8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 3)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 1, 2022

VERTEX ENERGY, INC.

(Exact name of registrant as specified in its charter)

Nevada	001-11476	94-3439569
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1331 Gemini Street Suite 250 Houston, Texas	77058
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (866) 660-8156

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value Per Share	VTNR	NASDAQ Stock Market LLC (Nasdaq Capital Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

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.  ☐ 

EXPLANATION NOTE

Vertex Energy, Inc. (the “Company”, “we” and “us”) previously filed a Current Report on Form 8-K with the Securities and Exchange Commission on April 7, 2022 (the “Initial Report”) disclosing among other things: (a) the April 1, 2022 entry into a Loan and Security Agreement between Vertex Refining Alabama LLC, a Delaware limited liability company (“Vertex Refining”) which is indirectly wholly-owned by the Company, the Company, as a guarantor, substantially all of the Company’s direct and indirect subsidiaries, as guarantors, certain funds, as lenders, and Cantor Fitzgerald Securities, in its capacity as administrative agent and collateral agent for the lenders; (b) the April 1, 2022 acquisition by Vertex Refining of a refinery located in Mobile, Alabama (the “Mobile Refinery”) and certain logistics assets (the “Logistics Assets”); and (c) the April 1, 2022 entry into a Supply and Offtake Agreement between Vertex Refining and Macquarie Energy North America Trading Inc. (“Macquarie”), pertaining to crude oil supply and offtake of finished products located at the Mobile Refinery (the “Supply and Offtake Agreement”).

On April 26, 2022, the Company filed an Amendment No. 1 to the Initial Report (“Amendment No. 1”), to disclose in greater detail a Storage & Services Agreement, Crude Oil & Hydrocarbon Feedstock Supply Agreement and Products Offtake Agreement entered into with certain of the transactions described in the Initial Report.

On June 15, 2022, the Company filed an Amendment No. 2 to the Initial Report (“Amendment No. 2”), amending Item 9.01 thereof to include the required financial statements and pro forma financial information relating to the acquisition of the Mobile Refinery.

This Amendment No. 3 to the Initial Report, which should be read together with the Initial Report, as amended by Amendment No. 1 and Amendment No. 2 thereto, is being filed solely to include additional financial statements relating to the Mobile Refinery and Logistics Assets as of, and for the three months ended March 31, 2022 and 2021, and to include pro forma financial information as of March 31, 2022, and for the three months ended March 31, 2022, which were not required to be included in the Initial Report, Amendment No. 1 or Amendment No. 2, thereto. The Company is providing this information so that it may be incorporated by reference into a prospectus included within a Form S-3 being filed today by the Company.

This Amendment should be read in conjunction with the Initial Report, as amended to date.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired

The unaudited financial statements of the Mobile Refinery and Logistics Assets, comprising the combined balance sheets as of March 31, 2022 and 2021, and the related combined statements of operations, changes in net parent investment and cash flows for the three months ended March 31, 2022 and 2021, and the related notes to the financial statements, are filed as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.

(b) Pro Forma Financial Information

The unaudited pro forma consolidated financial information of Vertex Energy, Inc. as of March 31, 2022, and for the three months ended March 31, 2022 and the year ended December 31, 2021, as well as the accompanying notes thereto, are filed as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference. The unaudited pro forma consolidated financial statements are based on the historical consolidated financial statements of the Company and adjusts such information to give effect of the acquisition of the Mobile Refinery and Logistics Assets.

(d) Exhibits.

Exhibit No.	Description
99.1	Unaudited financial statements of the Mobile Refinery and Logistics Assets, comprising the combined balance sheets as of March 31, 2022 and 2021, and the related combined statements of operations, changes in net parent investment and cash flows for the three months ended March 31, 2022 and 2021, and the related notes to the financial statements
99.2	Unaudited Proforma Financial Information of Vertex Energy, Inc. as of March 31, 2022, and for the three months ended March 31, 2022 and the year ended December 31, 2021, as well as the accompanying notes thereto
104	Inline XBRL for the cover page of this Current Report on Form 8-K

SIGNATURES

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 hereunto duly authorized.

	VERTEX ENERGY, INC.
Date: July 8, 2022	By:	/s/ Chris Carlson
		Chris Carlson
		Chief Financial Officer

EX-99.1

Vertex Energy, Inc. 8-K

Exhibit 99.1

Mobile Refinery and Logistics Assets

Combined Financial Statements

For the three months ended March 31, 2022 and 2021

Table of Contents

Combined Financial Statements	Page(s)
Combined Balance Sheets	1
Combined Statements of Income	2
Combined Statements of Changes in Net Parent Investment	3
Combined Statements of Cash Flows	4
Notes to Combined Financial Statements	5–17

Mobile Refinery and Logistics Assets

Combined Balance Sheets

(in millions of dollars)

			As of March 31,
	Notes			2022		2021
Assets
Current assets
Inventory		5		$	124.3	$	111.6
Accounts receivable - related parties		—			237.6		103.4
Accounts receivable - third parties		—			3.2		11.3
Environmental credits		9			113.4		39.0
Prepaid expenses		6			1.6		1.4
Taxes (other than income tax) receivable		—			—		0.1
Total current assets					480.1		266.8
Property, plant, and equipment, net		4			255.5		259.1
Deferred tax asset, net		10			18.0		22.5
Total assets				$	753.6	$	548.4
Liabilities
Current liabilities
Accounts payable - related parties		—		$	3.2	$	4.3
Accounts payable - third parties		—			6.3		4.1
Accrued liabilities - related parties		12			244.2		157.3
Accrued liabilities - third parties		12			14.8		14.1
Environmental credits		9			113.4		39.0
Income tax payable		10			3.8		0.7
Taxes (other than income tax) payable		—			0.8		0.7
Total current liabilities					386.5		220.2
Capital lease obligations		11			9.4		11.5
Environmental obligations		8			1.2		1.3
Total liabilities					397.1		233.0
Net parent investment
Net parent investment		—			356.5		315.4
Total net parent investment					356.5		315.4
Total liabilities and net parent investment				$	753.6	$	548.4

The accompanying notes are an integral part of the combined financial statements.

1 

Mobile Refinery and Logistics Assets

Combined Statements of Income

(in millions of dollars)

			Three months ended March 31,
	Notes			2022		2021
Revenue		—		$	750.9	$	427.4
Costs and expenses
Cost of sales		—			644.3		383.0
Operations and maintenance expenses - related parties		6			2.0		2.0
Operations and maintenance expenses - third parties		—			14.3		14.2
General and administrative expenses - related parties		6			4.2		7.1
General and administrative expenses - third parties		—			4.3		3.5
Property and other taxes		—			0.6		0.6
Depreciation and amortization		—			6.4		6.8
Operating income					74.8		10.2
Interest expense		11			0.2		0.2
Income before taxes				$	74.6	$	10.0
Income tax expense		10			19.5		2.6
Net income				$	55.1	$	7.4

The accompanying notes are an integral part of the combined financial statements.

2 

Mobile Refinery and Logistics Assets

Combined Statements of Changes in Net Parent Investment

(in millions of dollars)

	Three months ended March 31,
	2022			2021
Balance, beginning of period	$	332.7		$	312.9
Net income		55.1			7.4
Net distributions to Parent		(31.3	)		(4.9	)
Balance, end of period	$	356.5		$	315.4

The accompanying notes are an integral part of the combined financial statements.

3 

Mobile Refinery and Logistics Assets

Combined Statements of Cash Flows

(in millions of dollars)

	Three months ended March 31,
	2022			2021
Operating activities
Net income	$	55.1		$	7.4
Adjustments to reconcile income to net cash flows from operating activities:
Depreciation and amortization		6.4			6.8
Deferred income tax benefit		15.5			1.4
Changes in assets and liabilities:
Inventory		8.7			(43.4	)
Accounts receivable - related parties		(137.2	)		(26.7	)
Accounts receivable - third parties		4.0			(2.2	)
Prepaid expenses		1.5			1.4
Taxes (other than income tax) receivable		0.2			0.4
Environmental credits assets		(17.3	)		(14.7	)
Accounts payable - related parties		(0.6	)		(4.0	)
Accounts payable - third parties		4.5			5.3
Accrued liabilities - related parties		84.7			67.6
Accrued liabilities - third parties		(3.3	)		2.2
Environmental credits obligations		17.3			14.7
Income tax payable		3.8			0.7
Taxes (other than income tax) payable		0.6			0.4
Environmental obligations		(0.1	)		(0.1	)
Net cash provided by operating activities		43.8			17.2
Investing activities
Capital expenditures		(11.9	)		(11.7	)
Net cash used in investing activities		(11.9	)		(11.7	)
Financing activities
Repayment of capital lease obligations		(0.6	)		(0.6	)
Net distributions to Parent		(31.3	)		(4.9	)
Net cash used in financing activities		(31.9	)		(5.5	)
Net change in cash and cash equivalents		—			—
Cash and cash equivalents at beginning of year		—			—
Cash and cash equivalents at end of year		—			—

The accompanying notes are an integral part of the combined financial statement

4 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements

(in millions of dollars)

1 Nature of Operations and Basis of Presentation

Nature of Operations - The Mobile Refinery and Logistics Assets (“carve-out operations,” “Asset Group,” “we,” “us,” or “our”) are a group of downstream assets that operate ten miles north of Mobile in Saraland, Alabama, which includes the Mobile Refinery and the Blakely Island Terminal, as well as the related logistics infrastructure of the Mobile Truck Rack. We are owned and operated by subsidiaries of Shell Oil Company. The term “Parent” refers collectively to Royal Dutch Shell plc, Shell Oil Company, and their subsidiaries.

Our carve-out operations consist of the Mobile Refinery and the Blakely Island Terminal operations in Alabama, which process heavy and sour crude to produce heavy olefin feed, regular gasoline, premium gasoline, jet fuel, and diesel fuel. The carve-out operations also include the Mobile Truck Rack, which facilitates vehicle distribution and includes terminal capacity.

On May 26, 2021, Vertex Energy Operating LLC (“Vertex Operating”), a wholly-owned subsidiary of Vertex Energy Inc. entered into a definitive Sale and Purchase Agreement to acquire from the Parent the Mobile, Alabama refinery, certain real property associated therewith, and related assets, including all inventory at the refinery as of closing and certain equipment, rolling stock, and other personal property associated with the Mobile refinery. The initial base purchase price for the assets was $75 million. Vertex Operating also paid for the hydrocarbon inventory located at the Mobile refinery, valued at $165 million at closing on April 1, 2022. In addition to refining assets, the transaction included the acquisition by Vertex Operating of approximately 3.2 million barrels of inventory and product storage and logistics and distribution assets, together with more than 860 acres of developed and undeveloped land, together with the Blakeley Island Crude and Products Terminal.

Basis of Presentation - The accompanying combined financial statements have been prepared in accordance with US Generally Accepted Accounting Principles (“US GAAP”) and reported in US dollars, which is both the functional and reporting currency of the Asset Group.

The combined financial statements have been prepared on a historical cost basis. The accompanying combined financial statements were derived from the consolidated financial statements and accounting records of the Parent. These combined financial statements reflect the historical results of operations, financial position, and cash flows of the carve-out operations. All intercompany transactions and accounts between us and the Parent have been reflected as accounts receivable - related parties, accounts payable - related parties, accrued liabilities - related parties, and net parent investment in the accompanying combined balance sheets.

The accompanying combined statements of operations also include expense allocations for certain functions historically performed by the Parent, including allocations of general corporate expenses related to finance, legal, information technology, human resources, communications, shared services, employee benefits, and insurance. The portion of expenses specifically attributable to the carve-out operations is reflected in the combined financial statements in its entirety. Our management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocation of expenses from the Parent, are reasonable. Nevertheless, the accompanying combined financial statements may not include all expenses that would have been incurred or reflect our results of operations, financial position, and cash flows had we operated as a stand-alone company during the periods presented.

5 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements

(in millions of dollars)

We did not maintain separate bank accounts for the carve-out operations. The cash generated and used by our operations is deposited to the Parent’s centralized account, which is commingled with the cash of other entities controlled by the Parent. The Parent funds our operating and investing activities, as needed. Accordingly, we did not record any cash and cash equivalents held by the Parent on our behalf for the periods presented. We reflected the cash generated by our operations and expenses paid by the Parent on behalf of our operations as accounts receivable - related parties, accounts payable - related parties, and net parent investment in the accompanying combined balance sheets, combined statements of changes in net parent investment, and net contributions from Parent in the accompanying combined statements of cash flows. Changes in current assets and current liabilities related to the Parent are reflected in the operating activities section of the combined statements of cash flows. The changes in net parent investment are reflected in the financing section of the combined statements of cash flows.

2 Summary of Significant Accounting Policies

Revenue Recognition - Our revenues are generated through the sale of refined petroleum products and terminalling and storage services. We recognize revenue from product sales at prevailing market rates at the point in time in which the customer obtains control of the product. Terminalling and storage revenues are recognized as services are rendered, and our performance obligations have been satisfied once the product has been transferred back to the customer. These services are short-term in nature, and the service fees charged to our customers are at prevailing market rates. The timing of our revenue recognition may differ from the timing of payment from our customers. A receivable is recorded when revenue is recognized prior to payment and we have unconditional right to payment. We record an allowance for doubtful accounts if the receivable no longer becomes probable of collecting; no allowances have been recorded for the periods presented.

Leases - We lease assets for use in our operations. All lease agreements are evaluated and classified as either an operating lease or a capital lease. A lease is classified as a capital lease if any of the following criteria are met: transfer of ownership to the lessee by the end of the lease term, the lease contains a bargain purchase option, the lease term is equal to 75% or greater of the asset’s useful economic life, or the present value of the future minimum lease payments is equal to or greater than 90% of the asset’s fair market value. Capital leases are recorded at the lower of the net present value of the total amount of rent payable under the leasing agreement (excluding finance charges) or fair market value of the leased asset. Capital lease assets are depreciated on a straight-line basis over a period consistent with our normal depreciation policy for tangible fixed assets but not exceeding the lease term. Operating lease expense is recognized ratably over the entire lease term.

Net Parent Investment - In the accompanying combined balance sheets, net parent investment represents the Parent’s historical investment in us, our accumulated net earnings, and the net effect of transactions with, and allocations from, the Parent.

6 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements

(in millions of dollars)

Property, Plant, and Equipment - Property, plant, and equipment are initially recorded in the combined balance sheets at cost where it is probable that they will generate future economic benefits. Property, plant, and equipment are subsequently recognized at cost less accumulated depreciation in the combined balance sheets. Cost of repairs from normal maintenance of property are expensed as incurred. Gains and losses on disposal of property, plant, and equipment are determined by comparing disposal proceeds with the carrying amounts of assets sold and recognized in the combined statements of income as gain or loss on disposal of property, plant, and equipment.

Depreciation - Refining facilities and related equipment are depreciated on a straight-line basis over their useful lives of two to 40 years. Where facilities and equipment, including major components, are significant in relation to the total cost of the assets and have differing useful lives, they are depreciated separately. Major inspection costs, overhaul, and turnaround activities are depreciated over the estimated period before the next planned major activity (two to nine years). Capital expenditures are not depreciated until assets are substantially complete and ready for their intended use.

Impairment of Assets - We evaluate long-lived assets of identifiable business activities for impairment when events or changes in circumstances indicate, in management’s judgment, the carrying value of such assets may not be recoverable. These events include market declines that are believed to be other than temporary, changes in the way we intend to use a long-lived asset, decisions to sell an asset, and adverse changes in the legal or business environment, such as adverse actions by regulators. If an event occurs, which is a determination that involves judgment, we perform an impairment assessment by comparing management’s estimate of forecasted undiscounted future cash flows associated with the asset to the asset’s net book value. If the net book value exceeds our estimate of forecasted undiscounted cash flows then an impairment is recorded, and the asset is remeasured to its fair value in accordance with the approaches prescribed in Accounting Standards Codification (“ASC”) 820. We did not recognize any asset impairments for the three months ended March 31, 2022 and March 31, 2021.

Cost Classification - Cost of sales includes the purchase of material inputs into our refining process, utilities used in the refining process, and the cost of compliance with environmental regulations associated with our refining operations. Our operation and maintenance expenses include direct labor costs, repairs and maintenance, chemicals and catalysts, plant insurance, outside services, and some operational support services provided by the Parent.

Historically, the Parent and its related parties performed certain services which directly and indirectly supported our operations. Personnel and operating costs incurred by the Parent on our behalf were charged to us and are included in either general and administrative expenses or operations and maintenance expenses, depending on the nature of the employee’s role in our operations in the accompanying combined statements of income. The Parent also performs certain general corporate functions for us related to finance, legal, information technology, human resources, communications, ethics and compliance, and other shared services. See “Note 6 – Related- Party Transactions” for further discussion on our related-party transactions.

Income Taxes - The Asset Group has never filed a separate state or federal return. For the purpose of preparing a tax provision for these combined financial statements, we used the separate return method to calculate the estimated tax impact. We follow the asset and liability method of accounting for income taxes, whereby deferred income taxes are recorded for the effect of differences between the accounting and income tax basis of an asset or liability. Deferred income tax assets and liabilities are measured using enacted or substantively enacted income tax rates as of the balance sheet date that are anticipated to apply to taxable income in the periods in which temporary differences are anticipated to be recovered or settled.

7 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements

(in millions of dollars) 

We review our deferred tax assets, including net operating loss carryovers, for recoverability and a valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Among other items, we consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and available tax planning strategies. Based on the scheduled reversal of deferred tax liabilities, we believe that we will be able to realize our deferred tax assets in the future.

Pension and Other Postretirement Benefits - We participate in employee benefit programs sponsored by the Parent, consisting of a defined benefit pension plan and other postretirement benefits, including certain health care and life insurance benefits, for its retired employees and eligible surviving dependents. The estimated future cost of providing defined benefit pension and other postretirement benefits to all members of the program is determined by the Parent using its best estimate of demographic and financial assumptions.

For presentation of the accompanying combined financial statements, our portion of employee benefit plan costs have been allocated as a charge to us by the Parent. The Parent sponsors various employee pension and postretirement health and life insurance plans. We participate in the following defined benefit plans: Shell Oil Pension Plan, Shell Benefit Restoration Pension Plan, Alliance Restoration Plan, Shell Oil Company Comprehensive Welfare Benefits Plan, and Pennzoil-Quaker State Retiree Medical & Life Insurance. As a participant in these benefit plans, we recognize as expense an allocation from the Parent, and we do not recognize any employee benefit plan assets, liabilities, or other comprehensive income or loss. Pension expenses are included in general and administrative expenses in the accompanying combined statements of income.

Inventories - Inventories of crude oil, feedstocks, and refined products are valued at the lower of cost or net realizable value using the First In, First Out (“FIFO”) basis. Costs include direct expenditures incurred in bringing an item or product to its existing condition and location. Materials and supplies are valued at the lower of cost or net realizable value. Net realizable value is the estimate of the selling price in the ordinary course of business less selling expenses. See “Note 5 – Inventory” for additional information.

Commitments and Contingencies - We are subject to litigation and regulatory proceedings as the result of our business operations and transactions. We utilize both internal and external counsel in evaluating our potential exposure to adverse outcomes from orders, judgments, or settlements. In general, we expense legal costs as incurred. When we identify specific litigation that is expected to continue for a significant period, is reasonably possible to occur, and may require substantial expenditures, we identify a range of possible costs expected to be required to litigate the matter to a conclusion or reach an acceptable settlement, and we accrue for the best estimate in the range. To the extent actual outcomes differ from our estimates, or additional facts and circumstances cause us to revise our estimates, our earnings will be affected. See “Note 8 – Commitments and Contingencies” for additional information.

8 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements 

(in millions of dollars) 

Environmental Compliance Activities - We are subject to federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their economic benefit. We expense costs such as permits, compliance with existing environmental regulations, remedial investigations, soil sampling, and testing and monitoring costs to meet applicable environmental laws and regulations, where prudently incurred or determined to be reasonably possible in the ordinary course of business. We record environmental liabilities when environmental assessments and/or remedial efforts are probable, and we can reasonably estimate the costs. If we determine that a loss is probable and the loss or range of loss can be estimated, we disclose the possible loss in the notes to the combined financial statements. We recognize receivables for anticipated associated insurance recoveries when such recoveries are deemed to be probable. See “Note 9 – Environmental Compliance Activities” for a full breakdown of environmental activities.

As our refinery resides within the United States, we are subject to biofuel requirements under the Renewable Fuels Standards (“RFS”) that requires us to purchase renewable identification numbers (“RINs”) credits to meet our obligation. Our refinery is also subject to the Environmental Protection Agency’s (“EPA”) Mobile Source Air Toxics (“MSAT”) gasoline fuel program, which requires us to meet an annual average gasoline benzene and sulfur content standard. See “Note 9 – Environmental Compliance Activities” for a breakdown of our liabilities and assets related to environmental compliance.

We account for the inventory and associated liabilities of our environmental credits on a gross basis. Our Asset Group generates Sulfur credits which are issued by the EPA. Benzene and RINs credits are either transferred from the Parent or purchased within the open market. The inventory is recorded once we obtain legal title of the credits and is recorded at historical cost. The obligations and associated expenses are accrued for during the fiscal period in which the obligation is incurred, and the liability is subsequently relinquished once the credits are surrendered to the EPA. The cost of the accrued expense is valued based upon the cost of the inventory and recognized on a FIFO basis. For the three months ended March 31, 2022 and March 31, 2021, the cost of the obligation and associated expenses were based on actual known purchases of inventory or future purchase commitments.

Asset Retirement Obligations - We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

We have obligations with respect to certain owned assets to clean and/or dispose of various component parts at the time the assets are retired. However, these component parts can be used for extended and indeterminate periods of time as long as they are properly maintained and/or upgraded. It is our practice and current intent to maintain all our assets and continue making improvements to those assets based on technological advances. As a result, we believe that our assets have indeterminate lives for purposes of estimating asset retirement obligations because dates, or ranges of dates, upon which we would retire such assets cannot reasonably be estimated at this time. We will recognize a liability at such time when sufficient information exists to estimate a date, or range of potential settlement dates, that is needed to employ a present value technique to estimate fair value.

10 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements 

(in millions of dollars) 

Use of Estimates - The preparation of combined financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying combined financial statements and notes. While management believes current estimates are reasonable and appropriate, actual results could differ from those estimates.

Estimates and judgments are continually evaluated by management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

3 Recent Accounting Pronouncements

ASC Topic 842, Leases - In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) to Topic 842, which requires lessees to recognize assets and liabilities for leases with lease terms greater than 12 months in the statement of financial position. This update also requires improved disclosures to help users of financial statements better understand the amount, timing, and uncertainty of cash flows arising from leases. In June 2020, the FASB issued ASU 2020-05 which extends the effective date to fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. We do not intend to early adopt this accounting standard for these combined financial statements. We are currently evaluating the effect that adopting this new standard will have on our combined financial statements and related disclosures.

ASC Topic 326, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments - In June 2016, the FASB issued ASU to Topic 326 that changes the impairment model for trade receivables, net investments in leases, debt securities, loans, and certain other instruments. The standard requires the use of a forward-looking “expected loss” model as opposed to the current “incurred loss” model. This standard is effective for fiscal years beginning after December 15, 2022 and will be adopted on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the adoption period. We do not intend to early adopt this accounting standard for these combined financial statements. We are currently evaluating the effect that adopting this new standard will have on our combined financial statements and related disclosures.

11 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements 

(in millions of dollars) 

4 Property, Plant, and Equipment, net

Property, plant, and equipment, net consisted of the following:

	As of March 31,
	2022			2021
Refinery machinery and equipment	$	506.3		$	498.2
Leased assets		40.5			40.5
Assets under construction		0.1			11.3
Land		5.9			5.9
Others		6.6			6.6
Property, plant, and equipment at cost		559.4			562.5
Accumulated depreciation and amortization		(303.9	)		(303.4	)
Property, plant, and equipment, net	$	255.5		$	259.1

5 Inventory

Inventory consisted of the following:

	As of March 31,
	2022		2021
Refined products	$	85.2	$	67.9
Crude and other feedstocks		34.3		39.7
Materials and supplies		4.8		4.0
Total inventory	$	124.3	$	111.6

During the three months ended March 31, 2022 and March 31, 2021 we recorded a net realizable value adjustment of $0.1 million and $0.6 million, respectively, to refined products.

6 Related-Party Transactions

Cash Management Program - We participate in the Parent’s centralized cash management and funding system. Our working capital and capital expenditure requirements have historically been part of the corporate-wide cash management program for the Parent. As part of this program, the Parent maintains all cash generated by our operations, and cash required to meet our operating and investing needs is provided by the Parent, as necessary.

12 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements 

(in millions of dollars) 

Related-Party Sales and Purchases - The Asset Group enters into transactions with related parties in the normal course of business, which includes purchases of crude oil, distribution of refined products, and sale of refined products and byproducts. A summary of the significant related-party transactions for the three months ended March 31, 2022 and March 31, 2021 were as follows:

	Three months ended March 31,
	2022		2021
Sales	$	681.9	$	387.4
Purchases		602.2		395.3

Related-Party Services - Historically, the Parent and its related parties performed certain services that directly and indirectly supported our operations. Expenses related to these services for the three months ended March 31, 2022 and March 31, 2021, were $4.6 million and $7.7 million, respectively.

We are covered by the insurance policies of the Parent. For the three months ended March 31, 2022 and March 31, 2021, our allocated prepaid insurance balance was $1.6 million and $1.4 million, respectively. Our insurance expense was $1.6 million and $1.4 million for the three months ended March 31, 2022 and March 31, 2021, respectively, which was included within operations and maintenance expenses in the accompanying combined statements of operations.

Employees who directly or indirectly support our operations participate in the pension, postretirement health and life insurance, and defined contribution benefit plans sponsored by the Parent, which includes other Parent subsidiaries. Our share of pension and postretirement health and life insurance costs for the three months ended March 31, 2022 and March 31, 2021 were $1.1 million and $1.1 million, respectively. Our share of defined contribution plan costs for the three months ended March 31, 2022 and March 31, 2021, were $0.6 million and $0.5 million, respectively. Pension and defined contribution benefit plan expenses are included in either general and administrative expenses or operations and maintenance expenses in the accompanying combined statements of operations, depending on the nature of the employee’s role in our operations.

7 Transaction with Major Customers and Concentration of Credit Risk

The Parent and the Parent’s subsidiaries accounted for substantially all of our total revenues for the three months ended March 31, 2022 and March 31, 2021. As such, no third-party customer-generated revenue is greater than 10% of total revenues in 2022 or 2021.

No third-party customer accounted for accounts receivable greater than 10% of accounts receivable as of March 31, 2022 or March 31, 2021.

13 

Mobile Refinery and Logistics Assets

Notes to Combined Financial Statements 

(in millions of dollars) 

8 Commitments and Contingencies

The Parent and certain subsidiaries are named defendants in lawsuits and governmental proceedings that arise in the ordinary course of business. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies, and the likelihood of an unfavorable outcome. Actual liability with respect to these lawsuits is not determinable. Our management believes, based on legal counsels’ opinion, that any potential liability will not materially impact our combined financial position, operating results, or cash flows.

Environmental Matters - We accrue for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. The liability represents the expected costs of remediating contaminated soil and groundwater at the site. Costs of future expenditures for environmental remediation obligations are discounted to their present value. Our environmental remediation obligations consisted of the following:

	As of March 31,
	2022		2021
Environmental obligation - non-current	$	1.2	$	1.3

9 Environmental Compliance Activities

RINs Credits - We are required to comply with federal ethanol standards, and we recognize the related costs as part of our cost of sales. Our costs related to RFS compliance using RINs for the three months ended March 31, 2022 and March 31, 2021 were $17.3 million and $14.7 million, respectively. Our environmental credits obligations and assets related to RFS compliance using RINs consisted of the following:

	As of March 31,
	2022		2021
Environmental credits asset - current	$	113.4	$	39.0
Environmental credits obligation - current		113.4		39.0

Benzene Credits - We are required to comply with the federal benzene and sulfur standards for gasoline that is produced and sold within the United States. We recognize the related compliance costs as part of our cost of sales. No costs were incurred related to MSAT standards compliance for the three months ended March 31, 2022 and March 31, 2021. No environmental credits obligation related to MSAT standards compliance existed as of March 31, 2022 or March 31, 2021.

14 

Mobile Refinery and Logistics Assets
Notes to Combined Financial Statements

(in millions of dollars)

10 Income Taxes

Components of current and deferred income tax expense related to our operations were as follows: 

	Three months ended March 31,
	2022		2021
Current taxes
Federal	$	2.9	$	0.5
State		0.9		0.1
Total current taxes		3.8		0.6
Deferred taxes
Federal		15.7		2.0
State		—		—
Total deferred taxes		15.7		2.0
Income tax expense	$	19.5	$	2.6

Our reconciliation of effective tax rate is as follows:

	Three months ended March 31,
	2022			2021
Income before tax	$	74.6		$	10.0
Federal tax rate		21	%		21	%
Expected income tax expense	$	15.7		$	2.1
Effect on income tax of State tax expense	$	3.8		$	0.5
Total income tax expense		19.5			2.6
Income tax expense	$	19.5		$	2.6

The tax effects of significant temporary differences representing deferred tax assets and liabilities were as follows:

	As of March 31,
Deferred income tax assets	2022		2021
Net operating losses carryforward		64.1		69.9
Environmental obligations		0.4		0.4
Other		0.2		0.6
Total deferred income tax assets		64.7		70.9
Deferred income tax liabilities Property, plant, and equipment, net		46.7		48.4
Total deferred income tax liabilities		46.7		48.4
Non-current deferred tax asset, net	$	18.0	$	22.5

15

Mobile Refinery and Logistics Assets
Notes to Combined Financial Statements

(in millions of dollars)

11 Leases

We have capital lease obligations for a hydrogen facility and an office building that mature in 2027 and August 2022, respectively, both of which support our refining operations. We have an operating lease obligation related to storage.

Future minimum lease payments for capital leases as of March 31, 2022, are as follows:

years ending March 31,	Capital Leases
2023	$	2.2
2024		2.4
2025		2.4
2026		2.4
2027		2.4
Thereafter		1.8
Total minimum lease payments		13.6
Less interest		2.1
Total	$	11.5

There were no future minimum lease payments for operating leases as of March 31, 2022.

During the three months ended March 31, 2022 and March 31, 2021, we recognized capital lease obligations of $11.5 million and $13.8 million, respectively. We recognized net capital lease assets of $11.7 million and $13.9 million as of March 31, 2022 and March 31, 2021, respectively. All interest expense recognized for the three months ended March 31, 2022 and March 31, 2021 was related to capital lease obligations.

During the three months ended March 31, 2022 and March 31, 2021, we recognized operating lease expenses of $0.2 million and $4.1 million, respectively.

12 Accrued Liabilities

Accrued liabilities – third parties consisted of the following:

	As of March 31,
	2022		2021
Capital expenditure accruals	$	5.8	$	5.1
Utility cost accruals		3.2		2.2
Capital lease obligations (see Note 11)		2.1		2.3
Transportation cost accruals		0.3		—
Other liabilities		3.4		4.5
Total accrued liabilities - third parties	$	14.8	$	14.1

16

Mobile Refinery and Logistics Assets
Notes to Combined Financial Statements

(in millions of dollars)

Accrued liabilities – related parties consisted of accruals for the purchases of inventory.

13 Subsequent Events

We have performed an evaluation of subsequent events through June 30, 2022 which is the date the combined financial statements were available to be issued.

17

EX-99.2

Vertex Energy, Inc. 8-K

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial data are presented to illustrate the effect of the April 1, 2022, acquisition (the “Acquisition”) by Vertex Refining Alabama LLC (“Vertex Refining”), an indirect wholly-owned subsidiary of Vertex Energy, Inc. (the “Company”), from Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Oil Company and Shell Chemical LP, subsidiaries of Shell plc (“Shell”), of Shell’s Mobile, Alabama refinery, certain real property associated therewith and related assets, including all inventory at the refinery as of closing of the acquisition (collectively, the “Mobile Refinery”). The Mobile Refinery was acquired pursuant to the terms of that certain Refinery Purchase Agreement (the “Refinery Purchase Agreement”) between Vertex Energy Operating LLC (“Vertex Operating”) (the rights to which were assigned to Vertex Refining) and Shell, dated May 26, 2021 (the “Purchase Agreement”).

The following unaudited pro forma combined balance sheet data as of March 31, 2022 is presented as if the Acquisition had occurred on March 31, 2022. The following unaudited pro forma combined statement of operations data for the three months ended March 31, 2022 and for the year ended December 31, 2021, are presented as if the Acquisition occurred on January 1, 2021.

The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable under the circumstances; however, the actual results could differ. The pro forma adjustments are directly attributable to the Acquisition and are expected to have a continuing impact on the results of operations of the Company. Management believes that all adjustments necessary to present fairly the unaudited pro forma combined financial statements have been made. The unaudited pro forma combined financial statements are presented for informational purposes only and are not necessarily indicative of the results of operations that would have resulted had the Acquisition been consummated on the dates indicated, and should not be construed as being representative of the Company’s future results of operations or financial position.

 The Mobile Refinery’s assets, liabilities and results of operations presented herein were derived from the unaudited financial statements of the Mobile Refinery for the three months ended March 31, 2022 (the “Mobile Refinery Unaudited Financial Statements”) and the audited financial statements of the Mobile Refinery for the years ended December 31, 2021 and 2020 (the “Mobile Refinery Audited Financial Statements”, and together with the Mobile Refinery Unaudited Financials, collectively, the “Mobile Refinery Financial Statements”).

The unaudited pro forma combined financial statement data should be read in conjunction with (a) the historical consolidated financial statements and accompanying notes thereto of the Company for the year ended December 31, 2021, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on March 14, 2022 (the “2021 Annual Report”), (b) the historical unaudited consolidated financial statements and accompanying notes thereto of the Company for the three months ended March 31, 2022, which were included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2022, as filed with the Securities and Exchange Commission on May 10, 2022 (the “2022 Interim Report”), (c) the Mobile Refinery Audited Financial Statements, which are included as Exhibit 99.1 to the Current Report on Form 8-K/A (Amendment No. 2) filed by the Company with the Securities and Exchange Commission on June 15, 2022, and (d) the Mobile Refinery Unaudited Financial Statements, which are included as Exhibit 99.1 to this Current Report on Form 8-K/A (Amendment No. 3) of which these Unaudited Pro Forma Combined Financial Statements are included as Exhibit 99.2.

The unaudited pro forma combined financial statements included herein constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in the 2021 Annual Report and the Company’s 2022 Interim Report.

VERTEX ENERGY, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2022

	Consolidated			Mobile Refinery and		Transaction			Other Transaction			Combined
	Historical			Logistics Assets		Accounting			Accounting			Pro Forma
	March 31, 2022			Historical		Adjustments			Adjustments			March 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	24,050,252			-	$	(142,076,908	)(a)	$	238,017,897	(a), (c), (e)	$	119,991,241
Restricted cash		100,496,998			-		(100,396,998	)(a)		-			100,000
Accounts receivable, net		5,957,642			240,800,000		(240,800,000	)(b)		-			5,957,642
Inventory		13,052,840			124,300,000		5,919,849	(b), (e)		-			143,272,689
Derivative commodity asset		363,590			-		-			-			363,590
Prepaid expenses and other current assets		6,719,497			115,000,000		(100,000,000	)(b)		-			21,719,497
Assets held for sale, current		90,474,740			-		-			-			90,474,740
Total current assets		241,115,559			480,100,000		(577,354,057	)		238,017,897			381,879,399
Non-current Assets
Fixed assets, net		11,660,545			255,500,000		(158,195,260	)(b)		-			108,965,285
Operating lease right-of-use assets		4,891,254			-		-			-			4,891,254
Intangible assets, net		331,965			-		-			-			331,965
Other assets		22,498,249			18,000,000		(28,000,000	(a), (b)		-			12,498,249
													-
TOTAL ASSETS		280,497,572			753,600,000		(763,549,317	)		238,017,897			508,566,152
LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current liabilities
Accounts payable		12,023,382			9,500,000		(9,500,000	)(b)		-			12,023,382
Accrued expenses		2,864,643			259,000,000		(259,000,000	)(b)		-			2,864,643
Finance lease-current		263,065			-		-			-			263,065
Operating lease-current		959,573			-		-			-			959,573
Current portion of long-term debt		1,047,081			-		-			-			1,047,081
Taxes (other than income tax) payable		-			800,000		(800,000	)(b)		-			-
Income Tax Payable		-			3,800,000		(3,800,000	)(b)		-			-
Environmental credits		-			113,400,000		(113,400,000	)(b)		-			-
Product  financing arrangement		-			-		-			124,310,602	(e)		124,310,602
Liabilities held for sale, current		41,696,760			-		-			-			41,696,760
Total current liabilities		58,854,504			386,500,000		(386,500,000	)		124,310,602			183,165,106
Long-term liabilities
Long-term debt		104,777			-		-			90,086,382	(c)		90,191,159
Convertible Senior unsecured notes due 2027, net		65,786,685			-		-			-			65,786,685
Finance lease liability - long-term		-			9,400,000		(9,400,000	)(b)		-			-
Operating lease liability - long-term		3,931,681			-		-			-			3,931,681
Environmental Obligation		-			1,200,000		(1,200,000	)(b)		-			-
Derivative warrant liability		-			-		-			23,620,913	(c)		23,620,913
Total liabilities		128,677,647			397,100,000		(397,100,000	)		238,017,897			366,695,544
TEMPORARY EQUITY
Redeemable non-controlling interest		47,636,617			-		-			-			47,636,617
Total temporary equity		47,636,617			-		-			-			47,636,617
EQUITY
Net parent investment		-			356,500,000		(356,500,000	)(b)		-			-
Series A Convertible Preferred stock		381			-		-			-			381
Common stock		64,466			-		-			-			64,466
Additional paid-in capital		217,734,093			-		-			-			217,734,093
Retained earnings (accumulated deficit)		(115,582,890	)		-		(9,949,317	)(d)		-			(125,532,207	)
Total Vertex Energy, Inc. stockholders’ equity		102,216,050			356,500,000		(366,449,317	)		-			92,266,733
Non-controlling interest		1,967,258			-		-			-			1,967,258
Total equity		104,183,308			356,500,000		(366,449,317	)		-			94,233,991
TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY	$	280,497,572		$	753,600,000	$	(763,549,317	)	$	238,017,897		$	508,566,152

2 

VERTEX ENERGY, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2022

	Vertex			Mobile Refinery and			Transaction			Other Transaction
	Consolidated			Logistics Assets			Accounting			Accounting			Combined
	Historical			Historical			Adjustments			Adjustments			Pro Forma
Revenues	$	40,216,796		$	750,900,000		$	-		$	-		$	791,116,796
Cost of revenues		38,565,484			660,600,000			-			-			699,165,484
Depreciation and amortization expense attributable to COGS		114,053			6,400,000			(5,294,750	)(f)		-			1,219,303
Gross profit		1,537,259			83,900,000			5,294,750			-			90,732,009
Operating expenses:
Selling, general and administrative expenses		8,782,395			9,100,000			-			-			17,882,395
Depreciation and amortization expense attributable to operating exp		26,916			-			-			-			26,916
Total operating expenses		8,809,311			9,100,000			-			-			17,909,311
Income (loss) from operations		(7,272,052	)		74,800,000			5,294,750			-			72,822,698
Other income (expense):
Other income (expense)		414,972			-			-						414,972
Gain on sale of assets		57,402			-			-			-			57,402	)
Loss on change in value of derivative warrant liability		(3,578,947	)		-			-			-			(3,578,947	)
Interest expense		(4,229,884	)		(200,000	)		200,000	(i)		(11,097,527	)(k)		(15,327,411	)
Total other income (expense)		(7,336,457	)		(200,000	)		200,000			(11,097,527	)		(18,433,984	)
Income (loss) before income taxes		(14,608,509	)		74,600,000			5,361,250			(11,097,527	)		54,388,714
Income tax (expense) benefit		-			(19,500,000	)		2,680,102	(j)		2,330,481	(k)		(14,489,417)
Net income (loss) continuing operations		(14,608,509	)		55,100,000			8,174,852			(8,767,046	)		39,899,297
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations		(68,164	)											(68,164	)
Accretion of redeemable noncontrolling interest to redemption value		(421,399	)		-			-			-			(421,399	)
Net income (loss) available to Common Shareholders continuing Operations	$	(14,961,744	)	$	55,100,000		$	8,174,852		$	(8,767,046	)	$	39,546,062
Basic income (loss) per common share - continuing Operations	$	(0.24	)										$	0.62
Diluted income (loss) per common share - continuing Operations	$	(0.24	)										$	0.42
Shares used in computing earnings/(loss) per common share
Basic		63,372,005												63,372,005
Diluted		63,372,005												103,677,324

3 

VERTEX ENERGY, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2021

	Vertex			Mobile Refinery and			Transaction			Other Transaction
	Consolidated			Logistics Assets			Accounting			Accounting			Combined
	Historical			Historical			Adjustments			Adjustments			Pro Forma
Revenues	$	115,781,375		$	1,975,500,000		$	-		$	-		$	2,091,281,375
Cost of revenues		110,720,368			1,929,500,000			-			-			2,040,220,368
Depreciation and amortization expense attributable to COGS		486,428			26,800,000			(22,379,000	)(f)		-			4,907,428
Gross profit		4,574,579			19,200,000			22,379,000			-			46,153,579
Operating expenses:
Selling, general and administrative expenses		17,732,690			53,800,000			4,349,317	(g), (h)		-			75,882,007
Loss on assets impairment		2,123,703			-			-			-			2,123,703
Depreciation and amortization expense attributable to operating exp		107,664			-			-			-			107,664
Total operating expenses		19,964,057			53,800,000			4,349,317			-			78,113,374
Income (loss) from operations		(15,389,478	)		(34,600,000	)		18,029,683			-			(31,959,795	)
Other income (expense):
Other income (expense)		4,222,000			-			-						4,222,000
Loss on sale of assets		(64,278	)		-			-			-			(64,278	)
Gain on change in value of derivative warrant liability		(15,685,355	)		-			-			-			(15,685,355	)
Interest expense		(3,487,448	)		(800,000	)		800,000	(i)		(44,390,107	)(k)		(47,877,555	)
Total other income (expense)		(15,015,081	)		(800,000	)		800,000			(44,390,107	)		(59,405,188	)
Loss before income taxes		(30,404,559	)		(35,400,000	)		18,829,683			(44,390,107	)		(91,364,983	)
Income tax benefit		-			9,600,000			(6,120,233	)(j)		9,321,922	(k)		12,801,689
Net loss continuing operations		(30,404,559	)		(25,800,000	)		12,709,450			(35,068,185	)		(78,563,294	)
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations		206,804												206,804
Accretion of redeemable noncontrolling interest to redemption value		(1,992,360	)		-			-			-			(1,992,360	)
Accretion of discount on Series B and B1 Preferred Stock		(507,282	)		-			-			-			(507,282	)
Dividends on Series B and B1 Preferred Stock		258,138			-			-			-			258,138
Net loss available to Common Shareholders continuing Operations	$	(32,852,867	)	$	(25,800,000	)	$	12,709,450		$	(35,068,185	)	$	(81,011,602	)
Basic and diluted loss per common share - continuing Operations	$	(0.58	)										$	(1.44	)
Shares used in computing earnings/(loss) per common share
basic and diluted		56,302,716												56,302,716

4 

1. DESCRIPTION OF TRANSACTION

Acquisition of Mobile Refinery and Logistics Assets

On May 26, 2021, Vertex Energy Operating LLC (“Vertex Operating”), a wholly-owned subsidiary of Vertex Energy Inc. (“Vertex Energy” and collectively with its consolidated subsidiaries including Vertex Operating, the “Company”), entered into a definitive Sale and Purchase Agreement (the “Refinery Purchase Agreement”) with Equilon Enterprises LLC d/b/a Shell Oil Products US and/or Shell Chemical LP and/or Shell Oil Company (“Shell”), to purchase the Mobile, Alabama refinery (“Mobile Refinery”), certain real property associated therewith, and related assets, including all inventory at the refinery as of closing and certain equipment, rolling stock, and other personal property associated with the Mobile refinery (collectively, the “Mobile Acquisition”). The Mobile refinery is located on an 800+ acre site in the city and county of Mobile, Alabama. The 91,000 barrel-per-day nameplate capacity Mobile refinery is capable of sourcing a flexible mix of cost-advantaged light-sweet domestic and international feedstocks. Approximately 70% of the refinery’s current annual production is distillate, gasoline and jet fuel, with the remainder being vacuum gas oil, liquefied petroleum gas (LPG) and other products. The facility distributes its finished product across the south-eastern United States through a high-capacity truck rack, together with deep and shallow water distribution points capable of supplying waterborne vessels.

On April 1, 2022 (the “Effective Date”), Vertex Operating assigned its rights to the Refinery Purchase Agreement to Vertex Refining Alabama LLC, a Delaware limited liability company (“Vertex Refining”) which is indirectly wholly-owned by the Company and on the same date, Vertex Refining completed the Mobile Acquisition. On the Effective Date, a total of $75.0 million (less $10 million previously paid) was paid by Vertex Refining in consideration for the acquisition of the Mobile Refinery, which amount is subject to customary purchase price adjustments, $15.9 million was paid to Shell for previously agreed upon capital expenditures and miscellaneous prepaid and reimbursable items, and $130.2 million was paid to Shell by Vertex Refining in connection with the purchase of certain crude oil inventory and finished products owned by Shell and located at the Mobile Refinery on the Effective Date (approximately $124.3 million of which was funded by Macquarie Energy North America Trading Inc., a Delaware corporation (“Macquarie”) as a result of the simultaneous sale of such inventory to Macquarie pursuant to an Inventory Sales Agreement between Vertex Refining and Macquarie). The transaction with Macquarie was accounted for as a product financing agreement in connection with the financing of the Mobile Acquisition. The Company also paid $8.7 million at closing pursuant to the terms of a Swapkit Purchase Agreement entered into with Shell on May 26, 2021 (the “Swapkit Agreement”), pursuant to which the Company agreed to fund a technology solution comprising the ecosystem required for the Company to run the Mobile Refinery after closing (the “Swapkit”). The purchase price allocation is pending and subject to change based upon the finalization of a third party valuation report. The Company did not assume any liabilities of the Mobile Refinery as part of the Mobile Acquisition.

Following the closing of the Mobile Acquisition, the Company (through one or more of its subsidiaries and affiliates) plans to complete an $85 million capital project designed to modify the Mobile Refinery’s hydrocracking unit to produce renewable diesel fuel on a standalone basis.

Funds for the purchase of the Mobile Refinery, Swapkit Agreement, provision of cash collateral required pursuant to terms of the Supply and Offtake Agreement (discussed below), capital expenditures and transaction expenses, came from funds previously held in escrow in connection with our November 2021 sale of $155 million principal at maturity of Convertible Senior Notes ($100.4 million), a $125 million senior term loan and cash on hand. Immediately following the transactions described above, including the term loan, and other ancillary transactions, our unrestricted cash increased by approximately $96 million, which funds are anticipated to be used for (i) the planned renewable diesel conversion of the Mobile Refinery, and (ii) working capital and liquidity needs.

5

Supply and Offtake Agreement

On April 1, 2022 (the “Commencement Date”), Vertex Refining entered into a Supply and Offtake Agreement (the “Supply and Offtake Agreement”) with Macquarie, pertaining to crude oil supply and offtake of finished products located at the Mobile Refinery acquired on April 1, 2022. On the Commencement Date, pursuant to an Inventory Sales Agreement and in connection with the Supply and Offtake Agreement, Macquarie purchased from Vertex Refining all crude oil and finished products within the categories covered by the Supply and Offtake Agreement and the Inventory Sales Agreement, which were held at the Mobile Refinery and a certain specified third party storage terminal, which were previously purchased by Vertex Refining as part of the acquisition of the Mobile Refinery as discussed in greater detail above.

Pursuant to the Supply and Offtake Agreement, beginning on the Commencement Date and subject to certain exceptions, substantially all of the crude oil located at the Mobile Refinery and at a specified third party storage terminal from time to time, will be owned by Macquarie prior to its sale to Vertex Refining for consumption within the Mobile Refinery processing units. Also pursuant to the Supply and Offtake Agreement, and subject to the terms and conditions and certain exceptions set forth therein, Macquarie will purchase from Vertex Refining substantially all of the Mobile Refinery’s output of certain refined products and will own such refined products while they are located within certain specified locations at the Mobile Refinery. Macquarie will have title to and risk of loss of crude oil and refined products purchased from Vertex Refining while within certain specified locations at the Mobile Refinery and a specified third party storage terminal.

The obligations of Vertex Refining and any of its subsidiaries under the Supply and Offtake Agreement and related transaction documents are guaranteed by the Company. The obligations of Vertex Refining and any of its subsidiaries under the Supply and Offtake Agreement and related transaction documents are also secured by a Pledge and Security Agreement in favor of Macquarie, discussed below, executed by Vertex Refining. In addition, the Supply and Offtake Agreement also requires that Vertex Refining post and maintain cash collateral (in the form of an independent amount) as security for Vertex Refining’s obligations under the Supply and Offtake Agreement and the related transaction documents. The amount of cash collateral is subject to adjustments during the term.

The Supply and Offtake Agreement has a 24-month term following the Commencement Date, subject to the performance of customary covenants, and certain events of default and termination events provided therein (certain of which are discussed in greater detail below), for a facility of this size and type. Additionally, either party may terminate the agreement at any time, for any reason, with no less than 180 days prior notice to the other.

The Supply and Offtake Agreement includes certain customary representations, warranties, indemnification obligations and limitations of liability of the parties for a facility of this size and type, and also requires Vertex Refining to be responsible for certain ancillary costs relating to the Supply and Offtake Agreement and the transactions contemplated thereby. The Supply and Offtake Agreement requires Vertex Refining to comply with various indemnity, insurance and tax obligations, and also includes a prohibition on any amendments to Vertex Refining’s financing agreements which, among other things, adversely affect Macquarie’s rights and remedies under the Supply and Offtake Agreement and related transaction documents without the prior consent of Macquarie; a prohibition on Vertex Refining entering into any financing agreement which would cause Vertex Refining’s specified indebtedness to exceed $10 million without Macquarie’s prior consent, subject to certain exceptions; and a requirement that Vertex Refining not have less than $17.5 million in unrestricted cash for any period of more than three consecutive business days. The Supply and Offtake Agreement includes events of default and termination events, including if the Company ceases to beneficially own, directly or indirectly, 100% of the capital stock of Vertex Refining; the change in ownership of the Company or Vertex Refining resulting in one person or group acquiring 50% or more of the capital stock of the Company or Vertex Refining (as applicable); or a change in a majority of the Board of Directors of the Company or Vertex Refining during any 12 consecutive months, without certain approvals, including the approval of the Board of Directors of the Company or Vertex Refining (as applicable) immediately prior to such change; and a cross default to indebtedness (other than indebtedness under financing agreements) of the Company or Vertex Refining for over $20 million, a cross default to indebtedness under financing agreements of Vertex Refining or the Company, or a final judgment or order being rendered against Vertex Refining or the Company in an amount exceeding $20 million.

The price for crude oil purchased by the Company from Macquarie and for products sold by the Company to Macquarie within each agreed product group, in each case, is equal to a pre-determined benchmark, plus a pre-agreed upon differential, subject to adjustments and monthly true-ups.

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Vertex Refining will be required to pay Macquarie various monthly fees in connection with the Supply and Offtake Agreement and related arrangements, including, without limitation, (1) an inventory management fee, calculated based on the value of the inventory owned by Macquarie in connection with the Supply and Offtake Agreement, (2) a lien inventory fee based upon the value of certain inventory on which Macquarie has a lien, (3) a per barrel crude handling fee based upon the volume of crude oil Macquarie sells to Vertex Refining, (4) per barrel crude oil and products intermediation fees for each barrel of crude oil which Macquarie buys from a third party and each barrel of products Macquarie sells to a third party, in each case, in connection with the Supply and Offtake Agreement, and (5) a services fee in respect of which Macquarie agrees to make Crude Oil and Products available to the Company in accordance with the weekly nomination procedure as set forth in the Supply and Offtake Agreement. Vertex Refining will also be responsible for certain payments relating to Macquarie’s hedging of the inventory it owns in connection with the Supply and Offtake Agreement, including the costs of rolling hedges forward each month, as well as any costs (or gains) resulting from a mismatch between the Company’s projected target inventory levels (which provide the basis for Macquarie’s hedge position) and actual month end inventory levels.

In connection with the entry into the Supply and Offtake Agreement, Vertex Refining entered into various ancillary agreements which relate to supply, storage, marketing and sales of crude oil and refined products including, but not limited to the following: Inventory Sales Agreement, Master Crude Oil and Products Agreement, Storage and Services Agreement, and a Pledge and Security Agreement (collectively with the Supply and Offtake Agreement, the “Supply Transaction Documents”). The Company agreed to guarantee the obligations of Vertex Refining and any of its subsidiaries arising under the Supply Transaction Documents pursuant to the entry into a Guaranty in favor of Macquarie.

Tripartite Agreements

Also on the Commencement Date, Vertex Refining, Macquarie and certain parties subject to crude oil supply and products offtake agreements with Vertex Refining, relating to the Mobile Refinery, entered into various tripartite agreements (the “Tripartite Agreements”), whereby Vertex Refining granted Macquarie the right, on a rolling daily or monthly basis, as applicable, to elect to assume Vertex Refining’s rights and obligations under such crude oil supply and products offtake agreements in connection with the performance of the Supply and Offtake Agreement, and the counterparties thereto are deemed to have consented to Macquarie’s assuming such obligations. Such Tripartite Agreements also provided for certain interpretations of the provisions of such supply and offtake agreements between Vertex Refining and such third parties in connection with Macquarie’s right to elect to assume Vertex Refining’s rights and obligations under such agreements. The Tripartite Agreements remain in place until the termination of the agreements to which they relate, or the earlier termination thereof as set forth in the Tripartite Agreements, including in the event of certain events of default by the parties thereto under the modified crude oil supply and products offtake agreements or the Supply and Offtake Agreement and related transaction documents and also in the event of the termination of the Supply and Offtake Agreement. Macquarie, Vertex Refining and a third party offtaker also entered into a tripartite agreement pursuant to which certain storage capacity within the Mobile Refinery which Macquarie had leased pursuant to the Storage and Services Agreement was effectively made available to such third party consistent with the terms agreed by such party and Vertex Refining in its underlying products offtake agreement. Macquarie, Vertex Refining and a third party storage terminal operator also entered into a tripartite agreement relating to the storage of Macquarie-owned crude oil in such terminal in connection with the Supply and Offtake Agreement.

Pledge and Security Agreement

In connection with the entry into the Supply and Offtake Agreement, Vertex Refining entered into a Pledge and Security Agreement in favor of Macquarie, pursuant to which it provided Macquarie a first priority security interest in all inventory, including all crude oil, product, and all proceeds with respect of the forgoing, subject to certain exceptions. The Pledge and Security Agreement includes customary representations, warranties and covenants of Vertex Refining for a facility of this size and type.

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Inventory Sales Agreement

On April 1, 2022, pursuant to an Inventory Sales Agreement entered into between Vertex Refining and Macquarie, Macquarie purchased all crude oil and finished products (including, jet fuel, diesel and gasoline) located at the Mobile Refinery and held in inventory on such date, which purchase was based on agreed upon market values (the “Mobile Refinery Inventory”) from Vertex Refining for $154 million (which funds, together with cash on hand, were used by Vertex Refining to purchase the Mobile Refinery Inventory from Shell, as discussed in detail above), which Mobile Refinery Inventory then became subject to the terms of the Supply and Offtake Agreement.

Crude Supply Agreement

On the Commencement Date, Vertex Refining and Shell Trading (US) Company (“STUSCO”) entered into a Crude Oil & Hydrocarbon Feedstock Supply Agreement (the “Crude Supply Agreement”) pursuant to which STUSCO agreed to sell to Vertex Refining, and Vertex Refining agreed to buy from STUSCO, all of the crude oil and hydrocarbon feedstock requirements of the Mobile Refinery, subject to certain exceptions set forth therein. The agreement provides that STUSCO is the exclusive supplier for the Mobile Refinery’s requirement for crude oil and hydrocarbon feedstock.

The initial term of the Crude Supply Agreement will continue for five (5) years beginning on the Commencement Date, unless earlier terminated, and will automatically renew for one (1) year renewal terms thereafter subject to timely notice of either party that it elects not to so renew.

Pursuant to the Crude Supply Agreement, STUSCO will procure crude oil based upon a monthly mandate from Vertex Refining as to the Mobile Refinery’s requirements for each delivery month, based on a pre-agreed price, based on internal market prices, subject in certain cases to markup.

Vertex Refining will prepay STUSCO for crude oil deliveries on a provisional basis during a predetermined delivery period during each delivery month, subject to final true up.

The Crude Supply Agreement also contains customary and typical general terms and conditions for transactions of this nature.

Pursuant to a tripartite agreement, Macquarie may intermediate Vertex Refining’s purchases of crude oil from STUSCO under the Crude Supply Agreement, from time to time, by assuming Vertex Refining’s rights and obligations under the Crude Supply Agreement in respect of purchases of crude oil and feedstock in a given delivery month. If Macquarie assumes Vertex Refining’s rights and obligations, Macquarie will be responsible for paying the purchase price for such crude oil and feedstocks to STUSCO in accordance with the terms of the tripartite agreement. In the event that Macquarie intermediates a purchase and sale, the terms and conditions for Vertex Refining’s payments to Macquarie for such crude oil and feedstocks will be determined pursuant to the Supply and Offtake Agreement.

Storage & Services Agreement

On the Commencement Date, Vertex Refining and Macquarie entered into a Storage & Services Agreement (the “Storage & Services Agreement”), whereby Vertex Refining granted Macquarie certain access, storage, usage and information rights in respect of the Mobile Refinery and certain storage facilities and agreed to provide Macquarie certain services in connection with, among other things, such rights under certain other agreements, including the Supply and Offtake Agreement and various tripartite agreements.

Pursuant to the Storage & Services Agreement, Macquarie will pay Vertex Refining a monthly storage fee for provision of the storage and related services.

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Pursuant to the Storage & Services Agreement, Macquarie will have the exclusive and uninterrupted license and right to use certain storage facilities specified in the Supply and Offtake Agreement (the “Included Locations”), including the right to inject, store and withdraw crude oil and products (as applicable) in and from the Included Locations. Vertex Refining will be responsible for the care, custody and control of, and will hold as bailee, the property of Macquarie and certain other eligible hydrocarbons which are held within the Included Locations, and will be solely responsible for pumping, unloading, receipt, movements, blending, transportation, storage, measuring, gauging, sampling, analysis, treatment, refining, loading, and delivery of and use of such property, subject to the terms of the Supply and Offtake Agreement and other applicable transaction documents.

Pursuant to the Storage & Services Agreement and in addition to customary services provided by a storage provider, Macquarie has appointed Vertex Refining to perform certain obligations assumed by Macquarie in connection with supply, offtake and exchange arrangements related to the Supply and Offtake Agreement and related transaction documents, including, without limitation, giving, receiving, accepting and rejecting nominations for delivering, loading, unloading, receiving and transporting crude oil and products; the provision of facilities for the delivery, loading, unloading and transportation of crude oil and products; arranging, coordinating quantity and quality sampling, measurements, analysis and inspections for crude oil and products; preparing and handling shipping documentation; providing information with respect to, and submitting claims in relation to, quality, quantity and demurrage; and notifying Macquarie of the occurrence of certain specified events. Vertex Refining periodically will be required to provide various reports to Macquarie regarding the inventory held in the Included Locations.

The Storage & Services Agreement includes certain accelerated export rights pursuant to which, upon the occurrence of certain events, including during the continuation of an event of default under the Supply and Offtake Agreement, Macquarie can instruct Vertex Refining to withdraw all or any amount of Macquarie’s property from the Included Locations. Macquarie has certain rights to inspect and access the Included Locations and conduct audits on accounting records and other documents maintained by Vertex Refining relating to the Storage & Services Agreement, in each case subject to the terms and conditions of the Storage & Services Agreement.

Vertex Refining will be required to maintain and operate the Included Locations in accordance with various customary covenants contained within the Storage & Services Agreement, including, without limitation, in respect of the maintenance of the Included Locations and related facilities, the standard of care pursuant to which Vertex Refining will perform services under the Storage & Services Agreement, insurance requirements, and compliance with laws. Vertex Refining made various representations and warranties to Macquarie which are required to continue to be met during the term of the agreement, which are customary and typical for storage agreements relating to an intermediation facility, including maintaining insurance. The Supply & Storage Agreement also includes certain customary limitations on liability and damages.

In addition to certain obligations to indemnify Macquarie for loss, damage or degradation of Macquarie’s property held at the Included Locations, Vertex Refining agreed to indemnify Macquarie against various liabilities which may arise relating to its performance under the Storage & Services Agreement, as well as, among other liabilities, any liabilities directly or indirectly arising from or in connection with environmental conditions at the facility, environmental law, required permits, and law applicable to the operation of Vertex Refining’s refinery and storage facilities.

The term of the Storage & Services Agreement will continue until the earlier to occur of (i) the date upon which all of Macquarie’s property in the Included Locations has been sold to Vertex Refining or another person or (ii) the date upon which Macquarie has certified that all of its property has been removed from the Included Locations.

ULSD/Gasoline Offtake Agreement

On the Commencement Date, Vertex Refining and Equilon Enterprises LLC, dba Shell Oil Products US (“Shell”) entered into a refined products offtake agreement for the sale of ultra low sulfur diesel (“ULSD”) and gasoline (the “ULSD/Gasoline Offtake Agreement”) pursuant to which Shell agreed to purchase from Vertex Refining, and Vertex Refining agreed to sell to Shell, ULSD and gasoline produced by the Mobile Refinery according to an agreed nomination and confirmation process, subject to certain exceptions set forth therein.

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The initial term of the ULSD/Gasoline Offtake Agreement will continue for five years beginning on the Commencement Date, unless earlier terminated as provided in the ULSD/Gasoline Offtake Agreement, and will automatically renew for one year renewal terms thereafter, unless terminated by either party by written notice as set forth therein.

With respect to purchases and sales of ULSD, during the first three years of the term, Shell is required to purchase and Vertex Refining is required to sell certain pre-determined amounts of barrels (subject to minimums and maximums) per month. Thereafter, Vertex Refining may elect to sell Shell the same amounts or certain other pre-determined amounts, at Shell’s option. Volumes in excess of the foregoing limits for ULSD may be sold subject to mutual agreement.

With respect to purchases and sales of gasoline, during the first three years of the term, Shell will purchase all gasoline produced at the refinery up to a certain maximum number of barrels per day, and all premium gasoline up to a pre-determined maximum number of barrels per day. Thereafter, Vertex Refining may elect to sell Shell the same amounts or certain pre-determined amounts of barrels (subject to minimums and maximums) per month, at Shell’s option. Volumes in excess of the foregoing limits for gasoline may be sold subject to mutual agreement.

In the event that Shell does not purchase and take delivery of certain required quantities of product nominated for purchase in a given month, Vertex Refining is entitled to sell the resulting shortfall volumes and obtain cover damages from Shell (excluding shortfall volumes resulting from force majeure events). In the event that Vertex Refining does not supply certain required quantities of product nominated for sale in a given month, Shell is entitled to procure replacement product to cover the shortfall volumes and obtain damages from Vertex Refining (excluding shortfall volumes resulting from force majeure events) in connection therewith.

Products will be provisionally priced and invoiced over certain pre-determined periods, subject to final true up. Prices will be calculated based upon published indices and an agreed fixed per gallon differentials.

The ULSD/Gasoline Offtake Agreement also contains customary and typical general terms and conditions for transactions of this nature.

2. BASIS OF PRESENTATION AND EARNINGS PER SHARE

The accompanying unaudited pro forma combined financial statements are based on the Company’s and the Mobile Refinery’s historical financial statements as adjusted to give effect to the pro forma adjustments necessary to reflect the Acquisition and the Company’s new debt issuance to finance the acquisition. The unaudited pro forma combined statement of operations for the three months ended March 31, 2022 and the year ended December 31, 2021, give effect to the Mobile Acquisition as if it had occurred on January 1, 2021 and the pro forma combined balance sheet as of March 31, 2022 gives effect to the Acquisition as if it had occurred on March 31, 2022.

Pro forma basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the periods presented. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock, stock options, warrants or convertible securities. Due to their anti-dilutive effect, the calculation of diluted earnings per share for the three months ended March 31, 2022 and the year ended December 31, 2021 excludes: 1) options to purchase 1,153,215 and 4,195,168 shares, respectively, of common stock, 2) warrants to purchase 2,024,246 and 2,750,000 shares, respectively, of common stock, 3) Series A Preferred Stock which is convertible into 0 and 385,601 shares of common stock, and 6) 0 and 36,214,960 shares of common stock which may be issued upon conversion of the Senior Convertible Notes, based on the initial maximum conversion rate of 233.6449 shares of the Company’s common stock per $1,000 principal amount of the Senior Convertible Notes.

The following is a reconciliation of the numerator and denominator for pro forma basic and diluted earnings per share for the three months ended March 31, 2022 and the year ended December 31, 2021:

	Three Months ended March 31, 2022		Year Ended December 31, 2021
Pro Forma Basic loss per Share
Numerator:
Pro forma net income (loss) available to common shareholders from continuing operations	$	39,440,597	$	(81,433,462	)
Denominator:
Pro forma weighted-average common shares outstanding		63,372,005		56,302,716
Pro forma basic earnings (loss) per share	$	0.62	$	(1.45	)
Pro Forma Diluted Earnings per Share
Numerator:
Pro forma net income (loss) available to common shareholders from continuing operations	$	39,440,597	$	(81,433,462	)
Addback: Interest on convertible notes		4,214,750		—
Pro forma net income (loss) available to common shareholders from continuing operations for diluted earnings per share	$	43,655,347	$	(81,433,462	)
Denominator:
Weighted-average shares outstanding		63,372,005		56,302,716
Effect of dilutive securities
Stock options		2,981,953		—
Warrants		725,754		—
Convertible notes		36,214,960		—
Preferred stock		382,652		—
Pro forma diluted weighted-average shares outstanding		103,677,324		56,302,716
Pro forma Diluted basic earnings (loss) per share	$	0.42	$	(1.45	)

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3. PRELIMINARY PURCHASE PRICE ALLOCATION

The preliminary purchase price for the Mobile Acquisition has been allocated to the assets acquired and liabilities assumed for purposes of this pro forma financial information based on their estimated relative fair values. The purchase price allocation herein is preliminary. The final purchase price allocation for the Mobile Acquisition will be determined after completion of a thorough analysis to determine the fair value of all assets acquired and liabilities assumed but in no event later than one year following completion of the Mobile Acquisition. Accordingly, the final acquisition accounting adjustments could differ materially from the accounting adjustments included in the pro forma financial statements presented herein. Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company following the acquisition due to differences in purchase price allocation, depreciation and amortization related to some of these assets and liabilities.

The Mobile Acquisition is being accounted for as a business combination under Financial Accounting Standards Board Accounting Standards Codification (ASC) 805. The following information summarizes the provisional purchase consideration and preliminary allocation of the fair values assigned to the assets at the purchase date:

Preliminary Purchase Price:
Cash	$	227,524,589
Total preliminary purchase consideration	$	227,524,589
Preliminary Purchase Price Allocation
Inventory	$	130,219,849
Property, plant and equipment		97,304,740
Net assets acquired	$	227,524,589

The purchase consideration consists of the agreed upon purchase price of $75.0 million, the value of inventory of $164.5 million, and reimbursements related to capital expenditures made by Shell of $22.3 million, including new information technology costs related to operating the refinery assets.

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4. PRO FORMA ADJUSTMENTS – MOBILE ACQUISITION

The unaudited pro forma combined statements of operations and balance sheets reflect the effect of the following pro forma adjustments:

(a) Net pro forma impact to cash as follows:

Net proceeds from issuance of long-term debt	$	113,707,295
Cash released from escrow related to the Company’s November 2021 convertible notes		100,396,998
Cash proceeds from product financing agreement		124,310,602
Cash purchase price of Mobile Acquisition, net of $10.0 million previously paid		(217,524,589	)
Initial payment to Macquarie under Supply and Offtake Agreement		(15,000,000	)
Transaction costs associated with the Mobile Acquisition		(9,949,317	)
Net pro forma impact to cash	$	95,940,989

(b) Estimated preliminary purchase price allocation as discussed in Note 3.

(c) New long-term debt from the Company’s issuance of $125,000,000 in senior notes payable, $90,086,382 net of original issue discount, debt discount and deferred financing costs. The senior notes will bear interest at an estimated variable rate of 11.25%. Additionally, the Company granted warrants to purchase 2,750,000 shares of the Company’s common stock at an estimated value of $23,620,913, which was recorded as debt discount, in connection with the sale of the senior notes payable.

(d) Estimated transaction costs paid at closing.

(e) Adjustment to reflect the product financing of $154.3 million of the inventory purchased from Shell pursuant to the supply and offtake agreement.

(f) Adjustment to depreciation expense based on expected useful lives and the estimated fair value of the property and equipment acquired.

(g) Adjustment for loss on disposal of non-current assets incurred by Mobile Refinery of $5,600,000.

(h) Adjustment for transaction costs of $9,949,317 incurred by the Company at closing. These costs will not affect the Company’s statement of operations beyond 12 months after the acquisition date.

(i) Adjustment to remove interest expense on loans not assumed as part of Mobile Acquisition.

(j) Estimate income tax effect of transaction accounting adjustments as follows:

For the year ended December 31, 2021:

Historical tax benefit of Mobile Refinery			$	9,600,000
Estimated pre-tax loss of Mobile Refinery after transaction adjustments discussed above	(16,570,317	)
Estimated tax benefit at federal tax rate of 21%				(3,479,767	)
Net pro forma impact to estimated tax benefit			$	6,120,233

For the three months ended March 31, 2022:

Historical tax expense of Mobile Refinery		$	(19,500,000	)
Estimated pre-tax income of Mobile Refinery after transaction adjustments discussed above	80,094,750
Estimated tax expense at federal tax rate of 21%			16,819,898
Net pro forma impact to estimated tax expense		$	2,708,137

(k) Estimated interest from new convertible senior notes and the revolving credit facility issued to finance the Mobile Acquisition   and estimated interest associated with the Macquarie product financing arrangement (based on an estimated annual rate of 7% according to the terms of the agreement), with an estimated tax effect based on an estimated federal rate of 21%

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XML

Cover	Apr. 01, 2022
Cover [Abstract]
Document Type	8-K/A
Amendment Flag	true
Amendment Description	This Amendment No. 3 to the Initial Report, which should be read together with the Initial Report, as amended by Amendment No. 1 and Amendment No. 2 thereto, is being filed solely to include additional financial statements relating to the Mobile Refinery and Logistics Assets as of, and for the three months ended March 31, 2022 and 2021, and to include pro forma financial information as of March 31, 2022, and for the three months ended March 31, 2022, which were not required to be included in the Initial Report, Amendment No. 1 or Amendment No. 2, thereto. The Company is providing this information so that it may be incorporated by reference into a prospectus included within a Form S-3 being filed today by the Company.
Document Period End Date	Apr. 01, 2022
Entity File Number	001-11476
Entity Registrant Name	VERTEX ENERGY, INC.
Entity Central Index Key	0000890447
Entity Tax Identification Number	94-3439569
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1331 Gemini Street
Entity Address, Address Line Two	Suite 250
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77058
City Area Code	(866)
Local Phone Number	660-8156
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	VTNR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false