Nevada
|
26-1407544
|
(State or other jurisdiction
|
(I.R.S. Employer
|
of incorporation or organization)
|
Identification No.)
|
Item 1.
|
Financial Statements.
|
4
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
|
28
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market
Risk.
|
38
|
Item 4.
|
Controls and Procedures.
|
38
|
Item 1.
|
Legal Proceedings
|
39
|
Item 1A.
|
Risk Factors.
|
40
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of
Proceeds.
|
40
|
Item 3.
|
Defaults Upon Senior Securities.
|
40
|
Item 4.
|
Mine Safety Disclosures.
|
40
|
Item 5.
|
Other Information.
|
40
|
Item 6.
|
Exhibits.
|
40
|
Signatures
|
|
41
|
|
June 30,
2018
|
December 31,
2017
|
Assets
|
(unaudited)
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$1,069
|
$428
|
Accounts
receivable
|
1,601
|
2,219
|
Inventories
|
6,697
|
5,737
|
Prepaid
expenses
|
1,381
|
2,435
|
Other
current assets
|
540
|
643
|
Total
current assets
|
11,288
|
11,462
|
|
|
|
Property,
plant and equipment, net
|
77,703
|
78,837
|
Other
assets
|
4,137
|
4,032
|
Total
assets
|
$93,128
|
$94,331
|
|
|
|
Liabilities and stockholders' deficit
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$12,521
|
$10,457
|
Current
portion of long term debt
|
3,234
|
2,039
|
Short
term borrowings
|
16,184
|
13,586
|
Mandatorily
redeemable Series B convertible preferred stock
|
2,996
|
2,946
|
Accrued
property taxes
|
2,757
|
3,677
|
Other
current liabilities
|
3,567
|
3,311
|
Total
current liabilities
|
41,259
|
36,016
|
Long
term liabilities:
|
|
|
Senior
secured notes
|
83,431
|
73,986
|
EB-5
notes
|
35,000
|
34,000
|
GAFI
secured and revolving notes
|
24,604
|
24,351
|
Long
term subordinated debt
|
5,898
|
5,824
|
Other
long term liabilities
|
-
|
15
|
Total
long term liabilities
|
148,933
|
138,176
|
|
|
|
Stockholders'
deficit:
|
|
|
Series
B convertible preferred stock, $0.001 par value; 7,235 authorized;
1,323 shares issued and outstanding each period, respectively
(aggregate liquidation preference of $3,969 for each period
respectively)
|
1
|
1
|
Common
stock, $0.001 par value; 40,000 authorized; 20,223 and 20,088
shares issued and outstanding, respectively
|
20
|
20
|
Additional
paid-in capital
|
85,347
|
84,679
|
Accumulated
deficit
|
(175,921)
|
(160,188)
|
Accumulated
other comprehensive loss
|
(3,448)
|
(2,904)
|
Total
stockholders' deficit attributable to Aemetis, Inc.
|
(94,001)
|
(78,392)
|
Non-controlling
interest - GAFI
|
(3,063)
|
(1,469)
|
Total
stockholders' deficit
|
(97,064)
|
(79,861)
|
Total
liabilities and stockholders' deficit
|
$93,128
|
$94,331
|
|
For the three months ended June 30,
|
For the six months ended June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
$45,028
|
$40,764
|
$88,046
|
$72,338
|
|
|
|
|
|
Cost
of goods sold
|
42,260
|
39,059
|
83,412
|
71,220
|
|
|
|
|
|
Gross
profit
|
2,768
|
1,705
|
4,634
|
1,118
|
|
|
|
|
|
Research
and development expenses
|
55
|
110
|
117
|
196
|
Selling,
general and administrative expenses
|
3,589
|
3,262
|
7,396
|
6,557
|
|
|
|
|
|
Operating
loss
|
(876)
|
(1,667)
|
(2,879)
|
(5,635)
|
|
|
|
|
|
Other
(income) expense:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
Interest
rate expense
|
4,432
|
3,164
|
8,703
|
6,006
|
Debt
related fees and amortization expense
|
919
|
1,164
|
5,676
|
2,847
|
Other
(income) expense
|
(5)
|
(8)
|
63
|
20
|
|
|
|
|
|
Loss
before income taxes
|
(6,222)
|
(5,987)
|
(17,321)
|
(14,508)
|
|
|
|
|
|
Income
tax expense
|
-
|
-
|
6
|
6
|
|
|
|
|
|
Net
loss
|
(6,222)
|
(5,987)
|
$(17,327)
|
$(14,514)
|
|
|
|
|
|
Less:
Net loss attributable to non-controlling interest
|
(857)
|
-
|
(1,594)
|
-
|
|
|
|
|
|
Net
loss attributable to Aemetis, Inc.
|
$(5,365)
|
$(5,987)
|
$(15,733)
|
$(14,514)
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
Foreign
currency translation gain (loss)
|
(394)
|
29
|
(544)
|
398
|
Comprehensive
loss
|
$(6,616)
|
$(5,958)
|
$(17,871)
|
$(14,116)
|
|
|
|
|
|
Net loss per common share attributable to Aemetis,
Inc.
|
|
|
|
|
Basic
|
$(0.27)
|
$(0.30)
|
$(0.78)
|
$(0.74)
|
Diluted
|
$(0.27)
|
$(0.30)
|
$(0.78)
|
$(0.74)
|
|
|
|
|
|
Weighted
average shares outstanding
|
|
|
|
|
Basic
|
20,223
|
19,669
|
20,203
|
19,737
|
Diluted
|
20,223
|
19,669
|
20,203
|
19,737
|
|
For the six months ended June
30,
|
|
|
2018
|
2017
|
Operating activities:
|
|
|
Net
loss
|
$(17,327)
|
$(14,514)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
Share-based
compensation
|
581
|
604
|
Stock
issued for services
|
22
|
-
|
Depreciation
|
2,299
|
2,298
|
Debt
related fees and amortization expense
|
5,676
|
2,847
|
Intangibles
and other amortization expense
|
70
|
64
|
Change
in fair value of warrant liability
|
-
|
3
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
579
|
338
|
Inventories
|
(1,264)
|
(2,705)
|
Prepaid
expenses
|
1,053
|
(321)
|
Other
current and long-term assets
|
(134)
|
(99)
|
Accounts
payable
|
2,128
|
1,140
|
Accrued
interest expense and fees, net of payments
|
5,457
|
4,826
|
Other
liabilities
|
(745)
|
675
|
Net
cash used in operating activities
|
(1,605)
|
(4,844)
|
|
|
|
Investing activities:
|
|
|
Capital
expenditures
|
(1,771)
|
(511)
|
Net
cash used in investing activities
|
(1,771)
|
(511)
|
|
|
|
Financing activities:
|
|
|
Proceeds
from borrowings
|
12,415
|
10,833
|
Repayments
of borrowings
|
(8,381)
|
(6,589)
|
Net
cash provided by financing activities
|
4,034
|
4,244
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
(17)
|
292
|
Net
cash and cash equivalents increase (decrease) for
period
|
641
|
(819)
|
Cash
and cash equivalents at beginning of period
|
428
|
1,486
|
Cash
and cash equivalents at end of period
|
$1,069
|
$667
|
|
|
|
Supplemental
disclosures of cash flow information, cash paid:
|
|
|
Interest
paid
|
$3,213
|
$1,273
|
Income
taxes paid
|
6
|
6
|
Supplemental disclosures of cash flow information, non-cash
transactions:
|
|
|
Subordinated
debt extension fees added to debt
|
340
|
340
|
Fair
value of warrants issued to subordinated debt holders
|
65
|
174
|
Repurchase
of common stock added to TEC promissory note
|
-
|
451
|
TEC
promissory notes fees added to notes
|
204
|
1,169
|
Senior
debt extension and waiver fees added to debt
|
3,801
|
3,846
|
North
America (in
thousands)
|
|
|
|
|
|
For the three months
ended June 30,
|
For the six months
ended June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Ethanol
sales
|
$30,129
|
$28,130
|
$58,341
|
$51,675
|
Wet
distiller's grains sales
|
8,499
|
6,457
|
16,327
|
12,038
|
Other
sales
|
1,000
|
878
|
2,136
|
1,705
|
|
|
|
|
|
|
$39,628
|
$35,465
|
$76,804
|
$65,418
|
India (in
thousands)
|
|
|
|
|
|
For the three months
ended June 30,
|
For the six months
ended June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Biodiesel
sales
|
$3,841
|
$4,100
|
$8,342
|
$4,933
|
Refined
Glycerin sales
|
1,559
|
1,199
|
2,900
|
1,987
|
|
$5,400
|
$5,299
|
$11,242
|
$6,920
|
|
As of
|
|
|
June 30, 2018
|
June 30, 2017
|
|
|
|
Series
B preferred (post split basis)
|
132
|
133
|
Common
stock options and warrants
|
3,206
|
2,589
|
Debt
with conversion feature at $30 per share of common
stock
|
1,222
|
1,188
|
Total
number of potentially dilutive shares excluded from the diluted net
loss per share calculation
|
4,560
|
3,910
|
|
June 30,
2018
|
December 31,
2017
|
Raw
materials
|
$3,585
|
$2,829
|
Work-in-progress
|
2,102
|
1,605
|
Finished
goods
|
1,010
|
1,303
|
Total
inventories
|
$6,697
|
$5,737
|
|
June 30,
2018
|
December 31,
2017
|
Land
|
$2,709
|
$2,747
|
Plant
and buildings
|
82,642
|
82,652
|
Furniture
and fixtures
|
1,039
|
1,003
|
Machinery
and equipment
|
3,909
|
3,972
|
Construction
in progress
|
1,837
|
941
|
GAFI
property, plant & equipment
|
15,408
|
15,408
|
Total
gross property, plant & equipment
|
107,544
|
106,723
|
Less
accumulated depreciation
|
(29,841)
|
(27,886)
|
Total
net property, plant & equipment
|
$77,703
|
$78,837
|
|
Years
|
Plant
and Buildings
|
20 - 30
|
Machinery
& Equipment
|
5 - 7
|
Furniture
& Fixtures
|
3 - 5
|
|
June 30,
2018
|
December 31,
2017
|
Third
Eye Capital term notes
|
$7,022
|
$6,931
|
Third
Eye Capital revolving credit facility
|
41,117
|
35,371
|
Third
Eye Capital revenue participation term notes
|
11,792
|
11,636
|
Third
Eye Capital acquisition term notes
|
23,500
|
20,048
|
Third
Eye Capital promissory note
|
2,082
|
-
|
Cilion
shareholder seller notes payable
|
5,898
|
5,824
|
Subordinated
notes
|
9,391
|
8,725
|
EB-5
long term promissory notes
|
36,658
|
36,039
|
Unsecured
working capital loans
|
4,711
|
4,861
|
GAFI
Term and Revolving loans
|
26,180
|
24,351
|
Total debt
|
168,351
|
153,786
|
Less
current portion of debt
|
19,418
|
15,625
|
Total long term debt
|
$148,933
|
$138,161
|
Twelve months ended June 30,
|
Debt Repayments
|
2019
|
$19,418
|
2020
|
133,327
|
2021
|
14,000
|
2022
|
3,398
|
Total
debt
|
170,143
|
Debt
issuance costs
|
(1,792)
|
Total
debt, net of debt issuance costs
|
$168,351
|
|
Goodland
Advanced Fuels, Inc.
|
|
|
As
of
|
|
|
June 30,
2018
|
December
31, 2017
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$2
|
$184
|
Prepaid
expenses
|
787
|
1,581
|
Total
current assets
|
789
|
1,765
|
|
|
|
Property,
plant and equipment
|
15,408
|
15,408
|
Promissory
note receivable from Aemetis
|
6,921
|
5,709
|
|
|
|
Total
assets
|
$23,118
|
$22,882
|
|
|
|
Liabilities and stockholder deficit
|
|
|
Short term
borrowings
|
$1,577
|
$-
|
Secured
and revolving notes
|
24,604
|
24,351
|
|
|
|
Total
liabilities
|
26,181
|
24,351
|
|
|
|
Accumulated
deficit
|
(3,063)
|
(1,469)
|
Total
liabilities and stockholder deficit
|
$23,118
|
$22,882
|
|
Goodland Advanced Fuels, Inc.
|
|
|
Statements of Operations
|
|
|
Three months ended
|
Six months ended
|
|
June 30, 2018
|
June 30, 2018
|
|
|
|
Selling,
general and administrative expenses
|
$134
|
$232
|
|
|
|
Operating
loss
|
(134)
|
(232)
|
|
|
|
Interest
expense
|
|
|
Interest
rate expense
|
689
|
1,367
|
Debt
related fees and amortization expense
|
200
|
325
|
Other
income
|
(166)
|
(330)
|
|
|
|
Net
loss
|
$(857)
|
$(1,594)
|
|
Shares
Available for
Grant
|
Number of Shares Outstanding
|
Weighted-Average
Exercise Price
|
|
|
|
|
Balance
as of December 31, 2017
|
196
|
2,189
|
$2.70
|
Authorized
|
655
|
-
|
-
|
Granted
|
(1,148)
|
1,148
|
1.07
|
Exercised
|
-
|
(2)
|
0.67
|
Forfeited/expired
|
414
|
(414)
|
4.38
|
Balance
as of June 30, 2018
|
117
|
2,921
|
$1.82
|
|
For the three months ended June 30,
|
Description
|
2018
|
Dividend-yield
|
0%
|
Risk-free
interest rate
|
3.04%
|
Expected
volatility
|
85.6%
|
Expected
life (years)
|
6.48
|
Market
value per share on grant date
|
$1.71
|
Fair
value per share on grant date
|
$1.28
|
|
As of and for the three
months ended June 30,
|
As of and for the six
months ended June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Ethanol
sales
|
$30,129
|
$28,130
|
$58,341
|
$51,675
|
Wet
distiller's grains sales
|
8,499
|
6,457
|
16,327
|
12,038
|
Corn
oil sales
|
893
|
852
|
1,816
|
1,650
|
Corn/milo
purchases
|
28,760
|
26,338
|
56,505
|
49,727
|
Accounts
receivable
|
852
|
384
|
852
|
384
|
Accounts
payable
|
2,241
|
1,719
|
2,241
|
1,719
|
|
Three
months ended June 30, 2018
|
Six
months ended June 30, 2018
|
||||
|
North
America
|
India
|
Total
Consolidated
|
North
America
|
India
|
Total
Consolidated
|
|
|
|
|
|
|
|
Revenues
|
$39,628
|
$5,400
|
$45,028
|
$76,804
|
$11,242
|
$88,046
|
Cost
of goods sold
|
37,079
|
5,181
|
42,260
|
73,061
|
10,351
|
83,412
|
|
|
|
|
|
|
|
Gross
profit
|
2,549
|
219
|
2,768
|
3,743
|
891
|
4,634
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
Research
and development expenses
|
55
|
-
|
55
|
117
|
-
|
117
|
Selling,
general and administrative expenses
|
3,420
|
169
|
3,589
|
6,935
|
461
|
7,396
|
Interest
expense
|
5,199
|
152
|
5,351
|
14,083
|
296
|
14,379
|
Other
expense (income)
|
(2)
|
(3)
|
(5)
|
43
|
20
|
63
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
$(6,123)
|
$(99)
|
$(6,222)
|
$(17,435)
|
114
|
(17,321)
|
|
|
|
|
|
|
|
Capital
expenditures
|
$567
|
$208
|
$775
|
$1,057
|
$714
|
$1,771
|
Depreciation
|
992
|
157
|
1,149
|
1,984
|
315
|
2,299
|
|
Three months ended June 30, 2017
|
Six months ended June 30, 2017
|
||||
|
North America
|
India
|
Total Consolidated
|
North America
|
India
|
Total Consolidated
|
|
|
|
|
|
|
|
Revenues
|
$35,465
|
$5,299
|
$40,764
|
$65,418
|
$6,920
|
$72,338
|
Cost
of goods sold
|
34,359
|
4,700
|
39,059
|
65,008
|
6,212
|
71,220
|
|
|
|
|
|
|
|
Gross
profit
|
1,106
|
599
|
1,705
|
410
|
708
|
1,118
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
Research
and development expenses
|
110
|
-
|
110
|
196
|
-
|
196
|
Selling,
general and administrative expenses
|
2,867
|
395
|
3,262
|
5,891
|
666
|
6,557
|
Interest
expense
|
4,271
|
57
|
4,328
|
8,828
|
25
|
8,853
|
Other
expense (income)
|
(11)
|
3
|
(8)
|
38
|
(18)
|
20
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
$(6,131)
|
$144
|
$(5,987)
|
$(14,543)
|
35
|
(14,508)
|
|
|
|
|
|
|
|
Capital
expenditures
|
$340
|
$127
|
$467
|
$383
|
$128
|
$511
|
Depreciation
|
997
|
155
|
1,152
|
1,995
|
303
|
2,298
|
|
As of
|
|
|
June 30,
|
December 31,
|
|
2018
|
2017
|
|
|
|
North
America
|
$78,854
|
$80,479
|
India
|
14,274
|
13,852
|
Total
Assets
|
$93,128
|
$94,331
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$39,628
|
$35,465
|
$4,163
|
12%
|
India
|
5,400
|
5,299
|
101
|
2%
|
|
|
|
|
|
Total
|
$45,028
|
$40,764
|
$4,264
|
10%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$37,079
|
$34,359
|
$2,720
|
8%
|
India
|
5,181
|
4,700
|
481
|
10%
|
|
|
|
|
|
Total
|
$42,260
|
$39,059
|
$3,201
|
8%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$2,549
|
$1,106
|
$1,443
|
130%
|
India
|
219
|
599
|
(380)
|
-63%
|
|
|
|
|
|
Total
|
$2,768
|
$1,705
|
$1,063
|
62%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$55
|
$110
|
$(55)
|
-50%
|
India
|
-
|
-
|
-
|
0%
|
|
|
|
|
|
Total
|
$55
|
$110
|
$(55)
|
-50%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$3,420
|
$2,867
|
$553
|
19%
|
India
|
169
|
395
|
(226)
|
-57%
|
|
|
|
|
|
Total
|
$3,589
|
$3,262
|
$327
|
10%
|
Other
(income)/expense
|
|
|
|
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
North
America
|
|
|
|
|
Interest
rate expense
|
$4,280
|
$3,107
|
$1,173
|
38%
|
Debt
related fees and amortization expense
|
919
|
1,164
|
(245)
|
-21%
|
Other
income
|
(2)
|
(11)
|
(9)
|
-82%
|
|
|
|
|
|
India
|
|
|
|
|
Interest
rate expense
|
152
|
57
|
95
|
167%
|
Other
(income) expense
|
(3)
|
3
|
6
|
200%
|
|
|
|
|
|
Total
|
$5,346
|
$4,320
|
$1,020
|
24%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$76,804
|
$65,418
|
$11,386
|
17%
|
India
|
11,242
|
6,920
|
4,322
|
62%
|
|
|
|
|
|
Total
|
$88,046
|
$72,338
|
$15,708
|
22%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$73,061
|
$65,008
|
$8,053
|
12%
|
India
|
10,351
|
6,212
|
4,139
|
67%
|
|
|
|
|
|
Total
|
$83,412
|
$71,220
|
$12,192
|
17%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$3,743
|
$410
|
$3,333
|
813%
|
India
|
891
|
708
|
183
|
26%
|
|
|
|
|
|
Total
|
$4,634
|
$1,118
|
$3,516
|
314%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$117
|
$196
|
$(79)
|
-40%
|
India
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Total
|
$117
|
$196
|
$(79)
|
-40%
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
|
|
|
|
|
North
America
|
$6,935
|
$5,891
|
$1,044
|
18%
|
India
|
461
|
666
|
(205)
|
-31%
|
|
|
|
|
|
Total
|
$7,396
|
$6,557
|
$839
|
13%
|
Other
(income)/expense
|
|
|
|
|
|
2018
|
2017
|
Inc/(dec)
|
% change
|
North
America
|
|
|
|
|
Interest
rate expense
|
$8,407
|
$5,981
|
$2,426
|
41%
|
Debt
related fees and amortization expense
|
5,676
|
2,847
|
2,829
|
99%
|
Other
income
|
43
|
38
|
5
|
13%
|
|
|
|
|
|
India
|
|
|
|
|
Interest
rate expense
|
296
|
25
|
271
|
1084%
|
Other
(income) expense
|
20
|
(18)
|
(38)
|
-211%
|
|
|
|
|
|
Total
|
$14,442
|
$8,873
|
$5,493
|
62%
|
|
June 30,
2018
|
December 31,
2017
|
Cash
and cash equivalents
|
$1,069
|
$428
|
Current
assets (including cash, cash equivalents, and
deposits)
|
11,288
|
11,462
|
Current
and long term liabilities (excluding all debt)
|
21,841
|
20,406
|
Current
& long term debt
|
168,351
|
153,786
|
|
Change in total debt
|
$14,565
|
Increases
to debt:
|
|
|
Accrued
interest
|
8,415
|
|
Amendment
No.14 fee
|
500
|
|
TEC
debt Extension/redemption fee
|
3,051
|
|
January
2018 Promissory note including $10K withheld as fees by
TEC
|
160
|
|
Feb
2018 Promissory note including $0.1 million withheld as fees by TEC
and $84 thousand paybale at due date
|
2,184
|
|
April
2018 Promissory note including $10K withheld as fees by
TEC
|
260
|
|
Sub
debt extension fees
|
340
|
|
India
working capital draws and changes due to foreign
currency
|
8,015
|
|
GAFI
loan including $75K fee withheld as fees by TEC
|
1,575
|
|
EB-5
escrow received
|
500
|
|
Note
indebtedness covenant wavier fee for Q2'18
|
250
|
|
Change
in debt issuance costs, net of amortization
|
1,274
|
|
|
Total increases to debt
|
$26,524
|
|
|
|
|
|
|
Decreases
to debt:
|
|
|
Principal
and interest payments to senior lender
|
(1,774)
|
|
Interest
payments to EB-5 investors
|
(366)
|
|
Principal,
fees and interest payments on working capital loans in
India
|
(8,460)
|
|
GAFI
interest payments
|
(1,359)
|
|
|
|
|
|
Total decreases to debt
|
$(11,959)
|
Amended and Restated Articles of Incorporation filed on March 16,
2017.
|
|
Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under
the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under
the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes- Oxley Act of
2002.
|
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
|
AEMETIS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Eric A. McAfee
|
|
|
Eric A. McAfee
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
AEMETIS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Todd Waltz
|
|
|
Todd Waltz
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 31, 2018 |
|
Document Document And Entity Information Abstract | ||
Entity Registrant Name | AEMETIS, INC. | |
Entity Central Index Key | 0000738214 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,222,890 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2018 |
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Series B Preferred stock, par value | $ 0.001 | $ 0.001 |
Series B Preferred stock, authorized | 7,235 | 7,235 |
Series B Preferred stock, shares issued | 1,323 | 1,323 |
Series B Preferred stock, shares outstanding | 1,323 | 1,323 |
Aggregate liquidation preference | $ 3,969 | $ 3,969 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 20,223 | 20,088 |
Common stock, shares outstanding | 20,223 | 20,088 |
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Revenues | $ 45,028 | $ 40,764 | $ 88,046 | $ 72,338 |
Cost of goods sold | 42,260 | 39,059 | 83,412 | 71,220 |
Gross profit (loss) | 2,768 | 1,705 | 4,634 | 1,118 |
Research and development expenses | 55 | 110 | 117 | 196 |
Selling, general and administrative expenses | 3,589 | 3,262 | 7,396 | 6,557 |
Operating loss | (876) | (1,667) | (2,879) | (5,635) |
Interest expense | ||||
Interest rate expense | 4,432 | 3,164 | 8,703 | 6,006 |
Debt related fees and amortization expense | 919 | 1,164 | 5,676 | 2,847 |
Other (income) expense | (5) | (8) | 63 | 20 |
Loss before income taxes | (6,222) | (5,987) | (17,321) | (14,508) |
Income tax expense | 0 | 0 | 6 | 6 |
Net loss | (6,222) | (5,987) | (17,327) | (14,514) |
Less: Net loss attributable to non-controlling interest | (857) | 0 | (1,594) | 0 |
Net loss attributable to Aemetis, Inc. | (5,365) | (5,987) | (15,733) | (14,514) |
Other comprehensive income (loss) | ||||
Foreign currency translation gain (loss) | (394) | 29 | (544) | 398 |
Comprehensive loss | $ (6,616) | $ (5,958) | $ (17,871) | $ (14,116) |
Net loss per common share attributable to Aemetis, Inc. | ||||
Basic | $ (0.27) | $ (0.30) | $ (0.78) | $ (0.74) |
Diluted | $ (0.27) | $ (0.30) | $ (0.78) | $ (0.74) |
Weighted average shares outstanding | ||||
Basic | 20,223 | 19,669 | 20,203 | 19,737 |
Diluted | 20,223 | 19,669 | 20,203 | 19,737 |
1. Nature of Activities and Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. Nature of Activities and Summary of Significant Accounting Policies | Nature of Activities. Headquartered in Cupertino, California, Aemetis is an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products through the conversion of first-generation ethanol and biodiesel plants into advanced biorefineries. Founded in 2006, we own and operate a 60 million gallon per year ethanol plant in the California Central Valley near Modesto where we manufacture and produce ethanol, wet distillers’ grains (WDG), condensed distillers solubles (CDS), and distillers’ corn oil (DCO). We also own and operate a 50 million gallon per year renewable chemical and advanced fuel production facility on the East Coast of India producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. We operate a research and development laboratory and hold a portfolio of patents and related technology licenses for the production of renewable fuels and biochemicals.
Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis, Inc., a Nevada corporation, and its wholly owned subsidiaries (collectively, Aemetis or the Company). Additionally, we consolidate all entities in which we have a controlling financial interest either directly or by option to acquire the interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. An enterprise must consolidate a variable interest entity (VIE) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
In July 2017, Goodland Advanced Fuels, Inc. (GAFI) acquired a partially completed ethanol plant in Goodland, Kansas, and as part of the transaction, GAFI entered into a note purchase agreement (GAFI Note Purchase Agreement) for a revolving loan (GAFI Revolving Loan) and term loan (GAFI Term Loan, and together with the GAFI Revolving Loan, the GAFI Loans) with Third Eye Capital Corporation (Third Eye Capital). The arrangement provided Aemetis with both an option agreement (GAFI Option Agreement) to acquire all of the outstanding stock from GAFI at $0.01 per share, as well as the ability for Aemetis, and its subsidiary Aemetis Advanced Products Keyes, Inc. (AAPK), to borrow portions of the GAFI Revolving Loan. In exchange, Aemetis and AAPK each provided a limited guaranty (GAFI Limited Guaranty). GAFI is thinly capitalized by its sole shareholders, and dependent on the terms of the agreements with Third Eye Capital and Aemetis to support its own activities. Additionally, the combination of the GAFI Limited Guaranty and the GAFI Option Agreement provide sufficient basis for Aemetis to direct the activities of GAFI. Upon application of the consolidation guidance in ASC 810 Consolidation, we determined that GAFI is a variable interest entity with Aemetis as the primary beneficiary. Accordingly, the consolidated financial statements include the account of GAFI. See “Part I, Item 1. Financial Statements – Note 5. Variable Interest Entity.” All intercompany balances and transactions have been eliminated in consolidation, including transactions between GAFI and Aemetis, Inc.
The accompanying consolidated condensed balance sheet as of June 30, 2018, the consolidated condensed statements of operations and comprehensive loss for the three and six months ended June 30, 2018 and 2017, and the consolidated condensed statements of cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The consolidated condensed balance sheet as of December 31, 2017 was derived from the 2017 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2017 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the SEC. Certain information and footnote, disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the unaudited interim consolidated condensed financial statements for the three and six months ended June 30, 2018 and 2017 have been prepared on the same basis as the audited consolidated statements as of December 31, 2017 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition. In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance stated that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations regarding whether an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company adopted this guidance on January 1, 2018 using the modified retrospective approach. There was no cumulative impact to retained earnings. We assessed all of our revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition.
We derive revenue primarily from sales of ethanol and related co-products in North America, and biodiesel and refined glycerin in India based on the supply agreements and PO contracts. We assessed the following criteria under the guidance: i) identify the contracts with customer, ii) identify the performance obligations in the contract, iii) determine the transaction price, iv) allocate the transaction price to the performance obligations, and v) recognize revenue when the entity satisfies the performance obligations.
In North America, we sell the majority of our production to one customer under a supply contract, with individual sales transactions occurring under this contract. Given the similarity of these transactions, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to the tank of J.D. Heiskell & Co. (J.D. Heiskell) or to one of their contracted trucking companies. At this point in time, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy Marketing for ethanol and by A.L. Gilbert on WDG and DCO. There is no transaction price allocation needed.
The below table shows our sales in North America by product category:
In India where we sell product on purchase orders (written or verbal) or by contract with governmental or international parties, the performance obligation is satisfied by delivery and acceptance of the physical product. When the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined based on reference market prices for biodiesel and refined glycerin every day net of taxes. There is no transaction price allocation needed.
The below table shows our sales in India by product category:
We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in some contractual agreements.
In North America, we buy corn as feedstock in producing ethanol from our working capital partner J.D. Heiskell and we sell all ethanol, WDG, and corn oil produced in this process to J.D. Heiskell. Our finished goods tank is leased by J.D. Heiskell and they require us to transfer legal title to the product upon transfer of our finished ethanol to this location. We consider the purchase of corn as a cost of goods sold and the sale of ethanol upon transfer to the finished goods tank as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have a legal title to the goods during the processing time. Revenues from sales of ethanol and its co-products are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. The Company has elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized as expenses when revenue is recognized. Revenues are recorded at the gross invoiced amount.
In India, we occasionally enter into contracts where a customer provides feedstock and we process the feedstock into biodiesel and sell to the same customer. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel as long as it resides on premises. Hence, we are the principal in both North America and India sales scenarios where our customer and vendor are the same.
Based upon the timing of the transfer of control of our products to our customers, there are no contract assets or liabilities as of June 30, 2018.
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.
Cost of Goods Sold. Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense.
Accounts Receivable. The Company sells ethanol, WDG, CDS, and DCO through third-party marketing arrangements generally without requiring collateral. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30 days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts.
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and it requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We did not reserve any balance for allowances for doubtful accounts as of June 30, 2018 and December 31, 2017.
Inventories. Ethanol inventory, raw materials, and work-in-process are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (NRV). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Property, Plant and Equipment. Property, plant and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of buildings, furniture, machinery, equipment, land, and the plants in Keyes, California (Keyes plant), Goodland, Kansas (GAFI plant) and Kakinada, India (Kakinada plant). The GAFI plant is partially completed and is not ready for operation; hence, we are not depreciating these assets yet. Otherwise, it is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.
The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment –Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value.
Basic and Diluted Net Loss per Share. Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and six months ended June 30, 2018 and 2017, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.
The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of June 30, 2018 and 2017:
Comprehensive Loss. ASC 220 Comprehensive Income requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive income (loss) and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary.
Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation, adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates. Gains and losses from other foreign currency transactions are recorded in other income (expense).
Operating Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Aemetis recognized two reportable geographic segments: “North America” and “India.”
The “North America” operating segment includes the Company’s 60 million gallons per year capacity Keyes plant in Keyes, California, the GAFI plant in Goodland, Kansas and the research and development facility in St. Paul, Minnesota`.
The “India” operating segment encompasses the Company’s 50 million gallon per year capacity Kakinada plant in Kakinada, India, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius.
Share-Based Compensation. The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation, requiring the Company to recognize expense related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted adjusted to reflect only those shares that are expected to vest.
Commitments and Contingencies. The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.
Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt – Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.
Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date.
Recently Issued Accounting Pronouncements. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, with certain exceptions. ASU 2018-07 supersedes the guidance in ASC 505-50, Equity-Based Payments to Non-Employees, which previously included the accounting for non-employee awards. The standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company does not intend to early adopt and is in the process of determining the impact of adoption of this standard on its financial statements.
For a complete summary of the Company’s significant accounting policies, please refer to Note 1, “Nature of Activities and Summary of Significant Accounting Policies,” included with the Company’s audited financial statements and notes thereto for the years ended December 31, 2017 and 2016, filed with the Securities and Exchange Commission on March 29, 2018. |
2. Inventories |
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2. Inventories | Inventories consist of the following:
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3. Property, Plant and Equipment |
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3. Property, Plant and Equipment | Property, plant and equipment consist of the following:
Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:
For the three months ended June 30, 2018 and 2017, the Company recorded depreciation expense of $1.1 million and $1.2 million respectively. For the six months ended June 30, 2018 and 2017, the Company recorded depreciation expense of $2.3 million for each period.
Management is required to evaluate these long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Management determined there was no impairment on the long-lived assets during the three and six months ended June 30, 2018 and 2017.
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4. Debt | Debt consists of the notes from our senior lender, Third Eye Capital, other working capital lenders and subordinated lenders as follows:
On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (AAFK), entered into an Amended and Restated Note Purchase Agreement with Third Eye Capital (the Note Purchase Agreement). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $7.2 million to replace existing notes held by Third Eye Capital (the Term Notes); (ii) senior secured revolving loans in an aggregate principal amount of $18.0 million (Revolving Credit Facility); (iii) senior secured term loans in the principal amount of $10.0 million to convert the prior revenue participation agreement to a note (Revenue Participation Term Notes); and (iv) senior secured term loans in an aggregate principal amount of $15.0 million (Acquisition Term Notes) used to fund the cash portion of the acquisition of Cilion, Inc. (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the Original Third Eye Capital Notes).
On January 4, 2018, a Promissory Note (the January 2018 Note) for $160 thousand was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14% per annum maturing on the earlier of (a) receipt of proceeds from any financing, refinancing, or other similar transaction, (b) extension of credit by payee, as lender or as agent on behalf of certain lenders, to the Company or its affiliates, or (c) April 1, 2018. In consideration of the January 2018 Note, $10 thousand of the total proceeds were paid to Third Eye Capital as financing charges. As of June 30, 2018, the outstanding balance of principal and interest on the January 2018 note was $162 thousand. On April 1, 2018, the January 2018 Note was paid in full.
On February 27 2018, a Promissory Note (the February 2018 Note, together with the Original Third Eye Capital Notes, the Third Eye Capital Notes) for $2.1 million was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14% per annum maturing on the earlier of (a) receipt of proceeds from any financing, refinancing, or other similar transaction, (b) extension of credit by payee, as lender or as agent on behalf of certain lenders, to the Company or its affiliates, or (c) April 30, 2018. In consideration of the February 2018 Note, $0.1 million of the total proceeds were paid to Third Eye Capital as financing charges. Subsequently, the maturity date of the note was extended to June 30, 2018 with $84 thousand in fees due and payable at the time of the redemption of the Note. As of June 30, 2018, the outstanding balance of principal and interest on the February 2018 note was $2.1 million.
On March 27, 2018, Third Eye Capital agreed to Limited Waiver and Amendment No. 14 to the Note Purchase Agreement, or Amendment No. 14, to: (i) extend the maturity date of the Third Eye Capital Notes two years to April 1, 2020 in exchange for an amendment fee consisting of 6% (3% per year) of the outstanding note balance in the form of an increase in the fee payable in the event of a redemption of the Third Eye Capital Notes (as defined in the Note Purchase Agreement); (ii) provide that the maturity date may be further extended at our election to April 1, 2021 in exchange for an extension fee of 5%; (iii) provide for an optional quarterly waiver of the ratio of note indebtedness covenant until January 1, 2019 with the payment of a waiver fee of $0.25 million; and (iv) remove the redemption fee described in (i) above from the calculation of the ratio of note indebtedness covenant. In addition to the fee discussed in (i), as consideration for such amendment and waiver, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $0.5 million to be added to the outstanding principal balance of the Revolving Credit Facility.
We have evaluated Amendment No. 14 in accordance with ASC 470-60 Troubled Debt Restructuring. According to guidance, we considered Amendment No. 14 to be a troubled debt restructuring. We assessed all the terms to confirm if there is a concession granted by the creditor. The maturity date of the Third Eye Capital Notes was extended to April 1, 2020 for a 6% fee, compared to the extension fee of 5% provided by Amendment No. 13 for a one-year extension. No interest is accrued on these fees. In order to assess whether the creditor granted a concession, we calculated the post-restructuring effective interest rate by projecting cash flows on the new terms and solved for a discount rate equal to the carrying amount of pre-restructuring of debt, and by comparing this calculation to the terms of Amendment No. 13, we determined that Third Eye Capital provided a concession in accordance with the provisions of ASC 470-60 Troubled Debt Restructuring and thus applied troubled debt restructuring accounting. The extension fee, due at maturity, was discounted at the effective interest rate of the Third Eye Capital Notes, and an immediate charge was taken to recognize the fees into amortization expense on the income statement related to the troubled debt restructuring of $3.1 million and amendment fees of $0.5 million. Using the effective interest method of amortization, the remaining extension fee of $1.4 million will be amortized over the stated remaining life of the Third Eye Capital Notes.
On June 30, 2018, the Company requested and received an optional waiver of the ratio of note indebtedness covenant with the payment of a waiver fee of $0.25 million, which was added to the Revolving Credit Facility for the quarter ended June 30, 2018. The Company may request additional optional waivers of the ratio of note indebtedness covenant for the quarters ended September 30, 2018 and December 31, 2018, but there are no waivers available for the quarters ended March 31, 2019 and June 30, 2019. According to ASC 470-10-45 debt covenant classification guidance, if it is probable that the Company will not be able to cure the default at measurement dates within the next 12 months, the related debt needs to be classified as current. To assess this guidance, the Company performed ratio and cash flow analysis using the forecast and debt levels. Based on this analysis, the Company believes that it is reasonably possible that through a combination of cash flow from operations, new projects that provide additional liquidity, and sales of EB-5 investments, it will be able to meet the ratio of the note indebtedness covenant, hence the notes are classified as long term debt.
On March 27, 2018, Third Eye Capital agreed to a one-year reserve liquidity facility governed by a promissory note, payable in the principal amount of up to $6.0 million dollars. Borrowings under the facility are available from March 27, 2018 until maturity on April 1, 2019. Interest on borrowed amounts accrues at a rate of 30% per annum, paid monthly in arrears, or 40% if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) the closing of any new debt or equity financing, refinancing or other similar transaction between Third Eye Capital or any fund or entity arranged by them and the Company or its affiliates, (b) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (c) April 1, 2019. The promissory note is secured by liens and security interests upon the property and assets of the Company. If any amounts are drawn under the facility, the Company will pay a non-refundable fee in the amount of $0.2 million payable from the proceeds of the first drawing under the facility. As of June 30, 2018, no draws were outstanding on this Note.
Terms of Third Eye Capital Notes
The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Third Eye Capital Notes allow the lender to accelerate the maturity in the occurrence of any event that could reasonably be expected to have a material adverse effect, such as any change in the business, operations, or financial condition.
The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from Aemetis, Inc. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (McAfee Capital), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $8.0 million.
Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc., (Cilion) on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The liability bears interest at 3% per annum and is due and payable after the Third Eye Capital Notes have been paid in full. As of June 30, 2018, Aemetis Facility Keyes, Inc. had $5.9 million in principal and interest outstanding under the Cilion shareholder seller notes payable.
Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $0.9 million and $2.5 million in original notes to the investors (Subordinated Notes). The Subordinated Notes mature every six months. Upon maturity, the Subordinated Notes are generally extended with a fee of 10% added to the balance outstanding plus issuance of warrants exercisable at $0.01 with a two-year term. Interest accrues at 10% and is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full.
On July 1, 2018, the Subordinated Notes were amended to extend the maturity date until the earlier of (i) December 31, 2018; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; or (iii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10% cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. We will evaluate the July 1, 2018 amendment and the refinancing terms of the Subordinated Notes and determine the accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.
At June 30, 2018 and December 31, 2017, the Company had, in aggregate, $9.4 million and $8.7 million in principal and interest outstanding, respectively, under the Subordinated Notes.
EB-5 long-term promissory notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 (as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a Regional Center to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the EB-5 Notes) bearing interest at 3%. Each note was issued in the principal amount of $0.5 million and due and payable four years from the date of each note, for a total aggregate principal amount of up to $36.0 million (the EB-5 Phase I funding). The original maturity date on the promissory notes can be extended automatically for a one or two year period initially and is eligible for further one-year automatic extensions as long as there is no notice of non-extension from investors and the investors’ immigration process is in progress. The EB-5 Notes are convertible after three years at a conversion price of $30 per share.
Advanced BioEnergy, LP arranges investments with foreign investors, who each make loans to the Keyes plant in increments of $0.5 million. The Company has sold an aggregate principal amount of $36.0 million of EB-5 Notes under the EB-5 Phase I funding since 2012 to the date of this filing. As of June 30, 2018, $35.0 million has been released from the escrow amount to the Company including $0.5 million released on April 26, 2018. As of June 30, 2018, $0.5 million is remaining in escrow and $0.5 million is to be funded to escrow. As of June 30, 2018, $35.0 million in principal and $1.7 million in accrued interest was outstanding on the EB-5 Notes. Out of the $36.7 million total outstanding, $1.7 million will be due within a year.
On October 16, 2016, the Company launched its EB-5 Phase II funding, with plans to issue $50.0 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under the Company’s EB-5 Phase I funding to refinance indebtedness and for capital expenditures of Aemetis, Inc. and Goodland Advanced Fuels, Inc.
Unsecured working capital loans. On April 16, 2017, the Company entered into an operating agreement with Gemini Edibles and Fats India Private Limited (Gemini). Under this agreement, Gemini agreed to provide the Company with working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for its Kakinada plant. Working capital advances bear interest at 12%. In return, the Company agreed to pay Gemini an amount equal to 30% of the plant’s monthly net operating profit and recognized these as operational support charges in the financials. In the event that the Company’s biodiesel facility operates at a loss, Gemini owes the Company 30% of the losses as operational support charges. Either party can terminate the agreement at any time without penalty. Additionally, Gemini received a first priority lien on the assets of the Kakinada plant. The Company made principal and interest payments to Gemini of approximately $5.4 million and $2.8 million during the six months ended June 30, 2018 and 2017. As of June 30, 2018 and December 31, 2017, the Company had $3.4 million and $3.5 million outstanding on this agreement.
In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad Oils”). The 2008 agreement provided the working capital and had the first priority lien on assets in return for 30% of the plant’s monthly net operating profit. These expenses were recognized as operational support charges by the Company in the financials. All terms of the 2008 agreement with Secunderabad Oils were terminated to amend the agreement as below. On July 15, 2017, the agreement with Secunderabad Oils was amended to provide the working capital funds for British Petroleum business operations (“BP Operations”) only in the form of inter-corporate deposit for an amount of approximately $2.3 million over a 95 days period at the rate of 14.75% per annum interest rate. The term of the agreement continues until the either party terminates it. Secunderabad Oils has a second priority lien on the assets of the Company’s Kakinada plant after this agreement. On April 15, 2018, the agreement was amended to purchase the raw material for business operations at 12% per annum interest rate. During the six months ended June 30, 2018 and 2017, the Company made principal and interest payments to Secunderabad Oils of approximately $2.7 million and $2.3 million, respectively. As of June 30, 2018 and December 31, 2017, the Company had $1.3 million outstanding under this agreement, respectively.
Variable Interest Entity (GAFI) Term loan and Revolving loan. On July 10, 2017, GAFI entered into the GAFI Note Purchase Agreement with Third Eye Capital and the noteholders made a party thereto from time to time (the GAFI Noteholders). See “Part I, Item 1. Financial Statements – Note 5. Variable Interest Entity.” Pursuant to the GAFI Note Purchase Agreement, the GAFI Noteholders agreed, subject to the terms and conditions of the GAFI Note Purchase Agreement and relying on each of the representations and warranties set forth therein, to make (i) the GAFI Term Loan in an aggregate amount of fifteen million dollars and (ii) the GAFI Revolving Loan in an amount not to exceed ten million dollars in the aggregate. The interest rate per annum applicable to the GAFI Term Loan is equal to 10%. The interest rate per annum applicable to the GAFI Revolving Loan is the greater of the Prime Rate plus seven and three quarters percent (7.75%) and twelve percent (12%). The maturity date of the GAFI Loans is July 10, 2019. The maturity date may be extended at the option of GAFI for up to two additional one-year periods upon prior written notice and upon satisfaction of certain conditions and the payment of a renewal fee for such extension. An initial advance under the GAFI Revolving Loan was made for $2.2 million as a prepayment of interest on the GAFI Term Loan for the first eighteen months of interest payments. In addition, a fee of $1.0 million was paid in consideration to the Noteholders.
As of June 30, 2018 and December 31, 2017, GAFI had $15.0 million outstanding on the term loan and $10.0 million outstanding on the revolving loan, with $0.1 million in interest paid in arrears.
On June 28, 2018, GAFI borrowed an amount of $1.5 million with a fee of $75 thousand added to the loan fron Third Eye Capital at a 10% interest rate. As of June 30, 2018, the outstanding balance on the loan was $1.6 million.
GAFI, the Company and its subsidiary AAPK also entered into separate intercompany revolving promissory notes (the GAFI Intercompany Notes), dated July 10, 2017, pursuant to which GAFI may, from time to time, lend a portion of the proceeds of the GAFI Revolving Loan borrowed under the Amended GAFI NPA to the Company. The Company borrowed $1.5 million on June 28, 2018. As of June 30, 2018 and December 31, 2017, the Company and AAPK had $6.9 million and $5.7 million outstanding on the GAFI Intercompany Notes.
Debt repayments for the Company’s loan obligations follow:
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5. Variable Interest Entity |
GAFI was formed to acquire the partially completed Goodland ethanol plant in Goodland, Kansas. GAFI entered into the GAFI Note Purchase Agreement, with Third Eye Capital to acquire the plant. GAFI, the Company and its subsidiary AAPK also entered into separate GAFI Intercompany Notes, pursuant to which GAFI may, from time to time, lend a portion of the proceeds of the GAFI Revolving Loan incurred under the GAFI Note Purchase Agreement to the Company. Aemetis, Inc. and AAPK (in such capacity, the GAFI Guarantors) also agreed to enter into a limited guaranty (the GAFI Limited Guaranty). Pursuant to the GAFI Limited Guaranty, the Guarantors agreed to guarantee the prompt payment and performance of all unpaid principal and interest on the GAFI Loans and all other obligations and liabilities of GAFI to the GAFI Noteholders in connection with the GAFI Note Purchase Agreement. The obligations of the GAFI Guarantors pursuant to the GAFI Limited Guaranty are secured by a first priority lien over all assets of the GAFI Guarantors pursuant to separate general security agreements entered into by each GAFI Guarantor. The aggregate obligations and liabilities of each GAFI Guarantor is limited to the sum of (i) the aggregate amount advanced by GAFI to such GAFI Guarantor under and in accordance with the GAFI Intercompany Notes and (ii) the obligation of the GAFI Guarantor pursuant to its indemnity and expense obligations under the GAFI Limited Guaranty prior to the date on which the option under the GAFI Option Agreement is exercised. Additionally, on July 10, 2017, the Company entered into the GAFI Option Agreement by and between GAFI and the sole shareholder of GAFI, pursuant to which the Company was granted an irrevocable option to purchase all, but not less than all, of the capital stock of GAFI for an aggregate purchase price equal to $0.01 per share for a total purchase price of $10.00 (such option, the GAFI Option). The GAFI Option provides for automatic triggering in the event of certain default circumstances. After the automatic exercise upon default, the GAFI Limited Guaranty no longer applies and the GAFI Guarantors are responsible for the outstanding balances of the GAFI Term Loan and the GAFI Revolving Loan. Additionally, Third Eye Capital was granted a warrant for the purchase of 250 shares, representing 20% of the outstanding shares of GAFI, for a period of 10 years at an exercise price of $0.01 per share. The sole shareholder of GAFI received 100,000 common stock of the Company as consideration. On July 10, 2017, the Company issued the 100,000 shares and recognized $0.1 million of stock compensation expense during the year ended December 31, 2017.
After consideration of the above agreements, we concluded that GAFI did not have sufficient equity to finance its activities without additional subordinated financial support. Additionally, GAFI’s shareholder did not have a controlling financial interest in the entity. Hence, we concluded that GAFI is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly affect the economic performance of the VIE and the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. In determining whether the Company is the primary beneficiary, a number of factors are considered, including the structure of the entity, contractual provisions that grant any additional rights to influence or control the economic performance of the VIE, and obligation to absorb significant losses. Through providing the GAFI Limited Guaranty and signing the GAFI Option Agreement, the Company took the risks related to operations, financing the Goodland plant, and agreed to meet the financial covenants for GAFI to be in existence. Based upon this assessment, the Company has the power to direct the activities of GAFI and has been determined to be the primary beneficiary of GAFI and accordingly, the assets, liabilities, and operations of GAFI are consolidated into those of the Company.
The following are the Balance Sheet and Statement of Operations of GAFI:
As of June 30, 2018, the Company had outstanding balance of $6.9 million under the Intercompany Revolving Notes. In the consolidation process, these intercompany borrowings and interest thereon were eliminated.
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6. Stock-Based Compensation |
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6. Stock Based Compensation | Plan Stock Options
Aemetis authorized the issuance of 3.2 million shares of common stock under its Zymetis 2006 Stock Plan and Amended and Restated 2007 Stock Plan (together, the “Company Stock Plans”), which include both incentive and non-statutory stock options. These options generally expire five to ten years from the date of grant with a general vesting term of 1/12th every three months and are exercisable at any time after vesting subject to continuation of employment.
On January18, 2018 and May 17, 2018, 725 and 423 thousand stock option grants were issued to employees and directors under the Company Stock Plans respectively. As of June 30, 2018, 2.9 million options are outstanding under the Company Stock Plans.
Inducement Equity Plan Options
In March 2016, the Board of Directors of the Company approved an Inducement Equity Plan authorizing the issuance of 100 thousand non-statutory stock options to purchase common stock. As of June 30, 2018, 12 thousand options were outstanding.
Common Stock Reserved for Issuance
The following is a summary of options granted under the Company Stock Plans:
As of June 30, 2018, there were 1.7 million options vested under all the Company Stock Plans.
Stock-based compensation for employees
Stock-based compensation is accounted for in accordance with the provisions of ASC 718, Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.
For the three months ended June 30, 2018 and 2017, the Company recorded stock compensation expense in the amount of $318 thousand and $195 thousand, respectively. For the six months ended June 30, 2018 and 2017, the Company recorded stock compensation expense in the amount of $581 thousand and $604 thousand, respectively.
Valuation and Expense Information
All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. We also estimate forfeitures of unvested stock options. To the extent actual forfeitures differ from our estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. Compensation cost is recorded only for vested options. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants and the plan.
There were 423 thousand options granted during the three months ended June 30, 2018. The weighted average fair value calculations for options granted during the three months ended June 30, 2018 are based on the following assumptions:
As of June 30, 2018, the Company had $1.2 million of total unrecognized compensation expense for employees, which the Company will amortize over the 2.0 years weighted average remaining term. |
7. Agreements |
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7. Agreements | Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2018 and the term can be automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all ethanol the Company produces to Kinergy Marketing or other marketing purchasers designated by the Company and all WDG the Company produces to A.L. Gilbert. The Company markets and sells DCO to A.L. Gilbert and other third parties. The Company’s relationships with J.D. Heiskell, Kinergy Marketing, and A.L. Gilbert are well established and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. Revenue is recognized upon delivery of ethanol to J. D. Heiskell as revenue recognition criteria have been met and any performance required of the Company subsequent to the sale to J.D. Heiskell is inconsequential. These agreements are ordinary purchase and sale agency agreements for the Keyes plant.
The J.D. Heiskell sales activity associated with the Corn Procurement and Working Capital Agreement during the three and six months ended June 30, 2018 and 2017 are as follows:
Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy Marketing and a Wet Distillers Grains Marketing Agreement with A.L. Gilbert. Under the terms of the agreements, subject to certain conditions, the Ethanol Marketing Agreement matures on August 31, 2018 and the Wet Distillers Grains Marketing Agreement matures on December 31, 2018 with automatic one-year renewals thereafter. For the three months ended June 30, 2018 and 2017, the Company expensed marketing costs of $0.7 million and $0.7 million for each period, respectively, under the terms of both the Ethanol and the Wet Distiller’s Grains Marketing agreements. For the six months ended June 30, 2018 and 2017, the Company expensed marketing costs of $1.4 million and $1.2 million, respectively.
As of June 30, 2018, the Company entered into forward purchase contracts for approximately 36 thousand tons of corn, which is the principal raw material for ethanol production. The delivery of this grain will be expected through September 2018.
As of June 30, 2018, the Company has forward sales commitments for approximately 50 thousand tons of WDG. These committed sales will be expected through September 2018.
Unrealized gains and losses on forward contracts and commitments, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment. |
8. Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. Segment Information | Aemetis recognizes two reportable geographic segments: “North America” and “India.” The “North America” operating segment includes the Company’s owned ethanol plant in Keyes, California and its technology research and development lab. As the Company’s technology gains market acceptance, this business segment will initially include its domestic commercial application of cellulosic ethanol technology, its plant construction projects and any acquisitions of ethanol or ethanol related technology facilities in North America.
The “India” operating segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing plant in Kakinada, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly.
Summarized financial information by reportable segment for the three and six months ended June 30, 2018 and 2017 follows:
North America: During the three and six months ended June 30, 2018, the Company’s revenues from ethanol, WDG, and corn oil were made pursuant to the Corn Procurement and Working Capital Agreement established between the Company and J.D. Heiskell. Sales of ethanol, WDG, and corn oil to J.D. Heiskell accounted for 99.7% of the Company’s North America segment revenues for both the three and six months ended June 30, 2018.
During the three and six months ended June 30, 2017, the Company’s revenues from ethanol, WDG, and corn oil were made pursuant to the Corn Procurement and Working Capital Agreement established between the Company and J.D. Heiskell. Sales of ethanol, WDG, and corn oil to J.D. Heiskell accounted for 99.6% of the Company’s North America segment revenues for the three and six months ended June 30, 2017, respectively.
India. During the three months ended June 30, 2018, two biodiesel customers accounted for 46% and 10% and one refined glycerin customer accounted for 11% of the Company’s consolidated India segment revenues, compared to two biodiesel customers accounting for 57% and 17% and no refined glycerin customers accounting for more than 10% of the Company’s consolidated India segment revenues in the three months ended June 30, 2017.
During the six months ended June 30, 2018, two biodiesel customers accounted for 54% and 11% and no refined glycerin customers accounted for more than 10% of the Company’s consolidated India segment revenues, compared to two biodiesel customers accounting for 54% and 13% and no refined glycerin customers accounting for more than 10% of the Company’s consolidated India segment revenues during the six months ended June 30, 2017.
Total assets by segment consist of the following:
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9. Related Party Transactions |
6 Months Ended |
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Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
9. Related Party Transactions | The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital, owned by Eric McAfee, $0.4 million in connection with employment agreements and expense reimbursements previously accrued as salaries expense and accrued liabilities. The balance accrued related to these employment agreements was $0.4 million as of June 30, 2018 and December 31, 2017. For the three months ended June 30, 2018 and 2017, the Company expensed $10 thousand and $6 thousand, respectively, to reimburse actual expenses incurred by McAfee Capital and related entities. For the six months ended June 30, 2018 and 2017, the Company expensed $24 thousand and $23 thousand, respectively, to reimburse actual expenses incurred by McAfee Capital and related entities. The Company previously prepaid $0.2 million to Redwood Capital, a company controlled by Eric McAfee, for the Company’s use of flight time on a corporate jet. As of June 30, 2018, $0.1 million remained as a prepaid expense. As consideration for the reaffirmation of guaranties required by Amendment No. 13 to the Note Purchase Agreement which the Company entered into with Third Eye Capital on March 1, 2017, the Company also agreed to pay $0.2 million in consideration to McAfee Capital in exchange for their willingness to provide the guaranties. The balance of $284 thousand and $342 thousand for guaranty fee remained as accrued liability as of June 30, 2018 and December 31, 2017 respectively. |
10. Subsequent Events |
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Subsequent Events [Abstract] | |
10. Subsequent Events |
Subordinated Debt Refinancing
On July 1, 2018, the Subordinated Notes with two accredited investors were amended to extend the maturity date until the earlier of (i) December 31, 2018; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; or (iii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10% cash extension fee was paid by adding the fee to the balance of the new Note and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. Accounting for the July 1, 2018 amendments and the refinancing terms of the Subordinated Notes will be evaluated in accordance with ASC 470-50 Debt – Modification and Extinguishment.
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11. Management's Plan |
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11. Management's Plan | The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. The Company has been required to remit substantially all excess cash from operations to the senior lender and it is therefore reliant on the senior lender to provide additional funding when required. In order to meet its obligations during the next 12 months, the Company will need to either refinance the Company’s debt or receive the continued cooperation of the senior lender. This dependence on the senior lender raises substantial doubt about the entity’s ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business:
Management believes that through the above actions, the Company will have the ability to generate capital liquidity to carry out the business plan for next 12 months. |
1. Nature of Activities and Summary of Significant Accounting Policies (Policies) |
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Nature of Activities | Headquartered in Cupertino, California, Aemetis is an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products through the conversion of first-generation ethanol and biodiesel plants into advanced biorefineries. Founded in 2006, we own and operate a 60 million gallon per year ethanol plant in the California Central Valley near Modesto where we manufacture and produce ethanol, wet distillers’ grains (WDG), condensed distillers solubles (CDS), and distillers’ corn oil (DCO). We also own and operate a 50 million gallon per year renewable chemical and advanced fuel production facility on the East Coast of India producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. We operate a research and development laboratory and hold a portfolio of patents and related technology licenses for the production of renewable fuels and biochemicals. |
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Basis of Presentation and Consolidation | These consolidated financial statements include the accounts of Aemetis, Inc., a Nevada corporation, and its wholly owned subsidiaries (collectively, Aemetis or the Company). Additionally, we consolidate all entities in which we have a controlling financial interest either directly or by option to acquire the interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. An enterprise must consolidate a variable interest entity (VIE) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
In July 2017, Goodland Advanced Fuels, Inc. (GAFI) acquired a partially completed ethanol plant in Goodland, Kansas, and as part of the transaction, GAFI entered into a note purchase agreement (GAFI Note Purchase Agreement) for a revolving loan (GAFI Revolving Loan) and term loan (GAFI Term Loan, and together with the GAFI Revolving Loan, the GAFI Loans) with Third Eye Capital Corporation (Third Eye Capital). The arrangement provided Aemetis with both an option agreement (GAFI Option Agreement) to acquire all of the outstanding stock from GAFI at $0.01 per share, as well as the ability for Aemetis, and its subsidiary Aemetis Advanced Products Keyes, Inc. (AAPK), to borrow portions of the GAFI Revolving Loan. In exchange, Aemetis and AAPK each provided a limited guaranty (GAFI Limited Guaranty). GAFI is thinly capitalized by its sole shareholders, and dependent on the terms of the agreements with Third Eye Capital and Aemetis to support its own activities. Additionally, the combination of the GAFI Limited Guaranty and the GAFI Option Agreement provide sufficient basis for Aemetis to direct the activities of GAFI. Upon application of the consolidation guidance in ASC 810 Consolidation, we determined that GAFI is a variable interest entity with Aemetis as the primary beneficiary. Accordingly, the consolidated financial statements include the account of GAFI. See “Part I, Item 1. Financial Statements – Note 5. Variable Interest Entity.” All intercompany balances and transactions have been eliminated in consolidation, including transactions between GAFI and Aemetis, Inc.
The accompanying consolidated condensed balance sheet as of June 30, 2018, the consolidated condensed statements of operations and comprehensive loss for the three and six months ended June 30, 2018 and 2017, and the consolidated condensed statements of cash flows for the six months ended June 30, 2018 and 2017 are unaudited. The consolidated condensed balance sheet as of December 31, 2017 was derived from the 2017 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2017 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the SEC. Certain information and footnote, disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the unaudited interim consolidated condensed financial statements for the three and six months ended June 30, 2018 and 2017 have been prepared on the same basis as the audited consolidated statements as of December 31, 2017 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods. |
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Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. |
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Revenue Recognition | In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance stated that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations regarding whether an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company adopted this guidance on January 1, 2018 using the modified retrospective approach. There was no cumulative impact to retained earnings. We assessed all of our revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition.
We derive revenue primarily from sales of ethanol and related co-products in North America, and biodiesel and refined glycerin in India based on the supply agreements and PO contracts. We assessed the following criteria under the guidance: i) identify the contracts with customer, ii) identify the performance obligations in the contract, iii) determine the transaction price, iv) allocate the transaction price to the performance obligations, and v) recognize revenue when the entity satisfies the performance obligations.
In North America, we sell the majority of our production to one customer under a supply contract, with individual sales transactions occurring under this contract. Given the similarity of these transactions, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to the tank of J.D. Heiskell & Co. (J.D. Heiskell) or to one of their contracted trucking companies. At this point in time, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy Marketing for ethanol and by A.L. Gilbert on WDG and DCO. There is no transaction price allocation needed.
The below table shows our sales in North America by product category:
In India where we sell product on purchase orders (written or verbal) or by contract with governmental or international parties, the performance obligation is satisfied by delivery and acceptance of the physical product. When the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined based on reference market prices for biodiesel and refined glycerin every day net of taxes. There is no transaction price allocation needed.
The below table shows our sales in India by product category:
We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in some contractual agreements.
In North America, we buy corn as feedstock in producing ethanol from our working capital partner J.D. Heiskell and we sell all ethanol, WDG, and corn oil produced in this process to J.D. Heiskell. Our finished goods tank is leased by J.D. Heiskell and they require us to transfer legal title to the product upon transfer of our finished ethanol to this location. We consider the purchase of corn as a cost of goods sold and the sale of ethanol upon transfer to the finished goods tank as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have a legal title to the goods during the processing time. Revenues from sales of ethanol and its co-products are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. The Company has elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized as expenses when revenue is recognized. Revenues are recorded at the gross invoiced amount.
In India, we occasionally enter into contracts where a customer provides feedstock and we process the feedstock into biodiesel and sell to the same customer. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel as long as it resides on premises. Hence, we are the principal in both North America and India sales scenarios where our customer and vendor are the same.
Based upon the timing of the transfer of control of our products to our customers, there are no contract assets or liabilities as of June 30, 2018.
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year. |
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Cost of Goods Sold | Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense. |
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Accounts Receivable | The Company sells ethanol, WDG, CDS, and DCO through third-party marketing arrangements generally without requiring collateral. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30 days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts.
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and it requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We did not reserve any balance for allowances for doubtful accounts as of June 30, 2018 and December 31, 2017. |
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Inventories | Ethanol inventory, raw materials, and work-in-process are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (NRV). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. |
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Property, Plant and Equipment | Property, plant and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of buildings, furniture, machinery, equipment, land, and the plants in Keyes, California (Keyes plant), Goodland, Kansas (GAFI plant) and Kakinada, India (Kakinada plant). The GAFI plant is partially completed and is not ready for operation; hence, we are not depreciating these assets yet. Otherwise, it is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.
The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment –Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value. |
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Basic and Diluted Net Loss per Share. | Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and six months ended June 30, 2018 and 2017, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.
The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of June 30, 2018 and 2017:
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Comprehensive Loss | ASC 220 Comprehensive Income requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive income (loss) and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary. |
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Foreign Currency Translation/Transactions | Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation, adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates. Gains and losses from other foreign currency transactions are recorded in other income (expense). |
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Operating Segments | Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Aemetis recognized two reportable geographic segments: “North America” and “India.”
The “North America” operating segment includes the Company’s 60 million gallons per year capacity Keyes plant in Keyes, California, the GAFI plant in Goodland, Kansas and the research and development facility in St. Paul, Minnesota`.
The “India” operating segment encompasses the Company’s 50 million gallon per year capacity Kakinada plant in Kakinada, India, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. |
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Share-Based Compensation | The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation, requiring the Company to recognize expense related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted adjusted to reflect only those shares that are expected to vest. |
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Commitments and Contingencies | The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. |
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Debt Modification Accounting | The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt – Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.
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Convertible Instruments | The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date. |
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Recently Issued Accounting Pronouncements | In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, with certain exceptions. ASU 2018-07 supersedes the guidance in ASC 505-50, Equity-Based Payments to Non-Employees, which previously included the accounting for non-employee awards. The standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company does not intend to early adopt and is in the process of determining the impact of adoption of this standard on its financial statements.
For a complete summary of the Company’s significant accounting policies, please refer to Note 1, “Nature of Activities and Summary of Significant Accounting Policies,” included with the Company’s audited financial statements and notes thereto for the years ended December 31, 2017 and 2016, filed with the Securities and Exchange Commission on March 29, 2018. |
1. Nature of Activities and Summary of Significant Accounting Policies (Tables) |
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Disaggregation of revenue | The below table shows our sales in North America by product category:
The below table shows our sales in India by product category:
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Schedule of dilutive securities |
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2. Inventories (Tables) |
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Schedule of Inventories |
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3. Property, Plant and Equipment (Tables) |
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Schedule of Property, plant and equipment |
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Depreciation of property, plant, and equipment |
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4. Debt (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure 4.Notes Payable Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes Payable |
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Maturities of Long-term Debt |
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5. Variable Interest Entity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity Tables Abstract | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable interest entity, balance sheet and operations |
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6. Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Third Eye Capital Revenue Participation Term Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of options granted under employee stock plans |
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Assumptions for options granted |
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7. Agreements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure 7.Agreements Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of working capital agreement activity |
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8. Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information |
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Schedule of segment assets |
|
1. Nature of Activities and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Sales | $ 45,028 | $ 40,764 | $ 88,046 | $ 72,338 |
North America | ||||
Sales | 39,628 | 35,465 | 76,804 | 65,418 |
North America | Ethanol sales | ||||
Sales | 30,129 | 28,130 | 58,341 | 51,675 |
North America | Wet distiller's grains sales | ||||
Sales | 8,499 | 6,457 | 16,327 | 12,038 |
North America | Other sales | ||||
Sales | 1,000 | 878 | 2,136 | 1,705 |
India | ||||
Sales | 5,400 | 5,299 | 11,242 | 6,920 |
India | Biodiesel sales | ||||
Sales | 3,841 | 4,100 | 8,342 | 4,933 |
India | Refined Glycerin sales | ||||
Sales | $ 1,559 | $ 1,199 | $ 2,900 | $ 1,987 |
1. Nature of Activities and Summary of Significant Accounting Policies (Details 1 - shares |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Accounting Policies [Abstract] | ||
Series B preferred (post split basis) | 132 | 133 |
Common stock options and warrants | 3,206 | 2,589 |
Debt with conversion feature at $30 per share of common stock | 1,222 | 1,188 |
Total number of potentially dilutive shares excluded from the diluted net loss per share calculation | 4,560 | 3,910 |
2. Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventories Details Abstract | ||
Raw materials | $ 3,585 | $ 2,829 |
Work-in-progress | 2,102 | 1,605 |
Finished goods | 1,010 | 1,303 |
Total inventories | $ 6,697 | $ 5,737 |
3. Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property Plant And Equipment | ||
Land | $ 2,709 | $ 2,747 |
Plant and Buildings | 82,642 | 82,652 |
Furniture and fixtures | 1,039 | 1,003 |
Machinery and equipment | 3,909 | 3,972 |
Construction in progress | 1,837 | 941 |
GAFI property, plant & equipment | 15,408 | 15,408 |
Total gross property, plant & equipment | 107,544 | 106,723 |
Less accumulated depreciation | (29,841) | (27,886) |
Total net property, plant & equipment | $ 77,703 | $ 78,837 |
3. Property, Plant and Equipment (Details 1) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Plant and Buildings | Minimum | |
Depreciation (years) | 20 years |
Plant and Buildings | Maximum [Member] | |
Depreciation (years) | 30 years |
Machinery and Equipment | Minimum | |
Depreciation (years) | 5 years |
Machinery and Equipment | Maximum [Member] | |
Depreciation (years) | 7 years |
Furniture and Fixtures | Minimum | |
Depreciation (years) | 3 years |
Furniture and Fixtures | Maximum [Member] | |
Depreciation (years) | 5 years |
3. Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Property Plant And Equipment Details Narrative Abstract | ||||
Depreciation expense | $ 1,149 | $ 1,152 | $ 2,299 | $ 2,298 |
4. Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt | ||
Third Eye Capital term notes | $ 7,022 | $ 6,931 |
Third Eye Capital revolving credit facility | 41,117 | 35,371 |
Third Eye Capital revenue participation term notes | 11,792 | 11,636 |
Third Eye Capital acquisition term notes | 23,500 | 20,048 |
Third Eye Capital promissory note | 2,082 | 0 |
Cilion shareholder Seller note payable | 5,898 | 5,824 |
Subordinated notes | 9,391 | 8,725 |
EB-5 long term promissory notes | 36,658 | 36,039 |
Unsecured working capital loans | 4,711 | 4,861 |
GAFI Term and Revolving loans | 26,180 | 24,351 |
Total debt | 168,351 | 153,786 |
Less current portion of debt | 19,418 | 15,625 |
Total long term debt | $ 148,933 | $ 138,161 |
4. Debt (Details 1) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Twelve months ended June 30, | |
2019 | $ 19,418 |
2020 | 133,327 |
2021 | 14,000 |
2022 | 3,398 |
Total debt | 170,143 |
Debt issuance costs | (1,792) |
Total debt, net of debt issuance costs | $ 168,351 |
4. Debt (Details Narrative) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Third Eye Capital Term Notes | |||
Principal and interest outstanding | $ 7,000 | ||
Third Eye Capital Revolving Credit Facility | |||
Principal and interest outstanding | 41,100 | ||
Third Eye Capital Revenue Participation Term Note | |||
Principal and interest outstanding | 11,800 | ||
Third Eye Capital Acquisition Term Notes | |||
Principal and interest outstanding | 23,500 | ||
Cilion shareholder Seller notes payable | |||
Principal and interest outstanding | 5,900 | ||
Subordinated Notes | |||
Principal and interest outstanding | 9,400 | $ 8,700 | |
EB-5 long-term promissory notes | |||
Principal and interest outstanding | 35,000 | ||
Outstanding accrued interest | 1,700 | ||
Unsecured working capital loans | |||
Principal and interest outstanding | 1,300 | 1,300 | |
Principal and interest payments made | 2,700 | $ 2,300 | |
Unsecured working capital loans - Gemini | |||
Principal and interest outstanding | 3,400 | $ 3,500 | |
Principal and interest payments made | $ 5,400 | $ 2,800 |
6. Stock-Based Compensation (Details) - Employee Stock Plan |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Shares Available for Grant, Beginning | 196 |
Shares Available for Grant, Authorized | 655 |
Shares Available for Grant, Granted | (1,148) |
Shares Available for Grant, Forfeited/Expired | 414 |
Shares Available for Grant, Ending | 117 |
Number of Shares Outstanding, Beginning | 2,189 |
Number of Shares Authorized | 0 |
Number of Shares Granted | 1,148 |
Number of Shares Exercised | (2) |
Number of Shares Forfeited/Expired | (414) |
Number of Shares Outstanding, Ending | 2,921 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 2.70 |
Weighted Average Exercise Price Authorized | $ / shares | 0.00 |
Weighted Average Exercise Price Granted | $ / shares | 1.07 |
Weighted Average Exercise Price Exercised | $ / shares | 0.67 |
Weighted Average Exercise Price Forfeited/Expired | $ / shares | 4.38 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 1.82 |
6. Stock-Based Compensation (Details 1) |
3 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
| |
Stock-based Compensation | |
Dividend-yield | 0.00% |
Risk-free interest rate | 3.04% |
Expected volatility | 85.60% |
Expected life (years) | 6 years 5 months 23 days |
Market value per share on grant date | $ 1.71 |
Fair value per share on grant date | $ 1.28 |
6. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Stockbased Compensation Details Narrative Abstract | ||||
Stock compensation expense | $ 318 | $ 195 | $ 581 | $ 604 |
Unrecognized compensation expense | $ 1,200 | $ 1,200 | ||
Unrecognized compensation expense, recognition period | 2 years |
7. Agreements (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Agreements Details Abstract | ||||
Ethanol sales | $ 30,129 | $ 28,130 | $ 58,341 | $ 51,675 |
Wet distiller's grains sales | 8,499 | 6,457 | 16,327 | 12,038 |
Corn oil sales | 893 | 852 | 1,816 | 1,650 |
Corn/Milo purchases | 28,760 | 26,338 | 56,505 | 49,727 |
Accounts receivable | 852 | 384 | 852 | 384 |
Accounts payable | $ 2,241 | $ 1,719 | $ 2,241 | $ 1,719 |
7. Agreements (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Agreements Details Narrative Abstract | ||||
Marketing costs | $ 700 | $ 700 | $ 1,400 | $ 1,200 |
8. Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues | $ 45,028 | $ 40,764 | $ 88,046 | $ 72,338 |
Cost of goods sold | 42,260 | 39,059 | 83,412 | 71,220 |
Gross profit | 2,768 | 1,705 | 4,634 | 1,118 |
Expenses | ||||
Research and development expenses | 55 | 110 | 117 | 196 |
Selling, general and administrative expenses | 3,589 | 3,262 | 7,396 | 6,557 |
Interest rate expense | 5,351 | 4,328 | 14,379 | 8,853 |
Other expense | (5) | (8) | 63 | 20 |
Income (loss) before income taxes | (6,222) | (5,987) | (17,321) | (14,508) |
Capital expenditures | 775 | 467 | 1,771 | 511 |
Depreciation | 1,149 | 1,152 | 2,299 | 2,298 |
North America | ||||
Revenues | 39,628 | 35,465 | 76,804 | 65,418 |
Cost of goods sold | 37,079 | 34,359 | 73,061 | 65,008 |
Gross profit | 2,549 | 1,106 | 3,743 | 410 |
Expenses | ||||
Research and development expenses | 55 | 110 | 117 | 196 |
Selling, general and administrative expenses | 3,420 | 2,867 | 6,935 | 5,891 |
Interest rate expense | 5,199 | 4,271 | 14,083 | 8,828 |
Other expense | (2) | (11) | 43 | 38 |
Income (loss) before income taxes | (6,123) | (6,131) | (17,435) | (14,543) |
Capital expenditures | 567 | 340 | 1,057 | 383 |
Depreciation | 992 | 997 | 1,984 | 1,995 |
India | ||||
Revenues | 5,400 | 5,299 | 11,242 | 6,920 |
Cost of goods sold | 5,181 | 4,700 | 10,351 | 6,212 |
Gross profit | 219 | 599 | 891 | 708 |
Expenses | ||||
Research and development expenses | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | 169 | 395 | 461 | 666 |
Interest rate expense | 152 | 57 | 296 | 25 |
Other expense | (3) | 3 | 20 | (18) |
Income (loss) before income taxes | (99) | 144 | 114 | 35 |
Capital expenditures | 208 | 127 | 714 | 128 |
Depreciation | $ 157 | $ 155 | $ 315 | $ 303 |
8. Segment Information (Details 1) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | $ 93,128 | $ 94,331 |
North America | ||
Assets | 78,854 | 80,479 |
India | ||
Assets | $ 14,274 | $ 13,852 |
9. Related Party Transactions (Details Narrative) - Eric McAfee and McAfee Capital - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Related party debt | $ 400 | $ 400 | $ 400 | ||
Related party transaction | $ 10 | $ 6 | $ 24 | $ 23 |
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