguishment | 49,386 | 0 | 49,386 | (1,134) |
| Gain on litigation | 0 | 0 | (1,400) | 0 |
| Other (income) expense | (2) | (30) | (14,297) | 483 |
| Loss before income taxes | (66,842) | (17,597) | (85,335) | (46,259) |
| Income tax expense | 3 | 0 | 13 | 7 |
| Net loss | (66,845) | (17,597) | (85,348) | (46,266) |
| Other comprehensive loss | ||||
| Foreign currency translation loss | (300) | 22 | (884) | (187) |
| Comprehensive loss | $ (67,145) | $ (17,575) | $ (86,232) | $ (46,453) |
| Net loss per common share | ||||
| Basic (in dollars per share) | $ (1.92) | $ (0.55) | $ (2.49) | $ (1.55) |
| Diluted (in dollars per share) | $ (1.92) | $ (0.55) | $ (2.49) | $ (1.55) |
| Weighted average shares outstanding | ||||
| Basic (in shares) | 34,769 | 31,857 | 34,344 | 29,818 |
| Diluted (in shares) | 34,769 | 31,857 | 34,344 | 29,818 |
Note 1 - Nature of Activities and Summary of Significant Accounting Policies |
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| Basis of Presentation and Significant Accounting Policies [Text Block] |
1. Nature of Activities and Summary of Significant Accounting Policies
Nature of Activities. Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis, “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas, and renewable fuels company focused on the acquisition, development and commercialization of innovative negative carbon intensity products and technologies that replace traditional petroleum-based products. We operate in reportable segments “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel”. We have other operating segments determined not to be reportable segments and are collectively represented by the “All Other” category. At Aemetis, our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this through leading the low-carbon fuels industry by building a circular bioeconomy utilizing agricultural waste to produce advanced renewable fuels that produce less greenhouse gas emissions and thereby improve air quality.
We own and operate a 65 million gallon per year ethanol production facility located in Keyes, California (the “Keyes Plant”). In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to local dairies and feedlots. In the third quarter of 2022, a Mitsubishi Chemical Corporation ZEBREXTM ethanol dehydration system was commissioned, a key first step in the electrification of the Keyes Plant, which reduces our overall energy use and lowers the carbon intensity of our ethanol.
Aemetis Biogas, LLC (“ABGL”) was formed to construct bio-methane anaerobic digesters at local dairies near the Keyes Plant, many of whom also purchase WDG produced at the Keyes Plant. The digesters are connected via an underground private pipeline owned by ABGL to a gas cleanup and compression unit being built at the Keyes Plant to produce dairy renewable natural gas (“RNG”). Upon receiving the bio-methane from the dairies, impurities are removed, and the bio-methane is converted to negative carbon intensity RNG that will either be injected into the statewide PG&E gas utility pipeline, supplied as compressed RNG that will service local trucking fleets, or used as renewable process energy at the Keyes Plant.
Our Carbon Zero biofuels production plants are designed to produce biofuels, including sustainable aviation fuel (“SAF”) and diesel fuel utilizing renewable hydrogen and non-edible renewable oils sourced from existing Aemetis biofuels plants and other sources. The first plant to be built in Riverbank, California, is expected to utilize hydroelectric and other renewable power available onsite to produce 90 million gallons per year of SAF, renewable diesel, and other byproducts. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels to reduce GHG emissions and other pollutants associated with conventional petroleum-based fuels. By producing ultra-low carbon renewable fuels, the Company expects to capture higher value D3 Renewable Identification Numbers (“RINs”) and California’s LCFS credits. D3 RINs have a higher value in the marketplace than D6 RINs due to D3 RINs’ relative scarcity and mandated pricing formula from the United States Environmental Protection Agency (“EPA”).
Aemetis Carbon Capture, Inc. was formed to build Carbon Capture and Sequestration ("CCS") projects to generate LCFS and IRS 45Q credits by injecting CO₂ into wells which are monitored for emissions to ensure the long-term sequestration of carbon underground. The CCS projects are expected to capture and sequester up to two million metric tons per year of CO₂ at the two Aemetis biofuels plant sites in Keyes and Riverbank, California. In July 2022, Aemetis purchased 24 acres, on the Riverbank Industrial Complex site in Riverbank, California, to develop a CCS injection well. The Company plans to construct a characterization well to obtain both the data and well design information required for the EPA Class VI CO₂ injection well permit application. The well is expected to sequester up to one million metric tons per year of CO₂.
We also own and operate a production facility on the East Coast of India (the “Kakinada Plant”) with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meet international product standards. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive and other industries.
Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis. Additionally, we consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, an enterprise must consolidate a variable interest entity (“VIE”) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. ABGL was assessed to be a VIE and through the Company’s ownership interest in all of the outstanding common stock, the Company has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company.
All intercompany balances and transactions have been eliminated in consolidation.
The accompanying consolidated condensed balance sheet as of September 30, 2022, the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021, the consolidated condensed statements of cash flows for the nine months ended September 30, 2022 and 2021, and the consolidated condensed statements of stockholders’ deficit for the three and nine months ended September 30, 2022 and 2021 are unaudited. The consolidated condensed balance sheet as of December 31, 2021 was derived from the 2021 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of Company’s management, the unaudited interim consolidated condensed financial statements as of and for the three and nine months ended September 30, 2022 and 2021 have been prepared on the same basis as the audited consolidated statements as of and for the year ended December 31, 2021 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition. We derive revenue primarily from sales of ethanol and related co-products in North America, and biodiesel and refined glycerin in India pursuant to supply agreements and purchase order contracts. We assessed the following criteria under the Accounting Standards Codification (“ASC”) 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations.
California Ethanol: Until May 13, 2020, we sold all our ethanol to J.D. Heiskell & Co. (“J.D. Heiskell”) under the Working Capital and Purchasing Agreement (the “J.D. Heiskell Purchasing Agreement”). On May 13, 2020, we entered into an amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell (the “Corn Procurement and Working Capital”), under the terms of which we buy all corn from J.D. Heiskell and sell all WDG and corn oil we produce to J.D. Heiskell. Following May 13, 2020 and until October, 2021, we sold the majority of our fuel ethanol production to one customer, Kinergy Marketing, LLC (“Kinergy”), through individual sales transactions. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex LLC (“Murex”), in which we sell all our ethanol to Murex. Given the similarity of the individual sales transactions with Kinergy and Murex, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to one of our customer’s contracted trucking companies. Upon delivery, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy and Murex for ethanol and by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation.
The below table shows our sales in our California Ethanol segment by product category:
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.
We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in certain contractual agreements.
For our California Ethanol segment, we buy corn as feedstock for the production of ethanol, from our working capital partner J.D. Heiskell. Prior to May 13, 2020, we sold all our ethanol, WDG, and corn oil to J.D. Heiskell and we bought all our corn to process into ethanol from J.D. Heiskell. After May 13, 2020, we sold most of our fuel ethanol to one customer, Kinergy, and sold all WDG and corn oil to J.D. Heiskell. During the second quarter of 2021, we signed a biofuels offtake agreement with Murex, and beginning on October 1, 2021 we sold all our fuel ethanol to Murex. We only have customer relationships with Kinergy and Murex, hence the principal and agent criteria are not applied. However, we are still buying corn and selling WDG and corn oil to J.D.Heiskell. We analyzed the principal versus agent relationship criteria below.
We consider the purchase of corn as a cost of goods sold and the sale of WDG and, corn oil, upon trucks leaving the Keyes Plant, as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have legal title to the goods during the processing time. The pricing for both WDG and corn oil is set independently. Revenues from WDG and corn oil are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. We have elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized in cost of goods sold and selling, general and administrative expenses, respectively, when revenue is recognized. Revenues are recorded at the gross invoiced amount. Hence, we are the principal in California Ethanol segment where our customer and vendor may be the same.
Dairy Renewable Natural Gas: All of our Dairy Renewable Natural Gas segment revenues during the three and nine months ended September 30, 2022 and 2021 were from sales of biogas to the Keyes Plant for use in boilers. This resulted in lowering the carbon intensity of the Keyes Plant and increased revenues on ethanol sold through the California Ethanol segment. These revenues have been eliminated once consolidated. Refer to Note 10 Segment Information for the unconsolidated revenue of our Dairy Renewable Natural Gas segment.
India Biodiesel: We sell products pursuant to purchase orders (written or verbal) or by contract with governmental or international parties, in which performance is satisfied by delivery and acceptance of the physical product. Given that the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined daily based on reference market prices for biodiesel, refined glycerin, and palm fatty acid distillate net of taxes. Transaction price is allocated to one performance obligation.
The below table shows our sales in our India Biodiesel Segment by product category:
In India, we also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those same customers in certain contractual agreements. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel according to agreements when we enter into in these situations. Hence, we are the principal in India sales scenarios where our customer and vendor may be the same.
Cost of Goods Sold. Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense.
Shipping and Handling Costs. Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations.
Research and Development. Research and development costs are expensed as incurred, unless they have alternative future uses to the Company.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at various financial institutions domestically and abroad. The Federal Deposit Insurance Corporation insures domestic cash accounts. The Company’s accounts at these institutions may at times exceed federally insured limits. The Company has not experienced any losses in such accounts.
Accounts Receivable. The Company sells ethanol and WDG through third-party marketing arrangements generally without requiring collateral and high-grade alcohol directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO is marketed and sold to A.L. Gilbert and other customers under the J.D. Heiskell Purchasing Agreement. The Company sells CDS directly to customers on standard 30 day payment terms. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30-days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts.
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivables are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We reserved $1.4 million in the allowances for doubtful accounts as of December 31, 2021 and wrote off the balances as uncollectible during the second quarter of 2022.
Inventories. Finished goods, raw materials, and work-in-process inventories are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (“NRV”). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Variable Interest Entities. We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests in is considered a variable interest entity (“VIE”). We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in our interest or relationship with the entity affects our determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable U.S. GAAP.
Property, Plant and Equipment. Property, plant, and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of plant and buildings, furniture, machinery, equipment, land, and biogas dairy digesters. Capital expenses for in-process project are accumulated in construction in progress and will be capitalized and depreciated once the capital projects are finished and are in service. The Company’s plant in Goodland, Kansas (the ”Goodland Plant”) is partially completed and is not ready for operation. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.
The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment—Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value. The Company has not recorded any impairment during the three and nine months ended September 30, 2022 and 2021.
California Energy Commission Low-Carbon Fuel Production Program. The Company has been awarded $4.2 million in matching grants from the California Energy Commission Low-Carbon Fuel Production Program (“LCFPP”). The LCFPP grant reimburses the Company for costs to design, procure, and install processing facility to clean-up, measure and verify negative-carbon intensity dairy renewable natural gas fuel at the production facility in Keyes, California. The Company has received $3.8 million from the LCFPP as of September 30, 2022, as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received.
California Department of Food and Agriculture Dairy Digester Research and Development Grant. In 2019, the Company was awarded $3.2 million in matching grants from the California Department of Food and Agriculture (“CDFA”) Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct two of the Company’s biogas capture systems under contract with central California dairies. The Company received all the awarded grant proceeds as of the second quarter of 2021.
In October 2020, the Company was awarded $7.8 million in matching grants from the CDFA Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct six of the Company’s biogas capture systems under contract with central California dairies. The Company has received $2.3 million from the CDFA 2020 grant program as of September 30, 2022, as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received .
California Energy Commission Low Carbon Advanced Ethanol Grant Program. In May 2019, the Company was awarded the right to receive reimbursements from the California Energy Commission Community-Scale and Commercial-Scale Advanced Biofuels Production Facilities grant under the Alternative and Renewable Fuel and Vehicle Technology Program in an amount up to $5.0 million (the “CEC Reimbursement Program”) in connection with the Company’s expenditures toward the development of the Riverbank Cellulosic Ethanol Facility. To comply with the guidelines of the CEC Reimbursement Program, the Company must make a minimum of $7.9 million in matching contributions to the Riverbank project. The Company receives funds under the CEC Reimbursement Program for actual expenses incurred up to $5.0 million as long as the Company makes the minimum matching contribution. Given that the Company has not made the minimum matching contribution, the grant for reimbursement of capital expenditures of $1.7 million is presented with long-term liabilities as of September 30, 2022, and December 31, 2021. Due to the uncertainty associated with meeting the minimum matching contribution, the reimbursement will be recognized when the Company makes the minimum matching contribution.
U.S. Department of Food and Agriculture Forest Service Grant. Aemetis Advanced Products Keyes (“AAPK”) has been awarded $245 thousand in matching grants from the U.S. Department of Food and Agriculture Forest Service (“US Forest Service”) under the Wood Innovation and Community Wood program. The grant reimburses the Company for continued development of technologies and processes to valorize forest waste for the production of cellulosic ethanol. AAPK has received $73 thousand from the US Forest Service as reimbursement for actual allowable program costs incurred through September 30, 2022.
California Energy Commission Grant for Solar Microgrid, DSC and Battery Backup System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded an $8.0 million grant to design, construct and commission a grid-connected 1.56 MW photovoltaic microgrid and 1.25MW/2.5MWh Battery Energy Storage System integrated with an artificial intelligence-driven distributed control system (DCS). The grant requires $1.6 million in matching contribution in which the Company has made. AAFK received $3.9 million in grant funds from this program as reimbursement for actual expenditures incurred through September 30, 2022. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received.
California Department of Forestry and Fire Protection Grant. AAPK has been awarded $2 million in matching grants from the CAL FIRE Business and Workforce Development Grant Program (“CAL Fire”) in May 2022. This CAL Fire grant program reimburses AAPK for costs to design, construct, and commission a 2 million gallon per year cellulosic ethanol facility that will convert conifer biomass from forested regions of the Sierra Nevada into an ultra‐low carbon biofuel derived from 100% forest biomass (“CAL Fire Conversion Program”). AAPK must contribute $5.8 million in cost share contributions to the project to receive grant proceeds. AAPK has received no grant funds from the CAL Fire Conversion Program as reimbursement for actual costs through September 30, 2022
California Department of Forestry and Fire Protection Grant. AAPK has been awarded $500 thousand in grants from CAL Fire in May 2022. This CAL Fire grant program reimburses AAPK for costs to advance a new‐to‐the world technology that circumvents current limitations surrounding the extraction of cellulosic sugars by pioneering a novel route for deconstructing woody biomass using ionic liquids (“CAL Fire Extraction Program”). AAPK has received no grant funds from the CAL Fire Extraction Program as reimbursement for actual costs through September 30, 2022
U.S Forest Service Community Wood Grant. Aemetis Advanced Products Riverbank (“AAPR”) has been awarded $642 thousand in matching grants from the U.S Forest Service Wood Innovations Program (“USFS”) in May 2022. The USFS grant program reimburses AAPR for costs to design, construct, and commission a plant to produce cellulosic ethanol using preliminary research and development in partnership with the Joint Bioenergy Institute (JBEI). USFS grant funds will be used to complete the FEL-3 design phase of the entire process, construct a biomass pretreatment unit to extract sugars at the Aemetis Riverbank site and ferment sugars into ethanol at the Keyes Plant. AAPR must contribute $2.4 million in cost share contributions to the project to receive grant proceeds. AAPK has received no grant funds from the USFS grant program as reimbursement for actual costs through September 30, 2022
USDA’s Biofuel Producer Program Grant. During the second quarter of 2022, a grant in the amount of $14.2 million was received from the USDA’s Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic. This was recorded in the other expense (income) section of the Consolidated Statements of Operations and Comprehensive Loss.
California Energy Commission Grant for Mechanical Vapor Recompression System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded a $6.0 million grant to design, construct and commission a mechanical vapor recompression (MVR) system. The additional evaporation stages will eliminate natural gas consumption and related greenhouse gas emissions in the evaporation portion of the process by installing metering equipment and software to monitor and optimize the plant’s energy consumption. The MVR system will compress vapor to a higher pressure and temperature so that it can be recycled multiple times as steam heat in the evaporation process, which will dramatically reduce natural gas use. The grant requires $5.3 million in matching contributions. AAFK has received no grant funds from this program as reimbursement for actual expenditures incurred through September 30, 2022. Due to the uncertainty associated with the approval process under the grant program, the Company will recognize future grant proceeds received as a reduction of costs in the period when payment is received.
Basic and Diluted Net Loss per Share. Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and nine months ended September 30, 2022 and 2021, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.
The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of September 30, 2022 and 2021:
Comprehensive Income (Loss). ASC 220 Comprehensive Income (Loss) requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive loss and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments.
Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date and the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. Transactional gains and losses from foreign currency transactions are recorded in other (income) expense, net.
Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company further evaluates its operating segments to determine its reportable segments. Aemetis recognizes three reportable segments “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel.”
The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year Keyes plant and the adjacent land leased for the production of CO₂.
The “Dairy Renewable Natural Gas” reportable segment include, the dairy digesters, pipeline and gas condition hub for the production of biogas from dairies near Keyes, California.
The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly.
The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant in Kansas and the research and development facility in Minnesota. Refer to the “All Other” category.
Fair Value of Financial Instruments. Financial instruments include accounts receivable, accounts payable, accrued liabilities, current and non-current portion of subordinated debt, notes receivable, notes payable, Series A preferred units, and long-term debt. Due to the unique terms of our notes payable and long-term debt and the financial condition of the Company, the fair value of the debt is not readily determinable. The fair value determined using level 3 inputs, of all other current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments.
Share-Based Compensation. The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation requiring the Company to recognize expenses related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted, adjusted to reflect only those shares that are expected to vest.
Commitments and Contingencies. The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.
Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date.
Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt–Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.
For a complete summary of the Company’s significant accounting policies, please refer to the Company’s audited financial statements and notes thereto for the years ended December 31, 2021 and 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2022.
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Note 2 - Inventories |
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2. Inventories
Inventories consist of the following:
As of September 30, 2022, and December 31, 2021, the Company recognized a lower of cost or net realizable value impairment of $667 thousand and respectively, related to inventory.
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3. Property, Plant and Equipment
Property, plant and equipment consist of the following:
For the three months ended September 30, 2022 and 2021, interest capitalized in property, plant, and equipment was $3.1 million and $1.4 million, respectively. For the nine months ended September 30, 2022 and 2021, interest capitalized in property, plant, and equipment was $7.7 million and $2.9 million, respectively.
Construction in progress includes costs for the biogas construction projects (dairy digesters and pipeline), Riverbank projects (sustainable aviation fuel and renewable diesel plant as well as carbon capture characterization well), and energy efficiency projects at the Keyes Plant. Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:
For the three months ended September 30, 2022 and 2021, the Company recorded depreciation expense of $1.4 million and $1.3 million, respectively. For the nine months ended September 30, 2022 and 2021, the Company recorded depreciation expense of $4.0 million and $4.1 million, respectively.
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4. Debt
Debt consists of the following:
Third Eye Capital Note Purchase Agreement
On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement (the “Note Purchase Agreement”) with Third Eye Capital Corporation (“Third Eye Capital”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $7.2 million to replace existing notes held by Third Eye Capital (the “Term Notes”); (ii) senior secured revolving loans in an aggregate principal amount of $18.0 million (the “Revolving Credit Facility”); (iii) senior secured term loans in the principal amount of $10.0 million to convert the prior revenue participation agreement to a note (the “Revenue Participation Term Notes”); and (iv) senior secured term loans in an aggregate principal amount of $15.0 million (the “Acquisition Term Notes”) used to fund the cash portion of the acquisition of Cilion, Inc. (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the “Original Third Eye Capital Notes”).
On February 27, 2019, a promissory note (the “February 2019 Note”, together with the Original Third Eye Capital Notes, the “Third Eye Capital Notes”) for $2.1 million was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14% per annum maturing on the earlier of (a) receipt of proceeds from any financing, refinancing, or other similar transaction, (b) extension of credit by Third Eye Capital, as lender or as agent on behalf of certain lenders, to the Company or its affiliates, or (c) April 30, 2019. In consideration of the February 2019 Note, $0.1 million of the total proceeds were paid to Third Eye Capital as financing charges. On April 30, 2019, the February 2019 Note was modified to remove the stated maturity date and instead be due on demand by Third Eye Capital. In third quarter of 2019, the February 2019 Note was modified to include additional borrowings of $0.7 million. In first quarter of 2020, the February 2019 Note was modified to include additional borrowings of $0.6 million. The February 2019 note was fully repaid in the first quarter of 2021.
On March 14, 2021, Third Eye Capital agreed to Limited Waiver and Amendment No. 19 to the Note Purchase Agreement (“Amendment No. 19”), to (i) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended December 31, 2021, (ii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through March 31, 2021. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.1 million in cash (the “Amendment No. 19 Fee”). We gave the notice to extend the maturity date of the Notes to April 1, 2022 and the extension fee equal to 1% of the Note Indebtedness in respect to each Note, provided that half of such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension and rest of the balance may be payable in cash or common stock within 60 days of the date of such relevant extension. We evaluated the terms of the Amendment No. 19 and the maturity date extension and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.
On August 9, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 20 to the Note Purchase Agreement (“Amendment No. 20”) to: (i) provide that, upon written notice to Third Eye Capital, the maturity date may be further extended to April 1, 2023 in exchange for an extension fee equal to 1% of the Note Indebtedness in respect of each Note, where half of such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension; (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarters ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022; and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended June 30, 2021 in which the Company exceeded the $100,000 capital expenditures limit. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.3 million in cash. We evaluated the terms of the Amendment No.20 and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment. In the first quarter of 2022, the Company exercised the option to extend the maturity of Third Eye Capital Notes to April 1, 2023.
On November 5, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 21 to the Note Purchase Agreement (“Amendment No. 21”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by August 31, 2021 and (ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.1 million in cash. We will evaluate the terms of the Amendment No.21 in accordance with ASC 470-50 Debt – Modification and Extinguishment.
On March 8, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 22 to the Note Purchase Agreement (“Amendment No. 22”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by December 31, 2021, (ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender, and (iii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through December 31, 2021. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.1 million in cash.
On May 11, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 23 to the Note Purchase Agreement (“Amendment No. 23”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by March 31, 2022, (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended March 31, 2023 and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended March 31, 2022 in which the Company exceeded the $100,000 capital expenditures limit. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.1 million.
On August 8th, 2022, Third Eye Capital agreed to Limited Waiver and Amendment No. 24 to the Note Purchase Agreement ("Amendment No. 24") to: (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2024 in exchange for an extension fee equal to 1% of the Note Indebtedness in respect to each Note, provided that such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension, and (ii) provide for a waiver for certain covenant defaults. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.3 million in cash (the "Amendment No. 24 Fee").
Amendments No. 19 through No. 24 waived certain covenants for the periods between September 30, 2022 and March 31, 2023. According to ASC 470-10-45 Debt–Other Presentation Matters, if it is probable that the Company will not be able to cure the default at measurement dates within the next 12 months, the related debt needs to be classified as current. To assess this guidance, the Company performed ratio and cash flow analysis using its cash flow forecast and debt levels. The Company forecasted sufficient cash flows over the next 12 months to reduce debt levels of Third Eye Capital and meet operations of the Company. Based on this analysis, the Company believes that it is reasonably possible that through a combination of cash flows from operations, sales from EB-5 investments, and proceeds from the sale of common stock, it will be able to meet the ratio of the note indebtedness covenant over the next 12 months. As such, the notes are classified as long-term debt.
On March 6, 2020, we and a subsidiary entered into a one-year reserve liquidity facility governed by a promissory note, payable to Third Eye Capital, in the principal amount of $18 million. On March 14, 2021, Third Eye Capital agreed to increase the amount available under the reserve liquidity facility to $70.0 million. Borrowings under the reserve liquidity facility are available from March 14, 2021 until maturity on April 1, 2023. Interest on borrowed amounts accrues at a rate of 30% per annum, paid monthly in arrears and may be capitalized and due upon maturity, or 40% if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (b) April 1, 2023. Any amounts may be re-borrowed up to repaid amounts up until the maturity date of April 1, 2023. The promissory note is secured by liens and security interests upon the property and assets of the Company. In return, the Company will pay a non-refundable standby fee at 2% per annum of the difference between the aggregate principal amount outstanding and the commitment, payable monthly in cash. In addition, if any initial advances are drawn under the facility, the Company will pay a non-refundable one-time fee in the amount of $0.5 million provided that such fee may be added to the principal amount of the promissory note on the date of such initial advance. On August 9, 2021, Third Eye Capital agreed to decrease the amount available under the reserve liquidity notes governed by a promissory note to $40.0 million.
Terms of Third Eye Capital Notes
The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Third Eye Capital Notes allow the lender to accelerate the maturity in the occurrence of any event that could reasonably be expected to have a material adverse effect on the Company, such as any change in the business, operations, or financial condition. The Company has evaluated the likelihood of such an acceleration event and determined such an event to not be probable in the next twelve months. The terms of the notes allow interest to be capitalized.
The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from the Company’s North American subsidiaries. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $8.0 million.
GAFI Term Loan and Revolving Loan. On July 10, 2017, GAFI entered into a Note Purchase Agreement (“Note Purchase Agreement”) with Third Eye Capital. See further discussion regarding GAFI in Note 6. Pursuant to the Note Purchase Agreement, Third Eye Capital agreed, subject to the terms and conditions of the Note Purchase Agreement and relying on each of the representations and warranties set forth therein, to make (i) a single term loan to GAFI in an aggregate amount of $15 million (“Term Loan”) and (ii) revolving advances not to exceed $10 million dollars in the aggregate (the “Revolving Loans”). The interest rate applicable to the Term Loan is equal to 10% per annum. The interest rate applicable to the Revolving Loans is the greater of prime rate plus 7.75% and 12.00% per annum. The maturity date of the loans was extended to July 10, 2021 by exercising an option to extend the GAFI Loan Maturity Date for a fee of $0.5 million. The Company fully repaid the GAFI notes in the first quarter of 2021 and replaced the Note Purchase Agreement with the New Credit Facility, as described below.
Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, GAFI and Aemetis Carbon Capture, Inc. (“ACCI”) entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital , as administrative agent and collateral agent, and the lender party thereto (the “New Credit Facility”). The New Credit Facility provides for two credit facilities with aggregate availability of up to $100 million, consisting of a revolving credit facility with GAFI for up to $50 million (the “Fuels Revolving Line”) and a revolving credit facility with ACCI for up to $50 million (the “Carbon Revolving Line” and together with the Fuels Revolving Line, the “Revolving Lines”). The revolving loans made under the Fuels Revolving Line have a maturity date of March 1, 2025 and will accrue a rate of interest per annum equal to the greater of (i) the prime rate plus 6.00% and (ii) ten percent (10.0%), and the revolving loans made under the Carbon Revolving Line will have a maturity date of March 1, 2026 and accrue a rate of interest per annum equal to the greater of (i) the prime rate plus 4.00% and (ii) eight percent (8.0%). The revolving loans made under the Fuels Revolving Line are available for working capital purposes and the revolving loans made under the Carbon Revolving Line are available for projects that reduce, capture, use or sequester carbon with the objective of reducing carbon dioxide emissions. In connection with the New Credit Facility, the Company agreed to issue to the lender under the New Credit Facility: (i) warrants entitling the lender to purchase 50,000 shares of common stock of the Company at an exercise price equal to $10.20 per share, exercisable for a five-year period from March 2, 2022; and (ii) warrants entitling holders thereof to purchase 250,000 shares of common stock of the Company, at an exercise price equal to $20.00 per share, exercisable for a ten-year period from March 2, 2022. In addition, under the Fuels Revolving Line, we issued 100,000 shares of common stock to existing note holders under the GAFI note purchase agreement. The shares were accounted at fair value and are being amortized over the life of the Fuels Revolving Line. Upon closing of the New Credit Facility, the Company drew on the revolving lines to repay $16.0 million on the higher interest rate AAFK Revolving Credit Facility, $6.1 million in property taxes, and to fund the capital projects and working capital projects.
As of September 30, 2022, GAFI had $25.1 million in principal and interest outstanding net of $1.7 million unamortized debt issuance costs. As of September 30, 2022, ACCI had $22.5 million in principal and interest outstanding net of $2.6 million in unamortized debt issuance costs.
Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc. (“Cilion”), on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The liability bears interest at 3% per annum and is due and payable after the Third Eye Capital Notes have been paid in full. As of September 30, 2022, Aemetis Facility Keyes, Inc. had $6.8 million in principal and interest outstanding under the Cilion shareholder seller notes payable.
Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $0.9 million and $2.5 million in original notes to the investors (“Subordinated Notes”). The Subordinated Notes mature every six months. Upon maturity, the Subordinated Notes are generally extended with a fee of 10% added to the balance outstanding plus issuance of warrants exercisable at $0.01 with a -year term. Interest accrues at 10% per annum and is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full.
On January 1, 2022, the maturity on two Subordinated Notes’ was extended until the earlier of (i) June 30, 2022; (ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $90 thousand and $250 thousand cash extension fee was paid by adding the fee to the balance of the new Subordinated Notes and 113 thousand common stock warrants were granted with a term of years and an exercise price of $0.01 per share.
On July 1, 2022, the maturity on two Subordinated Notes’ was extended until the earlier of (i) December 31, 2022; (ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $90 thousand and $250 thousand cash extension fee was paid by adding the fee to the balance of the new Subordinated Notes and 113 thousand common stock warrants were granted with a term of years and an exercise price of $0.01 per share.
The Company evaluated the January 1, 2022 and July 1 2022 amendments and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.
At September 30, 2022 and December 31, 2021, the Company had, in aggregate, the amount of $15.2 million and $14.3 million in principal and interest outstanding, respectively, under the Subordinated Notes.
EB-5 promissory notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 (as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a “Regional Center” to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB-5 Notes”) bearing interest at 2-3%. Each note was issued in the principal amount of $0.5 million and due and payable years from the date of each note, for a total aggregate principal amount of up to $36.0 million (the “EB-5 Phase I funding”). The original maturity date on the promissory notes can be extended automatically for a one- or two-year period initially and is eligible for further one-year automatic extensions as long as there is no notice of non-extension from investors and the investors’ immigration process is in progress. On February 27, 2019, Advanced BioEnergy, LP, and the Company entered into an Amendment to the EB-5 Notes which restated the original maturity date on the promissory notes with automatic six-month extensions as long as the investors’ immigration processes are in progress. Except for six early investor EB-5 Notes, the Company was granted 12 months from the date of the completion of immigration process to redeem these EB-5 Notes. Given the COVID-19 pandemic and processing delays for immigration process, Advanced BioEnergy, LP extended the maturity dates for debt repayment based on their projected processing timings as long as the investors do not give notice of withdrawal or an I-829 gets approved. Accordingly, the notes have been recognized as long-term debt while investor notes who obtained green card approval have been classified as current debt. The EB-5 Notes are convertible after three years at a conversion price of $30 per share.
The Company has sold an aggregate principal amount of $36.0 million of EB-5 Notes under the EB-5 Phase I funding since 2012 to the date of this filing. As of September 30, 2022, $35.5 million has been released from the escrow amount to the Company, with $0.5 million remaining to be funded to escrow. As of September 30, 2022 and December 31, 2021, $37.0 million and $36.6 million was outstanding, respectively, on the EB-5 Notes sold under the EB-5 Phase I funding.
On October 16, 2016, the Company launched its EB-5 Phase II funding (the “EB-5 Phase II Funding”), with plans to issue $50.0 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under the Company’s EB-5 Phase I funding, to refinance indebtedness and capital expenditures of Aemetis, Inc. and Goodland Advanced Fuels Inc., (“GAFI”). On November 21, 2019, the minimum investment was raised from $0.5 million per investor to $0.9 million per investor. The Company entered into a Note Purchase Agreement dated with Advanced BioEnergy II, LP, a California limited partnership authorized as a Regional Center to receive EB-5 Phase II funding investments, for the issuance of up to 100 EB-5 Notes bearing interest at 3%. On May 1, 2020 Supplement No. 3 amended the offering documents and lowered the total eligible new EB-5 Phase II funding investors to 60. Eight EB-5 investors have funded at the $0.5 million per investor amount, with 52 new EB-5 Phase II funding investors remaining eligible at the new $0.9 million per investors amount under the current offering. Job creation studies show it may be possible to add additional investors and increase the total offering amount in the future. Each EB-5 note will be issued in the principal amount and due and payable five years from the date of each EB-5 note, for a total aggregate principal amount of up to $50.8 million.
The Company has sold an aggregate principal amount of $4.0 million of EB-5 Notes under the EB-5 Phase II funding since 2016 to the date of this filing. As of September 30, 2022, $4.0 million has been released from escrow to the Company and $46.8 million remains to be funded to escrow. As of September 30, 2022, $4.2 million was outstanding on the EB-5 Notes under the EB-5 Phase II funding.
Secunderabad Oils Operating Agreement. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad Oils”). The 2008 agreement provided the working capital and had the first priority lien on assets in return for 30% of the plant’s monthly net operating profit. These expenses were recognized as selling, general, and administrative expenses by the Company in the financials. All terms of the 2008 agreement with Secunderabad Oils were terminated to amend the agreement as below. On July 15, 2017, the agreement with Secunderabad Oils was amended to provide the working capital funds for British Petroleum business operations only in the form of inter-corporate deposit for an amount of approximately $2.3 million over a 95 day period at the rate of 14.75% per annum interest rate. The term of the agreement continues until either party terminates it. Secunderabad Oils has a second priority lien on the assets of the Company’s Kakinada Plant after this agreement. As of September 30, 2022 and December 31, 2021, the Company had no balance outstanding under this agreement.
Working capital loans. On July 26, 2022, the Company entered into a short-term loan with Secunderabad Oils Limited in an amount not to exceed $1.88 million. On August 1, 2022, the Company entered into a short-term loan with Leo Edibles & Fats Limited in an amount not to exceed $1.27 million. The loans bears interest at 18% and are payable monthly. The loans are repayable on demand by the lender or within one year from the date of issuance. As of September 30, 2022, $2.7 million was outstanding under these agreements.
Construction Loan Agreement. On October 4, 2022, the Company entered into a Construction Loan Agreement (“Loan Agreement”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the Loan Agreement, the lender has made available an aggregate principal amount not to exceed $25 million. The loan is secured by all personal property collateral and real property collateral of the Aemetis Biogas 1 LLC. The loan bears interest at a rate of 5.95% per annum and has an USDA annual renewal fee of 0.25%, with interest only payments to be paid in monthly installments, and a maturity date of March 4, 2023, at which time the entire unpaid principal amount, together with accrued and unpaid interest, is expected to be repaid from the proceeds of a term loan this is 80% USDA guaranteed and issued by GNCU pursuant to a USDA Conditional Commitment. The Loan Agreement contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2023, and annually for the term of the loan. The Loan Agreement also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of September 30, 2022, the Company had no outstanding balance under the Loan Agreement.
Financing Agreement for capital expenditures. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase ZEBREXTM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company also entered into a financing agreement with Mitsubishi for $5.7 million for this equipment. Payments pursuant to the financing transaction will commence after the installation date and interest will be charged based on the certain performance metrics after operation of the equipment. We recorded the asset in property, plant and equipment, net and recorded the related liability of $0.9 million in short term borrowings and $5.1 million in other long-term debt, respectively as of September 30, 2022.
Scheduled debt repayments for the Company’s loan obligations by year are as follows:
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Note 5 - Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Text Block] |
5. Commitments and Contingencies
Leases
We have identified assets as the corporate office, warehouse, monitoring equipment and laboratory facilities over which we have control and obtain economic benefits fully. We classified these identified assets as operating leases after assessing the terms under classification guidance. We have entered into several leases for trailers and carbon units with purchase option at the end of the term. We have concluded that it is reasonably certain that we would exercise the purchase option at the end of the term, hence the leases were classified as finance leases. All of our leases have remaining term of less than a year to 15 years.
We made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses.
When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and measure lease liabilities and right-of-use (“ROU”) assets. The incremental borrowing rate used by the Company was based on weighted average baseline rates commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period, when there is a new lease initiated, the rates established for that quarter will be used.
On December 14, 2021, we entered into a real estate purchase agreements and lease disposition and development agreement with the City of Riverbank. We plan to utilize the purchased and leased properties, located at 5300 Claus Road in the city of Riverbank, California, for the construction of the Carbon Zero 1 Facility. The lease commenced on April 1, 2022. The Company evaluated the lease in accordance with ASC 842 – Lease Accounting and classified the lease as a finance lease.
The components of lease expense and sublease income were as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Supplemental non-cash flow information related to ROU asset and lease liabilities was as follows for the three and nine months ended September 30, 2022 and 2021:
Supplemental balance sheet information related to leases was as follows:
Maturities of operating lease liabilities were as follows:
The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on a gross basis on the consolidated financial statements. This was recorded in the other operating income section of the Consolidated Statements of Operations and Comprehensive Loss.
The components of lease income for the three and nine months ended September 30, 2022 and September 30, 2021 were as follows:
Future lease commitments to be received by the Company as of September 30, 2022 were as follows:
Property taxes On March 3, 2022, the Company paid $6.1 million to Stanislaus County for property taxes past due.
On August 31, 2016, the Company filed a lawsuit in Santa Clara County Superior Court against defendant EdenIQ, Inc. (“EdenIQ”). The lawsuit was based on EdenIQ’s wrongful termination of a merger agreement that would have effectuated the merger of EdenIQ into a new entity that would be primarily owned by Aemetis. On July 24, 2019, the court awarded EdenIQ a portion of the fees and costs it had sought in the amount of approximately $6.2 million and the Company recorded these fees based on the court order. On May 6, 2022 the parties settled the dispute for $4.8 million by entering into a settlement agreement. The settlement was paid and a gain on litigation of $1.4 million was recognized on the income statement in the second quarter of 2022.
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Note 6 - Aemetis Biogas LLC, Series A Preferred Financing and Variable Interest Entity |
9 Months Ended |
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| Notes to Financial Statements | |
| Stockholders' Equity Note Disclosure [Text Block] |
6. Aemetis Biogas LLC – Series A Preferred Financing and Variable Interest Entity
On December 20, 2018, ABGL entered into a Series A Preferred Unit Purchase Agreement for the sale of Series A Preferred Units to Protair-X Americas, Inc., with Third Eye Capital acting as an agent.
ABGL is authorized to issue 11,000,000 common units, and up to 6,000,000 convertible, redeemable, secured, preferred membership units (the “Series A Preferred Units”). ABGL issued 6,000,000 common units to the Company at $5.00 per common unit for a total of $30,000,000 in funding. Additionally, 5,000,000 common units of ABGL are held in reserve as potential conversion units issuable to the Purchaser upon certain triggering events discussed below.
The Preferred Unit Agreement includes (i) preference payments of $0.50 per unit on the outstanding Series A Preferred Units commencing on the second anniversary, with any outstanding preference payments shall have an interest per annum rate equal to ten percent (ii) conversion rights for up to 1,200,000 common units or up to maximum number of 5,000,000 common units (also at a one Series A Preferred Unit to one common unit basis) if certain triggering events occur, (iv) one board seat of the three available to be elected by Series A Preferred Unit holders, (iii) mandatory redemption value at $15 per unit payable at an amount equal to 75% of free cash flow generated by ABGL, up to $90 million in the aggregate (if all units are issued), (iv) full redemption of the units on the sixth anniversary, (v) minimum cash flow requirements from each digester, and (vi) $0.9 million paid as fees to the Agent from the proceeds. Until paid, the obligations of ABGL under the Preferred Unit Agreement are secured by the assets of ABGL in an amount not to exceed the sum of (i) $30,000,000, plus (ii) all interest, fees, charges, expenses, reimbursement obligations and indemnification obligations of ABGL.
Triggering events occur upon ABGL’s failure to redeem units, comply with covenants, any other defaults or cross defaults, or to perform representations or warranties. Upon a triggering event: (i) the obligation of the Purchaser to purchase additional Series A Preferred Units is terminated, (ii) cash flow payments for redemption payments increases from 75% to 100% of free cash flows, and (iii) total number of common units into which preferred units may be converted increases from 1,200,000 common units to 5,000,000 common units on a one for one basis. As of September 30, 2022, ABGL has not generated minimum quarterly operating cash flows by operating the dairies. As a result of the violation of this covenant, free cash flows, when they occur, may be applied for redemption payments at the increased rate of 100% instead of the initial rate of 75% of free cash flows.
On August 8th, 2022, ABGL, Protair-X America, Inc. (“Protair”), and Third Eye Capital entered into a Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Amendment") which amends that certain Series A Preferred Unit Purchase Agreement (“PUPA”) dated as of December 20, 2018. The PUPA Amendment provides for: (i) a waiver of certain covenants prohibiting the internal reorganization of ABGL subsidiaries and the incurrence of indebtedness by ABGL and its subsidiaries pursuant to a USDA loan, provided that, among other things, Third Eye Capital shall have received a repayment of at least $7.3 million to be applied to the Carbon Revolving Line contemporaneously with the closing of the Construction Loan Agreement; (ii) a waiver of certain operational defaults under the PUPA; and (iii) an amendment which (a) requires ABGL to redeem all of the outstanding Series A Preferred Units by December 31, 2022 (the “Final Redemption Date”) for $116 million; and (b) provides ABGL the right to redeem all of the outstanding Series A Preferred Units by September 30, 2022 for $106 million. The PUPA Amendment further provides the failure to redeem the Series A Preferred Units by the Final Redemption Date would constitute a triggering event requiring ABGL to enter into a credit agreement with Protair and Third Eye Capital effective as of January 1, 2023. We evaluated the terms of the PUPA Amendment and applied extinguishment accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment and recorded a loss on extinguishment of $49.4 million.
From inception of the agreement to date, ABGL issued 3,200,000 Series A Preferred Units on first tranche for a value of $16.0 million and also issued 2,800,000 of Series A Preferred Units on second tranche for a value of $14.0 million, reduced by a redemption of 20,000 Series A Preferred Units for $0.3 million. The Company is accreting these tranches from an initial fair value at August 8, 2022 of $105.8 million to the redemption value of $116 million over the next three months ending December 31, 2022 using the effective interest method. In addition, the Company identified freestanding future tranche rights and the accelerated redemption feature related to a change in control provision as derivatives which required bifurcation. These derivative features were assessed to have minimal value as of September 30, 2022 and December 31, 2021 based on the evaluation of the other conditions included in the agreement.
In the three months ended March 31, 2021, ABGL issued 626,000 of Series A Preferred Units for incremental proceeds of $3.1 million as part of the second tranche of the Preferred Unit Agreement and redeemed 20,000 of Series A Preferred Units for $0.3 million. Consistent with the previous issuances which were treated as a liability as the conversion option was deemed to be non-substantive, the current issuances are treated as a liability as the conversion option was still deemed to be non-substantive.
The Company recorded Series A Preferred Unit liabilities, net of unit issuance costs and inclusive of accretive preference pursuant to this agreement, and accrued preference payments, classified as current portion of Series A Preferred Units, of $109.4 million and $3.2 million, and long-term liabilities of $0 and $45.0 million as of September 30, 2022 and December 31, 2021, respectively.
Variable interest entity assessment
After consideration of ABGL’s operations and the above agreement, we concluded that ABGL did not have enough equity to finance its activities without additional subordinated financial support. ABGL is capitalized with Series A Preferred Units that are recorded as liabilities under U.S. GAAP. Hence, we concluded that ABGL is a VIE. Through the Company's ownership interest in all of the outstanding common stock, its current ability to control the board of directors, the management fee paid to Aemetis and control of subordinated financing decisions, Aemetis has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company. Total assets, before intercompany eliminations, of ABGL as of September 30, 2022 were $67.2 million which serve as collateral for the Series A Preferred Unit totaling $109.4 million. The Series A Preferred Units are not collateralized by any other assets or guarantees from Aemetis or its subsidiaries.
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Note 7 - Stock-based Compensation |
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| Shareholders' Equity and Share-Based Payments [Text Block] |
7. Stock-Based Compensation
2019 Stock Plan
On April 29, 2019, the Aemetis 2019 Stock Plan (the “2019 Stock Plan”) was approved by stockholders of the Company. This plan permits the grant of Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine in its discretion. The 2019 Stock Plan’s term is 10 years and supersedes all prior plans. The 2019 Stock Plan authorized the issuance of 200,000 shares of common stock for the 2019 calendar year, in addition to permitting transferring and granting any available and unissued or expired options under the Amended and Restated 2007 Stock Plan in an amount up to 177,246 shares of common stock.
With the approval of the 2019 Stock Plan, the Zymetis 2006 Stock Plan, and Amended and Restated 2007 Stock Plan (collectively, the “Stock Plans” ) are terminated for granting any options under either plan. However, any options granted before the 2019 Stock Plan approved will remain outstanding and can be exercised, and any expired options will be available to grant under the 2019 Stock Plan.
During the year ended December 31, 2021, 120,000 restricted stock awards and 1,140,000 stock option grants were issued and approved by the Company’s board of directors (“Board”) for employees and directors under the 2019 Stock Plan with 10-year terms and vesting terms ranging from immediately to 3 years.
During the nine months ended September 2022, the company issued 1.3 million incentive stock option for employees under the 2019 Stock Plan. In addition, 89,000 restricted stock award grants, with a weighted average fair value on date of grant of $10.92 per award, were issued to the Board.
Common Stock Reserved for Issuance
The following is a summary of awards granted under the Stock Plans:
As of September 30, 2022, there were 2.9 million options vested under the Stock Plans.
Stock-based compensation for employees
Stock-based compensation is accounted for in accordance with the provisions of ASC 718 Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.
Valuation and Expense Information
All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. Under ASU 2016-09 Improvements to Employee Share-Based Payments Accounting, we have elected to recognize forfeitures as they occur. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants.
During the three months ended September 30, 2022 and 2021, the company granted 369,000 and no options, respectively. The weighted average fair value calculations for the options granted during these periods are based on the following assumptions:
As of September 30, 2022, the Company had $12.3 million of total unrecognized compensation expense for employees, which the Company will amortize over the 2.3 years of weighted average remaining term.
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Note 8 - Outstanding Warrants |
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| Outstanding Warrants [Text Block] |
8. Outstanding Warrants
The weighted average fair value calculations for warrants granted are based on the following weighted average assumptions:
A summary of historical warrant activity follows:
All of the above outstanding warrants are vested and exercisable as of September 30, 2022. As of September 30, 2022 and 2021, the Company had no unrecognized compensation expense related to warrants, respectively.
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Note 9 - Agreements |
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| Agreements [Text Block] |
9. Agreements
Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2022 and the term can be automatically renewed for additional one-year terms. WDG continues to be sold to A.L.Gilbert and DCO is sold to other customers under the J.D.Heiskell Purchase Agreement. The Company’s relationships with J.D. Heiskell, and A.L. Gilbert are well established, and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. These agreements are ordinary purchase and sale agency agreements for the Keyes Plant. On May 13, 2020, J.D. Heiskell and the Company entered into Amendment No.1 to the J.D. Heiskell Purchasing Agreement to remove J.D. Heiskell’s obligations to purchase ethanol from the Company under the J.D. Heiskell Purchasing Agreement.
As of September 30, 2022 and December 31, 2021, Aemetis had prepayments to J.D. Heiskell of $0.9 million and $4.0 million, respectively.
The J.D. Heiskell sales and purchases activity associated with the J.D. Heiskell Purchase Agreement and J.D. Heiskell Procurement Agreement during the three and nine months ended September 30, 2022 and 2021 were as follows:
Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy and a Wet Distillers Grains Marketing Agreement with A.L. Gilbert. Under the terms of the agreements the Wet Distillers Grains Marketing Agreement matures on December 31, 2022, with automatic one-year renewals thereafter. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex. Under the terms of the agreement, the initial term matures on October 31, 2023, with automatic one-year renewals thereafter.
Accounts receivable associated with our marketing partners was $0.2 million and $1.2 million as of September 30, 2022 and December 31, 2021.
For the three months ended September 30, 2022 and 2021, the Company expensed marketing costs of $0.8 million and $0.7 million, respectively and for the nine months ended September 30, 2022 and 2021, the Company expensed marketing costs of $2.2 million and $2.1 million, respectively, under the terms of both the Ethanol Marketing Agreement and the Wet Distillers Grains Marketing Agreement. These marketing costs are and are presented as a part of Selling, General, and Administration expense.
Supply Trade Agreement. On July 1, 2022, the Company entered into an operating agreement with Gemini Edibles and Fats India Private Limited (“Gemini”). Under this agreement, Gemini agreed to provide the Company with a supply of feedstock up to a credit limit of $12.7 million. If the Company fails to pay the invoice within the ten-day credit period, the outstanding amount will bear interest at 12%. The term of the agreement is for one year. Either party can terminate the agreement by giving notice one month notice in writing. As of September 30, 2022 and December 31, 2021, the Company had $5.3 million and no outstanding balance, respectively, under this agreement.
As of September 30, 2022 and 2021, the Company has no forward sales commitments.
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Note 10 - Segment Information |
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| Segment Reporting Disclosure [Text Block] |
10. Segment Information
Aemetis recognizes three reportable segments: “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel.”
The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year Keyes Plant, and the adjacent land leased for the production of CO₂.
The “Dairy Renewable Natural Gas” reportable segment includes, the dairy digesters, pipeline and gas condition hub for the production of biogas from dairies near Keyes, California.
The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly.
The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant, and the research and development facility in Minnesota. Refer to the “All Other” category.
Summarized financial information by reportable segment for the three months ended September 30, 2022 and 2021 follows:
A reconciliation of reportable segment revenues to total consolidated revenue for the three months ended September 30, 2022 and 2021 follows:
Summarized financial information by reportable segment for the nine months ended September 30, 2022 and 2021 follows:
A reconciliation of reportable segment revenues to total consolidated revenues for the nine months ended September 30, 2022 and 2021 follow:
California Ethanol: The Company amended the Corn Procurement and Working Capital Agreement and the J.D. Heiskell Purchasing Agreement to procure corn from J.D. Heiskell and sell all WDG and corn oil the Company produces to J.D. Heiskell. Sales of ethanol, WDG, corn oil to customers accounted for 73% and 26% of the Company’s California Ethanol segment revenues for the three months ended September 30, 2022. Sales of ethanol, WDG, and corn oil to customers accounted for 77% and 21% of the Company’s California Ethanol segment revenues for the three months ended September 30, 2021. Sales of ethanol, WDG, corn oil to customers accounted for 73% and 27% of the Company’s California Ethanol segment revenues for the nine months ended September 30, 2022. Sales of ethanol, WDG, and corn oil to customers accounted for 75% and 24% of the Company’s California Ethanol segment revenues for the nine months ended September 30, 2021.
Dairy Renewable Natural Gas: Substantially all of our Dairy Renewable Natural Gas segment revenues during the three and nine months ended September 30, 2022 and 2021 were from sales of biogas to the Keyes Plant for use in boilers, which allowed qualification of carbon credits for the ethanol produced in the Keyes Plant.
India Biodiesel: Three biodiesel customers sales customers accounted for 52%, 23%, and 22% of the Company’s consolidated India segment revenues for the three and nine months ended September 30, 2022. Two other sales customers accounted for 71% and 23% of the Company’s consolidated India segment revenues for the three months ended September 30, 2021. One biodiesel customer accounted for 66% of the Company’s consolidated India segment revenues while one other sales customer accounted for 16% of such revenues for the nine months ended September 30, 2021.
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Note 11 - Related Party Transactions |
9 Months Ended |
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Sep. 30, 2022 | |
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| Related Party Transactions Disclosure [Text Block] |
11. Related Party Transactions
The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital LLC (“McAfee Capital”), owned by Eric McAfee, $0.4 million in connection with employment agreements and expense reimbursements previously accrued as salaries expense and accrued liabilities. The Company previously prepaid $0.2 million to Redwood Capital, a company controlled by Eric McAfee, for the Company’s use of flight time on a corporate jet. As of September 30, 2022, $0.1 million remained as a prepaid expense.
On November 4, 2021, the Audit Committee of the Company approved a guarantee fee of $0.4 million to Mr. McAfee. The balance of and $0.3 million, for guaranty fees, remained as an accrued liability as of September 30, 2022 and December 31, 2021, respectively. On January 12, 2022, the Audit Committee of the Company approved a one-time guarantee fee of $2.0 million to McAfee Capital in connection with McAfee Capital’s extension of certain guarantees of the Company’s indebtedness with Third Eye Capital. The Company paid this fee by issuing 180,000 shares of common stock of the Company.
The Company owes various members of the Board amounts totaling $0.3 and $0.2 million as of September 30, 2022 and December 31, 2021, in connection with board compensation fees, which are included in accounts payable on the balance sheet. For the three months ended September 30, 2022 and 2021, the Company expensed $0.1 million respectively, in connection with board compensation fees. For the nine months ended September 30, 2022 and 2021, the Company expensed $0.3 million and $0.2 million, in connection with board compensation fees.
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Note 12 - Subsequent Events |
9 Months Ended |
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Sep. 30, 2022 | |
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12. Subsequent Events
Construction Loan Agreement
On October 4, 2022, the Company entered into a Construction Loan Agreement (“Loan Agreement”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the Loan Agreement, the lender has made available an aggregate principal amount not to exceed $25 million. The loan is secured by all personal property collateral and real property collateral of the Aemetis Biogas 1 LLC. The loan bears interest at a rate of 5.95% per annum and has an USDA annual renewal fee of 0.25%, with interest only payments to be paid in monthly installments, and a maturity date of March 4, 2023, at which time the entire unpaid principal amount, together with accrued and unpaid interest, is expected to be repaid from the proceeds of a term loan that is 80% USDA guaranteed and issued by GNCU pursuant to a USDA Conditional Commitment. The Loan Agreement contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2023, and annually for the term of the loan. The Loan Agreement also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of September 30, 2022, the Company had no outstanding balance under the Loan Agreement.
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Note 13 - Managements Plan |
9 Months Ended |
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Sep. 30, 2022 | |
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| Substantial Doubt about Going Concern [Text Block] |
13. Management’s Plan
The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. As a result of negative capital and negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the Company will need to either refinance the Company’s debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the Company’s ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we plan to operate the plant and continue to improve financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction or revenue enhancements, execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement.
For Aemetis Biogas we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the higher carbon credits available in California. Funding for continued construction is based upon obtaining government guaranteed loans and executing on existing and new state grant programs.
For the Riverbank project, we plan to raise the funds necessary to construct and operate the Carbon Zero 1 plant using loan guarantees and public financings based upon the licensed technology that generate federal and state carbon credits available for ultra-low carbon fuels utilizing lower cost, non-food advanced feedstocks to significantly increase margins.
For the Kakinada Plant, we plan to develop sales channels for domestic products as the costs of feedstock normalize against the price of diesel, as recently announced governmental incentives take effect to promote the blending of biodiesel, and as feedstocks such as refined animal tallow are used domestically and exported. Additionally, we are in the process of obtaining approval to export refined animal tallow and biodiesel produced using animal tallow into international markets as the use of refined animal tallow received approval from the Pollution Control Board of India for production of biodiesel.
In addition to the above we plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, selling bonds in the taxable and tax-exempt markets, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, or by vendor financing arrangements.
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Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis. Additionally, we consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, an enterprise must consolidate a variable interest entity (“VIE”) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. ABGL was assessed to be a VIE and through the Company’s ownership interest in all of the outstanding common stock, the Company has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company.
All intercompany balances and transactions have been eliminated in consolidation.
The accompanying consolidated condensed balance sheet as of September 30, 2022, the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021, the consolidated condensed statements of cash flows for the nine months ended September 30, 2022 and 2021, and the consolidated condensed statements of stockholders’ deficit for the three and nine months ended September 30, 2022 and 2021 are unaudited. The consolidated condensed balance sheet as of December 31, 2021 was derived from the 2021 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of Company’s management, the unaudited interim consolidated condensed financial statements as of and for the three and nine months ended September 30, 2022 and 2021 have been prepared on the same basis as the audited consolidated statements as of and for the year ended December 31, 2021 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods. |
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| Use of Estimates, Policy [Policy Text Block] | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue [Policy Text Block] | Revenue Recognition. We derive revenue primarily from sales of ethanol and related co-products in North America, and biodiesel and refined glycerin in India pursuant to supply agreements and purchase order contracts. We assessed the following criteria under the Accounting Standards Codification (“ASC”) 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations.
California Ethanol: Until May 13, 2020, we sold all our ethanol to J.D. Heiskell & Co. (“J.D. Heiskell”) under the Working Capital and Purchasing Agreement (the “J.D. Heiskell Purchasing Agreement”). On May 13, 2020, we entered into an amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell (the “Corn Procurement and Working Capital”), under the terms of which we buy all corn from J.D. Heiskell and sell all WDG and corn oil we produce to J.D. Heiskell. Following May 13, 2020 and until October, 2021, we sold the majority of our fuel ethanol production to one customer, Kinergy Marketing, LLC (“Kinergy”), through individual sales transactions. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex LLC (“Murex”), in which we sell all our ethanol to Murex. Given the similarity of the individual sales transactions with Kinergy and Murex, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to one of our customer’s contracted trucking companies. Upon delivery, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy and Murex for ethanol and by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation.
The below table shows our sales in our California Ethanol segment by product category:
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.
We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in certain contractual agreements.
For our California Ethanol segment, we buy corn as feedstock for the production of ethanol, from our working capital partner J.D. Heiskell. Prior to May 13, 2020, we sold all our ethanol, WDG, and corn oil to J.D. Heiskell and we bought all our corn to process into ethanol from J.D. Heiskell. After May 13, 2020, we sold most of our fuel ethanol to one customer, Kinergy, and sold all WDG and corn oil to J.D. Heiskell. During the second quarter of 2021, we signed a biofuels offtake agreement with Murex, and beginning on October 1, 2021 we sold all our fuel ethanol to Murex. We only have customer relationships with Kinergy and Murex, hence the principal and agent criteria are not applied. However, we are still buying corn and selling WDG and corn oil to J.D.Heiskell. We analyzed the principal versus agent relationship criteria below.
We consider the purchase of corn as a cost of goods sold and the sale of WDG and, corn oil, upon trucks leaving the Keyes Plant, as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have legal title to the goods during the processing time. The pricing for both WDG and corn oil is set independently. Revenues from WDG and corn oil are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. We have elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized in cost of goods sold and selling, general and administrative expenses, respectively, when revenue is recognized. Revenues are recorded at the gross invoiced amount. Hence, we are the principal in California Ethanol segment where our customer and vendor may be the same.
Dairy Renewable Natural Gas: All of our Dairy Renewable Natural Gas segment revenues during the three and nine months ended September 30, 2022 and 2021 were from sales of biogas to the Keyes Plant for use in boilers. This resulted in lowering the carbon intensity of the Keyes Plant and increased revenues on ethanol sold through the California Ethanol segment. These revenues have been eliminated once consolidated. Refer to Note 10 Segment Information for the unconsolidated revenue of our Dairy Renewable Natural Gas segment.
India Biodiesel: We sell products pursuant to purchase orders (written or verbal) or by contract with governmental or international parties, in which performance is satisfied by delivery and acceptance of the physical product. Given that the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined daily based on reference market prices for biodiesel, refined glycerin, and palm fatty acid distillate net of taxes. Transaction price is allocated to one performance obligation.
The below table shows our sales in our India Biodiesel Segment by product category:
In India, we also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those same customers in certain contractual agreements. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel according to agreements when we enter into in these situations. Hence, we are the principal in India sales scenarios where our customer and vendor may be the same. |
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| Cost of Goods and Service [Policy Text Block] | Cost of Goods Sold. Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shipping and Handling Costs [Policy Text Block] | Shipping and Handling Costs. Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivable [Policy Text Block] | Accounts Receivable. The Company sells ethanol and WDG through third-party marketing arrangements generally without requiring collateral and high-grade alcohol directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO is marketed and sold to A.L. Gilbert and other customers under the J.D. Heiskell Purchasing Agreement. The Company sells CDS directly to customers on standard 30 day payment terms. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30-days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts.
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivables are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We reserved $1.4 million in the allowances for doubtful accounts as of December 31, 2021 and wrote off the balances as uncollectible during the second quarter of 2022. |
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| Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at various financial institutions domestically and abroad. The Federal Deposit Insurance Corporation insures domestic cash accounts. The Company’s accounts at these institutions may at times exceed federally insured limits. The Company has not experienced any losses in such accounts. |
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| Inventory, Policy [Policy Text Block] | Inventories. Finished goods, raw materials, and work-in-process inventories are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (“NRV”). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidation, Variable Interest Entity, Policy [Policy Text Block] | Variable Interest Entities. We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests in is considered a variable interest entity (“VIE”). We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in our interest or relationship with the entity affects our determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable U.S. GAAP. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment, Policy [Policy Text Block] | Property, Plant and Equipment. Property, plant, and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of plant and buildings, furniture, machinery, equipment, land, and biogas dairy digesters. Capital expenses for in-process project are accumulated in construction in progress and will be capitalized and depreciated once the capital projects are finished and are in service. The Company’s plant in Goodland, Kansas (the ”Goodland Plant”) is partially completed and is not ready for operation. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.
The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment—Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value. The Company has not recorded any impairment during the three and nine months ended September 30, 2022 and 2021. |
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| California Energy Commission Low Carbon Fuel Production Program [Policy Text Block] | California Energy Commission Low-Carbon Fuel Production Program. The Company has been awarded $4.2 million in matching grants from the California Energy Commission Low-Carbon Fuel Production Program (“LCFPP”). The LCFPP grant reimburses the Company for costs to design, procure, and install processing facility to clean-up, measure and verify negative-carbon intensity dairy renewable natural gas fuel at the production facility in Keyes, California. The Company has received $3.8 million from the LCFPP as of September 30, 2022, as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| California Department of Food and Agriculture Dairy Digester Research and Development Grant [Policy Text Block] | California Department of Food and Agriculture Dairy Digester Research and Development Grant. In 2019, the Company was awarded $3.2 million in matching grants from the California Department of Food and Agriculture (“CDFA”) Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct two of the Company’s biogas capture systems under contract with central California dairies. The Company received all the awarded grant proceeds as of the second quarter of 2021.
In October 2020, the Company was awarded $7.8 million in matching grants from the CDFA Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct six of the Company’s biogas capture systems under contract with central California dairies. The Company has received $2.3 million from the CDFA 2020 grant program as of September 30, 2022, as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received |
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| California Energy Commission Low Carbon Advanced Ethanol Grant Program [Policy Text Block] | California Energy Commission Low Carbon Advanced Ethanol Grant Program. In May 2019, the Company was awarded the right to receive reimbursements from the California Energy Commission Community-Scale and Commercial-Scale Advanced Biofuels Production Facilities grant under the Alternative and Renewable Fuel and Vehicle Technology Program in an amount up to $5.0 million (the “CEC Reimbursement Program”) in connection with the Company’s expenditures toward the development of the Riverbank Cellulosic Ethanol Facility. To comply with the guidelines of the CEC Reimbursement Program, the Company must make a minimum of $7.9 million in matching contributions to the Riverbank project. The Company receives funds under the CEC Reimbursement Program for actual expenses incurred up to $5.0 million as long as the Company makes the minimum matching contribution. Given that the Company has not made the minimum matching contribution, the grant for reimbursement of capital expenditures of $1.7 million is presented with long-term liabilities as of September 30, 2022, and December 31, 2021. Due to the uncertainty associated with meeting the minimum matching contribution, the reimbursement will be recognized when the Company makes the minimum matching contribution. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Department of Food and Agriculture Forest Service Grant [Policy Text Block] | U.S. Department of Food and Agriculture Forest Service Grant. Aemetis Advanced Products Keyes (“AAPK”) has been awarded $245 thousand in matching grants from the U.S. Department of Food and Agriculture Forest Service (“US Forest Service”) under the Wood Innovation and Community Wood program. The grant reimburses the Company for continued development of technologies and processes to valorize forest waste for the production of cellulosic ethanol. AAPK has received $73 thousand from the US Forest Service as reimbursement for actual allowable program costs incurred through September 30, 2022. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| California Energy Commission Grant For Solar Microgrid DSC and Battery Backup System [Policy Text Block] | California Energy Commission Grant for Solar Microgrid, DSC and Battery Backup System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded an $8.0 million grant to design, construct and commission a grid-connected 1.56 MW photovoltaic microgrid and 1.25MW/2.5MWh Battery Energy Storage System integrated with an artificial intelligence-driven distributed control system (DCS). The grant requires $1.6 million in matching contribution in which the Company has made. AAFK received $3.9 million in grant funds from this program as reimbursement for actual expenditures incurred through September 30, 2022. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received. |
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| California Department of Forestry and Fire Protection Grant [Policy Text Block] | California Department of Forestry and Fire Protection Grant. AAPK has been awarded $2 million in matching grants from the CAL FIRE Business and Workforce Development Grant Program (“CAL Fire”) in May 2022. This CAL Fire grant program reimburses AAPK for costs to design, construct, and commission a 2 million gallon per year cellulosic ethanol facility that will convert conifer biomass from forested regions of the Sierra Nevada into an ultra‐low carbon biofuel derived from 100% forest biomass (“CAL Fire Conversion Program”). AAPK must contribute $5.8 million in cost share contributions to the project to receive grant proceeds. AAPK has received no grant funds from the CAL Fire Conversion Program as reimbursement for actual costs through September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| California Department of Forestry and Fire Protection Grant 2 [Policy Text Block] | California Department of Forestry and Fire Protection Grant. AAPK has been awarded $500 thousand in grants from CAL Fire in May 2022. This CAL Fire grant program reimburses AAPK for costs to advance a new‐to‐the world technology that circumvents current limitations surrounding the extraction of cellulosic sugars by pioneering a novel route for deconstructing woody biomass using ionic liquids (“CAL Fire Extraction Program”). AAPK has received no grant funds from the CAL Fire Extraction Program as reimbursement for actual costs through September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States Forest Service Community Wood Grant [Policy Text Block] | U.S Forest Service Community Wood Grant. Aemetis Advanced Products Riverbank (“AAPR”) has been awarded $642 thousand in matching grants from the U.S Forest Service Wood Innovations Program (“USFS”) in May 2022. The USFS grant program reimburses AAPR for costs to design, construct, and commission a plant to produce cellulosic ethanol using preliminary research and development in partnership with the Joint Bioenergy Institute (JBEI). USFS grant funds will be used to complete the FEL-3 design phase of the entire process, construct a biomass pretreatment unit to extract sugars at the Aemetis Riverbank site and ferment sugars into ethanol at the Keyes Plant. AAPR must contribute $2.4 million in cost share contributions to the project to receive grant proceeds. AAPK has received no grant funds from the USFS grant program as reimbursement for actual costs through September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States Department of Biofuel Producer Program Grant [Policy Text Block] | USDA’s Biofuel Producer Program Grant. During the second quarter of 2022, a grant in the amount of $14.2 million was received from the USDA’s Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic. This was recorded in the other expense (income) section of the Consolidated Statements of Operations and Comprehensive Loss. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| California Energy Commission Grant for Mechanical Vapor Recompression System [Policy Text Block] | California Energy Commission Grant for Mechanical Vapor Recompression System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded a $6.0 million grant to design, construct and commission a mechanical vapor recompression (MVR) system. The additional evaporation stages will eliminate natural gas consumption and related greenhouse gas emissions in the evaporation portion of the process by installing metering equipment and software to monitor and optimize the plant’s energy consumption. The MVR system will compress vapor to a higher pressure and temperature so that it can be recycled multiple times as steam heat in the evaporation process, which will dramatically reduce natural gas use. The grant requires $5.3 million in matching contributions. AAFK has received no grant funds from this program as reimbursement for actual expenditures incurred through September 30, 2022. Due to the uncertainty associated with the approval process under the grant program, the Company will recognize future grant proceeds received as a reduction of costs in the period when payment is received. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share, Policy [Policy Text Block] | Basic and Diluted Net Loss per Share. Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and nine months ended September 30, 2022 and 2021, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.
The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of September 30, 2022 and 2021:
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| Comprehensive Income, Policy [Policy Text Block] | Comprehensive Income (Loss). ASC 220 Comprehensive Income (Loss) requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive loss and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date and the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. Transactional gains and losses from foreign currency transactions are recorded in other (income) expense, net. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting, Policy [Policy Text Block] | Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company further evaluates its operating segments to determine its reportable segments. Aemetis recognizes three reportable segments “California Ethanol”, “Dairy Renewable Natural Gas”, and “India Biodiesel.”
The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year Keyes plant and the adjacent land leased for the production of CO₂.
The “Dairy Renewable Natural Gas” reportable segment include, the dairy digesters, pipeline and gas condition hub for the production of biogas from dairies near Keyes, California.
The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly.
The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant in Kansas and the research and development facility in Minnesota. Refer to the “All Other” category. |
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| Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments. Financial instruments include accounts receivable, accounts payable, accrued liabilities, current and non-current portion of subordinated debt, notes receivable, notes payable, Series A preferred units, and long-term debt. Due to the unique terms of our notes payable and long-term debt and the financial condition of the Company, the fair value of the debt is not readily determinable. The fair value determined using level 3 inputs, of all other current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Policy Text Block] | Share-Based Compensation. The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation requiring the Company to recognize expenses related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted, adjusted to reflect only those shares that are expected to vest. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies, Policy [Policy Text Block] | Commitments and Contingencies. The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Instruments [Policy Text Block] | Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt, Policy [Policy Text Block] | Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt–Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.
For a complete summary of the Company’s significant accounting policies, please refer to the Company’s audited financial statements and notes thereto for the years ended December 31, 2021 and 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2022. |
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| Research and Development Expense, Policy [Policy Text Block] | Research and Development. Research and development costs are expensed as incurred, unless they have alternative future uses to the Company. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1 - Nature of Activities and Summary of Significant Accounting Policies (Tables) |
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| Disaggregation of Revenue [Table Text Block] |
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| Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] |
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Note 2 - Inventories (Tables) |
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| Schedule of Inventory, Current [Table Text Block] |
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Note 3 - Property, Plant and Equipment (Tables) |
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| Property, Plant and Equipment [Table Text Block] |
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| Depreciation Of Property, Plant, and Equipment [Table Text Block] |
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Note 4 - Debt (Tables) |
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| Schedule of Debt [Table Text Block] |
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| Schedule of Maturities of Long-Term Debt [Table Text Block] |
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Note 5 - Commitments and Contingencies (Tables) |
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| Lease, Cost [Table Text Block] |
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| Supplemental Non-cash Flow Information Related to Leases [Table Text Block] |
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| Supplemental Balance Sheet Information Related to Leases [Table Text Block] |
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| Lease Term [Table Text Block] |
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| Operating Lease, Lease Income [Table Text Block] |
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| Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity [Table Text Block] |
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Note 7 - Stock-based Compensation (Tables) |
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| Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award [Table Text Block] |
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| Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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Note 8 - Outstanding Warrants (Tables) |
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| Schedule of Warrants, Valuation Assumptions [Table Text Block] |
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| Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
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Note 9 - Agreements (Tables) |
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Note 10 - Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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| Reconciliation of Revenue from Segments to Consolidated [Table Text Block] |
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Note 1 - Nature of Activities and Summary of Significant Accounting Policies - Schedule of America By Product Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| India Biodiesel [Member] | ||||
| Sales | $ 10,923 | $ 63 | $ 10,941 | $ 696 |
| California [Member] | ||||
| Sales | 60,908 | 49,832 | 178,840 | 146,890 |
| Ethanol Sales [Member] | California [Member] | ||||
| Sales | 44,673 | 39,131 | 130,224 | 111,220 |
| Biodiesel Sales [Member] | India Biodiesel [Member] | ||||
| Sales | 10,828 | 0 | 10,828 | 465 |
| Wet Distiller's Grains Sales [Member] | California [Member] | ||||
| Sales | 13,003 | 8,919 | 39,669 | 30,584 |
| Other Sales [Member] | India Biodiesel [Member] | ||||
| Sales | 95 | 63 | 113 | 231 |
| Other Sales [Member] | California [Member] | ||||
| Sales | $ 3,231 | $ 1,782 | $ 8,947 | $ 5,086 |
Note 1 - Nature of Activities and Summary of Significant Accounting Policies - Schedule of Dilutive Securities (Details) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Total Number of Potentially Dilutive Shares Excluded from the basic and diluted net loss per share calculation (in shares) | 6,447 | 5,338 |
| Series B Convertible Preferred Stock [Member] | ||
| Total Number of Potentially Dilutive Shares Excluded from the basic and diluted net loss per share calculation (in shares) | 127 | 129 |
| Common Stock Options and Warrants [Member] | ||
| Total Number of Potentially Dilutive Shares Excluded from the basic and diluted net loss per share calculation (in shares) | 5,064 | 3,929 |
| Debt with Conversion Feature [Member] | ||
| Total Number of Potentially Dilutive Shares Excluded from the basic and diluted net loss per share calculation (in shares) | 1,256 | 1,280 |
Note 1 - Nature of Activities and Summary of Significant Accounting Policies - Schedule of Dilutive Securities (Details) (Parentheticals) - $ / shares |
Sep. 30, 2022 |
Sep. 30, 2021 |
|---|---|---|
| Debt with Conversion Feature [Member] | ||
| Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ 30 | $ 30 |
Note 2 - Inventories (Details Textual) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Inventory Write-down | $ 667 | $ 0 |
Note 2 - Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Raw materials | $ 1,526 | $ 727 |
| Work-in-progress | 2,911 | 2,083 |
| Finished goods | 5,994 | 2,316 |
| Total inventories | $ 10,431 | $ 5,126 |
Note 3 - Property, Plant and Equipment (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Capitalized Interest Costs, Including Allowance for Funds Used During Construction, Total | $ 3.1 | $ 1.4 | $ 7.7 | $ 2.9 |
| Depreciation, Depletion and Amortization, Total | $ 1.4 | $ 1.3 | $ 4.0 | $ 4.1 |
Note 3 - Property, Plant and Equipment - Schedule of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Land | $ 7,352 | $ 4,082 |
| Plant and buildings | 99,220 | 97,110 |
| Furniture and fixtures | 1,697 | 1,334 |
| Machinery and equipment | 15,613 | 5,294 |
| Tenant improvements | 56 | 0 |
| Construction in progress | 76,225 | 55,859 |
| Property held for development | 15,437 | 15,437 |
| Finance lease right of use assets | 3,045 | 2,317 |
| Total gross property, plant & equipment | 218,645 | 181,433 |
| Less accumulated depreciation | (49,160) | (46,332) |
| Total net property, plant & equipment | $ 169,485 | $ 135,101 |
Note 3 - Property, Plant and Equipment - Depreciation of property, Plant, and Equipment (Details) |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Minimum [Member] | Machinery and Equipment [Member] | |
| Plant and buildings (Year) | 5 years |
| Minimum [Member] | Furniture and Fixtures [Member] | |
| Plant and buildings (Year) | 3 years |
| Minimum [Member] | Property, Plant and Equipment [Member] | |
| Plant and buildings (Year) | 20 years |
| Maximum [Member] | Machinery and Equipment [Member] | |
| Plant and buildings (Year) | 15 years |
| Maximum [Member] | Furniture and Fixtures [Member] | |
| Plant and buildings (Year) | 5 years |
| Maximum [Member] | Property, Plant and Equipment [Member] | |
| Plant and buildings (Year) | 30 years |
Note 4 - Debt - Maturities of Long-term Debt (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| 2023 | $ 29,020 |
| 2024 | 136,757 |
| 2025 | 32,240 |
| 2026 | 28,612 |
| 2027 | 985 |
| There after | 1,136 |
| Total debt | 228,750 |
| Debt issuance costs | (5,768) |
| Total debt, net of debt issuance costs | $ 222,982 |
Note 5 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Jun. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
May 06, 2022 |
Mar. 03, 2022 |
Dec. 31, 2021 |
Jul. 24, 2019 |
|
| Lease Term (Year) | 15 years | ||||||||
| Accrual for Taxes Other than Income Taxes, Current | $ 1,028 | $ 1,028 | $ 6,100 | $ 6,830 | |||||
| Estimated Litigation Liability, Current | 0 | 0 | $ 6,200 | $ 6,200 | |||||
| Settlement Agreement Amount | $ 4,800 | ||||||||
| Gain (Loss) Related to Litigation Settlement | $ (0) | $ 1,400 | $ (0) | $ 1,400 | $ (0) | ||||
Note 5 - Commitments and Contingencies - Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Operating lease expense | $ 159 | $ 204 | $ 506 | $ 612 |
| Short term lease expense | 44 | 28 | 146 | 138 |
| Variable lease expense | 23 | 30 | 68 | 84 |
| Total operating lease cost | 226 | 262 | 720 | 834 |
| Amortization of right-of-use assets | 26 | 58 | 115 | 168 |
| Interest on lease liabilities | 98 | 20 | 217 | 61 |
| Total finance lease cost | 124 | 78 | 332 | 229 |
| Operating cash flows used in operating leases | 184 | 179 | 522 | 519 |
| Operating cash flows used in finance leases | 98 | 20 | 216 | 61 |
| Financing cash flows used in finance leases | $ 132 | $ 126 | $ 314 | $ 373 |
Note 5 - Commitments and Contingencies - Non-cash Flow Information Related to Rou Asset and Lease Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Accretion of the lease liability | $ 83 | $ 93 | $ 262 | $ 288 |
| Amortization of right-of-use assets | $ 76 | $ 111 | $ 244 | $ 324 |
| Operating leases (in years) (Year) | 5 years 7 months 6 days | 5 years 7 months 6 days | ||
| Finance leases (in years) (Year) | 14 years 2 months 12 days | 14 years 2 months 12 days | ||
| Operating leases | 14.00% | 14.00% | ||
| Finance leases | 13.20% | 13.20% | ||
Note 5 - Commitments and Contingencies - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Operating lease right-of-use assets | $ 2,227 | $ 2,462 |
| Current portion of operating lease liability | 267 | 260 |
| Operating lease liability | 2,120 | 2,318 |
| Total operating lease liabilities | 2,387 | 2,578 |
| Property and equipment, at cost | 3,045 | 2,317 |
| Accumulated depreciation | (79) | (376) |
| Property and equipment, net | 2,966 | 1,941 |
| Other current liability | 118 | 550 |
| Other long term liabilities | 2,854 | 720 |
| Total finance lease liabilities | $ 2,972 | $ 1,270 |
Note 5 - Commitments and Contingencies - Maturities of Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| 2023, Operating leases | $ 572 | |
| 2023, Finance leases | 479 | |
| 2024, Operating leases | 586 | |
| 2024, Finance leases | 204 | |
| 2025, Operating leases | 603 | |
| 2025, Finance leases | 176 | |
| 2026, Operating leases | 622 | |
| 2026, Finance leases | 145 | |
| 2027, Operating leases | 641 | |
| 2027, Finance leases | 145 | |
| There after, Operating leases | 442 | |
| There after, Finance leases | 11,000 | |
| Total lease payments, Operating leases | 3,466 | |
| Total lease payments, Finance leases | 12,149 | |
| Less imputed interest, Operating leases | (1,079) | |
| Less imputed interest, Finance leases | (9,177) | |
| Total operating lease liabilities | 2,387 | $ 2,578 |
| Total finance lease liabilities | $ 2,972 | $ 1,270 |
Note 5 - Commitments and Contingencies - Lease Income (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Lease income | $ 804 | $ 0 |
Note 5 - Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| 2023 | $ 858 |
| 2024 | 643 |
| 2025 | 521 |
| 2026 | 474 |
| 2027 | 474 |
| There after | 1,184 |
| Total future lease commitments | $ 4,154 |
Note 7 - Stock-based Compensation - Fair Value Assumptions (Details) - The 2019 Stock Plan [Member] - $ / shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Dividend-yield | 0.00% | 0.00% |
| Risk-free interest rate | 2.03% | 0.83% |
| Expected volatility | 117.21% | 100.47% |
| Expected life (years) (Year) | 7 years | 6 years 7 months 2 days |
| Market value per share on grant date (in dollars per share) | $ 10.97 | $ 5.30 |
| Fair value per option on grant date (in dollars per share) | $ 9.71 | $ 4.68 |
Note 8 - Outstanding Warrants - Fair Value Assumptions (Details) |
Sep. 30, 2022
yr
|
Sep. 30, 2021
yr
|
|---|---|---|
| Measurement Input, Expected Dividend Rate [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 0 | 0 |
| Measurement Input, Risk Free Interest Rate [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 1.75 | 0.19 |
| Measurement Input, Price Volatility [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 151.41 | 139.35 |
| Measurement Input, Expected Term [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 3.52 | 2.00 |
| Measurement Input, Exercise Price [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 10.47 | 0.01 |
| Measurement Input, Share Price [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 11.29 | 6.83 |
| Fair Value per Warrant on Grant Date [Member] | ||
| Warrants and Rights Outstanding, Measurement Input | 9.68 | 6.82 |
Note 8 - Outstanding Warrants - Schedule of Warrants or Rights (Details) - $ / shares shares in Thousands |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Outstanding, warrants (in shares) | 55 | 95 | |
| Outstanding, Weighted - Average Exercise Price (in dollars per share) | $ 15.92 | $ 2.59 | $ 2.59 |
| Outstanding, Average Remaining Term in Years (Year) | 7 years 8 months 26 days | 3 years 11 months 12 days | 4 years 11 months 12 days |
| Granted, warrants (in shares) | 527 | 292 | |
| Granted, Weighted - Average Exercise Price (in dollars per share) | $ 10.46 | $ 0.01 | |
| Exercised, warrants (in shares) | (227) | (332) | |
| Exercised, Weighted - Average Exercise Price (in dollars per share) | $ 0.01 | $ 0.32 | |
| Outstanding, warrants (in shares) | 355 | 55 |
Note 9 - Agreements (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Jul. 01, 2022 |
Dec. 31, 2021 |
|
| Prepaid Expense, Current, Total | $ 3,671 | $ 3,671 | $ 5,598 | |||
| Accounts Receivable, after Allowance for Credit Loss, Current, Total | 9,127 | 9,127 | 1,574 | |||
| Marketing Expense | 800 | $ 700 | 2,200 | $ 2,100 | ||
| Forward Sales Commitments [Member] | ||||||
| Other Commitment, Total | 0 | 0 | 0 | 0 | ||
| Operating Agreement with Gemini Edibles and Fats India Private Limited [Member] | ||||||
| Debt Agreement, Maximum Borrowing Capacity | $ 12,700 | |||||
| Debt Instrument, Interest Rate, Stated Percentage | 12.00% | |||||
| Accounts Payable, Total | 5,300 | 5,300 | 0 | |||
| J.D. Heiskell [Member] | ||||||
| Prepaid Expense, Current, Total | 900 | 900 | 4,000 | |||
| Accounts Receivable, after Allowance for Credit Loss, Current, Total | 106 | $ 88 | 106 | $ 88 | ||
| Marketing Partners [Member] | ||||||
| Accounts Receivable, after Allowance for Credit Loss, Current, Total | $ 200 | $ 200 | $ 1,200 | |||
Note 9 - Agreements - Schedule of Working Capital Agreement Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
| Revenues | $ 71,831 | $ 49,895 | $ 189,781 | $ 147,586 | |
| Accounts receivable, net of allowance for doubtful accounts of $0 and $1,404 as of September 30, 2022 and December 31, 2021, respectively | 9,127 | 9,127 | $ 1,574 | ||
| Accounts payable | 32,938 | 32,938 | $ 16,415 | ||
| J.D. Heiskell [Member] | |||||
| Accounts receivable, net of allowance for doubtful accounts of $0 and $1,404 as of September 30, 2022 and December 31, 2021, respectively | 106 | 88 | 106 | 88 | |
| Accounts payable | 540 | 307 | 540 | 307 | |
| Wet Distiller's Grains Sales [Member] | J.D. Heiskell [Member] | |||||
| Revenues | 13,003 | 8,919 | 39,669 | 30,584 | |
| Corn Oil Sales [Member] | J.D. Heiskell [Member] | |||||
| Revenues | 2,917 | 1,515 | 8,067 | 4,252 | |
| Corn Purchases [Member] | J.D. Heiskell [Member] | |||||
| Corn purchases | $ 53,063 | $ 39,058 | $ 151,425 | $ 119,217 | |
Note 10 - Segment Information - Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Revenues | $ 71,831 | $ 49,895 | $ 189,781 | $ 147,586 |
| Revenues | (71,831) | (49,895) | (189,781) | (147,586) |
| Operating Segments [Member] | ||||
| Revenues | 72,139 | 50,250 | 190,721 | 148,676 |
| Revenues | (72,139) | (50,250) | (190,721) | (148,676) |
| Intersegment Eliminations [Member] | ||||
| Revenues | 308 | 355 | 940 | 1,090 |
| Revenues | $ (308) | $ (355) | $ (940) | $ (1,090) |
Note 12 - Subsequent Events (Details Textual) - Subsequent Event [Member] - Construction Loan Agreement [Member] $ in Millions |
Oct. 04, 2022
USD ($)
|
|---|---|
| Debt Agreement, Maximum Borrowing Capacity | $ 25 |
| Debt Instrument, Interest Rate, Stated Percentage | 5.95% |
| Usda Annual Renewal Fee | 0.25% |