Last10K.com

Aemetis, Inc (AMTX) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, June 30, 2021

Aemetis, Inc

CIK: 738214 Ticker: AMTX
  Exhibit 99.1
External Investor Relations Contact:
Kirin 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 2021 Financial Results
 
CUPERTINO, Calif. – August 12, 2021 -
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, 2021.
 
“Revenues from ethanol sales in the second quarter of 2021 increased 16% compared to the second quarter of 2020 as economic recovery from COVID-19 continues to create increased demand for liquid transportation fuels along with its associated stronger pricing,” said Todd Waltz, Chief Financial Officer of Aemetis.  “North America revenues during the second quarter of 2021 increased to $54.7 million compared to $45.2 million during the second quarter of 2020. Capital expenditures for ultra-low carbon projects were $12.9 million for the first six months of 2021 as our engineering and construction teams progress with the initiatives outlined in our previously announced Five Year Plan,” added Waltz.
 
“We are pleased with the milestones accomplished during the second quarter of 2021, including progress in engineering and permitting the next 32 miles of biogas pipeline and several dairy digesters,” said Eric McAfee, Chairman and CEO of Aemetis.  “The Aemetis Biogas RNG project received approval for a Low Carbon Fuel Standard pathway that established a -426 carbon intensity for our dairy RNG biogas project, and we received California Environmental Quality Act approval for the 32-mile extension to our existing 4-mile biogas pipeline, in addition to an encroachment permit to construct approximately 20 miles of pipeline in Stanislaus County.  We also expanded the team managing the Aemetis Carbon Capture subsidiary to inject CO2 emissions into sequestration wells which are expected to be drilled at our two biofuels plant sites in California above unique shale formations.  We invite investors to review the updated Aemetis Corporate Presentation on the Aemetis home page prior to the earnings call.”
 
Today, Aemetis will host an earnings review call at 11:00 a.m. Pacific time (PT).
 
Live Participant Dial In (Toll Free): +1-844-602-0380
Live Participant Dial In (International): +1-862-298-0970
Webcast URL:  https://www.webcaster4.com/Webcast/Page/2211/42353
 
For details on the call, please visit http://www.aemetis.com/investors/conference-calls/
 
 
 
 
Financial Results for the Three Months Ended June 30, 2021
 
Revenues during the second quarter of 2021 were $54.9 million compared to $47.8 million for the second quarter of 2020. Our North America operations in the second quarter of 2021, as compared to the second quarter of 2020, experienced steady sales volume with an increase in the selling price of ethanol from $2.63 per gallon to $2.78 per gallon, and an increase in the delivered corn price from an average of $4.55 per bushel during the second quarter of 2020 to $8.04 per bushel during the second quarter of 2021. Increased COVID-19 infection rates and high stearin costs negatively impacted sales in India.
 
Gross profit for the second quarter of 2021 was $3.6 million, compared to $14.1 million during the second quarter of 2020. Our North America segment accounted for substantially all of the reported, consolidated gross profit in both periods.
 
Selling, general and administrative expenses were $5.8 million during the second quarter of 2021, compared to $4.0 million during the second quarter of 2020 as a result of period expenses incurred as part of the development of our ultra-low carbon initiatives.
 
Operating loss was $2.1 million for the second quarter of 2021, compared to an operating income of $10.0 million for the second quarter of 2020 resulting from a combination of lower demand for the higher profitability industrial alcohol products and rising corn prices.
 
Interest expense during the second quarter of 2021 was $5.2 million, excluding accretion and other expenses in connection with Series A preferred units in our Aemetis Biogas LLC subsidiary, compared to $6.2 million during the second quarter of 2020. Additionally, our Aemetis Biogas LLC subsidiary recognized $3.8 million of accretion and other expenses in connection with preference payments on its preferred stock during the second quarter of 2021 compared to $1.4 million during the second quarter of 2020.
 
Net loss was $10.6 million for the second quarter of 2021, compared to a net income of $2.2 million for the second quarter of 2020.
 
Cash at the end of the second quarter of 2021 increased to $7.2 million, compared to $0.6 million at the end of 2020. Capital expenditures increased property, plant and equipment by $12.9 million driven by investments in our ultra-low carbon initiatives and company debt decreased by $48.7 million compared to December 31, 2020.
 
Financial Results for the Six Months Ended June 30, 2021
 
Revenues were $97.7 million for the first half of 2021, compared to $87.3 million for the first half of 2020, driven by an increase in the selling price of ethanol from $2.08 per gallon to $2.34 per gallon on increased volumes of 1.2 million gallons from 29.6 million gallons to 30.8 million gallons.
 
 
 
 
Gross profit for the first half of 2021 was $38 thousand, compared to $13.6 million during the first half of 2020, primarily attributable to delivered corn price increasing from $4.89 per bushel during the first half of 2020 to $7.44 per bushel during the first half of 2021.
 
Selling, general and administrative expenses were $11.1 million during the first half of 2021, compared to $8.0 million during the first half of 2020.
 
Operating loss was $11.1 million for the first half of 2021, compared to an operating income of $5.5 million for the first half of 2020.
 
Interest expense was $12.4 million during the first half of 2021, excluding accretion and other expenses of Series A preferred units in our Aemetis Biogas LLC subsidiary, compared to interest expense of $13.1 million during the first half of 2020. Additionally, our Aemetis Biogas LLOC subsidiary recognized $5.7 million of accretion and other expenses in connection with preference payments on its preferred stock during the first half of 2021 compared to $2.3 million during the first half of 2020.
 
Net loss for the first half of 2021 was $28.7 million, compared to a net loss of $9.9 million in 2020.
 
About Aemetis
 
Aemetis has a mission to transform renewable energy with below zero carbon intensity transportation fuels. Aemetis has launched the Carbon Zero production process to decarbonize the transportation sector using today's infrastructure.
 
Aemetis Carbon Zero products include zero-carbon fuels that can "drop-in" to be used in airplanes, truck, and ship fleets. Aemetis low-carbon fuels have substantially reduced carbon intensity compared to standard petroleum fossil-based fuels across their lifecycle.
 
Headquartered in Cupertino, California, Aemetis is a renewable natural gas, renewable fuel, and biochemicals company focused on the acquisition, development, and commercialization of innovative technologies that replace petroleum-based products and reduce greenhouse gas emissions. Founded in 2006, Aemetis has completed Phase 1 and is expanding a California biogas digester network and pipeline system to convert dairy waste gas into Renewable Natural Gas (RNG). Aemetis owns and operates a 65 million gallon per year ethanol production facility in California's Central Valley near Modesto that supplies about 80 dairies with animal feed. Aemetis also owns and operates a 50 million gallon per year production facility on the East Coast of India, producing high-quality distilled biodiesel and refined glycerin for customers in India and Europe. Aemetis is developing the Carbon Zero Sustainable Aviation Fuel (SAF) and renewable diesel fuel biorefineries in California from renewable oils and orchard and forest waste. Aemetis holds a portfolio of patents and exclusive technology licenses to produce 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, gain on extinguishment, income tax expense, intangible and other amortization expense, accretion and other expenses of Series A preferred units, depreciation expense, 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. Adjusted 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, statements relating to our five-year growth plan, expansion of our biogas digestor network, development of our carbon sequestration projects 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, demand for high grade alcohol and related products, including hand sanitizers, 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, 2020, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 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)
 
 
 
 
 
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share data)
 
 
 
Three months ended
 
 
Six months ended
 
 
 
June 30,
 
 
June 30,
 
 
 
2021
 
 
2020
 
 
2021
 
 
2020
 
Revenues
 $54,884 
 $47,824 
 $97,691 
 $87,304 
Cost of goods sold
  51,238 
  33,765 
  97,653 
  73,678 
Gross profit
  3,646 
  14,059 
  38 
  13,626 
 
    
    
    
    
Research and development expense
  21 
  21 
  44 
  138 
Selling, general and admin. expense
  5,753 
  4,049 
  11,135 
  7,985 
Operating income (loss)
  (2,128)
  9,989 
  (11,141)
  5,503 
 
    
    
    
    
Interest expense
    
    
    
    
Interest rate expense
  4,529 
  5,574 
  10,494 
  11,160 
Debt related fees and Amortization expense
  690 
  614 
  1,905 
  1,904 
Accretion and other expenses of Series A preferred units
  3,800 
  1,362 
  5,743 
  2,322 
Gain on debt extinguishment
  (1,134)
  - 
  (1,134)
  - 
Other expense
  544 
  303 
  513 
  240 
Income (loss) before income taxes
  (10,557)
  2,136 
  (28,662)
  (10,123)
 
    
    
    
    
Income tax expense (benefit)
  - 
  (56)
  7 
  (263)
 
    
    
    
    
Net income (loss)
 $(10,557)
 $2,192 
 $(28,669)
 $(9,860)
 
    
    
    
    
Net income (loss) per common share
    
    
    
    
Basic
 $(0.34)
 $0.11 
 $(1.00)
 $(0.48)
Diluted
 $(0.34)
 $0.10 
 $(1.00)
 $(0.48)
 
    
    
    
    
Weighted average shares outstanding
    
    
    
    
Basic
  30,924 
  20,683 
  28,781 
  20,668 
Diluted
  30,924 
  21,152 
  28,781 
  20,668 
 
 
 
 
 
AEMETIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
 
 
 
June 30,
2021
(Unaudited)
 
 
December 31,
2020
 
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $7,175 
 $592 
Accounts receivable
  1,743 
  1,821 
Inventories
  4,570 
  3,969 
Prepaid and other current assets
  5,470 
  2,301 
Total current assets
  18,958 
  8,683 
 
    
    
  Property, plant and equipment, net
  119,158 
  109,880 
Right-of-use and other assets
  5,171 
  6,576 
Total assets
 $143,287 
 $125,139 
 
    
    
Liabilities and stockholders' deficit
    
    
Current liabilities:
    
    
Accounts payable
 $16,048 
 $20,739 
Current portion of long term debt
  9,910 
  44,974 
Short term borrowings
  14,107 
  14,541 
Mandatorily redeemable Series B stock
  3,302 
  3,252 
Accrued property taxes
  6,371 
  5,674 
Accrued contingent litigation fees
  6,200 
  6,200 
Other liabilities
  6,966 
  6,855 
Total current liabilities
  62,904 
  102,235 
 
    
    
Total long term liabilities
  204,407 
  207,648 
 
    
    
Stockholders' deficit:
    
    
    Series B convertible preferred stock
  1 
  1 
    Common stock
  32 
  23 
    Additional paid-in capital
  183,015 
  93,426 
    Accumulated deficit
  (302,749)
  (274,080)
    Accumulated other comprehensive loss
  (4,323)
  (4,114)
Total stockholders’ deficit
  (124,024)
  (184,744)
Total liabilities and stockholders' deficit
 $143,287 
 $125,139 
 
 
 
 
RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS
(unaudited, in thousands)
 
 
 
Three Months Ended
June 30,
 
 
Six Months Ended
June 30,
 
 
 
2021
 
 
2020
 
 
2021
 
 
2020
 
Net income (loss)
 $(10,557)
 $2,192 
 $(28,669)
 $(9,860)
Adjustments:
    
    
    
    
Interest expense
  5,219 
  6,188 
  12,399 
  13,064 
Depreciation expense
  1,378 
  1,172 
  2,764 
  2,262 
Accretion and other expenses of Series A preferred units
  3,800 
  1,362 
  5,743 
  2,322 
Share-based compensation
  281 
  325 
  1,116 
  635 
Intangibles and other amortization expense
  12 
  12 
  24 
  24 
Gain on debt extinguishment
  (1,134)
  - 
  (1,134)
  - 
Income tax expense (benefit)
  - 
  (56)
  7 
  (263)
Total adjustments
  9,556 
  9,003 
  20,919 
  18,044 
Adjusted EBITDA
 $(1,001)
 $11,195 
 $(7,750)
 $8,184 
 
PRODUCTION AND PRICE PERFORMANCE
(unaudited)
 
 
 
Three months ended
June 30,
 
 
Six months ended
June 30,
 
 
 
2021
 
 
2020
 
 
2021
 
 
2020
 
Ethanol and high grade alcohol
 
 
 
 
 
 
 
 
 
 
 
 
Gallons sold (in millions)
  15.2 
  13.8 
  30.8 
  29.6 
Average sales price/gallon
 $2.78 
 $2.63 
 $2.34 
 $2.08 
Percentage of nameplate capacity
  110%
  100%
  112%
  108%
WDG
    
    
    
    
Tons sold (in thousands)
  101.4 
  90.9 
  205.3 
  198.0 
Average sales price/ton
 $105 
 $82 
 $106 
 $80 
Delivered cost of corn
    
    
    
    
Bushels ground (in millions)
  5.2 
  4.9 
  10.7 
  10.6 
Average delivered cost / bushel
 $8.04 
 $4.55 
 $7.44 
 $4.89 
Biodiesel
    
    
    
    
Metric tons sold (in thousands)
  0.1 
  2.6 
  0.5 
  6.3 
Average sales price/metric ton
 $1,017 
 $835 
 $1,024 
 $786 
Percentage of nameplate capacity
  0%
  7%
  1%
  8%
Refined glycerin
    
    
    
    
Metric tons sold (in thousands)
  0.0 
  0.4 
  0.1 
  0.6 
Average sales price/metric ton
 $967 
 $901 
 $956 
 $772 
  
 

The following information was filed by Aemetis, Inc (AMTX) on Thursday, August 12, 2021 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: June 30, 2021

 

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

Non-accelerated filer

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 July 31, 2021 was 31,689,517 shares.

 

 

 

 

AEMETIS, INC.

 

FORM 10-Q

 

Quarterly Period Ended June 30, 2021

 

INDEX

 

PART I--FINANCIAL INFORMATION

 

 

 

 

 

Item 1

Financial Statements.

4

 

 

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

35

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

46

 

 

 

 

 

Item 4.

Controls and Procedures.

47

 

PART II--OTHER INFORMATION

 

 

 

 

 

Item 1.

Legal Proceedings

48

 

 

 

 

 

Item 1A.

Risk Factors.

48

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

48

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities.

48

 

 

 

 

 

Item 4.

Mine Safety Disclosures.

48

 

 

 

 

 

Item 5.

Other Information.

48

 

 

 

 

 

Item 6.

Exhibits.

50

 

 

 

 

 

Signatures

 

51

 

 

 
2

Table of Contents

  

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 terms reasonably acceptable to us or at all; our ability to continue to fund operations and our future sources of liquidity and capital resources; our ability to 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

Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1 - Financial Statements.

 

AEMETIS, INC.

 

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited, in thousands except for par value)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents ($117 and $235 respectively from VIE)

 

$7,175

 

 

$592

 

Accounts receivable, net of allowance for doubtful accounts of $1,404 and $1,260 as of June 30, 2021 and December 31, 2020

 

 

1,743

 

 

 

1,821

 

Inventories

 

 

4,570

 

 

 

3,969

 

Prepaid expenses ($78 and $192 respectively from VIE)

 

 

5,142

 

 

 

750

 

Other current assets  ($0 and $741 respectively from VIE)

 

 

328

 

 

 

1,551

 

Total current assets

 

 

18,958

 

 

 

8,683

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net ($29,481 and $22,628 respectively from VIE)

 

 

119,158

 

 

 

109,880

 

Operating lease right-of-use assets ($19 and $28 respectively from VIE)

 

 

2,679

 

 

 

2,889

 

Other assets ($24 and $24 respectively from VIE)

 

 

2,492

 

 

 

3,687

 

Total assets

 

$143,287

 

 

$125,139

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' deficit

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable  ($7,005 and $6,271 respectively from VIE)

 

$16,048

 

 

$20,739

 

Current portion of long term debt

 

 

9,910

 

 

 

44,974

 

Short term borrowings

 

 

14,107

 

 

 

14,541

 

Mandatorily redeemable Series B convertible preferred stock

 

 

3,302

 

 

 

3,252

 

Accrued property taxes

 

 

6,371

 

 

 

5,674

 

Accrued contingent litigation fees

 

 

6,200

 

 

 

6,200

 

Current portion of operating lease liability ($16 and $10 respectively from VIE)

 

 

310

 

 

 

316

 

Current portion of Series A preferred units ($1,566  and $2,015 respectively from VIE)

 

 

1,566

 

 

 

2,015

 

Other current liabilities ($506 and $129 respectively from VIE)

 

 

5,090

 

 

 

4,524

 

Total current liabilities

 

 

62,904

 

 

 

102,235

 

Long term liabilities:

 

 

 

 

 

 

 

 

Senior secured notes and revolving notes

 

 

112,970

 

 

 

125,624

 

EB-5 notes

 

 

32,500

 

 

 

32,500

 

Other long term debt ($45 and $0 respectively from VIE)

 

 

11,461

 

 

 

11,980

 

Series A preferred units ($42,210  and $32,022 respectively from VIE)

 

 

42,210

 

 

 

32,022

 

Operating lease liability ($0 and $11 respectively from VIE)

 

 

2,443

 

 

 

2,578

 

Other long term liabilities ($127 and $74 respectively from VIE)

 

 

2,823

 

 

 

2,944

 

Total long term liabilities

 

 

204,407

 

 

 

207,648

 

 

 

 

 

 

 

 

 

 

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; 31,572 and 22,830 shares issued and outstanding each period, respectively

 

 

32

 

 

 

23

 

Additional paid-in capital

 

 

183,015

 

 

 

93,426

 

Accumulated deficit

 

 

(302,749)

 

 

(274,080)

Accumulated other comprehensive loss

 

 

(4,323)

 

 

(4,114)

Total stockholders' deficit

 

 

(124,024)

 

 

(184,744)

Total liabilities and stockholders' deficit

 

$143,287

 

 

$125,139

 

  

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

 

 
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Table of Contents

 

AEMETIS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(LOSS)

(Unaudited, in thousands except for earnings per share)

 

 

 

For the three months ended June 30,

 

 

For the six months ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

$54,884

 

 

$47,824

 

 

$97,691

 

 

$87,304

 

Cost of goods sold

 

 

51,238

 

 

 

33,765

 

 

 

97,653

 

 

 

73,678

 

Gross profit

 

 

3,646

 

 

 

14,059

 

 

 

38

 

 

 

13,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

21

 

 

 

21

 

 

 

44

 

 

 

138

 

Selling, general and administrative expenses

 

 

5,753

 

 

 

4,049

 

 

 

11,135

 

 

 

7,985

 

Operating income (loss)

 

 

(2,128)

 

 

9,989

 

 

 

(11,141)

 

 

5,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate expense

 

 

4,529

 

 

 

5,574

 

 

 

10,494

 

 

 

11,160

 

Debt related fees and amortization expense

 

 

690

 

 

 

614

 

 

 

1,905

 

 

 

1,904

 

Accretion and other expenses of Series A preferred units

 

 

3,800

 

 

 

1,362

 

 

 

5,743

 

 

 

2,322

 

Gain on debt extinguishment

 

 

(1,134)

 

 

-

 

 

 

(1,134)

 

 

-

 

Other expense (income)

 

 

544

 

 

 

303

 

 

 

513

 

 

 

240

 

Income (loss) before income taxes

 

 

(10,557)

 

 

2,136

 

 

 

(28,662)

 

 

(10,123)

Income tax expense (benefit)

 

 

-

 

 

 

(56)

 

 

7

 

 

 

(263)

Net income (loss)

 

$(10,557)

 

$2,192

 

 

$(28,669)

 

$(9,860)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

(184)

 

 

(27)

 

 

(209)

 

 

(695)

Comprehensive income (loss)

 

$(10,741)

 

$2,165

 

 

$(28,878)

 

$(10,555)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$(0.34)

 

$0.11

 

 

$(1.00)

 

$(0.48)

Diluted

 

$(0.34)

 

$0.10

 

 

$(1.00)

 

$(0.48)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,924

 

 

 

20,683

 

 

 

28,781

 

 

 

20,668

 

Diluted

 

 

30,924

 

 

 

21,152

 

 

 

28,781

 

 

 

20,668

 

  

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

 

 
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AEMETIS, INC

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

For the six months ended June 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$(28,669)

 

$(9,860)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Share-based compensation

 

 

1,116

 

 

 

635

 

Depreciation

 

 

2,764

 

 

 

2,262

 

Debt related fees and amortization expense

 

 

1,905

 

 

 

1,904

 

Intangibles and other amortization expense

 

 

24

 

 

 

24

 

Accretion and other expenses of Series A preferred units

 

 

5,743

 

 

 

2,322

 

Gain on debt extinguishment

 

 

(1,134)

 

 

-

 

Deferred tax benefit

 

 

-

 

 

 

(263)

Provision for bad debts

 

 

144

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(70)

 

 

(3,233)

Inventories

 

 

(610)

 

 

(1,016)

Prepaid expenses

 

 

(4,393)

 

 

(339)

Other assets

 

 

2,588

 

 

 

1,570

 

Accounts payable

 

 

(2,711)

 

 

721

 

Accrued interest expense and fees

 

 

4,361

 

 

 

10,433

 

Other liabilities

 

 

729

 

 

 

(302)

Net cash (used in) provided by operating activities

 

 

(18,213)

 

 

4,858

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(12,935)

 

 

(8,621)

Grant proceeds received for capital expenditures

 

 

1,224

 

 

 

-

 

Net cash used in investing activities

 

 

(11,711)

 

 

(8,621)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

-

 

 

 

6,861

 

Repayments of borrowings

 

 

(53,523)

 

 

(7,524)

Grant proceeds received for capital expenditures

 

 

115

 

 

 

-

 

Payments on finance leases

 

 

(247)

 

 

(702)

Proceeds from issuance of common stock in equity offering

 

 

86,319

 

 

 

-

 

Proceeds from the exercise of stock options

 

 

1,032

 

 

 

-

 

Proceeds from Series A preferred units financing

 

 

3,130

 

 

 

7,902

 

Series A preferred financing redemption

 

 

(300)

 

 

-

 

Net cash provided by financing activities

 

 

36,526

 

 

 

6,537

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(19)

 

 

(20)

Net change in cash and cash equivalents for period

 

 

6,583

 

 

 

2,754

 

Cash and cash equivalents at beginning of period

 

 

592

 

 

 

656

 

Cash and cash equivalents at end of period

 

$7,175

 

 

$3,410

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information, cash paid:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$5,425

 

 

$539

 

Income taxes paid

 

 

7

 

 

 

8

 

Supplemental disclosures of cash flow information, non-cash transactions:

 

 

 

 

 

 

 

 

Subordinated debt extension fees added to debt

 

 

340

 

 

 

340

 

Fair value of warrants issued to subordinated debt holders

 

 

281

 

 

 

93

 

TEC debt extension, waiver fees, promissory notes fees added to debt

 

 

1,215

 

 

 

1,076

 

Capital expenditures in accounts payable

 

 

4,948

 

 

 

2,132

 

Operating lease liabilities arising from obtaining right of use assets

 

 

-

 

 

 

2,632

 

Financing lease liabilities arising from obtaining right of use assets

 

 

-

 

 

 

2,881

 

Capital expenditures purchased on financing

 

 

55

 

 

 

5,652

 

Issuance of RSAs to pay off accounts payable

 

 

893

 

 

 

-

 

 

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

 

 
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AEMETIS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited, in thousands)

 

For the six months ended June 30, 2021

 

 

 

 

 

 

 

 

Additional 

 

 

 

 

 

Accumulated Other

 

 

Total

 

 

 

Series B Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

Description

 

Shares

 

 

Dollars

 

 

Shares

 

 

Dollars

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

1,323

 

 

$1

 

 

22,830

 

 

$23

 

 

$93,426

 

 

$(274,080)

 

$(4,114)

 

$(184,744)

Issuance of common stock

 

 

-

 

 

 

-

 

 

 

5,682

 

 

 

6

 

 

 

62,389

 

 

 

-

 

 

 

-

 

 

 

62,395

 

Stock options exercised

 

 

-

 

 

 

-

 

 

 

1,226

 

 

 

1

 

 

 

1,002

 

 

 

-

 

 

 

-

 

 

 

1,003

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

835

 

 

 

-

 

 

 

-

 

 

 

835

 

Issuance and exercise of warrants

 

 

-

 

 

 

-

 

 

 

113

 

 

 

-

 

 

 

281

 

 

 

-

 

 

 

-

 

 

 

281

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(25)

 

 

(25)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,112)

 

 

-

 

 

 

(18,112)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

 

 

1,323

 

 

$1

 

 

 

29,851

 

 

$30

 

 

$157,933

 

 

$(292,192)

 

$(4,139)

 

$(138,367)

Issuance of common stock

 

 

-

 

 

 

-

 

 

 

976

 

 

 

1

 

 

 

24,773

 

 

 

-

 

 

 

-

 

 

 

24,774

 

Stock options exercised

 

 

-

 

 

 

-

 

 

 

745

 

 

 

1

 

 

 

28

 

 

 

-

 

 

 

-

 

 

 

29

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

 -

 

 

 

-

 

 

 

281

 

 

 

-

 

 

 

-

 

 

 

281

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

 -

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(184)

 

 

(184)

Net loss

 

 

-

 

 

 

-

 

 

 

 -

 

 

 

-

 

 

 

-

 

 

 

(10,557)

 

 

-

 

 

 

(10,557)

Balance at June 30, 2021

 

 

1,323

 

 

$1

 

 

 

31,572

 

 

$32

 

 

$183,015

 

 

$(302,749)

 

$(4,323)

 

$(124,024)

 

For the six months ended June 30, 2020

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Accumulated Other

 

 

Total

 

 

 

Series B Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

Description

 

Shares

 

 

Dollars

 

 

Shares

 

 

Dollars

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

1,323

 

 

$1

 

 

 

20,570

 

 

$21

 

 

$86,852

 

 

$(237,421)

 

$(3,825)

 

$(154,372)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

310

 

 

 

-

 

 

 

-

 

 

 

310

 

Issuance and exercise of warrants

 

 

-

 

 

 

-

 

 

 

113

 

 

 

-

 

 

 

93

 

 

 

-

 

 

 

-

 

 

 

93

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(668)

 

 

(668)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,052)

 

 

-

 

 

 

(12,052)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

1,323

 

 

$1

 

 

 

20,683

 

 

$21

 

 

$87,255

 

 

$(249,473)

 

$(4,493)

 

$(166,689)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

325

 

 

 

-

 

 

 

-

 

 

 

325

 

Issuance and exercise of warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(27)

 

 

(27)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,192

 

 

 

-

 

 

 

2,192

 

Balance at June 30, 2020

 

 

1,323

 

 

$1

 

 

 

20,683

 

 

$21

 

 

$87,580

 

 

$(247,281)

 

$(4,520)

 

$(164,199)

 

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

 

 
7

Table of Contents

 

1. Nature of Activities and Summary of Significant Accounting Policies

 

Nature of Activities. Headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis, “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas, renewable fuels and byproducts company focused on the acquisition, development and commercialization of innovative negative carbon intensity products and technologies that replace traditional petroleum-based products.

 

Founded in 2006, we own and operate a 65 million gallon per year ethanol production facility located in Keyes, California (the “Keyes Plant”). In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold to local dairies and feedlots as animal feed. 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 that produces 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 own a partially completed plant in Goodland, Kansas (the “Goodland Plant”) through our subsidiary Goodland Advanced Fuels, Inc., (“GAFI”), which was formed to acquire the Goodland Plant.

 

We also own and operate the Kakinada Plant with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year. We believe the Kakinada Plant is one of the largest biodiesel production facilities in India on a nameplate capacity basis. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meet international product standards. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive and other industries.

 

During 2018, Aemetis Biogas, LLC (“ABGL”) was formed to construct bio-methane anaerobic digesters at local dairies near the Keyes Plant, many of whom also purchase WDG produced at the Keyes Plant. The digesters are connected via a pipeline owned by ABGL to a gas cleanup and compression unit being built at the Keyes Plant to produce Renewable Natural Gas (“RNG”). During the third quarter of 2020, ABGL completed construction on the first two dairy digesters along with the pipeline that carries bio-methane from these dairies to the Keyes Plant. Upon receiving the bio-methane from the dairies, impurities are removed, and the bio-methane is converted to RNG where it will be either injected into the local gas utility pipeline, supplied to a renewable compressed natural gas (“RCNG”) that will service local trucking fleets, or used as renewable energy at the Keyes Plant.

 

During the first quarter of 2021, Aemetis announced its “Carbon Zero” biofuels production plants designed to produce biofuels, including renewable jet and diesel fuel utilizing cellulosic hydrogen and non-edible renewable oils sourced from existing Aemetis biofuels plants and other sources. The first plant, in Riverbank, California, “Carbon Zero 1”, is expected to utilize hydroelectric and other renewable power available onsite to produce 45 million gallons per year of jet fuel, renewable diesel, and other byproducts. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels to reduce greenhouse gas (“GHG”) emissions and other pollutants associated with conventional petroleum-based fuels.

 

The Company is continuing to develop a biomass-to-fuel technology to build a carbon zero production facility. By producing ultra-low carbon renewable fuels, the Company expects to capture higher value D3 RINs and California’s LCFS credits. D3 RINs have a higher value in the marketplace than D6 RINs due to D3 RINs’ relative scarcity and mandated pricing formula from the United States EPA.

 

On April 1, 2021, Aemetis established a new subsidiary named Aemetis Carbon Capture, Inc. to build carbon sequestration projects to generate LCFS and IRS 45Q credits by injecting CO₂ into wells which are monitored for emissions to ensure the long-term sequestration of carbon underground. California’s Central Valley is well established as a major region for large-scale natural gas production and CO₂ injection projects due to the subsurface geologic formation that retains gases.

 

 
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During the second quarter of 2021, Aemetis has opened negotiations for the supply of 1.6 million metric tonnes (“MT”) per year of CO₂ for Carbon Capture and Sequestration (“CCS”) to be located at or near the two Aemetis renewable fuels plant sites in Central California near Modesto. It is anticipated that the capacity of each injection well site will be approximately one million metric tonnes per year, for a combined total of two million MT of CO₂ sequestration per year.

 

Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis. Additionally, we consolidate all entities in which we have a controlling financial. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, an enterprise must consolidate a variable interest entity (“VIE”) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. ABGL was assessed to be a VIE and through the Company’s ownership interest in all of the outstanding common stock, the Company has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company.

 

All intercompany balances and transactions have been eliminated in consolidation.

 

The accompanying consolidated condensed balance sheet as of June 30, 2021, the consolidated condensed statements of operations and comprehensive income (loss) for the six months ended June 30, 2021 and 2020, the consolidated condensed statements of cash flows for the six months ended June 30, 2021 and 2020, and the consolidated condensed statements of stockholders’ deficit for the three and six months ended June 30, 2021 and 2020 are unaudited. The consolidated condensed balance sheet as of December 31, 2020 was derived from the 2020 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2020 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2020. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

 

In the opinion of Company’s management, the unaudited interim consolidated condensed financial statements for the three and six months ended June 30, 2021 and 2020 have been prepared on the same basis as the audited consolidated statements as of December 31, 2020 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 six months ended June 30, 2021 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.

 

 
9

Table of Contents

 

Revenue Recognition. We derive revenue primarily from sales of ethanol and related co-products in North America, and biodiesel and refined glycerin in India pursuant to supply agreements and purchase order contracts. We assessed the following criteria under the Accounting Standards Codification (“ASC”) 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations.

 

North America: In North America, until May 13, 2020, we sold all our ethanol to J.D. Heiskell & Co. (“J.D. Heiskell”) under the Working Capital and Purchasing Agreement (the “J.D. Heiskell Purchasing Agreement”). On May 13, 2020, we entered into an amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell (the “Corn Procurement and Working Capital”), under the terms of which we buy all corn from J.D. Heiskell and sell all WDG and corn oil we produce to J.D. Heiskell. Following May 13, 2020, we sold the majority of our fuel ethanol production to one customer, Kinergy Marketing, LLC (“Kinergy”), through individual sales transactions. Given the similarity of the individual sales transactions with Kinergy, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to one of our customer’s contracted trucking companies. Upon delivery, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy for ethanol and by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. There is no transaction price allocation needed.

 

During the first quarter of 2020, Aemetis began selling high-grade alcohol for consumer applications directly to customers on the West Coast and Midwest using a variety of payment terms. These agreements and terms were evaluated according to ASC 606 guidance and such revenue is recognized upon satisfaction of the performance obligation by delivery of the product based on the terms of the agreement. Sales of high-grade alcohol were minimal for the second quarter and year to date revenue and were aggregated with ethanol sales for the three and six months ended June 30, 2021. Sales of high-grade alcohol represented 48% and 28% of revenue for the three and six months ended June 30, 2020, respectively.

 

The below table shows our sales in North America by product category:

 

North America (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For the three months ended June 30,

 

 

 For the six months ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Ethanol and high-grade alcohol sales

 

$42,169

 

 

$36,240

 

 

$72,089

 

 

$61,562

 

Wet distiller's grains sales

 

 

10,630

 

 

 

7,466

 

 

 

21,665

 

 

 

15,840

 

Other sales

 

 

1,931

 

 

 

1,517

 

 

 

3,304

 

 

 

3,693

 

 

 

$54,730

 

 

$45,223

 

 

$97,058

 

 

$81,095

 

 

We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.

 

We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in certain contractual agreements.

 

 
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In North America, we buy corn as feedstock for the production of ethanol, from our working capital partner J.D. Heiskell. Prior to May 13, 2020, we sold all our ethanol, WDG, and corn oil to J.D. Heiskell. Subsequent to May 13, 2020, we sold most of our fuel ethanol to one customer, Kinergy, and sold all WDG and corn oil to J.D. Heiskell. During the second quarter, the Company signed a biofuels offtake agreement with Murex, LLC, and beginning on October 1, 2021 the Company will sell all of our fuel ethanol to that customer.

 

We consider the purchase of corn as a cost of goods sold and the sale of ethanol, upon transfer to the common carrier, as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have legal title to the goods during the processing time. The pricing for both corn and ethanol is set independently. Revenues from sales of ethanol and its co-products are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. The Company has elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized in cost of goods sold and selling, general and administrative expenses, respectively, when revenue is recognized. Revenues are recorded at the gross invoiced amount. Hence, we are the principal in North America sales scenarios where our customer and vendor may be the same.

 

We have a contract liability of $0.2 million as of June 30, 2021 and December 31, 2020, in connection with a contract with a customer to sell carbon credit allowances.

 

India: In India, we sell products pursuant to purchase orders (written or verbal) or by contract with governmental or international parties, in which performance is satisfied by delivery and acceptance of the physical product. Given that the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in the contracts. The transaction price is determined daily based on reference market prices for biodiesel, refined glycerin, and PFAD net of taxes. Transaction price allocation is not needed.

 

The below table shows our sales in India by product category:

 

India (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 For the three months ended June 30,

 

 

 For the six months ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Biodiesel sales

 

$107

 

 

$2,149

 

 

$465

 

 

$4,942

 

Refined glycerin sales

 

 

9

 

 

 

370

 

 

 

125

 

 

 

460

 

PFAD sales

 

 

-

 

 

 

62

 

 

 

-

 

 

 

774

 

Other sales

 

 

38

 

 

 

20

 

 

 

43

 

 

 

33

 

 

 

$154

 

 

$2,601

 

 

$633

 

 

$6,209

 

  

In India, we also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those same customers in certain contractual agreements. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel according to agreements when we enter into in these situations. Hence, we are the principal in India sales scenarios where our customer and vendor may be the same.

 

 
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Cost of Goods Sold. Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense.

 

Accounts Receivable. The Company sells ethanol and WDG through third-party marketing arrangements generally without requiring collateral and high-grade alcohol directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO is marketed and sold to A.L. Gilbert and other customers under the J.D. Heiskell Purchasing Agreement. The Company sells CDS directly to customers on standard 30 day payment terms. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30 days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts.

 

The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivables are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We reserved $1.4 million and $1.3 million in the allowances for doubtful accounts as of June 30, 2021 and December 31, 2020, respectively.

 

Inventories. Finished goods, raw materials, and work-in-process inventories are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (“NRV”). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

 

Investments. The Company follows ASC 325-20, Cost Method Investments, to account for its ownership interest in noncontrolled entities. Under ASC 325-20, equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities) and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments). Investments of this nature are initially recorded at cost. Income is recorded for dividends received that are distributed from net accumulated earnings of the noncontrolled entity subsequent to the date of investment. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions in the cost of the investment. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred. During 2020, the Company received 489,716 preferred stock shares and 5,000,000 common stock shares in Nevo Motors, a privately held company, in exchange for conversion of its existing debt, carried at zero value, into equity. Due to the lack of operations, the carrying amount of our investment is zero at June 30, 2021 and December 31, 2020.

 

Variable Interest Entities. We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests in is considered a variable interest entity (“VIE”). We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable GAAP.

 

 
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Property, Plant and Equipment. Property, plant, and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of plant and buildings, furniture, machinery, equipment, land, and biogas dairy digesters. The Goodland Plant is partially completed and is not ready for operation. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.

 

The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment-Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value. The Company has not recorded any impairment during the three and six months ended June 30, 2021 and 2020.

 

California Energy Commission Low-Carbon Fuel Production Program. The Company has been awarded $4.2 million in matching grants from the California Energy Commission Low-Carbon Fuel Production Program (“LCFPP”). The LCFPP grant reimburses the Company for costs to design, procure, and install processing facility to clean-up, measure and verify negative-carbon intensity dairy renewable natural gas fuel at the production facility in Keyes, California. The Company has received $875 thousand from the LCFPP as of June 30, 2021 as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognizes the grant as a reduction of the costs in the period when approval is received.

 

California Department of Food and Agriculture Dairy Digester Research and Development Grant. In 2019, the Company was awarded $3.2 million in matching grants from the California Department of Food and Agriculture (“CDFA”) Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct two of the Company’s biogas capture systems under contract with central California dairies. The Company has received all the awarded grant proceeds as of June 30, 2021.

 

In October 2020, the Company was awarded $7.8 million in matching grants from the CDFA Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct six of the Company’s biogas capture systems under contract with central California dairies. The Company has received $33 thousand from the CDFA 2020 grant program as of June 30, 2021 as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognizes the grant as a reduction of the costs in the period when approval is received.

 

California Energy Commission Low Carbon Advanced Ethanol Grant Program. In May 2019, the Company was awarded the right to receive reimbursements from the California Energy Commission Community-Scale and Commercial-Scale Advanced Biofuels Production Facilities grant under the Alternative and Renewable Fuel and Vehicle Technology Program in an amount up to $5.0 million (the “CEC Reimbursement Program”) in connection with the Company’s expenditures toward the development of the Riverbank Cellulosic Ethanol Facility. To comply with the guidelines of the CEC Reimbursement Program, the Company must make a minimum of $7.9 million in matching contributions to the Riverbank project. The Company receives funds under the CEC Reimbursement Program for actual expenses incurred up to $5.0 million as long as the Company makes the minimum matching contribution. Given that the Company has not made the minimum matching contribution, the grant for reimbursement of capital expenditures of $115 thousand received during the first quarter of 2021, and $1.7 million from prior years were recorded as other long-term liabilities as of June 30, 2021. Due to the uncertainty associated with meeting the minimum matching contribution, the reimbursement will be recognized when the Company makes the minimum matching contribution.

 

 
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Basic and Diluted Net Loss per Share. Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and six months ended June 30, 2021 and the six months ended June 30, 2020, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive. As the Company incurred net income for the three months ended June 30, 2020, potentially dilutive securities have been included in the diluted net income per share computations and any potentially anti-dilutive shares have been excluded and are shown below.

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

 

 

(In thousands, except per share amounts)

 

 

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(10,557)

 

$2,192

 

 

$(28,669)

 

$(9,860)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares:                                  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding-basic

 

 

30,924

 

 

 

20,683

 

 

 

28,781

 

 

 

20,668

 

Weighted average dilutive share equivalents from preferred shares

 

 

-

 

 

 

132

 

 

 

-

 

 

 

-

 

Weighted average dilutive share equivalents from stock options

 

 

-

 

 

 

337

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding-diluted

 

 

30,924

 

 

 

21,152

 

 

 

28,781

 

 

 

20,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share-basic

 

$(0.34)

 

$0.11

 

 

$(1.00)

 

$(0.48)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share-diluted

 

$(0.34)

 

$0.10

 

 

$(1.00)

 

$(0.48)

 

The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of June 30, 2021 and 2020:

 

 

 

As of

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

 

 

 

 

 

 

Series B preferred (post split basis)

 

 

132

 

 

 

-

 

Common stock options and warrants

 

 

4,252

 

 

 

2,950

 

Debt with conversion feature at $30 per share of common stock

 

 

1,273

 

 

 

1,271

 

 

 

 

 

 

 

 

 

 

Total number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation

 

 

5,657

 

 

 

4,221

 

 

Comprehensive Income (Loss). ASC 220 Comprehensive Income (Loss) requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive loss and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments.

 

Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date and the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. Transactional gains and losses from foreign currency transactions are recorded in other (income) loss, net.

 

 
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Operating Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Aemetis recognized two reportable geographic segments: “North America” and “India.”

 

The “North America” operating segment includes the Company’s 65 million gallons per year capacity Keyes Plant in California, the ultra-low carbon renewable fuel project in Riverbank, the biogas digesters on dairies near Keyes, California, the Goodland Plant in Kansas and the research and development facility in Minnesota.

 

The “India” operating segment includes the Company’s 50 million gallon per year capacity Kakinada Plant in India, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius.

 

Fair Value of Financial Instruments. Financial instruments include accounts receivable, accounts payable, accrued liabilities, current and non-current portion of subordinated debt, notes receivable, notes payable, series A preferred units, and long-term debt. Due to the unique terms of our notes payable and long-term debt and the financial condition of the Company, the fair value of the debt is not readily determinable. The fair value, determined using level 3 inputs, of all other current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments.

 

Share-Based Compensation. The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation requiring the Company to recognize expenses related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted, adjusted to reflect only those shares that are expected to vest.

 

Commitments and Contingencies. The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.

 

Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date.

 

Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt-Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.

 

Recently Issued Accounting Pronouncements.

 

ASU 2016-13: Measurement of Credit Losses on Financial Instruments. This ASU requires the use of an expected loss model for certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required. For available-for-sale debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset. This standard is effective for fiscal years beginning after December 15, 2022. We are assessing the impact of adopting this standard on our consolidated financial statements and related disclosures.

 

 
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For a complete summary of the Company’s significant accounting policies, please refer to the Company’s audited financial statements and notes thereto for the years ended December 31, 2020 and 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2021.

 

2. Inventories

 

Inventories consist of the following:

 

 

 

As of

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Raw materials

 

$1,326

 

 

$1,382

 

Work-in-progress

 

 

2,121

 

 

 

1,266

 

Finished goods

 

 

1,123

 

 

 

1,321

 

Total inventories

 

$4,570

 

 

$3,969

 

 

As of June 30, 2021 and December 31, 2020, the Company recognized a lower of cost or market impairment of none and $0.7 million respectively, related to inventory.

 

3. Property, Plant and Equipment

 

Property, plant and equipment consist of the following:

 

 

 

As of

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Land

 

$4,083

 

 

$4,092

 

Plant and buildings

 

 

97,035

 

 

 

97,398

 

Furniture and fixtures

 

 

1,276

 

 

 

1,195

 

Machinery and equipment

 

 

5,259

 

 

 

5,188

 

Construction in progress

 

 

37,524

 

 

 

25,397

 

Property held for development

 

 

15,408

 

 

 

15,408

 

Finance lease right of use assets

 

 

2,204

 

 

 

2,308

 

Total gross property, plant & equipment

 

 

162,789

 

 

 

150,986

 

Less accumulated depreciation

 

 

(43,631)

 

 

(41,106)

Total net property, plant & equipment

 

$119,158

 

 

$109,880

 

 

For the three months ended June 30, 2021 and 2020, interest capitalized in property, plant, and equipment was $0.9 million and $0.1 million, respectively. For the six months ended June 30, 2021 and 2020, interest capitalized in property, plant, and equipment was $1.5 million and $0.2 million, respectively.

 

 
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Construction in progress contains incurred costs for the ABGL biogas project, Riverbank project, and Zebrex equipment installation at the Keyes Plant. In the second quarter of 2020, the CO₂ Project commenced operations and was placed in service at that time. In the third quarter of 2020, two diary digesters commenced operations and were placed in service at that time. Spending for ongoing capital projects is accumulated in construction in progress and will be capitalized with subsequent depreciation once the capital projects are finished and are in service. Depreciation on the components of property, plant and equipment is calculated using the straight-line method over their estimated useful lives as follows:

 

Years

 

Plant and buildings

 

20 - 30

 

Machinery and equipment

5 - 15

 

Furniture and fixtures

 

3 - 5

 

 

For the three months ended June 30, 2021 and 2020, the Company recorded depreciation expense of $1.4 and $1.2 million, respectively. For the six months ended June 30, 2021 and 2020, the Company recorded depreciation expense of $2.8 and $2.3 million, respectively.

 

Management is required to evaluate these long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Management determined there was no impairment on the long-lived assets during the three and six months ended June 30, 2021 and 2020.

 

4. Debt

 

Debt consists of the following:

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Third Eye Capital term notes

 

$7,077

 

 

$7,066

 

Third Eye Capital revolving credit facility

 

 

67,592

 

 

 

80,310

 

Third Eye Capital revenue participation term notes

 

 

11,887

 

 

 

11,864

 

Third Eye Capital acquisition term notes

 

 

26,414

 

 

 

26,384

 

Third Eye Capital promissory note

 

 

-

 

 

 

1,444

 

Cilion shareholder seller notes payable

 

 

6,349

 

 

 

6,274

 

Subordinated notes

 

 

13,512

 

 

 

12,745

 

Term loans on capital expenditures

 

 

5,707

 

 

 

5,652

 

EB-5 promissory notes

 

 

42,410

 

 

 

43,120

 

PPP loans

 

 

-

 

 

 

1,134

 

GAFI Term and Revolving loans

 

 

-

 

 

 

33,626

 

Total debt

 

 

180,948

 

 

 

229,619

 

Less current portion of debt

 

 

24,017

 

 

 

59,515

 

Total long term debt

 

$156,931

 

 

$170,104

 

  

Third Eye Capital Note Purchase Agreement

 

On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement with Third Eye Capital (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $7.2 million to replace existing notes held by Third Eye Capital (the “Term Notes”); (ii) senior secured revolving loans in an aggregate principal amount of $18.0 million (the “Revolving Credit Facility”); (iii) senior secured term loans in the principal amount of $10.0   million to convert the prior revenue participation agreement to a note (the “Revenue Participation Term Notes”); and (iv) senior secured term loans in an aggregate principal amount of $15.0 million (the “Acquisition Term Notes”) used to fund the cash portion of the acquisition of Cilion, Inc. (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the “Original Third Eye Capital Notes”).

 

 
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On April 1, 2020, the Company exercised the option to extend the maturity of Third Eye Capital Notes to April 1, 2021 for a fee of 1% of the outstanding note balance instead of agreed fee of 5% in Amendment No.14 to the Note Purchase Agreement. We have evaluated the reduction in extension fee to 1% in accordance with ASC 470-60 Troubled Debt Restructuring. According to the guidance, we considered the 1% extension fee to be a troubled debt restructuring.

 

On August 11, 2020, Third Eye Capital agreed to Limited Waiver and Amendment No. 17 to the Note Purchase Agreement (“Amendment No. 17”), to (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2022 in exchange for an extension fee equal to 1% of the Note Indebtedness in respect to each Note, provided that such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension, (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarters ended March 31, 2021 and June 30, 2021. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.3 million in cash (the “Amendment No. 17 Fee”). On November 5, 2020, Third Eye Capital agreed to Limited Waiver and Amendment No. 18 to the Note Purchase Agreement (“Amendment No. 18”) to provide for a waiver of the ratio of note indebtedness covenant for the quarter ended September 30, 2021. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment fee of $50 thousand. We have evaluated the 1% extension fee in Amendment No. 17, and the $50 thousand waiver fee in Amendment No. 18 in accordance with ASC 470-60 Troubled Debt Restructuring.

 

According to the guidance, we considered the 1% extension fee in Amendment No.17 and the $50 thousand waiver fee in Amendment No. 18 to be troubled debt restructurings. In order to assess whether the creditor granted a concession, we calculated the post-restructuring effective interest rate by projecting cash flows on the new terms and calculated a discount rate equal to the carrying amount of pre-restructuring of debt, and by comparing this calculation to the terms of Amendment No. 15, we determined that Third Eye Capital provided a concession in accordance with the provisions of ASC 470-60 and thus applied troubled debt restructuring accounting, resulting in no gain or loss from the application of this accounting. Using the effective interest method of amortization, the 1% extension fee of $1.0 million and Amendment No. 17 Fee of $0.3 million are being amortized over the stated remaining life of the Third Eye Capital Notes.

 

On February 27, 2019, a promissory note (the “February 2019 Note”, together with the Original Third Eye Capital Notes, the “Third Eye Capital Notes”) for $2.1 million was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14% per annum maturing on the earlier of (a) receipt of proceeds from any financing, refinancing, or other similar transaction, (b) extension of credit by payee, as lender or as agent on behalf of certain lenders, to the Company or its affiliates, or (c) April 30, 2019. In consideration of the February 2019 Note, $0.1 million of the total proceeds were paid to Third Eye Capital as financing charges. On April 30, 2019, the February 2019 Note was modified to remove the stated maturity date and instead be due on demand by Third Eye Capital. In third quarter of 2019, the February 2019 Note was modified to include additional borrowings of $0.7 million. In first quarter of 2020, the February 2019 Note was modified to include additional borrowings of $0.6 million. The February 2019 note was fully repaid in the first quarter of 2021.

 

On March 14, 2021, Third Eye Capital agreed to Limited Waiver and Amendment No. 19 to the Note Purchase Agreement (“Amendment No. 19”), to (i) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended December 31, 2021, (ii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through March 31, 2021. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.1 million in cash (the “Amendment No. 19 Fee”). We gave the notice to extend the maturity date of the Notes to April 1, 2022 and the extension fee equal to 1% of the Note Indebtedness in respect to each Note, provided that half of such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension and rest of the balance may be payable in cash or common stock within 60 days of the date of such relevant extension. We evaluated the terms of the Amendment No. 19 and the maturity date extension and applied modification accounting treatment in accordance with ASC 470-50 Debt - Modification and Extinguishment.

 

 
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On August 9, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 20 to the Note Purchase Agreement (“Amendment No. 20”) to: (i) provide that, upon written notice to Third Eye Capital, the maturity date may be further extended to April 1, 2023 in exchange for an extension fee equal to 1% of the Note Indebtedness in respect of each Note, where half of such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension; (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarters ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022; and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended June 30, 2021 in which the Company exceeded the $100,000 capital expenditures limit. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.3 million in cash. We will evaluate the terms of the Amendment No.20 in accordance with ASC 470-50 Debt - Modification and Extinguishment.

 

Based on prior amendments and Amendment No. 20, the ratio of note indebtedness covenant is waived for the quarters ended June 30, 2021 through December 31, 2022. According to ASC 470-10-45 Debt-Other Presentation Matters, if it is probable that the Company will not be able to cure the default at measurement dates within the next 12 months, the related debt needs to be classified as current. As Amendment No. 20 waived the ratio of the note indebtedness covenant over the next four quarters, the notes are classified as long-term debt.

 

On March 6, 2020, we and a subsidiary entered into a one-year reserve liquidity facility governed by a promissory note, payable to Third Eye Capital, in the principal amount of $18 million. On March 14, 2021, Third Eye agreed to increase the amount available under the reserve liquidity facility to $70.0 million and extend the maturity date to April 1, 2022. Borrowings under the facility are available from March 14, 2021 until maturity on April 1, 2022. Interest on borrowed amounts accrues at a rate of 30% per annum, paid monthly in arrears and may be capitalized and due upon maturity, or 40% if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (b) April 1, 2022. Any amounts may be re-borrowed up to repaid amounts up until the maturity date of April 1, 2022. The promissory note is secured by liens and security interests upon the property and assets of the Company. In return, the Company will pay a non-refundable standby fee at 2% per annum of the difference between the aggregate principal amount outstanding and the commitment, payable monthly in cash. In addition, if any initial advances are drawn under the facility, the Company will pay a non-refundable one-time fee in the amount of $0.5 million provided that such fee may be added to the principal amount of the promissory note on the date of such initial advance. On August 9, 2021, Third Eye Capital agreed to decrease the amount available under the reserve liquidity notes governed by a promissory note to $40.0 million.

 

 

 
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Terms of Third Eye Capital Notes

  

A.

Term Notes. As of June 30, 2021, the Company had $7.1 million in principal and interest outstanding net of $52 thousand unamortized debt issuance costs under the Term Notes. The Term Notes accrue interest at 14% per annum. The Term Notes mature on April 1, 2022*. Fifty percent of the Amendment No. 19 extension fee of $71 thousand was paid in cash, hence $35 thousand was added to the outstanding balance as of June 30, 2021.

 

 

B.

Revolving Credit Facility. The Revolving Credit Facility accrues interest at the prime rate plus 13.75% (17.00% as of June 30, 2021) payable monthly in arrears. The Revolving Credit Facility matures on April 1, 2022*. As of June 30, 2021, AAFK had $68.3 million in principal and interest and waiver fees outstanding net of $669 thousand unamortized debt issuance costs under the Revolving Credit Facility. $518 thousand of the Amendment No. 19 extension fee of $926 thousand was paid in cash, hence $418 thousand was added to the outstanding balance as of June 30, 2021.

 

 

C.

Revenue Participation Term Notes. The Revenue Participation Term Note bears interest at 5% per annum and matures on April 1, 2022*. As of June 30, 2021, AAFK had $12.0 million in principal and interest outstanding net of $83 thousand unamortized debt issuance costs on the Revenue Participation Term Notes. Fifty percent of the Amendment No. 19 extension fee of $119 thousand was paid in cash, hence $60 thousand was added to the outstanding balance as of June 30, 2021.

 

 

D.

Acquisition Term Notes. The Acquisition Term Notes accrue interest at the prime rate plus 10.75% (14.00% per annum as of June 30, 2021) and mature on April 1, 2022*. As of June 30, 2021, Aemetis Facility Keyes, Inc. had $26.6 million in principal and interest and redemption fees outstanding net of $138 thousand unamortized debt issuance costs. The outstanding principal balance includes a total of $7.5 million in redemption fees. Fifty percent of the Amendment No. 19 extension fee of $191 thousand was paid in cash, hence $95 thousand was added to the outstanding balance as of June 30, 2021.

 

 

E.

Reserve Liquidity Notes. The Reserve Liquidity Notes, with available borrowing capacity in the amount of $70.0 million, accrues interest at the rate of 30% per annum and are due and payable upon the earlier of receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and April 1, 2022. We have no borrowings outstanding under the Reserve Liquidity Notes as of June 30, 2021. On August 9, 2021, Third Eye agreed to decrease the amount available under the reserve liquidity notes governed by a promissory note to $40.0 million.

  

*The note maturity date can be extended by the Company to April 2023. As a condition to any such extension, the Company would be required to pay a fee of 1% of the carrying value of the debt which can be paid 50% in cash or common stock and 50% can be added to the outstanding debt. As a result of this ability to extend the maturity at the Company’s will, the Third Eye Capital Notes are classified as non-current debt.

 

The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Third Eye Capital Notes allow the lender to accelerate the maturity in the occurrence of any event that could reasonably be expected to have a material adverse effect, such as any change in the business, operations, or financial condition. The terms of the notes allow interest to be capitalized.

 

 
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The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from the Company’s North American subsidiaries. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $8.0 million.

 

Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc., (“Cilion”) on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The liability bears interest at 3% per annum and is due and payable after the Third Eye Capital Notes have been paid in full. As of June 30, 2021, Aemetis Facility Keyes, Inc. had $6.3 million in principal and interest outstanding under the Cilion shareholder seller notes payable.

 

Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $