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Aemetis, Inc (AMTX) SEC Filing 10-Q Quarterly report for the period ending Monday, September 30, 2019

Aemetis, Inc

CIK: 738214 Ticker: AMTX
  Exhibit 99.1
External Investor Relations Contact:
httpKirin Smith
PCG Advisory Group
(646) 863-6519
ksmith@pcgadvisory.com
 
 
Investor Relations/
Media Contact:
Todd Waltz
(408) 213-0940
investors@aemetis.com
 
 
Aemetis, Inc. Reports Second Quarter 2019 Financial Results Reflecting Strong Growth from India Plant
Reports 200% year over year increase in biodiesel sales volumes from 4,282 metric tons to 12,960 metric tons
 
CUPERTINO, Calif. – August 8, 2019 -
Aemetis, Inc. (NASDAQ: AMTX), an advanced renewable fuels and biochemicals company, today announced its financial results for the three and six months ended June 30, 2019.
 
Aemetis’ second quarter of 2019 included significant announcements related to the market expansion of its India plant and the opening of a new customer base in India, culminating in $11.1 million of revenue from India operations during the second quarter of 2019, representing a 106% increase from the prior year quarter and 22% of total revenue for the quarter. India operations generated $16.4 million of revenue for the first half of 2019, a 46% increase from the prior year first half. Aemetis continues to advance its ultra-low carbon California cellulosic ethanol biorefinery, which is expected, upon completion, to add approximately $80 million of high margin revenues. Utilizing thousands of tons of waste wood from California’s Central Valley, the Aemetis cellulosic ethanol biorefinery is expected to produce the state’s lowest carbon ethanol fuel and reduce greenhouse gas emissions in the process.
 
Key milestones during Q2 2019 included:
 
 
India plant won a $23 million biodiesel supply contract with India state-owned oil marketing companies (“OMC”)
India plant awarded large biodiesel supply contract in mining sector
India plant achieved record $4 million monthly domestic biodiesel revenue during May 2019 as shipments begin under OMC contract
India plant expands revenue to $50 million per year run rate driven by biodiesel shipments to large refiners
 
Today, Aemetis will host an earnings review call at 11:00 am Pacific (PT). For details on the call, visit: http://www.aemetis.com/investors/conference-calls/
 
Financial Results for the Three Months Ended June 30, 2019
 
Revenues were $50.6 million for the second quarter of 2019 compared to $45.0 million for the second quarter of 2018, driven by a 203% increase in biodiesel sales volumes from 4.3 thousand metric tons to 13 thousand metric tons. In addition, quarter over quarter volumes for biodiesel grew by 7.8 thousand metric tons, or 145%, from 5.2 thousand metric tons during the first quarter of 2019. Revenues from the India segment were $11.1 million and accounted for 22% of total revenue. North America segment revenues remained steady between the two quarters.
 
Gross profit for the second quarter of 2019 rose to $3.3 million, compared to a gross profit of $2.8 million during the second quarter of 2018. India segment accounted for $2.3 million of the reported, consolidated gross profits.
 
Selling, general and administrative expenses were $3.9 million during the second quarter of 2019, compared to $3.6 million during the second quarter of 2018.
 
Operating loss was $0.8 million for the second quarter of 2019, a reduction from the operating loss of $0.9 million for the second quarter of 2018.
 
Interest expense during the second quarter of 2019, excluding accretion in connection with Series A preferred units in the Aemetis Biogas LLC subsidiary, was $6.6 million, compared to $5.4 million during the second quarter of 2018. Additionally, the Aemetis Biogas initiative recognized $471 thousand of accretion in connection with preference payments on its preferred stock.
 
Net loss was $13.9 million for the second quarter of 2019, compared to a net loss of $6.2 million for the second quarter of 2018 due to higher interest expense and a $6.2 million one-time charge for loss contingency on litigation.
 
Cash at the end of the second quarter of 2019 was $0.4 million, compared to $1.2 million at the end of 2018.
 
 
1
 
 
Financial Results for the Six Months Ended June 30, 2019
 
Revenues were $92.5 million for the first half of 2019, an increase of $4.5 million compared to $88.0 million for the first half of 2018. This increase in revenues was driven by strong demand for biodiesel in India during the second quarter of 2019, as a result of supplying the India OMCs as well as domestic retail, mining and bulk customers with biodiesel product. North America segment remained steady between the two periods.
 
Selling, general and administrative expenses were $8.2 million during the first half of 2019, compared to $7.4 million during the first half of 2018.
 
Operating loss increased to $5.4 million for the first half of 2019, compared to an operating loss of $2.9 million for the first half of 2018.
 
Interest expense, excluding accretion in connection with preference payment on Series A preferred units in the Aemetis Biogas LLC subsidiary, decreased to $12.8 million during the first half of 2019, compared to interest expense of $14.4 million during the first half of 2018. Additionally, the Aemetis Biogas initiative recognized $920 thousand of accretion in connection with preference payments on its preferred stock.
 
Net loss was $24.6 million for the first half of 2019, compared to a net loss of $17.3 million during the first half of 2018, due to a $6.2 million one-time charge for loss contingency on litigation.
 
About Aemetis
 
Headquartered in Cupertino, California, Aemetis is an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products by the conversion of ethanol and biodiesel plants into advanced biorefineries. Founded in 2006, Aemetis owns and operates a 60 million gallon per year ethanol production facility in the California Central Valley near Modesto. Aemetis also owns and operates a 50 million gallon per year renewable chemical and advanced fuel production facility on the East Coast of India producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. Aemetis holds a portfolio of patents and related technology licenses for the production of renewable fuels and biochemicals. For additional information about Aemetis, please visit www.aemetis.com.
 
NON-GAAP FINANCIAL INFORMATION
 
We have provided non-GAAP measures as a supplement to financial results based on GAAP. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying supplemental data. Adjusted EBITDA is defined as net income/(loss) plus (to the extent deducted in calculating such net income) interest expense, loss on extinguishment, income tax expense, intangible and other amortization expense, depreciation expense, loss contingency on litigation and share-based compensation expense.
 
Adjusted EBITDA is not calculated in accordance with GAAP and should not be considered as an alternative to net income/(loss), operating income or any other performance measures derived in accordance with GAAP or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA is presented solely as a supplemental disclosure because management believes that it is a useful performance measure that is widely used within the industry in which we operate. In addition, management uses Adjusted EBITDA for reviewing financial results and for budgeting and planning purposes. EBITDA measures are not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparison between companies.
 
Safe Harbor Statement
 
This news release contains forward-looking statements, including statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events or other statements that are not historical facts. Forward-looking statements in this news release include, without limitation, expectations for growth in India and development of our cellulosic ethanol business in North America.  Words or phrases such as “anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “showing signs,” “targets,” “view,” “will likely result,” “will continue” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current assumptions and predictions and are subject to numerous risks and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain factors, including, without limitation, competition in the ethanol, biodiesel and other industries in which we operate, commodity market risks including those that may result from current weather conditions, financial market risks, customer adoption, counter-party risks, risks associated with changes to federal policy or regulation, and other risks detailed in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and in our subsequent filings with the SEC. We are not obligated, and do not intend, to update any of these forward-looking statements at any time unless an update is required by applicable securities laws.
 
(Tables follow)
 
 
2
 
 
 
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share data)
 
 
 
 
 
Three months ended
 
 
Six months ended
 
 
 
June 30,
 
 
June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Revenues
 $50,619 
 $45,028 
 $92,507 
 $88,046 
Cost of goods sold
  47,346 
  42,260 
  89,585 
  83,412 
Gross profit
  3,273 
  2,768 
  2,922 
  4,634 
 
    
    
    
    
Research and development expense
  90 
  55 
  123 
  117 
Selling, general and admin. expense
  3,945 
  3,589 
  8,186 
  7,396 
Operating loss
  (762)
  (876)
  (5,387)
  (2,879)
 
    
    
    
    
Interest expense
    
    
    
    
Interest rate expense
  5,190 
  4,432 
  10,176 
  8,703 
Debt related fees and amort. expense
  1,396 
  919 
  2,619 
  5,676 
Accretion of preference payments on Series A preferred units
  471 
  -- 
  920 
  -- 
Loss contingency on litigation
  6,200 
  -- 
  6,200 
  -- 
Other (income) expense
  (89)
  (5)
  (712)
  63 
Loss before income taxes
  (13,930)
  (6,222)
  (24,590)
  (17,321)
 
    
    
    
    
Income tax expense
  -- 
  -- 
  7 
  6 
 
    
    
    
    
Net loss
 $(13,930)
 $(6,222)
 $(24,597)
 $(17,327)
 
    
    
    
    
Less: Net loss attributable to non-controlling interest
  (994)
  (857)
  (1,932)
  (1,594)
Net loss attributable to Aemetis, Inc.
  (12,936)
  (5,365)
  (22,665)
  (15,733)
 
    
    
    
    
Net loss per common share
    
    
    
    
Basic
 $(0.63)
 $(0.27)
 $(1.11)
 $(0.78)
Diluted
 $(0.63)
 $(0.27)
 $(1.11)
 $(0.78)
 
    
    
    
    
Weighted average shares outstanding
    
    
    
    
Basic
  20,375 
  20,223 
  20,371 
  20,203 
Diluted
  20,375 
  20,223 
  20,371 
  20,203 
 
 
3
 
 
AEMETIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
 
 
 
June 30,
2019
(Unaudited)
 
 
December 31,
2018
 
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $350 
 $1,188 
Accounts receivable
  3,838 
  1,096 
Inventories
  4,093 
  6,129 
Prepaid and other current assets
  1,946 
  1,898 
Total current assets
  10,227 
  10,311 
  Property, plant and equipment, net
  78,507 
  78,492 
Other assets
  3,601 
  3,018 
Total assets
 $92,335 
 $91,821 
 
    
    
Liabilities and stockholders' deficit
    
    
Current liabilities:
    
    
Accounts payable
 $17,193 
 $13,500 
Current portion of long term debt and lease liability
  5,401 
  2,396 
Short term borrowings
  16,551 
  14,902 
Mandatorily redeemable Series B stock
  3,098 
  3,048 
Other current liabilities
  15,312 
  8,733 
Total current liabilities
  57,555 
  42,579 
 
    
    
Total long term liabilities
  174,291 
  164,824 
 
    
    
Stockholders' deficit:
    
    
    Series B convertible preferred stock
  1 
  1 
    Common stock
  20 
  20 
    Additional paid-in capital
  86,470 
  85,917 
    Accumulated deficit
  (215,869)
  (193,204)
    Accumulated other comprehensive loss
  (3,461)
  (3,576)
    Non-controlling interest
  (6,672)
  (4,740)
Total stockholders’ deficit
  (139,511)
  (115,582)
Total liabilities and stockholders' deficit
 $92,335 
 $91,821 
 
 
4
 
 
RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS
(unaudited, in thousands)
 

 
 Three Months Ended
June 30,  
 
 
Six Months Ended
June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Net loss attributable to Aemetis, Inc.
 $(12,936)
 $(5,365)
 $(22,665)
 $(15,733)
Adjustments:
    
    
    
    
Interest expense
  5,694 
  4,628 
  11,075 
  13,017 
Loss contingency on litigation
  6,200 
  -- 
  6,200 
  -- 
Depreciation expense
  1,096 
  1,149 
  2,234 
  2,299 
Accretion of preference payments on Series A preferred units
  471 
  -- 
  920 
  -- 
Share-based compensation
  196 
  316 
  486 
  603 
Intangibles and other amortization expense
  12 
  35 
  24 
  70 
Income tax expense
  -- 
  -- 
  7 
  6 
Total adjustments
  13,669 
  6,128 
  20,946 
  15,995 
Adjusted EBITDA
 $733 
 $763 
 $(1,719)
 $262 
 
 
PRODUCTION AND PRICE PERFORMANCE
(unaudited)
 
 
 
Three months ended
June 30,
 
 
Six months ended
June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Ethanol
 
 
 
 
 
 
 
 
 
 
 
 
Gallons sold (in millions)
  16.2 
  16.4 
  32.4 
  32.4 
Average sales price/gallon
 $1.84 
 $1.84 
 $1.76 
 $1.80 
WDG
    
    
    
 
 
 
Tons sold (in thousands)
  106.9 
  105.4 
  213.8 
  208.0 
Average sales price/ton
 $82 
 $81 
 $81 
 $79 
Delivered cost of corn
    
    
    
 
 
 
Bushels ground (in millions)
  5.7 
  5.7 
  11.3 
  11.3 
Average delivered cost / bushel
 $5.37 
 $5.02 
 $5.29 
 $4.98 
 
Biodiesel
    
    
    
 
 
 
Metric tons sold (in thousands)
  13.0 
  4.3 
  18.2 
  9.2 
Average sales price/metric ton
 $833 
 $897 
 $830 
 $910 
Refined glycerin
    
    
    
 
 
 
Metric tons sold (in thousands)
  0.6 
  1.5 
  2.0 
  2.7 
Average sales price/metric ton
 $560 
 $1,027 
 $618 
 $1,068 
 
 
5

The following information was filed by Aemetis, Inc (AMTX) on Thursday, August 8, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2019
Or
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to
 
Commission File Number: 001-36475
———————
AEMETIS, INC.
 (Exact name of registrant as specified in its charter)
———————
Nevada
26-1407544
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
 
20400 Stevens Creek Blvd., Suite 700
Cupertino, CA 95014
 (Address of Principal Executive Offices, including zip code)
 
(408) 213-0940
 (Registrant’s telephone number, including area code)
 
Title of each class of registered securities
 
Trading Symbol
 
Name of each exchange on which registered
Common Stock, $0.001 par value
 
AMTX
 
NASDAQ
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ☑ No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Accelerated filer ☐     Non-accelerated filer ☐ Smaller reporting company ☑
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
 
The number of shares outstanding of the registrant’s Common Stock on October 31, 2019 was 20,570,187 shares.
 

 
 
 
AEMETIS, INC.
 
FORM 10-Q
 
Quarterly Period Ended September 30, 2019
 
INDEX
 
PART I--FINANCIAL INFORMATION
 
Item 1
Financial Statements.
4
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
36
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
48
Item 4.
Controls and Procedures.
48
 
PART II--OTHER INFORMATION
 
Item 1.
Legal Proceedings
49
Item 1A.
Risk Factors.
49
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
50
Item 3.
Defaults Upon Senior Securities.
50
Item 4.
Mine Safety Disclosures.
50
Item 5.
Other Information.
50
Item 6.
Exhibits.
50
SIGNATURES
 
51
 
 
 
 
 
 
2
 
 
SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS
 
On one or more occasions, we may make forward-looking statements in this Quarterly Report on Form 10-Q, including statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events or other statements that are not historical facts. Forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding management’s plans; trends in market conditions with respect to prices for inputs for our products versus prices for our products; our ability to leverage approved feedstock pathways; our ability to leverage our location and infrastructure; our ability to incorporate lower-cost, non-food advanced biofuels feedstock at the Keyes plant; our ability to adopt value-add by-product processing systems; our ability to expand into alternative markets for biodiesel and its by-products, including continuing to expand our sales into international markets; our ability to maintain and expand strategic relationships with suppliers; our ability to continue to develop new, and to maintain and protect new and existing, intellectual property rights; our ability to adopt, develop and commercialize new technologies; our ability to refinance our senior debt on more commercial terms or at all; our ability to continue to fund operations and our future sources of liquidity and capital resources; our ability to sell additional notes under our EB-5 note program and our expectations regarding the release of funds from escrow under our EB-5 note program; our ability to improve margins; and our ability to raise additional capital. Words or phrases such as “anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current assumptions and predictions and are subject to numerous risks and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain factors, including, without limitation, the risks set forth under the caption “Risk Factors” below, which are incorporated herein by reference as well as those business risks and factors described elsewhere in this report and in our other filings with the Securities and Exchange Commission (the “SEC”), including without limitation, our most recent Annual Report on Form 10-K.
 
 
 
 
 
 
 
 
3
 
 
PART I - FINANCIAL INFORMATION
 
Item 1 - Financial Statements.
 
AEMETIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except for par value)
 
 
 
September 30,
2019
 
 
December 31,
2018
 
Assets
 
(unaudited)
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $919 
 $1,188 
Accounts receivable
  5,421 
  1,096 
Inventories
  3,521 
  6,129 
Prepaid expenses
  558 
  942 
Other current assets
  2,186 
  956 
Total current assets
  12,605 
  10,311 
 
    
    
Property, plant and equipment, net
  80,843 
  78,492 
Operating lease right-of-use assets
  743 
  - 
Other assets
  2,492 
  3,018 
Total assets
 $96,683 
 $91,821 
 
    
    
Liabilities and stockholders' deficit
    
    
Current liabilities:
    
    
Accounts payable
 $17,453 
 $13,500 
Current portion of long term debt
  5,059 
  2,396 
Short term borrowings
  17,417 
  14,902 
Mandatorily redeemable Series B convertible preferred stock
  3,124 
  3,048 
Accrued property taxes
  4,234 
  3,337 
Accrued contingent litigation fees
  6,200 
  - 
Other current liabilities
  4,995 
  5,396 
Total current liabilities
  58,482 
  42,579 
Long term liabilities:
    
    
Senior secured notes
  102,463 
  89,884 
EB-5 notes
  35,500 
  36,500 
GAFI secured and revolving notes
  29,013 
  25,461 
Long term subordinated debt
  6,086 
  5,974 
Series A preferred units
  10,239 
  7,005 
Other long term liabilities
  1,652 
  - 
Total long term liabilities
  184,953 
  164,824 
 
    
    
Stockholders' deficit:
    
    
Series B convertible preferred stock, $0.001 par value; 7,235 authorized; 1,323 shares issued and outstanding each period, respectively (aggregate liquidation preference of $3,969 for each period respectively)
  1
 
  1 
Common stock, $0.001 par value; 40,000 authorized; 20,570 and 20,345 shares issued and outstanding each period, respectively
  21
 
  20 
Additional paid-in capital
  86,708 
  85,917 
Accumulated deficit
  (222,195)
  (193,204)
Accumulated other comprehensive loss
  (3,715)
  (3,576)
Total stockholders' deficit attributable to Aemetis, Inc.
  (139,180)
  (110,842)
Non-controlling interest - GAFI
  (7,572)
  (4,740)
Total stockholders' deficit
  (146,752)
  (115,582)
Total liabilities and stockholders' deficit
 $96,683 
 $91,821 
 
The accompanying notes are an integral part of the financial statements.
 
4
 
 
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(Unaudited, in thousands except for earnings per share)
 
 
 For the three months ended
September 30,
 
 
For the nine months ended
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Revenues
 $57,389 
 $44,635 
 $149,896 
 $132,681 
 
    
    
    
    
Cost of goods sold
  53,407 
  41,967 
  142,992 
  125,379 
 
    
    
    
    
Gross profit
  3,982 
  2,668 
  6,904 
  7,302 
 
    
    
    
    
Research and development expenses
  37 
  74 
  160 
  191 
Selling, general and administrative expenses
  4,529 
  3,893 
  12,715 
  11,289 
 
    
    
    
    
Operating loss
  (584)
  (1,299)
  (5,971)
  (4,178)
 
    
    
    
    
Other (income) expense:
    
    
    
    
 
    
    
    
    
Interest expense
    
    
    
    
Interest rate expense
  5,396 
  4,692 
  15,572 
  13,395 
Debt related fees and amortization expense
  946 
  719 
  3,565 
  6,395 
Accretion of Series A preferred units
  589 
  - 
  1,509 
  - 
Loss contingency on litigation
  - 
  - 
  6,200 
  - 
Other (income) expense
  (289)
  (61)
  (1,001)
  2 
 
    
    
    
    
Loss before income taxes
  (7,226)
  (6,649)
  (31,816)
  (23,970)
 
    
    
    
    
Income tax expense
  - 
  - 
  7 
  6 
 
    
    
    
    
Net loss
 $(7,226)
 $(6,649)
 $(31,823)
 $(23,976)
 
    
    
    
    
Less: Net loss attributable to non-controlling interest
  (900)
  (792)
  (2,832)
  (2,386)
 
    
    
    
    
Net loss attributable to Aemetis, Inc.
 $(6,326)
 $(5,857)
 $(28,991)
 $(21,590)
 
    
    
    
    
Other comprehensive income (loss)
    
    
    
    
Foreign currency translation loss
  (254)
  (423)
  (139)
  (967)
Comprehensive loss
 $(7,480)
 $(7,072)
 $(31,962)
 $(24,943)
 
    
    
    
    
Net loss per common share attributable to Aemetis, Inc.
    
    
    
    
Basic
 $(0.31)
 $(0.29)
 $(1.42)
 $(1.07)
Diluted
 $(0.31)
 $(0.29)
 $(1.42)
 $(1.07)
 
    
    
    
    
Weighted average shares outstanding
    
    
    
    
Basic
  20,554 
  20,252 
  20,433 
  20,220 
Diluted
  20,554 
  20,252 
  20,433 
  20,220 
 
The accompanying notes are an integral part of the financial statements.
 
 
5
 
 
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
 
 
For the nine months ended
September 30,
 
 
 
2019
 
 
2018
 
Operating activities:
 
 
 
 
 
 
Net loss
 $(31,823)
 $(23,976)
 
Adjustments to reconcile net loss to net cash used in operating activities:
 
    
Share-based compensation
  630 
  783 
Stock issued for services
  - 
  22 
Depreciation
  3,337 
  3,457 
Debt related fees and amortization expense
  3,565 
  6,395 
Intangibles and other amortization expense
  36 
  105 
Accretion of Series A preferred units
  1,509 
  - 
Change in fair value of Stock Appreciation Rights
  (80)
  (44)
Changes in operating assets and liabilities:
    
    
Accounts receivable
  (4,359)
  670 
Inventories
  2,563 
  (2,588)
Prepaid expenses
  384 
  1,551 
Other assets
  (154)
  (344)
Accounts payable
  3,429 
  2,999 
Accrued interest expense and fees
  13,272 
  8,451 
Other liabilities
  6,565 
  (835)
Net cash used in operating activities
  (1,126)
  (3,354)
 
    
    
Investing activities:
    
    
Capital expenditures
  (5,053)
  (2,498)
 
    
    
Net cash used in investing activities
  (5,053)
  (2,498)
 
    
    
Financing activities:
    
    
Proceeds from borrowings
  38,203 
  16,484 
Repayments of borrowings
  (35,722)
  (12,449)
GAFI proceeds from borrowings
  1,043 
  1,500 
GAFI repayments of borrowings
  (164)
  - 
GAFI renewal fee payment
  (530)
  - 
Grant proceeds received for capital expenditures
  1,364 
  - 
Proceeds from Series A preferred units financing
  1,725 
  - 
Net cash provided by financing activities
  5,919 
  5,535 
 
    
    
Effect of exchange rate changes on cash and cash equivalents
  (9)
  (43)
Net change in cash and cash equivalents for period
  (269)
  (360)
Cash and cash equivalents at beginning of period
  1,188 
  428 
Cash and cash equivalents at end of period
 $919 
 $68 
 
    
    
Supplemental disclosures of cash flow information, cash paid:
    
    
Cash paid for interest, net of capitalized interest of $231 and $0 for the nine months ended September 30, 2019 and 2018, respectively
 $1,836 
 $4,700 
Income taxes paid
  - 
  6 
Supplemental disclosures of cash flow information, non-cash transactions:
    
    
Subordinated debt extension fees added to debt
  680 
  680 
Fair value of warrants issued to subordinated debt holders
  162 
  235 
TEC debt extension, waiver fees, promissory notes fees added to debt
  1,102 
  4,255 
Capital expenditures in accounts payable
  1,443 
  - 
Operating lease liabilities arising from obtaining right of use assets
  1,181 
  - 
Stock Appreciation Rights issued for GAFI Amendment No. 1 added to GAFI debt
  1,050 
  1,277 
 
    
    
 
The accompanying notes are an integral part of the financial statements.
 
 
6
 
 
AEMETIS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited, in thousands)
 
 
For the three and nine months ended September 30, 2019
 
Description
 
Series B Preferred Stock
 
 
Common Stock
 
 
 
 
 
 
 
 
Accumulated Other
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Accumulated
 
 
Comprehensive
 
 
 Noncotrolling
 
 
 Stockholders'
 
 
 
Shares
 
 
Dollars
 
 
Shares
 
 
Dollars
 
 
Paid-in Capital
 
 
Deficit
 
 
Income/(Loss)
 
 
 Interest
 
 
 deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
  1,323 
 $1 
  20,345 
 $20 
 $85,917 
 $(193,204)
 $(3,576)
 $(4,740)
 $(115,582)
 
    
    
    
    
    
    
    
    
    
Stock-based compensation
  - 
  - 
  - 
  - 
  290 
  - 
  - 
  - 
  290 
Issuance and exercise of warrants
  - 
  - 
  30 
  - 
  67 
  - 
  - 
  - 
  67 
Foreign currency translation gain
  - 
  - 
  - 
  - 
  - 
  - 
  58 
  - 
  58 
Net loss
  - 
  - 
  - 
  - 
  - 
  (9,729)
  - 
  (938)
  (10,667)
 
    
    
    
    
    
    
    
    
    
Balance at March 31, 2019
  1,323 
 $1 
  20,375 
 $20 
 $86,274 
 $(202,933)
 $(3,518)
 $(5,678)
 $(125,834)
 
    
    
    
    
    
    
    
    
    
Stock-based compensation
  - 
  - 
  - 
  - 
  196 
  - 
  - 
  - 
  196 
Foreign currency translation gain
  - 
  - 
  - 
  - 
  - 
  - 
  57 
  - 
  57 
Net loss
  - 
  - 
  - 
  - 
  - 
  (12,936)
  - 
  (994)
  (13,930)
 
    
    
    
    
    
    
    
    
    
Balance at June 30, 2019
  1,323 
 $1 
  20,375 
 $20 
 $86,470 
 $(215,869)
 $(3,461)
 $(6,672)
 $(139,511)
 
    
    
    
    
    
    
    
    
    
Stock-based compensation
  - 
  - 
  - 
  - 
  144 
  - 
  - 
  - 
  144 
Issuance and exercise of warrants
  - 
  - 
  195 
  1 
  94 
  - 
  - 
  - 
  95 
Foreign currency translation loss
  - 
  - 
  - 
  - 
  - 
  - 
  (254)
  - 
  (254)
Net loss
  - 
  - 
  - 
  - 
  - 
  (6,326)
  - 
  (900)
  (7,226)
Balance at September 30, 2019
  1323 
 $1 
  20,570 
 $21 
 $86,708 
 $(222,195)
 $(3,715)
 $(7,572)
 $(146,752)
 
  For the three and nine months ended September 30, 2018
Description
 
Series B Preferred Stock
 
 
Common Stock
 
 
 
 
 
 
 
 
Accumulated Other
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Accumulated
 
 
 Comprehensive
 
 
 Noncotrolling
 
 
Stockholders'
 
 
 
Shares
 
 
Dollars
 
 
Shares
 
 
Dollars
 
 
Paid-in Capital
 
 
Deficit
 
 
 Income/(Loss)
 
 
 Interest
 
 
 deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
  1,323 
 $1 
  20,088 
 $20 
 $84,679 
 $(160,188)
 $(2,904)
 $(1,469)
 $(79,861)
Conversion of Series B preferred to common stock
    
    
    
    
    
    
    
    
  - 
Options exercised
  - 
  - 
  2 
  - 
  - 
  - 
  - 
  - 
  - 
Stock-based compensation
  - 
  - 
  - 
  - 
  264 
  - 
  - 
  - 
  264 
Issuance and exercise of warrants
  - 
  - 
  113 
  - 
  65 
  - 
  - 
  - 
  65 
Shares issued to consultants and other services
  - 
  - 
  20 
  - 
  22 
  - 
  - 
  - 
  22 
Foreign currency translation loss
  - 
  - 
  - 
  - 
  - 
  - 
  (150)
  - 
  (150)
Net loss
  - 
  - 
  - 
  - 
  - 
  (10,368)
  - 
  (737)
  (11,105)
 
    
    
    
    
    
    
    
    
    
Balance at March 31, 2018
  1,323 
 $1 
  20,223 
 $20 
 $85,030 
 $(170,556)
 $(3,054)
 $(2,206)
 $(90,765)
 
  - 
    
    
    
    
    
    
    
    
Stock-based compensation
  - 
  - 
  - 
  - 
  317 
  - 
  - 
  - 
  317 
Foreign currency translation loss
  - 
  - 
  - 
  - 
  - 
  - 
  (394)
  - 
  (394)
Net loss
  - 
  - 
  - 
  - 
  - 
  (5,365)
  - 
  (857)
  (6,222)
 
    
    
    
    
    
    
    
    
    
Balance at June 30, 2018
  1,323 
 $1 
  20,223 
 $20 
 $85,347 
 $(175,921)
 $(3,448)
 $(3,063)
 $(97,064)
 
    
    
    
    
    
    
    
    
    
Stock-based compensation
  - 
  - 
  - 
  - 
  202 
  - 
  - 
  - 
  202 
Shares issued to consultants and other services
  - 
  - 
  10 
  - 
  - 
  - 
  - 
  - 
  - 
Issuance and exercise of warrants
  - 
  - 
  112 
  - 
  170 
  - 
  - 
  - 
  170 
Foreign currency translation loss
  - 
  - 
  - 
  - 
  - 
  - 
  (423)
  - 
  (423)
Net loss
  - 
  - 
  - 
  - 
  - 
  (5,857)
  - 
  (792)
  (6,649)
Balance at September 30, 2018
  1323 
 $1 
  20,345 
 $20 
 $85,719 
 $(181,778)
 $(3,871)
 $(3,855)
 $(103,764)
 
The accompanying notes are an integral part of the financial statements.
 
 
7
AEMETIS, INC.
 
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited, tabular data in thousands except par value and per share data)
 
1.            
Nature of Activities and Summary of Significant Accounting Policies
 
Nature of Activities. Headquartered in Cupertino, California, Aemetis is an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products through the conversion of second-generation ethanol and biodiesel plants into advanced biorefineries.  Founded in 2006, we own and operate a 60 million gallon per year ethanol facility (“Keyes Plant”) in the California Central Valley near Modesto where we manufacture and produce ethanol, wet distillers’ grains (“WDG”), condensed distillers solubles (“CDS”), and distillers’ corn oil (“DCO”). We also own and operate a 50 million gallon per year renewable chemical and advanced fuel production facility (“Kakinada Plant”) on the East Coast of India producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. We operate a research and development laboratory to develop efficient conversion technologies using waste feedstocks to produce biofuels and biochemicals. Additionally, we have the option to own a partially completed plant in Goodland, Kansas (the “Goodland Plant”) through a variable interest entity (“VIE”) Goodland Advanced Fuels, Inc., (“GAFI”), which was formed to acquire the Goodland Plant. Upon exercise of the option, we plan to deploy a cellulosic ethanol technology to the Goodland Plant.
 
We also lease a site in Riverbank, California, near the Keyes Plant, where we plan to utilize biomass-to-fuel technology that we have licensed from LanzaTech Technology (“LanzaTech”) and InEnTec Technology (“InEnTec”) to build a cellulosic ethanol production facility (the “Riverbank Cellulosic Ethanol Facility”) capable of converting local California surplus biomass – principally agricultural waste – into ultra-low carbon renewable cellulosic ethanol. By producing ultra-low carbon renewable cellulosic ethanol, we expect to capture higher value D3 cellulosic renewable identification numbers (“RINs”) and California’s Low Carbon Fuel Standard (“LCFS”) credits.
 
In December 2018, we acquired a 5.2-acre parcel of land for the construction of a facility by Linde LLC industrial gas company to sell carbon dioxide (“CO2”) produced at the Keyes Plant, which will add incremental income for the North America segment.
 
During 2018, Aemetis Biogas, LLC (“ABGL”) was formed to construct bio-methane digesters at local dairies near the Keyes Plant, many of whom are already customers of the distillers’ grain produced at the Keyes Plant. The digesters are connected by a pipeline to a gas cleanup and compression facility to produce Renewable Natural Gas (“RNG”).  ABGL currently has signed participation agreements with over a dozen local dairies and three fully executed leases with dairies near the Keyes Plant in order to capture their methane, which would otherwise be released into the atmosphere, primarily from manure wastewater lagoons. We plan to capture biogas from multiple dairies and pipe the gas to a centralized location at our Keyes Plant where we will remove the impurities of the methane and clean it into bio-methane for injection into the local utility pipeline or to a renewable compressed natural gas (“RCNG”) truck loading station that will service local trucking fleets to displace diesel fuel.  The biogas can also be used in our Keyes Plant to displace petroleum-based natural gas. The environmental benefits of the ABGL project are potentially significant because dairy biogas has a negative carbon intensity (“CI”) under the California LCFS. The biogas produced by ABGL will also receive D3 RINs under the federal Renewable Fuel Standard (“RFS”).
 
 
8
 
AEMETIS, INC.
 
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited, tabular data in thousands except par value and per share data)
 
Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis, Inc., a Nevada corporation, and its wholly owned subsidiaries (collectively, Aemetis or the Company). Additionally, we consolidate all entities in which we have a controlling financial interest either directly or by option to acquire the interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. An enterprise must consolidate a VIE if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
 
The accompanying consolidated condensed balance sheet as of September 30, 2019, the consolidated condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018, the consolidated condensed statements of cash flows for the nine months ended September 30, 2019 and 2018, and the consolidated condensed statements of stockholders’ deficit for the three and nine months ended September 30, 2019 and 2018 are unaudited. The consolidated condensed balance sheet as of December 31, 2018 was derived from the 2018 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2018 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
 
In the opinion of management, the unaudited interim consolidated condensed financial statements for the three and nine months ended September 30, 2019 and 2018 have been prepared on the same basis as the audited consolidated statements as of December 31, 2018 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.
 
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
 
Revenue Recognition. We derive revenue primarily from sales of ethanol and related co-products in North America, and of biodiesel and refined glycerin in India based on the supply agreements and purchase order contracts. We assessed the following criteria under the ASC 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations.
 
 
9
 
AEMETIS, INC.
 
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited, tabular data in thousands except par value and per share data)
 
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.
 
North America:  In North America, we sell the majority of our production to one customer under a supply contract, with individual sales transactions occurring under this contract. Given the similarity of these transactions, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to the tank of J.D. Heiskell or to one of their contracted trucking companies. At this point in time, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy for ethanol and by A.L. Gilbert on WDG and DCO. There is no transaction price allocation needed.
 
The below table shows our sales in North America by product category:
 
North America (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
September 30,
 
 
 For the nine months ended
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Ethanol sales
 $27,456 
 $29,661 
 $84,453 
 $88,002 
Wet distiller's grains sales
  8,783 
  8,116 
  26,119 
  24,443 
Other sales
  1,581 
  799 
  3,370 
  2,935