10-Q 1 amtx20240331_10q.htm FORM 10-Q amtx20240331_10q.htm
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Table of Contents

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 March 31, 2024

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)


Delaware

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

(408) 213-0940

(Address and telephone number of principal executive offices)

 

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 every Interactive Data File required to be submitted 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 such files). Yes  ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐  Accelerated filer ☑  Non-accelerated filer ☐  Smaller reporting company   Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑

 

The number of shares outstanding of the registrant’s Common Stock on April 30, 2024 was44,397,833 shares.



 

 

 

AEMETIS, INC.

 

FORM 10-Q

 

Quarterly Period Ended March 31, 2024

 

INDEX
     
PART I--FINANCIAL INFORMATION
     
     
Item 1 Financial Statements. 4
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 26
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk. 31
     
Item 4. Controls and Procedures. 31
     
PART II--OTHER INFORMATION
     
Item 1. Legal Proceedings. 32
     
Item 1A. Risk Factors. 32
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 32
     
Item 3. Defaults Upon Senior Securities. 32
     
Item 4. Mine Safety Disclosures. 32
     
Item 5. Other Information. 32
     
Item 6. Exhibits. 32
     
Signatures 33

 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

We 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 and 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 expand into alternative markets for biodiesel and its byproducts, including continuing to expand our sales into international markets; our ability to maintain and expand strategic relationships with suppliers; our ability to access governmental carbon reduction incentives; our ability to supply gas into transportation markets; our ability to continue to develop, maintain, and protect new and existing intellectual property rights; our ability to adopt, develop and commercialize new technologies; our ability to extend or 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 fund, develop, build, maintain and operate digesters, facilities and pipelines for our California Dairy Renewable Natural Gas segment; our ability to fund, develop and operate our carbon capture sequestration projects, including obtaining required permits; our ability to receive awarded grants by meeting all of the required conditions, including meeting the minimum contributions; our ability to obtain additional financing under the EB-5 program; our ability to generate and sell or utilize various credits, including LCFS, D3 RINs, production tax credits, and investment tax credits; our ability to improve margins; and our ability to raise additional debt and equity funding at the parent, subsidiary, or project level. Words or phrases such as “anticipates,” “may,” “will,” “should,” “could,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” and 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. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

 

 

PART I - FINANCIAL INFORMATION

 

Item 1 - Financial Statements

AEMETIS, INC.

 

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited, In thousands except for par value)

 

  

March 31, 2024

  

December 31, 2023

 

Assets

        

Current assets:

        

Cash and cash equivalents ($10 and $1,093 respectively from VIE)

 $1,629  $2,667 

Accounts receivable ($675 and $55 respectively from VIE)

  8,867   8,633 

Inventories, net of allowance for excess and obsolete inventory of $1,040 as of March 31, 2024 and December 31, 2023, respectively

  16,011   18,291 

Prepaid expenses ($1,034 and $1,438 respectively from VIE)

  2,418   3,347 

Other current assets ($143 and $289 respectively from VIE)

  4,027   3,462 

Total current assets

  32,952   36,400 
         

Property, plant and equipment, net ($85,514 and $81,966 respectively from VIE)

  197,737   195,108 

Operating lease right-of-use assets ($125 and $145 respectively from VIE)

  1,951   2,056 

Other assets ($4,722 and $4,881 respectively from VIE)

  9,599   9,842 

Total assets

 $242,239  $243,406 
         

Liabilities and stockholders' deficit

        

Current liabilities:

        

Accounts payable ($4,387 and $3,815 respectively from VIE)

 $29,789  $32,132 

Current portion of long term debt ($498 and $190 respectively from VIE)

  48,870   13,585 

Short term borrowings ($9 and $9 respectively from VIE)

  23,937   23,443 

Other current liabilities ($50 and $48 respectively from VIE)

  15,322   15,229 

Total current liabilities

  117,918   84,389 

Long term liabilities:

        

Senior secured notes and revolving notes

  150,830   176,476 

EB-5 notes

  29,500   29,500 

Other long term debt ($43,416 and $40,857 respectively from VIE)

  54,087   51,717 

Series A preferred units ($116,870 and $113,189 respectively from VIE)

  116,870   113,189 

Other long term liabilities ($54 and $67 respectively from VIE)

  5,175   5,112 

Total long term liabilities

  356,462   375,994 
         

Stockholders' deficit:

        
         

Common stock, $0.001 par value per share; 80,000 shares authorized; 42,616 and 40,966 shares issued and outstanding each period, respectively

  43   41 

Additional paid-in capital

  273,167   264,058 

Accumulated deficit

  (499,636)  (475,405)

Accumulated other comprehensive loss

  (5,715)  (5,671)

Total stockholders' deficit

  (232,141)  (216,977)

Total liabilities and stockholders' deficit

 $242,239  $243,406 
         

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

 

 

 

AEMETIS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands except for loss per share)

 

   

For the three months ended March 31,

 
   

2024

   

2023

 

Revenues

  $ 72,634     $ 2,151  

Cost of goods sold

  $ 73,246       3,446  

Gross loss

    (612 )     (1,295 )
                 

Selling, general and administrative and R&D expenses

    8,850       10,828  

Operating loss

    (9,462 )     (12,123 )
                 

Other expense (income):

               

Interest expense

               

Interest rate expense

    9,092       7,078  

Debt related fees and amortization expense

    1,421       1,969  

Accretion and other expenses of Series A preferred units

    3,311       5,564  

Other (income) expense

    67       (76 )

Loss before income taxes

    (23,353 )     (26,658 )

Income tax expense (benefit)

    878       (248 )

Net loss

  $ (24,231 )   $ (26,410 )
                 

Other comprehensive income (loss)

               

Foreign currency translation (loss) income

    (44 )     117  

Comprehensive loss

  $ (24,275 )   $ (26,293 )
                 

Net loss per common share

               

Basic

  $ (0.58 )   $ (0.73 )

Diluted

  $ (0.58 )   $ (0.73 )
                 

Weighted average shares outstanding

               

Basic

    41,889       36,425  

Diluted

    41,889       36,425  

 

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

 

 

 

AEMETIS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

  

For the three months ended March 31,

 
  

2024

  

2023

 

Operating activities:

        

Net loss

 $(24,231) $(26,410)

Adjustments to reconcile net loss to net cash used in operating activities:

        

Share-based compensation

  2,969   2,662 

Depreciation

  1,798   1,790 

Debt related fees and amortization expense

  1,421   1,969 

Intangibles and other amortization expense

  12   12 

Accretion and other expenses of Series A preferred units

  3,311   5,564 

Deferred tax benefit

  -   (262)

Changes in operating assets and liabilities:

        

Accounts receivable

  (245)  1,005 

Inventories

  2,259   (7,942)

Prepaid expenses

  929   2,315 

Other assets

  (544)  460 

Accounts payable

  (3,236)  3,002 

Accrued interest expense and fees

  5,500   5,356 

Other liabilities

  (221)  (779)

Net cash used in operating activities

  (10,278)  (11,258)
         

Investing activities:

        

Capital expenditures

  (3,583)  (7,616)

Grant proceeds and other reimbursements received for capital expenditures

  1,900   6,757 

Net cash used in investing activities

  (1,683)  (859)
         

Financing activities:

        

Proceeds from borrowings

  6,223   11,583 

Repayments of borrowings

  (411)  (2,724)

Lender debt renewal and waiver fee payments

  (750)  - 

Payments on finance leases

  (8)  (83)

Proceeds from sales of common stock

  5,513   2,617 

Proceeds from exercise of stock options

  36   - 

Net cash provided by financing activities

  10,603   11,393 
         

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

  15   (56)

Net change in cash, cash equivalents, and restricted cash for period

  (1,343)  (780)

Cash, cash equivalents, and restricted cash at beginning of period

  6,280   6,999 

Cash, cash equivalents and restricted cash at end of period

 $4,937  $6,219 
         

Supplemental disclosures of cash flow information, cash paid:

        

Cash paid for interest

 $2,963  $1,515 

Income taxes paid

  878   14 

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

        

Subordinated debt extension fees added to debt

  340   340 

Debt fees added to revolving lines

  -   423 

Fair value of warrants issued to subordinated debt holders

  593   448 

Lender debt extension, waiver, and other fees added to debt

  595   384 

Cumulative capital expenditures in accounts payable, including net increase (decrease) of $1,027 and ($511), respectively

  8,927   14,900 

 

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

 

 

 

AEMETIS, INC.

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

(Unaudited, in thousands)

 

For the three months ended March 31, 2024

 
   

Series B Preferred Stock

   

Common Stock

   

Additional

           

Accumulated Other

   

Total

 
                                   

Paid-in

   

Accumulated

   

Comprehensive

   

Stockholders'

 

Description

 

Shares

   

Dollars

   

Shares

   

Dollars

   

Capital

   

Deficit

   

Gain (Loss)

   

deficit

 
                                                                 

Balance at December 31, 2023

    -     $ -       40,966     $ 41     $ 264,058     $ (475,405 )   $ (5,671 )     (216,977 )
                                                                 

Issuance of common stock

    -       -       1,523       2       5,511       -       -       5,513  

Stock options exercised

    -       -       14       -       36       -       -       36  

Stock-based compensation

    -       -       -       -       2,969       -       -       2,969  

Issuance and exercise of warrants

    -       -       113       -       593       -       -       593  

Foreign currency translation gain

    -       -       -       -       -       -       (44 )     (44 )

Net loss

    -       -       -       -       -       (24,231 )     -       (24,231 )

Balance at March 31, 2024

    -     $ -       42,616     $ 43     $ 273,167     $ (499,636 )   $ (5,715 )   $ (232,141 )

 

For the three months ended March 31, 2023

 
   

Series B Preferred Stock

   

Common Stock

   

Additional

           

Accumulated Other

   

Total

 
                                   

Paid-in

   

Accumulated

   

Comprehensive

   

Stockholders'

 

Description

 

Shares

   

Dollars

   

Shares

   

Dollars

   

Capital

   

Deficit

   

Loss

   

deficit

 
                                                                 

Balance at December 31, 2022

    1,270     $ 1       35,869     $ 36     $ 232,546     $ (428,985 )   $ (5,452 )   $ (201,854 )
                                                                 

Issuance of common stock

    -       -       668       1       2,616       -       -       2,617  

Series B conversion to common stock

    -       -       -       -       -       -       -       -  

Stock options exercised

    -       -       40       -       -       -       -       -  

Stock-based compensation

    -       -       -       -       2,662       -       -       2,662  

Issuance and exercise of warrants

    -       -       113       -       448       -       -       448  

Foreign currency translation gain

    -       -       -       -       -       -       117       117  

Net loss

    -       -       -       -       -       (26,410 )     -       (26,410 )

Balance at March 31, 2023

    1,270     $ 1       36,690     $ 37     $ 238,272     $ (455,395 )   $ (5,335 )   $ (222,420 )

 

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

 

   

7

(Tabular data in thousands, except par value and per share data)

 

 

1. Summary of Significant Accounting Policies

 

Nature of Activities

 

Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis referred to herein as “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas and renewable fuels company focused on the operation, acquisition, development, and commercialization of innovative technologies to produce low and negative carbon intensity renewable fuels that replace fossil-based products.  We do this by building a local circular bioeconomy using agricultural products and waste to produce low carbon, advanced renewable fuels that reduce greenhouse gas ("GHG") emissions and improve air quality.  Our current operations include:

 

California Ethanol - We own and operate a 65 million gallon per year capacity ethanol production facility 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 as animal feed to local dairies and feedlots.  The Keyes Plant also sells CO₂ to Messer Gas who converts it to liquid and sells it to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives at the Keyes Plant focused on reducing operating costs and lowering the carbon intensity of our fuel.

 

California Dairy Renewable Natural Gas - We produce Renewable Natural Gas (RNG) in central California.  Our facilities consist of eight anaerobic digesters that produce biogas from dairy waste, a 36-mile biogas collection pipeline leading to a central upgrading hub, and an interconnect to inject the RNG into the utility natural gas pipeline for delivery to customers for use as transportation fuel.  We are actively expanding our RNG production dairies, with several additional digesters under construction, agreements with a total of 43 dairies, and environmental review completed for an additional 24 miles of pipeline.  We are also building our own RNG dispensing station, which is planned to begin operating in 2024.

 

India Biodiesel - We own and operate a plant in Kakinada, India (“Kakinada Plant”) with a capacity to produce about 60 million gallons per year of high-quality distilled biodiesel from a variety of vegetable oil and animal waste feedstocks.  The Kakinada Plant is one of the largest biodiesel production facilities in India.  The Kakinada Plant can also distill 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. 

 

In addition, we are actively growing our business by seeking to develop or acquire new facilities, including the following key projects:

 

Sustainable Aviation Fuel and Renewable Diesel – We are developing a sustainable aviation fuel and renewable diesel (“SAF/RD”) production plant to be located at the Riverbank Industrial Complex in Riverbank, CA. The plant is currently designed to produce an expected 90 million gallons per year of SAF/RD from renewable oil and fats obtained from the Company’s other biofuels plants and other sources. The plant will use low-carbon hydroelectric electricity and renewable hydrogen that is generated within the plant’s own processes using byproducts of the SAF/RD production. In 2023, we received approval of the Use Permit and CEQA for the development of the plant, and in March 2024, we received the Authority to Construct air permits for the plant. We are continuing with the engineering and other required development activities for the plant.

 

Carbon Capture and Underground Sequestration – We are developing Carbon Capture and Underground Sequestration (“CCUS”) facilities that will inject carbon dioxide captured from air emissions deep into the ground for geologic storage to reduce emissions to the atmosphere of greenhouse gases that contribute to global warming.  In May 2023, the Company received a permit from the State of California to build a geologic characterization well that will provide information for the permitting and design of a CCUS well to be located in Riverbank, California. The Company plans to construct the geologic characterization well in 2024 and is at the same time continuing engineering, permitting and other development activities for the sequestration well.

 

8

(Tabular data in thousands, except par value and per share data)
 

The Company’s current and planned businesses produce renewable fuels and reduce carbon emissions, while generating valuable Renewable Fuel Standard credits, California Low Carbon Fuel Standard credits, and federal tax credits.

 

Basis of Presentation and Consolidation

 

These consolidated financial statements include the accounts of Aemetis, Inc. and its subsidiaries. We consolidate all entities in which we have a controlling financial interest. 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. We consider Aemetis Biogas LLC ("ABGL") to be a VIE because the Company owns all of the outstanding common units of ABGL and is the primary beneficiary of ABGL's operations; accordingly, the assets, liabilities, and operations of ABGL are consolidated in these financial statements.

 

All intercompany balances and transactions have been eliminated in consolidation.

 

The accompanying consolidated condensed balance sheet as of  March 31, 2024, the consolidated condensed statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, the consolidated condensed statements of cash flows for the three months ended March 31, 2024 and 2023, and the consolidated condensed statements of stockholders’ deficit for the three months ended March 31, 2024 and 2023 are unaudited. The consolidated condensed balance sheet as of December 31, 2023, was derived from the 2023 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2023 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023. 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 as of and for the three months ended March 31, 2024 and 2023 have been prepared on the same basis as the audited consolidated statements as of and for the year ended  December 31, 2023 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 months ended March 31, 2024 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods. 

 

There have been no material changes to our significant accounting policies disclosed in Note 1 - Nature of Activities and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

 

9

(Tabular data in thousands, except par value and per share data)
 
 

2.  Revenue

 

We derive revenue primarily from sales of ethanol and related co-products in California, renewable natural gas ("RNG") and related environmental attributes in California, and biodiesel and refined glycerin in India.

 

California Ethanol Revenues: Starting in the second quarter of 2023, we began selling all our ethanol to J.D. Heiskell Holdings, LLC ("J.D. Heiskell"), who sells it to customers designated by us, and we have designated Murex, LLC, who continues to market the product.  J.D. Heiskell does not charge a fee for reselling the ethanol, but it receives the payments from the ultimate customer.  We also buy our corn feedstock from J.D. Heiskell, and J.D. Heiskell pays us the net balance between ethanol and other product we sell to J.D. Heiskell and our corn purchases from J.D. Heiskell. Our accounting (i) treats us as the purchaser/customer for corn purchases from J.D. Heiskell and we record the full purchase cost in cost-of-good sold, and (ii) treats us as the seller for ethanol and other product sales, so we treat all sales as revenue.

 

Given the similarity of the individual sales transactions with J.D. Heiskell, we have assessed them as a portfolio of similar contracts. Prior to May 25, 2023, the performance obligation was satisfied by delivery of the physical product from our finished goods tank to our customer’s contracted trucks. Effective on May 25, 2023, the performance obligation is satisfied by delivery of the physical product to our finished goods tank leased by J.D. Heiskell. The transaction price is determined based on daily market prices and quarterly contract pricing negotiated by Murex for its customers for ethanol and based on dry distillers' market and local demand by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation.

 

During the last two weeks of December 2022, we undertook an extended maintenance cycle and accelerated the implementation of several important ethanol plant energy efficiency upgrades. Our decision was partly driven by the high natural gas prices in California during the period. After monitoring natural gas pricing and margin profitability, we decided to extend the maintenance cycle into the first and second quarters of 2023 and restarted the plant at the end of May 2023, which accounts for lower revenue amounts shown in the table below for the period ending March 31, 2023.

 

The following table shows sales in our California Ethanol segment by product category:

 

   

For the three months ended March 31,

 
   

2024

   

2023

 

Ethanol sales

  $ 25,385     $ 368  

Wet distiller's grains sales

    9,213       -  

Other sales

    1,491       107  

Total

  $ 36,089     $ 475  

 

California Dairy Renewable Natural Gas Revenues: Our facilities as of March 31, 2024, consist of eight anaerobic digesters that process feedstock from dairies into biogas, a 36-mile collection pipeline leading to a central upgrading hub, and an interconnect to inject the RNG into the utility natural gas pipeline for delivery to customers for use as transportation fuel.  In connection with dispensing the RNG, we generate sellable credits under the federal Renewable Fuel Standard (referred to as "D3 RINs") and the California Low Carbon Fuel Standard ("LCFS"). We began selling D3 RINs in the third quarter of 2023 and began selling LCFS credits in the first quarter of 2024. We recognize revenue from sales of RNG concurrent with our production and injection into the transportation pipeline.  We recognize revenue from sales of D3 RINs and LCFS credits at the time we sell the credits.

 

   

For the three months ended March 31,

 
   

2024

   

2023

 

RNG, LCFS and D3 RIN sales

  $ 3,792     $ 206  

 

10

(Tabular data in thousands, except par value and per share data)
 

India Biodiesel Revenues: 

 

The following table shows our sales in our India Biodiesel segment by product category:

 

   

For the three months ended March 31,

 
   

2024

   

2023

 

Biodiesel sales

  $ 30,992     $ 1,190  

Other sales

    1,761       280  

Total

  $ 32,753     $ 1,470  

  

 

3.  Cash and Cash Equivalents

 

The following table reconciles cash, cash equivalents, and restricted cash reported in the Consolidated Balance Sheet to the statement of cash flows:

 

   

As of

 
   

March 31, 2024

   

December 31, 2023

 

Cash and cash equivalents

  $ 1,629     $ 2,667  

Restricted cash included in other current assets

    143       289  

Restricted cash included in other assets

    3,165       3,324  

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

  $ 4,937     $ 6,280  

 

Restricted cash shown in the table above includes amounts required to be set aside by the Construction and Term Loan Agreement arranged by Greater Commercial Lending ("GCL") for financing reserves and construction contingencies.

 

4.  Basic and Diluted Net Loss Per Share

 

Basic net loss per share is computed by dividing income or loss attributable to common stockholders by the weighted average number of shares of common stock 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.

 

 

The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of March 31, 2024 and 2023:

 

  

As of

 
  

March 31, 2024

  

March 31, 2023

 

Series B preferred (post split basis)

  -   127 

Common stock options and warrants

  7,743   6,125 

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

  1,270   1,246 

Total number of potentially dilutive shares

  9,013   7,498 

 

11

(Tabular data in thousands, except par value and per share data)
 
 

5. Inventories

 

Inventories consist of the following:

 

   

As of

 
   

March 31, 2024

   

December 31, 2023

 

Raw materials

  $ 9,564     $ 9,907  

Work-in-progress

    1,657       1,682  

Finished goods

    4,790       6,702  

Total inventories

  $ 16,011     $ 18,291  

 

As of  March 31, 2024 , and December 31, 2023 , the Company recognized a lower of cost or net realizable value adjustment  of $109 thousand and $ 58 thousand, respectively, related to inventory.
 

6. Property, Plant and Equipment

 

Property, plant and equipment consist of the following:

 

  

As of

 
  

March 31, 2024

  

December 31, 2023

 

Land

 $7,344  $7,345 

Plant and buildings

  136,750   136,318 

Furniture and fixtures

  2,529   2,266 

Machinery and equipment

  15,150   14,982 

Construction in progress

  76,609   73,057 

Property held for development

  15,431   15,431 

Finance lease right of use assets

  2,889   2,889 

Total gross property, plant & equipment

  256,702   252,288 

Less accumulated depreciation

  (58,965)  (57,180)

Total net property, plant & equipment

 $197,737  $195,108 

 

For the three months ended March 31, 2024 and 2023, interest capitalized in property, plant and equipment was $1.7 million and $1.8 million, respectively.

 

Construction in progress includes costs for the biogas construction projects (dairy digesters and pipeline), Riverbank projects (sustainable aviation fuel and renewable diesel plant as well as carbon capture characterization well), and energy efficiency projects at the Keyes Plant. Property held for development is the partially completed Goodland Plant which is not ready for operation. Depreciation will begin for each project when the project is finalized and placed into service. Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts 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 March 31, 2024 and 2023, the Company recorded depreciation expense of $1.8 million for each period.

 

12

(Tabular data in thousands, except par value and per share data)
 
 

7. Debt

 

Debt consists of the following:

 

  

March 31, 2024

  

December 31, 2023

 

Third Eye Capital term notes

 $7,172  $7,159 

Third Eye Capital revolving credit facility

  23,800   20,922 

Third Eye Capital revolving notes Series B

  57,694   54,412 

Third Eye Capital revenue participation term notes

  12,046   12,011 

Third Eye Capital acquisition term notes

  26,709   26,655 

Third Eye Capital Fuels Revolving Line

  35,168   32,511 

Third Eye Capital Carbon Revolving Line

  23,673   23,486 

Construction and term loans

  43,894   41,024 

Cilion shareholder purchase obligation

  7,081   7,028 

Subordinated notes

  17,747   17,625 

EB-5 promissory notes

  42,439   42,211 

Working capital loans

  3,954   3,827 

Term loans on capital expenditures

  5,847   5,850 

Total debt

  307,224   294,721 

Less current portion of debt

  72,807   37,028 

Total long term debt

 $234,417  $257,693 

 

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 (the “Note Purchase Agreement”) with Third Eye Capital Corporation (“Third Eye Capital”). 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”).

 

The Original Third Eye Capital Notes have been amended several times. Most recently, on  March 25, 2024, the Company and Third Eye Capital Corporation entered into a “Limited Waiver and Amendment No. 28 to Amended and Restated Note Purchase Agreement” (“Amendment No. 28”) that (i) revised the loan covenant related to Keyes plant note indebtedness to exclude certain draws on Third Eye credit facilities and to exclude the "Redemption Fee," as defined in the Amended and Restated Note Purchase Agreement, and (ii) changed the maximum ratio of Note Indebtedness to the Keyes Plant market value to 120%. As consideration for Amendment No. 28, the Company agreed to pay Third Eye Capital an amendment fee of $0.1 million. We evaluated the terms of Amendment No. 28 in accordance with ASC 470-50 Debt – Modification and Extinguishment and ASC 470-60 Troubled Debt Restructuring and applied modification accounting treatment.

 

13

(Tabular data in thousands, except par value and per share data)
 

Terms of Original Third Eye Capital Notes:

 

A.

Term Notes.  As of March 31, 2024, the Company had $7.3 million in principal and interest outstanding under the Term Notes and $104 thousand unamortized debt issuance costs. The Term Notes accrue interest at 14% per annum. The Term Notes mature on April 1, 2025.

 

B.

Revolving Credit Facility. The Revolving Credit Facility accrues interest at the prime rate plus 13.75% (22.25% as of March 31, 2024) payable monthly in arrears. The Revolving Credit Facility matures on April 1, 2025. As of March 31, 2024, AAFK had $24.8 million in principal and interest and waiver fees outstanding and $1.0 million unamortized debt issuance costs under the Revolving Credit Facility.

 

C.

Revolving Notes Series B. The Revolving Notes Series B accrues interest at the prime rate plus 13.75% (22.25% as of March 31, 2024) payable monthly in arrears. The Revolving Notes Series B matures on April 1, 2025. As of March 31, 2024, AAFK had $58.5 million in principal and interest and waiver fees outstanding and $0.8 million unamortized debt issuance costs under the Revolving Notes Series B.

 

D.

Revenue Participation Term Notes. The Revenue Participation Term Notes bear interest at 5% per annum and mature on April 1, 2025. As of March 31, 2024, AAFK had $12.2 million in principal and interest outstanding under the Revenue Participation Term Notes and $168 thousand unamortized debt issuance costs.

 

E.

Acquisition Term Notes. The Acquisition Term Notes accrue interest at the prime rate plus 10.75% (19.25% per annum as of March 31, 2024) and mature on April 1, 2025. As of March 31, 2024, Aemetis Facility Keyes, Inc. had $27.0 million in principal and interest and redemption fees outstanding under the Acquisition Term Notes and $325 thousand unamortized debt issuance costs. The outstanding principal balance includes $7.5 million in redemption fee on which interest is not charged.

 

The Original 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 Notes allow the lender to accelerate the maturity in the event of any default that could reasonably be expected to have a material adverse effect on the Company, such as any change in the business, operations, or financial condition. The Company has evaluated the likelihood of such an acceleration event and determined such an event to not be probable in the next twelve months. The Notes allow interest to be added to the outstanding principal balance. The Original 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 Original Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chair and CEO, provided a guaranty of payment and performance secured by all Company shares owned by McAfee Capital and additional assets. In addition, Eric McAfee has provided a personal guaranty of up to $10 million plus a pledge of his ownership interests in several personal assets.

 

Third Eye Capital Reserve Facility. On March 6, 2020, we entered into a reserve liquidity facility governed by a promissory note, payable to Third Eye Capital Corporation, in the principal amount of $18 million. The reserve liquidity facility has been amended several times.  Most recently, on March 25, 2024, the Company and Third Eye Capital entered into a "Seventh Amended and Restated Promissory Note" that increased the amount available under the reserve liquidity facility to $85 million and extended the maturity date to  April 1, 2025. Borrowings under the Note are available until maturity. Interest on borrowed amounts would accrue at a rate of 30% per annum, to be paid monthly in arrears, or 40% if an event of default has occurred and continues. Interest payments due may be capitalized into the principal balance of the Note. The Company pays a standby fee of 2% per annum of the difference between the aggregate principal outstanding under the Note and the commitment, payable monthly arrears in either cash or stock. The Note also requires the Company to pay a fee in the amount of $0.5 million in connection with a request for an advance on the Note, provided that such fee may be added to the principal amount of the Note. In addition, the Company would be required to make payments on the Note with funds received from the closing of certain new debt or equity financing or transactions, as described in the Note. The Note is secured by liens and security interests upon the property and assets of the Company. As of March 31, 2024, we have no borrowings outstanding under the Reserve Liquidity Note.

 

Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, Goodland Advanced Fuels, Inc. ("GAFI) and Aemetis Carbon Capture, Inc. (“ACCI”) entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital, as administrative agent and collateral agent, and the lender party thereto (the “New Credit Facility”). The New Credit Facility provides for two credit lines with aggregate availability of up to $100 million, consisting of a revolving credit facility with GAFI for up to $50 million (the “Fuels Revolving Line”) and a revolving credit facility with ACCI for up to $50 million (the “Carbon Revolving Line” and together with the Fuels Revolving Line, the “Revolving Lines”). Loans received under the Fuels Revolving Line have a maturity date of March 1, 2025, and accrue interest per annum at a rate equal to the greater of (i) the prime rate plus 6.00% and (ii) ten percent (10.0%).  Loans received under the Carbon Revolving Line have a maturity date of March 1, 2026 and accrue interest per annum at a rate equal to the greater of (i) the prime rate plus 4.00% and (ii) eight percent (8.0%). Loans under the Fuels Revolving Line are available for working capital purposes and loans made under the Carbon Revolving Line are available for projects that reduce, capture, use, or sequester carbon with the objective of reducing carbon dioxide emissions. As of March 31, 2024, GAFI had principal and interest outstanding of $35.1 million classified as current debt and $1.8 million unamortized debt issuance costs. As of March 31, 2024, ACCI had principal and interest outstanding of $0.3 million classified as current debt, $23.4 million classified as long-term debt, and $1.5 million in unamortized debt issuance costs.  

 

14

(Tabular data in thousands, except par value and per share data)
 

Cilion Shareholder Purchase Obligation. In connection with the Company’s merger with Cilion, Inc. (“Cilion”), on July 6, 2012, the Company incurred a $5.0 million payment obligation 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 March 31, 2024, Aemetis Facility Keyes, Inc. had $7.0 million in principal and interest outstanding under the Cilion payment obligation under the merger agreement.

 

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 $3.4 million in original notes to the investors (“Subordinated Notes”). The Subordinated Notes mature every six months. Upon maturity, the Subordinated Notes are renewable at the Company's election for six month periods with a fee of 10% added to the balance outstanding plus issuance of warrants exercisable at $0.01 with a two-year term. Interest accrues at 10% per annum and is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full. On  January 1, 2024, the maturity on the Subordinated Notes was extended to June 30, 2024. In connection with the extension, the Company paid a $340 thousand extension fee by adding the fee to the balance of the Subordinated Notes and issued warrants exercisable for 113 thousand shares of common stock with a term of two years and an exercise price of $0.01 per share. The Company evaluated the January 1, 2024, amendment and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.  At March 31, 2024 and December 31, 2023, the Company had, in aggregate, $17.7 million and $17.6 million in principal and interest outstanding, respectively, under the Subordinated Notes.

 

EB-5 Promissory Notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 (as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a “Regional Center” to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB-5 Notes”) bearing interest at 2-3%. Advanced BioEnergy, LP arranged equity investments by foreign investors, and then Advanced BioEnergy used the invested equity to make loans to the Keyes Plant. Each note was issued in the principal amount of $0.5 million for a total aggregate principal amount of up to $36.0 million (the “EB-5 Phase I funding”). The original maturity date on the promissory notes has been extended. On February 27, 2019, Advanced BioEnergy, LP, and the Company entered into an Amendment to the EB-5 Notes which restated the original maturity date on the promissory notes with automatic six-month extensions as long as the Advanced Bioenergy investors’ immigration processes are in progress. Given the COVID-19 pandemic and processing delays for immigration process, Advanced BioEnergy, LP extended the maturity dates for debt repayment based on their projected processing timings as long as the investors do not give notice of withdrawal or an I-829 gets approved. Accordingly, the notes have been recognized as long-term debt while investor notes who obtained green card approval have been classified as current debt. The EB-5 Notes are convertible into Aemetis, Inc. common stock at a conversion price of $30 per share. As of March 31, 2024, $35.5 million has been released from the escrow amount to the Company, with $0.5 million remaining to be funded to escrow. As of March 31, 2024 and December 31, 2023, $38.0 million and $37.9 million was outstanding, respectively, on the EB-5 Notes.

 

On October 16, 2016, the Company launched its EB-5 Phase II funding (the “EB-5 Phase II Funding”) and entered into a Note Purchase Agreement with Advanced BioEnergy II, LP, a California limited partnership authorized as a Regional Center to receive EB-5 Phase II funding investments.  The Company received $4.0 million in loan funds before certain changes to and expiration of the EB-5 program prevented further funding.  The federal EB-5 program was recently reauthorized, and in March 2024, the U.S. Customs and Immigration Service approved the Company's project for up to $200 million of additional investment using EB-5 funds. Under the new rules, the minimum investment was raised from $0.5 million per investor to $0.8 million per investor. The terms of the EB-5 Phase II Funding are similar to the terms of the first round of EB-5 funding. As of March 31, 2024, and  December 31, 2023, $4.4 million and $4.3 million were outstanding on the EB-5 Notes under the EB-5 Phase II funding, respectively.

 

15

(Tabular data in thousands, except par value and per share data)
 

 

India Biodiesel Secure and Unsecured Loans. On November 13, 2023, the Company entered into a secure loan agreement with Secunderabad Oils Limited in an amount not to exceed $3.6 million. The loan is secured by the fixed assets and currents assets of the India Plant. The loans bear interest at 18% and are payable monthly. On November 6, 2023, the Company entered into a short-term loan with Leo Edibles & Fats Limited in an amount not to exceed $1.27 million. The loans bears interest at 18% and are payable monthly.  The loans are repayable on demand by the lender or within one year from the date of issuance. As of March 31, 2024 and December 31, 2023, the Company had outstanding balance of $4.0 million and $3.8 million, respectively.

 

Aemetis Biogas 1 LLC Term Loan. On  October 4, 2022, the Company entered into a Construction Loan Agreement (“AB1 Construction Loan”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the AB1 Construction Loan, the lender made available an aggregate principal amount of $25 million, secured by all personal property collateral and real property collateral of Aemetis Biogas 1 LLC. The AB1 Construction Loan contained certain financial covenants to be measured as of the last day of each fiscal year end, and annually for the term of the loan. Effective as of December 22, 2023, the AB1 Construction Loan was refinanced and replaced with a term loan ("AB1 Term Loan"). The AB1 Term Loan is secured by all personal property collateral and real property collateral of Aemetis Biogas 1 LLC. It bears interest at a rate of 9.25% per annum, to be adjusted every five years thereafter to equal the five-year Treasury Constant Maturity Rate, as published by the Board of Governors of the Federal Reserve System as of the adjustment date, plus 5.00% or (ii) the index floor. Other material terms of the loan include: (i) payments of interest only to be paid in monthly installments beginning January 22, 2024, (ii) payments of equal combined monthly installments of principal and interest beginning on January 22, 2025, and (iii) a maturity date of December 22, 2042, at which time the entire unpaid principal amount, together with accrued and unpaid interest thereon, shall become due and payable. The AB1 Term Loan contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2025, and annually for the term of the loan. The AB1 Term Loan also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of March 31, 2024 and December 31, 2023, the Company had $25.3 million and $25.1 million, respectively, outstanding under the AB1 Term Loan.

 

Aemetis Biogas 2 LLC Construction and Term Loan. On July 28, 2023, the Company entered into a second Construction and Term Loan Agreement (“AB2 Loan") with Magnolia Bank, Incorporated. Pursuant to the AB2 Loan, the lender has made available an aggregate principal amount not to exceed $25 million. The loan is secured by all personal property collateral and real property collateral of Aemetis Biogas 2 LLC. The loan bears interest at a rate of 8.75% per annum, to be adjusted every five years thereafter to equal the five-year Treasury Constant Maturity Rate, as published by the Board of Governors of the Federal Reserve System as of the adjustment date, plus 5.00%. Other material terms of the AB2 Loan include: (i) payments of interest only to be paid in monthly installments beginning August 15, 2023, (ii) payments of equal combined monthly installments of principal and interest beginning on August 15, 2025, and (iii) a maturity date of July 28, 2043, at which time the entire unpaid principal amount, together with accrued and unpaid interest thereon, shall become due and payable. The AB2 Loan contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2025, and annually for the term of the loan. The AB2 Loan also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of March 31, 2024, and December 31, 2023, the Company had $19.4 million and $16.8 million, respectively, outstanding and unamortized discount issuances costs of $0.8 million for each period, respectively, under the AB2 Loan. 

 

Financing Agreement for Capital Expenditures. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase ZEBREXTM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company also entered into a financing agreement with Mitsubishi for $5.7 million for this equipment. Payments pursuant to the financing transaction will commence after the installation date and interest will be charged based on the certain performance metrics after operation of the equipment. After an initial start-up process, process bottlenecks were encountered and operations were suspended pending further examination and optimization. We recorded the asset in property, plant and equipment, net and recorded the related liability of $2.2 million in short term borrowings and $3.6 million in other long-term debt, respectively as of March 31, 2024.

 

Maturity Date Schedule

 

Scheduled debt repayments for the Company’s loan obligations by year are as follows:

 

Twelve Months ended March 31,

 

Debt Repayments

 

2025

 $72,807 

2026

  180,279 

2027

  13,211 

2028

  4,375 

2029

  2,085 

Thereafter

  39,220 

Total debt

  311,977 

Debt issuance costs

  (4,753)

Total debt, net of debt issuance costs

 $307,224 

 

16

(Tabular data in thousands, except par value and per share data)
 
 

8. Leases

 

The Company is a party to operating leases for the Company's corporate office in Cupertino, modular offices, and laboratory facilities.  We have also entered into several finance leases for mobile equipment and for the Riverbank Industrial Complex.  These finance leases have a purchase option at the end of the term that we are reasonably certain we will exercise, so the leases are classified as finance leases. Our leases have remaining terms of one year to 13 years. We made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses.

 

The Company evaluates leases in accordance with ASC 842 – Lease Accounting. When discount rates implicit in leases cannot be readily determined, we use the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and right of use (ROU) assets. The incremental borrowing rate used by the Company is based on weighted average baseline rates commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter are used.

 

The components of lease expense are as follows:

 

   

Three months ended March 31,

 
   

2024

   

2023

 

Operating lease cost

               

Operating lease expense

  $ 181     $ 181  

Short term lease expense

    21       21  

Variable lease expense

    32       22  

Total operating lease cost

  $ 234     $ 224  
                 

Finance lease cost

               

Amortization of right-of-use assets

  $ 30     $ 31  

Interest on lease liabilities

    86       91  

Total finance lease cost

  $ 116     $ 122  

 

Cash paid for amounts included in the measurement of lease liabilities:

 

   

Three months ended March 31,

 
   

2024

   

2023

 

Operating cash flows used in operating leases

  $ 169     $ 164  

Operating cash flows used in finance leases

    86       91  

Financing cash flows used in finance leases

  $ 8     $ 83  

 

Supplemental non-cash flow information related to ROU asset and lease liabilities was as follows for the three months ended March 31, 2024 and 2023:

 

  

Three months ended March 31,

 
  

2024

  

2023

 

Operating leases

        

Accretion of the lease liability

 $74  $87 

Amortization of right-of-use assets

  105   94 
         

The weighted average remaining lease term and weighted average discount rate as of March 31, 2024 are as follows:

        
         

Weighted Average Remaining Lease Term

     

Operating leases (in years)

  4.0   4.9 

Finance leases (in years)

  12.8   13.7 
         

Weighted Average Discount Rate

        

Operating leases

  14.1%  14.1%

Finance leases

  13.3%  13.2%

 

17

(Tabular data in thousands, except par value and per share data)
 

Supplemental balance sheet information related to leases is as follows:

 

  

March 31, 2024

  

December 31, 2023

 

Operating leases

        

Operating lease right-of-use assets

 $1,951  $2,056 
         

Other current liability

  417   406 

Other long term liabilities

  1,677   1,783 

Total operating lease liabilities

  2,094   2,189 
         

Finance leases

        

Property and equipment, at cost

 $2,889  $2,889 

Accumulated depreciation

  (258)  (228)

Property and equipment, net

  2,631   2,661 
         

Other current liability

  31   30 

Other long term liabilities

  2,763   2,687 

Total finance lease liabilities

  2,794   2,717 

 

Maturities of operating lease liabilities are as follows:

 

Twelve months ended March 31,

 

Operating leases

   

Finance leases

 
                 

2025

  $ 678     $ 179  

2026

    670       159  

2027

    631       145  

2028

    650       145  

2029

    109       145  

Thereafter

    -       10,105  

Total lease payments

    2,738       10,878  

Less imputed interest

    (644 )     (8,084 )

Total lease liability

  $ 2,094     $ 2,794  

 

The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on net basis on the consolidated financial statements. Sublease income is recorded in the other operating income section of the Consolidated Statements of Operations and Comprehensive Loss.

 

The components of lease income are as follows:

 

   

Three months ended March 31,

 
   

2024

   

2023

 

Lease income

  $ 491     $ 471  

  

Future lease commitments to be received by the Company as of March 31, 2024, are as follows:

 

Twelve months ended March 31,

       

2025

  $ 845  

2026

    825  

2027

    670  

2028

    615  

2029

    613  

Thereafter

    631  

Total future lease commitments

  $ 4,199  

 

18

(Tabular data in thousands, except par value and per share data)
 
 

9.  Aemetis Biogas LLC Series A Preferred Financing

 

On December 20, 2018, Aemetis Biogas LLC ("ABGL") entered into a Series A Preferred Unit Purchase Agreement for the sale of Series A Preferred Units to Protair-X Americas, Inc., with Third Eye Capital acting as an agent. ABGL is authorized to issue 11,000,000 common units and 6,000,000 convertible, redeemable, secured, preferred membership units (the “Series A Preferred Units”). ABGL issued 6,000,000 common units to Aemetis, Inc. at a value of $5.00 per common unit for a total of $30.0 million in funding. 5,000,000 common units of ABGL are held in reserve as potential conversion units issuable to the Preferred Unit holder upon certain triggering events. From inception of the agreement through 2022, ABGL issued 6,000,000 Series A Preferred Units in exchange for $30.0 million in funding, reduced by a redemption of 20,000 Series A Preferred Units for $0.3 million. The original Preferred Unit Purchase Agreement included requirements for preference payments and mandatory redemption, in addition to several operating covenants.

 

On February 8, 2024, ABGL entered into an agreement entitled Fifth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Fifth Amendment") providing: (i) a waiver to ABGL for not redeeming all Series A Preferred Units by December 31, 2023 and (ii) the right for ABGL to redeem all of the outstanding Series A Preferred Units by April 30, 2024, for an aggregate redemption price of $111.0 million. The PUPA Fifth Amendment further provides that if ABGL does not redeem the Series A Preferred Units by the redemption date, ABGL will enter into a credit agreement with Protair-X and Third Eye Capital effective as of May 1, 2024 and maturing April 30, 2025, in substantially the form attached to the PUPA Fifth Amendment. The credit agreement bears an interest rate equal to the greater of (i) the prime rate plus 10.0% and (ii) 16.0%. In accordance with the provisions of ASC 470-60 Troubled Debt Restructuring, we applied troubled debt restructuring accounting to the PUPA Fifth Amendment, resulting in no gain or loss from the application of this accounting to the entry of the PUPA Fifth Amendment. As of filing of this Form 10Q, the Company has not executed the credit agreement and has been in the process of obtaining the extension to redeem the Series A Preferred Units. In addition, consistent with ASC 470-60, the Company accretes the amount of principal and interest due using the effective interest method from the starting liability value to the full amount that would be due as of April 30, 2025. Based on the terms of the PUPA Fifth Amendment, the deferred PUPA redemption balance is classified as long term liability as of March 31, 2024.

 

The Company recorded Series A Preferred Unit liabilities as long-term liabilities of $116.9 million and $113.2 million as of March 31, 2024, and December 31, 2023, respectively.

 

19

(Tabular data in thousands, except par value and per share data)
 
 

10. Stock-Based Compensation

 

2019 Stock Plan

 

On August 26, 2021, the stockholders of the Company approved the Aemetis, Inc. Amended and Restated 2019 Stock Plan (the “2019 Stock Plan”). This plan allows our Board or delegated Board committee to grant Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, and other stock or cash awards to employees, Directors, and consultants. The 2019 Stock Plan has a term of 10 years from the original version adoption date of April 25, 2019, and supersedes all prior stockholder approved plans with respect to new grants. Options issued under prior plans and the prior version of the 2019 stock plan remain outstanding and exercisable according to their terms. The 2019 Stock Plan authorizes a total pool of 4,558,621 shares as of July 1, 2021, including all outstanding option grants under all plans and all shares then available for issuance under the 2019 Stock Plan as of that date. Shares within this pool that expire or terminate unused become available for a subsequent grant. In addition, the number of shares available for issuance automatically increases on January 1 of each year by an amount equal to 4% of the sum of total common stock outstanding on January 1 and 2,541,823 shares.

 

The following table summarizes activity under the 2019 Stock Plan and prior plan during the three-month period ending March 31, 2024:

 

   

Shares Available for Grant

   

Number of Shares Outstanding

   

Weighted-Average Exercise Price

 

Balance as of December 31, 2023

    456       5,526     $ 4.42  

Authorized

    1,740       -       -  

Options Granted

    (1,761 )     1,761       3.10  

RSAs Granted

    (364 )     -       -  

Exercised

    -       (14 )     2.54  

Forfeited/expired

    61       (61 )     6.97  

Balance as of March 31, 2024

    132       7,212     $ 4.08  

 

The number of outstanding option shares as of March 31, 2024, includes 4.3 million shares that are vested.

 

Inducement Equity Plan

 

In March 2016, the Board of Directors of the Company approved an Inducement Equity Plan authorizing the issuance of 100,000 non-statutory stock options to purchase common stock. This plan was not approved by stockholders, and as a result is available only for grants to prospective employees. As of March 31, 2024, there are no option grants outstanding under the Inducement Equity Plan.

 

Stock-based Compensation Expense

 

Stock-based compensation is accounted for in accordance with ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and consultants based on estimated fair value on the grant date. We estimate the fair value using the Black-Scholes option pricing model and recognize that fair value as an expense over the vesting period of each grant using the straight-line method. We only record compensation cost for vested options. The Black-Scholes valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, expected dividends, and expected forfeitures. We use the simplified calculation of expected term described in SEC Staff Accounting Bulletin Topic 14, Share-Based Payment. Volatility is based on an average of the historical volatility of Aemetis, Inc. common stock during the period of time preceding the date of option issuance that matches the term of the option grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the treasury maturity term corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants. To the extent actual forfeitures occur, the difference is recorded as an adjustment in the scheduled expense during the period of the forfeiture.

 

The weighted average fair value calculations for the options granted during the three months ended March 31, 2024 and 2023 are based on the following assumptions:

 

   

For the three months ended March 31,

 

Description

 

2024

   

2023

 

Dividend-yield

    -       -  

Risk-free interest rate

    4.08 %     3.82 %

Expected volatility

    115.42 %     125.32 %

Expected life (years)

    5.81       7.00  

Market value per share on grant date

  $ 3.10     $ 3.75  

Fair value per option on grant date

  $ 2.65     $ 3.43  

 

During the three months ended March 31, 2024 and 2023, the Company granted 363,500 and 243,850 restricted stock awards, respectively, with a fair value on date of grant of $3.10 and $3.75, respectively, per share.

 

As of  March 31, 2024, the Company had $9.9 million of total unrecognized compensation expense for option issuance, which the Company will amortize over the remaining vesting period for each applicable grant, which has a weighted average of 1.9 years as of March 31, 2024.

 

20

(Tabular data in thousands, except par value and per share data)
 
 

11. Warrants

 

During the three months ending March 31, 2024, the Company granted warrants to two subordinated lenders in connection with debt extensions.  The warrants were exercisable for 113,000 shares of the Company's common stock at an exercise price of $0.01 per share with a two-year term.  These warrants were exercised during the three months ending March 31, 2024.

 

The fair value calculations for issued warrants are based on the following weighted average factors:

 

   

For the three months ended March 31,

 

Description

 

2024

   

2023

 

Dividend-yield

    - %     - %

Risk-free interest rate

    4.23 %     4.41 %

Expected volatility

    101.36 %     125.32 %

Expected life (years)

    2.00       2.00  

Exercise price per share

  $ 0.01     $ 0.01  

Market value per share on grant date

  $ 5.24     $ 3.96  

Fair value per share on grant date

  $ 5.23     $ 3.95  

 

The following table summarizes warrant activity during the three months ending March 31, 2024:

 

   

Warrants Outstanding & Exercisable

   

Weighted - Average Exercise Price

   

Average Remaining Term in Years

 

Outstanding December 31, 2023

    530     $ 11.70       5.77  

Granted

    113       0.01          

Exercised

    (113 )     0.01          

Outstanding March 31, 2024

    530     $ 11.70       5.54  

 

All of the above outstanding warrants are vested and exercisable as of March 31, 2024.

  

21

(Tabular data in thousands, except par value and per share data)
 
 

12. Agreements

 

Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company procures whole yellow corn from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin.  Pursuant to a separate agreement entered in May 2023, J.D. Heiskell also purchases all of our ethanol and other products and sells them to customers designated by us.  We have designated Murex to purchase ethanol and WDG and A.L Gilbert to purchase corn oil. The Company’s relationships with J.D. Heiskell, and A.L. Gilbert are well established, and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and providing working capital relationships.

 

The J.D. Heiskell sales and purchases activity associated with the J.D. Heiskell Purchase Agreement and J.D. Heiskell Procurement Agreement during the three months ended March 31, 2024 and 2023 were as follows:

 

  

As of and for the three months ended March 31,

 
  

2024

  

2023

 

Ethanol sales

 $25,385  $- 

Wet distiller's grains sales

  9,213   - 

Corn oil sales

  1,292   37 

CDS sales

  21   - 

Corn purchases

  30,913   302 
         
         
   March 31, 2024   December 31, 2023 

Accounts receivable

  1,540   1,073 

Accounts payable

  1,580   1,207 

 

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into a Fuel Ethanol Purchase and Sale Agreement with Murex, which matures on October 31, 2023, with automatic one-year renewals thereafter. On May 30, 2023, the Company entered into Amendment No. 1 to the Fuel Ethanol Purchase and Sale Agreement that provides (i) the Company temporarily suspend the agreement for the duration of the Company's Working Capital Agreement with J.D. Heiskell, and (ii) the initial term shall be automatically renewed beginning on October 1, 2023, and ending on March 31, 2025. The Company also entered into a Wet Distillers Grains Marketing Agreement with A.L. Gilbert, which matures on December 31, 2024, with automatic one-year renewals thereafter.

 

For the three months ended March 31, 2024 and 2023, the Company expensed marketing costs of 0.2 million and $0.4 million, respectively, under the terms of both the Ethanol Marketing Agreement and the Wet Distillers Grains Marketing Agreement. These marketing costs are presented as part of Selling, General, and Administration expenses.

 

For the three months ended March 31, 2024 and 2023, the Company expensed shipping and handling costs related to sales of ethanol $0.7 million and expensed transportation costs related to sales of WDG of $1.4 million.

 

For the three months ended March 31, 2023, the Company did not incur material marketing costs, shipping and handling cost related to sales of ethanol, or transportation costs related to the sales of WDG as the Keyes Plant was in extended maintenance cycle.

 

Supply Trade Agreement. On July 1, 2022, the Company entered into an operating agreement with Gemini Edibles and Fats India Private Limited (“Gemini”). Under this agreement, Gemini agreed to provide the Company with a supply of feedstock up to a credit limit of $12.7 million with collateral of inventories, current assets, and fixed assets. If the Company fails to pay the invoice within the ten-day credit period, the outstanding amount will bear interest at 18%. The original term of the agreement is for one year and which was extended for two years with maturity of June 2025. Either party can terminate the agreement by giving notice one month notice in writing. As of March 31, 2024 and December 31, 2023, the Company had accounts payable of $4.3 million and $7.5 million outstanding balance, respectively, under this agreement.

 

As of March 31, 2024, we have no forward sale commitments.

 

Natural Gas Purchase Agreement. As of March 31, 2024, we entered into a forward purchase agreement to buy 80 thousand MMBtu of natural gas at a fixed price from April through October 2024. 

 

22

(Tabular data in thousands, except par value and per share data)
 
 

13. Segment Information

 

Aemetis recognizes three reportable segments “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.”  

 

The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year ethanol plant in Keyes, California, and the adjacent land leased for the production of CO₂.

 

The “California Dairy Renewable Natural Gas” reportable segment includes the production and sale of Renewable Natural Gas ("RNG") and associated environmental attributes, consisting of anaerobic digesters located at diaries, at 36 mile biogas collection pipeline, biogas upgrading hub that produces RNG from the biogas, and a pipeline interconnect.

 

The “India Biodiesel” reportable segment includes the Company’s 60 million gallon per year nameplate capacity biodiesel manufacturing plant in Kakinada India, and administrative offices in Hyderabad, India.

 

The Company has additional operating segments that have been determined not to be separately reportable segments, including our key projects under development which consists of the development of a sustainable aviation fuel and renewable diesel production plant in Riverbank, California, and the development of Carbon Capture and Underground Sequestration wells in California.  Additionally, our corporate offices, Goodland Plant in Kansas, and research and development facility in Minnesota are included in the “All Other” category.

 

Summarized financial information by reportable segment for the three months ended March 31, 2024 and 2023 follows: 

 

   

For the three months ended March 31, 2024

 
   

California Ethanol

   

California Dairy Renewable Natural Gas

   

India Biodiesel

   

All Other

   

Total

 
                                         

Revenues

  $ 36,089     $ 3,792     $ 32,753     $ -     $ 72,634  

Gross profit (loss)

    (5,658 )     2,210       2,836       -       (612 )
                                         

Interest expense including amortization of debt fees

    6,753       636       425       2,699       10,513  

Accretion and other expenses of Series A preferred units

    -       3,311       -       -       3,311  

Income tax expense (benefit)

    -       35       843       -       878  

Capital expenditures

    107       2,843       304       329       3,583  

Depreciation

    966       569       208       55       1,798  

 

   

For the three months ended March 31, 2023

 
   

California Ethanol

   

California Dairy Renewable Natural Gas

   

India Biodiesel

   

All Other

   

Total

 
                                         

Revenues

  $ 475     $ 206     $ 1,470     $ -     $ 2,151  

Gross loss

    (12 )     (773 )     (510 )     -       (1,295 )
                                         

Interest expense including amortization of debt fees

    5,518       704       69       2,756       9,047  

Accretion and other expenses of Series A preferred units

    -       5,564       -       -       5,564  

Capital expenditures

    334       6,499       36       747       7,616  

Depreciation

    1,109       457       155       69       1,790  

 

 

23

(Tabular data in thousands, except par value and per share data)
 

 

California Ethanol: During 2023, t he Company amended the Corn Procurement and Working Capital Agreement and the J.D. Heiskell Purchasing Agreement to procure corn from J.D. Heiskell and sell all ethanol, WDG, and corn oil that the Company produces to J.D. Heiskell. Sales of ethanol, WDG, and corn oil to one customer accounted for 99.7% of the Company’s California Ethanol segment revenues for the three months ended March 31, 2024 . Sales of ethanol, WDG, and corn oil to one customer accounted for 77% of th e Company’s California Ethanol segment revenues for the three months ended March 31, 2023

 

 

California Dairy Renewable Natural Gas: During the  three months ended March 31, 2024, we sold RNG to a single customer and sold D3 RINs and LCFS credits to two other customers.  During the three months ended March 31, 2023, all sales of RNG were to a single customer.

 

 

India Biodiesel: Three biodiesel customers accounted for 40%, 38%, and 16% of the Company’s India segment revenues for the three months ended March 31, 2024.  One biodiesel customer accounted for 80% of the Company’s India segment revenues for the three months ended March 31, 2024.

 

Total assets by reportable segments as of  March 31, 2024 and December 31, 2023 follows: