UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer |
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(Address of principal executive offices) | (Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol |
| Name of Each Exchange on Which Registered |
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.
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).
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Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 13, 2023,
GEVO, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS
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Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 | 3 | |
4 | ||
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6 | ||
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8 | ||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | |
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43 | ||
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities | 43 | |
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45 | ||
2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements.
GEVO, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)
| Note |
| September 30, 2023 |
| December 31, 2022 | |||
Assets |
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Current assets |
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Cash and cash equivalents |
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Marketable securities |
| 5 |
| — |
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Restricted cash |
| 6 |
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Trade accounts receivable, net |
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Inventories |
| 9 |
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Prepaid expenses and other current assets |
| 7 |
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Total current assets |
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Property, plant and equipment, net |
| 10, 20 |
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Restricted cash |
| 6 |
| — |
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Operating right-of-use assets |
| 8 |
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Finance right-of-use assets |
| 8 |
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Intangible assets, net |
| 11 |
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Deposits and other assets |
| 12 |
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Total assets |
| $ | | $ | | |||
Liabilities |
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Current liabilities |
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Accounts payable and accrued liabilities |
| 13, 20 | $ | | $ | | ||
Operating lease liabilities |
| 8 |
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Finance lease liabilities |
| 8 |
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Loans payable |
| 14 |
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2021 Bonds payable, net | 14 | | — | |||||
Total current liabilities |
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2021 Bonds payable, net |
| 14 |
| — |
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Loans payable |
| 14 |
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Operating lease liabilities |
| 8 |
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Finance lease liabilities |
| 8 |
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Other liabilities |
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| — |
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Total liabilities |
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Stockholders' Equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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| — |
| ( | ||
Accumulated deficit |
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| ( |
| ( | ||
Total stockholders' equity |
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Total liabilities and stockholders' equity |
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| $ | | $ | | ||
See the accompanying Notes to the Consolidated Financial Statements.
3
GEVO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share amounts)
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||
| Note |
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Total operating revenues |
| 2, 21 | $ | | $ | | $ | | $ | | ||||
Operating expenses: |
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Cost of production |
| 15 |
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Depreciation and amortization |
| 10, 11 |
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Research and development expense |
| 15 |
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General and administrative expense | | | | | ||||||||||
Project development costs |
| 15 |
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Facility idling costs |
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Impairment loss |
| 3 |
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Total operating expenses |
| 15 |
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Loss from operations |
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| ( |
| ( |
| ( |
| ( | |||||
Other income (expense) |
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Interest expense |
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| ( |
| ( |
| ( | ( | |||||
Interest and investment income |
| 5, 18 |
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Other income (expense), net |
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| ( |
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Total other income, net |
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Net loss |
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| $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share - basic and diluted |
| ( | ( | ( | ( | |||||||||
Weighted-average number of common shares outstanding - basic and diluted |
| 4 |
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| | | |||||
See the accompanying Notes to the Consolidated Financial Statements.
4
GEVO, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, in thousands)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| Note |
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Net loss |
|
| $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income (loss): |
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Unrealized gain (loss) on available-for-sale securities | 5 |
| — |
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| |
| ( | |||||
Comprehensive loss |
| $ | ( | $ | ( | $ | ( | $ | ( | |||||
See the accompanying Notes to the Consolidated Financial Statements.
5
GEVO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share amounts)
For the Three Months Ended September 30, 2023 and 2022 | |||||||||||||||||||
Common Stock | Accumulated Other | Accumulated | Stockholders’ | ||||||||||||||||
| Note |
| Shares |
| Amount |
| Paid-In Capital |
| Comprehensive Loss |
| Deficit |
| Equity | ||||||
Balance, June 30, 2023 |
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|
| |
| $ | |
| $ | |
| $ | — |
| $ | ( |
| $ | |
Non-cash stock-based compensation |
| 15 |
| — |
| — |
| |
| — |
| — |
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Stock-based awards and related share issuances, net |
| 19 |
| |
| |
| ( |
| — |
| — |
| — | |||||
Net loss |
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| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2023 |
|
|
| | $ | | $ | | $ | — | $ | ( | $ | | |||||
Balance, June 30, 2022 |
|
|
| | $ | | $ | | $ | ( |
| $ | ( |
| $ | | |||
Non-cash stock-based compensation |
| 15 |
| — |
| — |
| |
| — |
| — |
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Stock-based awards and related share issuances, net | | | | — | — | | |||||||||||||
Other comprehensive income |
|
|
| — |
| — |
| — |
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| — |
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Net loss |
|
|
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2022 |
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| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
For the Nine Months Ended September 30, 2023 and 2022 | |||||||||||||||||||
Common Stock | Accumulated Other | Accumulated | Stockholders’ | ||||||||||||||||
| Note |
| Shares |
| Amount |
| Paid-In Capital |
| Comprehensive Loss |
| Deficit |
| Equity | ||||||
Balance, December 31, 2022 |
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| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
Non-cash stock-based compensation |
| 15 |
| — |
| — |
| |
| — |
| — |
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Stock-based awards and related share issuances, net |
| 19 |
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| ( |
| — |
| — |
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Other comprehensive income |
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| — |
| — |
| — |
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| — |
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Net loss |
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| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2023 |
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| | $ | | $ | | $ | — | $ | ( | $ | | |||||
Balance, December 31, 2021 |
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| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
Issuance of common stock and common stock warrants, net of issuance costs | 19 | | | | — | — | | ||||||||||||
Issuance of common stock upon exercise of warrants |
| 19 |
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| — |
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| — |
| — |
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Non-cash stock-based compensation |
| 15 |
| — |
| — |
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| — |
| — |
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Stock-based awards and related share issuances, net | 19 | | | | — | — | | ||||||||||||
Other comprehensive loss |
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| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Net loss |
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| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2022 |
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| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
See the accompanying Notes to the Consolidated Financial Statements.
6
GEVO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended September 30, | ||||||||
| Note |
| 2023 |
| 2022 | |||
Operating Activities |
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Net loss |
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| $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Impairment loss |
| 3 |
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Stock-based compensation |
| 15 |
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Depreciation and amortization |
| 10, 11 |
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Amortization of marketable securities (discount) premium |
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| ( |
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Other noncash expense (income) |
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| ( | ||
Changes in operating assets and liabilities: |
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Accounts receivable |
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| ( |
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Inventories |
| 9 |
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| ( | ||
Prepaid expenses and other current assets, deposits and other assets |
| 7, 12 |
| ( |
| ( | ||
Accounts payable, accrued expenses and non-current liabilities |
| 13 |
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Net cash used in operating activities |
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| ( |
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Investing Activities |
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Acquisitions of property, plant and equipment |
| 10, 20 |
| ( |
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Acquisition of patent portfolio |
| 11 |
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| ( | ||
Proceeds from maturity of marketable securities |
| 5 |
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Purchase of marketable securities |
| 5 |
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| ( | ||
Proceeds from sale of property, plant and equipment | 10 | |
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Net cash provided by investing activities |
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Financing Activities |
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Debt and equity offering costs |
| 19 |
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| ( | ||
Proceeds from issuance of common stock and common stock warrants |
| 19 |
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Proceeds from exercise of warrants |
| 19 |
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Net settlement of common stock under stock plans |
| 15 |
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| ( | ||
Payment of loans payable |
| 14 |
| ( |
| ( | ||
Payment of finance lease liabilities |
| 8 |
| ( |
| ( | ||
Net cash (used in) provided by financing activities |
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| ( |
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Net increase in cash and cash equivalents |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
|
| $ | | $ | | ||
| Nine Months Ended September 30, | |||||
Schedule of cash, cash equivalents and restricted cash | 2023 |
| 2022 | |||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash (current) |
| |
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Restricted cash (non-current) |
| — |
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Total cash, cash equivalents and restricted cash | $ | | $ | | ||
| Nine Months Ended September 30, | |||||
Supplemental disclosures of cash and non-cash investing and financing transactions | 2023 |
| 2022 | |||
Cash paid for interest, net of amounts capitalized | $ | | $ | | ||
Non-cash purchase of property, plant and equipment | | | ||||
Right-of-use asset purchased with operating lease | $ | | $ | — | ||
See the accompanying Notes to the Consolidated Financial Statements.
7
1. | Nature of Business, Financial Condition and Basis of Presentation |
Nature of business.
Gevo, Inc. (Nasdaq: GEVO) (“Gevo”, “we”, “us”, “our”, or the “Company,” which, unless otherwise indicated, refers to Gevo, Inc. and its subsidiaries), a Delaware corporation founded in 2005, is a growth-oriented company with the mission of solving greenhouse gas (“GHG”) emissions for those sectors of the transportation industry that are not amenable to electrification or hydrogen.
The Company is focused on transforming renewable energy into energy-dense liquid drop-in hydrocarbons that can be used as renewable fuels, such as sustainable aviation fuel (“SAF”) and other fuels and chemicals, with the potential to achieve a “net-zero” GHG, or even carbon negative footprint measured by the Argonne National Laboratory’s GREET (Greenhouse gases, Regulated Emissions, and Energy use in Transportation) model (the “GREET Model”) to measure, predict and verify GHG emissions across the life-cycle. Our “net-zero” concept means production of drop-in hydrocarbon fuels by using sustainably grown feedstocks (e.g., low till, no-till and dry corn cultivation), renewable and substantially decarbonized energy sources, resulting in a net-zero carbon footprint from the full life cycle of the fuel measured from the capture of renewable carbon through the burning of the fuel.
Gevo’s primary market focus, given current demand and growing customer interest, is SAF. The Company believes that SAF from carbohydrates to alcohol is the most economically viable approach for carbon abatement. The Company also has commercial opportunities for other renewable hydrocarbon products, such as (i) renewable natural gas, also known as biogas (“RNG”), (ii) hydrocarbons for gasoline blendstocks and diesel fuel, and (iii) plastics, materials and other chemicals. We are engaged in technology, process and intellectual property development targeted to large scale deployment of net-zero hydrocarbon fuels and chemicals. We are developing the marketplace and customers for SAF and other related products. We also are engaged as a developer and enabler/licensor for large scale commercial production, and we expect to be a co-investor on certain projects. Gevo’s business model is that of a developer of projects, a licensor, process technology developer, and operator of certain assets in the future.
Net-Zero Projects
In early 2021, we announced our proprietary “Net-Zero Projects” that we developed and engineered as a series of planned facilities to produce energy dense liquid hydrocarbons using renewable energy and our proprietary technology. Our Net-Zero Projects will convert renewable energy (e.g., photosynthetic, wind, RNG) from a variety of sources into energy dense liquid hydrocarbons that, when burned in traditional engines, has the potential to achieve net-zero GHG emissions across the whole lifecycle of the liquid fuel: from the way carbon is captured from the atmosphere, processed to make liquid fuel products, and burned as a fuel for planes, cars, trucks, and ships. Gevo has engineered, developed, and owns our Net-Zero plant designs, and the overall Gevo Net-Zero process (i.e., the process to enable carbon-negative olefins, and hydrocarbon fuels with an anticipated net-zero or better carbon footprint measured across the lifecycle of the whole processes). The proprietary Gevo Net-Zero processes and plant designs are based upon the conversion of carbohydrates to alcohols, then the conversion of the alcohols to olefins (i.e., building blocks for chemicals, plastics, and fuels), and then the conversion of the olefins into fuels, all optimized and integrated to achieve a net-zero carbon footprint. We’ve taken what we believe are the best of proven unit operations from the fermentation and petrochemical industry. In the fermentation section of our plant design, we work with Fluid Quip Technologies, LLC and PRAJ Industries Limited (“PRAJ”), as well as other suppliers of unit operations, and using Axens North America, Inc. (“Axens”) as the unit operation technology supplier for producing olefins and fuels. Gevo has developed and owns the overall proprietary plant designs, engineering details, integration technologies, and has filed patents on several process improvements.
In November 2021, Gevo entered into an agreement to exclusively utilize Axens’ technology for isobutanol conversion into hydrocarbons. In February of 2022, Gevo and Axens entered into a second exclusive agreement to specifically cover the process steps for ethanol to finished jet fuel.
8
Our initial Net-Zero Project, Net-Zero 1 (“NZ1”), is expected to be located in Lake Preston, South Dakota, and is being currently designed to produce approximately
We also are developing other commercial production projects for SAF at other locations in the United States where we expect to use our Net-Zero plant designs based on work done for NZ1 at Lake Preston. Gevo expects to play the role of project developer, plant design and technology licensor, and investor, based on traditional developer business models where the developer gets a partial ownership stake for developing the project. We may also co-invest in projects to increase our equity ownership in those projects.
Renewable Natural Gas Facilities
Gevo’s RNG facilities in Northwest Iowa (“NW Iowa RNG”) are owned by Gevo NW Iowa RNG, LLC, and produce RNG captured from dairy cow manure supplied by
Luverne Facility
Gevo’s development plant in Luverne, Minnesota (the “Luverne Facility”), recorded in the Agri-Energy segment, was originally constructed in 1998 and is located on approximately
Basis of presentation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) along with the instructions to Form 10-Q and Article 10 of Regulation S-X assuming the Company will continue as a going concern. Accordingly, they do not include the information and footnotes required by GAAP for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company as of, and for the nine months ended, September 30, 2023, and are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included under the heading “Financial Statements and Supplementary Data” in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The financial statements at December 31, 2022, have been derived from the audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included for the year ended December 31, 2022 (the “2022 Annual Report”).
9
Prior Period Financial Statement Immaterial Adjustment. The Company has entered into agreements with Zero6 Energy Development, Inc. (“ZEDI”), a national clean energy expert that provides expertise in capital management, development, engineering, and asset management, to develop and construct facilities to provide carbon neutral power to NZ1 via the two limited liability companies: Kingsbury Country Wind Fuel, LLC (“KCWF”) and Dakota Renewable Hydrogen, LLC (“DRH”) (collectively, the “Project LLCs”), respectively, to induce the design and construction of the power generation, transmission and distribution facilities that will serve NZ1. The Project LLCs formed to govern the projects are VIEs. In determining whether the Company was the primary beneficiary of the VIEs, the Company considered both qualitative and quantitative factors regarding the nature, size and form of the involvement with the VIE, such as the role in establishing the VIEs and the ongoing rights and responsibilities; the economic interests deemed to be variable interests in the VIEs; the design of the VIEs, including the capitalization structure, subordination of interests, and payment priority. During the third quarter of 2023, the Company identified that the governance structure and operating procedures of the Project LLCs resulted in the Company having the power to control certain significant activities of the Project LLCs, as defined by Accounting Standards Codification 810 (“ASC 810”), Consolidations. Therefore, the Company is the primary beneficiary of the VIEs, and per ASC 810, must consolidate the VIEs. Prior to the third quarter of 2023, the Company did not consolidate the Project LLCs. The Company assessed the materiality of this correction on the previously issued interim and annual financial statements in accordance with SEC Staff Accounting Bulletin No. 99. The Company concluded that the changes were not material to any of the previously issued consolidated financial statements. The Company’s primary involvement with the VIEs is to fund the deposits in order to induce the contractor to design and construct the power generation, transmission and distribution facilities that will serve NZ1. These amounts funded will be either fully reimbursed upon completion of the project or used as an investment into the Project LLC. Gevo has contractual priority liens against the equipment and constructed facilities under the contracts.
A summary of the impact of the adjustment on the Consolidated Balance Sheets for each of the periods ended December 31, 2022, March 31, 2023, and June 30, 2023, respectively, is as follows: an increase to property, plant, and equipment of $
Additionally, the following immaterial adjustments were made to the consolidated statements of cash flows associated with the above changes for each of the periods ended September 30, 2022, December 31, 2022, March 31, 2023, and June 30, 2023, respectively, as follows: a decrease in the net cash used in operating activities of $
Reclassifications. The Company reclassified certain prior period amounts to conform to the current period presentation. The reclassifications included the categorization of depreciation and amortization on the Consolidated Statements of Operations and had no impact on total revenues, total operating expenses, net loss or stockholders’ equity for any period.
Significant Accounting Policies
Variable Interest Entities. The Company enters into agreements with special purpose entities (“SPEs”), some of which are variable interest entities (“VIEs”), in the ordinary course of business. A legal entity is considered a VIE if it has either a total equity investment that is insufficient to finance its operations without additional subordinated financial support or whose equity holders lack the characteristics of a controlling financial interest. The Company’s variable interests arise from contractual or other monetary interests in the entity. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests.
10
The Company consolidates a VIE if it is deemed to be the primary beneficiary. The Company determines it is the primary beneficiary if it has the power to direct the activities that most significantly impact the VIEs’ economic performance and has the obligation to absorb losses or has the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it is the primary beneficiary. See Footnote 20 below for further information.
2. | Revenues from Contracts with Customers and Other Revenues |
RNG Revenue
The Company’s revenues are primarily comprised of the sale of RNG and related environmental attributes produced at the NW Iowa RNG facility under long-term contracts with customers. Revenue is recognized at a point in time when the Company transfers the product to its customer. The customer obtains control of the product upon RNG delivery into gas pipeline system, whereas the title and control for the environmental attributes are transferred to the customer subsequent to the issuance of such attributes by the relevant regulatory agency. The Company generally has a single performance obligation in our arrangements with customers. The Company’s performance obligation related to the sales of RNG and related environmental attributes are satisfied at a point in time upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products. There is
Licensing and Development Revenue
The Company’s licensing and development revenue is related to a joint development agreement with LG Chem, Ltd. ("LG Chem") to develop bio-propylene for renewable chemicals using Gevo’s Ethanol-to-Olefins ("ETO") technology. As the contractually promised intellectual properties (“IP”) are not individually distinct, the Company combined each individual IP noted in the contract into a bundle of IP (“IP Rights”) that is distinct and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. The Company’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. The Company has no further obligation with respect to the grant of IP Rights, including no expressed or implied obligation to maintain or upgrade the technology, or provide future support or services. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met.
Other Hydrocarbon Revenue
The Company recorded limited revenues from its development-scale plant, the Luverne Facility, during the three and nine months ended September 30, 2023 and 2022. These revenues were promotional in nature and from customer contracts for ethanol sales and related products and hydrocarbon revenues, which included SAF, isooctene, and isooctane. These products were sold mostly on a free-on-board shipping point basis (recognized at a point in time), were independent transactions, did not provide post-sale support or promises to deliver future goods, and were single performance obligations.
The following table displays the Company’s revenue by major source based on product type (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
Major Goods/Service Line | 2023 |
| 2022 | 2023 |
| 2022 | ||||||
Renewable natural gas commodity | $ | | $ | | $ | | $ | | ||||
Environmental attribute revenue | | | | | ||||||||
Licensing and development revenue |
| |
| |
| |
| | ||||
Other hydrocarbon revenue - ethanol, isooctane, IBA | | | | | ||||||||
Total operating revenue | $ | | $ | | $ | | $ | | ||||
11
3. | Asset Impairment |
During the three and nine months ended September 30, 2022, the Company recorded a $
4. | Net Loss Per Share |
Basic net loss per share is calculated based on the weighted average number of common shares outstanding for the period. Diluted net loss per share is calculated based on the assumption that stock options and other dilutive securities outstanding, which have an exercise price less than the average market price of the Company’s common shares during the period, would have been exercised on the later of the beginning of the period or the date granted, and that the funds obtained from the exercise were used to purchase common shares at the average market price during the period. None of the Company’s stock options or other dilutive securities are considered to be dilutive in periods with net losses.
The effect of the Company’s dilutive securities is calculated using the treasury stock method and only those instruments that result in a reduction in net income per common share are included in the calculation. Diluted net loss per share excluded common stock equivalents because the effect of their inclusion would be anti-dilutive or would decrease the reported net loss per share. Therefore
Basic and diluted net loss per share is calculated as follows (net loss in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2023 |
| 2022 | 2023 |
| 2022 | |||||||
Net loss | ( | ( | ( | ( | ||||||||
Basic weighted-average shares outstanding |
| |
| |
| |
| | ||||
Net loss per share - basic and diluted | ( | ( | ( | ( | ||||||||
12
5. | Marketable Securities |
The Company’s investments in marketable securities are stated at fair value and are available for sale. During the nine months ended September 30, 2023, all remaining investments in marketable securities matured with
December 31, 2022 | |||||||||
| Amortized |
| Gross |
| |||||
Cost | Unrealized | ||||||||
Basis | Losses | Fair Value | |||||||
Marketable securities (current) |
|
|
|
|
|
| |||
U.S. Treasury notes | $ | | $ | ( | $ | | |||
U.S. Government-sponsored enterprise securities |
| |
| ( |
| | |||
Total marketable securities (current) | $ | | $ | ( | $ | | |||
The cost of securities sold is based upon the specific identification method. The Company did not record investment income during the three months ended September 30, 2023, and recorded investment income from marketable securities totaling $
6. | Restricted Cash |
As of September 30, 2023, current restricted cash of $
The Company entered into an irrevocable direct pay letter of credit (the “Bond Letter of Credit”) with Citibank N.A (“Citibank”) in April 2021 to support the 2021 Bonds (as defined below) for the development and construction of NW Iowa RNG. See Note 14, Debt, for additional information on the 2021 Bonds. The Bond Letter of Credit has a
In September 2022, the Company entered into a Pledge and Assignment agreement with Citibank to provide credit support in the form of a letter of credit (the “Power Letter of Credit”) from Citibank to a local electric utility company in order to induce the utility company to design and construct the power transmission and distribution facilities that will serve NZ1. The Company deposited $
7. | Prepaid Expenses and Other Current Assets |
The following table sets forth the components of the Company’s prepaid expenses and other current assets (in thousands) as of:
September 30, 2023 |
| December 31, 2022 | ||||
Prepaid insurance | $ | | $ | | ||
Interest receivable |
| |
| | ||
Prepaid feedstock |
| |
| | ||
Other current assets |
| |
| | ||
Total prepaid expenses and other current assets | $ | | $ | | ||
13
8. | Leases, Right-of-Use Assets and Related Liabilities |
The Company is party to an operating lease contract for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029, and an operating lease contract for additional office space in Albuquerque, New Mexico, which expires in 2025. These leases contain options to extend the leases, which management does not reasonably expect to exercise, so they are not included in the length of the terms. The Company also has one production line piece of equipment with an operating lease that expires in 2024.
The Company has
The following tables present the (i) other quantitative information and (ii) future minimum payments under non-cancelable financing and operating leases as they relate to the Company’s leases (in thousands, except for weighted averages):
| Nine Months Ended September 30, |
| |||||
2023 |
| 2022 |
| ||||
Other Information |
|
|
|
| |||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
| |||
Operating cash flows from finance leases | $ | | $ | | |||
Operating cash flows from operating leases | $ | | $ | | |||
Finance cash flows from finance leases | $ | | $ | | |||
Right-of-use asset obtained in exchange for new operating lease liabilities | $ | | $ | | |||
Weighted-average remaining lease term, finance lease (months) |
|
| |||||
Weighted-average remaining lease term, operating leases (months) |
|
| |||||
Weighted-average discount rate - finance leases (1) |
| | % |
| | % | |
Weighted-average discount rate - operating leases (1) |
| | % |
| | % | |
| (1) | Our leases do not provide an implicit interest rate; we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease. |
Year Ending December 31, |
| Operating Leases |
| Finance Leases | ||
2023 (remaining) | $ | | $ | | ||
2024 |
| |
| | ||
2025 |
| |
| | ||
2026 |
| |
| | ||
2027 |
| |
| | ||
2028 and thereafter |
| |
| | ||
Total |
| |
| | ||
Less: amounts representing present value discounts |
| |
| | ||
Total lease liabilities |
| |
| | ||
Less: current portion |
| |
| | ||
Non-current portion | $ | | $ | | ||
14
9. | Inventories |
The following table sets forth the components of the Company’s inventory balances (in thousands) as of:
September 30, 2023 |
| December 31, 2022 | ||||
Raw materials |
| $ | |
| $ | |
Finished goods |
|
|
| |||
SAF, Isooctane, Isooctene and other |
| |
| | ||
Work in process |
|
|
|
| ||
Environmental attributes, net of allowance of $ | | | ||||
Jet fuel |
| |
| | ||
Spare parts |
| |
| | ||
Total inventories | $ | | $ | | ||
10. | Property, Plant and Equipment |
The following table sets forth the Company’s property, plant and equipment by classification (in thousands) as of:
| September 30, 2023 |
| December 31, 2022 | |||
Land | $ | | $ | | ||
Plant facilities and infrastructure |
| |||||