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
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
|
|
|
|
|
|
|
|
|
||||