10-Q 1 gevo-20220331.htm 10-Q gevo-20220331
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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, 2022
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)
Delaware87-0747704
(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 ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareGEVOThe 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 filerAccelerated filer
    
Non-accelerated filerSmaller 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 6, 2022, 201,752,722 shares of the registrant’s common stock were outstanding.


GEVO, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS
  Page
   
 
 
 
 
 
 
   
   
   
   
 
2


PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.
GEVO, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)

 NoteMarch 31, 2022December 31, 2021
Assets  
Current assets  
Cash and cash equivalents$44,626 $40,833 
Marketable securities (current)5, 17265,813 275,340 
Restricted cash (current)1216,216 25,032 
Accounts receivable, net168 978 
Inventories72,735 2,751 
Prepaid expenses and other current assets45,861 6,857 
Total current assets335,419 351,791 
Property, plant and equipment, net8156,896 139,141 
Long-term marketable securities5, 1732,724 64,396 
Long-term restricted cash1270,238 70,168 
Operating right-of-use assets62,209 2,414 
Finance right-of-use assets626,887 27,297 
Intangible assets, net98,656 8,938 
Deposits and other assets5,631 2,331 
Total assets$638,660 $666,476 
Liabilities
Current liabilities
Accounts payable and accrued liabilities11$13,410 $28,288 
Operating lease liabilities (current)6416 772 
Finance lease liabilities (current)64,029 3,413 
Loans payable - other (current)1289 158 
Total current liabilities17,944 32,631 
2021 Bonds payable (long-term)12, 1766,669 66,486 
Loans payable - other (long-term)12276 318 
Operating lease liabilities (long-term)61,838 1,902 
Finance lease liabilities (long-term)617,403 17,797 
Other long-term liabilities95 87 
Total liabilities104,225 119,221 
Stockholders' Equity
Common stock, $0.01 par value per share; 500,000,000 and 250,000,000 shares authorized at March 31, 2022 and December 31, 2021, respectively; 201,752,722 and 201,988,662 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.
2,019 2,020 
Additional paid-in capital1,107,051 1,103,224 
Accumulated other comprehensive loss(1,587)(614)
Accumulated deficit(573,048)(557,375)
Total stockholders' equity534,435 547,255 
Total liabilities and stockholders' equity$638,660 $666,476 
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)

 NoteThree Months Ended March 31,
 20222021
Revenue and cost of goods sold  
Ethanol sales and related products, net2$169 $ 
Hydrocarbon revenue263 13 
Other revenue2 80 
Total revenues2, 18232 93 
Cost of production (including non-cash compensation expense of $0.09 million and nil, respectively)
14, 183,090 901 
Depreciation and amortization8, 9, 181,091 1,093 
Total cost of goods sold4,181 1,994 
Gross loss(3,949)(1,901)
Operating expenses
Research and development expense (including non-cash compensation expense of $0.1 million and $0.5 million, respectively)
141,192 1,378 
Selling, general and administrative expense (including non-cash compensation expense of $1.4 million and $0.5 million, respectively)
149,367 3,814 
Preliminary stage project costs507 2,727 
Other operations (including non-cash compensation expense of $0.1 million and nil, respectively)
14589  
Depreciation and amortization8, 9, 18351 58 
Total operating expenses12,006 7,977 
Loss from operations18(15,955)(9,878)
Other income (expense)
(Loss) gain from change in fair value of derivative warrant liability (53)
Interest expense12, 18(2)(5)
Interest and dividend income5252 31 
Other income (expense), net32 (152)
Total other income (expense), net282 (179)
Net loss$(15,673)$(10,057)
 
Net loss per share - basic and diluted3$(0.08)$(0.05)
 
Weighted-average number of common shares outstanding - basic and diluted201,925,747 183,566,524 

See the accompanying Notes to the Consolidated Financial Statements.
4

GEVO, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
 NoteThree Months Ended March 31,
 20222021
Net loss$(15,673)$(10,057)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities, net of tax5(974) 
Adjustment for net gain (loss) realized and included in net income, net of tax51  
Total change in other comprehensive income (loss) (973) 
Comprehensive loss$(16,646)$(10,057)
See the accompanying Notes to the Consolidated Financial Statements.
5

GEVO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share amounts)

 NoteCommon StockPaid-In CapitalAccumulated Other Comprehensive Loss Accumulated DeficitStockholders’ Equity
 SharesAmount
Balance, December 31, 2021201,988,662 $2,020 $1,103,224 $(614)$(557,375)$547,255 
Issuance of common stock upon exercise of warrants104,677 — 3 — — 3 
Non-cash stock-based compensation14— — 4,044 — — 4,044 
Issuance of common stock under stock plans, net of taxes14(240,617)(1)(220)— — (221)
Other comprehensive loss— — — (973)— (973)
Net loss— — — — (15,673)(15,673)
Balance, March 31, 2022201,752,722 $2,019 $1,107,051 $(1,587)$(573,048)$534,435 
Balance, December 31, 2020128,138,311 $1,282 $643,269 $ $(498,172)$146,379 
Issuance of common stock, net of issuance costs68,170,579 682 457,008 — — 457,690 
Issuance of common stock upon exercise of warrants101,863,058 18 1,099 — — 1,117 
Non-cash stock-based compensation14— — 562 — — 562 
Issuance of common stock under stock plans, net of taxes14(121,499)(1)1 — — — 
Net loss— — — — (10,057)(10,057)
Balance, March 31, 2021198,050,449 $1,981 $1,101,939 $ $(508,229)$595,691 
See the accompanying Notes to the Consolidated Financial Statements.
6

GEVO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 NoteThree Months Ended March 31,
 20222021
Operating Activities
Net loss$(15,673)$(10,057)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation144,258 925 
Depreciation and amortization8, 9, 181,442 1,149 
Non-cash lease expense6139 17 
Non-cash interest expense51,150  
Changes in operating assets and liabilities:
Accounts receivable810 435 
Inventories716 39 
Prepaid expenses and other current assets, deposits and other assets4(2,317)(4,273)
Accounts payable, accrued expenses and long-term liabilities11, 12, 6(2,285)4,600 
Net cash used in operating activities(12,460)(7,165)
Investing Activities
Acquisitions of property, plant and equipment8(31,218)(4,630)
Acquisition of patent portfolio9(10) 
Proceeds from sale and maturity of marketable securities571,082  
Purchase of marketable securities5(31,993) 
Net cash used in investing activities7,861 (4,630)
Financing Activities
Debt and equity offering costs12 (31,683)
Proceeds from issuance of common stock and common stock warrants 489,373 
Proceeds from exercise of warrants103 1,117 
Net settlement of common stock under stock plans14(220) 
Payment of loans payable - other12(103)(27)
Payment of finance lease liabilities6(34) 
Net cash provided by financing activities(354)458,780 
Net increase (decrease) in cash and cash equivalents(4,953)446,985 
Cash, cash equivalents and restricted cash at beginning of period136,033 78,338 
Cash, cash equivalents and restricted cash at end of period$131,080 $525,323 

Three Months Ended March 31,
Schedule of cash, cash equivalents and restricted cash20222021
Cash and cash equivalents$44,626 $525,323 
Restricted cash (current)16,216 
Long-term restricted cash70,238 
Total cash, cash equivalents and restricted cash$131,080 $525,323 

Three Months Ended March 31,
Supplemental disclosures of cash and non-cash investing and financing transactions20222021
Cash paid for interest$2 $3 
Cash paid for interest capitalized to construction in progress$516 $ 
Non-cash interest capitalized to construction in progress$1 $ 
Non-cash purchase of property, plant and equipment$7,530 $999 
Right-of-use asset purchased with operating lease$ $1,562 
See the accompanying Notes to the Consolidated Financial Statements.
7

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" 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 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 hydrocarbons that can be used as renewable fuels, such as sustainable aviation fuel ("SAF"), with the potential to achieve a “net-zero” greenhouse gas ("GHG") footprint. The Company uses 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 of its products. The “net-zero” concept means Gevo expects that by using renewable and substantially decarbonized energy sources, drop-in hydrocarbon fuels can be produced that have a net-zero, full life cycle footprint 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 it also has commercial opportunities for other renewable hydrocarbon products, such as (i) hydrocarbons for gasoline blendstocks and diesel fuel, (ii) ingredients for the chemical industry, such as ethylene and butenes, and (iii) plastics, materials and other chemicals.

The Company believes it has the technology and know-how to convert various carbohydrate feeds through a fermentation process into alcohols and then transform the alcohols into renewable fuels and materials. While the Company expects its first major capital deployments to focus on the production of SAF, Gevo recognizes that there are opportunities to operate in several different markets, and it will pursue those opportunities when appropriate based on customer interest, access to capital and expected investment returns.

Gevo currently operates a wholly-owned development plant in Luverne, Minnesota (the "Luverne Facility"). The Luverne Facility was originally constructed in 1998 and is located on approximately 55 acres of land, which contains approximately 50,000 square feet of building space. Our Luverne Facility is a scale up and development site. Gevo intends to use the Luverne Facility 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.

Gevo's renewable natural gas ("RNG") project ("NW Iowa RNG") owned by Gevo NW Iowa RNG, LLC, will generate RNG captured from dairy cow manure supplied by three dairies located in Northwest Iowa totaling over 20,000 milking cows. Animal manure can be digested anaerobically to produce biogas, which is then upgraded to pipeline quality gas referred to as RNG. Gevo NW Iowa RNG, LLC intends to sell RNG to the California market through an agreement with BP Canada Energy Marketing Corp. and BP Products North America Inc. (collectively, "BP"). Our dairy farm partners realize a variety of benefits including improved operational and environmental compliance options. These services facilitate long-term relationships with project hosts that may serve as a source for future projects and relationships. Gevo believes that RNG has potential to displace fossil-based natural gas used in the future production of net-zero hydrocarbon manufacturing facilities, providing the benefit of lowering the carbon intensity of hydrocarbon fuels.

In 2021, we began construction on NW Iowa RNG under a self-perform project delivery format. We completed most of the construction efforts at the end of 2021, and in January 2022, we began the process of commissioning the project. NW Iowa RNG is expected to be completed within budget. All digesters are currently in the start-up phase and are expected to reach steady production levels in the second quarter of 2022. When fully operational, NW Iowa RNG is expected to generate approximately 355,000 MMBtu of RNG per year.

We also operate a demonstration facility in Silsbee, Texas in partnership with South Hampton Resources, Inc. (the "South Hampton Facility"), from which the Company produces limited volumes of SAF and liquid hydrocarbon fuel.

Ultimately, the Company believes that the attainment of profitable operations is dependent upon future events, including, but not limited to (i) the successful development of the Company's initial Net-Zero Project (the "Net-Zero 1 Project") and future projects for the production of energy dense liquid hydrocarbons using renewable energy and our proprietary technology; and (ii) the achievement of a level of revenues adequate to support its cost structure.

Basis of presentation. The unaudited consolidated financial statements of the Company (which include the accounts of its wholly-owned subsidiaries Gevo Asset, LLC, Gevo RNG HoldCo, LLC, Gevo NW Iowa RNG, LLC, Gevo Net-Zero
8

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
HoldCo, LLC, Gevo Net-Zero 1, LLC, and Agri-Energy, LLC (“Agri-Energy”)) have been prepared, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States (“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, 2022, 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, 2021. The financial statements at December 31, 2021, 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, 2021 (the "2021 Annual Report").

Reclassifications. The Company reclassified certain prior period amounts to conform to the current period presentation, including the categorization of depreciation and amortization on the Consolidated Statements of Operations. These reclassifications had no impact on total revenues, total cost of goods sold, total operating expenses, net loss or stockholders' equity for any period.

2.Revenues from Contracts with Customers and Other Revenues

The Company's limited revenues are derived from two development-scale plants: (i) the South Hampton Facility and (ii) the Luverne Facility. These revenues are from customer contracts for ethanol sales and related products and hydrocarbon revenues, which include SAF, isooctene, and isooctane. These are sold mostly on a free-on-board, shipping point basis (recognized at a point in time), are independent transactions, do not provide post-sale support or promises to deliver future goods, and are single performance obligations. Historically, grant revenues consisted of governmental and cooperative research grants, while other revenue includes consulting services and short-term leases for certain storage facilities at the Luverne Facility. For the quarters ended March 31, 2022 and 2021, there were no variable revenues and as of March 31, 2022 and December 31, 2021, there were no remaining unfulfilled or partially fulfilled performance obligations. The Company does not offer explicit or implicit price concessions, so it records the revenue and trade receivables at 100% of the transaction price. Since all amounts are provided and due in less than one year, the Company elects to not record a financing component.
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 for the three months ended March 31, 2022 and 2021 excluded 1,751,170 and 220,099, respectively, of common stock equivalents because the effect of their inclusion would be anti-dilutive or would decrease the reported net loss per share.

9

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
Basic and diluted net loss per share is calculated as follows (net loss in thousands):

Three Months Ended March 31,
20222021
Net loss$(15,673)$(10,057)
Basic and diluted weighted-average shares outstanding201,925,747 183,566,524 
Basic and diluted net loss per share$(0.08)$(0.05)

4.Prepaid and Other Current Assets

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

March 31, 2022December 31, 2021
Prepaid insurance$397 $805 
Interest receivable1,252 1,530 
Exclusivity fees 3,250 
Prepaid engineering2,275 409 
Prepaid other1,937 863 
Total Prepaid and other current assets$5,861 $6,857 
The $3.3 million of prepaid fees above are exclusivity fees and are reported in Deposits and other assets in the Consolidated Balance Sheets (Note 13) as of March 31, 2022.

5.Marketable Securities

The Company's investments in marketable securities are stated at fair value and are available-for-sale. The following table summarizes the Company's investments in marketable securities (in thousands):

Available-for-Sale Securities at
March 31, 2022
MaturityAmortized Cost BasisGross Unrealized LossesFair Value
Short-term marketable securities
U.S. Treasury notesWithin one year$188,665 $(527)$188,138 
U.S. Government-sponsored enterprise securitiesWithin one year78,375 (700)77,675 
Total short-term marketable securities$267,040 $(1,227)$265,813 
Long-term marketable securities
U.S Treasury notesWithin two years$11,040 $(72)$10,968 
U.S. Government-sponsored enterprise securitiesWithin two years22,044 (288)21,756 
Total long-term marketable securities$33,084 $(360)$32,724 

10

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
Available-for-Sale Securities at
 December 31, 2021
MaturityAmortized Cost BasisGross Unrealized LossesFair Value
Short-term marketable securities
U.S. Treasury notesWithin one year$226,136 $(344)$225,792 
U.S. Government-sponsored enterprise securitiesWithin one year49,618 (70)49,548 
Total short-term marketable securities$275,754 $(414)$275,340 
Long-term marketable securities
U.S Treasury notesWithin two years$ $ $ 
U.S. Government-sponsored enterprise securitiesWithin two years64,596 (200)64,396 
Total long-term marketable securities$64,596 $(200)$64,396 

The cost of securities sold is based upon the specific identification method. Interest receivable related to the marketable securities of $1.3 million was included within prepaid expenses and other current assets on the accompanying Consolidated Balance Sheets as of March 31, 2022.

Interest income totaled $1.6 million the three months ended March 31, 2022 (nil for the three months ended March 31, 2021) and is included in "Interest and dividend income" in the Consolidated Statements of Operations.

Future maturities of the Company's marketable securities are $207.0 million in 2022 and $91.5 million in 2023.

6.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, that expires in January 2029. The lease contains an option to extend the lease which management does not reasonably expect to exercise, so it is not included in the length of the term. The Company also has one production line piece of equipment with an operating lease that expires in 2024. As of March 31, 2022, right-of-use assets under operating leases totaling $2.2 million are included in "Operating right-of use assets," and related lease liabilities totaling $2.3 million ($0.4 million in current and $1.8 million in long-term) are included in the Consolidated Balance Sheets.
The Company also 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, related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. The partially conditioned biogas will be transported from the three digester sites to a central gas upgrade system located at the fourth site that will upgrade the biogas to pipeline quality RNG for sale. These leases expire at various dates between 2031 and 2050. Since the Company adopted the practical expedient, all amounts paid to the lessor under these arrangements for cow manure and non-lease services are classified as lease payments and are included in the calculation of the right-of-use assets and lease liabilities. This results in significantly higher right-of-use assets and lease liabilities than if the Company did not elect this practical expedient. The Company also has one office equipment finance lease, which expires in 2025. As of March 31, 2022, right-of-use assets under finance leases totaling $26.9 million are included in "Finance right-of-use assets," and related lease liabilities totaling $21.4 million ($4.0 million in current and $17.4 million in long-term) are included in the Consolidated Balance Sheets.
11

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
The following table presents the (a) costs by lease category and (b) other quantitative information relating to the Company’s leases (in thousands):
 Three Months Ended March 31,
 20222021
Lease Cost
 
 
 
Finance lease cost:  
Amortization of right-of-use assets (1)$464 $ 
Interest on lease liabilities (1)262 11 
Operating lease cost139 61 
Short-term lease cost379 132 
Variable lease cost (2)115 39 
Total lease cost$1,359 $243 
(1)$0.6 million and $0.4 million of amortization and interest expense for the three months ended March 31, 2022 and 2021, respectively, were capitalized as part of construction in progress, for related finance lease liabilities of $23.0 million and $0.6 million, respectively. The accumulated capitalized amounts of $3.0 million are included in "Property, plant and equipment, net" in the Consolidated Balance Sheets as the related NW Iowa RNG facilities were still under construction on March 31, 2022. Since these leases include approximately 75% fuel supplies, when the RNG facilities reach 60% production (expected in the second or third quarter of 2022), these capitalized amounts will be moved to inventory, and as units are sold they will be expensed through cost of goods sold.
(2)Represents amounts incurred in excess of minimum payments, including payments for common area expenses under our office and research facility lease, and additional amounts due under our NW Iowa RNG leases based on the number of cows maintained by the owners above the minimum required by the contracts of the respective facilities.
 Three Months Ended March 31,
 20222021
Other Information


Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows from finance leases$16$6
Operating cash flows from operating leases$456$61
Finance cash flows from finance leases$34$7
Right-of-use asset obtained in exchange for new finance lease liabilities$$
Right-of-use asset obtained in exchange for new operating lease liabilities$$1,562
Weighted-average remaining lease term, finance lease (months)215221
Weighted-average remaining lease term, operating leases (months)7194
Weighted-average discount rate - finance leases (1)5%13%
Weighted-average discount rate - operating leases (1)5%5%
(1)The discount rate used for operating and finance leases is based on the Company's implicit borrowing rate ("IBR"). The Company estimated the IBR based on collateralized borrowings for similar terms and payments.
12

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
The table below shows the future minimum payments under non-cancelable financing and operating leases at March 31, 2022 (in thousands):

Year ending December 31,
Operating Leases
Finance Leases
2022 (remaining)$447 $2,204 
2023528 1,713 
2024305 1,729 
2025315 1,743 
2026324 1,781 
2027 and thereafter706 22,130 
Total2,625 31,300 
Less: Amounts representing present value discounts371 9,868 
Total lease liabilities2,254 21,432 
Less: current portion416 4,029 
Long-term portion$1,838 $17,403 

7.Inventories
The following table sets forth the components of the Company’s inventory balances (in thousands):
 March 31, 2022December 31, 2021
Raw materials  
Corn$223 $301 
Enzymes and other inputs108 183 
Nutrients2 3 
Palladium203 265 
Finished goods
SAF, Isooctane and Isooctene501 335 
Isobutanol181 223 
Ethanol82 96 
Work in process
Agri-Energy84 83 
Gevo51  
Spare parts1,300 1,262 
Total inventories$2,735 $2,751 
Work in process inventory includes unfinished SAF, isooctane and isooctene inventory.
During the three months ended March 31, 2022, the Company adjusted its finished goods and work in process inventory to net realizable value and recorded a $2.9 million loss in cost of goods sold. There were no net realizable losses recorded during the three months ended March 31, 2021, as the Luverne Facility was temporarily shut down due to the COVID-19 pandemic.

13

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
8.Property, Plant and Equipment
The following table sets forth the Company’s property, plant and equipment by classification (in thousands):
 Useful Life (in years)March 31, 2022December 31, 2021
Luverne Facility retrofit asset20$70,820 $70,820 
Plant machinery and equipment1017,949 17,949 
Site improvements107,157 7,157 
Lab equipment, furniture and fixtures and vehicles56,813 6,811 
Demonstration plant23,597 3,597 
Buildings102,543 2,543 
Leasehold improvements, pilot plant, land and support equipment2to72,841 2,802 
Computer, office equipment and software3to62,338 2,332 
Construction in progress107,848 88,989 
Total property, plant and equipment221,906 203,000 
Less accumulated depreciation and amortization(65,010)(63,859)
Property, plant and equipment, net$156,896 $139,141 
The Company recorded depreciation and amortization expense related to property, plant and equipment and intangible assets as follows (in thousands):
Three Months Ended March 31,
20222021
Depreciation:
Cost of goods sold$1,086 $1,088 
Operating expenses65 56 
Patent amortization:
Cost of goods sold5 5 
Operating expenses286  
Total depreciation and amortization$1,442 $1,149 

Construction in progress includes $0.6 million for Gevo, $13.1 million for Agri-Energy, $67.4 million for NW Iowa RNG and $26.8 million for the Net-Zero 1 Project at March 31, 2022. Construction in progress includes $0.4 million for Gevo, $9.1 million for Agri-Energy, $56.9 million for NW Iowa RNG and $22.5 million for Net-Zero 1 Project at December 31, 2021. Construction in progress is not subject to depreciation until the assets are placed into service.

Borrowing costs. Borrowing costs directly attributable to acquisition and construction of an asset are capitalized until it is completed and ready for its intended use, and thereafter are recognized in profit or loss for the current period. The Company capitalized $0.5 million and nil of interest expense for the three months ended March 31, 2022, and March 31, 2021, respectively.

9.Intangible Assets

Intangible assets consist of 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.

14

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
The following table sets forth the Company’s identifiable intangible assets by classification (in thousands):
 March 31, 2022
 Gross Carrying AmountAccumulated AmortizationIdentifiable Intangible Assets, NetWeighted-Average Useful Life (Years)
Finite-lived intangible assets:    
Patents$4,580 $(516)$4,064 7.3
Defensive assets4,900 (308)4,592 8.4
Identifiable intangible assets$9,480 $(824)$8,656 7.9
December 31, 2021
Gross Carrying AmountAccumulated AmortizationIdentifiable Intangible Assets, NetWeighted-Average Useful Life (Years)
Finite-lived intangible assets:
Patents$4,575 $(368)$4,207 7.3
Defensive assets4,895 (164)4,731 8.4
Identifiable intangible assets$9,470 $(532)$8,938 7.9
The following table details the estimated amortization of identifiable intangible assets as of March 31, 2022 (in thousands):
Year ending December 31,PatentsDefensive AssetsTotal
2022 (remaining)$452 $442 $894 
2023599 586 1,185 
2024601 588 1,189 
2025599 586 1,185 
2026585 586 1,171 
2027 and thereafter1,228 1,804 3,032 
Total$4,064 $4,592 $8,656 

See Note 8 for the amortization of intangible assets for the three months ended March 31, 2022 and March 31, 2021.

10.Warrants

On February 17, 2022, the Series K warrants expired with 7,126 unexercised warrants.
The following table sets forth information pertaining to shares issued upon the exercise of warrants:
Issuance DateExpiration DateExercise Price as of March 31, 2022Shares Underlying Warrants on Issuance DateShares Issued upon Warrant Exercises as of March 31, 2022Shares Underlying Warrants Outstanding as of March 31, 2022
Series 2020-A Warrants (1)7/6/20207/6/2025$0.60 30,000,000 29,914,069 85,931 
(1) The Series 2020-A Warrants are equity-classified warrants.
15

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
During the three months ended March 31, 2022, common stock was issued as a result of the exercise of warrants as shown below (dollars in thousands):
 Common Stock IssuedProceeds
Series 2020-A Warrants4,677 $3 

11.Accounts Payable and Accrued Liabilities
The following table sets forth the components of the Company's accounts payable and accrued liabilities (in thousands):
 March 31, 2022December 31, 2021
Accounts payable - trade$1,399 $4,868 
NW Iowa RNG accrued project costs 2,902 11,000 
Accrued employee compensation3,294 4,678 
Net-Zero 1 accrued project costs2,778 5,010 
Other accrued liabilities3,037 2,732 
Total accounts payable and accrued liabilities$13,410 $28,288 

12.Debt
2021 Bond Issuance

On April 15, 2021, on behalf of Gevo NW Iowa RNG, LLC, the Iowa Finance Authority ("the "Authority") 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 are being used as a source of construction financing alongside equity from the Company. The bonds were issued under a Trust Indenture dated as of April 1, 2021 (the "Indenture") between the Authority and Citibank, N.A. as trustee (the "Trustee"). The 2021 Bonds mature April 1, 2042. They initially bear interest at 1.50% 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 bonds are supported by a $71.2 million irrevocable direct pay letter of credit (the "Letter of Credit"), which expires April 4, 2024 (unless terminated earlier), and was issued by Citibank, N.A. The Trustee will draw sufficient amounts on the Letter of Credit to pay the principal and interest until the first mandatory tender date of April 1, 2024. The bonds are callable and re-marketable on or after October 1, 2022. If the bonds have not been called and re-marketed by the first mandatory tender date the Trustee may draw on the Letter of Credit to repay the bonds in their entirety at the purchase price. Gevo deposited $71.2 million with Citibank, N.A. as restricted cash to secure any amounts drawn under the Letter of Credit. As of March 31, 2022, no amounts have been drawn under the Letter of Credit.

Gevo anticipates re-marketing the 2021 Bonds in the fall of 2022 under revised terms that will include a long-term maturity date and be non-recourse to Gevo. Upon a successful remarketing, Gevo anticipates that the Letter of Credit, the associated reimbursement agreement and the associated pledge of cash will be terminated, with a concurrent release of the restricted cash securing the 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 long-term debt and is presented net of the premium and issuance costs, which are being amortized over the life of the bonds using the interest method. As of March 31, 2022, the premium balance, and debt issuance cost net of amortization were $0.6 million and $2.1 million, respectively.

Restricted cash and cash equivalents. The Company’s restricted cash and restricted cash equivalents consists of unused proceeds from the issuance of the 2021 Bonds, and are restricted for the purpose of constructing NW Iowa RNG projects as well as amounts pledged and assigned to Citibank, N.A. in its capacity as provider of the Letter of Credit as collateral for the reimbursement obligations of Gevo.

16