(State or other jurisdiction of | (I.R.S. Employer Identification No.) | ||||
incorporation or organization) | |||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $0.001 Par Value Per Share | ||||||||
(Nasdaq Capital Market) |
Large accelerated filer | ☐ | ☒ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Page | |||||||||||
PART I | |||||||||||
Item 1. | |||||||||||
F-1 | |||||||||||
F-3 | |||||||||||
F-5 | |||||||||||
F-7 | |||||||||||
F-9 | |||||||||||
Item 2 | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. |
June 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Derivative commodity asset | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Assets held for sale, current | |||||||||||
Total current assets | |||||||||||
Fixed assets, at cost | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Fixed assets, net | |||||||||||
Finance lease right-of-use assets | |||||||||||
Operating lease right-of use assets | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES, TEMPORARY EQUITY, AND EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Finance lease liability-current | |||||||||||
Operating lease liability-current | |||||||||||
Current portion of long-term debt, net | |||||||||||
Obligations under inventory financing agreements, net | |||||||||||
Derivative commodity liability | |||||||||||
Liabilities held for sale, current | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net | |||||||||||
Finance lease liability-long-term | |||||||||||
Convertible senior unsecured note 2027, net | |||||||||||
Operating lease liability-long-term | |||||||||||
Derivative warrant liability | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
COMMITMENTS AND CONTINGENCIES (Note 3) |
June 30, 2022 | December 31, 2021 | ||||||||||
TEMPORARY EQUITY | |||||||||||
Redeemable non-controlling interest | |||||||||||
Total temporary equity | |||||||||||
EQUITY | |||||||||||
Series A Convertible Preferred Stock, $ | |||||||||||
Series C Convertible Preferred Stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total Vertex Energy, Inc. shareholders' equity | |||||||||||
Non-controlling interest | |||||||||||
Total equity | |||||||||||
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | ||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Other income | ||||||||||||||||||||||||||
Loss on change in value of derivative warrant liability | ( | ( | ( | ( | ||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Total other expense | ( | ( | ( | ( | ||||||||||||||||||||||
Loss from continuing operations before income tax | ( | ( | ( | ( | ||||||||||||||||||||||
Income tax benefit (expense) | ||||||||||||||||||||||||||
Loss from continuing operations | ( | ( | ( | ( | ||||||||||||||||||||||
Income from discontinued operations, net of tax (see note 16) | ||||||||||||||||||||||||||
Net loss | ( | ( | ( | ( | ||||||||||||||||||||||
Net income attributable to non-controlling interest and redeemable non-controlling interest from continuing operations | ||||||||||||||||||||||||||
Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations | ||||||||||||||||||||||||||
Net loss attributable to Vertex Energy, Inc. | ( | ( | ( | ( | ||||||||||||||||||||||
Accretion of redeemable noncontrolling interest to redemption value from continued operations | ( | ( | ( | ( | ||||||||||||||||||||||
Accretion of discount on Series B and B1 Preferred Stock | ( | ( | ||||||||||||||||||||||||
Dividends on Series B and B1 Preferred Stock | ||||||||||||||||||||||||||
Net loss attributable to shareholders from continuing operations | ( | ( | ( | ( |
Net income attributable to shareholders from discontinued operations, net of tax | ||||||||||||||||||||||||||
Net loss attributable to common shareholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Basic income (loss) per common share | ||||||||||||||||||||||||||
Continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Discontinued operations, net of tax | ||||||||||||||||||||||||||
Basic income (loss) per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Diluted income (loss) per common share | ||||||||||||||||||||||||||
Continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Discontinued operations, net of tax | ||||||||||||||||||||||||||
Diluted income (loss) per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Shares used in computing earnings per share | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted |
Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Series A Preferred | Series C Preferred | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | $ | Shares | $ | Shares | $ | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance on January 1, 2022 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series A Preferred stock to common | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of derivative liabilities | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance on March 31, 2022 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common- unissued | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution to noncontrolling shareholder | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non controlling interest | — | — | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Convertible Senior Notes to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series A Preferred stock to common | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance on June 30, 2022 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Series A Preferred | Series C Preferred | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | $ | Shares | $ | Shares | $ | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance on January 1, 2021 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of B1 warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchanges of Series B Preferred stock to common | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance on March 31, 2021 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common- unissued | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leverage Lubricants contribution | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of B1 warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of B1 warrants-unissued | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series A Preferred stock to common | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B Preferred stock to common-unissued | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance on June 30, 2021 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended | |||||||||||
June 30, 2022 | June 30, 2021 | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Income from discontinued operations, net of tax | |||||||||||
Loss from continuing operations | ( | ( | |||||||||
Adjustments to reconcile net loss from continuing operations to cash provided by (used in) operating activities, net of acquisitions | |||||||||||
Stock based compensation expense | |||||||||||
Depreciation and amortization | |||||||||||
Gain on forgiveness of debt | ( | ||||||||||
Gain on sale of assets | ( | ( | |||||||||
Provision for environment clean up | |||||||||||
Increase (reduction) of allowance for bad debt | ( | ||||||||||
Increase in fair value of derivative warrant liability | |||||||||||
Loss on commodity derivative contracts | |||||||||||
Net cash settlements on commodity derivatives | ( | ( | |||||||||
Amortization of debt discount and deferred costs | |||||||||||
Changes in operating assets and liabilities, net of acquisition | |||||||||||
Accounts receivable and other receivables | ( | ( | |||||||||
Inventory | ( | ( | |||||||||
Prepaid expenses and other current assets | ( | ||||||||||
Accounts payable | |||||||||||
Accrued expenses | ( | ||||||||||
Other assets | ( | ( | |||||||||
Net cash used in operating activities from continuing operations | ( | ( | |||||||||
Cash flows from investing activities | |||||||||||
Acquisition of business, net of cash | ( | ||||||||||
Software purchase | ( | ||||||||||
Purchase of fixed assets | ( | ( | |||||||||
Proceeds from sale of fixed assets | |||||||||||
Net cash used in investing activities from continuing operations | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Payments on finance leases | ( | ( | |||||||||
Proceeds from exercise of options and warrants to common stock | |||||||||||
Distributions to noncontrolling interest | ( | ||||||||||
Net borrowings on inventory financing agreements | |||||||||||
Line of credit proceeds, net | |||||||||||
Redemption of noncontrolling interest | ( | ||||||||||
Proceeds from note payable, net | |||||||||||
Payments on note payable | ( | ( | |||||||||
Net cash provided by financing activities from continuing operations | |||||||||||
Discontinued operations: | |||||||||||
Net cash provided by operating activities | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net cash provided by discontinued operations | |||||||||||
Net change in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents, and restricted cash at beginning of the period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
SUPPLEMENTAL INFORMATION | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid for taxes | $ | $ | |||||||||
NON-CASH INVESTING AND FINANCING TRANSACTIONS | |||||||||||
Equity component of the convertible note issuance | $ | $ | |||||||||
Conversion of Series B Preferred Stock into common stock | $ | $ | |||||||||
Conversion of Series B1 Preferred Stock into common stock | $ | $ | |||||||||
Exchanges of Series B Preferred Stock into common stock | $ | $ | |||||||||
Accretion of discount on Series B and B1 Preferred Stock | $ | $ | |||||||||
Dividends-in-kind accrued on Series B and B1 Preferred Stock | $ | $ | ( | ||||||||
Conversion of Convertible Senior Notes to common stock | $ | $ | |||||||||
Equipment acquired (disposed) under leases | $ | $ | |||||||||
Accretion of redeemable noncontrolling interest to redemption value | $ | $ | |||||||||
June 30, 2022 | December 31, 2021 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows | $ | $ |
As of and for the Six Months Ended | |||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||
% of Revenues | % of Receivables | % of Revenues | % of Receivables | ||||||||||||||||||||
Customer 1 | |||||||||||||||||||||||
Customer 2 | |||||||||||||||||||||||
Customer 3 | |||||||||||||||||||||||
% of Revenue by Segment | % Revenue by Segment | ||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||
Black Oil | Refining | Recovery | Black Oil | Refining | Recovery | ||||||||||||||||||||||||||||||
Customer 1 | |||||||||||||||||||||||||||||||||||
Customer 2 | |||||||||||||||||||||||||||||||||||
Customer 3 | |||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2022 | |||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | ||||||||||||||||||||
Primary Geographical Markets | |||||||||||||||||||||||
Southern United States | $ | $ | $ | $ | |||||||||||||||||||
Sources of Revenue | |||||||||||||||||||||||
Gasolines | |||||||||||||||||||||||
Jet Fuels | |||||||||||||||||||||||
Diesel | |||||||||||||||||||||||
Pygas | |||||||||||||||||||||||
Oil collection services | |||||||||||||||||||||||
Metals | |||||||||||||||||||||||
Other refinery products | |||||||||||||||||||||||
VGO/Marine fuel sales | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
Three Months Ended June 30, 2021 | |||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | ||||||||||||||||||||
Primary Geographical Markets | |||||||||||||||||||||||
Southern United States | $ | $ | $ | $ | |||||||||||||||||||
Sources of Revenue | |||||||||||||||||||||||
Gasolines | |||||||||||||||||||||||
Diesel | |||||||||||||||||||||||
Pygas | |||||||||||||||||||||||
Industrial fuel | |||||||||||||||||||||||
Oil collection services | |||||||||||||||||||||||
Metals | |||||||||||||||||||||||
Other refinery products | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
Six Months Ended June 30, 2022 | |||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | ||||||||||||||||||||
Primary Geographical Markets | |||||||||||||||||||||||
Southern United States | $ | $ | $ | $ | |||||||||||||||||||
Sources of Revenue | |||||||||||||||||||||||
Gasolines | |||||||||||||||||||||||
Jet Fuels | |||||||||||||||||||||||
Diesel | |||||||||||||||||||||||
Pygas | |||||||||||||||||||||||
Industrial fuel | |||||||||||||||||||||||
Oil collection services | |||||||||||||||||||||||
Metals | |||||||||||||||||||||||
Other refinery products | |||||||||||||||||||||||
VGO/Marine fuel sales | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
Six Months Ended June 30, 2021 | |||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | ||||||||||||||||||||
Primary Geographical Markets | |||||||||||||||||||||||
Southern United States | $ | $ | $ | $ | |||||||||||||||||||
Sources of Revenue | |||||||||||||||||||||||
Gasolines | |||||||||||||||||||||||
Diesel | |||||||||||||||||||||||
Pygas | |||||||||||||||||||||||
Industrial fuel | |||||||||||||||||||||||
Oil collection services | |||||||||||||||||||||||
Metals | |||||||||||||||||||||||
Other refinery products | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
Accounts receivable trade | $ | $ | |||||||||
Allowance for doubtful accounts | ( | ( | |||||||||
Accounts receivable trade, net | $ | $ |
Creditor | Loan Type | Balance on June 30, 2022 | Balance on December 31, 2021 | ||||||||||||||
Term Loan 2025 | Loan | $ | $ | ||||||||||||||
John Deere Note | Note | ||||||||||||||||
AVT Equipment Lease-HH | Finance Lease | ||||||||||||||||
SBA Loan | SBA Loan | ||||||||||||||||
VRA Finance Lease | Finance Lease | ||||||||||||||||
Various institutions | Insurance premiums financed | ||||||||||||||||
Principal amount of long-term debt and finance lease liabilities | |||||||||||||||||
Less: unamortized discount and deferred financing costs | ( | ||||||||||||||||
Total debt, net of unamortized discount and deferred financing costs | |||||||||||||||||
Less: current maturities, net of unamortized discount and deferred financing costs | ( | ( | |||||||||||||||
Long term debt and finance lease liabilities, net of current maturities | $ | $ |
Year Ended June 30, | Amount Due | |||||||
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total | $ |
Level Three Roll-Forward | ||||||||
2022 | ||||||||
Balance at beginning of period | $ | |||||||
April 1 warrants issued | ||||||||
May 26 warrants issued | ||||||||
Value of warrants exercised | ||||||||
Change in valuation of warrants | ||||||||
Balance at end of period | $ |
June 30, 2022 | ||||||||
Principal Amounts | $ | |||||||
Conversion of principal into common stock | ( | |||||||
Unamortized discount and issuance costs | ( | |||||||
Net Carrying Amount | $ |
Interest payable | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Thereafter | ||||||||||||||||||||||||||||||||
Interest payable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Basic and diluted loss per Share | ||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||
Net loss attributable to shareholders from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Net income attributable to shareholders from discontinued operations, net of tax | ||||||||||||||||||||||||||
Net loss attributable to common shareholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted-average common shares outstanding | ||||||||||||||||||||||||||
Continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Discontinued operations, net of tax | ||||||||||||||||||||||||||
Basic and diluted loss per share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
THREE MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Gasolines | $ | $ | $ | $ | ||||||||||||||||||||||
Jet Fuels | ||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||
Pygas | ||||||||||||||||||||||||||
Oil collection services | ||||||||||||||||||||||||||
Metals (1) | ||||||||||||||||||||||||||
Other refinery products (2) | ||||||||||||||||||||||||||
VGO/Marine fuel sales | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
THREE MONTHS ENDED JUNE 30, 2021 | ||||||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Gasolines | $ | $ | $ | $ | ||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||
Pygas | ||||||||||||||||||||||||||
Industrial fuel | ||||||||||||||||||||||||||
Oil collection services | ||||||||||||||||||||||||||
Metals (1) | ||||||||||||||||||||||||||
Other refinery products (2) | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit (loss) | ( | |||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Income (loss) from operations | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Gasoline | $ | $ | $ | $ | ||||||||||||||||||||||
Jet Fuels | ||||||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||
Pygas | ||||||||||||||||||||||||||
Industrial fuel | ||||||||||||||||||||||||||
Oil collection services | ||||||||||||||||||||||||||
Metals (1) | ||||||||||||||||||||||||||
Other refinery products (2) | ||||||||||||||||||||||||||
VGO/Marine fuel sales | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit (loss) | ( | |||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2021 | ||||||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Gasoline | $ | $ | $ | $ | ||||||||||||||||||||||
Diesel | ||||||||||||||||||||||||||
Pygas | ||||||||||||||||||||||||||
Industrial fuel | ||||||||||||||||||||||||||
Oil collection services | ||||||||||||||||||||||||||
Metals (1) | ||||||||||||||||||||||||||
Other refinery products (2) | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit (loss) | ( | |||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Income (loss) from operations | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
As of June 30, 2022 | ||||||||||||||
Contract Type | Contract Period | Weighted Average Strike Price (Barrels) | Remaining Volume (Barrels) | Fair Value | ||||||||||
(in thousands) | (in thousands) | |||||||||||||
Swap | Aug. 2022- Oct. 2022 | $ | $ | ( | ||||||||||
Options | Aug 2022 - Aug 2022 | $ | $ | |||||||||||
Futures | Aug 2022 - Aug 2022 | $ | $ | ( | ||||||||||
Futures | Sep 2022 - Sep 2022 | $ | $ | |||||||||||
Futures | June 2022 - June 2022 | $ | $ | |||||||||||
As of December 31, 2021 | ||||||||||||||
Contract Type | Contract Period | Weighted Average Strike Price (Barrels) | Remaining Volume (Barrels) | Fair Value | ||||||||||
(in thousands) | (in thousands) | |||||||||||||
Options | Dec. 2021-Mar. 2022 | $ | $ | |||||||||||
Futures | Dec. 2021-Mar. 2022 | $ | $ | |||||||||||
Futures | Dec. 2021-Mar. 2022 | $ | $ | ( | ||||||||||
Balance Sheet Classification | Contract Type | 2022 | 2021 | ||||||||
Crude oil options | $ | $ | |||||||||
Crude oil swaps | ( | ||||||||||
Crude oil futures | ( | ||||||||||
Derivative commodity assets (liabilities) | $ | ( | $ |
June 30, 2022 | |||||||||||||||||||||||
Facilities | Equipment | Plant | Total | ||||||||||||||||||||
Year 1 | $ | $ | $ | $ | |||||||||||||||||||
Year 2 | |||||||||||||||||||||||
Year 3 | |||||||||||||||||||||||
Year 4 | |||||||||||||||||||||||
Year 5 | |||||||||||||||||||||||
Thereafter | |||||||||||||||||||||||
Total lease payments | |||||||||||||||||||||||
Less: interest | ( | ( | ( | ( | |||||||||||||||||||
Present value of operating lease liabilities | $ | $ | $ | $ |
Remaining lease term and discount rate: | June 30, 2022 | |||||||
Weighted average remaining lease terms (years) | ||||||||
Lease facilities | ||||||||
Lease equipment | ||||||||
Lease plant | ||||||||
Weighted average discount rate | ||||||||
Lease facilities | % | |||||||
Lease equipment | % | |||||||
Lease plant | % | |||||||
June 30, 2022 | June 30, 2021 | |||||||
Beginning balance | $ | $ | ||||||
Net loss attributable to redeemable non-controlling interest | ( | ( | ||||||
Accretion of non-controlling interest to redemption value | ||||||||
Redemption of non-controlling interest | ( | |||||||
Ending balance | $ | $ |
June 30, 2022 | June 30, 2021 | |||||||
Beginning balance | $ | $ | ||||||
Net income attributable to redeemable non-controlling interest | ||||||||
Redemption of non-controlling interest | ( | |||||||
Ending balance | $ | $ |
Financing agreement | Vertex acquisition | Total | |||||||||||||||
Inventory | $ | $ | $ | ||||||||||||||
Prepaid assets | |||||||||||||||||
Fixed assets | |||||||||||||||||
Total purchase price | $ | $ | $ |
For Three Months Ended June 30, 2022 | |||||
Revenue | $ | ||||
Net loss | $ | ( |
For Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | $ | |||||||||
Net income (loss) | $ | $ | ( |
June 30, 2022 | ||||||||
Obligations under inventory financing agreement | $ | |||||||
Unamortized financing cost | ( | |||||||
Obligations under inventory financing agreement, net | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Cost of revenues (exclusive of depreciation shown separately below) | |||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative expenses (exclusive of acquisition related expenses) | |||||||||||||||||||||||
Depreciation and amortization expense attributable to operating expenses | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ||||||||||||||||||||
Total other expense | ( | ( | ( | ||||||||||||||||||||
Income before income tax | |||||||||||||||||||||||
Income tax benefit (expense) | |||||||||||||||||||||||
Income from discontinued operations, net of tax | $ | $ | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Accounts receivable, net | $ | $ | |||||||||
Inventory | |||||||||||
Prepaid expenses | |||||||||||
Total current assets | |||||||||||
Fixed assets, at cost | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Fixed assets, net | |||||||||||
Finance lease right-of-use assets | |||||||||||
Operating lease right-of use assets | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Assets held for sale | |||||||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable | |||||||||||
Accrued expenses | |||||||||||
Finance lease liability-current | |||||||||||
Operating lease liability-current | |||||||||||
Liabilities held for sale, current | $ | $ | |||||||||
Useful Life (in years) | June 30, 2022 | December 31, 2021 | |||||||||||||||
Equipment | $ | $ | |||||||||||||||
Furniture and fixtures | |||||||||||||||||
Leasehold improvements | |||||||||||||||||
Office equipment | |||||||||||||||||
Vehicles | |||||||||||||||||
Building | |||||||||||||||||
Land improvements | |||||||||||||||||
Construction in progress | |||||||||||||||||
Land | |||||||||||||||||
Total fixed assets | |||||||||||||||||
Less accumulated depreciation | ( | ( | |||||||||||||||
Net fixed assets | $ | $ |
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||||||||
Software | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Year 1 | $ | ||||
Year 2 | |||||
Year 3 | |||||
Thereafter | |||||
$ |
June 30, 2022 | December 31, 2021 | |||||||||||||
Accrued purchases | $ | $ | ||||||||||||
Accrued interest | ||||||||||||||
Accrued compensation and benefits | ||||||||||||||
Accrued income, real estate, sales and other taxes | ||||||||||||||
RINS liabilities | ||||||||||||||
Environmental liabilities - current | ||||||||||||||
$ | $ |
Black Oil(1) | Refining and Marketing(2) | Recovery(3) | |||||||||
Gasolines | X | ||||||||||
Jet Fuels | X | ||||||||||
Diesel | X | ||||||||||
Base oil | X | X | |||||||||
Pygas | X | ||||||||||
Industrial fuel | X | X | |||||||||
Oil collection services | X | ||||||||||
Metals | X | ||||||||||
Other refinery products | X | X | X | ||||||||
VGO/Marine fuel sales | X |
Three Months Ended June 30, 2022 | ||||||||||||||
Total Refining and Marketing | Mobile Refinery | |||||||||||||
Gross profit | $ | 3,614 | $ | 1,967 | ||||||||||
Operating expenses included in cost of revenues | 17,575 | 17,575 | ||||||||||||
Depreciation and amortization attributable to cost of revenues | 3,009 | 2,986 | ||||||||||||
Unrealized loss on hedging activities | 46,901 | 46,901 | ||||||||||||
Loss on inventory intermediation agreement | 23,180 | 23,180 | ||||||||||||
Refining gross margin | $ | 94,279 | $ | 92,609 | ||||||||||
Net loss from operations | $ | (20,719) | $ | (20,729) | ||||||||||
Depreciation and amortization | 3,745 | 3,722 | ||||||||||||
Unrealized loss on hedging activities | 46,901 | 46,901 | ||||||||||||
Loss on intermediation agreement | 23,180 | 23,180 | ||||||||||||
Acquisition costs | 9,078 | 9,078 |
Environmental reserve | 1,428 | 1,428 | ||||||||||||
Refining Adjusted EBITDA | $ | 63,613 | $ | 63,580 |
Three Months Ended June 30, 2022 | ||||||||
Statement of operations data: | ||||||||
Revenues | $ | 922,196 | ||||||
Cost of revenues | 917,243 | |||||||
Depreciation and amortization attributable to cost of revenues | 2,986 | |||||||
Gross profit | 1,967 | |||||||
Operating expenses: | ||||||||
Operating expenses | 21,960 | |||||||
Depreciation and amortization | 736 | |||||||
Total operating expenses | 22,696 | |||||||
Operating income (loss) | (20,729) | |||||||
Other income (expense) | ||||||||
Interest expense | (3,250) | |||||||
Other income, net | 18 | |||||||
Net loss | $ | (23,961) | ||||||
Adjusted EBITDA | $ | 63,580 | ||||||
Key performance indicators: | ||||||||
Sales volume (MBLs) | 6,468 | |||||||
Refining gross margin | $ | 92,608 | ||||||
Refining gross margin per bbl of throughput | 14.11 | |||||||
USGC 2-1-1 Crack Spread Per Barrel | 45.06 | |||||||
Operating expenses per bbl of throughput | $ | 3.35 |
Three Months Ended June 30, 2022 | ||||||||
Refinery Feedstocks (bpd) | ||||||||
Crude oil | 72,133 | |||||||
Total feedstocks | 72,133 | |||||||
Refinery Yields (bpd) |
Gasolines | 17,997 | |||||||
Distillates | 30,112 | |||||||
Other (1) | 23,646 | |||||||
Total average barrel yields per day | 71,755 |
Three Months Ended June 30, | $ Change - Favorable (Unfavorable) | % Change - Favorable (Unfavorable) | |||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Revenues | $ | 991,839 | $ | 30,228 | $ | 961,611 | 3,181 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 984,442 | 28,041 | (956,401) | (3,411) | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 3,122 | 116 | (3,006) | (2,591) | % | ||||||||||||||||||
Gross profit | 4,275 | 2,071 | 2,204 | 106 | % | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative expenses | 36,641 | 4,177 | (32,464) | (777) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 763 | 27 | (736) | (2,726) | % | ||||||||||||||||||
Total operating expenses | 37,404 | 4,204 | (33,200) | (790) | % | ||||||||||||||||||
Loss from operations | (33,129) | (2,133) | (30,996) | (1,453) | % | ||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | 18 | — | 18 | 100 | % | ||||||||||||||||||
Other income | 152 | 4,222 | (4,070) | (96) | % | ||||||||||||||||||
Gain on asset sales | — | — | — | — | % | ||||||||||||||||||
Loss on change in value of derivative warrant liability | (945) | (21,508) | 20,563 | 96 | % | ||||||||||||||||||
Interest expense | (47,722) | (139) | (47,583) | (34,232) | % | ||||||||||||||||||
Total other expense | (48,497) | (17,425) | (31,072) | (178) | % | ||||||||||||||||||
Loss from continuing operation before income tax | (81,626) | (19,558) | (62,068) | (317) | % | ||||||||||||||||||
Income tax benefit (expense) | — | — | — | — | % | ||||||||||||||||||
Loss from continuing operations | (81,626) | (19,558) | (62,068) | (317) | % | ||||||||||||||||||
Income from discontinued operations, net of tax | 17,844 | 3,601 | 14,243 | 396 | % | ||||||||||||||||||
Net loss | (63,782) | (15,957) | (47,825) | 79 | % | ||||||||||||||||||
Net income attributable to non-controlling interest and redeemable non-controlling interest from continuing operations | 165 | 243 | (78) | (32) | % | ||||||||||||||||||
Net income attributable to non-controlling interest and redeemable non-controlling from discontinued operations | 3,023 | 3,175 | (152) | (5) | % | ||||||||||||||||||
Net loss attributable to Vertex Energy, Inc. | $ | (66,970) | $ | (19,375) | $ | (47,595) | 116 | % | |||||||||||||||
Three Months Ended June 30, | $ Change - Favorable (Unfavorable) | % Change - Favorable (Unfavorable) | |||||||||||||||||||||
Black Oil Segment | 2022 | 2021 | |||||||||||||||||||||
Revenues | $ | 20,254 | $ | 155 | $ | 20,099 | 12,967 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 20,147 | 363 | (19,784) | (5,450) | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 31 | 19 | (12) | (63) | % | ||||||||||||||||||
Gross profit (loss) | 76 | (227) | 39,895 | 35 | % | ||||||||||||||||||
Selling general and administrative expense | 12,027 | 3,281 | (8,746) | (267) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 27 | 27 | — | — | % | ||||||||||||||||||
Loss from operations | $ | (11,978) | $ | (3,535) | $ | 48,641 | (239) | % | |||||||||||||||
Refining and Marketing Segment | |||||||||||||||||||||||
Revenues | $ | 966,390 | $ | 23,836 | $ | 942,554 | 3,954 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 959,767 | 22,248 | (937,519) | (4,214) | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 3,009 | 31 | (2,978) | (9,606) | % | ||||||||||||||||||
Gross profit | 3,614 | 1,557 | 2,057 | 132 | % | ||||||||||||||||||
Selling general and administrative expense | 23,597 | 687 | (22,910) | (3,335) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 736 | — | (736) | (100) | % | ||||||||||||||||||
Income (loss) from operations | $ | (20,719) | $ | 870 | $ | 25,703 | (2,481) | % | |||||||||||||||
Recovery Segment | |||||||||||||||||||||||
Revenues | $ | 5,195 | $ | 6,237 | $ | (1,042) | (17) | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 4,528 | 5,430 | 902 | 17 | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 82 | 66 | (16) | (24) | % | ||||||||||||||||||
Gross profit | 585 | 741 | (156) | (21) | % | ||||||||||||||||||
Selling general and administrative expense | 1,017 | 209 | (808) | (387) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | — | — | — | — | % | ||||||||||||||||||
Income (loss) from operations | $ | (432) | $ | 532 | $ | (964) | (181) | % | |||||||||||||||
Six Months Ended June 30, | $ Change - Favorable (Unfavorable) | % Change - Favorable (Unfavorable) | |||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||
Revenues | $ | 1,032,056 | $ | 55,273 | $ | 976,783 | 1,767 | % | |||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 1,023,008 | 50,850 | (972,158) | (1,912) | % | ||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 3,236 | 228 | (3,008) | (1,319) | % | ||||||||||||||||||||||||
Gross Profit | 5,812 | 4,195 | 1,617 | 39 | % | ||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | 45,423 | 7,035 | (38,388) | (546) | % | ||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 790 | 54 | (736) | (1,363) | % | ||||||||||||||||||||||||
Total operating expenses | 46,213 | 7,089 | (39,124) | (552) | % | ||||||||||||||||||||||||
Loss from operations | (40,401) | (2,894) | (37,507) | (1,296) | % | ||||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||||
Interest income | 18 | — | 18 | 100 | % | ||||||||||||||||||||||||
Other Income | 625 | 4,223 | (3,598) | (85) | % | ||||||||||||||||||||||||
Bargain purchase gain related to Omega acquisition | — | — | — | — | % | ||||||||||||||||||||||||
Loss on sale of assets | — | — | — | — | % | ||||||||||||||||||||||||
Loss on change in value of derivative liability | (4,524) | (23,288) | 18,764 | 81 | % | ||||||||||||||||||||||||
Gain (loss) on futures contracts | — | — | — | — | % | ||||||||||||||||||||||||
Interest expense | (51,952) | (251) | (51,701) | (20,598) | % | ||||||||||||||||||||||||
Total other expense | (55,833) | (19,316) | (36,517) | — | |||||||||||||||||||||||||
Loss before income taxes | (96,234) | (22,210) | (74,024) | (333) | % | ||||||||||||||||||||||||
Income tax (expense) benefit | — | — | — | — | % | ||||||||||||||||||||||||
Net loss from continuing operations | (96,234) | (22,210) | (74,024) | (333) | % | ||||||||||||||||||||||||
Income (loss) from discontinued operations (see Note 15) | 31,643 | 9,219 | 25,222 | 303 | % | ||||||||||||||||||||||||
Net income attributable to non-controlling interest and redeemable non-controlling interest from continued operations | 97 | 626 | (529) | (85) | % | ||||||||||||||||||||||||
Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations | 6,829 | 4,783 | 2,046 | 43 | % | ||||||||||||||||||||||||
Net loss attributable to Vertex Energy, Inc. | $ | (71,517) | $ | (18,400) | $ | (27,895) | (152) | % |
Six Months Ended June 30, | $ Change - Favorable (Unfavorable) | % Change - Favorable (Unfavorable) | ||||||||||||||||||||||||
Black Oil Segment | 2022 | 2021 | ||||||||||||||||||||||||
Revenues | $ | 21,804 | $ | 278 | $ | 21,526 | 7,743 | % | ||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 21,797 | 643 | (21,154) | (3,290) | % | |||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 47 | 39 | (8) | (21) | % | |||||||||||||||||||||
Gross loss | (40) | (404) | 364 | 90 | % | |||||||||||||||||||||
Selling, general and administrative expense | 19,438 | 5,223 | (14,215) | (272) | % | |||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 54 | 54 | — | — | % | |||||||||||||||||||||
Loss from operations | $ | (19,532) | $ | (5,681) | $ | (13,851) | (244) | % | ||||||||||||||||||
Refining Segment | ||||||||||||||||||||||||||
Revenues | $ | 1,001,109 | $ | 43,110 | $ | 957,999 | 2,222 | % | ||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 992,852 | 40,198 | (952,654) | (2,370) | % | |||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 3,033 | 63 | (2,970) | (4,714) | % | |||||||||||||||||||||
Gross profit | 5,224 | 2,849 | 2,375 | 83 | % | |||||||||||||||||||||
Selling, general and administrative expense | 24,721 | 1,447 | (23,274) | (1,608)% | ||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 736 | — | (736) | (100)% | ||||||||||||||||||||||
Income (loss) from operations | $ | (20,233) | $ | 1,402 | $ | (21,635) | (1,543)% | |||||||||||||||||||
Recovery Segment | ||||||||||||||||||||||||||
Revenues | $ | 9,143 | $ | 11,885 | $ | (2,742) | (23)% | |||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 8,357 | 10,009 | 1,652 | 17% | ||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 156 | 126 | (30) | (24)% | ||||||||||||||||||||||
Gross loss | 630 | 1,750 | (1,120) | (64)% | ||||||||||||||||||||||
Selling, general and administrative expense | 1,264 | 365 | (899) | (246)% | ||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | — | — | — | —% | ||||||||||||||||||||||
Loss from operations | $ | (634) | $ | 1,385 | $ | (2,019) | (146)% | |||||||||||||||||||
2022 | ||||||||||||||||||||||||||
Benchmark | High | Date | Low | Date | ||||||||||||||||||||||
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon) | $ | 4.36 | March 8 | $ | 2.15 | January 3 | ||||||||||||||||||||
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon) | $ | 4.35 | June 3 | $ | 2.26 | January 3 | ||||||||||||||||||||
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel) | $ | 112.93 | March 8 | $ | 67.84 | January 3 | ||||||||||||||||||||
NYMEX Crude oil (dollars per barrel) | $ | 123.70 | March 8 | $ | 76.08 | January 3 | ||||||||||||||||||||
Reported in Platt’s US Marketscan (Gulf Coast) |
2021 | ||||||||||||||||||||||||||
Benchmark | High | Date | Low | Date | ||||||||||||||||||||||
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon) | $ | 2.10 | June 22 | $ | 1.32 | January 4 | ||||||||||||||||||||
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon) | $ | 2.21 | June 23 | $ | 1.36 | January 4 | ||||||||||||||||||||
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel) | $ | 64.92 | June 25 | $ | 45.08 | January 4 | ||||||||||||||||||||
NYMEX Crude oil (dollars per barrel) | $ | 74.05 | June 25 | $ | 47.62 | January 4 | ||||||||||||||||||||
Reported in Platt’s US Marketscan (Gulf Coast) |
Creditor | Loan Type | Balance on June 30, 2022 | Balance on December 31, 2021 | |||||||||||||||||
Term Loan 2025 | Loan | $ | 165,000 | $ | — | |||||||||||||||
John Deere Note | Note | — | 93 | |||||||||||||||||
AVT Equipment Lease-HH | Finance Lease | — | 302 | |||||||||||||||||
SBA Loan | SBA Loan | 59 | 59 | |||||||||||||||||
VRA Finance lease | Finance Lease | 45,291 | — | |||||||||||||||||
Various institutions | Insurance premiums financed | 9,236 | 2,375 | |||||||||||||||||
Total | $ | 219,586 | $ | 2,829 | ||||||||||||||||
Creditor | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Thereafter | |||||||||||||||||||||||||||||
Totals | $ | 14,013 | $ | 9,514 | $ | 154,049 | $ | 1,605 | $ | 1,809 | $ | 38,596 | |||||||||||||||||||||||
June 30, 2022 | ||||||||
Principal Amounts | $ | 155,000 | ||||||
Conversion of principal into common stock | (59,822) | |||||||
Unamortized discount and issuance costs | (53,635) | |||||||
Net Carrying Amount | $ | 41,543 |
Interest payable | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Thereafter | ||||||||||||||||||||||||||||||||
Interest payable | $ | 6,572 | $ | 5,949 | $ | 5,949 | $ | 5,949 | $ | 5,949 | $ | 2,974 | ||||||||||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Beginning cash, cash equivalents and restricted cash | $ | 136,627 | $ | 10,995 | ||||||||||
Net cash provided by (used in): | ||||||||||||||
Operating activities | (88,194) | 5,045 | ||||||||||||
Investing activities | (230,211) | (2,745) | ||||||||||||
Financing activities | 279,792 | 1,772 | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (38,613) | 4,072 | ||||||||||||
Ending cash, cash equivalents and restricted cash | $ | 98,014 | $ | 15,067 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filed or Furnished Herewith | Form | Exhibit | Filing Date/Period End Date | File No. | ||||||||||||||||||||||||||||||||
2.1+£ | 8-K | 2.1 | 5/27/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
2.2 | 8-K | 2.2 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
4.1 | 8-K | 4.1 | 11/2/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
4.2 | 8-K | 4.2 | 11/2/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
4.3 | 8-K | 4.1 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
4.4 | 8-K | 4.1 | 5/27/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.1# | 8-K | 10.2 | 5/27/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.2 | 8-K | 10.1 | 7/2/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.3 | 8-K | 10.2 | 10/14/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.4 | 8-K | 10.1 | 3/3/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.5 | 8-K | 10.2 | 3/3/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.6 | 8-K | 10.3 | 3/3/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.7 | 8-K | 10.4 | 3/3/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.8 | 8-K | 10.1 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.9 | 8-K | 10.2 | 4/7/2022 | 001-11476 |
10.10 | 8-K | 10.3 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.11 | 8-K | 10.4 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.12 | 8-K | 10.5 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.13 | 8-K | 10.6 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.14 | 8-K | 10.7 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.15 | 8-K | 10.8 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.16 | 8-K | 10.11 | 4/7/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.17#£ | 8-K | 10.12 | 4/26/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.18 | 8-K | 10.13 | 4/26/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.19£ | 8-K | 10.14 | 4/26/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.20# | 8-K | 10.1 | 5/27/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.21 | 8-K | 10.2 | 5/27/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.22*** | 8-K | 10.1 | 6/14/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.23 | 8-K | 10.2 | 6/21/2022 | 001-11476 | ||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X |
32.2 | X | |||||||||||||||||||||||||||||||||||||
101* | Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q | X | ||||||||||||||||||||||||||||||||||||
101.INS* | Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | ||||||||||||||||||||||||||||||||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set | X |
VERTEX ENERGY, INC. | |||||
Date: August 8, 2022 | By: /s/ Benjamin P. Cowart | ||||
Benjamin P. Cowart | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: August 8, 2022 | By: /s/ Chris Carlson | ||||
Chris Carlson | |||||
Chief Financial Officer | |||||
(Principal Financial/Accounting Officer) |
Date: August 8, 2022 | By: | /s/ Benjamin P. Cowart | ||||||
Benjamin P. Cowart Chief Executive Officer (Principal Executive Officer) |
Date: August 8, 2022 | By: | /s/ Chris Carlson | ||||||
Chris Carlson Chief Financial Officer (Principal Financial/Accounting Officer) |
Date: August 8, 2022 | By: | /s/ Benjamin P. Cowart | ||||||
Benjamin P. Cowart Chief Executive Officer (Principal Executive Officer) |
Date: August 8, 2022 | By: | /s/ Chris Carlson | ||||||
Chris Carlson Chief Financial Officer (Principal Financial/Accounting Officer) |
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) |
Jun. 30, 2022
$ / shares
|
---|---|
Common stock, par value (in dollars per share) | $ 0.001 |
Preferred stock, par value (in dollars per share) | 0.001 |
Series A Preferred Stock | |
Preferred stock, par value (in dollars per share) | 0.001 |
Series C Preferred Stock | |
Preferred stock, par value (in dollars per share) | 0.001 |
Common Stock | |
Common stock, par value (in dollars per share) | $ 0.001 |
BASIS OF PRESENTATION AND NATURE OF OPERATIONS |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND NATURE OF OPERATIONS | BASIS OF PRESENTATION AND NATURE OF OPERATIONS The accompanying unaudited interim consolidated financial statements of Vertex Energy, Inc. (the "Company" or "Vertex Energy") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021, contained in the Company's annual report, as filed with the SEC on Form 10-K on March 11, 2022 (the "Form 10-K"). The December 31, 2021 balance sheet was derived from the audited financial statements of our 2021 Form 10-K. In the opinion of management all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented, have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the most recent fiscal year 2021 as reported in Form 10-K have been omitted. UMO Business On June 29, 2021, Vertex Energy entered into an Asset Purchase Agreement (the “Sale Agreement”) with Vertex Energy Operating, LLC, Vertex’s wholly-owned subsidiary (“Vertex Operating”) and Vertex Refining LA, LLC (“Vertex LA”) (wholly-owned by Vertex Operating), Vertex Refining OH, LLC (“Vertex Ohio”) (wholly-owned by HPRM, LLC, of which Vertex Energy currently owns a 100% interest)(“HPRM”), Cedar Marine Terminals, L.P. (“CMT”) (indirectly wholly-owned), and H & H Oil, L.P. (“H&H”) (indirectly wholly-owned)(collectively, the “Vertex Entities”, and together, Vertex, Vertex Operating and the Vertex Entities, the “Seller Parties”), as sellers, and Safety-Kleen Systems, Inc., as purchaser (“Safety-Kleen”). Pursuant to the Sale Agreement, the Company agreed to sell its used motor oil (UMO) business (the "UMO Business") to Safety-Kleen. During the third quarter of 2021, the Company classified the UMO Business as held for sale based on management’s intention and the Company’s shareholders’ approval to sell this business. The Company’s historical financial statements have been revised to present the operating results of the UMO business as discontinued operations. The results of operations of this business are presented as “Income (loss) from discontinued operations” in the statement of operations and the related cash flows of this business have been reclassified to discontinued operations for all periods presented. The assets and liabilities of the UMO Business have been reclassified to “Assets held for sale” and “Liabilities held for sale”, respectively, in the consolidated balance sheet for all periods presented. On January 24, 2022, each of the Company and its subsidiaries that were party to the Sale Agreement and Safety-Kleen, entered into an Asset Purchase Termination Agreement (the “Termination Agreement”) pursuant to which the Sale Agreement was terminated. Pursuant to the terms of the Termination Agreement, the Company agreed to pay a termination fee to Safety-Kleen of $3 million. Immediately upon receipt of such termination fee, which the Company paid simultaneously with the execution of the Termination Agreement, the Sale Agreement was terminated and is of no further force or effect, and with no further liability to any party thereunder, other than certain confidentiality obligations of the parties and ongoing liability for any willful or intentional breach of, or non-compliance with, the Sale Agreement. The Company is still exploring opportunities to sell the UMO Business and believes it will sell such assets within a year.
|
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES | SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows (in thousands).
The Company has placed $100 thousand of restricted cash in a money market account, to serve as collateral for payment of a credit card. As of December 31, 2021, a total of $100 million of restricted cash was held in an escrow account in connection with the issuance of the convertible notes, which was released in conjunction with the purchase of the Mobile Refinery (defined below) on April 1, 2022. Accounts Receivable Accounts receivable represents amounts due from customers. Accounts receivable are recorded at invoiced amounts, net of reserves and allowances, do not bear interest and are not collateralized. The Company uses its best estimate to determine the required allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, economic trends and conditions affecting its customer base, significant one-time events, and historical write-off experience. Specific provisions are recorded for individual receivables when we become aware of a customer’s inability to meet its financial obligations. The Company reviews the adequacy of its reserves and allowances quarterly. Receivable balances greater than 90 days past due are individually reviewed for collectability and if deemed uncollectible, are charged off against the allowance accounts after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance was $1 million and $1 million at June 30, 2022 and December 31, 2021, respectively. Inventory and Obligations Under Inventory Financing Agreements Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals. Commodity inventories, excluding commodity inventories at the Mobile Refinery (defined and discussed below under “Note 14. Share Purchase, Subscription Agreements and Mobile Refinery Acquisition — Mobile Refinery Acquisition”), are stated at the lower of cost or net realizable value using the first in, first out (FIFO) accounting method. Commodity inventories at the Mobile Refinery are stated at the lower of cost or net realizable value using the weighted average inventory accounting method. We value merchandise along with spare parts, materials, and supplies at average cost. Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for these sales. All of the crude oil utilized at the Mobile Refinery is financed by Macquarie Energy North America Trading Inc. ("Macquarie") under procurement contracts. The crude oil remains in the legal title of Macquarie and is stored in our storage tanks governed by a storage agreement. Legal title to the crude oil passes to us at the tank outlet. After processing, Macquarie takes title to the refined products stored in our storage tanks until they are sold to our retail locations or to third parties. We record the inventory owned by Macquarie on our behalf as inventory with a corresponding accrued liability on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we have an obligation to repurchase it. The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement occurs at the end of the reporting period. In connection with the consummation of the Mobile Acquisition (defined and discussed below under “Note 14. Share Purchase, Subscription Agreements and Mobile Refinery Acquisition — Mobile Refinery Acquisition”), the Company became a party to a Supply and Offtake Agreement with Macquarie. Under this arrangement, the Company purchases crude oil supplied from third-party suppliers and Macquarie provides credit support for certain of these purchases. Macquarie holds title to all crude oil and refined products inventories, except for liquefied petroleum gases or sulfur, at all times and pledges such inventories, together with all receivables arising from the sales of these inventories. The valuation of our terminal obligation requires that we make estimates of the prices and differentials for our then monthly forward purchase obligations. Impairment of long-lived assets The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company determined that no long-lived asset impairment existed during the six months ended June 30, 2022 and 2021. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations. Redeemable Noncontrolling Interests As more fully described in “Note 14. Share Purchase and Subscription Agreements”, the Company is party to put/call option agreements with the holder of Vertex Refining Myrtle Grove LLC (“MG SPV”) and HPRM LLC, a Delaware limited liability company (“Heartland SPV”), which entities were formed as special purpose vehicles in connection with the transactions described in greater detail below, non-controlling interests. The put options permit MG SPV's and Heartland SPV's non-controlling interest holders, at any time on or after the earlier of (a) the fifth anniversary of the applicable closing date of such issuances and (ii) the occurrence of certain triggering events (an “MG Redemption” and "Heartland Redemption", as applicable) to require MG SPV and Heartland SPV to redeem the non-controlling interest from the holder of such interest. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. Based on this guidance, the Company has classified the MG SPV and Heartland SPV non-controlling interests between the liabilities and equity sections of the accompanying consolidated balance sheets. If an equity instrument subject to the guidance is currently redeemable, the instrument is adjusted to its maximum redemption amount at the balance sheet date. If the equity instrument subject to the guidance is not currently redeemable but it is probable that the equity instrument will become redeemable (for example, when the redemption depends solely on the passage of time), the guidance permits either of the following measurement methods: (a) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, or (b) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The amount presented in temporary equity should be no less than the initial amount reported in temporary equity for the instrument. Because the MG SPV and Heartland SPV equity instruments will become redeemable solely based on the passage of time, the Company determined that it is probable that the MG SPV and Heartland SPV equity instruments will become redeemable. The Company has elected to apply the second of the two measurement options described above. An adjustment to the carrying amount of a non-controlling interest from the application of the above guidance does not impact net loss in the consolidated financial statements. Rather, such adjustments are treated as equity transactions and adjustment to net loss in determining net loss available to common stockholders for the purpose of calculating earnings per share. On April 1, 2022, the Company redeemed the non-controlling interest holder's interest of MG SPV, and on May 26, 2022, the Company redeemed the non-controlling interest holder's interest of Heartland SPV. Variable Interest Entities The Company determines whether each business entity in which it has equity interests, debt, or other investments constitutes a variable interest entity (“VIE”) based on consideration of the following criteria: (i) the entity lacks sufficient equity at-risk to finance its activities without additional subordinated financial support, or (ii) equity holders, as a group, lack the characteristics of a controlling financial instrument. If an entity is determined to be a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity. Assets and Liabilities Held for Sale The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. No loss was recognized during the periods presented. Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets. Discontinued Operations The results of operations of a component of the Company that can be clearly distinguished, operationally and for financial reporting purposes, that either has been disposed of or is classified as held for sale is reported in discontinued operations, if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results. 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 an unconditional right to payment. 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. Recently adopted accounting pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity to simplify the accounting for convertible debt and other equity-linked instruments. The new guidance simplifies the accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature models used to separately account for embedded conversion features as a component of equity. Instead, the entity will account for the convertible debt or convertible preferred stock securities as a single unit of account, unless the conversion feature requires bifurcation and recognition as derivatives. Additionally, the guidance requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement for instruments that may be settled in cash or shares. The Company adopted this new guidance as of January 1, 2022, under the modified retrospective method.
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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES |
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Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES | CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES At June 30, 2022 and 2021 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:
For each of the six months ended June 30, 2022 and 2021, the Company’s segment revenues were comprised of the following customer concentrations:
The Company had one vendor that represented 70% and 59% of total purchases for the six months ended June 30, 2022 and 2021, respectively, and 73% and 69% of total payables at June 30, 2022 and 2021, respectively. Litigation The Company, in its normal course of business, is involved in various other claims and legal action. In the opinion of management, the outcome of these claims and actions will not have a material adverse impact upon the financial position of the Company. We are currently party to the following material litigation proceedings: Vertex Refining LA, LLC (“Vertex Refining LA”), the wholly-owned subsidiary of Vertex Operating was named as a defendant, along with numerous other parties, in five lawsuits filed on or about February 12, 2016, in the Second Parish Court for the Parish of Jefferson, State of Louisiana, Case No. 121749, by Russell Doucet et. al., Case No. 121750, by Kendra Cannon et. al., Case No. 121751, by Lashawn Jones et. al., Case No. 121752, by Joan Strauss et. al. and Case No. 121753, by Donna Allen et. al. The suits relate to alleged noxious and harmful emissions from our facility located in Marrero, Louisiana. The suits seek damages for physical and emotional injuries, pain and suffering, medical expenses and deprivation of the use and enjoyment of plaintiffs’ homes. We intend to vigorously defend ourselves and oppose the relief sought in the complaints, provided that at this stage of the litigation, the Company has no basis for determining whether there is any likelihood of material loss associated with the claims and/or the potential and/or the outcome of the litigation. On November 17, 2020, Vertex filed a lawsuit against Penthol LLC (“Penthol”) in the 61st Judicial District Court of Harris County, Texas, Cause No. 2020-65269, for breach of contract and simultaneously sought a Temporary Restraining Order and Temporary Injunction enjoining Penthol from, among other things, circumventing Vertex in violation of the terms of that certain June 5, 2016 Sales Representative and Marketing Agreement entered into between Vertex Operating and Penthol (the “Penthol Agreement”). Vertex seeks permanent injunctive relief, damages, attorney’s fees, costs of court, and all other relief to which it may be entitled. On February 8, 2021, Penthol filed a complaint against Vertex Operating in the United States District Court for the Southern District of Texas; Civil Action No. 4:21-CV-416 (the “Complaint”). Penthol’s Complaint sought damages from Vertex Operating for alleged violations of the Sherman Act, breach of contract, business disparagement, and misappropriation of trade secrets under the Defend Trade Secrets Act and Texas Uniform Trade Secrets Act. On August 12, 2021, United States District Judge Andrew S. Hanen dismissed Penthol’s Sherman Act claim. Penthol’s remaining claims are pending. Penthol is seeking a declaration that Vertex has materially breached the agreement; an injunction that prohibits Vertex from using Penthol’s alleged trade secrets and requires Vertex to return any of Penthol’s alleged trade secrets; awards of actual, consequential and exemplary damages, attorneys’ fees and costs of court; and other relief to which it may be entitled. Vertex denies Penthol’s allegations in the Complaint. Vertex contends Penthol’s claims are completely without merit, and that Penthol’s termination of the Penthol Agreement was wrongful and resulted in damages to Vertex that it is seeking to recover in the Harris County lawsuit. Further, Vertex contends that Penthol’s termination of the Penthol Agreement constitutes a breach by Penthol under the express terms of the Penthol Agreement, and that Vertex remains entitled to payment of the amounts due Vertex under the Penthol Agreement for unpaid commissions and unpaid performance incentives. Vertex disputes Penthol’s allegations of wrongdoing and intends to vigorously defend itself in this matter. On February 26, 2021, Penthol filed its second amended answer and counterclaims, alleging that Vertex improperly terminated the Penthol Agreement and that Vertex tortiously interfered with Penthol’s prospective and existing business relationships. Vertex denies these allegations and is vigorously defending them. This case is pending but is currently set for trial in February 2023. We cannot predict the impact (if any) that any of the matters described above may have on our business, results of operations, financial position, or cash flows. Because of the inherent uncertainties of such matters, including the early stage and lack of specific damage claims in the Penthol matter, we cannot estimate the range of possible losses from them (except as otherwise indicated). Related Parties From time to time, the Company consults Ruddy Gregory, PLLC., a related party law firm of which James Gregory, a member of the Board of Directors, serves as a partner. During the six months ended June 30, 2022 and 2021, we paid $382 thousand and $134 thousand, respectively, to such law firm for services rendered, which services includes the drafting and negotiation of, and due diligence associated with, the Sale Agreement and Refinery Purchase Agreement (defined and discussed below), and related transactions, including the Loan and Security Agreement and Supply and Offtake Agreement, discussed below.
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REVENUES |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES | REVENUES Disaggregation of Revenue The following tables present our revenues disaggregated by geographical market and revenue source (in thousands):
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ACCOUNTS RECEIVABLE |
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ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE Accounts receivable, net, consists of the following at June 30, 2022 and December 31, 2021(in thousands):
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FINANCING ARRANGEMENTS |
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FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTSThe Company's outstanding debt facilities as of June 30, 2022 and December 31, 2021 are summarized as follows (in thousands):
Future contractual principal maturities of notes payable as of June 30, 2022 are summarized as follows (in thousands):
Insurance Premiums The Company financed insurance premiums through various financial institutions bearing interest rates from 3.24% to 4.09% per annum. All such premium finance agreements have maturities of less than one year and have a balance of $9.2 million at June 30, 2022 and $2.4 million at December 31, 2021. Finance Leases On April 1, 2022, the Company entered into one finance lease. Base payments are $0.4 million per month for the first six months, increasing to $0.5 million per month for the next 180 months. The amount of the right of use assets is $44.4 million at June 30, 2022, and the finance lease obligation is $45 million at June 30, 2022. Term Loan On April 1, 2022 (the “Closing Date”), Vertex Refining; the Company, as a guarantor; substantially all of the Company’s direct and indirect subsidiaries, as guarantors (together with the Company, the “Guarantors”); certain funds and accounts under management by BlackRock Financial Management, Inc. or its affiliates, as lenders (“BlackRock”), certain funds managed or advised by Whitebox Advisors, LLC, as lenders (“Whitebox”), certain funds managed by Highbridge Capital Management, LLC, as lenders (“Highbridge”), Chambers Energy Capital IV, LP, as a lender (“Chambers”), CrowdOut Capital LLC, as a lender (“CrowdOut Capital”), CrowdOut Credit Opportunities Fund LLC, as a lender (collectively with BlackRock, Whitebox, Highbridge, Chambers and CrowdOut Capital, the “Lenders”); and Cantor Fitzgerald Securities, in its capacity as administrative agent and collateral agent for the Lenders (the “Agent”), entered into a Loan and Security Agreement (the “Loan and Security Agreement”). Pursuant to the Loan and Security Agreement, the Lenders agreed to provide a $125 million term loan to Vertex Refining (the “Initial Term Loan”), the proceeds of which, less agreed upon fees and discounts, were held in escrow prior to the Closing Date, pursuant to an Escrow Agreement. On the Closing Date, net proceeds from the term loans, less the agreed upon fees and discounts, as well as certain transaction expenses, were released from escrow to Vertex Refining in an aggregate amount of $94 million. On May 26, 2022, each of the Initial Guarantors (including the Company), Vertex Ohio, HPRM LLC, a Delaware limited liability company (“HPRM”), and Tensile-Heartland Acquisition Corporation, a Delaware corporation (“Tensile-Heartland”, and together with Vertex Ohio and HPRM, the “Additional Guarantors”, and the Additional Guarantors, together with the Initial Guarantors, the “Guarantors”, and the Guarantors, together with Vertex Refining, the “Loan Parties”), entered into an Amendment Number One to Loan and Security Agreement (“Amendment No. One to Loan Agreement”), with certain of the Lenders and CrowdOut Warehouse LLC, as a lender (the “Additional Lenders” and together with the Initial Lenders, the “Lenders”) and the Agent, pursuant to which, the amount of the Term Loan (as defined below) was increased from $125 million to $165 million, with the Additional Lenders providing an additional term loan in the amount of $40 million (the “Additional Term Loan”, and together with the Initial Term Loan, the “Term Loan”). Pursuant to the Loan and Security Agreement, on the last day of March, June, September and December of each year (or if such day is not a business day, the next succeeding business day), beginning on March 31, 2023 and ending on December 31, 2024, Vertex Refining is required to repay $2 million of the principal amount owed under the Loan and Security Agreement (i.e., 1.25% of the original principal amount per quarter), subject to reductions in the event of any prepayment of the Loan and Security Agreement. The Company used a portion of the proceeds from the Term Loan borrowing to pay a portion of the purchase price associated with the acquisition of the Mobile Refinery (defined below) acquired by Vertex Refining on April 1, 2022, as discussed in greater detail below, and to pay certain fees and expenses associated with the closing of the Loan and Security Agreement and is required to use the remainder of the funds for (i) the planned renewable diesel conversion of the Mobile Refinery, and (ii) working capital and liquidity needs. Warrant Agreement and Derivative Liabilities In connection with the Loan and Security Agreement, and as additional consideration for the Lenders agreeing to loan funds to the Company thereunder, the Company granted warrants to purchase 2.75 million shares of common stock of the Company to the Lenders (and/or their affiliates) on the Closing Date (the “Initial Warrants”). The terms of the warrants are set forth in a Warrant Agreement (the “April 2022 Warrant Agreement”) entered into on April 1, 2022, between the Company and Continental Stock Transfer & Trust Company as warrant agent. In connection with the entry into the Amendment No. One to Loan Agreement, and as a required term and condition thereof, on May 26, 2022, the Company granted warrants (the “Additional Warrants” and together with the Initial Warrants, the “Warrants”) to purchase 250 thousand shares of the Company’s common stock to the Additional Lenders and their affiliates. The terms of the Additional Warrants are set forth in a Warrant Agreement (the “May 2022 Warrant Agreement” and together with the April 2022 Warrant Agreement, the “Warrant Agreements”) entered into on May 26, 2022, between the Company and Continental Stock Transfer & Trust Company as warrant agent. Each holder shall have a put right to require the Company to repurchase any portion of the warrants held by such holder concurrently with the consummation of such fundamental transaction. The fundamental transaction clause requires the warrants to be classified as liabilities. The initial 2.75 million Initial Warrants were valued at April 1, 2022, the 250 thousand additional Warrants were valued at May 26, 2022 and the total 3 million warrants were revalued at June 30, 2022 using the Dynamic Black Scholes model that computes the impact of a possible change in control transaction upon the exercise of the warrant shares at approximately $23 million, $3 million and $27 million, respectively. The Dynamic Black Scholes Merton inputs used were: expected dividend rate of 0%, expected volatility of 97%-111%, risk free interest rate of 2.61% - 3.01% and expected term of 5.5 years. The following is an analysis of changes in the derivative liability for the six months ended June 30, 2022 (in thousands):
Indenture and Convertible Senior Notes On November 1, 2021, we issued $155 million aggregate principal amount at maturity of our 6.25% Convertible Senior Notes due 2027 (the “Convertible Senior Notes”) pursuant to an Indenture (the “Indenture”), dated November 1, 2021, between the Company and U.S. Bank National Association, as trustee (the “Trustee”), in a private offering (the “Note Offering”) to persons reasonably believed to be “qualified institutional buyers” and/or to “accredited investors” in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Securities Purchase Agreements. The issue price was 90% of the face amount of each note. Interest payments on the Notes are paid semiannually on April 1 and October 1 of each year, beginning on April 1, 2022. On April 1, 2022, a total of $4 million of interest was paid on our outstanding Convertible Senior Notes. A total of seventy-five percent (75%) of the net proceeds from the offering were placed into an escrow account to be released to the Company, upon the satisfaction of certain conditions, including the satisfaction or waiver of all of the conditions precedent to the Company’s obligation to consummate the Mobile Acquisition (collectively, the “Escrow Release Conditions”). The Mobile Acquisition (defined below) was consummated on April 1, 2022, and the proceeds from the sale of the Convertible Senior Notes which were held in escrow were released on April 1, 2022. Prior to July 1, 2027, the Convertible Senior Notes will be convertible at the option of the holders of the Convertible Senior Notes only upon the satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, provided that until such time as the Company’s stockholders had approved the issuance of more than 19.99% of our common stock issuable upon conversion of the Convertible Senior Notes in accordance with the rules of The Nasdaq Capital Market, such Convertible Senior Notes were not convertible. Initially, a maximum of 36 million shares of common stock could be issued upon conversion of the Convertible Senior Notes, based on the initial maximum conversion rate of 233.6449 shares of the Company’s common stock per $1,000 principal amount of Convertible Senior Notes, which is subject to customary and other adjustments described in the Indenture. On January 20, 2022, our shareholders approved the issuance of shares of our common stock issuable upon conversion of the Convertible Senior Notes, in accordance with Nasdaq Listing Rules 5635 (a) and (d). Accordingly, $79 million of derivative Convertible Senior Note liabilities were reclassified to additional paid in capital. On May 26, 2022, May 27, 2022, May 31, 2022, and June 1, 2022, holders of $60 million of the Convertible Senior Notes due 2027, converted such notes into 10.2 million shares of common stock of the Company pursuant to the terms of the Indenture. The shares of common stock issued upon conversion of the $60 million in 6.25% Convertible Senior Notes due 2027 were issued in reliance upon Section 3(a)(9) of the Securities Act, as involving an exchange by the Company exclusively with its security holders. Upon the conversion, the Company recognized $33.9 million unamortized deferred loan cost and discount as interest expense. The components of the Convertible Senior Notes are presented as follows (in thousands):
Our Convertible Senior Notes will mature on October 1, 2027, unless earlier repurchased, redeemed or converted. Interest is payable semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2022. The following table represents the future interest payment (in thousands):
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EARNINGS PER SHARE | EARNINGS PER SHARE 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 June 30, 2022 and 2021 excludes: 1) options to purchase 0.8 million and 5.6 million shares, respectively, of common stock, 2) warrants to purchase 1.3 million and 1.9 million shares, respectively, of common stock, 3) Series A Preferred Stock which is convertible into 0 and 0.4 million shares of common stock, and 6) 22.2 million shares of common stock which may be issued upon conversion of the Convertible Senior 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 Convertible Senior Notes. Due to their anti-dilutive effect, the calculation of diluted earnings per share for the six months ended June 30, 2022 and 2021 excludes: 1) options to purchase 0.9 million and 5.6 million shares, respectively, of common stock, 2) warrants to purchase 1.6 million and 1.9 million shares, respectively, of common stock, 3) Series A Preferred Stock which is convertible into 0 and 0.4 million shares of common stock, and 6) 22.2 million shares of common stock which may be issued upon conversion of the Convertible Senior 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 Convertible Senior Notes. The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the three months and six months ended June 30, 2022 and 2021 (in thousands, except per share amounts):
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COMMON STOCK |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMON STOCK | COMMON STOCK During the six months ended June 30, 2022, the Company issued 386 thousand shares of common stock in connection with the conversion of Series A Convertible Preferred Stock, pursuant to the terms of such securities, issued 1.1 million shares of the Company's common stock in exchange for warrants to purchase 1.5 million shares of the Company's common stock with an exercise price of $2.25 per share on a cashless basis, and issued 10.2 million shares of the Company's common stock in conversion of $59.8 million in Convertible Senior Notes. In addition, the Company issued 0.6 million shares of common stock in connection with the exercise of options. During the six months ended June 30, 2021, the Company issued 13.8 million shares of common stock in connection with the conversion of Series A, Series B & B1 Convertible Preferred Stock and exercises of warrants into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 0.5 million shares of common stock in connection with the exercise of options. Warrant Exchange Agreement On March 24, 2022, the Company entered into an Exchange Agreement with Tensile Capital Partners Master Fund LP (the “Holder” and "Tensile"). Pursuant to the Exchange Agreement, the Holder agreed to exchange outstanding warrants to purchase 1.5 million shares of the Company’s common stock with an exercise price of $2.25 per share and an expiration date of July 25, 2029, for 1.1 million shares of the Company’s common stock, effectively resulting in a net cashless exercise of the warrants (which were cancelled in connection with the transaction), with the value of such surrendered shares based on the five day trailing volume weighted average price of the Company’s common stock. Conversion of Convertible Senior Notes On May 26, 2022, May 27, 2022, May 31, 2022, and June 1, 2022, holders of $59.8 million of the Company’s 6.25% Convertible Senior Notes due 2027, converted such notes into 10.2 million shares of common stock of the Company pursuant to the terms of the Indenture. Conversion of Series A Preferred Stock Pursuant to the designation of the rights and preferences of the Series A Convertible Preferred Stock of the Company, each share of Series A Convertible Preferred Stock is automatically converted into shares of common stock of the Company (on a one-for-one basis), automatically and without further action by the Company or any holder, upon the first to occur of certain events, including if the closing price of the Company’s common stock on the Nasdaq Capital Market averages at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume over the same 20-day period averages at least 7,500 shares (the “Automatic Conversion Provision”). Effective on June 10, 2022, the Automatic Conversion Provision of the Series A Convertible Preferred Stock was triggered, and the 374,337 outstanding shares of the Company’s Series A Convertible Preferred Stock automatically converted into 374,337 shares of common stock of the Company and on June 10, 2022, all rights of any holder with respect to the shares of the Series A Convertible Preferred Stock so converted, including the rights, if any, to receive distributions of the Company’s assets terminated, except only for the rights of such holders to receive certificates for the number of whole shares of common stock into which such shares of the Series A Convertible Preferred Stock were converted. PREFERRED STOCK AND DETACHABLE WARRANTSThe total number of authorized shares of the Company’s preferred stock is 50 million shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5 million (“Series A Preferred”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10 million. The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17 million. The total number of designated shares of Series C Convertible Preferred Stock is 44,000. As of June 30, 2022 and December 31, 2021, there were 0 and 386 thousand shares, respectively, of Series A Preferred Stock issued and outstanding. As of June 30, 2022 and December 31, 2021, there were no shares of Series B , B1 and C Preferred Stock outstanding. SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITIONCompletion of Myrtle Grove Purchase Agreement On April 1, 2022, the Company, through Vertex Splitter Corporation (“Vertex Splitter”), a wholly-owned subsidiary of the Company acquired the 15% noncontrolling interest of Vertex Refining Myrtle Grove LLC (“MG SPV”) held by Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”) from Tensile-Vertex for $7.2 million, which was based on the value of the Class B Unit preference of MG SPV held by Tensile-MG, plus capital invested by Tensile-MG in MG SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-MG as of the closing date. As a result, the Company acquired 100% of MG SPV, which in turn owns the Company’s Belle Chasse, Louisiana, re-refining complex. Myrtle Grove Redeemable Noncontrolling Interest In accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with MG SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary’s net loss of $38 thousand to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. Pursuant to ASC 480-10-S99-3A, for a security that is probable of becoming redeemable in the future, the Company adjusted the carrying amount of the redeemable noncontrolling interests to what would be the redemption value assuming the security was redeemable at the balance sheet date. This accretion adjustment of $0.4 million increased the carrying amount of redeemable noncontrolling interests to the redemption value as of April 1, 2022 of $7.2 million. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of June 30, 2022 and 2021 (in thousands):
Completion of Heartland Purchase Agreement On May 26, 2022, the Company, through Vertex Splitter acquired the 65% noncontrolling interest of Heartland SPV held by Tensile-Heartland from Tensile-Vertex Holdings LLC (“Tensile-Vertex”), an affiliate of Tensile for $43.5 million, which was based on the value of the Class B Unit preference of Heartland SPV held by Tensile-Heartland, plus capital invested by Tensile-Heartland in Heartland SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-Heartland as of the closing date. As a result, the Company acquired 100% of Heartland SPV, which in turn owns the Company’s Columbus, Ohio, re-refining complex. Heartland Redeemable Noncontrolling Interest In accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with Heartland SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary’s net income of $6.8 million to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. At May 26, 2022, the cumulative amount resulting from the application of the measurement guidance in ASC 810-10 was $43.5 million. On May 26, 2022, the Company acquired a 65% interest in Heartland SPV from Tensile for $43.5 million. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of June 30, 2022 and 2021 (in thousands):
The amount of accretion of redeemable noncontrolling interest to redemption value of $0.4 million and $0.8 million are presented as an adjustment to net income (loss) attributable to Vertex Energy, Inc., to arrive at net income (loss) attributable to common shareholders on the consolidated statements of operations which represent the MG SPV and Heartland SPV accretion of redeemable noncontrolling interest to redemption value combined for the six months ended June 30, 2022 and 2021, respectively. Mobile Refinery Acquisition On April 1, 2022, Vertex Operating assigned its rights to the May 26, 2021 Sale and Purchase Agreement between Vertex Operating and Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Oil Company and Shell Chemical LP, subsidiaries of Shell plc (“Shell”) (the “Refinery Purchase Agreement”), to Vertex Refining and on the same date, Vertex Refining completed the acquisition of a Mobile, Alabama refinery (the “Mobile Refinery”) from Shell (the “Mobile Acquisition”). On the Effective Date, a total of $75 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 and reimbursement for certain capital expenditures in the amount of approximately $0.4 million, $15.9 million was paid to Shell for previously agreed upon capital expenditures and miscellaneous prepaid and reimbursable items, and $130 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 April 1, 2022 (approximately $124 million of which was funded by Macquarie (defined below) as a result of the simultaneous sale of such inventory to Macquarie pursuant to an Inventory Sales Agreement between Vertex Refining and Macquarie). 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 preliminary and subject to change based upon the finalization of our valuation report. The following table summarizes the preliminary determination and recognition of assets acquired (in thousands):
The following table presents summarized results of operations of Mobile Refinery for the period from April 1, 2022 to June 30, 2022, and are included in the accompanying consolidated statement of operations for the period ended June 30, 2022 (in thousands):
The following table presents unaudited pro forma results of operations reflecting the acquisition of Mobile Refinery as if the acquisition had occurred as of January 1, 2021. This information has been compiled from current and historical financial statements and is not necessarily indicative of the results that actually would have been achieved had the transaction occurred at the beginning of the periods presented or that may be achieved in the future (in thousands):
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PREFERRED STOCK AND DETACHABLE WARRANTS | COMMON STOCK During the six months ended June 30, 2022, the Company issued 386 thousand shares of common stock in connection with the conversion of Series A Convertible Preferred Stock, pursuant to the terms of such securities, issued 1.1 million shares of the Company's common stock in exchange for warrants to purchase 1.5 million shares of the Company's common stock with an exercise price of $2.25 per share on a cashless basis, and issued 10.2 million shares of the Company's common stock in conversion of $59.8 million in Convertible Senior Notes. In addition, the Company issued 0.6 million shares of common stock in connection with the exercise of options. During the six months ended June 30, 2021, the Company issued 13.8 million shares of common stock in connection with the conversion of Series A, Series B & B1 Convertible Preferred Stock and exercises of warrants into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 0.5 million shares of common stock in connection with the exercise of options. Warrant Exchange Agreement On March 24, 2022, the Company entered into an Exchange Agreement with Tensile Capital Partners Master Fund LP (the “Holder” and "Tensile"). Pursuant to the Exchange Agreement, the Holder agreed to exchange outstanding warrants to purchase 1.5 million shares of the Company’s common stock with an exercise price of $2.25 per share and an expiration date of July 25, 2029, for 1.1 million shares of the Company’s common stock, effectively resulting in a net cashless exercise of the warrants (which were cancelled in connection with the transaction), with the value of such surrendered shares based on the five day trailing volume weighted average price of the Company’s common stock. Conversion of Convertible Senior Notes On May 26, 2022, May 27, 2022, May 31, 2022, and June 1, 2022, holders of $59.8 million of the Company’s 6.25% Convertible Senior Notes due 2027, converted such notes into 10.2 million shares of common stock of the Company pursuant to the terms of the Indenture. Conversion of Series A Preferred Stock Pursuant to the designation of the rights and preferences of the Series A Convertible Preferred Stock of the Company, each share of Series A Convertible Preferred Stock is automatically converted into shares of common stock of the Company (on a one-for-one basis), automatically and without further action by the Company or any holder, upon the first to occur of certain events, including if the closing price of the Company’s common stock on the Nasdaq Capital Market averages at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume over the same 20-day period averages at least 7,500 shares (the “Automatic Conversion Provision”). Effective on June 10, 2022, the Automatic Conversion Provision of the Series A Convertible Preferred Stock was triggered, and the 374,337 outstanding shares of the Company’s Series A Convertible Preferred Stock automatically converted into 374,337 shares of common stock of the Company and on June 10, 2022, all rights of any holder with respect to the shares of the Series A Convertible Preferred Stock so converted, including the rights, if any, to receive distributions of the Company’s assets terminated, except only for the rights of such holders to receive certificates for the number of whole shares of common stock into which such shares of the Series A Convertible Preferred Stock were converted. PREFERRED STOCK AND DETACHABLE WARRANTSThe total number of authorized shares of the Company’s preferred stock is 50 million shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5 million (“Series A Preferred”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10 million. The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17 million. The total number of designated shares of Series C Convertible Preferred Stock is 44,000. As of June 30, 2022 and December 31, 2021, there were 0 and 386 thousand shares, respectively, of Series A Preferred Stock issued and outstanding. As of June 30, 2022 and December 31, 2021, there were no shares of Series B , B1 and C Preferred Stock outstanding. SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITIONCompletion of Myrtle Grove Purchase Agreement On April 1, 2022, the Company, through Vertex Splitter Corporation (“Vertex Splitter”), a wholly-owned subsidiary of the Company acquired the 15% noncontrolling interest of Vertex Refining Myrtle Grove LLC (“MG SPV”) held by Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”) from Tensile-Vertex for $7.2 million, which was based on the value of the Class B Unit preference of MG SPV held by Tensile-MG, plus capital invested by Tensile-MG in MG SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-MG as of the closing date. As a result, the Company acquired 100% of MG SPV, which in turn owns the Company’s Belle Chasse, Louisiana, re-refining complex. Myrtle Grove Redeemable Noncontrolling Interest In accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with MG SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary’s net loss of $38 thousand to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. Pursuant to ASC 480-10-S99-3A, for a security that is probable of becoming redeemable in the future, the Company adjusted the carrying amount of the redeemable noncontrolling interests to what would be the redemption value assuming the security was redeemable at the balance sheet date. This accretion adjustment of $0.4 million increased the carrying amount of redeemable noncontrolling interests to the redemption value as of April 1, 2022 of $7.2 million. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of June 30, 2022 and 2021 (in thousands):
Completion of Heartland Purchase Agreement On May 26, 2022, the Company, through Vertex Splitter acquired the 65% noncontrolling interest of Heartland SPV held by Tensile-Heartland from Tensile-Vertex Holdings LLC (“Tensile-Vertex”), an affiliate of Tensile for $43.5 million, which was based on the value of the Class B Unit preference of Heartland SPV held by Tensile-Heartland, plus capital invested by Tensile-Heartland in Heartland SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-Heartland as of the closing date. As a result, the Company acquired 100% of Heartland SPV, which in turn owns the Company’s Columbus, Ohio, re-refining complex. Heartland Redeemable Noncontrolling Interest In accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with Heartland SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary’s net income of $6.8 million to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. At May 26, 2022, the cumulative amount resulting from the application of the measurement guidance in ASC 810-10 was $43.5 million. On May 26, 2022, the Company acquired a 65% interest in Heartland SPV from Tensile for $43.5 million. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of June 30, 2022 and 2021 (in thousands):
The amount of accretion of redeemable noncontrolling interest to redemption value of $0.4 million and $0.8 million are presented as an adjustment to net income (loss) attributable to Vertex Energy, Inc., to arrive at net income (loss) attributable to common shareholders on the consolidated statements of operations which represent the MG SPV and Heartland SPV accretion of redeemable noncontrolling interest to redemption value combined for the six months ended June 30, 2022 and 2021, respectively. Mobile Refinery Acquisition On April 1, 2022, Vertex Operating assigned its rights to the May 26, 2021 Sale and Purchase Agreement between Vertex Operating and Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Oil Company and Shell Chemical LP, subsidiaries of Shell plc (“Shell”) (the “Refinery Purchase Agreement”), to Vertex Refining and on the same date, Vertex Refining completed the acquisition of a Mobile, Alabama refinery (the “Mobile Refinery”) from Shell (the “Mobile Acquisition”). On the Effective Date, a total of $75 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 and reimbursement for certain capital expenditures in the amount of approximately $0.4 million, $15.9 million was paid to Shell for previously agreed upon capital expenditures and miscellaneous prepaid and reimbursable items, and $130 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 April 1, 2022 (approximately $124 million of which was funded by Macquarie (defined below) as a result of the simultaneous sale of such inventory to Macquarie pursuant to an Inventory Sales Agreement between Vertex Refining and Macquarie). 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 preliminary and subject to change based upon the finalization of our valuation report. The following table summarizes the preliminary determination and recognition of assets acquired (in thousands):
The following table presents summarized results of operations of Mobile Refinery for the period from April 1, 2022 to June 30, 2022, and are included in the accompanying consolidated statement of operations for the period ended June 30, 2022 (in thousands):
The following table presents unaudited pro forma results of operations reflecting the acquisition of Mobile Refinery as if the acquisition had occurred as of January 1, 2021. This information has been compiled from current and historical financial statements and is not necessarily indicative of the results that actually would have been achieved had the transaction occurred at the beginning of the periods presented or that may be achieved in the future (in thousands):
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SEGMENT REPORTING |
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SEGMENT REPORTING | SEGMENT REPORTING The Company’s reportable segments include the (1) Black Oil, (2) Refining and Marketing, and (3) Recovery segments. (1) The Black Oil segment consists primarily of the sale of (a) petroleum products which include base oil and industrial fuels—which consist of used motor oils, cutterstock and fuel oil generated by our facilities; (b) oil collection services—which consist of used oil sales, burner fuel sales, antifreeze sales and service charges; (c) the sale of other re-refinery products including asphalt, condensate, recovered products, and used motor oil; (d) transportation revenues; and (e) the sale of VGO (vacuum gas oil)/marine fuel. (2) The Refining and Marketing segment consists primarily of the sale of gasoline, diesel and jet fuel produced at our Mobile refinery as well as pygas and industrial fuels, which are produced at a third-party facility. (3) The Recovery segment consists primarily of revenues generated from the sale of ferrous and non-ferrous recyclable Metal(s) products that are recovered from manufacturing and consumption. It also includes revenues generated from trading/marketing of Group III Base Oils. We also disaggregate our revenue by product category for each of our segments, as we believe such disaggregation helps depict how our revenue and cash flows are affected by economic factors. Segment information for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):
(1) Metals consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing. (2) Other re-refinery products include the sales of asphalt, condensate, recovered products, and other petroleum products.
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INCOME TAXES |
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Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective tax rate of 0% on pretax income differs from the U.S. federal income tax rate of 21% because of the change in our valuation allowance. The year to date loss at June 30, 2022 puts the Company in an accumulated loss position for the cumulative 12 quarters then ended. For tax reporting purposes, we have net operating losses (“NOLs”) of approximately $146 million as of June 30, 2022 that are available to reduce future taxable income. In determining the carrying value of our net deferred tax asset, the Company considered all negative and positive evidence. The Company has generated pre-tax loss of approximately $65 million from January 1, 2022 through June 30, 2022.
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COMMODITY DERIVATIVE INSTRUMENTS |
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COMMODITY DERIVATIVE INSTRUMENTS | COMMODITY DERIVATIVE INSTRUMENTS The Company utilizes derivative instruments to manage its exposure to fluctuations in the underlying commodity prices of its inventory. The Company’s management sets and implements hedging policies, including volumes, types of instruments and counterparties, to support oil prices at targeted levels and manage its exposure to fluctuating prices. The Company’s derivative instruments consist of option and futures arrangements for oil. For option and futures arrangements, the Company receives the difference positive or negative between an agreed-upon strike price and the market price. The mark-to-market effects of these contracts as of June 30, 2022 and December 31, 2021, are summarized in the following table. The notional amount is equal to the total net volumetric derivative position during the period indicated. The fair value of the crude oil futures agreements is based on the difference between the strike price and the New York Mercantile Exchange and Brent Complex futures price for the applicable trading months.
The carrying values of the Company’s derivatives positions and their locations on the consolidated balance sheets as of June 30, 2022 and December 31, 2021 are presented in the table below.
For the three months ended June 30, 2022 and 2021, we recognized $94.3 million and $1 million of loss, respectively, on commodity derivative contracts on the consolidated statements of operations as part of our cost of revenues. For the six months ended June 30, 2022 and 2021, we recognized $93.7 million and $1.9 million of loss, respectively, on commodity derivative contracts on the consolidated statements of operations as part of our cost of revenues.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES Finance Leases On April 1, 2022, the Company entered into one finance lease and the balance of finance lease right-of-use lease assets is $44.4 million at June 30, 2022. The associated amortization expenses for the three months ended June 30, 2022 and 2021 were $0.8 million and $1.1 thousand, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the three months ended June 30, 2022 and 2021 were $0.8 million and $14 thousand, respectively, and are included in interest expense on the unaudited consolidated statements of operations. The associated amortization expenses for the six months ended June 30, 2022 and 2021 were $0.8 million and $2.2 thousand, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the six months ended June 30, 2022 and 2021 were $1.4 million and $23 thousand, respectively, and are included in interest expense on the unaudited consolidated statements of operations. Please see “Note 6. Financing Arrangements” for more details. Operating Leases Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the unaudited consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three and six months ended June 30, 2022 and 2021. Total operating lease costs for both the three months ended June 30, 2022 and 2021 were $0.25 million and $0.2 million, respectively. Total operating lease costs for both the six months ended June 30, 2022 and 2021 were $0.5 million and $0.4 million, respectively. Cash Flows Cash paid for amounts included in operating lease liabilities was $0.5 million and $0.4 million during the six months ended June 30, 2022 and 2021, and is included in operating cash flows. Cash paid for amounts included in finance lease was $107 thousand and $134 thousand during the six months ended June 30, 2022 and 2021, respectively, and is included in financing cash flows. Maturities of our lease liabilities for all operating leases are as follows as of June 30, 2022 (in thousands):
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2022:
The plant lease has multiple 5-year extension options for a total of 20 years. The extension option has been included in the lease right-of-use asset and lease obligation. The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so.
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LEASES | LEASES Finance Leases On April 1, 2022, the Company entered into one finance lease and the balance of finance lease right-of-use lease assets is $44.4 million at June 30, 2022. The associated amortization expenses for the three months ended June 30, 2022 and 2021 were $0.8 million and $1.1 thousand, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the three months ended June 30, 2022 and 2021 were $0.8 million and $14 thousand, respectively, and are included in interest expense on the unaudited consolidated statements of operations. The associated amortization expenses for the six months ended June 30, 2022 and 2021 were $0.8 million and $2.2 thousand, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the six months ended June 30, 2022 and 2021 were $1.4 million and $23 thousand, respectively, and are included in interest expense on the unaudited consolidated statements of operations. Please see “Note 6. Financing Arrangements” for more details. Operating Leases Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the unaudited consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three and six months ended June 30, 2022 and 2021. Total operating lease costs for both the three months ended June 30, 2022 and 2021 were $0.25 million and $0.2 million, respectively. Total operating lease costs for both the six months ended June 30, 2022 and 2021 were $0.5 million and $0.4 million, respectively. Cash Flows Cash paid for amounts included in operating lease liabilities was $0.5 million and $0.4 million during the six months ended June 30, 2022 and 2021, and is included in operating cash flows. Cash paid for amounts included in finance lease was $107 thousand and $134 thousand during the six months ended June 30, 2022 and 2021, respectively, and is included in financing cash flows. Maturities of our lease liabilities for all operating leases are as follows as of June 30, 2022 (in thousands):
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2022:
The plant lease has multiple 5-year extension options for a total of 20 years. The extension option has been included in the lease right-of-use asset and lease obligation. The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so.
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SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION |
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SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION | COMMON STOCK During the six months ended June 30, 2022, the Company issued 386 thousand shares of common stock in connection with the conversion of Series A Convertible Preferred Stock, pursuant to the terms of such securities, issued 1.1 million shares of the Company's common stock in exchange for warrants to purchase 1.5 million shares of the Company's common stock with an exercise price of $2.25 per share on a cashless basis, and issued 10.2 million shares of the Company's common stock in conversion of $59.8 million in Convertible Senior Notes. In addition, the Company issued 0.6 million shares of common stock in connection with the exercise of options. During the six months ended June 30, 2021, the Company issued 13.8 million shares of common stock in connection with the conversion of Series A, Series B & B1 Convertible Preferred Stock and exercises of warrants into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 0.5 million shares of common stock in connection with the exercise of options. Warrant Exchange Agreement On March 24, 2022, the Company entered into an Exchange Agreement with Tensile Capital Partners Master Fund LP (the “Holder” and "Tensile"). Pursuant to the Exchange Agreement, the Holder agreed to exchange outstanding warrants to purchase 1.5 million shares of the Company’s common stock with an exercise price of $2.25 per share and an expiration date of July 25, 2029, for 1.1 million shares of the Company’s common stock, effectively resulting in a net cashless exercise of the warrants (which were cancelled in connection with the transaction), with the value of such surrendered shares based on the five day trailing volume weighted average price of the Company’s common stock. Conversion of Convertible Senior Notes On May 26, 2022, May 27, 2022, May 31, 2022, and June 1, 2022, holders of $59.8 million of the Company’s 6.25% Convertible Senior Notes due 2027, converted such notes into 10.2 million shares of common stock of the Company pursuant to the terms of the Indenture. Conversion of Series A Preferred Stock Pursuant to the designation of the rights and preferences of the Series A Convertible Preferred Stock of the Company, each share of Series A Convertible Preferred Stock is automatically converted into shares of common stock of the Company (on a one-for-one basis), automatically and without further action by the Company or any holder, upon the first to occur of certain events, including if the closing price of the Company’s common stock on the Nasdaq Capital Market averages at least $15.00 per share over a period of 20 consecutive trading days and the daily trading volume over the same 20-day period averages at least 7,500 shares (the “Automatic Conversion Provision”). Effective on June 10, 2022, the Automatic Conversion Provision of the Series A Convertible Preferred Stock was triggered, and the 374,337 outstanding shares of the Company’s Series A Convertible Preferred Stock automatically converted into 374,337 shares of common stock of the Company and on June 10, 2022, all rights of any holder with respect to the shares of the Series A Convertible Preferred Stock so converted, including the rights, if any, to receive distributions of the Company’s assets terminated, except only for the rights of such holders to receive certificates for the number of whole shares of common stock into which such shares of the Series A Convertible Preferred Stock were converted. PREFERRED STOCK AND DETACHABLE WARRANTSThe total number of authorized shares of the Company’s preferred stock is 50 million shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5 million (“Series A Preferred”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10 million. The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17 million. The total number of designated shares of Series C Convertible Preferred Stock is 44,000. As of June 30, 2022 and December 31, 2021, there were 0 and 386 thousand shares, respectively, of Series A Preferred Stock issued and outstanding. As of June 30, 2022 and December 31, 2021, there were no shares of Series B , B1 and C Preferred Stock outstanding. SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITIONCompletion of Myrtle Grove Purchase Agreement On April 1, 2022, the Company, through Vertex Splitter Corporation (“Vertex Splitter”), a wholly-owned subsidiary of the Company acquired the 15% noncontrolling interest of Vertex Refining Myrtle Grove LLC (“MG SPV”) held by Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”) from Tensile-Vertex for $7.2 million, which was based on the value of the Class B Unit preference of MG SPV held by Tensile-MG, plus capital invested by Tensile-MG in MG SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-MG as of the closing date. As a result, the Company acquired 100% of MG SPV, which in turn owns the Company’s Belle Chasse, Louisiana, re-refining complex. Myrtle Grove Redeemable Noncontrolling Interest In accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with MG SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary’s net loss of $38 thousand to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. Pursuant to ASC 480-10-S99-3A, for a security that is probable of becoming redeemable in the future, the Company adjusted the carrying amount of the redeemable noncontrolling interests to what would be the redemption value assuming the security was redeemable at the balance sheet date. This accretion adjustment of $0.4 million increased the carrying amount of redeemable noncontrolling interests to the redemption value as of April 1, 2022 of $7.2 million. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of June 30, 2022 and 2021 (in thousands):
Completion of Heartland Purchase Agreement On May 26, 2022, the Company, through Vertex Splitter acquired the 65% noncontrolling interest of Heartland SPV held by Tensile-Heartland from Tensile-Vertex Holdings LLC (“Tensile-Vertex”), an affiliate of Tensile for $43.5 million, which was based on the value of the Class B Unit preference of Heartland SPV held by Tensile-Heartland, plus capital invested by Tensile-Heartland in Heartland SPV (which had not been returned as of the date of payment), plus cash and cash equivalents held by Tensile-Heartland as of the closing date. As a result, the Company acquired 100% of Heartland SPV, which in turn owns the Company’s Columbus, Ohio, re-refining complex. Heartland Redeemable Noncontrolling Interest In accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with Heartland SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary’s net income of $6.8 million to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. At May 26, 2022, the cumulative amount resulting from the application of the measurement guidance in ASC 810-10 was $43.5 million. On May 26, 2022, the Company acquired a 65% interest in Heartland SPV from Tensile for $43.5 million. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of June 30, 2022 and 2021 (in thousands):
The amount of accretion of redeemable noncontrolling interest to redemption value of $0.4 million and $0.8 million are presented as an adjustment to net income (loss) attributable to Vertex Energy, Inc., to arrive at net income (loss) attributable to common shareholders on the consolidated statements of operations which represent the MG SPV and Heartland SPV accretion of redeemable noncontrolling interest to redemption value combined for the six months ended June 30, 2022 and 2021, respectively. Mobile Refinery Acquisition On April 1, 2022, Vertex Operating assigned its rights to the May 26, 2021 Sale and Purchase Agreement between Vertex Operating and Equilon Enterprises LLC d/b/a Shell Oil Products US, Shell Oil Company and Shell Chemical LP, subsidiaries of Shell plc (“Shell”) (the “Refinery Purchase Agreement”), to Vertex Refining and on the same date, Vertex Refining completed the acquisition of a Mobile, Alabama refinery (the “Mobile Refinery”) from Shell (the “Mobile Acquisition”). On the Effective Date, a total of $75 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 and reimbursement for certain capital expenditures in the amount of approximately $0.4 million, $15.9 million was paid to Shell for previously agreed upon capital expenditures and miscellaneous prepaid and reimbursable items, and $130 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 April 1, 2022 (approximately $124 million of which was funded by Macquarie (defined below) as a result of the simultaneous sale of such inventory to Macquarie pursuant to an Inventory Sales Agreement between Vertex Refining and Macquarie). 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 preliminary and subject to change based upon the finalization of our valuation report. The following table summarizes the preliminary determination and recognition of assets acquired (in thousands):
The following table presents summarized results of operations of Mobile Refinery for the period from April 1, 2022 to June 30, 2022, and are included in the accompanying consolidated statement of operations for the period ended June 30, 2022 (in thousands):
The following table presents unaudited pro forma results of operations reflecting the acquisition of Mobile Refinery as if the acquisition had occurred as of January 1, 2021. This information has been compiled from current and historical financial statements and is not necessarily indicative of the results that actually would have been achieved had the transaction occurred at the beginning of the periods presented or that may be achieved in the future (in thousands):
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INVENTORY FINANCING AGREEMENT |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY FINANCING AGREEMENT | INVENTORY FINANCING AGREEMENTOn April 1, 2022, pursuant to an Inventory Sales Agreement entered into between Vertex Refining and Macquarie, Macquarie purchased all the Mobile Refinery Inventory from Vertex Refining for $130 million (which funds, together with cash on hand, were used by Vertex Refining to purchase the Mobile Refinery Inventory from Shell), which Mobile Refinery Inventory then became subject to the terms of the Supply and Offtake Agreement, discussed in detail below. The following table summarizes our outstanding obligations under our inventory financing agreements as of June 30, 2022 (in thousands):
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 Energy North America Trading Inc., a Delaware corporation (“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 takes title to the refined products stored in our storage tanks until they are sold to our retail locations or to third parties. We record the inventory owned by Macquarie on our behalf as inventory with a corresponding accrued liability on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we have an obligation to repurchase it. Pursuant to the Supply and Offtake Agreement and subject to the terms and conditions therein, Macquarie may during the term of the Supply and Offtake Agreement procure crude oil and refined products from certain third parties which may be sold to Vertex Refining or third parties pursuant to the Supply and Offtake Agreement and may sell Refined Products to Vertex Refining or third parties (including customers of Vertex Refining). 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. Pursuant to the Supply and Offtake Agreement, Vertex Refining and Macquarie agreed to cooperate to develop and document, by no later than 180 days after the Commencement Date (September 28, 2022), procedures relating to the unwinding and termination of the agreement and related agreements, in the event of the expiration or early termination of the Supply and Offtake Agreement. The parties also agreed to use commercially reasonable efforts to negotiate mutually agreeable terms for Macquarie’s intermediating of renewable feedstocks and renewable diesel that will be utilized and/or produced by Vertex Refining in connection with and following a planned renewable diesel conversion project at the Mobile Refinery (including providing Macquarie a right of first refusal in connection therewith), for 90 days after the Commencement Date (the “RD Period”), which discussions are ongoing. If, by the end of the RD Period, Macquarie and Vertex Refining, each acting in good faith and in a commercially reasonable manner, have not been able to reach commercial agreement regarding the entry into a renewable diesel intermediation, Vertex Refining may elect to terminate the Supply and Offtake Agreement by providing notice of any such election to Macquarie; provided that no such election may be effective earlier than the date falling 90 calendar days following the date on which such notice is delivered. The agreement is also subject to termination upon the occurrence of certain events, including the termination of certain agreements relating to the delivery of crude oil to and the offtake of products from the Mobile Refinery. Upon an early termination of the Supply and Offtake Agreement, Vertex Refining is required to pay amounts relating to such termination to Macquarie including, among other things, outstanding unpaid amounts, amounts owing with respect to terminating transactions under the Supply and Offtake Agreement and related transaction documents, unpaid ancillary costs, and breakage costs, losses and out-of-pocket costs with respect to the termination, liquidation, maintenance or reestablishment, or redeployment of certain hedges put in place by Macquarie in connection with the transactions contemplated by the agreement, and Vertex Refining is required to pay other termination fees and amounts to Macquarie in the event of any termination of the agreement. Additionally, upon the termination of the Supply and Offtake Agreement, the outstanding obligations of Vertex Refining and Macquarie to each other will be calculated and reduced to an estimated net settlement payment which will be subject to true-up when the final settlement payment has been calculated following termination. The Supply and Offtake Agreement requires Vertex Refining to prepare and deliver certain forecasts, projections and estimates and comply with financial statement delivery obligations and other disclosure obligations. The agreement also requires Vertex Refining to provide Macquarie notice of certain estimated monthly crude oil delivery, crude oil consumption, product production, target inventory levels and product offtake terms, which Macquarie has the right to reject, subject to certain disclosure requirements. 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 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. 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. Guaranty Vertex Refining’s obligations under the Supply and Offtake Agreement and related transaction documents (other than the hedges which are secured and guaranteed on a pari passu basis under the Loan and Security Agreement) were unconditionally guaranteed by the Company pursuant to the terms of a Guaranty entered into on April 1, 2022, by the Company in favor of Macquarie (the “Guaranty”).
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DISCONTINUED OPERATIONS |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS During the third quarter of 2021, the Company initiated and began executing a strategic plan to sell its UMO Business. An investment banking advisory services firm was engaged and actively marketed this segment. On September 28, 2021, the shareholders approved the proposed sale of its portfolio of used motor oil collection and recycling assets to Safety-Kleen. The Company met all of the criteria to classify the UMO Business’s assets and liabilities as held for sale in the third quarter 2021. The Company has classified the assets, liabilities, and results of operations for this business as “Discontinued Operations” for all periods presented. Disposal of the UMO Business represented a strategic shift that will have a major effect on the Company’s operations and financial results. On June 29, 2021, the Company announced that it had entered into a definitive agreement to sell its portfolio of used motor oil collection and recycling assets (the UMO business) to Safety-Kleen, a subsidiary of Clean Harbors, Inc. (“Clean Harbors”) for total cash consideration of $140 million, subject to working capital and other adjustments, and subject to certain closing conditions, including regulatory approvals and a shareholder vote. After retiring term debt, together with the payment of transaction-related fees and financial obligations, total net cash proceeds from the transaction to Vertex were expected to be approximately $90 million. The Board of Directors considered a number of factors before deciding to enter into the Sale Agreement, including, among other factors, the price to be paid by Safety-Kleen for the UMO Business, the scope of the sale process with respect to the UMO Business that led to entering into the Sale Agreement, the future business prospects of the UMO Business, including the costs to remain competitive and grow, the opinion of H.C. Wainwright & Co., LLC that the terms were fair, from a financial point of view, the then planned acquisition of the Mobile Refinery, and the planned change in business focus associated therewith, and the terms and conditions of the Sale Agreement. On January 25, 2022, the Company entered into a mutual agreement with Safety-Kleen to terminate the Sale Agreement. In connection with the termination agreement, the Company paid Safety-Kleen a break-up fee of $3 million. Vertex is continuing to explore opportunities for the sale of the UMO business. The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months ended June 30, 2022, and 2021 (in thousands):
The assets and liabilities held for sale on the Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 are as follows (in thousands):
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FIXED ASSETS, NET |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FIXED ASSETS, NET | FIXED ASSETS, NET Fixed assets consist of the following (in thousands):
The increase in fixed assets is due to the fixed assets acquired by the acquisition of the Mobile Refinery on April 1, 2022. Depreciation expense was $2.4 million and $0.1 million for the three months ended June 30, 2022 and 2021, respectively, for the continued operations. Depreciation expense was $2.5 million and $0.2 million for the six months ended June 30, 2022 and 2021, respectively for the continued operations. Asset Retirement Obligations: The Company has asset retirement obligations with respect to certain of its refinery assets due to various legal obligations to clean and/or dispose of various component parts of each refinery at the time they 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 the Company’s practice and current intent to maintain its refinery assets and continue making improvements to those assets based on technological advances. As a result, the Company believes that its refinery assets have indeterminate lives for purposes of estimating asset retirement obligations because dates, or ranges of dates, upon which the Company would retire refinery assets cannot reasonably be estimated. When a date or range of dates can reasonably be estimated for the retirement of any component part of a refinery, the Company estimates the cost of performing the retirement activities and records a liability for the fair value of that cost using established present value techniques.
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INTANGIBLE ASSETS, NET |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS, NET | INTANGIBLE ASSETS, NET Components of intangible assets (subject to amortization) consist of the following items:
Intangible assets are amortized on a straight-line basis. We continually evaluate the amortization period and carrying basis of intangible assets to determine whether subsequent events and circumstances warrant a revised estimated useful life or reduction in value. Total amortization expense of intangibles was $763 thousand and $27 thousand for the three months ended June 30, 2022 and 2021, respectively. Total amortization expense of intangibles was $790 thousand and $54 thousand for the six months ended June 30, 2022 and 2021, respectively. Estimated future amortization expense is as follows (in thousands):
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ACCRUED LIABILITIES |
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ACCRUED LIABILITIES | ACCRUED LIABILITIES Accrued expenses and other current liabilities consisted of the following (in thousands):
The increase in accrued liabilities from December 31, 2021 is due to the operation of the Mobile Refinery, which was acquired on April 1, 2022.
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SUBSEQUENT EVENTS |
6 Months Ended |
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Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Warrant Exercises On July 11, 2022, two holders of warrants to purchase an aggregate of 165,000 shares of our common stock with an exercise price of $4.50 per share and a holder of warrants to purchase 15,000 shares of our common stock with an exercise price of $9.25 per share, exercised such warrants in a cashless exercise (surrendering 81,925 shares of common stock in connection with such exercise, valued based on the five day trailing volume weighted average price of the Company’s common stock, to pay the exercise price due in connection therewith), pursuant to the terms of such warrants, and were issued 98,075 shares of common stock. On July 19, 2022, a holder of warrants to purchase 100 shares of our common stock with an exercise price of $4.50 per share exercised such warrants for cash and was issued 100 shares of common stock.
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SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES (Policies) |
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Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted CashThe Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable represents amounts due from customers. Accounts receivable are recorded at invoiced amounts, net of reserves and allowances, do not bear interest and are not collateralized. The Company uses its best estimate to determine the required allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, economic trends and conditions affecting its customer base, significant one-time events, and historical write-off experience. Specific provisions are recorded for individual receivables when we become aware of a customer’s inability to meet its financial obligations. The Company reviews the adequacy of its reserves and allowances quarterly. Receivable balances greater than 90 days past due are individually reviewed for collectability and if deemed uncollectible, are charged off against the allowance accounts after all means of collection have been exhausted and the potential for recovery is considered remote.
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Inventory and Obligations Under Inventory Financing Agreements | Inventory and Obligations Under Inventory Financing Agreements Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals. Commodity inventories, excluding commodity inventories at the Mobile Refinery (defined and discussed below under “Note 14. Share Purchase, Subscription Agreements and Mobile Refinery Acquisition — Mobile Refinery Acquisition”), are stated at the lower of cost or net realizable value using the first in, first out (FIFO) accounting method. Commodity inventories at the Mobile Refinery are stated at the lower of cost or net realizable value using the weighted average inventory accounting method. We value merchandise along with spare parts, materials, and supplies at average cost. Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for these sales. All of the crude oil utilized at the Mobile Refinery is financed by Macquarie Energy North America Trading Inc. ("Macquarie") under procurement contracts. The crude oil remains in the legal title of Macquarie and is stored in our storage tanks governed by a storage agreement. Legal title to the crude oil passes to us at the tank outlet. After processing, Macquarie takes title to the refined products stored in our storage tanks until they are sold to our retail locations or to third parties. We record the inventory owned by Macquarie on our behalf as inventory with a corresponding accrued liability on our balance sheet because we maintain the risk of loss until the refined products are sold to third parties and we have an obligation to repurchase it. The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement occurs at the end of the reporting period. In connection with the consummation of the Mobile Acquisition (defined and discussed below under “Note 14. Share Purchase, Subscription Agreements and Mobile Refinery Acquisition — Mobile Refinery Acquisition”), the Company became a party to a Supply and Offtake Agreement with Macquarie. Under this arrangement, the Company purchases crude oil supplied from third-party suppliers and Macquarie provides credit support for certain of these purchases. Macquarie holds title to all crude oil and refined products inventories, except for liquefied petroleum gases or sulfur, at all times and pledges such inventories, together with all receivables arising from the sales of these inventories. The valuation of our terminal obligation requires that we make estimates of the prices and differentials for our then monthly forward purchase obligations.
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Impairment of long-lived assets | Impairment of long-lived assets The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.
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Reclassification of Prior Year Presentation | Reclassification of Prior Year PresentationCertain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations. |
Redeemable Noncontrolling Interest | Redeemable Noncontrolling InterestsAs more fully described in “Note 14. Share Purchase and Subscription Agreements”, the Company is party to put/call option agreements with the holder of Vertex Refining Myrtle Grove LLC (“MG SPV”) and HPRM LLC, a Delaware limited liability company (“Heartland SPV”), which entities were formed as special purpose vehicles in connection with the transactions described in greater detail below, non-controlling interests. The put options permit MG SPV's and Heartland SPV's non-controlling interest holders, at any time on or after the earlier of (a) the fifth anniversary of the applicable closing date of such issuances and (ii) the occurrence of certain triggering events (an “MG Redemption” and "Heartland Redemption", as applicable) to require MG SPV and Heartland SPV to redeem the non-controlling interest from the holder of such interest. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. Based on this guidance, the Company has classified the MG SPV and Heartland SPV non-controlling interests between the liabilities and equity sections of the accompanying consolidated balance sheets. If an equity instrument subject to the guidance is currently redeemable, the instrument is adjusted to its maximum redemption amount at the balance sheet date. If the equity instrument subject to the guidance is not currently redeemable but it is probable that the equity instrument will become redeemable (for example, when the redemption depends solely on the passage of time), the guidance permits either of the following measurement methods: (a) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, or (b) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The amount presented in temporary equity should be no less than the initial amount reported in temporary equity for the instrument. Because the MG SPV and Heartland SPV equity instruments will become redeemable solely based on the passage of time, the Company determined that it is probable that the MG SPV and Heartland SPV equity instruments will become redeemable. The Company has elected to apply the second of the two measurement options described above. An adjustment to the carrying amount of a non-controlling interest from the application of the above guidance does not impact net loss in the consolidated financial statements. Rather, such adjustments are treated as equity transactions and adjustment to net loss in determining net loss available to common stockholders for the purpose of calculating earnings per share. On April 1, 2022, the Company redeemed the non-controlling interest holder's interest of MG SPV, and on May 26, 2022, the Company redeemed the non-controlling interest holder's interest of Heartland SPV. |
Variable Interest Entities | Variable Interest Entities The Company determines whether each business entity in which it has equity interests, debt, or other investments constitutes a variable interest entity (“VIE”) based on consideration of the following criteria: (i) the entity lacks sufficient equity at-risk to finance its activities without additional subordinated financial support, or (ii) equity holders, as a group, lack the characteristics of a controlling financial instrument. If an entity is determined to be a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity.
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Assets and Liabilities Held for Sale | Assets and Liabilities Held for Sale The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. No loss was recognized during the periods presented. Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets.
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Discontinued Operations | Discontinued Operations The results of operations of a component of the Company that can be clearly distinguished, operationally and for financial reporting purposes, that either has been disposed of or is classified as held for sale is reported in discontinued operations, if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results.
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Revenue Recognition | Revenue RecognitionOur 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 an unconditional right to payment. |
Environmental Matters | 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.
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Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity to simplify the accounting for convertible debt and other equity-linked instruments. The new guidance simplifies the accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature models used to separately account for embedded conversion features as a component of equity. Instead, the entity will account for the convertible debt or convertible preferred stock securities as a single unit of account, unless the conversion feature requires bifurcation and recognition as derivatives. Additionally, the guidance requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement for instruments that may be settled in cash or shares. The Company adopted this new guidance as of January 1, 2022, under the modified retrospective method.
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SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES (Tables) |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restrictions on cash and cash equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows (in thousands).
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Schedule of cash and cash equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows (in thousands).
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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of concentrations | At June 30, 2022 and 2021 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:
For each of the six months ended June 30, 2022 and 2021, the Company’s segment revenues were comprised of the following customer concentrations:
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REVENUES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of revenue | The following tables present our revenues disaggregated by geographical market and revenue source (in thousands):
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ACCOUNTS RECEIVABLE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts receivable | Accounts receivable, net, consists of the following at June 30, 2022 and December 31, 2021(in thousands):
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FINANCING ARRANGEMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding debt facilities | The Company's outstanding debt facilities as of June 30, 2022 and December 31, 2021 are summarized as follows (in thousands):
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Schedule of future maturities of notes payable | Future contractual principal maturities of notes payable as of June 30, 2022 are summarized as follows (in thousands):
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Schedule of liabilities with unobservable inputs | The following is an analysis of changes in the derivative liability for the six months ended June 30, 2022 (in thousands):
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Schedule of debt | The components of the Convertible Senior Notes are presented as follows (in thousands):
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Schedule of future interest payments | The following table represents the future interest payment (in thousands):
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EARNINGS PER SHARE (Tables) |
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of basic and diluted earnings per share | The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the three months and six months ended June 30, 2022 and 2021 (in thousands, except per share amounts):
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SEGMENT REPORTING (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the company's reportable segment information | Segment information for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):
(1) Metals consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing. (2) Other re-refinery products include the sales of asphalt, condensate, recovered products, and other petroleum products.
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COMMODITY DERIVATIVE INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | The fair value of the crude oil futures agreements is based on the difference between the strike price and the New York Mercantile Exchange and Brent Complex futures price for the applicable trading months.
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Schedule of fair value of derivative instruments within balance sheet | The carrying values of the Company’s derivatives positions and their locations on the consolidated balance sheets as of June 30, 2022 and December 31, 2021 are presented in the table below.
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LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of maturities of operating lease liabilities | Maturities of our lease liabilities for all operating leases are as follows as of June 30, 2022 (in thousands):
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Schedule of operating lease weighted average remaining lease terms and discount rates | The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2022:
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SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of changes in redeemable noncontrolling interest | The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of June 30, 2022 and 2021 (in thousands):
The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of June 30, 2022 and 2021 (in thousands):
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Schedule of business acquisitions, by acquisition | The purchase price allocation is preliminary and subject to change based upon the finalization of our valuation report. The following table summarizes the preliminary determination and recognition of assets acquired (in thousands):
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Summarized results of operations | The following table presents summarized results of operations of Mobile Refinery for the period from April 1, 2022 to June 30, 2022, and are included in the accompanying consolidated statement of operations for the period ended June 30, 2022 (in thousands):
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Schedule of unaudited pro forma | The following table presents unaudited pro forma results of operations reflecting the acquisition of Mobile Refinery as if the acquisition had occurred as of January 1, 2021. This information has been compiled from current and historical financial statements and is not necessarily indicative of the results that actually would have been achieved had the transaction occurred at the beginning of the periods presented or that may be achieved in the future (in thousands):
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INVENTORY FINANCING AGREEMENT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | The following table summarizes our outstanding obligations under our inventory financing agreements as of June 30, 2022 (in thousands):
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DISCONTINUED OPERATIONS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups Including Discontinued Operations Income Statement and Balance Sheet | The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months ended June 30, 2022, and 2021 (in thousands):
The assets and liabilities held for sale on the Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 are as follows (in thousands):
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FIXED ASSETS, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fixed assets | Fixed assets consist of the following (in thousands):
|
INTANGIBLE ASSETS, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets | Components of intangible assets (subject to amortization) consist of the following items:
|
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Schedule of estimated future amortization expense | Estimated future amortization expense is as follows (in thousands):
|
ACCRUED LIABILITIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands):
|
BASIS OF PRESENTATION AND NATURE OF OPERATIONS (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jan. 25, 2022 |
Jan. 24, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Product Information | ||||||
Net loss attributable to common shareholders, basic | $ (66,976,000) | $ (20,046,000) | $ (71,945,000) | $ (19,411,000) | ||
Net income attributable to shareholders from discontinued operations, net of tax, diluted | $ (66,976,000) | $ (20,046,000) | $ (71,945,000) | $ (19,411,000) | ||
Safety-Kleen | ||||||
Product Information | ||||||
Break up fee payment | $ 3,000,000 | $ 3,000,000 |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 97,914 | $ 36,130 | ||
Restricted cash | 100 | 100,497 | ||
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows | $ 98,014 | $ 136,627 | $ 15,067 | $ 10,995 |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES - Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
New Accounting Pronouncements or Change in Accounting Principle | |||
Restricted cash and cash equivalents | $ 100,000,000 | ||
Allowance for credit loss | 1,000,000 | $ 1,000,000 | |
Asset impairment | 0 | $ 0 | |
Money Market Funds | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Restricted cash and cash equivalents | $ 100,000 |
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | ||
Related party payments | $ 382 | $ 134 |
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | ||
Accounts receivable trade | $ 91,866 | $ 6,297 |
Allowance for doubtful accounts | (1,012) | (1,000) |
Accounts receivable trade, net | $ 90,854 | $ 5,297 |
FINANCING ARRANGEMENTS - Outstanding Debt Facilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument | ||
Long-term debt | $ 219,586 | $ 2,829 |
Less: unamortized discount and deferred financing costs | (37,035) | 0 |
Total debt, net of unamortized discount and deferred financing costs | 182,551 | 2,829 |
Less: current maturities, net of unamortized discount and deferred financing costs | (2,579) | (2,715) |
Long term debt and finance lease liabilities, net of current maturities | 179,972 | 114 |
Term Loan 2025 | ||
Debt Instrument | ||
Long-term debt | 165,000 | 0 |
SBA Loan | SBA Loan | ||
Debt Instrument | ||
Long-term debt | 59 | 59 |
John Deere Note | John Deere Note | ||
Debt Instrument | ||
Long-term debt | 0 | 93 |
John Deere Note | Various institutions | ||
Debt Instrument | ||
Long-term debt | 9,236 | 2,375 |
AVT Equipment Lease-HH | AVT Equipment Lease-HH | ||
Debt Instrument | ||
Finance lease obligation | 0 | 302 |
VRA Finance Lease | VRA Finance Lease | ||
Debt Instrument | ||
Finance lease obligation | $ 45,291 | $ 0 |
FINANCING ARRANGEMENTS - Future Contractual Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Disclosure [Abstract] | ||
2023 | $ 14,013 | |
2024 | 9,514 | |
2025 | 154,049 | |
2026 | 1,605 | |
2027 | 1,809 | |
Thereafter | 38,596 | |
Total | $ 219,586 | $ 2,829 |
FINANCING ARRANGEMENTS - Insurance Premiums (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument | ||
Long-term debt | $ 219,586 | $ 2,829 |
Insurance premiums financed | Various institutions | Minimum | ||
Debt Instrument | ||
Debt instrument, stated rate (as a percent) | 3.24% | |
Insurance premiums financed | Various institutions | Maximum | ||
Debt Instrument | ||
Debt instrument, stated rate (as a percent) | 4.09% |
FINANCING ARRANGEMENTS - Finance Leases (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Apr. 01, 2022
USD ($)
contract
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
Lessee, Lease, Description | ||||
Finance lease payment | $ 107 | $ 134 | ||
Finance lease right-of-use assets | 44,373 | $ 0 | ||
Secured debt | AVT Equipment Lease-HH | ||||
Lessee, Lease, Description | ||||
Number of finance leases assumed | contract | 1 | |||
Finance lease payment | $ 400 | |||
Finance Lease | ||||
Lessee, Lease, Description | ||||
Finance lease payment | $ 500 | |||
Finance lease term | 180 months | |||
Finance lease obligation | $ 45,000 |
FINANCING ARRANGEMENTS - Schedule of liabilities with unobservable inputs (Details) - Fair Value, Inputs, Level 3 $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Debt Instrument | |
Balance at beginning of period | $ 0 |
April 1 warrants issued | 22,796 |
May 26 warrants issued | 2,874 |
Value of warrants exercised | 0 |
Change in valuation of warrants | 945 |
Balance at end of period | $ 26,615 |
FINANCING ARRANGEMENTS - Indenture and Convertible Senior Notes (Details) - USD ($) |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 26, 2022 |
Nov. 01, 2021 |
Jun. 30, 2022 |
Jun. 01, 2022 |
Apr. 01, 2022 |
Jan. 20, 2022 |
Dec. 31, 2021 |
|
Line of Credit Facility [Line Items] | |||||||
Derivative commodity liability | $ 46,536,000 | $ 79,000,000 | $ 0 | ||||
Unamortized debt | 33,900,000 | ||||||
Convertible Notes | Senior Notes | |||||||
Line of Credit Facility [Line Items] | |||||||
Principal Amounts | $ 60,000,000 | $ 155,000,000 | $ 59,800,000 | $ 60,000,000 | |||
Debt instrument, stated rate (as a percent) | 6.25% | 6.25% | 6.25% | ||||
Issue price, percentage | 90.00% | ||||||
Interest Payable | $ 4,000,000 | ||||||
Percentage of offer amount for escrow account to be released | 75.00% | ||||||
Percentage of common stock issuable upon conversion | 19.99% | ||||||
Common stock issued upon conversion of the convertible notes (in shares) | 10,200,000 | 10,200,000 | |||||
Convertible Notes | Unsecured Debt | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Common stock issued upon conversion of the convertible notes (in shares) | 36,000,000 |
FINANCING ARRANGEMENTS - Components of Convertible Notes (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Mar. 31, 2022 |
|
Debt Instrument | |||
Conversion of principal into common stock | $ (59,822) | $ 0 | |
Convertible Debt | |||
Debt Instrument | |||
Principal Amounts | $ 155,000 | ||
Conversion of principal into common stock | $ (59,822) | ||
Unamortized discount and issuance costs | (53,635) | ||
Net Carrying Amount | $ 41,543 |
FINANCING ARRANGEMENTS - Future Interest Payments (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Year 1 | $ 6,572 |
Year 2 | 5,949 |
Year 3 | 5,949 |
Year 4 | 5,949 |
Year 5 | 5,949 |
Thereafter | $ 2,974 |
EARNINGS PER SHARE - Narrative (Details) - shares |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 24, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||||
Options to purchase (in shares) | 800,000 | 5,600,000 | 900,000 | 5,600,000 | ||
Warrants to purchase (in shares) | 1,500,000 | 1,300,000 | 1,600,000 | 1,900,000 | ||
Convertible Debt | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||||
Debt conversion converted instrument | 22,200,000 | |||||
Debt conversion, converted instrument, rate | 23.36449% | 23.36449% | ||||
Series A Preferred Stock | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||||
Warrants to purchase (in shares) | 1,500,000 | |||||
Conversion of stock, shares issued (in shares) | 0 | 400,000 |
INCOME TAXES (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2022
USD ($)
|
Mar. 31, 2022
USD ($)
|
Jun. 30, 2021
USD ($)
|
Mar. 31, 2021
USD ($)
|
Jun. 30, 2022
USD ($)
quarter
|
Jun. 30, 2021
USD ($)
|
|
Income Tax Disclosure [Abstract] | ||||||
Effective income tax rate (as a percent) | 0.00% | |||||
U.S. federal income tax rate (as a percent) | 21.00% | |||||
Number of quarters of cumulative loss | quarter | 12 | |||||
Operating loss carryforwards | $ 146,000 | $ 146,000 | ||||
Before income tax | $ 63,782 | $ 808 | $ 15,957 | $ (2,965) | $ 64,591 | $ 12,991 |
COMMODITY DERIVATIVE INSTRUMENTS - Fair Value of Derivative Instruments within Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Derivative | ||
Derivative commodity assets (liabilities) | $ (46,536) | $ 96 |
Crude oil options | ||
Derivative | ||
Derivative commodity assets (liabilities) | 1,048 | 136 |
Crude oil swaps | ||
Derivative | ||
Derivative commodity assets (liabilities) | (47,773) | 0 |
Crude oil futures | ||
Derivative | ||
Derivative commodity assets (liabilities) | $ 189 | $ (40) |
COMMODITY DERIVATIVE INSTRUMENTS - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Gain (loss) on commodity derivative contracts | $ (94,300) | $ (1,000) | $ 93,745 | $ 1,925 |
LEASES - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
New Accounting Pronouncements or Change in Accounting Principle | |||||
Finance lease right-of-use assets | $ 44,373,000 | $ 44,373,000 | $ 0 | ||
Finance lase cost | $ 1,100 | 800,000 | $ 2,200 | ||
Finance lease, interest expense | 800,000 | 14,000 | 1,400,000 | 23,000 | |
Operating lease cost | $ 250,000 | $ 200,000 | 500,000 | 400,000 | |
Operating lease payments | 500,000 | 400,000 | |||
Finance lease payment | $ 107,000 | $ 134,000 | |||
Plant | |||||
New Accounting Pronouncements or Change in Accounting Principle | |||||
Lease renewal term | 5 years | 5 years | |||
Lease renewal term, total | 20 years |
LEASES - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Lessee, Lease, Description | |
Year 1 | $ 954 |
Year 2 | 813 |
Year 3 | 754 |
Year 4 | 712 |
Year 5 | 701 |
Thereafter | 3,331 |
Total lease payments | 7,265 |
Less: interest | (2,496) |
Present value of operating lease liabilities | 4,769 |
Facilities | |
Lessee, Lease, Description | |
Year 1 | 244 |
Year 2 | 105 |
Year 3 | 47 |
Year 4 | 11 |
Year 5 | 0 |
Thereafter | 0 |
Total lease payments | 407 |
Less: interest | (33) |
Present value of operating lease liabilities | 374 |
Equipment | |
Lessee, Lease, Description | |
Year 1 | 8 |
Year 2 | 7 |
Year 3 | 6 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Total lease payments | 21 |
Less: interest | (1) |
Present value of operating lease liabilities | 20 |
Plant | |
Lessee, Lease, Description | |
Year 1 | 702 |
Year 2 | 701 |
Year 3 | 701 |
Year 4 | 701 |
Year 5 | 701 |
Thereafter | 3,331 |
Total lease payments | 6,837 |
Less: interest | (2,462) |
Present value of operating lease liabilities | $ 4,375 |
LEASES - Schedule of Operating Lease Weighted Average Remaining Lease Terms and Discount Rates (Details) |
Jun. 30, 2022 |
---|---|
Lease facilities | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 1 year 7 months 13 days |
Weighted average discount rate (in pure) | 9.16% |
Lease equipment | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 2 years 10 months 2 days |
Weighted average discount rate (in pure) | 8.00% |
Lease plant | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 9 years 4 months 13 days |
Weighted average discount rate (in pure) | 9.37% |
SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION - Completion of Myrtle Grove Purchase Agreement (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Apr. 01, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Class of Stock [Line Items] | |||||||||
Less: amount attributable to redeemable non-controlling interest | $ (3,023) | $ (3,769) | $ (3,113) | $ (1,542) | |||||
MG SPV | |||||||||
Class of Stock [Line Items] | |||||||||
Less: amount attributable to redeemable non-controlling interest | $ 38 | $ 129 | |||||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount | $ 7,200 | $ 0 | $ 6,106 | 0 | $ 6,106 | $ 6,812 | $ 5,473 | ||
Accretion adjustment | $ 400 | ||||||||
MG SPV | |||||||||
Class of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 100.00% | ||||||||
MG SPV | Vertex Splitter | |||||||||
Class of Stock [Line Items] | |||||||||
Ownership percentage (as a percent) | 15.00% | ||||||||
Acquisition of noncontrolling interest | $ 7,200 |
SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION - Mobile Refinery Acquisition (Details) - USD ($) $ in Thousands |
Apr. 01, 2022 |
Jun. 30, 2022 |
---|---|---|
Capital Addition Purchase Commitments | ||
Business Acquisition | ||
Amount payable after closing | $ 8,700 | |
Mobile Refinery | ||
Business Acquisition | ||
Inventory | $ 130,220 | |
Mobile Refinery | Vertex Refining | ||
Business Acquisition | ||
Total purchase price | 75,000 | |
Amount previously paid in consideration for acquisition | 10,000 | |
Certain capital expenditures reimbursed | 400 | |
Acquisition of VRA | 15,900 | |
Mobile Refinery | Vertex Refining | Shell | ||
Business Acquisition | ||
Acquisition of VRA | 130,000 | |
Inventory | $ 124,000 |
SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION - Schedule of Business Acquisitions, by Acquisition (Details) - Mobile Refinery $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Business Acquisition | |
Inventory | $ 130,220 |
Prepaid expenses | 147 |
Fixed assets | 97,158 |
Total purchase price | 227,525 |
Financing agreement | |
Business Acquisition | |
Inventory | 124,311 |
Prepaid expenses | 0 |
Fixed assets | 0 |
Total purchase price | 124,311 |
Vertex acquisition | |
Business Acquisition | |
Inventory | 5,909 |
Prepaid expenses | 147 |
Fixed assets | 97,158 |
Total purchase price | $ 103,214 |
SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION - Operations of Mobile Refinery (Details) - Mobile Refinery $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Business Acquisition | |
Revenue | $ 922,196 |
Net loss | $ (24,271) |
SHARE PURCHASE, SUBSCRIPTION AGREEMENTS AND MOBILE REFINERY ACQUISITION - Pro Forma (Details) - Mobile Refinery - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Business Acquisition | ||
Revenue | $ 1,670,800 | $ 942,900 |
Net income (loss) | $ 30,200 | $ (24,900) |
INVENTORY FINANCING AGREEMENT - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Inventory [Line Items] | ||
Obligations under inventory financing agreement, net | $ 172,857 | $ 0 |
Inventory Financing Agreement | Macquarie | ||
Inventory [Line Items] | ||
Obligations under inventory financing agreement | 174,607 | |
Unamortized financing cost | (1,750) | |
Obligations under inventory financing agreement, net | $ 172,857 |
DISCONTINUED OPERATIONS - Narrative (Details) - USD ($) |
Jan. 25, 2022 |
Jan. 24, 2022 |
Jun. 29, 2021 |
---|---|---|---|
Safety-Kleen | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Break up fee payment | $ 3,000,000 | $ 3,000,000 | |
Held-for-sale | UMO business | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total cash, consideration | $ 140,000,000 | ||
Total net cash proceeds from the transaction | $ 90,000,000 |
DISCONTINUED OPERATIONS - Balance Sheet Disclosures by Disposal Groups (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
ASSETS | ||
Total current assets | $ 92,494 | $ 84,116 |
LIABILITIES AND EQUITY | ||
Liabilities held for sale, current | 35,507 | 37,645 |
Held-for-sale | UMO business | ||
ASSETS | ||
Accounts receivable, net | 15,135 | 9,583 |
Inventory | 9,014 | 5,548 |
Prepaid expenses | 1,953 | 450 |
Total current assets | 26,102 | 15,581 |
Fixed assets, at cost | 66,065 | 63,837 |
Less accumulated depreciation | (34,388) | (32,045) |
Fixed assets, net | 31,677 | 31,792 |
Finance lease right-of-use assets | 0 | 813 |
Operating lease right-of use assets | 27,995 | 28,260 |
Intangible assets, net | 6,236 | 7,107 |
Other assets | 484 | 563 |
Assets held for sale | 92,494 | 84,116 |
LIABILITIES AND EQUITY | ||
Accounts payable | 6,156 | 7,764 |
Accrued expenses | 1,355 | 1,324 |
Finance lease liability-current | 0 | 296 |
Operating lease liability-current | 27,996 | 28,261 |
Liabilities held for sale, current | $ 35,507 | $ 37,645 |
FIXED ASSETS, NET - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 2.4 | $ 0.1 | $ 2.5 | $ 0.2 |
INTANGIBLE ASSETS, NET -Schedule of Intangible Assets (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
Net Carrying Amount | ||
Net Carrying Amount | $ 8,375 | |
Software | ||
Net Carrying Amount | ||
Useful Life (in years) | 3 years | |
Gross Carrying Amount | $ 9,344 | $ 538 |
Accumulated Amortization | 969 | 179 |
Net Carrying Amount | $ 8,375 | $ 359 |
INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 763 | $ 27 | $ 790 | $ 54 |
INTANGIBLE ASSETS, NET -Schedule of Estimated Future Amortization Expense (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Estimated future amortization expense | |
Year 1 | $ 3,051 |
Year 2 | 3,051 |
Year 3 | 2,273 |
Thereafter | 0 |
Net Carrying Amount | $ 8,375 |
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued purchases | $ 6,440 | $ 553 |
Accrued interest | 2,111 | 1,594 |
Accrued compensation and benefits | 241 | 1,082 |
Accrued income, real estate, sales and other taxes | 1,328 | 389 |
RINS liabilities | 20,389 | 0 |
Environmental liabilities - current | 51 | 0 |
Accrued liabilities total | $ 30,560 | $ 3,618 |
SUBSEQUENT EVENTS (Details) - Subsequent Event - Warrant |
Jul. 19, 2022
$ / shares
shares
|
Jul. 11, 2022
warrant
$ / shares
shares
|
---|---|---|
Subsequent Event [Line Items] | ||
Number of warrant holders | warrant | 2 | |
Exercise price (in dollars per share) | $ / shares | $ 4.50 | |
Common stock purchased upon exercise of options (in shares) | 100,000 | 81,925,000 |
Expected term (years) | 5 days | |
Exercise of options to purchase common stock (in shares) | 98,075 | |
Warrant Holder One and Two | ||
Subsequent Event [Line Items] | ||
Number of warrants (in shares) | 165,000 | |
Exercise price (in dollars per share) | $ / shares | $ 4.50 | |
Warrant Holder Three | ||
Subsequent Event [Line Items] | ||
Number of warrants (in shares) | 15,000 | |
Exercise price (in dollars per share) | $ / shares | $ 9.25 |
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