Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Nature of Business [Policy Text Block]

Nature of Business

.  Gevo, Inc. (“Gevo” or the “Company,” which, unless otherwise indicated, refers to Gevo, Inc. and its subsidiaries) is a growth-oriented renewable fuels company that is commercializing the next generation of renewable low-carbon liquid transportation fuels with the potential to achieve “net zero” greenhouse gas (“GHG”) footprint and address global needs of reducing GHG emissions with sustainable alternatives to petroleum fuels. As next generation renewable fuels, Gevo’s hydrocarbon transportation fuels have the advantage of being “drop-in” substitutes for conventional fuels that are derived from crude oil, working seamlessly and without modification in existing fossil-fuel based engines, supply chains and storage infrastructure. In addition to the potential of net

zero

carbon emissions across the whole of the fuel life-cycle, Gevo’s renewable fuels eliminate other pollutants associated with the burning of traditional fossil fuels such as particulates and sulfur, while delivering superior performance. Gevo believes that the world is substantially under-supplied with low-carbon, drop-in renewable fuels that can be immediately used in existing transportation engines and infrastructure, and Gevo is uniquely positioned to grow in serving that demand.

Gevo’s production processes and fuel products have been proven to work. Gevo uses low-carbon, renewable resource-based carbohydrates as raw materials. In the near-term, Gevo’s feedstocks will primarily consist of non-food corn. As Gevo’s technology is applied globally, feedstocks can consist of sugar cane, molasses or other cellulosic sugars derived from wood, agricultural residues and waste. Gevo’s patented fermentation yeast biocatalyst produces isobutanol, a

four

-carbon alcohol, via the fermentation of renewable plant biomass carbohydrates. The resulting renewable isobutanol has a variety of direct applications but, more importantly to Gevo’s fundamental strategy, serves as a building block to make renewable gasoline and jet fuel using simple and common chemical conversion processes. Gevo also plans to reduce or eliminate fossil-based process energy inputs by replacing them with renewable energy such as wind-powered electricity and renewable natural gas (“RNG”).

Ultimately, the Company believes that the attainment of profitable operations is dependent upon future events, including (i) completing certain capital improvements at the Company’s production facility located in Luverne, Minnesota (the "Luverne Facility") to increase the production capacity of renewable gasoline and jet fuel and other related products that can be made from isobutanol; (ii) completing the Company's development activities resulting in commercial production and sales of renewable hydrocarbon products; (iii) obtaining adequate financing to complete the Company's development activities, including the build out of renewable hydrocarbon capacity; (iv) gaining market acceptance and demand for the Company's products and services; (v) attracting and retaining qualified personnel; and (vi) achieving a level of revenues adequate to support the Company's cost structure.

COVID-

19.

  

The novel coronavirus ("COVID-

19"

) pandemic has had an adverse impact on global commercial activity, including the global transportation industry and its supply chain, and has contributed to significant volatility in the financial markets including, among other effects, a decline in the equity markets and reduced liquidity generally for many companies, including the Company. In light of the potential future disruption to the Company's business operations and those of its customers, suppliers and other

third

parties with whom the Company interacts, the Company considered the impact of the COVID-

19

pandemic on its business. This analysis considered the Company's resilience and continuity plans, financial modeling and stress testing of liquidity and financial resources.

The analysis concluded that the COVID-

19

pandemic did

not

have a material adverse impact to the Company's financial results for the

first

quarter of

2020.

Although the COVID-

19

pandemic did

not

have a material adverse impact to the Company’s financial results for the

first

quarter of

2020,

the Company expects that the impact of the COVID-

19

pandemic on general economic activity could negatively impact its revenue and operating results for the remainder of

2020.

For example, in

March 2020,

following a temporary suspension of ethanol production at the Luverne Facility, the Company ultimately suspended production for the foreseeable future due to the impact of COVID-

19

on the economy and its industry as a whole. There is also a risk that COVID-

19

could have a material adverse impact on customer demand and cash flow for the remainder of

2020

and beyond. The Company will continue to monitor the situation and assess possible implications to its business and its stakeholders and will take appropriate actions to help mitigate adverse consequences. The extent to which COVID-

19

impacts its business and financial position will depend on future developments, which are difficult to predict, including the severity, duration and scope of the COVID-

19

outbreak as well as the types of measures imposed by governmental authorities to contain the virus or address its impact and the duration of those actions and measures.

The Company has considered multiple scenarios, with both positive and negative inputs, as part of the significant estimates and assumptions that are inherent in its financial statements and are based on trends in customer behavior and the economic environment throughout the quarter and beyond as the COVID-

19

pandemic has impacted the industries in which the Company operates. These estimates and assumptions include the collectability of billed and unbilled receivables, the estimation of revenue and tangible and intangible assets. With regard to collectability, the Company believes it

may

face atypical delays in client payments going forward. In addition, management believes that the demand for certain discretionary lines of business

may

decrease, and that such decrease will impact our financial results in succeeding periods. Non-discretionary lines of business

may

also be adversely affected, for example because reduced economic activity or disruption in hydrocarbon markets reduces demand for or the extent of renewable alcohol-to-jet fuel (“ATJ”), isooctane and isooctene. The Company believes that these trends and uncertainties are comparable to those faced by other registrants as a result of the pandemic.

Following a temporary suspension of ethanol production at the Luverne Facility, the Company ultimately suspended production for the foreseeable future due to the impact of COVID-

19,

including its effect on the economy and the Company’s industry as a whole. With these steps, the Company expects to save several million dollars of cash burn during

2020.

In response to the impact of the COVID-

19

pandemic, the Company reduced its workforce in

March 

2020,

 impacting 

26

people at the Luverne Facility and

four

people at the Company's corporate headquarters. (See "

Restructuring Expenses

" below.) The Company also reduced, and each of Patrick R. Gruber, its Chief Executive Officer, Christopher M. Ryan, its President, Chief Operating Officer and Chief Technology Officer, L. Lynn Smull, its Chief Financial Officer, Timothy J. Cesarek, its Chief Commercial Officer, Geoffrey T. Williams, Jr., its General Counsel and Secretary, and Carolyn M. Romero, its Vice President - Controller and Principal Accounting Officer (collectively, the “Officers”) accepted

20%

reductions to their base salaries. These reductions became effective as of

April 1, 2020

for a period of

90

days thereafter. In connection with the

20%

salary reduction, the Officers were granted Company stock in the form of restricted stock awards in an amount equal to the

20%

reduction. Certain remaining employees that earn above a certain dollar threshold also agreed to take a

20%

salary reduction over the next

three

months, with the

20%

portion to be paid in the form of restricted stock awards.

In addition, in connection with the impact that the COVID-

19

pandemic has had on the economy and on the resulting disruption to the airline industry specifically, the Company and Delta Air Lines, Inc. (“Delta”) amended portions of the Company's previously disclosed Fuel Sales Agreement (the “Delta Agreement”) on

April 22, 2020 (

the “Delta Amendment”).  The Delta Amendment provides that Delta

may

terminate the Delta Agreement if the Company does

not

notify Delta by

June 30, 2024

that the facility for the production, refining and delivery of ATJ with a nameplate capacity of up to

12

million gallons per year (the “Facility”) has achieved commercial operation and the ability to produce and deliver the ATJ purchased pursuant to the Delta Agreement (the date upon which such operation occurs is referred to as the “Commencement Date”).

The Delta Amendment also revises the credit support terms in the Delta Agreement to state that the Company and Delta will work to mutually agree upon credit support terms for the take or pay that are acceptable to the Company’s lender to enable the Company to obtain

third

party financing prior to the earlier of the time that the Company obtains financing for construction of the Facility or otherwise issues a notice to commence construction of the Facility. If the Company and Delta are unable to agree on reasonable credit support terms, the Company

may

terminate the Delta Agreement. The balance of Delta’s credit support obligations were deleted.

In addition, the Delta Amendment revises the ATJ pricing in the Delta Agreement to the extent that if Brent Crude is below a certain cutoff price as of the date that is

60

days prior to the Commencement Date (the “Commencement Notice Date”), then the pricing adjusts based upon a formula related to the Brent crude prices as of the Commencement Notice Date. The Delta Amendment also provides that, if as of the Commencement Notice Date, the Brent Crude price is below the price adjustment range, Delta

may

eliminate the take-or-pay requirements of the Delta Agreement, which includes eliminating Delta’s obligation to take-or-pay the

10

million gallons per year of ATJ. Instead, the Delta Agreement would require the Company and Delta to agree at that time on the volumes and price of any ATJ to be sold under the Delta Agreement.

Costs Associated with Exit or Disposal Activities or Restructurings, Policy [Policy Text Block]

Restructuring Expenses.

 During the

first

quarter of

2020,

the Company temporarily suspended and ultimately suspended for the foreseeable future its ethanol production at the Luverne Facility. In addition, due to the impact of the COVID-

19

 pandemic on the global economy and the Company’s industry, in

March 2020,

the Company reduced its workforce, impacting

26

people at the Luverne Facility and

four

 people at the Company's corporate headquarters. Affected employees were offered a severance package which included a

one

-time payment,

one

month of health insurance and acceleration of vesting for any unvested restricted stock awards.

The Company incurred

$0.1

million related to severance costs and

$0.2

million related to lease agreements for which it will

no

longer receive value during the

three

months ended

March 31, 2020,

which are recorded as

Restructuring expenses

on the Consolidated Statements of Operations. Restructuring expense totaled

$0.02

million and

$0.3

million for Gevo and Gevo Development/Agri-Energy segments, respectively.

The Company intends to continue developing its hydrocarbon business, including the planned expansion of the Luverne Facility, and the Company expects to move forward in securing the project funding needed to expand the Luverne Facility. The expansion is designed to allow the Company to produce large quantities of low carbon isobutanol, sustainable aviation fuel and renewable isooctane. The Company also expects to continue engineering efforts for the expansion of isobutanol production and the construction of a commercial renewable hydrocarbon production facility, as well as additional decarbonization projects, at the Luverne Facility.

As of

March 31, 2020,

the Company had the following liabilities outstanding related to the restructuring expenses included in

"Accounts payable and accrued liabilities

" in the Consolidated Balance Sheets:

	December 31, 2019		Additions		Payments		March 31, 2020
Severance (including payroll taxes)	$	—	$	96	$	—	$	96
Lease agreements		—		203		—		203
Total	$	—	$	299	$	—	$	299

Financial Condition [Policy Text Block]

Financial Condition

. For the 

three

months ended

March 

31,

2020

 and

2019,

the Company incurred a consolidated net loss of

$9.3

million and

$6.1

million, respectively, and had an accumulated deficit of

$467.2

 million as of

March 

31,

2020.

The Company’s cash and cash equivalents as of 

March 31, 2020 

totaled

$9.3

 million and are expected to be used for the following purposes: (i) operating activities at the Company’s corporate headquarters in Colorado, including research and development work; (ii) development projects associated with RNG; (iii) exploration of strategic alternatives and new financings; (iv) debt service obligations; and (v) maintaining the Luverne Facility;

The Company expects to incur future net losses as it continues to fund the development and commercialization of its product candidates. To date, the Company has financed its operations primarily with proceeds from issuance of equity and debt securities, borrowings under debt facilities and product sales. The Company’s transition to profitability is dependent upon, among other things, the successful development and commercialization of its product candidates and the achievement of a level of revenues adequate to support the Company’s cost structure. The Company

may

never achieve profitability or positive cash flows, and unless and until it does, the Company will continue to need to raise additional capital. Management intends to fund future operations through additional private and/or public offerings of debt or equity securities. In addition, the Company

may

seek additional capital through arrangements with strategic partners or from other sources, it

may

seek to restructure its debt and it will continue to address its cost structure. Notwithstanding, there can be

no

assurance that the Company will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.

Existing working capital was

not

sufficient to meet the cash requirements to fund planned operations through the period that is

one

year after the date the Company’s financial statements for the

three

months ended

March 31, 2020 

were issued. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s inability to continue as a going concern

may

potentially affect the Company’s rights and obligations under its senior secured debt and issued and outstanding convertible notes. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do

not

include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

At-the-market Offering Program, Policy [Policy Text Block]

At-the-Market Offering Program.

In

February 2018,

the Company commenced an at-the-market offering program, which allows it to sell and issue shares of its common stock from time-to-time. In

August 2019,

the at-the-market offering program was amended to provide available capacity under the at-the-market offering program of 

$10.7

million.

During the

three

months ended

March 31, 2020,

the Company issued

425,776

 shares of common stock under the at-the-market offering program for total proceeds of

$0.9

 million, net of commissions and other offering related expenses. As of

March 31, 2020,

the Company has remaining capacity to issue up to approximately

$7.8

 million of common stock under the at-the-market offering program.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation.

The unaudited consolidated financial statements of the Company (which include the accounts of its wholly-owned subsidiaries Gevo Development, LLC (“Gevo Development”) 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 Compan

y at

March 31, 2020

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,

2019.

Income Tax, Policy [Policy Text Block]

Income Taxes.

There is

no

provision for income taxes because the Company has incurred operating losses since inception.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Business Risk.

 

As of

March 31, 2020, 

one

customer, Air Total International SA, comprised approximately

52%

 of the Company's outstanding trade accounts receivable, respectively. As of

December 31, 2019,

three

customers, Eco-Energy, LLC (Eco-Energy"), Purina Animal Nutrition, LLC ("Purina"), and HCS Group GmbH ("HCS") comprised

57%,

13%

 and

15%

 of the Company's outstanding trade accounts receivable, respectively.

For the

three

months ended

March 31, 2020

and

2019,

Eco-Energy accounted for approximately

73%

 and

68%

 of the Company's consolidated revenue, respectively. Purina represented approximately

22%

 and

18%

 of the Company's consolidated revenue for the

three

months ended

March 

31,

2020

 and 

2019,

respectively. All are customers of the Company's Gevo Development/Agri-Energy segment (see Note

14

).