10-Q 1 gevo-20240331x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 001-35073

GEVO, INC.

(Exact name of registrant as specified in its charter)

Delaware

   

87-0747704

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

345 Inverness Drive South,
Building C, Suite 310
Englewood, CO

   

80112

(Address of principal executive offices)

(Zip Code)

(303) 858-8358

(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

Common Stock, par value $0.01 per share

GEVO

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

As of May 1, 2024, 236,232,717 shares of the registrant’s common stock were outstanding.

GEVO, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023

3

Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)

4

Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023 (unaudited)

5

Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)

6

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)

7

Notes to Consolidated Financial Statements (unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

36

Item 3.

Defaults Upon Senior Securities

36

Item 4.

Mine Safety Disclosures

36

Item 5.

Other Information

37

Item 6.

Exhibits

38

Signatures

39

2

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

GEVO, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)

    

Note

  

March 31, 2024

    

December 31, 2023

Assets

 

  

 

  

 

  

Current assets

 

  

 

  

 

  

Cash and cash equivalents

 

  

$

270,642

$

298,349

Restricted cash

 

5

 

 

77,248

Trade accounts receivable, net

 

  

 

2,488

 

2,623

Inventories

 

8

 

3,762

 

3,809

Prepaid expenses and other current assets

 

6

 

5,408

 

4,353

Total current assets

 

  

 

282,300

 

386,382

Property, plant and equipment, net

 

9, 20

 

227,674

 

211,563

Restricted cash

 

5

 

69,913

 

Operating right-of-use assets

 

7

 

1,295

 

1,324

Finance right-of-use assets

 

7

 

208

 

210

Intangible assets, net

 

10

 

6,232

 

6,524

Deposits and other assets

 

11

 

45,949

 

44,319

Total assets

 

$

633,571

$

650,322

Liabilities

 

  

 

  

 

  

Current liabilities

 

  

 

  

 

  

Accounts payable and accrued liabilities

 

12, 20

$

21,556

$

22,752

Operating lease liabilities

 

7

 

364

 

532

Finance lease liabilities

 

7

 

25

 

45

Loans payable

 

13

 

118

 

130

2021 Bonds payable, net

13

67,967

Total current liabilities

 

  

 

22,063

 

91,426

2021 Bonds payable, net

 

13

 

68,155

 

Loans payable

 

13

 

 

21

Operating lease liabilities

 

7

 

1,222

 

1,299

Finance lease liabilities

 

7

 

186

 

187

Total liabilities

 

  

 

91,626

 

92,933

Stockholders' Equity

 

  

 

  

 

  

Common stock, $0.01 par value per share; 500,000,000 shares authorized; 239,576,404 and 240,499,833 shares issued and outstanding at March 31, 2024, and December 31, 2023, respectively.

 

  

 

2,396

 

2,405

Additional paid-in capital

 

  

 

1,280,021

 

1,276,581

Accumulated deficit

 

  

 

(740,472)

 

(721,597)

Total stockholders' equity

 

  

 

541,945

 

557,389

Total liabilities and stockholders' equity

 

  

$

633,571

$

650,322

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 March 31, 

    

Note

  

2024

    

2023

Total operating revenues

 

2, 20

$

3,990

$

4,060

Operating expenses:

 

  

 

  

 

Cost of production

 

14

 

2,587

4,425

Depreciation and amortization

 

9, 10

 

4,451

4,575

Research and development expense

 

14

 

1,548

1,198

General and administrative expense

12,150

10,761

Project development costs

 

14

 

5,319

2,959

Facility idling costs

 

 

1,076

999

Total operating expenses

 

14

 

27,131

 

24,917

Loss from operations

 

 

(23,141)

 

(20,857)

Other income (expense)

 

  

 

  

 

  

Interest expense

 

  

 

(542)

(539)

Interest and investment income

 

4, 5, 17

 

4,593

3,784

Other income (expense), net

 

  

 

215

(6)

Total other income, net

 

  

 

4,266

 

3,239

Net loss

 

  

$

(18,875)

$

(17,618)

Net loss per share - basic and diluted

 

3

$

(0.08)

$

(0.07)

Weighted-average number of common shares outstanding - basic and diluted

 

3

 

240,844,334

237,260,681

See the accompanying Notes to the Consolidated Financial Statements.

4

GEVO, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands)

Three Months Ended March 31, 

    

Note

  

2024

    

2023

Net loss

    

  

$

(18,875)

$

(17,618)

Other comprehensive income:

  

 

  

Unrealized gain on available-for-sale securities

4

 

 

925

Comprehensive loss

  

$

(18,875)

$

(16,693)

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 March 31, 2024 and 2023

Common Stock

Accumulated Other

Accumulated 

Stockholders’

    

Note

    

Shares

    

Amount

    

Paid-In Capital

    

Comprehensive Loss

    

Deficit

    

Equity

Balance, December 31, 2023

    

  

    

240,499,833

    

$

2,405

    

$

1,276,581

    

$

    

$

(721,597)

    

$

557,389

Non-cash stock-based compensation

 

14

 

 

 

4,233

 

 

 

4,233

Stock-based awards and related share issuances, net

 

18

 

1,204,232

 

12

 

583

 

 

 

595

Repurchase of common stock

18

(2,127,661)

(21)

(1,376)

(1,397)

Net loss

 

  

 

 

 

 

 

(18,875)

 

(18,875)

Balance, March 31, 2024

 

  

 

239,576,404

$

2,396

$

1,280,021

$

$

(740,472)

$

541,945

Balance, December 31, 2022

    

  

    

237,166,625

    

$

2,372

    

$

1,259,527

    

$

(1,040)

    

$

(655,382)

    

$

605,477

Non-cash stock-based compensation

 

14

 

 

 

4,677

 

 

 

4,677

Stock-based awards and related share issuances, net

18

94,539

1

(1)

Other comprehensive income

 

  

 

 

 

 

925

 

 

925

Net loss

 

  

 

 

 

 

 

(17,618)

 

(17,618)

Balance, March 31, 2023

 

  

 

237,261,164

$

2,373

$

1,264,203

$

(115)

$

(673,000)

$

593,461

See the accompanying Notes to the Consolidated Financial Statements.

6

GEVO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Three Months Ended March 31, 

    

Note

  

2024

    

2023

Operating Activities

    

  

    

  

    

  

Net loss

 

  

$

(18,875)

$

(17,618)

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

 

  

 

Stock-based compensation

 

14

 

4,233

 

4,677

Depreciation and amortization

 

9, 10

 

4,451

 

4,575

Amortization of marketable securities discount

 

4

 

 

(114)

Other noncash expense

 

  

 

656

 

234

Changes in operating assets and liabilities:

 

  

 

 

Accounts receivable

 

  

 

135

 

(429)

Inventories

 

8

 

(55)

 

1,650

Prepaid expenses and other current assets, deposits and other assets

 

6, 11

 

(3,297)

 

(2,193)

Accounts payable, accrued expenses and non-current liabilities

 

12

 

(3,326)

 

446

Net cash used in operating activities

 

  

 

(16,078)

 

(8,772)

Investing Activities

 

  

 

  

 

  

Acquisitions of property, plant and equipment

 

9, 20

 

(17,512)

 

(22,093)

Proceeds from maturity of marketable securities

 

4

 

 

135,550

Proceeds from sale of property, plant and equipment

9

 

67

Net cash (used in) provided by investing activities

 

  

 

(17,512)

 

113,524

Financing Activities

 

  

 

  

 

  

Payment of loans payable

 

13

 

(32)

 

(39)

Payment of finance lease liabilities

 

7

 

(23)

 

(23)

Repurchases of common stock

18

(1,397)

-

Net cash used in by financing activities

 

  

 

(1,452)

 

(62)

Net (decrease) increase in cash and cash equivalents

 

  

 

(35,042)

 

104,690

Cash, cash equivalents and restricted cash at beginning of period

 

  

 

375,597

 

315,376

Cash, cash equivalents and restricted cash at end of period

 

  

$

340,555

$

420,066

    

Three Months Ended March 31, 

Schedule of cash, cash equivalents and restricted cash

2024

    

2023

Cash and cash equivalents

$

270,642

$

342,298

Restricted cash (current)

 

 

1,032

Restricted cash (non-current)

 

69,913

 

76,736

Total cash, cash equivalents and restricted cash

$

340,555

$

420,066

    

Three Months Ended March 31, 

Supplemental disclosures of cash and non-cash investing and financing transactions

2024

    

2023

Cash paid for interest

$

770

$

515

Non-cash purchase of property, plant and equipment

$

9,554

$

13,277

Right-of-use asset purchased with operating lease

$

35

$

See the accompanying Notes to the Consolidated Financial Statements.

7

Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

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, carbon abatement 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 are developing and engineering 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 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. 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 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.

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Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

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 65 million gallons per year (“MGPY”) of total hydrocarbon volumes, including 60 MGPY of SAF. Along with the hydrocarbons, NZ1 is being currently designed to produce approximately 1,390 million pounds per year of high-value protein products for use in the food chain and more than 34 million pounds per year of corn oil. Our products will be produced in three steps; the first step is milling the corn and the production of protein, oil, and carbohydrates, the second step produces alcohols using fermentation and the third step is the conversion of the alcohols into hydrocarbons.

We are also 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”), recorded in the Renewable Natural Gas segment, produce RNG captured from dairy cow manure supplied by three local dairies. Animal manure can be digested anaerobically to produce biogas, which is then upgraded to pipeline quality gas referred to as RNG. The original design capacity for this project was 355,000 MMBtu. We sell the produced RNG to the California market through an agreement with BP Canada Energy Marketing Corp. and BP Products North America Inc. (collectively, “BP”). In addition, we generate and sell Low Carbon Fuel Standard (“LCFS”) credits as well as D3 Renewable Identification Numbers (“RINs”) through the production of RNG (collectively, “environmental attributes”).

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 55 acres of land, which contains approximately 50,000 square feet of building space. Gevo may use the Luverne Facility in the future to prove our processes, process concepts, unit operations and for other purposes in order to optimize feedstocks and the processes used for producing hydrocarbons from alcohols. Currently, the activities at the Luverne Facility are minimized to care and maintenance, market development, and customer education.

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 three months ended, March 31, 2024, 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, 2023. The financial statements at December 31, 2023, 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, 2023 (the “2023 Annual Report”).

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Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

Significant Accounting Policies

Governmental Grants

There is no U.S. GAAP that explicitly covers accounting for government "grants" to for-profit entities, with the exception of certain agricultural subsidies. In the absence of authoritative U.S. GAAP guidance, the Company considered the application of other authoritative accounting guidance by analogy and concluded that the guidance outlined in International Accounting Standard 20 – Accounting for Government Grants and Disclosures of Government Assistance (“IAS 20”) was the most appropriate analogy for the purpose of recording and classifying the federal funds received by the Company. Under IAS 20, once it is reasonably assured that the entity will comply with the conditions of the grant, the grant money should be recognized on a systematic basis over the periods in which the entity recognizes the related expenses or losses for which the grant money is intended to compensate.

The Company recognizes grants once both of the following conditions are met: (1) the Company is able to comply with the relevant conditions of the grant and (2) the grant is received. Further, IAS 20 permits for the recognition in earnings either (1) separately under a general heading such as other income, or (2) as a reduction of the related expenses. The Company records such grants either as a reduction of the related expense, a reduction of the cost of the related asset, or as other income depending upon the nature of the grant.

In September 2023, the Company executed a Notice of Grant and Agreement Award with the U.S. Department of Agriculture (“USDA”) for a Partnerships for Climate-Smart Commodities grant of up to $30.0 million for Gevo’s Climate-Smart Farm-to-Flight Program (the “USDA Grant”), with project activity beginning in 2023 and continuing through 2027. The project expects to create critical structural climate-smart market incentives for corn with a low carbon intensity (“CI”) score as well as to accelerate the production of SAF to reduce the sector’s dependency on fossil-based fuels. In addition, this program will help provide support and incentive payments for farmers to produce, measure, report and verify low CI corn using climate smart agricultural practices, as well as accelerate development of the low-CI corn supply chain for low-carbon ethanol and SAF.

During the three months ended March 31, 2024, the Company incurred $0.7 million of costs under the USDA Grant, which are included in Project development costs in the Consolidated Statement of Operations. During the three months ended March 31, 2024, the Company recognized $0.8 million of grant reimbursements, included in Project development costs in the Consolidated Statement of Operations, which represent reimbursements for prior period costs. The Company expects to be reimbursed for all remaining costs not yet reimbursed by the USDA under the grant in future periods.

Recently Issued, Not Yet Adopted Accounting Pronouncements

Segment Reporting. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker (“CODM”) uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. Currently, ASC 280 requires that a public entity disclose certain information about its reportable segments. For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources. ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that ASU 2023-07 may have on its financial statements and related disclosures when adopted.

10

Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

2.

Revenues from Contracts with Customers and Other Revenue

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 no variable consideration present in the Company’s performance obligations. Consideration for each transaction is based upon quoted market prices at the time of delivery. All material contracts have payment terms of between one to three months and there are no return or refund rights.

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.

The Company realized $1.3 million in Q2 2023 when the first milestone was met under the joint development agreement, and expects to receive another $0.8 million in Q2 2024 due to the achievement of the second milestone in April 2024.

Other Hydrocarbon Revenue

The Company recorded limited revenues from its development-scale plant, the Luverne Facility, during the three months ended March 31, 2023. 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 March 31, 

Major Goods/Service Line

2024

    

2023

Renewable natural gas

$

219

$

130

Environmental attributes

3,771

3,533

Other hydrocarbon revenue - ethanol, isooctane, IBA

397

Total operating revenue

$

3,990

$

4,060

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GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

3.

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 26,668 and 58,651 of dilutive common stock equivalents have been excluded for the three months ended March 31, 2024 and 2023, respectively, as the Company is in a net loss position. See Notes 14 and 18 for all outstanding options and warrants that were not included in the computation of diluted weighted average common shares outstanding, as the exercise price of the options and warrants exceeded the average price of the Company’s common stock during the reporting period, and therefore are anti-dilutive.

Basic and diluted net loss per share is calculated as follows (net loss in thousands):

Three Months Ended March 31, 

2024

    

2023

Net loss

$

(18,875)

$

(17,618)

Basic weighted-average shares outstanding

 

240,844,334

 

237,260,681

Net loss per share - basic and diluted

$

(0.08)

$

(0.07)

4.

Marketable Securities

The Company’s investments in marketable securities are stated at fair value and are available for sale. All remaining investments in marketable securities matured with no realized gain or loss during May 2023.

The cost of securities sold is based upon the specific identification method. The Company did not record investment income during the three months ended March 31, 2024, and recorded $0.8 million for the three months ended March 31, 2023, included in “Interest and investment income” in the Consolidated Statements of Operations.

5.

Restricted Cash

As of March 31, 2024, non-current restricted cash of $69.9 million consists of amounts held as collateral for letters of credit to provide financing support for the Company’s 2021 Bonds (as defined below).

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 for the development and construction of NW Iowa RNG. See Note 13, Debt, for additional information on the 2021 Bonds. The Bond Letter of Credit has a 0.5% annual fee and would have expired April 4, 2024 (but was terminated earlier and replaced with the New Bond Letter of Credit on April 1, 2024 as described below). The Company deposited $71.2 million with Citibank as restricted cash to secure any amounts drawn under the Bond Letter of Credit. As of March 31, 2024, no amounts have been drawn under the Bond Letter of Credit.

12

Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

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 $6.6 million of restricted cash in an account with Citibank to collateralize the Power Letter of Credit, which has a 0.3% annual fee and expires September 30, 2024 (unless terminated earlier). In January 2024, Citibank was notified by the local electric utility company to close the letter of credit, as the Company has discontinued its relationship with the local utility and fulfilled all obligations under the Power Letter of Credit.

The Company is entitled to receive interest income on the restricted cash, and recorded interest income of $0.9 million and $0.7 million for the three months ended March 31, 2024, and 2023, respectively, included in “Other income, net” in the Consolidated Statements of Operations.

In April 2024, the Company entered into an irrevocable direct pay letter of credit (the “New Bond Letter of Credit”) with Citibank to support the Remarketed Bonds (as defined below). See Note 13, Debt, for additional information on the Remarketed Bonds. The New Bond Letter of Credit has a 0.75% annual fee and expires April 6, 2026 (unless terminated earlier). The Company maintained $69.6 million of the existing collateral with Citibank as restricted cash to secure any amounts drawn under the New Bond Letter of Credit, with $0.3 million of the balance as of March 31, 2024, returned to the Company in the second quarter of 2024.

6.

Prepaid and Other Current Assets

The following table sets forth the components of the Company’s prepaid and other current assets (in thousands) as of:

March 31, 2024

    

December 31, 2023

Prepaid insurance

$

1,826

$

568

Interest receivable

 

1,195

 

1,331

Prepaid feedstock

 

1,097

 

1,097

Other current assets

 

1,290

 

1,357

Total prepaid expenses and other current assets

$

5,408

$

4,353

7.

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 two operating lease contracts for additional office space in Albuquerque, New Mexico, and San Diego, California, which expire 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 has four finance leases for land under arrangements related to NW Iowa RNG. Under these contracts, the Company leases land from dairy farmers on which it has built three anaerobic digesters, and a gas upgrade facility with related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. These leases expire at various dates between 2031 and 2050. The Company accounts for lease components separately from non-lease components for the Company’s dairy lease asset class. The total consideration in the lease agreement is allocated to the lease and non-lease components based on their relative standalone selling prices.

13

Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

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):

    

Three Months Ended March 31, 

 

2024

    

2023

 

Other Information

 

  

 

  

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

 

  

 

  

Operating cash flows from finance leases

$

23

$

23

Operating cash flows from operating leases

$

71

$

74

Finance cash flows from finance leases

$

2

$

2

Right-of-use asset obtained in exchange for new operating lease liabilities

$

35

$

Weighted-average remaining lease term, finance lease (months)

 

303

 

308

Weighted-average remaining lease term, operating leases (months)

 

54

 

61

Weighted-average discount rate - finance leases (1)

 

12

%  

 

12

%

Weighted-average discount rate - operating leases (1)

 

6

%  

 

5

%

(1)Our leases do not provide an implicit interest rate, and 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

2024

$

339

$

28

2025

 

411

 

25

2026

 

367

 

25

2027

 

335

 

26

2028

 

345

 

25

2029 and thereafter

 

 

523

Total

 

1,797

 

652

Less: amounts representing present value discounts

 

211

 

441

Total lease liabilities

 

1,586

 

211

Less: current portion

 

364

 

25

Non-current portion

$

1,222

$

186

14

Table of Contents

GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

8.

Inventories

The following table sets forth the components of the Company’s inventory balances (in thousands) as of:

March 31, 2024

    

December 31, 2023

Raw materials

 

$

97

 

$

104

Finished goods

 

 

  

SAF, Isooctane, Isooctene and other

 

1,167

 

1,167

Work in process

 

  

 

  

Environmental attributes

1,947

2,067

Spare parts

 

551

 

471

Total inventories

$

3,762

$

3,809

During each of the three months ended March 31, 2024 and 2023, the Company recorded net realizable value adjustments of $0.3 million.

9.

Property, Plant and Equipment

The following table sets forth the Company’s property, plant and equipment by classification (in thousands) as of:

    

March 31, 2024

    

December 31, 2023

Land

$

6,505

$

6,505

Plant facilities and infrastructure

 

77,426

 

77,329

Machinery and equipment

 

95,581

 

95,212

Furniture and office equipment

 

2,881

 

2,864

Software

 

1,656

 

1,636

Construction in progress

 

133,886

 

114,332

Total property, plant and equipment

 

317,935

 

297,878

Less: accumulated depreciation and amortization

 

(90,261)

 

(86,315)

Property, plant and equipment, net

$

227,674

$

211,563

The Company recorded depreciation expense of $4.0 million and $4.2 million for the three months ended March 31, 2024, and 2023, respectively.

Construction in progress includes $117.5 million for Gevo, primarily related to the NZ1 project, $16.0 million for the Agri-Energy segment (“Agri-Energy”) related to a fractionation and hydrocarbon skid, and $0.4 million for NW Iowa RNG at March 31, 2024. Construction in progress includes $98.2 million for Gevo, primarily related to the NZ1 project, $15.5 million for Agri-Energy, and $0.6 million for NW Iowa RNG at December 31, 2023. Construction in progress is not subject to depreciation until the assets are placed into service.

10.

Intangible Assets

Identifiable intangible assets consist of acquired patents, which management evaluates to determine whether they (i) support current products, (ii) support planned research and development, or (iii) prevent others from competing with Gevo’s products.

15

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GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

The following tables set forth the Company’s intangible assets by classification (in thousands) as of:

    

March 31, 2024

    

    

Identifiable

    

Weighted-

Gross Carrying

Accumulated

Intangible

Average Useful Life

Amount

    

Amortization

    

Assets, net

    

(Years)

Patents

$

4,580

$

(1,766)

$

2,814

 

7.4

Defensive assets

 

4,900

 

(1,482)

 

3,418

 

8.4

Intangible assets

$

9,480

$

(3,248)

$

6,232

 

7.9

    

December 31, 2023

    

    

Identifiable

    

Weighted-

Gross Carrying

Accumulated

Intangible

Average Useful Life

Amount

Amortization

Assets, Net

(Years)

Patents

$

4,580

$

(1,621)

$

2,959

 

7.4

Defensive assets

 

4,900

 

(1,335)

 

3,565

 

8.4

Intangible assets

$

9,480

$

(2,956)

$

6,524

 

7.9

The Company recorded amortization expense of $0.3 million for each of the three months ended March 31, 2024 and 2023.

The following table details the estimated amortization of identifiable intangible assets as of March 31, 2024 (in thousands):

Year Ending December 31, 

    

Patents

    

Defensive Assets

    

Total

2024

$

437

$

439

$

876

2025

 

582

 

586

 

1,168

2026

 

582

 

586

 

1,168

2027

 

582

 

586

 

1,168

2028

 

582

 

586

 

1,168

2029 and thereafter

 

49

 

635

 

684

Total intangible assets

$

2,814

$

3,418

$

6,232

11.

Deposits and Other Assets

The following table sets forth the components of the Company’s deposits and other assets (in thousands) as of:

    

March 31, 2024

    

December 31, 2023

Deposits (1)

$

167

$

166

Prepaid feedstock (2)

 

1,562

 

440

Equity interest (3)

 

1,500

 

1,500

Exclusivity fees (4)

 

583

 

583

Deposits receivable (5)

 

34,217

 

33,602

Other assets, net (6)

 

7,920

 

8,028

Total deposits and other assets

$

45,949

$

44,319

(1)Deposits for services.
(2)Prepaid feedstock fees, non-current, for the production of RNG.

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GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

(3)The Company directly holds a 4.3% interest in the Series A Preferred Stock of Zero6 Clean Energy Assets, Inc. (“Zero6”), formerly Juhl Clean Energy Assets, Inc., which is not a publicly listed entity with a readily determinable fair value. The Company therefore measures the securities at cost. Recent observable equity raises indicated no impairment issues. This ownership interest is also pledged as collateral against two future obligations to Rock County Wind Fuel, LLC (“RCWF”), a Zero6 subsidiary, see Note 16, Commitments and Contingencies, for additional information.
(4)Axens will provide certain alcohol-to-SAF technologies and services exclusively provided to the Company which may be offset against future license fees subject to the delivery of a process design package.
(5)Deposits provided to a developer of certain wind-farm projects and power utility contractor to induce to design and construct the power generation, transmission and distribution facilities that will serve NZ1, $5.5 million of which will be either reimbursed or used as an investment into wind generation facility and the remaining $28.7 million is expected to be fully reimbursed upon completion of the project. Gevo has contractual priority liens against the equipment and constructed facilities under the contracts.
(6)Pre-operation payments for sand separation systems to process manure feedstock which were allocated to the non-lease fuel supply, being amortized over the life of the project.

12.

Accounts Payable and Accrued Liabilities

The following table sets forth the components of the Company’s accounts payable and accrued liabilities in the Consolidated Balance Sheets (in thousands) as of:

    

March 31, 2024

    

December 31, 2023

Accounts payable

$

3,600

$

2,718

Accrued liabilities

 

4,882

 

6,448

Accrued construction in progress

9,554

6,965

Accrued payroll and related benefits

 

3,520

 

6,621

Total accounts payable and accrued liabilities

$

21,556

$

22,752

13.

Debt

2021 Bond Issuance

On April 15, 2021, on behalf of Gevo NW Iowa RNG, LLC, the Iowa Finance Authority (the “Issuer”) issued $68,155,000 of its non-recourse Solid Waste Facility Revenue Bonds (Gevo NW Iowa RNG, LLC Renewable Natural Gas Project), Series 2021 (Green Bonds) (the “2021 Bonds”) for NW Iowa RNG. The bond proceeds were used as a source of construction financing alongside equity from the Company. The 2021 Bonds were issued under a Trust Indenture dated April 1, 2021 (the “Indenture”) between the Issuer and Citibank, N.A. as trustee (the “Trustee”). The 2021 Bonds mature April 1, 2042. The bonds bear interest at 1.5% per annum during the Initial Term Rate Period (as defined in the Indenture), payable semi-annually on January 1 and July 1 of each year. The effective interest rate is 1.1%. The 2021 Bonds are supported by the $71.2 million Bond Letter of Credit; see Note 5, Restricted Cash. The Trustee can draw sufficient amounts on the Bond Letter of Credit to pay the principal and interest until the first mandatory tender date of April 1, 2024. The 2021 Bonds are callable and re-marketable on or after October 1, 2022. If the 2021 Bonds have not been called and re-marketed by the first mandatory tender date, the Trustee may draw on the Bond Letter of Credit to repay the bonds in their entirety at the purchase price. As of March 31, 2024, no amounts have been drawn under the Bond Letter of Credit.

The 2021 Bonds were issued at a premium of $0.8 million and debt issuance costs were $3.0 million. The bond debt is classified as non-current debt and is presented net of the premium and issuance costs, which are being amortized over the life of the 2021 Bonds using the interest method. As of March 31, 2024 all premiums and debt issuance costs were fully amortized. As of December 31, 2023, the premium balance and the debt issuance cost net of amortization were $0.1 million and $0.3 million, respectively.

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GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

2024 Bond Remarketing

On April 1, 2024 (the “Conversion Date”), the 2021 Bonds became subject to mandatory tender for purchase and have been remarketed to bear interest in a new term rate period (the “Remarketed Bonds”). In connection with the conversion and remarketing of the 2021 Bonds on the Conversion Date, the original Indenture was amended by a First Supplemental Indenture dated as of April 1, 2024 (together with the original Indenture the “First Supplemental Indenture,”) between the Issuer and the Trustee. The original bond financing agreement was amended by a First Supplemental Bond Financing Agreement dated as of April 1, 2024 (together with the original bond financing Agreement, the “First Supplemental Bond Financing Agreement”) between the Issuer and the Company.

The Remarketed Bonds retained the same maturity date of April 1, 2042. The Remarketed Bonds now bear interest of 3.875% per annum during the Initial Term Rate Period (as defined in the Indenture), payable semi-annually on October 1 and April 1 of each year. The effective interest rate is 1.2%. The Company incurred approximately $1.7 million of debt issuance costs associated with the remarketing. The Remarketed Bonds are supported by a $69.6 million New Letter of Credit; see Note 5, Restricted Cash, issued to the incumbent Trustee that can draw sufficient amounts on the New Letter of Credit to pay the principal and interest, in case of default, until the first mandatory tender date of March 31, 2026. The Remarketed Bonds are callable and re-marketable on or after November 1, 2024. If the Remarketed Bonds have not been called and re-marketed by the first mandatory tender date, the Trustee may draw on the Bond Letter of Credit to repay the bonds in their entirety at the purchase price.

Loans Payable

In April 2020, the Company and Agri-Energy each entered into a loan agreement with Live Oak Banking Company, pursuant to which the Company and Agri-Energy obtained loans from the Small Business Administration’s Paycheck Protection Program (“SBA PPP”) totaling $1.0 million in the aggregate (the “SBA Loans”).

In April 2021, the balance of $0.5 million of the Company’s and $0.1 million of Agri-Energy’s loans and accrued interest obtained through the SBA PPP were forgiven. The remaining SBA Loan for Agri-Energy totals $0.2 million, bears interest at 1.0% per annum and matures in April 2025. Monthly payments of $8,230, including interest, began on June 5, 2021, and are payable through April 2025.

The summary of the Company’s long-term debt is as follows (in thousands) as of:

Interest Rate

Maturity Date

    

March 31, 2024

    

December 31, 2023

2021 Bonds, net

 

1.5%

 

April 2042

$

68,155

$

67,967

SBA Loans

 

1.0%

 

April 2025

 

94

 

119

Equipment

 

4% to 5%

 

December 2023 to December 2024

 

24

 

32

Total debt

 

  

 

68,273

 

68,118

Less: current portion

 

  

 

(118)

 

(68,097)

Non-current portion

 

  

$

68,155

$

21

Future payments for the Company’s long-term debt are as follows (in thousands):

Year Ending December 31, 

    

Total Debt

2024

$

97

2025

 

21

2026

 

68,155

Total debt

$

68,273

14.

Stock-Based Compensation

Equity incentive plans. In February 2011, the Company’s stockholders approved the Gevo, Inc. 2010 Stock Incentive Plan (as amended and restated to date, the “2010 Plan”), and the Employee Stock Purchase Plan (the “ESPP”).

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GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

The 2010 Plan provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units and other equity awards to employees and directors of the Company. In May 2023, upon approval of the stockholders at the 2023 Annual Meeting of Stockholders, the 2010 Plan was amended and restated, which increased the number of shares of common stock reserved for issuance under the 2010 Plan to 37,980,074 shares. At March 31, 2024, 13,015,893 shares were available for future issuance under the 2010 Plan.

Stock-based compensation expense. The Company records stock-based compensation expense during the requisite service period for share-based payment awards granted to employees and non-employees.

The following table sets forth the Company’s equity classified stock-based compensation expense for the periods indicated (in thousands):

Three Months Ended March 31, 

2024

    

2023

Cost of production

$

13

$

18

General and administrative

 

3,688

 

3,923

Other

 

532

 

736

Total stock-based compensation

$

4,233

$

4,677

Stock option award activity. Stock option activity under the Company’s stock incentive plans and changes during the three months ended March 31, 2024, were as follows:

    

    

    

Weighted-

    

Average

Weighted-

Remaining

Average

Contractual

Aggregate

Number of

Exercise

Term

Intrinsic

Options

    

Price (1)

    

(years)

    

Value

Options outstanding at December 31, 2023

 

8,109,123

$

3.51

8.8

 

$

Granted

 

$

 

  

 

$

Canceled or forfeited

 

(145,190)

$

2.74

 

  

 

$

Exercised

 

$

 

  

 

$

Options outstanding at March 31, 2024

 

7,963,933

$

3.53

 

8.6

$

Options vested and expected to vest at March 31, 2024

 

3,001,384

$

4.80

 

7.8

$

(1)Exercise price of options outstanding ranges from $1.15 to $876 as of March 31, 2024. The higher end of the range is due to the impact of several reverse stock splits during the years 2015 to 2018.

As of March 31, 2024, the total unrecognized compensation expense, net of actual forfeitures, relating to stock options was $6.6 million, which is expected to be expensed over the remaining weighted-average recognition period of approximately 1.6 years.

Restricted stock. The Company periodically grants restricted stock awards to employees and directors. The vesting period for restricted stock awards granted may be based upon a service period or based upon the attainment of performance objectives. The Company recognizes stock-based compensation over the vesting period, which for awards that vest based on a service period is generally two to three years.

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GEVO, INC.

Notes to Consolidated Financial Statements

(unaudited)

Non-vested restricted stock awards and the changes during the three months ended March 31, 2024, were as follows:

    

    

Weighted-