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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
o
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 001-39835
Benson Hill, Inc.
(Exact name of registrant as specified in its charter)
Delaware
85-3374823
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1001 North Warson Rd
St. Louis,
Missouri
63132
(Address of Principal Executive Offices)
(Zip Code)
(314) 222-8218
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value
BHIL
The New York Stock Exchange
Warrants exercisable for one share of common stock at an exercise price of $11.50
BHIL WS
The New York Stock Exchange
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 x No o
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 x No o
1

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
o
Accelerated filer
x
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
x
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 o No x
As of November 7, 2023, 208,379,035 shares of the registrant’s Common Stock, par value $0.0001, were issued and outstanding.
2

Benson Hill, Inc.
TABLE OF CONTENTS
Page
3

Part I - Financial Information
Item 1. Financial Statements
Benson Hill, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In Thousands, Except Per Share Data)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$12,041 $25,053 
Restricted cash20,438 17,912 
Marketable securities53,524 132,121 
Accounts receivable, net37,553 28,591 
Inventories, net30,419 62,110 
Prepaid expenses and other current assets13,883 11,434 
Current assets of discontinued operations555 23,507 
Total current assets168,413 300,728 
Property and equipment, net99,628 99,759 
Finance lease right-of-use assets, net61,511 66,533 
Operating lease right-of-use assets5,542 1,660 
Goodwill and intangible assets, net7,587 27,377 
Other assets9,838 4,863 
Total assets$352,519 $500,920 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$14,134 $36,717 
Finance lease liabilities, current portion3,935 3,318 
Operating lease liabilities, current portion1,456 364 
Long-term debt, current portion35,581 2,242 
Accrued expenses and other current liabilities18,639 33,435 
Current liabilities of discontinued operations871 16,441 
Total current liabilities74,616 92,517 
Long-term debt, less current portion73,596 103,991 
Finance lease liabilities, less current portion75,399 76,431 
Operating lease liabilities, less current portion6,333 1,291 
Warrant liabilities1,694 24,285 
Conversion option liabilities21 8,091 
Deferred income taxes155 283 
Other non-current liabilities231 129 
Total liabilities232,045 307,018 
Stockholders’ equity:
Common stock, $0.0001 par value, 440,000 and 440,000 shares authorized, 207,981 and 206,668 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
21 21 
Additional paid-in capital609,554 609,450 
Accumulated deficit(485,939)(408,474)
Accumulated other comprehensive loss(3,162)(7,095)
Total stockholders’ equity120,474 193,902 
Total liabilities and stockholders’ equity$352,519 $500,920 
See accompanying notes to the condensed consolidated financial statements (unaudited).
4

Benson Hill, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues$113,066 $122,296 356,747 282,053 
Cost of sales108,927 116,365 340,117 279,315 
Gross profit (loss)4,139 5,931 16,630 2,738 
Operating expenses:
Research and development10,525 11,438 33,480 35,739 
Selling, general and administrative expenses17,874 18,912 44,892 59,448 
Impairment of goodwill  19,226  
Total operating expenses28,399 30,350 97,598 95,187 
Loss from operations(24,260)(24,419)(80,968)(92,449)
Other (income) expense:
Interest expense, net7,179 6,200 20,425 16,030 
Changes in fair value of warrants and conversion option(12,001)(4,036)(30,661)(41,676)
Other expense, net(201)(181)2,588 2,104 
Total other (income) expense, net(5,023)1,983 (7,648)(23,542)
Net loss from continuing operations before income taxes(19,237)(26,402)(73,320)(68,907)
Income tax expense (benefit)6 13 (117)30 
Net loss from continuing operations, net of income taxes(19,243)(26,415)$(73,203)$(68,937)
Net income (loss) from discontinued operations, net of income taxes (refer to Note 4, Discontinued Operations)
1,673 (3,754)(4,262)(5,362)
Net loss attributable to common stockholders$(17,570)$(30,169)$(77,465)$(74,299)
Net loss per common share:
Basic and diluted net loss per common share from continuing operations$(0.10)$(0.14)$(0.39)$(0.39)
Basic and diluted net loss per common share from discontinued operations$0.01 $(0.02)$(0.02)$(0.03)
Basic and diluted total net loss per common share$(0.09)$(0.16)$(0.41)$(0.42)
Weighted average shares outstanding:
Basic and diluted weighted average shares outstanding188,223 186,097 187,691 177,539 
See accompanying notes to the condensed consolidated financial statements (unaudited).
5

Benson Hill, Inc.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In Thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss attributable to common stockholders$(17,570)$(30,169)$(77,465)$(74,299)
Foreign currency:
Comprehensive income (loss) (1) (46)
 (1) (46)
Marketable securities:
Comprehensive income (loss)395 (1,759)875 (9,918)
Adjustment for net loss (income) realized in net loss14 (97)3,058 2,132 
409 (1,856)3,933 (7,786)
Total other comprehensive income (loss)409 (1,857)3,933 (7,832)
Total comprehensive loss$(17,161)$(32,026)$(73,532)$(82,131)
See accompanying notes to the condensed consolidated financial statements (unaudited).
6

Benson Hill, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(In Thousands, Except Per Share Data)
Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 2022206,668 $21 $609,450 $(408,474)$(7,095)$193,902 
Stock option exercises, net791 — 121 — — 121 
Stock-based compensation expense— — 2,814 — — 2,814 
Comprehensive income (loss)— — — (3,054)856 (2,198)
Balance as of March 31, 2023207,459 $21 $612,385 $(411,528)$(6,239)$194,639 
Stock option exercises, net8 — 19 — — 19 
Stock-based compensation expense— — (3,882)— — (3,882)
Comprehensive income (loss)— — — (56,841)2,668 (54,173)
Balance as of June 30, 2023207,467 $21 $608,522 $(468,369)$(3,571)$136,603 
Stock option exercises, net514 — 109 109 
Stock-based compensation expense— 923 923 
Comprehensive income (loss)— (17,570)409 (17,161)
Balance at Balance as of September 30, 2023207,981 $21 $609,554 $(485,939)$(3,162)$120,474 


Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 2021178,089 $18 $533,101 $(280,569)$(1,103)$251,447 
Stock option exercises, net830 — 636 — — 636 
Stock-based compensation expense— — 5,683 — — 5,683 
PIPE Investment, net of issuance cost of $3,456
26,150 3 54,925 — — 54,928 
Comprehensive loss— — — (16,576)(2,624)(19,200)
Balance as of March 31, 2022205,069 $21 $594,345 $(297,145)$(3,727)$293,494 
Stock option exercises, net547 — 715 — — 715 
Stock-based compensation expense— — 5,676 — — 5,676 
Comprehensive loss— — — (27,554)(3,351)(30,905)
Balance as of June 30, 2022205,616 $21 $600,736 $(324,699)$(7,078)$268,980 
Stock option exercises, net727 — 736 — — 736 
Vesting of restricted stock units, net94 — — $— $— — 
Stock-based compensation expense— — 4,412 $— $— 4,412 
Comprehensive loss— — — (30,169)(1,857)(32,026)
Balance as of September 30, 2022206,437 $21 $605,884 $(354,868)$(8,935)$242,102 
See accompanying notes to the condensed consolidated financial statements (unaudited).
7

Benson Hill, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
Nine Months Ended September 30,
20232022
Operating activities
Net loss$(77,465)$(74,299)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization16,056 16,504 
Stock-based compensation expense(347)15,771 
Bad debt expense(263)724 
Changes in fair value of warrants and conversion option(30,661)(41,676)
Accretion and amortization related to financing activities6,624 8,481 
Realized losses on sale of marketable securities3,058 2,132 
Impairment of goodwill19,226  
Other1,815 4,180 
Changes in operating assets and liabilities:
Accounts receivable(3,073)(7,208)
Inventories43,323 6,441 
Other assets and other liabilities(4,170)8,052 
Accounts payable(32,306)(6,093)
Accrued expenses(15,685)2,604 
Net cash used in operating activities(73,868)(64,387)
Investing activities
Purchases of marketable securities(87,619)(350,333)
Proceeds from maturities of marketable securities66,193 109,514 
Proceeds from sales of marketable securities99,838 170,217 
Purchase of property and equipment(10,127)(11,835)
Acquisition, net of cash acquired (1,044)
Proceeds from divestiture of discontinued operations2,378  
Proceeds from an insurance claim from a prior business acquisition1,533  
Other41  
Net cash provided by (used in) investing activities72,237 (83,481)
Financing activities
Contributions from PIPE Investment, net of transaction costs $3,761 in 2022
 80,825 
Repayments of long-term debt(4,874)(6,736)
Proceeds from issuance of long-term debt 24,078 
Payments of debt issuance costs(2,000)(38)
Borrowing under revolving line of credit 18,970 
Repayments under revolving line of credit (19,017)
Payments of finance lease obligations(2,428)(1,103)
Proceeds from exercise of stock awards, net of withholding taxes249 1,950 
Net cash (used in)/provided by financing activities(9,053)98,929 
Effect of exchange rate changes on cash (46)
Net decrease in cash and cash equivalents(10,684)(48,985)
Cash, cash equivalents and restricted cash, beginning of period43,321 78,963 
Cash, cash equivalents and restricted cash, end of period$32,637 $29,978 
8

Supplemental disclosure of cash flow information
Cash paid for taxes$35 $1 
Cash paid for interest$14,523 $9,864 
Supplemental disclosure of non-cash activities
Purchases of property and equipment included in liabilities$125 $2,710 
Financing leases commencing in the period$ $806 
See accompanying notes to the condensed consolidated financial statements (unaudited).
9

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements 
(Unaudited)
(In Thousands, Except Per Share Data)
1. Description of Business
Benson Hill, Inc. and subsidiaries (collectively, “Benson Hill”, the “Company”, “we”, “us”, or “our”) is a food technology company on a mission to lead the pace of innovation in food. We have a vision to build a healthier and happier world by unlocking the natural genetic diversity of plants with our leading technology platform, CropOS®. Starting with consumer demand, we leverage CropOS® and advanced breeding techniques to design food that’s better from the beginning: more nutritious, more functional, and more accessible, while enabling efficient production and delivering novel sustainability benefits to food and feed customers. We are headquartered in St. Louis, Missouri, where the majority of our research and development activities are managed. We operate a soy crushing and food-grade white flake and soy flour manufacturing operation in Creston, Iowa, and we process dry peas in North Dakota. We recently sold our soy crushing facility in Seymour, Indiana. We sell our products throughout North America, in Europe and in several countries globally.
Fresh Business Segment Divestiture
On December 29, 2022, we entered into a Stock Purchase Agreement (the “Stock Sale”) to sell J&J Produce, Inc. (“J&J”) and all of the outstanding equity securities of J&J’s subsidiaries for aggregate cash consideration of $3,000, subject to certain adjustments. J&J was the main component of the former Fresh segment. In connection with the Stock Purchase Agreement, on December 29, 2022, J&J entered into a Purchase and Sale Agreement, pursuant to which J&J sold certain real and personal property comprising an agricultural production and processing facility located in Vero Beach, Florida, for an aggregate purchase price of $18,000, subject to certain adjustments. Certain property was leased back to J&J pursuant to a separate agricultural and facility lease for a short period of time. On June 30, 2023, we closed the Stock Sale. Our strategic shift to exit the Fresh segment met the criteria to be classified as businesses held for sale and to be presented as a discontinued operation. Refer to Note 4, Discontinued Operations for further details on the divestiture of the former Fresh segment.
Liquidity and Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and Securities and Exchange Commission (“SEC”) regulations, assuming we will continue as a going concern.
For the three and nine months ended September 30, 2023, we incurred a net loss from continuing operations of $19,243 and $73,203, respectively, and for the nine months ended September 30, 2023, we had negative cash flows from operating activities of $73,868 and had capital expenditures of $10,127. As of September 30, 2023, we had cash and marketable securities of $65,565 and restricted cash of $20,438. Furthermore, as of September 30, 2023, we had an accumulated deficit of $485,939 and term debt and notes payable of $109,177, which are subject to repayment terms and covenants further described in Note 9, Debt and Note 16, Subsequent Events. Specifically, as of the fourth quarter of 2023, the Convertible Notes Payable becomes due and payable in full on March 1, 2024. Further, there is a risk to our compliance with the financial covenants on the Convertible Notes Payable. We have incurred significant losses since our inception, primarily to fund investment into technology and costs associated with early-stage commercialization of products.
These factors, coupled with expected debt repayments and capital expenditures indicated that, without further action, our forecasted cash flows would not be sufficient for us to meet our contractual commitments and obligations as they came due in the ordinary course of business for 12 months after the date the condensed consolidated financial statements are issued. Therefore, there is substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.
During the first quarter of 2023, we entered into a third amendment to our existing Convertible Loan and Security Agreement, which among other things, extended the interest-only period by six months through the second quarter of 2024, and allowed the restricted cash to be counted towards the required minimum liquidity covenant calculation. During the fourth quarter of 2023, we entered into a fourth amendment to the Convertible Loan and Security Agreement, which among other things, changed the maturity date to March 1, 2024, updated the prepayment fee to be equal to 1% of any prepayments made prior to January 14, 2024, and the “final payment” was increased from 12.70% to 17.70% of the original Commitment amount of $100,000. Refer to Note 16, Subsequent Events for further details. Further, during the fourth quarter of 2023, we sold our soybean processing facility located in Seymour, Indiana, together with certain related assets, for approximately $36,000 of total gross proceeds, which includes $25,900 for the facility assets and the remainder for net working capital, subject to certain adjustments,
10

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
including an adjustment for inventory and other working capital. The Company utilized funds from the proceeds of the sale of the Seymour facility, in combination with restricted cash, to pay down a portion of the Convertible Notes Payable subsequent to the close date. Refer to Note 16, Subsequent Events for further details. In addition, our liquidity plans and operating budget include further actions that management believes are probable of being achieved in the 12 months after the date the condensed consolidated financial statements were issued. These actions include improving operating efficiencies by reducing certain operating costs and restructuring certain parts of the organization. Further, we are considering additional actions to allow us to meet our obligations as they come due including exploring options to divest our processing assets, supplementing cash needs by selling additional shares of our common stock, or securities convertible into common stock, to the public through our shelf registration statement, or otherwise, or obtaining alternative forms of financing which may or may not be dilutive. There are no guarantees that we will achieve any of these plans, which involve risks and uncertainties.
For the three and nine months ended September 30, 2023, we recognized severance charges of $386 and $1,624, respectively, within selling, general and administrative expenses on the Condensed Consolidated Statement of Operations.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and SEC regulations. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ended December 31, 2023. A description of our significant accounting policies is included in the notes to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2022 audited consolidated financial statements and the notes thereto.
Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Certain prior period balances have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements and the accompanying notes.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We expect to remain an emerging growth company at least through December 31, 2023 and expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. We expect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and non-public companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
11

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosures that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.
We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2026, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant management estimates include those with respect to allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of our warrant liabilities and conversion option liabilities.
Cash, Cash Equivalents and Restricted Cash
We consider all short-term, highly liquid investments with maturities of 90 days or less at the acquisition date to be cash equivalents. Restricted cash primarily represents cash proceeds from the sale of certain assets pursuant to the covenants with a lender. Restricted cash is classified as non-current if we expect that the cash will remain restricted for a period greater than one year. Current restricted cash is included in the prepaid expenses and other current assets on the condensed consolidated balance sheets.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets, inclusive of $158 of cash and cash equivalents reported within current assets of discontinued operations as of September 30, 2023 to the amount shown in the condensed consolidated statements of cash flows. There was no restricted cash as of September 30, 2022.
September 30,
2023
Cash and cash equivalents$12,199 
Restricted cash, current20,438 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows$32,637 
Goodwill and Intangible Assets
Goodwill, arising from a business combination as the excess of purchase price and related costs over the fair value of identifiable assets acquired and liabilities assumed is not amortized and is subject to an annual impairment test as of December 1, unless events indicate an interim test is required. In performing this impairment test, management will first qualitatively assess indicators of a reporting unit’s fair value. If, after completing the qualitative assessment, management believes it is likely that a reporting unit is impaired, a discounted cash flow analysis is prepared to estimate the fair value of the reporting unit.
Critical estimates in the determination of the fair value of each reporting unit include, but are not limited to, future expected cash flows based on estimates of future sales volumes, sales prices, production costs, and discount rates. These estimates
12

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

generally constitute unobservable Level 3 inputs under the fair value hierarchy. An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired.
During the second quarter of 2023, we identified an indicator of impairment and determined it was no longer more likely than not that the fair value of our sole reporting unit was in excess of the carrying value. As a result, a quantitative goodwill and separately identifiable intangible asset impairment assessment was performed as of June 30, 2023, and we recorded an impairment of the carrying value of goodwill of $19,226, which represented the entire goodwill balance prior to the impairment charge. The goodwill impairment charge had an immaterial impact on the provision for income taxes.
We performed an interim impairment analysis for the Ingredients reporting unit as of June 30, 2023, using a discounted cash flow model (a form of the income approach), utilizing Level 3 unobservable inputs. Our estimates in this analysis included, but were not limited to, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate. The impairment charge reflects an ongoing assessment of current market conditions and potential strategic investments to continue commercializing our proprietary products and pursue other strategic investments in the industry.
For the quarter ended September 30, 2023, we determined there was no impairment of our intangible assets. However, we are currently exploring a broad strategic review of our business which could result in us being unable to recover all or a portion of the carrying value of our intangible assets. The amount and timing of any impairment charge would depend on a number of factors including the structure, timing, and scope of any assets disposed in any future transactions.
Impairment of Long-lived Assets
We review long-lived assets, including lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that an asset group’s carrying amount may not be recoverable. We conduct our long-lived asset impairment analysis in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, which requires us to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset group is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value. We conducted a review of our long-lived assets as of September 30, 2023 and determined that the carrying value of our assets is recoverable and no impairment charge was necessary. However, we are currently exploring a broad strategic review of our business which could result in us being unable to recover all or a portion of the carrying value of our long-lived assets. The amount and timing of any impairment charge would depend on a number of factors including the structure, timing, and scope of any assets disposed in any future transactions.
Stock Award Modifications
In June 2023, we announced that our former Chief Executive Officer (CEO) agreed to resign from our Company effective June 15, 2023, and entered into a consulting agreement to provide transition support through June 15, 2024. In connection with the separation, we modified the terms of our former CEO’s outstanding stock awards to (1) continue vesting over the consulting period through June 15, 2024, if continuous service is achieved with us; (2) extend the period during which the vested stock options may be exercised for a period of 90 days following the termination of consultancy, if continuous service is achieved with us; and (3) extend the period in which performance-based vesting conditions for restricted stock units may be achieved through June 15, 2024, if continuous service is achieved with us. As a result of the stock award modifications, we recorded a $6.2 million decrease to stock-based compensation expense for the nine months ended September 30, 2023.
Recently Issued Accounting Guidance Not Yet Effective
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. In December 2022, the FASB issued ASU 2022-06 and deferred the sunset date of the Reference Rate Reform (Topic 848) from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate
13

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

reform. We have a floating rate revolving credit facility, a term loan and an equipment loan due in 2024 and plans on phasing out LIBOR as a reference rate before December 31, 2024.
In August 2020, the FASB issued ASU 2020-06, Debt (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2023, and interim periods within those years, and early adoption is permitted. We are currently evaluating the impact ASU 2020-06 will have on our condensed consolidated financial statements.
3. Business Combinations
ZFS Creston
On December 30, 2021, we completed the acquisition of a food-grade white flake and soy flour manufacturing operation and related assets through the acquisition of ZFS Creston, LLC, a Delaware limited liability company (“ZFS Creston”), for aggregate cash consideration of $103,099, which included a working capital adjustment payment of $1,034 in the first quarter of 2022.
4.Discontinued Operations
On December 29, 2022, we entered into a Stock Purchase Agreement (the “Stock Sale”) to sell J&J Produce, Inc. (“J&J”) and all of the outstanding equity securities of J&J’s subsidiaries for aggregate cash consideration of $3,000, subject to certain adjustments. In connection with the Stock Purchase Agreement, on December 29, 2022, J&J entered into a Purchase and Sale Agreement, pursuant to which J&J sold certain real and personal property comprising an agricultural production and processing facility located in Vero Beach, Florida, for an aggregate purchase price of $18,000, subject to certain adjustments. Certain property was leased back to J&J pursuant to a separate agricultural and facility lease for a short period of time. On June 30, 2023, we closed the Stock Sale. As of September 30, 2023, the carrying value of assets and liabilities in discontinued operations approximated their fair value due to their short maturities.
J&J was the main component of our former Fresh segment. Our strategic shift to exit the Fresh segment met the criteria to be classified as businesses held for sale and presented as a discontinued operation. Accordingly, we reclassified the results of operations of the Fresh segment to discontinued operations in our condensed consolidated statements of operations for all periods presented. The carrying amounts of the assets and liabilities of the discontinued operations were as follows:
14

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents$158 $356 
Accounts receivable, net232 9,808 
Inventories, net 11,633 
Prepaid expenses and other current assets165 1,710 
Total assets from discontinued operations$555 $23,507 
Liabilities
Current liabilities:
Accounts payable$79 $9,743 
Current lease liability 1,890 
Current maturities of long-term debt 3,194 
Accrued expenses and other liabilities792 1,614 
Total liabilities from discontinued operations$871 $16,441 
As of December 31, 2022, the fair value of the debt included in the liabilities from discontinued operations was $3,305. Fair values are based upon valuation models using market information, which fall into Level 3 in the fair value hierarchy. We capitalized no interest costs into property and equipment for the three and nine months ended September 30, 2023. We capitalized interest costs of $456 and $1,236, respectively, into property and equipment for the three and nine months ended September 30, 2022.
In August 2023, we received an insurance claim reimbursement of $1,533 related to the J&J acquisition. The operating results of the discontinued operations, net of tax, were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues$ $7,883 $32,237 $51,318 
Cost of sales(26)9,447 34,105 49,335 
Gross profit (loss)26 (1,564)(1,868)1,983 
Operating expenses:
Research and development (5) 17 
Selling, general and administrative expenses(164)2,130 3,173 7,212 
Total operating expenses(164)2,125 3,173 7,229 
Interest expense 78 14 160 
Other income, net(1,483)(13)(793)(44)
Net income (loss) from discontinued operations, before income taxes1,673 (3,754)(4,262)(5,362)
Net income (loss) from discontinued operations, net of income taxes$1,673 $(3,754)$(4,262)$(5,362)

15

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

Depreciation, amortization and significant operating and investing items in the condensed consolidated statements of cash flows for the discontinued operations are as follows:
Nine Months Ended September 30,
20232022
Operating activities
Depreciation and amortization$ $1,512 
Bad debt expense53 135 
Net loss on divestiture172  
Investing activities
Payments for acquisitions of property and equipment (4,348)
Net proceeds from divestiture2,378  
5. Fair Value Measurements
Assets and liabilities recorded at fair value on a recurring basis on the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Our financial instruments consist of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, commodity derivatives, commodity contracts, accounts payable, accrued liabilities, warrant liabilities, conversion option liabilities, and notes payable. As of September 30, 2023 and December 31, 2022, we had cash and cash equivalents of $12,041 and $25,053, respectively, which include money market funds with maturities of less than three months. As of September 30, 2023 and December 31, 2022, we had restricted cash of $20,438 and $17,912. At September 30, 2023 and December 31, 2022, the carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximated fair value due to their short maturities.
The following tables provide the financial instruments measured at fair value on a recurring basis based on the fair value hierarchy:
September 30, 2023
Level 1Level 2Level 3Total
Assets
U.S. treasury securities$8,901 $ $ $8,901 
Corporate bonds$ $32,281 $ $32,281 
Preferred stock 12,342  12,342 
Marketable securities$8,901 $44,623 $ $53,524 
Liabilities
Warrant liabilities$716 $ $978 $1,694 
Conversion option liabilities  21 21 
Total liabilities$716 $ $999 $1,715 
16

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

December 31, 2022
Level 1Level 2Level 3Total
Assets
U.S. treasury securities$1,059 $ $ $1,059 
Corporate bonds 116,616  116,616 
Preferred stock 14,446  14,446 
Marketable securities$1,059 $131,062 $ $132,121 
Liabilities
Warrant liabilities$5,469 $ $18,816 $24,285 
Conversion option liabilities  8,091 8,091 
Total liabilities$5,469 $ $26,907 $32,376 
There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for 2023 or 2022.
All of our derivative contracts are centrally cleared and therefore are cash-settled on a daily basis. This results in the derivative contracts having a fair value that approximates zero on a daily basis. Therefore, there are no derivative assets or liabilities included in the table above. Refer to Note 7, Derivatives for further discussion.
The warrant liabilities consist of PIPE Investment Warrants, Convertible Notes Payable Warrants, Notes Payable Warrants, Private Placement Warrants, and Public Warrants. History, fair value hierarchy, valuation techniques and inputs of those warrants are more fully described in Note 5, Fair Value Measurements and Note 15, Warrant Liabilities, to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. Pursuant to the Third Amendment to the Convertible Loan and Security Agreement, as of September 30, 2023, the exercise price of the Convertible Notes Payable Warrants (the “Conversion Price”) is the lowest of (i) $2.47; (ii) the 5-day VWAP determined as of March 10, 2023, where “5-day VWAP” means the volume-weighted average price of our Common Stock, determined for the five consecutive trading days ending on the last trading day immediately preceding the applicable date; and (iii) the effective price per share of any bona fide equity offering prior to March 10, 2024. As such, as of September 30, 2023, these warrant liabilities are valued based on a Monte Carlo simulation that values the warrants using a probability weighted discounted cash flow model, which are considered Level 3 liabilities, whereas previously they were valued based on Black-Scholes option pricing model.
17

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)

The significant inputs to the valuation of Level 3 warrants and conversion option liabilities as of September 30, 2023 were as follows:
PIPE Investment WarrantsPrivate Placement WarrantsConvertible Notes Payable WarrantsConversion Option Liabilities
Exercise Price$3.90 $11.50 $2.47 $2.47 
Stock Price$0.33 $0.33 $0.33 $0.33 
Volatility98.9 %110.0 %100.0 %75.8 %
Remaining term in years3.493.003.251.25
Risk-free rate4.8 %4.8 %4.8 %5.4 %
Dividend yield % % % %
The significant inputs to the valuation of Level 3 warrants and conversion option liabilities as of December 31, 2022 were as follows:
PIPE Investment WarrantsPrivate Placement WarrantsConvertible Notes Payable WarrantsConversion Option Liabilities
Exercise Price$3.90 $11.50 $2.47 $2.47 
Stock Price$2.55 $2.55 $2.55 $2.55 
Volatility90.4 %84.0 %89.0 %64.7 %
Remaining term in years4.243.754.002.00
Risk-free rate4.0 %4.1 %4.1 %4.4 %
Dividend yield % % % %
The following table summarizes the changes in the warrants and conversion option liabilities categorized as Level 3 for the three and nine months ended September 30, 2023 and 2022:
Three Months Ended
September 30, 2023
Nine Months Ended
September 30, 2023
Balance, beginning of period$10,306 $26,907 
Changes in estimated fair value(9,307)(25,908)
Ending balance, September 30, 2023
$999 $999 
Three Months Ended
September 30, 2022
Nine Months Ended
September 30, 2022
Balance, beginning of period$39,068 $42,457 
Changes in estimated fair value(3,129)(33,122)
Issuance of PIPE Investment warrants 26,604 
Ending balance, September 30, 2022
$35,939 $35,939 
Fair Value of Long-Term Debt
As of September 30, 2023 and December 31, 2022, the fair value of our debt, including amounts classified as current, was $93,857 and $103,814, respectively. Fair values are based upon valuation models using market information, which fall into Level 3 in the fair value hierarchy.
18

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
6. Investments in Available-for-Sale Securities
We have invested in marketable debt securities, primarily investment-grade corporate bonds, preferred stock, and highly liquid U.S Treasury securities, which are held in the custody of a major financial institution. These securities are classified as available-for-sale and, accordingly, the unrealized gains and losses are recorded through other comprehensive income and loss.
Marketable securities classified as available-for-sale securities are summarized below:
September 30, 2023
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
U.S. treasury securities$9,589 $ $(3)$9,586 
Corporate bonds33,831 2 (2,080)31,753 
Preferred stock13,082  (897)12,185 
Total Investments$56,502 $2 $(2,980)$53,524 
December 31, 2022
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
U.S. treasury securities$1,059 $ $ $1,059 
Corporate bonds122,257  (5,641)116,616 
Preferred stock15,454  (1,008)14,446 
Total Investments$138,770 $ $(6,649)$132,121 
The aggregate fair value of investments with unrealized losses that had been owned for less than a year was $17,662 and $66,296 as of September 30, 2023 and December 31, 2022, respectively. The aggregate fair value of investments with unrealized losses that had been owned for more than one year was $30,800 and $64,723 as of September 30, 2023 and December 31, 2022, respectively.
Available-for-sale investments outstanding as of September 30, 2023, classified as marketable securities in the condensed consolidated balance sheets, have maturity dates ranging from the fourth quarter of 2023 through the fourth quarter of 2026. The fair value of marketable securities as of September 30, 2023 with maturities within one year and one to five years is $28,417 and $25,107, respectively. We classify available-for-sale investments as current based on the nature of the investments and their availability to provide cash for use in current operations, if needed.
7. Derivatives
Corporate Risk Management Activities
We use exchange-traded futures to manage price risk of fluctuating Chicago Board of Trade prices related to forecasted purchases and sales of soybeans and soybean related products in the normal course of business. These risk management activities are actively monitored for compliance with our risk management policies.
As of September 30, 2023, we held financial futures related to a portion of our forecasted purchases of soybeans for an aggregate notional volume of 8,870 bushels of soybeans; 6,965 bushels of the aggregate notional volume will settle in 2023 with the remaining 1,905 bushels settling in 2024. As of September 30, 2023, we held financial futures related to a portion of our forecasted sales of soybean oil for an aggregate notional volume of 403 pounds of soybean oil; 385 pounds of soybean oil will settle in 2023 with the remaining settling in 2024. As of September 30, 2023, we held financial futures related to a portion of our forecasted sales of soybean meal for an aggregate notional volume of 67 tons of soybean meal; 61 tons of soybean meal will settle in 2023 with the remaining settling in 2024.
19

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
Tabular Derivatives Disclosures
We have master netting agreements with our counterparties, which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce our credit exposure related to these counterparties. As all of our derivative contracts are centrally cleared and therefore are cash-settled on a daily basis, the fair value approximates zero. Our derivative contracts were as follows:
September 30, 2023December 31, 2022
Asset DerivativeLiability DerivativeAsset DerivativeLiability Derivative
Soybeans$4,121 $2,578 $1,112 $1,925 
Soybean oil635 737 533 73 
Soybean meal1,282 70 400 2,414 
Effect of daily cash settlement(6,038)(3,385)(2,045)(4,412)
Net derivatives as classified in the balance sheet$ $ $ $ 
We had a current asset representing excess cash collateral posted to a margin account of $2,336 and $2,714 as of September 30, 2023 and December 31, 2022, respectively. These amounts are not included with the derivatives presented in the table above and are included in prepaid expenses and other current assets in the condensed consolidated balance sheets.
Currently, we do not seek cash flow hedge accounting treatment for our derivative financial instruments and thus changes in fair value are reflected in current earnings.
The tables below show the amounts of pre-tax gains and losses related to our derivatives:
Three Months Ended
September 30, 2023
Three Months Ended
September 30, 2022
Gain (loss) realized on
derivatives
Unrealized gain (loss) on
derivatives
Total gain (loss)
recognized in
income
Gain (loss) realized on
derivatives
Unrealized gain (loss) on
derivatives
Total gain (loss)
recognized in
income
Soybeans$(2,573)$2,705 $132 $(1,988)$(1,927)$(3,915)
Soybean oil48 1,112 1,160 2,078 1,074 3,152 
Soybean meal968 (217)751 (1,846)2,065 219 
Total$(1,557)$3,600 $2,043 $(1,756)$1,212 $(544)
Nine Months Ended
September 30, 2023
Nine Months Ended
September 30, 2022
Gain (loss) realized on
derivatives
Unrealized gain (loss) on
derivatives
Total gain (loss)
recognized in
income
Gain (loss) realized on
derivatives
Unrealized gain (loss) on
derivatives
Total gain (loss)
recognized in
income
Soybeans$(3,820)$2,357 $(1,463)$(8,219)$(716)$(8,935)
Soybean oil2,548 (563)1,985 (5,327)1,281 (4,046)
Soybean meal894 3,227 4,121 (2,091)2,837 746 
Total$(378)$5,021 $4,643 $(15,637)$3,402 $(12,235)
Our soybean positions are designed to hedge risk related to inventory purchases, therefore the gains and losses on soybean instruments are recorded in cost of sales in the condensed consolidated statements of operations. Our soybean oil and soybean meal positions are designed to hedge risk related to sales transactions therefore the gains and losses on soybean oil and soybean meal instruments are recorded in revenues in the condensed consolidated statements of operations.
We classify the cash effects of our derivatives within the “Cash Flows from Operating Activities” section of the condensed consolidated statements of cash flows.
20

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
8. Inventories, Net
Inventories, net consist of the following:
September 30,
2023
December 31,
2022
Raw materials and supplies$12,070 $37,483 
Work-in-process5,804 4,977 
Finished goods12,545 19,650 
Total inventories$30,419 $62,110 
Work-in-process inventory consists of seed provided to contracted seed producers and growers with which we hold a purchase option for, or are required to purchase the future harvested seeds or grains. It also includes crops under production which represent the direct costs of land preparation, seed, planting, growing, and maintenance.
9. Debt
September 30,
2023
December 31,
2022
DDB Term loan, due April 2025$6,541 $7,393 
DDB Equipment loan, due July 2024700 1,225 
Convertible Notes Payable, due March 2024112,700 110,700 
Equipment Financing, due March 2025585 873 
Notes Payable, varying maturities through June 202666 81 
Less: unamortized debt discount and debt issuance costs(11,415)(14,039)
109,177 106,233 
Less: current maturities of long-term debt(35,581)(2,242)
Long-term debt$73,596 $103,991 
Term Loan, Equipment Loan and Revolver
In April 2019, our wholly-owned subsidiary, Dakota Dry Bean, Inc. (“DDB”) entered into a Credit Agreement comprised of a $14,000 aggregate principal amount of floating rate, five-year term loan (“DDB Term Loan”), a $3,500 floating rate, five-year loan to be used for facility expansion (“DDB Equipment Loan”), and a $6,000 floating rate revolving credit facility (“DDB Revolver”), which is renewed annually (together the “Credit Agreement”). In the fourth quarter of 2022, the DDB Revolver maturity date was extended to November 2023. In the second quarter of 2023, the DDB Term Loan maturity date was extended to April 2025. As of September 30, 2023, the interest rate is U.S. prime rate plus 0.75% on the DDB Term Loan and DDB Equipment Loan, and U.S. prime rate plus 0.25% on the DDB Revolver.
The Credit Agreement is secured by substantially all of DDB’s real and personal property and is guaranteed, in part, by Benson Hill, Inc., DDB’s parent company, to a maximum of $7,000. The DDB Term Loan is payable in equal quarterly installments of $284 plus interest with the remaining balance of $4,834 due in April 2025. The DDB Equipment Loan is payable in equal quarterly installments of $175 plus interest through July 2024.
Under the Credit Agreement, DDB and us must comply with certain financial covenants based on DDB’s operations, including a minimum working capital covenant, a minimum net worth covenant, a funded debt to EBITDA ratio covenant, and a fixed charge coverage ratio covenant.
Benson Hill, Inc., as guarantor, must also comply with a minimum cash covenant. The Credit Agreement also contains various restrictions on our activities, including restrictions on indebtedness, liens, investments, distributions, acquisitions and dispositions, control changes, transactions with affiliates, establishment of bank and brokerage accounts, sale-leaseback transactions, margin stocks, hazardous substances, hedging, and management agreements. During the third quarter of 2023, we were in compliance with the financial covenants under the Credit Agreement.
21

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
Convertible Notes Payable
In December 2021, we entered into a financing agreement with an investment firm (the “Convertible Loan and Security Agreement”), which included a commitment by the lender to make term loans available to us in an amount of up to $100,000 with $80,000 available immediately. Under the original Convertible Loan and Security Agreement, upon our achievement of certain milestones, a second tranche of $20,000 became available on June 30, 2022 and we could elect to extend the interest-only period from 12 to 24 months and the maturity date by six months as of September 30, 2022.
We executed term notes with the lender in December 2021 in the aggregate amount of $80,000 with an initial term of 36 months payable in interest only, at the greater of (a) the prime rate of interest as published in the Wall Street Journal or (b) 3.25% per annum, plus 5.75% per annum for the first 12 months and principal and interest payments for the remaining 24 months. The term notes are secured by substantially all of our assets.
In June 2022, we amended the Convertible Loan and Security Agreement (“First Amendment”), which changed the definition of gross margin, and modified the Conversion Price and the Exercise Price. The change to the definition of gross margin removed the impact of derivative hedging gains or losses related to future periods and resulted in our achievement of the milestones required to draw on the second tranche. We drew on the full $20,000 available under the second tranche upon entering into this amendment.
In November 2022, we entered into a second amendment to the Convertible Loan and Security Agreement (“Second Amendment”), which, among other things, changed the definition of Outstanding Shares based on the updated definition of Market Cap Threshold I. Additionally, the required minimum liquidity covenant requirement was reduced from six months to four months. The Second Amendment also increased the designated interest rate by 25 basis points. Pursuant to the Second Amendment, we achieved the milestones required to extend the interest-only period from 12 to 24 months and extend the maturity date by six months. This extended the interest-free period through 2023 and the maturity date to June 2025.
In March 2023, we entered into a third amendment to the Convertible Loan and Security Agreement (“Third Amendment”), which, among other things, extended the interest-only period for six months through the second quarter of 2024 and allowed the restricted cash to be counted towards the required minimum liquidity covenant calculation. In addition, the Third Amendment increased the final balloon payment by 200 basis points and reset the prime rate floor from 5.75% to 7.75%.
In October 2023, we entered into a fourth amendment to the Convertible Loan and Security Agreement (“Fourth Amendment”) with the lender. Refer to Note 16, Subsequent Events for further details.
As of September 30, 2023, upon maturity or other satisfaction of the term notes, a final payment (in addition to other payments of principal and interest) equal to $12,700 is payable by us to the lenders. In the event the term notes are prepaid, a prepayment fee is due, ranging from 1% to 6% of the principal amount of the term notes, based upon the time from the initial closing to the prepayment date.
At any time after six months and before 42 months from the closing date of the initial term notes, up to $20,000 of the principal amount of the term loans then outstanding may be converted (at the lender’s option) into shares of our common stock.
The conversion option is subject to: (a) the closing sales price of our common stock for each of the seven consecutive trading days immediately preceding the conversion, being greater than or equal to the conversion price; (b) the shares of our common stock issued in connection with any such conversion not exceeding 20% of the total trading volume of our common stock for the 22 consecutive trading days immediately prior to and including the effective date of the conversion; and (c) all lenders’ pro forma shares of our common stock resulting from the conversion option, when added to all lenders’ pro forma shares of our common stock resulting from the exercise of the warrants, not exceeding 2.5% of the number of shares of our common stock outstanding at the time of the conversion.
As of September 30, 2023, the lender has not yet exercised their conversion option for any portion of the outstanding principal. The fair value of the conversion option, an estimated $8,783 at issuance, was recorded as a debt discount, which is amortized over the life of the term notes using the effective interest method and recorded as interest expense.
Under the terms of the Convertible Loan and Security Agreement, we must comply with certain affirmative, negative, and financial covenants. These covenants are primarily restrictions on our activities, including restrictions on indebtedness, liens, dividends, and significant business changes. We are required to maintain, at all times, a minimum remaining months liquidity
22

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
equal to or greater than six months. We were in compliance with the financial covenants under the Convertible Loan and Security Agreement during the nine months ended September 30, 2023.
Equipment Financing
In March 2022, we entered into a sale-leaseback transaction relating to certain of our equipment. We evaluated whether the transaction qualified as a sale under ASC 606 and ultimately determined that as the leases are classified as financing leases under ASC 842, the transaction did not qualify as a sale and therefore control of the equipment was not transferred. Therefore, the proceeds from the sales of $1,160 were recorded as a financing liability in 2022. We will make monthly payments of $33 under the financing arrangement for a term of 36 months.
10. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
September 30,
2023
December 31,
2022
Payroll and employee benefits$6,960 $12,306 
Insurance premiums55 4,687 
Professional services1,532 2,842 
Research and development608 924 
Inventory 530 
Interest170 167 
Contract liability6,706 9,965 
Other2,608 2,014 
$18,639 $33,435 
11. Income Taxes
Our effective tax rate was 0% for the three and nine months ended September 30, 2023 and 2022. The 2023 and 2022 effective tax rates differed from the statutory rate of 21% primarily due to the fact that we recorded no income tax benefit on our pretax losses as we recorded a full valuation allowance globally. The tax benefit recorded in 2023 relates primarily to the reversal of deferred tax liabilities due to the impairment of goodwill.
12. Comprehensive Income
Our other comprehensive income (loss) (“OCI”) consists of unrealized gains and losses on marketable debt securities classified as available for sale and foreign currency translation adjustments from our subsidiaries in Brazil and Canada.
The following table shows changes in accumulated other comprehensive income (“AOCI”) by component for the three and nine months ended September 30, 2023 and 2022:

23

Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(In Thousands, Except Per Share Data)
Cumulative
Foreign
Currency
Translation
Unrealized
Gains/(Losses)
on Marketable
Securities
Total
Balance as of June 30, 2023$(385)$(3,186)$(3,571)
Other comprehensive income before reclassifications 395 395 
Amounts reclassified from AOCI 14 14 
Other comprehensive income 409 409 
Balance at September 30, 2023
$(385)$(2,777)$(3,162)
Balance at December 31, 2022
$(385)$(6,710)$(7,095)
Other comprehensive income before reclassifications 875 875 
Amounts reclassified from AOCI 3,058 3,058 
Other comprehensive income 3,933 3,933 
Balance at September 30, 2023
$(385)$(2,777)$(3,162)