(State or other jurisdiction of | (I.R.S. Employer Identification No.) | ||||
incorporation or organization) | |||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $0.001 Par Value Per Share | ||||||||
(Nasdaq Capital Market) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
☒ | Smaller reporting company | |||||||||||||
Emerging growth |
Page | |||||||||||
PART I | |||||||||||
Item 1. | |||||||||||
F-1 | |||||||||||
F-3 | |||||||||||
F-4 | |||||||||||
F-6 | |||||||||||
F-8 | |||||||||||
Item 2 | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. |
March 31, 2021 | December 31, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Derivative commodity asset | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Noncurrent assets | |||||||||||
Fixed assets, at cost | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Fixed assets, net | |||||||||||
Finance lease right-of-use assets | |||||||||||
Operating lease right-of use assets | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
LIABILITIES, TEMPORARY EQUITY, AND EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Dividends payable | |||||||||||
Finance lease liability-current | |||||||||||
Operating lease liability-current | |||||||||||
Current portion of long-term debt, net of unamortized finance costs | |||||||||||
Revolving note | |||||||||||
Derivative commodity liability | |||||||||||
Total current liabilities | |||||||||||
Long-term liabilities | |||||||||||
Long-term debt, net of unamortized finance costs | |||||||||||
Finance lease liability-long-term | |||||||||||
Operating lease liability-long-term | |||||||||||
Derivative warrant liability | |||||||||||
Total liabilities | |||||||||||
COMMITMENTS AND CONTINGENCIES (Note 3) | |||||||||||
TEMPORARY EQUITY | |||||||||||
Series B Convertible Preferred Stock, $ | |||||||||||
Series B1 Convertible Preferred Stock, $ | |||||||||||
Redeemable non-controlling interest | |||||||||||
Total temporary equity | |||||||||||
EQUITY | |||||||||||
Series A Convertible Preferred Stock, $ | |||||||||||
Series C Convertible Preferred Stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total Vertex Energy, Inc. stockholders' equity | |||||||||||
Non-controlling interest | |||||||||||
Total equity | |||||||||||
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY | $ | $ |
Three Months Ended March 31, | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Revenues | $ | $ | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | |||||||||||||||||
Depreciation and amortization attributable to costs of revenues | |||||||||||||||||
Gross profit | |||||||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||
Depreciation and amortization attributable to operating expenses | |||||||||||||||||
Total operating expenses | |||||||||||||||||
Income from operations | |||||||||||||||||
Other income (expense): | |||||||||||||||||
Other income | |||||||||||||||||
Gain on sale of assets | |||||||||||||||||
Gain (loss) on change in value of derivative warrant liability | ( | ||||||||||||||||
Interest expense | ( | ( | |||||||||||||||
Total other income (expense) | ( | ||||||||||||||||
Income before income tax | |||||||||||||||||
Income tax benefit (expense) | |||||||||||||||||
Net income | |||||||||||||||||
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest | ( | ||||||||||||||||
Net income attributable to Vertex Energy, Inc. | |||||||||||||||||
Accretion of redeemable noncontrolling interest to redemption value | ( | ( | |||||||||||||||
Accretion of discount on Series B and B1 Preferred Stock | ( | ( | |||||||||||||||
Dividends on Series B and B1 Preferred Stock | ( | ||||||||||||||||
Net income (loss) available to common shareholders | $ | $ | ( | ||||||||||||||
Income (loss) per common share | |||||||||||||||||
Basic | $ | $ | ( | ||||||||||||||
Diluted | $ | $ | ( | ||||||||||||||
Shares used in computing earnings per share | |||||||||||||||||
Basic | |||||||||||||||||
Diluted |
Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Series A Preferred | Series C Preferred | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | $ | Shares | $ | Shares | $ | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance on January 1, 2021 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of B1 warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchanges of Series B Preferred stock to common | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance on March 31, 2021 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Series A Preferred | Series C Preferred | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | $ | Shares | $ | Shares | $ | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance on January 1, 2020 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of shares of consolidated subsidiary | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of carrying amount of non-controlling interest | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance on March 31, 2020 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||
March 31, 2021 | March 31, 2020 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to cash provided by operating activities | |||||||||||
Stock based compensation expense | |||||||||||
Depreciation and amortization | |||||||||||
Loss (gain) on sale of assets | ( | ||||||||||
Bad debt and reduction in allowance for bad debt | |||||||||||
(Decrease) increase in fair value of derivative warrant liability | ( | ||||||||||
(Gain) loss on commodity derivative contracts | ( | ||||||||||
Net cash settlements on commodity derivatives | ( | ||||||||||
Amortization of debt discount and deferred costs | |||||||||||
Changes in operating assets and liabilities, net of effect of acquisition | |||||||||||
Accounts receivable | ( | ||||||||||
Inventory | ( | ||||||||||
Prepaid expenses | |||||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses | ( | ( | |||||||||
Other assets | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Internally developed software | ( | ||||||||||
Purchase of fixed assets | ( | ( | |||||||||
Proceeds from sale of fixed assets | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Payments on finance leases | ( | ( | |||||||||
Proceeds from exercise of stock warrants | |||||||||||
Contributions received from redeemable noncontrolling interest | |||||||||||
Line of credit (payments) proceeds, net | ( | ( | |||||||||
Payments on note payable | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Net change in cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents, and restricted cash at beginning of the period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
SUPPLEMENTAL INFORMATION | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid for taxes | $ | $ | |||||||||
NON-CASH INVESTING AND FINANCING TRANSACTIONS | |||||||||||
Exchanges of Series B Preferred Stock into common stock | $ | $ | |||||||||
Conversion of Series B Preferred Stock into common stock | $ | $ | |||||||||
Conversion of Series B1 Preferred Stock into common stock | $ | $ | |||||||||
Accretion of discount on Series B and B1 Preferred Stock | $ | $ | |||||||||
Dividends-in-kind accrued on Series B and B1 Preferred Stock | $ | ( | $ | ||||||||
Initial adjustment of carrying amount redeemable noncontrolling interests | $ | $ | |||||||||
Accretion of redeemable noncontrolling interest to redemption value | $ | $ | |||||||||
March 31, 2021 unaudited | March 31, 2020 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows | $ | $ |
Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | ||||||||||||||||||||||
% of Revenues | % of Receivables | % of Revenues | % of Receivables | ||||||||||||||||||||
Customer 1 | |||||||||||||||||||||||
Customer 2 | |||||||||||||||||||||||
Customer 3 | |||||||||||||||||||||||
Customer 4 | |||||||||||||||||||||||
% of Revenue by Segment | % Revenue by Segment | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||||||||
Black Oil | Refining | Recovery | Black Oil | Refining | Recovery | ||||||||||||||||||||||||||||||
Customer 1 | |||||||||||||||||||||||||||||||||||
Customer 2 | |||||||||||||||||||||||||||||||||||
Customer 3 | |||||||||||||||||||||||||||||||||||
Customer 4 | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | ||||||||||||||||||||
Primary Geographical Markets | |||||||||||||||||||||||
Northern United States | $ | $ | $ | $ | |||||||||||||||||||
Southern United States | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Sources of Revenue | |||||||||||||||||||||||
Base oil | $ | $ | $ | $ | |||||||||||||||||||
Pygas | |||||||||||||||||||||||
Industrial fuel | |||||||||||||||||||||||
Distillates | |||||||||||||||||||||||
Oil collection services | |||||||||||||||||||||||
Metals | |||||||||||||||||||||||
Other re-refinery products | |||||||||||||||||||||||
VGO/Marine fuel sales | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
Three Months Ended March 31, 2020 | |||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | ||||||||||||||||||||
Primary Geographical Markets | |||||||||||||||||||||||
Northern United States | $ | $ | $ | $ | |||||||||||||||||||
Southern United States | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Sources of Revenue | |||||||||||||||||||||||
Base oil | $ | $ | $ | $ | |||||||||||||||||||
Pygas | |||||||||||||||||||||||
Industrial fuel | |||||||||||||||||||||||
Oil collection services | |||||||||||||||||||||||
Metals | |||||||||||||||||||||||
Other re-refinery products | |||||||||||||||||||||||
VGO/Marine fuel sales | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
March 31, 2021 Unaudited | December 31, 2020 | ||||||||||
Accounts receivable trade | $ | $ | |||||||||
Allowance for doubtful accounts | ( | ( | |||||||||
Accounts receivable trade, net | $ | $ |
Creditor | Loan Type | Origination Date | Maturity Date | Loan Amount | Balance on March 31, 2021 | Balance on December 31, 2020 | ||||||||||||||||||||||||||
Encina Business Credit, LLC | Term Loan | February 1, 2017 | February 1, 2022 | $ | $ | $ | ||||||||||||||||||||||||||
Encina Business Credit SPV, LLC | Revolving Note | February 1, 2017 | February 1, 2022 | $ | ||||||||||||||||||||||||||||
Encina Business Credit, LLC | Capex Loan | August 7, 2020 | February 1, 2022 | $ | ||||||||||||||||||||||||||||
Wells Fargo Equipment Lease-Ohio | Finance Lease | April-May, 2019 | April-May, 2024 | $ | ||||||||||||||||||||||||||||
AVT Equipment Lease-Ohio | Finance Lease | April 2, 2020 | April 2, 2023 | $ | ||||||||||||||||||||||||||||
AVT Equipment Lease-HH | Finance Lease | May 22, 2020 | May 22, 2023 | $ | ||||||||||||||||||||||||||||
John Deere Note | Note | May 27, 2020 | June 24, 2024 | $ | ||||||||||||||||||||||||||||
Tetra Capital Lease | Finance Lease | May, 2018 | May, 2022 | $ | ||||||||||||||||||||||||||||
Well Fargo Equipment Lease-VRM LA | Finance Lease | March, 2018 | March, 2021 | $ | ||||||||||||||||||||||||||||
Texas Citizens Bank | PPP Loan | May 5, 2020 | April 28, 2022 | $ | ||||||||||||||||||||||||||||
Various institutions | Insurance premiums financed | Various | < 1 year | $ | ||||||||||||||||||||||||||||
Total | $ | $ | ||||||||||||||||||||||||||||||
Creditor | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Thereafter | |||||||||||||||||||||||||||||
Encina Business Credit, LLC | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Encina Business Credit, LLC | |||||||||||||||||||||||||||||||||||
John Deere Note | |||||||||||||||||||||||||||||||||||
Well Fargo Equipment Lease- Ohio | |||||||||||||||||||||||||||||||||||
AVT Equipment Lease-Ohio | |||||||||||||||||||||||||||||||||||
AVT Equipment Lease-HH | |||||||||||||||||||||||||||||||||||
Tetra Capital Lease | |||||||||||||||||||||||||||||||||||
Texas Citizens Bank | |||||||||||||||||||||||||||||||||||
Various institutions | |||||||||||||||||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||
Basic loss per Share | ||||||||||||||
Numerator: | ||||||||||||||
Net income (loss) available to common shareholders | $ | $ | ( | |||||||||||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | ||||||||||||||
Basic loss per share | $ | $ | ( | |||||||||||
Diluted Earnings per Share | ||||||||||||||
Numerator: | ||||||||||||||
Net income (loss) available to common shareholders | $ | $ | ( | |||||||||||
Denominator: | ||||||||||||||
Weighted-average shares outstanding | ||||||||||||||
Effect of dilutive securities | ||||||||||||||
Stock options and warrants | ||||||||||||||
Preferred stock | ||||||||||||||
Diluted weighted-average shares outstanding | ||||||||||||||
Diluted loss per share | $ | $ | ( |
2021 | 2020 | ||||||||||
Balance at beginning of period | $ | $ | |||||||||
Less: conversions of shares to common | ( | ||||||||||
Less: exchanges of shares to common | ( | ||||||||||
Plus: discount accretion | |||||||||||
Plus: dividends in kind | |||||||||||
Balance at end of period | $ | $ |
2021 | 2020 | ||||||||||
Balance at beginning of period | $ | $ | |||||||||
Less: conversions of shares to common | ( | ( | |||||||||
Plus: discount accretion | |||||||||||
Plus: dividends in kind | |||||||||||
Balance at end of period | $ | $ |
Level Three Roll-Forward | |||||||||||
2021 | 2020 | ||||||||||
Balance at beginning of period | $ | $ | |||||||||
Value of warrants exercised | ( | ||||||||||
Change in valuation of warrants | ( | ||||||||||
Balance at end of period | $ | $ | |||||||||
THREE MONTHS ENDED MARCH 31, 2021 | ||||||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Base oil | $ | $ | $ | $ | ||||||||||||||||||||||
Pygas | ||||||||||||||||||||||||||
Industrial fuel | ||||||||||||||||||||||||||
Distillates (1) | ||||||||||||||||||||||||||
Oil collection services | ||||||||||||||||||||||||||
Metals (2) | ||||||||||||||||||||||||||
Other re-refinery products (3) | ||||||||||||||||||||||||||
VGO/Marine fuel sales | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Income from operations | $ | $ | $ | $ | ||||||||||||||||||||||
THREE MONTHS ENDED MARCH 31, 2020 | ||||||||||||||||||||||||||
Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Base oil | $ | $ | $ | $ | ||||||||||||||||||||||
Pygas | ||||||||||||||||||||||||||
Industrial fuel | ||||||||||||||||||||||||||
Distillates (1) | ||||||||||||||||||||||||||
Oil collection services | ||||||||||||||||||||||||||
Metals (2) | ||||||||||||||||||||||||||
Other re-refinery products (3) | ||||||||||||||||||||||||||
VGO/Marine fuel sales | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | ||||||||||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | ||||||||||||||||||||||||||
Gross profit (loss) | ( | ( | ||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization attributable to operating expenses | ||||||||||||||||||||||||||
Income (loss) from operations | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
As of March 31, 2021 | ||||||||||||||
Contract Type | Contract Period | Weighted Average Strike Price (Barrels) | Remaining Volume (Barrels) | Fair Value | ||||||||||
Futures | Mar. 2021- Jun. 2021 | $ | $ | |||||||||||
As of December 31, 2020 | ||||||||||||||
Contract Type | Contract Period | Weighted Average Strike Price (Barrels) | Remaining Volume (Barrels) | Fair Value | ||||||||||
Futures | Dec. 2020-Mar. 2021 | $ | $ | ( | ||||||||||
Balance Sheet Classification | Contract Type | 2021 | 2020 | ||||||||
Crude oil futures | $ | $ | ( | ||||||||
Derivative commodity asset (liability) | $ | $ | ( |
March 31, 2021 | |||||||||||||||||||||||||||||
Facilities | Equipment | Plant | Railcar | Total | |||||||||||||||||||||||||
Year 1 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Year 2 | |||||||||||||||||||||||||||||
Year 3 | |||||||||||||||||||||||||||||
Year 4 | |||||||||||||||||||||||||||||
Year 5 | |||||||||||||||||||||||||||||
Thereafter | |||||||||||||||||||||||||||||
Total lease payments | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Less: interest | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Present value of lease liabilities | $ | $ | $ | $ | $ |
Remaining lease term and discount rate: | March 31, 2021 | |||||||
Weighted average remaining lease terms (years) | ||||||||
Lease facilities | ||||||||
Lease equipment | ||||||||
Lease plant | ||||||||
Lease railcar | ||||||||
Weighted average discount rate | ||||||||
Lease facilities | % | |||||||
Lease equipment | % | |||||||
Lease plant | % | |||||||
Lease railcar | % |
March 31, 2021 | March 31, 2020 | |||||||
Beginning balance | $ | $ | ||||||
Net loss attributable to redeemable non-controlling interest | ( | ( | ||||||
Change in ownership | ||||||||
Accretion of non-controlling interest to redemption value | ||||||||
Ending balance | $ | $ |
March 31, 2021 | March 31, 2020 | |||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net | ||||||||
Inventory | ||||||||
Prepaid expense and other current assets | ||||||||
Total current assets | ||||||||
Fixed assets, net | ||||||||
Finance lease right-of-use assets | ||||||||
Operating lease right-of-use assets | ||||||||
Intangible assets, net | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
Accounts payable | $ | $ | ||||||
Accrued expenses | ||||||||
Finance lease liability-current | ||||||||
Operating lease liability-current | ||||||||
Total current liabilities | ||||||||
Finance lease liability-long term | ||||||||
Operating lease liability-long term | ||||||||
Total liabilities | $ | $ |
March 31, 2021 | March 31, 2020 | |||||||
Beginning balance | $ | $ | ||||||
Initial adjustment of carrying amount of non-controlling interest | ||||||||
Net income (loss) attributable to redeemable non-controlling interest | ( | |||||||
Accretion of non-controlling interest to redemption value | ||||||||
Ending balance | $ | $ |
Black Oil(1) | Refining and Marketing(2) | Recovery(3) | |||||||||
Base oil | X | X | |||||||||
Pygas | X | ||||||||||
Industrial fuel | X | X | |||||||||
Distillates | X | ||||||||||
Oil collection services | X | ||||||||||
Metals | X | ||||||||||
Other re-refinery products | X | X | |||||||||
VGO/Marine fuel sales | X |
Three Months Ended March 31, | $ Change - Favorable (Unfavorable) | % Change - Favorable (Unfavorable) | |||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenues | $ | 58,083,993 | $ | 36,203,429 | $ | 21,880,564 | 60 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 43,346,274 | 26,836,854 | (16,509,420) | (62) | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 1,347,820 | 1,178,594 | (169,226) | (14) | % | ||||||||||||||||||
Gross profit* | 13,389,899 | 8,187,981 | 5,201,918 | 64 | % | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative expenses | 7,926,580 | 6,700,518 | (1,226,062) | (18) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 482,869 | 455,953 | (26,916) | (6) | % | ||||||||||||||||||
Total operating expenses | 8,409,449 | 7,156,471 | (1,252,978) | (18) | % | ||||||||||||||||||
Income from operations | 4,980,450 | 1,031,510 | 3,948,940 | 383 | % | ||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Other income | — | 80 | (80) | (100) | % | ||||||||||||||||||
Gain (loss) on asset sales | 1,424 | — | 1,424 | 100 | % | ||||||||||||||||||
Gain (loss) on change in value of derivative liability | (1,780,203) | 1,698,747 | (3,478,950) | (205) | % | ||||||||||||||||||
Interest expense | (236,333) | (340,086) | 103,753 | 31 | % | ||||||||||||||||||
Total other income (expense) | (2,015,112) | 1,358,741 | (3,373,853) | (248) | % | ||||||||||||||||||
Income before income tax | 2,965,338 | 2,390,251 | 575,087 | 24 | % | ||||||||||||||||||
Income tax benefit (expense) | — | — | — | — | % | ||||||||||||||||||
Net income | 2,965,338 | 2,390,251 | 575,087 | 24 | % | ||||||||||||||||||
Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest | 1,990,969 | (398,609) | 2,389,578 | 599 | % | ||||||||||||||||||
Net income attributable to Vertex Energy, Inc. | $ | 974,369 | $ | 2,788,860 | $ | (1,814,491) | (65) | % | |||||||||||||||
Three Months Ended March 31, | $ Change - Favorable (Unfavorable) | % Change - Favorable (Unfavorable) | |||||||||||||||||||||
Black Oil Segment | 2021 | 2020 | |||||||||||||||||||||
Revenues | $ | 32,158,248 | $ | 29,531,370 | $ | 2,626,878 | 9 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 19,836,446 | 20,066,240 | 229,794 | 1 | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 1,074,260 | 936,895 | (137,365) | (15) | % | ||||||||||||||||||
Gross profit* | 11,247,542 | 8,528,235 | 2,719,307 | 32 | % | ||||||||||||||||||
Selling general and administrative expense | 6,421,696 | 5,411,222 | (1,010,474) | (19) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 353,948 | 335,105 | (18,843) | (6) | % | ||||||||||||||||||
Income from operations | $ | 4,471,898 | $ | 2,781,908 | $ | 1,689,990 | 61 | % | |||||||||||||||
Refining and Marketing Segment | |||||||||||||||||||||||
Revenues | $ | 19,273,952 | $ | 2,510,593 | $ | 16,763,359 | 668 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 18,150,770 | 2,596,052 | (15,554,718) | (599) | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 125,634 | 105,768 | (19,866) | (19) | % | ||||||||||||||||||
Gross profit* | 997,548 | (191,227) | 1,188,775 | 622 | % | ||||||||||||||||||
Selling general and administrative expense | 759,410 | 592,389 | (167,021) | (28) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 108,471 | 100,398 | (8,073) | (8) | % | ||||||||||||||||||
Income (loss) from operations | $ | 129,667 | $ | (884,014) | $ | 1,013,681 | 115 | % | |||||||||||||||
Recovery Segment | |||||||||||||||||||||||
Revenues | $ | 6,651,793 | $ | 4,161,466 | $ | 2,490,327 | 60 | % | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 5,359,058 | 4,174,562 | (1,184,496) | (28) | % | ||||||||||||||||||
Depreciation and amortization attributable to costs of revenues | 147,926 | 135,931 | (11,995) | (9) | % | ||||||||||||||||||
Gross profit* | 1,144,809 | (149,027) | 1,293,836 | 868 | % | ||||||||||||||||||
Selling general and administrative expense | 745,474 | 696,907 | (48,567) | (7) | % | ||||||||||||||||||
Depreciation and amortization attributable to operating expenses | 20,450 | 20,450 | — | — | % | ||||||||||||||||||
Income (loss) from operations | $ | 378,885 | $ | (866,384) | $ | 1,245,269 | 144 | % | |||||||||||||||
2021 | ||||||||||||||||||||||||||
Benchmark | High | Date | Low | Date | ||||||||||||||||||||||
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon) | $ | 1.79 | March 12 | $ | 1.32 | January 4 | ||||||||||||||||||||
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon) | $ | 2.13 | March 11 | $ | 1.36 | January 4 | ||||||||||||||||||||
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel) | $ | 59.54 | March 5 | $ | 45.08 | January 4 | ||||||||||||||||||||
NYMEX Crude oil (dollars per barrel) | $ | 66.09 | March 5 | $ | 47.62 | January 4 | ||||||||||||||||||||
Reported in Platt's US Marketscan (Gulf Coast) |
2020 | ||||||||||||||||||||||||||
Benchmark | High | Date | Low | Date | ||||||||||||||||||||||
U.S. Gulfcoast No. 2 Waterborne (dollars per gallon) | $ | 1.95 | January 3 | $ | 0.74 | March 18 | ||||||||||||||||||||
U.S. Gulfcoast Unleaded 87 Waterborne (dollars per gallon) | $ | 1.75 | January 3 | $ | 0.40 | March 23 | ||||||||||||||||||||
U.S. Gulfcoast Residual Fuel No. 6 3% (dollars per barrel) | $ | 47.34 | January 29 | $ | 15.64 | March 31 | ||||||||||||||||||||
NYMEX Crude oil (dollars per barrel) | $ | 63.27 | January 6 | $ | 20.09 | March 30 | ||||||||||||||||||||
Reported in Platt's US Marketscan (Gulf Coast) |
Creditor | Loan Type | Origination Date | Maturity Date | Loan Amount | Balance on March 31, 2021 | Balance on December 31, 2020 | ||||||||||||||||||||||||||
Encina Business Credit, LLC | Term Loan | February 1, 2017 | February 1, 2022 | $ | 20,000,000 | $ | 5,208,000 | $ | 5,433,000 | |||||||||||||||||||||||
Encina Business Credit SPV, LLC | Revolving Note | February 1, 2017 | February 1, 2022 | $ | 10,000,000 | — | 133,446 | |||||||||||||||||||||||||
Encina Business Credit, LLC | Capex Loan | August 7, 2020 | February 1, 2022 | $ | 2,000,000 | 1,286,603 | 1,378,819 | |||||||||||||||||||||||||
Wells Fargo Equipment Lease-Ohio | Finance Lease | April-May, 2019 | April-May, 2024 | $ | 621,000 | 406,765 | 436,411 | |||||||||||||||||||||||||
AVT Equipment Lease-Ohio | Finance Lease | April 2, 2020 | April 2, 2023 | $ | 466,030 | 350,086 | 380,829 | |||||||||||||||||||||||||
AVT Equipment Lease-HH | Finance Lease | May 22, 2020 | May 22, 2023 | $ | 551,609 | 414,632 | 450,564 | |||||||||||||||||||||||||
John Deere Note | Note | May 27, 2020 | June 24, 2024 | $ | 152,643 | 122,063 | 131,303 | |||||||||||||||||||||||||
Tetra Capital Lease | Finance Lease | May, 2018 | May, 2022 | $ | 419,690 | 148,309 | 172,235 | |||||||||||||||||||||||||
Well Fargo Equipment Lease-VRM LA | Finance Lease | March, 2018 | March, 2021 | $ | 30,408 | — | 1,804 | |||||||||||||||||||||||||
Texas Citizens Bank | PPP Loan | May 5, 2020 | April 28, 2022 | $ | 4,222,000 | 4,222,000 | 4,222,000 | |||||||||||||||||||||||||
Various institutions | Insurance premiums financed | Various | < 1 year | $ | 2,902,428 | 473,417 | 1,183,543 | |||||||||||||||||||||||||
Total | $ | 12,631,875 | $ | 13,923,954 | ||||||||||||||||||||||||||||
Creditor | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Thereafter | |||||||||||||||||||||||||||||
Encina Business Credit, LLC | $ | 5,208,000 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Encina Business Credit, LLC | 1,286,603 | — | — | — | — | — | |||||||||||||||||||||||||||||
John Deere Note | 37,528 | 38,459 | 39,413 | 6,663 | — | — | |||||||||||||||||||||||||||||
Well Fargo Equipment Lease- Ohio | 122,458 | 128,908 | 135,698 | 19,701 | — | — | |||||||||||||||||||||||||||||
AVT Equipment Lease-Ohio | 129,676 | 141,111 | 79,299 | — | — | — | |||||||||||||||||||||||||||||
AVT Equipment Lease-HH | 151,568 | 164,934 | 98,130 | — | — | — | |||||||||||||||||||||||||||||
Tetra Capital Lease | 99,832 | 48,477 | — | — | — | — | |||||||||||||||||||||||||||||
Texas Citizens Bank | 1,877,461 | 2,344,539 | — | — | — | — | |||||||||||||||||||||||||||||
Various institutions | 473,417 | — | — | — | — | — | |||||||||||||||||||||||||||||
Totals | $ | 9,386,543 | $ | 2,866,428 | $ | 352,540 | $ | 26,364 | $ | — | $ | — | |||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
Beginning cash, cash equivalents and restricted cash | $ | 10,995,169 | $ | 4,199,825 | ||||||||||
Net cash provided by (used in): | ||||||||||||||
Operating activities | 2,189,096 | 3,115,008 | ||||||||||||
Investing activities | (1,017,379) | (491,409) | ||||||||||||
Financing activities | 359,943 | 9,571,772 | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,531,660 | 12,195,371 | ||||||||||||
Ending cash, cash equivalents and restricted cash | $ | 12,526,829 | $ | 16,395,196 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filed or Furnished Herewith | Form | Exhibit | Filing Date/Period End Date | File No. | ||||||||||||||||||||||||||||||||
10.1 | S-8 | 4.3 | 2/25/2021 | 333-253523 | ||||||||||||||||||||||||||||||||||
10.2 | S-8 | 4.5 | 2/25/2021 | 333-253523 | ||||||||||||||||||||||||||||||||||
10.3 | S-8 | 4.6 | 2/25/2021 | 333-253523 | ||||||||||||||||||||||||||||||||||
10.4 | 8-K | 10.1 | 2/26/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
10.5 | 8-K | 10.1 | 3/5/2021 | 001-11476 | ||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||
32.2 | X | |||||||||||||||||||||||||||||||||||||
99.1 | 10-K | 99.1 | 12/31/2012 | 001-11476 | ||||||||||||||||||||||||||||||||||
101* | Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q | X | ||||||||||||||||||||||||||||||||||||
104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set | X |
VERTEX ENERGY, INC. | |||||
Date: May 12, 2021 | By: /s/ Benjamin P. Cowart | ||||
Benjamin P. Cowart | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: May 12, 2021 | By: /s/ Chris Carlson | ||||
Chris Carlson | |||||
Chief Financial Officer | |||||
(Principal Financial/Accounting Officer) |
Date: May 12, 2021 | By: | /s/ Benjamin P. Cowart | ||||||
Benjamin P. Cowart Chief Executive Officer (Principal Executive Officer) |
Date: May 12, 2021 | By: | /s/ Chris Carlson | ||||||
Chris Carlson Chief Financial Officer (Principal Financial/Accounting Officer) |
Date: May 12, 2021 | By: | /s/ Benjamin P. Cowart | ||||||
Benjamin P. Cowart Chief Executive Officer (Principal Executive Officer) |
Date: May 12, 2021 | By: | /s/ Chris Carlson | ||||||
Chris Carlson Chief Financial Officer (Principal Financial/Accounting Officer) |
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, par value (in dollars per share) | 0.001 | |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | 0.001 | 0.001 |
Series C Preferred Stock | ||
Preferred stock, par value (in dollars per share) | 0.001 | $ 0.001 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 |
BASIS OF PRESENTATION AND NATURE OF OPERATIONS |
3 Months Ended |
---|---|
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND NATURE OF OPERATIONS | BASIS OF PRESENTATION AND NATURE OF OPERATIONS The accompanying unaudited consolidated interim financial statements of Vertex Energy, Inc. (the "Company" or "Vertex Energy") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2020, contained in the Company's annual report, as filed with the SEC on Form 10-K on March 9, 2021 (the "Form 10-K"). The December 31, 2020 balance sheet was derived from the audited financial statements of our 2020 Form 10-K. In the opinion of management all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented, have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the most recent fiscal year 2020 as reported in Form 10-K have been omitted. Novel Coronavirus (COVID-19) In December 2019, a novel strain of coronavirus, which causes the infectious disease known as COVID-19, was reported in Wuhan, China. The World Health Organization declared COVID-19 a “Public Health Emergency of International Concern” on January 30, 2020 and a global pandemic on March 11, 2020. In March and April, many U.S. states and local jurisdictions began issuing ‘stay-at-home’ orders, which continue in various forms as of the date of this report. Notwithstanding such ‘stay-at-home’ orders, to date, our operations have for the most part been deemed an essential business under applicable governmental orders based on the critical nature of the products we offer. We sell products and services primarily in the U.S. domestic oil and gas commodity markets. Throughout the first quarter of 2020, the industry experienced multiple factors which lowered both the demand for, and prices of, oil and gas. First, the COVID-19 pandemic lowered global demand for hydrocarbons, as social distancing and travel restrictions were implemented across the world. Second, the lifting of Organization of the Petroleum Exporting Countries (OPEC)+ supply curtailments, and the associated increase in production of oil, drove the global supply of hydrocarbons higher through the first quarter of 2020. As a result of both dynamics, prices for hydrocarbons declined 67% from peak prices within the first quarter of 2020. While global gross domestic product (GDP) growth was impacted by COVID-19 during 2020 and into the first quarter of 2021, we expect GDP to continue to be impacted globally for at least the early part of 2021, as a result of the COVID-19 pandemic. As a result, we expect oil and gas related markets will continue to experience significant volatility in 2021. Our goal through this downturn has been to remain disciplined in allocating capital and to focus on liquidity and cash preservation. We are taking the necessary actions to right-size the business for expected activity levels. As a result of the impact of the COVID-19 outbreak, some of our feedstock suppliers have permanently or temporarily closed their businesses, limited our access to their businesses, and/or have experienced a decreased demand for services. As a result of the above, and due to ‘stay-at-home’ and other social distancing orders, as well as the decline in U.S. travel caused by COVID-19, we have seen a significant decline in the volume of feedstocks (specifically used oil) that we have been able to collect, and therefore process through our facilities. A prolonged economic slowdown, period of social quarantine (imposed by the government or otherwise), or a prolonged period of decreased travel due to COVID-19 or the responses thereto, will likely continue to have a material negative adverse impact on our ability to produce products, and consequently our revenues and results of operations. The full extent of the impact of COVID-19 on our business and operations currently cannot be estimated and will depend on a number of factors including the scope and duration of the global pandemic, the efficacy of, ability to manufacture a sufficient amount of, and the willingness of the general public to obtain, vaccines. Currently we believe that we have sufficient cash on hand and will generate sufficient cash through operations to support our operations for the foreseeable future; however, we will continue to evaluate our business operations based on new information as it becomes available and will make changes that we consider necessary in light of any new developments regarding the pandemic. |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES | SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows.
The Company placed all the restricted cash in a money market account, to serve as collateral for payment of a credit card. Inventory Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals and are reported at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. The Company reviews its inventory commodities for impairment whenever events or circumstances indicate that the value may not be recoverable. Impairment of long-lived assets The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") regarding long-lived assets. It requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company determined that no long-lived asset impairment existed during the three months ended March 31, 2021. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations. Redeemable Noncontrolling Interests As more fully described in "Note 14. Share Purchase and Subscription Agreements", the Company is party to put/call option agreements with the holder of MG SPV’s and Heartland SPV's non-controlling interests. The put options permit MG SPV's and Heartland SPV's non-controlling interest holders, at any time on or after the earlier of (a) the fifth anniversary of the applicable closing date of such issuances and (ii) the occurrence of certain triggering events (an “MG Redemption” and "Heartland Redemption", as applicable) to require MG SPV and Heartland SPV to redeem the non-controlling interest from the holder of such interest. Per the agreements, the cash purchase price for such redeemed Class B Units (MG SPV) and Class A Units (Heartland SPV) is the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking an MG SPV Redemption and Heartland SPV Redemption and Vertex Operating, LLC, our wholly-owned subsidiary (“Vertex Operating”) (provided that Vertex Operating still owns Class A Units (as to MG SPV) or Class B Units (as to Heartland SPV) on such date, as applicable) and (z) the original per-unit price for such Class B Units/Class A Units plus any unpaid Class A/Class B preference. The preference is defined as the greater of (A) the aggregate unpaid “Class B/Class A Yield” (equal to an annual return of 22.5% per annum) and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class B/Class A Unit holders. The agreements also permit the Company to acquire the non-controlling interest from the holders thereof upon certain events. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. Based on this guidance, the Company has classified the MG SPV and Heartland SPV non-controlling interests between the liabilities and equity sections of the accompanying March 31, 2021 and December 31, 2020 consolidated balance sheets. If an equity instrument subject to the guidance is currently redeemable, the instrument is adjusted to its maximum redemption amount at the balance sheet date. If the equity instrument subject to the guidance is not currently redeemable but it is probable that the equity instrument will become redeemable (for example, when the redemption depends solely on the passage of time), the guidance permits either of the following measurement methods: (a) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, or (b) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The amount presented in temporary equity should be no less than the initial amount reported in temporary equity for the instrument. Because the MG SPV and Heartland SPV equity instruments will become redeemable solely based on the passage of time, the Company determined that it is probable that the MG SPV and Heartland SPV equity instruments will become redeemable. The Company has elected to apply the second of the two measurement options described above. An adjustment to the carrying amount of a non-controlling interest from the application of the above guidance does not impact net income or loss in the consolidated financial statements. Rather, such adjustments are treated as equity transactions. Variable Interest Entities The Company accounts for the investments it makes in certain legal entities in which equity investors do not have (1) sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support, (2) as a group (the holders of the equity investment at risk), either the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impacts the entity’s economic performance, or (3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity. These certain legal entities are referred to as “variable interest entities” or “VIEs.” The Company consolidates the results of any such entity in which it determines that it has a controlling financial interest. The Company has a “controlling financial interest” in such an entity if the Company has both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive benefits from, the VIE that could be potentially significant to the VIE. On a quarterly basis, the Company reassesses whether it has a controlling financial interest in any investments it has in these certain legal entities.
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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES |
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Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES | CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES At March 31, 2021 and 2020 and for each of the three months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:
For each of the three months ended March 31, 2021 and 2020, the Company's segment revenues were comprised of the following customer concentrations:
The Company had one and no vendors that represented 10% of total purchases or payables for the three months ended March 31, 2021 and 2020, respectively. The Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for petroleum-based products. Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future. A substantial or extended decline in such prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, access to capital, and the quantities of petroleum-based products that the Company can economically produce. Litigation The Company, in its normal course of business, is involved in various other claims and legal action. In the opinion of management, the outcome of these claims and actions will not have a material adverse impact upon the financial position of the Company. We are currently party to the following material litigation proceedings: Vertex Refining LA, LLC ("Vertex Refining LA"), the wholly-owned subsidiary of Vertex Operating was named as a defendant, along with numerous other parties, in five lawsuits filed on or about February 12, 2016, in the Second Parish Court for the Parish of Jefferson, State of Louisiana, Case No. 121749, by Russell Doucet et. al., Case No. 121750, by Kendra Cannon et. al., Case No. 121751, by Lashawn Jones et. al., Case No. 121752, by Joan Strauss et. al. and Case No. 121753, by Donna Allen et. al. The suits relate to alleged noxious and harmful emissions from our facility located in Marrero, Louisiana. The suits seek damages for physical and emotional injuries, pain and suffering, medical expenses and deprivation of the use and enjoyment of plaintiffs’ homes. We intend to vigorously defend ourselves and oppose the relief sought in the complaints, provided that at this stage of the litigation, the Company has no basis for determining whether there is any likelihood of material loss associated with the claims and/or the potential and/or the outcome of the litigation. On November 17, 2020, Vertex filed a lawsuit against Penthol LLC (“Penthol”) in the District Court for the 61st Judicial District, Harris County, Texas (Cause No. 2020-65269), for breach of contract and simultaneously sought a Temporary Injunction enjoining Penthol from, among other things, circumventing Vertex in violation of the terms of that certain June 5, 2016 Sales Representative and Marketing Agreement entered into between Vertex Operating and Penthol (the “Penthol Agreement”). On February 8, 2021, Penthol filed a complaint against Vertex Operating with the Federal District Court for the Southern District of Texas Houston division; Civil Action No. 4:21-CV-416 (the “Complaint”). Because the issues raised in the Complaint largely mirror those in the then pending state court action in the District Court of Harris County Texas, 61st Judicial District Court, the state court action was removed to federal court and combined with the pending federal court action. Penthol’s Complaint seeks damages from Vertex Operating for alleged violations of the Sherman Act, breach of contract, business disparagement, and misappropriation of trade secrets under the Defend Trade Secrets Act and Texas Uniform Trade Secrets Act. Penthol is seeking a declaration that the Penthol Agreement is invalid, unenforceable and was terminated on January 27, 2021, or that Penthol’s actions are excused due to Vertex’s breach of such agreement; that Vertex has materially breached the agreement; an injunction that prohibits enforcement of the agreement, Vertex from using Penthol’s trade secrets, and requires Vertex to return any of Penthol’s trade secrets; awards of actual, treble, consequential and exemplary damages, attorneys’ fees and costs of court; and other relief to which it may be entitled. Vertex contends the claims made by Penthol are completely without merit, and that the termination of the Penthol Agreement was wrongful and resulted in damages to Vertex that it will seek to recover. Further, Vertex contends that the termination of the Penthol Agreement by Penthol constitutes a breach by Penthol under the express terms of the Penthol Agreement, and that Vertex remains entitled to payment of the amounts due Vertex under the Penthol Agreement for unpaid commissions and unpaid performance incentives. On March 2, 2021, Vertex filed a Motion to Dismiss Penthol's lawsuit with the court. Vertex plans to seek the recovery of its legal fees and costs incurred in enforcing its rights under the terms of the Penthol Agreement.Vertex disputes Penthol’s allegations of wrongdoing and intends to vigorously defend itself in this matter. We cannot predict the impact (if any) that any of the matters described above may have on our business, results of operations, financial position, or cash flows. Because of the inherent uncertainties of such matters, including the early stage and lack of specific damage claims in the Penthol matter, we cannot estimate the range of possible losses from them (except as otherwise indicated). Related Parties From time to time, the Company consults with a related party law firm. During the three months ended March 31, 2021 and 2020, we paid $33,228 and $24,689, respectively, to such law firm for services rendered.
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REVENUES |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES | REVENUES Disaggregation of Revenue The following tables present our revenues disaggregated by geographical market and revenue source:
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ACCOUNTS RECEIVABLE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE Accounts receivable, net, consists of the following at March 31, 2021 and December 31, 2020:
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LINE OF CREDIT AND LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LINE OF CREDIT AND LONG-TERM DEBT | LINE OF CREDIT AND LONG-TERM DEBT On April 24, 2020, (a) Encina Business Credit, LLC (“EBC”) and the lenders under our Revolving Credit Agreement with EBC (the “EBC Lenders”), and Vertex Operating, entered into a Fourth Amendment and Limited Waiver to Credit Agreement, effective on April 24, 2020, pursuant to which the EBC Lenders agreed to amend the EBC Credit Agreement; and (b) the EBC Lenders and Vertex Operating entered into a Fourth Amendment and Limited Waiver to ABL Credit Agreement, effective on April 24, 2020, pursuant to which the EBC Lenders agreed to amend the Revolving Credit Agreement (collectively, the “Waivers”). The Waivers amended the credit agreements to extend the due date of amounts owed thereunder from February 1, 2021 to February 1, 2022. On August 7, 2020, the Company and Vertex Operating entered into a Fifth Amendment to Credit Agreement with EBC (the “Fifth Amendment”), which amended the EBC Credit Agreement to provide the Company up to a $2 million term loan to be used for capital expenditures (the “CapEx Loan”), which amounts may be requested from time to time by the Company, provided that not more than four advances of such amount may be requested, with each advance being not less than $500,000 (in multiples of $100,000). The amendment also provided that any prepayments of the EBC Credit Agreement would first be applied to the term loan and then to the CapEx Loan. The CapEx Loan bears interest at the rate of LIBOR (1.15% at March 31, 2021) plus 7%, or to the extent that LIBOR is not available, the highest of the prime rate and the Federal Funds Rate plus 0.50%, in each case, plus 6%. We are required to repay the CapEx Loan in monthly installments of 1/48th of the amount borrowed, each month that the CapEx Loan is outstanding, with a final balloon payment due at maturity. The obligation of EBC to fund the CapEx Loan is subject to customary conditions and requirements set forth in the Fifth Amendment, including the requirement that the Company has maintained daily availability under the ABL Credit Agreement greater than $1 million for the last thirty days, and that such availability would remain over $1 million, on a pro forma basis with such new loan. We are also required to provide the agent for the EBC Credit Agreement, a first priority security interest in the rolling stock collection assets or other assets acquired with the CapEx Loan. On November 27, 2020, the Company, Vertex Operating, the Agent and the EBC Lenders, entered into a Fifth Amendment and Limited Waiver to Credit Agreement (the “Amendment and Waiver”), pursuant to which the Lenders agreed to amend the Revolving Credit Agreement, to (1) provide for the Lender’s waiver of an event of default which occurred under the Revolving Credit Agreement, relating solely to the Company exceeding the $3 million capital expenditure limitation for 2020 set forth in the Revolving Credit Agreement; (2) amend the capital expenditure limit set forth in the Revolving Credit Agreement to $4 million for 2020 (compared to $3 million previously) and $3 million thereafter; and (3) amended the minimum required availability under the Revolving Credit Agreement to be $1 million prior to December 31, 2020 (which amount was previously $2 million) and $2 million thereafter. Notwithstanding the technical default under the Revolving Credit Agreement discussed above, the Lenders did not take any action to accelerate amounts due under the Revolving Credit Agreement, such amounts due thereunder were not automatically accelerated in connection with the default, and as discussed above, such technical default was waived by the Lenders according to the Amendment and Waiver. As of the date of this filing, the Company is in the process of extending the maturity date of the Encina debt to February 1, 2023. The Company presented the Encina debt in the current portion of long-term debt balance on the consolidated balance sheet at March 31,2021. Loan Agreements On May 4, 2020, the Company applied for a loan from Texas Citizens Bank in the principal amount of $4.22 million, pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020. On May 5, 2020, the Company received the loan funds. The Note is unsecured, matures on April 28, 2022, and bears interest at a rate of 1.00% per annum, payable monthly commencing in February 2021, following an initial deferral period as specified under the PPP. Under the terms of the PPP, the entire amount may be forgiven to the extent loan proceeds are used for qualifying expenses. As of the date of this report, the Company believes it has used the PPP funds for qualifying expenses and has applied for forgiveness. On May 27, 2020, the Company entered into a loan contract security agreement with John Deere to finance $152,643 to purchase equipment. The Note matures on June 27, 2024, and bears interest at a rate of 2.45% per annum, payable monthly commencing on June 27, 2020. The payment of the note is secured by the equipment purchased. Insurance Premiums The Company financed insurance premiums through various financial institutions bearing interest rates from 4.00% to 4.90% per annum. All such premium finance agreements have maturities of less than one year and have a balance of $473,417 at March 31, 2021 and $1,183,543 at December 31, 2020. Finance Leases On April 2, 2020, the Company obtained one finance lease with payments of $9,322 per month for three years and on July 28, 2020, the Company entered into another finance lease with payments of $3,545 per month for three years. The amount of the finance lease obligation has been reduced to $350,086 at March 31, 2021. On May 22, 2020, the Company entered into one finance lease. Payments are $15,078 per month for three years and the amount of the finance lease obligation has been reduced to $414,632 at March 31, 2021. The Company's outstanding debt facilities as of March 31, 2021 and December 31, 2020 are summarized as follows:
Future contractual maturities of notes payable as of March 31, 2021 are summarized as follows:
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EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the periods presented. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock, stock options, warrants or convertible securities. Due to their anti-dilutive effect, the calculation of diluted earnings per share for the three months ended March 31, 2021 and 2020 excludes: 1) options to purchase 4,065,059 and 4,418,250 shares, respectively, of common stock, 2) warrants to purchase 1,983,510 and 8,633,193 shares, respectively, of common stock, 3) Series B Preferred Stock which is convertible into 2,035,666 and 3,883,449 shares, respectively, of common stock, 4) Series B1 Preferred Stock which is convertible into 5,497,450 and 7,004,236 shares, respectively, of common stock, and 5) Series A Preferred Stock which is convertible into 419,859 shares of common stock as of March 31, 2021 and 2020. The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the three months ended March 31, 2021 and 2020:
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COMMON STOCK | COMMON STOCK The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of March 31, 2021, there were 51,742,499 common shares issued and outstanding. During the three months ended March 31, 2021, the Company issued 6,164,666 shares of common stock in connection with the conversions and exercises of Series B and B1 Convertible Preferred Stock and warrants into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 22,992 shares of common stock in connection with the exercise of options. During the three months ended March 31, 2020, the Company issued 2,159,278 shares of common stock in connection with the conversion of Series B1 Convertible Preferred Stock into common stock of the Company, pursuant to the terms of such securities. Series B Exchange Agreements On February 23, 2021, the Company entered into a Series B Preferred Stock Exchange Agreement with Pennington Capital LLC, the holder of shares of Series B Preferred Stock, pursuant to which the holder exchanged 822,824 shares of the Series B Preferred Stock of the Company which it held, which had an aggregate liquidation preference of $2,550,754 ($3.10 per share), for 1,261,246 shares of the Company's common stock (based on an exchange ratio equal to approximately the five-day volume-weighted average price per share of the Company's common stock on the date the Exchange Agreement was entered into). The Series B Preferred Stock shares were subsequently returned to the Company and cancelled in consideration for the issuance of the 1,261,246 shares of common stock. The Exchange Agreement included customary representations and warranties of the parties. This could result in gain or loss recognition due to more shares being issued than were provided in the original agreement. On March 2, 2021, the Company entered into a Series B Preferred Stock Exchange Agreement with Carrhae & Co FBO Wasatch Micro Cap Value Fund, the holder of shares of Series B Preferred Stock, pursuant to which the holder exchanged 708,547 shares of the Series B Preferred Stock of the Company which it held, which had an aggregate liquidation preference of $2,196,496 ($3.10 per share), for 1,098,248 shares of the Company's common stock (based on an exchange ratio equal to $2.00 per share of common stock). The Series B Preferred Stock are in the process of being returned to the Company and cancelled in consideration for the issuance of the 1,098,248 shares of common stock (which have not been issued to date). The Exchange Agreement included customary representations and warranties of the parties. This could result in gain or loss recognition due to more shares being issued than were provided in the original agreement. As described in ASC 260-10-S99-2, when preferred stock is redeemed, the difference between fair value of the consideration transferred to the holders of the preferred stock and (2) the carrying amount of the preferred stock in the registrant’s balance sheet (net of issuance costs) should be subtracted from (or added to) net income to arrive at income available to common shareholders in the calculation of earnings per share. As a result, the Company recorded a credit to retained earnings with a corresponding debit to APIC of $630,321 and added to net income to arrive to net income available to common shareholders. PREFERRED STOCK AND DETACHABLE WARRANTSThe total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5,000,000 (“Series A Preferred”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10,000,000. The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17,000,000. As of March 31, 2021 and December 31, 2020, there were 419,859 shares of Series A Preferred Stock issued and outstanding. As of March 31, 2021 and December 31, 2020, there were 2,035,666 and 4,102,690 shares of Series B Preferred Stock issued and outstanding, respectively. As of March 31, 2021 and December 31, 2020, there were 5,497,450 and 7,399,649 shares of Series B1 Preferred Stock issued and outstanding, respectively. Series B Preferred Stock and Temporary Equity The following table represents the activity related to the Series B Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, during the three months ended March 31, 2021 and 2020:
At March 31, 2021 and December 31, 2020, a total of $157,778 and $317,970 of dividends were accrued on our outstanding Series B Preferred Stock, respectively. During the three months ended March 31, 2021 and 2020, we paid dividends in-kind in additional shares of Series B Preferred Stock of $317,970 and $177,921, respectively. Because such preferred stock was not redeemed on June 24, 2020, the preferred stock accrues a 10% per annum dividend (payable in-kind at the option of the Company), until such preferred stock is redeemed or converted into common stock. Series B1 Preferred Stock and Temporary Equity The following table represents the activity related to the Series B1 Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, for the three months ended March 31, 2021 and 2020:
The Series B1 Warrants were revalued at March 31, 2021 and December 31, 2020 using the Dynamic Black Scholes model that computes the impact of a possible change in control transaction upon the exercise of the warrant shares at approximately $1,004,680 and $330,412, respectively. The Dynamic Black Scholes Merton inputs used were: expected dividend rate of 0%, expected volatility of 66%-114%, risk free interest rate of 0.06% and expected term of 0.75 years. The Series B Warrants expired pursuant to their terms on December 24, 2020. As of March 31, 2021 and December 31, 2020, respectively, a total of $214,405 and $288,594 of dividends were accrued on our outstanding Series B1 Preferred Stock. During the three months ended March 31, 2021 and 2020, we paid dividends in-kind in additional shares of Series B1 Preferred Stock of $288,594 and $211,269, respectively. Because such preferred stock was not redeemed on June 24, 2020, the preferred stock accrues a 10% per annum dividend (payable in-kind at the option of the Company), until such preferred stock is redeemed or converted into common stock. The following is an analysis of changes in the derivative liability for the three months ended March 31:
Myrtle Grove Share Purchase and Subscription Agreement Amounts received by MG SPV from its direct sale of Class B Units to Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”) may only be used for additional investments in the Company’s former Belle Chasse, Louisiana, re-refining complex (the “MG Refinery”) or for day to day operations at the MG refinery. At March 31, 2021, $0.6 million reported as cash and cash equivalents on the balance sheet is restricted to MG Refinery investments or operating expenses. The Class B Unit holders may force MG SPV to redeem the outstanding Class B Units at any time on or after the earlier of (a) the fifth anniversary of July 26, 2019 (the "MG Closing Date") and (ii) the occurrence of a Triggering Event (defined below)(an “MG Redemption”). The cash purchase price for such redeemed Class B Units is the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking an MG Redemption and Vertex Operating (provided that Vertex Operating still owns Class A Units on such date) and (z) the original per-unit price for such Class B Units plus any unpaid Class B preference. The preference is defined as the greater of (A) the aggregate unpaid “Class B Yield” (equal to an annual return of 22.5% per annum) and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class B Unit holders. The Company did not pay the preferential yield during the three months ended March 31, 2021. “Triggering Events” mean (a) any dissolution, winding up or liquidation of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (b) any sale, lease, license or disposition of any material assets of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (c) any transaction or series of related transactions (whether by merger, exchange, contribution, recapitalization, consolidation, reorganization, combination or otherwise) involving the Company, Vertex Operating or any significant subsidiary of Vertex Operating, the result of which is that the holders of the voting securities of the relevant entity as of the Closing Date are no longer the beneficial owners, in the aggregate, after giving effect to such transaction or series of transactions, directly or indirectly, of more than fifty percent (50%) of the voting power of the outstanding voting securities of the entity, subject to certain other requirements set forth in the MG Company Agreement, (d) the failure to consummate the Heartland Closing (defined below) by June 30, 2020 (a “Failure to Close”), provided that such Heartland Closing was consummated by June 30, 2020, (e) the failure of Vertex Operating to operate MG SPV in good faith with appropriate resources, or (f) the material failure of the Company and its affiliates to comply with the terms of the contribution agreement, whereby the Company contributed assets and operations to MG SPV. No triggering events occurred during the three months ended March 31, 2021. Myrtle Grove Redeemable Noncontrolling Interest As a result of the Share Purchase and Subscription Agreement (the “MG Share Purchase”), Tensile, through Tensile-Myrtle Grove Acquisition Corporation, acquired an approximate 15.58% ownership interest in Vertex Refining Myrtle Grove LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions. This is considered a redeemable noncontrolling equity interest, as it is redeemable in the future and not solely within our control. The initial carrying amount that is recognized in temporary equity for redeemable noncontrolling interests is the initial carrying amount determined in accordance with the accounting requirements for noncontrolling interests in ASC 810-10. In accordance with ASC 810-10-45-23, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, the Company recognized no gain or loss in consolidated net income and the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest of the subsidiary. The difference of $970,809 between the fair value of the consideration received of $3,150,000 and the carrying amount of the noncontrolling interest determined in accordance with ASC 810-10 of $2,179,191, was recognized in additional paid in capital. After initial recognition, in accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with MG SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary's net loss of $65,901 to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. Pursuant to ASC 480-10-S99-3A, for a security that is probable of becoming redeemable in the future, the Company adjusted the carrying amount of the redeemable noncontrolling interests to what would be the redemption value assuming the security was redeemable at the balance sheet date. This adjustment of $373,749 increased the carrying amount of redeemable noncontrolling interests to the redemption value as of March 31, 2021 of $5,780,689. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of March 31, 2021 and 2020.
Heartland Share Purchase and Subscription Agreement On January 17, 2020 (the “Heartland Closing Date”), Vertex Operating, Tensile-Heartland Acquisition Corporation (“Tensile-Heartland”), an affiliate of Tensile, and solely for the purposes of the Heartland Guaranty (defined below), the Company, and HPRM LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions, described in greater detail below (“Heartland SPV”), entered into a Share Purchase and Subscription Agreement (the “Heartland Share Purchase”). Prior to entering into the Heartland Share Purchase, the Company transferred 100% of the ownership of Vertex Refining OH, LLC, its indirect wholly-owned subsidiary (“Vertex OH”) to Heartland SPV in consideration for 13,500 Class A Units, 13,500 Class A-1 Preferred Units and 11,300 Class B Units of Heartland SPV and immediately thereafter contributed 248 Class B Units to the Company’s wholly-owned subsidiary, Vertex Splitter Corporation, a Delaware corporation (“Vertex Splitter”), as a contribution to capital. Vertex OH owned the Company’s Columbus, Ohio, Heartland facility, which produces a base oil product that is sold to lubricant packagers and distributors. Pursuant to the Heartland Share Purchase, Vertex Operating sold Tensile-Heartland the 13,500 Class A Units and 13,500 Class A-1 Preferred Units of Heartland SPV in consideration for $13.5 million. Also, on the Heartland Closing Date, Tensile-Heartland purchased 7,500 Class A Units and 7,500 Class A-1 Units in consideration for $7.5 million (less the expenses of Tensile-Heartland in connection with the transaction) directly from Heartland SPV. The approximate $7.5 million purchase amount and future free cash flows from the operation of Heartland SPV are planned to be available for investments at the Heartland facility to increase self-collections, maximize the throughput of the refinery, enhance the quality of the output and complete other projects. Concurrently with the closing of the transactions described above, and pursuant to the terms of the Heartland Share Purchase, the Company, through Vertex Operating, purchased 1,000 newly issued Class A Units from MG SPV at a cost of $1,000 per unit ($1 million in aggregate). As a result of this transaction, MG SPV is owned 85.00% by Vertex Operating and 15.00% by Tensile-MG. The Heartland Share Purchase provides Tensile-Heartland an option, exercisable at its election, at any time, subject to the terms of the Heartland Share Purchase, to purchase up to an additional 7,000 Class A-2 Preferred Units at a cost of $1,000 per Class A-2 Preferred Unit from Heartland SPV. The Heartland SPV is currently owned 35% by Vertex Operating and 65% by Tensile-Heartland. Heartland SPV is managed by a five-member Board of Managers, of which three members are appointed by Tensile-Heartland and two are appointed by the Company. The Class A Units held by Tensile-Heartland are convertible into Class B Units as provided in the Limited Liability Company Agreement of Heartland SPV (the “Heartland Company Agreement”), based on a conversion price (initially one-for-one) which may be reduced from time to time if new Units of Heartland SPV are issued and will automatically convert into Series B Units upon certain events described in the Heartland Company Agreement. The Class A-1 and A-2 Preferred Units (“Class A Preferred Units”), which are 100% owned by Tensile-Heartland, accrue a 22.5% per annum preferred return subject to terms of the Heartland Company Agreement (the “Class A Yield”). Additionally, the Class A Unit holders (common and preferred) may force Heartland SPV to redeem the outstanding Class A Units at any time on or after the earlier of (a) the fifth anniversary of the Heartland Closing Date and (ii) the occurrence of a Heartland Triggering Event (defined below)(a “Heartland Redemption”). The cash purchase price for such redeemed Class A Unit will be the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking Heartland Redemption and Vertex Operating (provided that Vertex Operating still owns Class B Units on such date) and (z) the original per-unit price for such Class A Units plus any unpaid Class A preference. The Class A preference is defined as the greater of (A) the aggregate unpaid Class A yield and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class A Unit holders through such Heartland Redemption date. “Heartland Triggering Events” include (a) any termination of an Administrative Services Agreement entered into with Tensile, pursuant to its terms and/or any material breach by us of the environmental remediation and indemnity agreement entered into with Tensile, (b) any dissolution, winding up or liquidation of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (c) any sale, lease, license or disposition of any material assets of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, or (d) any transaction or series of related transactions (whether by merger, exchange, contribution, recapitalization, consolidation, reorganization, combination or otherwise) involving the Company, Vertex Operating or any significant subsidiary of Vertex Operating, the result of which is that the holders of the voting securities of the relevant entity as of the Heartland Closing Date are no longer the beneficial owners, in the aggregate, after giving effect to such transaction or series of transactions, directly or indirectly, of more than fifty percent (50%) of the voting power of the outstanding voting securities of the entity, subject to certain other requirements set forth in the Heartland Company Agreement. In the event that Heartland SPV fails to redeem such Class A Units within 180 days after a redemption is triggered, the Class A Yield is increased to 25% until such time as such redemption is completed (with such increase being effective back to the original date of a notice of redemption). In addition, in such event, the Class A Unit holders may cause Heartland SPV to initiate a process intended to result in a sale of Heartland SPV. Distributions of available cash of Heartland SPV pursuant to the Heartland Company Agreement (including pursuant to liquidations of Heartland SPV), subject to certain exceptions set forth therein, are to be made (a) first, to the holders of the Class A Preferred Units, in an amount equal to the Class A preference; (b) second, the Class A Preferred Unit holders, together as a separate and distinct class, are entitled to receive an amount equal to the aggregate Heartland Invested Capital; (c) third, the Class B Unitholders (other than Class B Unitholders which received Class B Units upon conversion of Class A Preferred Units), together as a separate and distinct class, are entitled to receive all or a portion of any distribution equal to the sum of all distributions made under sections (a) and (b) above; and (d) fourth, to the holders of Units who are eligible to receive such distributions in proportion to the number of Units held by such holders. Heartland Variable interest entity The Company has assessed the Heartland SPV under the variable interest guidance in ASC 810. The Company determined that the Class A Units are not at risk due to a 22.5% preferred return and a redemption provision that, if elected, would require Heartland SPV to repurchase the Class A Units at their original cost plus the preferred return. The Company further determined that as a minority shareholder, holding only 35% of the voting rights, the Company does not have the ability to direct the activities of Heartland SPV that most significantly impact the entity’s performance. Based on this assessment, the Company concluded that Heartland SPV is a variable interest entity. In assessing if the Company is the primary beneficiary of Heartland SPV, the Company determined that certain provisions of the Heartland Company Agreement prohibiting the transfer of its Class B Units result in the Class A Unit holders being related parties under the de facto agents criteria in ASC 810. The Company and the Class A Unit holders, as a group, have the power to direct the significant activities of Heartland SPV and the obligations to absorb the losses and the right to receive the benefits that could potentially be significant to Heartland SPV. The Company concluded that substantially all of the activities of Heartland SPV are conducted on its behalf, and not on behalf of the Class A Unit holders, the decision maker, thus the Company is the primary beneficiary and required to consolidate Heartland SPV in accordance with ASC 810. The Company's consolidated financial statements include the assets, liabilities and results of operations of Heartland SPV for which the Company is the primary beneficiary. The other equity holders’ interests are reflected in net loss attributable to noncontrolling interests and redeemable noncontrolling interest in the consolidated statements of income and noncontrolling interests in the consolidated balance sheets. The following table summarizes the carrying amounts of Heartland SPV's assets and liabilities included in the Company’s consolidated balance sheets at March 31, 2021 and 2020:
The assets of Heartland SPV may only be used to settle the obligations of Heartland SPV, and may not be used for other consolidated entities. The liabilities of Heartland SPV are non-recourse to the general credit of the Company’s other consolidated entities. Heartland Redeemable Noncontrolling Interest As a result of the Heartland Share Purchase (as defined and discussed above), Tensile, through Tensile-Heartland, acquired an approximate 65.00% ownership interest in Heartland SPV, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions. This is considered a redeemable noncontrolling equity interest, as it is redeemable in the future and not solely within our control. The initial carrying amount that is recognized in temporary equity for redeemable noncontrolling interests is the initial carrying amount determined in accordance with the accounting requirements for noncontrolling interests in ASC 810-10. In accordance with ASC 810-10-45-23, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, the Company recognized no gain or loss in consolidated net income and the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest of the subsidiary. The difference of $9,091,068 between the fair value of the consideration received of $21,000,000 and the carrying amount of the noncontrolling interest determined in accordance with ASC 810-10 of $11,908,932, was recognized in additional paid in capital. After initial recognition, in accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with Heartland SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary's net income of $1,608,303 to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. At March 31, 2021, the cumulative amount resulting form the application of the measurement guidance in ASC 810-10 exceeded the redemption value of $27,609,142. The carrying amount of redeemable noncontrolling interests to the redemption value as of March 31, 2021 of $27,747,136. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of March 31, 2021 and 2020.
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PREFERRED STOCK AND DETACHABLE WARRANTS | COMMON STOCK The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of March 31, 2021, there were 51,742,499 common shares issued and outstanding. During the three months ended March 31, 2021, the Company issued 6,164,666 shares of common stock in connection with the conversions and exercises of Series B and B1 Convertible Preferred Stock and warrants into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 22,992 shares of common stock in connection with the exercise of options. During the three months ended March 31, 2020, the Company issued 2,159,278 shares of common stock in connection with the conversion of Series B1 Convertible Preferred Stock into common stock of the Company, pursuant to the terms of such securities. Series B Exchange Agreements On February 23, 2021, the Company entered into a Series B Preferred Stock Exchange Agreement with Pennington Capital LLC, the holder of shares of Series B Preferred Stock, pursuant to which the holder exchanged 822,824 shares of the Series B Preferred Stock of the Company which it held, which had an aggregate liquidation preference of $2,550,754 ($3.10 per share), for 1,261,246 shares of the Company's common stock (based on an exchange ratio equal to approximately the five-day volume-weighted average price per share of the Company's common stock on the date the Exchange Agreement was entered into). The Series B Preferred Stock shares were subsequently returned to the Company and cancelled in consideration for the issuance of the 1,261,246 shares of common stock. The Exchange Agreement included customary representations and warranties of the parties. This could result in gain or loss recognition due to more shares being issued than were provided in the original agreement. On March 2, 2021, the Company entered into a Series B Preferred Stock Exchange Agreement with Carrhae & Co FBO Wasatch Micro Cap Value Fund, the holder of shares of Series B Preferred Stock, pursuant to which the holder exchanged 708,547 shares of the Series B Preferred Stock of the Company which it held, which had an aggregate liquidation preference of $2,196,496 ($3.10 per share), for 1,098,248 shares of the Company's common stock (based on an exchange ratio equal to $2.00 per share of common stock). The Series B Preferred Stock are in the process of being returned to the Company and cancelled in consideration for the issuance of the 1,098,248 shares of common stock (which have not been issued to date). The Exchange Agreement included customary representations and warranties of the parties. This could result in gain or loss recognition due to more shares being issued than were provided in the original agreement. As described in ASC 260-10-S99-2, when preferred stock is redeemed, the difference between fair value of the consideration transferred to the holders of the preferred stock and (2) the carrying amount of the preferred stock in the registrant’s balance sheet (net of issuance costs) should be subtracted from (or added to) net income to arrive at income available to common shareholders in the calculation of earnings per share. As a result, the Company recorded a credit to retained earnings with a corresponding debit to APIC of $630,321 and added to net income to arrive to net income available to common shareholders. PREFERRED STOCK AND DETACHABLE WARRANTSThe total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5,000,000 (“Series A Preferred”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10,000,000. The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17,000,000. As of March 31, 2021 and December 31, 2020, there were 419,859 shares of Series A Preferred Stock issued and outstanding. As of March 31, 2021 and December 31, 2020, there were 2,035,666 and 4,102,690 shares of Series B Preferred Stock issued and outstanding, respectively. As of March 31, 2021 and December 31, 2020, there were 5,497,450 and 7,399,649 shares of Series B1 Preferred Stock issued and outstanding, respectively. Series B Preferred Stock and Temporary Equity The following table represents the activity related to the Series B Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, during the three months ended March 31, 2021 and 2020:
At March 31, 2021 and December 31, 2020, a total of $157,778 and $317,970 of dividends were accrued on our outstanding Series B Preferred Stock, respectively. During the three months ended March 31, 2021 and 2020, we paid dividends in-kind in additional shares of Series B Preferred Stock of $317,970 and $177,921, respectively. Because such preferred stock was not redeemed on June 24, 2020, the preferred stock accrues a 10% per annum dividend (payable in-kind at the option of the Company), until such preferred stock is redeemed or converted into common stock. Series B1 Preferred Stock and Temporary Equity The following table represents the activity related to the Series B1 Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, for the three months ended March 31, 2021 and 2020:
The Series B1 Warrants were revalued at March 31, 2021 and December 31, 2020 using the Dynamic Black Scholes model that computes the impact of a possible change in control transaction upon the exercise of the warrant shares at approximately $1,004,680 and $330,412, respectively. The Dynamic Black Scholes Merton inputs used were: expected dividend rate of 0%, expected volatility of 66%-114%, risk free interest rate of 0.06% and expected term of 0.75 years. The Series B Warrants expired pursuant to their terms on December 24, 2020. As of March 31, 2021 and December 31, 2020, respectively, a total of $214,405 and $288,594 of dividends were accrued on our outstanding Series B1 Preferred Stock. During the three months ended March 31, 2021 and 2020, we paid dividends in-kind in additional shares of Series B1 Preferred Stock of $288,594 and $211,269, respectively. Because such preferred stock was not redeemed on June 24, 2020, the preferred stock accrues a 10% per annum dividend (payable in-kind at the option of the Company), until such preferred stock is redeemed or converted into common stock. The following is an analysis of changes in the derivative liability for the three months ended March 31:
Myrtle Grove Share Purchase and Subscription Agreement Amounts received by MG SPV from its direct sale of Class B Units to Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”) may only be used for additional investments in the Company’s former Belle Chasse, Louisiana, re-refining complex (the “MG Refinery”) or for day to day operations at the MG refinery. At March 31, 2021, $0.6 million reported as cash and cash equivalents on the balance sheet is restricted to MG Refinery investments or operating expenses. The Class B Unit holders may force MG SPV to redeem the outstanding Class B Units at any time on or after the earlier of (a) the fifth anniversary of July 26, 2019 (the "MG Closing Date") and (ii) the occurrence of a Triggering Event (defined below)(an “MG Redemption”). The cash purchase price for such redeemed Class B Units is the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking an MG Redemption and Vertex Operating (provided that Vertex Operating still owns Class A Units on such date) and (z) the original per-unit price for such Class B Units plus any unpaid Class B preference. The preference is defined as the greater of (A) the aggregate unpaid “Class B Yield” (equal to an annual return of 22.5% per annum) and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class B Unit holders. The Company did not pay the preferential yield during the three months ended March 31, 2021. “Triggering Events” mean (a) any dissolution, winding up or liquidation of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (b) any sale, lease, license or disposition of any material assets of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (c) any transaction or series of related transactions (whether by merger, exchange, contribution, recapitalization, consolidation, reorganization, combination or otherwise) involving the Company, Vertex Operating or any significant subsidiary of Vertex Operating, the result of which is that the holders of the voting securities of the relevant entity as of the Closing Date are no longer the beneficial owners, in the aggregate, after giving effect to such transaction or series of transactions, directly or indirectly, of more than fifty percent (50%) of the voting power of the outstanding voting securities of the entity, subject to certain other requirements set forth in the MG Company Agreement, (d) the failure to consummate the Heartland Closing (defined below) by June 30, 2020 (a “Failure to Close”), provided that such Heartland Closing was consummated by June 30, 2020, (e) the failure of Vertex Operating to operate MG SPV in good faith with appropriate resources, or (f) the material failure of the Company and its affiliates to comply with the terms of the contribution agreement, whereby the Company contributed assets and operations to MG SPV. No triggering events occurred during the three months ended March 31, 2021. Myrtle Grove Redeemable Noncontrolling Interest As a result of the Share Purchase and Subscription Agreement (the “MG Share Purchase”), Tensile, through Tensile-Myrtle Grove Acquisition Corporation, acquired an approximate 15.58% ownership interest in Vertex Refining Myrtle Grove LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions. This is considered a redeemable noncontrolling equity interest, as it is redeemable in the future and not solely within our control. The initial carrying amount that is recognized in temporary equity for redeemable noncontrolling interests is the initial carrying amount determined in accordance with the accounting requirements for noncontrolling interests in ASC 810-10. In accordance with ASC 810-10-45-23, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, the Company recognized no gain or loss in consolidated net income and the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest of the subsidiary. The difference of $970,809 between the fair value of the consideration received of $3,150,000 and the carrying amount of the noncontrolling interest determined in accordance with ASC 810-10 of $2,179,191, was recognized in additional paid in capital. After initial recognition, in accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with MG SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary's net loss of $65,901 to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. Pursuant to ASC 480-10-S99-3A, for a security that is probable of becoming redeemable in the future, the Company adjusted the carrying amount of the redeemable noncontrolling interests to what would be the redemption value assuming the security was redeemable at the balance sheet date. This adjustment of $373,749 increased the carrying amount of redeemable noncontrolling interests to the redemption value as of March 31, 2021 of $5,780,689. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of March 31, 2021 and 2020.
Heartland Share Purchase and Subscription Agreement On January 17, 2020 (the “Heartland Closing Date”), Vertex Operating, Tensile-Heartland Acquisition Corporation (“Tensile-Heartland”), an affiliate of Tensile, and solely for the purposes of the Heartland Guaranty (defined below), the Company, and HPRM LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions, described in greater detail below (“Heartland SPV”), entered into a Share Purchase and Subscription Agreement (the “Heartland Share Purchase”). Prior to entering into the Heartland Share Purchase, the Company transferred 100% of the ownership of Vertex Refining OH, LLC, its indirect wholly-owned subsidiary (“Vertex OH”) to Heartland SPV in consideration for 13,500 Class A Units, 13,500 Class A-1 Preferred Units and 11,300 Class B Units of Heartland SPV and immediately thereafter contributed 248 Class B Units to the Company’s wholly-owned subsidiary, Vertex Splitter Corporation, a Delaware corporation (“Vertex Splitter”), as a contribution to capital. Vertex OH owned the Company’s Columbus, Ohio, Heartland facility, which produces a base oil product that is sold to lubricant packagers and distributors. Pursuant to the Heartland Share Purchase, Vertex Operating sold Tensile-Heartland the 13,500 Class A Units and 13,500 Class A-1 Preferred Units of Heartland SPV in consideration for $13.5 million. Also, on the Heartland Closing Date, Tensile-Heartland purchased 7,500 Class A Units and 7,500 Class A-1 Units in consideration for $7.5 million (less the expenses of Tensile-Heartland in connection with the transaction) directly from Heartland SPV. The approximate $7.5 million purchase amount and future free cash flows from the operation of Heartland SPV are planned to be available for investments at the Heartland facility to increase self-collections, maximize the throughput of the refinery, enhance the quality of the output and complete other projects. Concurrently with the closing of the transactions described above, and pursuant to the terms of the Heartland Share Purchase, the Company, through Vertex Operating, purchased 1,000 newly issued Class A Units from MG SPV at a cost of $1,000 per unit ($1 million in aggregate). As a result of this transaction, MG SPV is owned 85.00% by Vertex Operating and 15.00% by Tensile-MG. The Heartland Share Purchase provides Tensile-Heartland an option, exercisable at its election, at any time, subject to the terms of the Heartland Share Purchase, to purchase up to an additional 7,000 Class A-2 Preferred Units at a cost of $1,000 per Class A-2 Preferred Unit from Heartland SPV. The Heartland SPV is currently owned 35% by Vertex Operating and 65% by Tensile-Heartland. Heartland SPV is managed by a five-member Board of Managers, of which three members are appointed by Tensile-Heartland and two are appointed by the Company. The Class A Units held by Tensile-Heartland are convertible into Class B Units as provided in the Limited Liability Company Agreement of Heartland SPV (the “Heartland Company Agreement”), based on a conversion price (initially one-for-one) which may be reduced from time to time if new Units of Heartland SPV are issued and will automatically convert into Series B Units upon certain events described in the Heartland Company Agreement. The Class A-1 and A-2 Preferred Units (“Class A Preferred Units”), which are 100% owned by Tensile-Heartland, accrue a 22.5% per annum preferred return subject to terms of the Heartland Company Agreement (the “Class A Yield”). Additionally, the Class A Unit holders (common and preferred) may force Heartland SPV to redeem the outstanding Class A Units at any time on or after the earlier of (a) the fifth anniversary of the Heartland Closing Date and (ii) the occurrence of a Heartland Triggering Event (defined below)(a “Heartland Redemption”). The cash purchase price for such redeemed Class A Unit will be the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking Heartland Redemption and Vertex Operating (provided that Vertex Operating still owns Class B Units on such date) and (z) the original per-unit price for such Class A Units plus any unpaid Class A preference. The Class A preference is defined as the greater of (A) the aggregate unpaid Class A yield and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class A Unit holders through such Heartland Redemption date. “Heartland Triggering Events” include (a) any termination of an Administrative Services Agreement entered into with Tensile, pursuant to its terms and/or any material breach by us of the environmental remediation and indemnity agreement entered into with Tensile, (b) any dissolution, winding up or liquidation of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (c) any sale, lease, license or disposition of any material assets of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, or (d) any transaction or series of related transactions (whether by merger, exchange, contribution, recapitalization, consolidation, reorganization, combination or otherwise) involving the Company, Vertex Operating or any significant subsidiary of Vertex Operating, the result of which is that the holders of the voting securities of the relevant entity as of the Heartland Closing Date are no longer the beneficial owners, in the aggregate, after giving effect to such transaction or series of transactions, directly or indirectly, of more than fifty percent (50%) of the voting power of the outstanding voting securities of the entity, subject to certain other requirements set forth in the Heartland Company Agreement. In the event that Heartland SPV fails to redeem such Class A Units within 180 days after a redemption is triggered, the Class A Yield is increased to 25% until such time as such redemption is completed (with such increase being effective back to the original date of a notice of redemption). In addition, in such event, the Class A Unit holders may cause Heartland SPV to initiate a process intended to result in a sale of Heartland SPV. Distributions of available cash of Heartland SPV pursuant to the Heartland Company Agreement (including pursuant to liquidations of Heartland SPV), subject to certain exceptions set forth therein, are to be made (a) first, to the holders of the Class A Preferred Units, in an amount equal to the Class A preference; (b) second, the Class A Preferred Unit holders, together as a separate and distinct class, are entitled to receive an amount equal to the aggregate Heartland Invested Capital; (c) third, the Class B Unitholders (other than Class B Unitholders which received Class B Units upon conversion of Class A Preferred Units), together as a separate and distinct class, are entitled to receive all or a portion of any distribution equal to the sum of all distributions made under sections (a) and (b) above; and (d) fourth, to the holders of Units who are eligible to receive such distributions in proportion to the number of Units held by such holders. Heartland Variable interest entity The Company has assessed the Heartland SPV under the variable interest guidance in ASC 810. The Company determined that the Class A Units are not at risk due to a 22.5% preferred return and a redemption provision that, if elected, would require Heartland SPV to repurchase the Class A Units at their original cost plus the preferred return. The Company further determined that as a minority shareholder, holding only 35% of the voting rights, the Company does not have the ability to direct the activities of Heartland SPV that most significantly impact the entity’s performance. Based on this assessment, the Company concluded that Heartland SPV is a variable interest entity. In assessing if the Company is the primary beneficiary of Heartland SPV, the Company determined that certain provisions of the Heartland Company Agreement prohibiting the transfer of its Class B Units result in the Class A Unit holders being related parties under the de facto agents criteria in ASC 810. The Company and the Class A Unit holders, as a group, have the power to direct the significant activities of Heartland SPV and the obligations to absorb the losses and the right to receive the benefits that could potentially be significant to Heartland SPV. The Company concluded that substantially all of the activities of Heartland SPV are conducted on its behalf, and not on behalf of the Class A Unit holders, the decision maker, thus the Company is the primary beneficiary and required to consolidate Heartland SPV in accordance with ASC 810. The Company's consolidated financial statements include the assets, liabilities and results of operations of Heartland SPV for which the Company is the primary beneficiary. The other equity holders’ interests are reflected in net loss attributable to noncontrolling interests and redeemable noncontrolling interest in the consolidated statements of income and noncontrolling interests in the consolidated balance sheets. The following table summarizes the carrying amounts of Heartland SPV's assets and liabilities included in the Company’s consolidated balance sheets at March 31, 2021 and 2020:
The assets of Heartland SPV may only be used to settle the obligations of Heartland SPV, and may not be used for other consolidated entities. The liabilities of Heartland SPV are non-recourse to the general credit of the Company’s other consolidated entities. Heartland Redeemable Noncontrolling Interest As a result of the Heartland Share Purchase (as defined and discussed above), Tensile, through Tensile-Heartland, acquired an approximate 65.00% ownership interest in Heartland SPV, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions. This is considered a redeemable noncontrolling equity interest, as it is redeemable in the future and not solely within our control. The initial carrying amount that is recognized in temporary equity for redeemable noncontrolling interests is the initial carrying amount determined in accordance with the accounting requirements for noncontrolling interests in ASC 810-10. In accordance with ASC 810-10-45-23, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, the Company recognized no gain or loss in consolidated net income and the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest of the subsidiary. The difference of $9,091,068 between the fair value of the consideration received of $21,000,000 and the carrying amount of the noncontrolling interest determined in accordance with ASC 810-10 of $11,908,932, was recognized in additional paid in capital. After initial recognition, in accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with Heartland SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary's net income of $1,608,303 to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. At March 31, 2021, the cumulative amount resulting form the application of the measurement guidance in ASC 810-10 exceeded the redemption value of $27,609,142. The carrying amount of redeemable noncontrolling interests to the redemption value as of March 31, 2021 of $27,747,136. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of March 31, 2021 and 2020.
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SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING The Company’s reportable segments include the (1) Black Oil, (2) Refining and Marketing, and (3) Recovery segments. (1) The Black Oil segment consists primary of the sale of (a) petroleum products which include base oil and industrial fuels—which consist of used motor oils, cutterstock and fuel oil generated by our facilities; (b) oil collection services—which consist of used oil sales, burner fuel sales, antifreeze sales and service charges; (c) the sale of other re-refinery products including asphalt, condensate, recovered products, and used motor oil; (d) transportation revenues; and (e) the sale of VGO (vacuum gas oil)/marine fuel. (2) The Refining and Marketing segment consists primarily of the sale of pygas; industrial fuels, which are produced at a third-party facility; and distillates. (3) The Recovery segment consists primarily of revenues generated from the sale of ferrous and non-ferrous recyclable Metal(s) products that are recovered from manufacturing and consumption. It also includes revenues generated from trading/marketing of Group III Base Oils. We also disaggregate our revenue by product category for each of our segments, as we believe such disaggregation helps depict how our revenue and cash flows are affected by economic factors. Segment information for the three months ended March 31, 2021 and 2020 is as follows:
(1) Distillates are finished fuel products such as gasoline and diesel fuels. (2) Metals consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing. (3) Other re-refinery products include the sales of asphalt, condensate, recovered products, and other petroleum products.
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INCOME TAXES |
3 Months Ended |
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Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective tax rate of 0% on pretax income differs from the U.S. federal income tax rate of 21% because of the change in our valuation allowance. The year to date income at March 31, 2021 puts the Company in an accumulated loss position for the cumulative 12 quarters then ended. For tax reporting purposes, we have net operating losses ("NOLs") of approximately $49.1 million as of March 31, 2021 that are available to reduce future taxable income. In determining the carrying value of our net deferred tax asset, the Company considered all negative and positive evidence. The Company has generated pre-tax income of approximately $3.0 million from January 1, 2021 through March 31, 2021.
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COMMODITY DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMODITY DERIVATIVE INSTRUMENTS | COMMODITY DERIVATIVE INSTRUMENTS The Company utilizes derivative instruments to manage its exposure to fluctuations in the underlying commodity prices of its inventory. The Company's management sets and implements hedging policies, including volumes, types of instruments and counterparties, to support oil prices at targeted levels and manage its exposure to fluctuating prices. The Company’s derivative instruments consist of swap and futures arrangements for oil. In a commodity swap agreement, if the agreed-upon published third-party index price (“index price”) is lower than the swap fixed price, the Company receives the difference between the index price and the swap fixed price. If the index price is higher than the swap fixed price, the Company pays the difference. For futures arrangements, the Company receives the difference positive or negative between an agreed-upon strike price and the market price. The mark-to-market effects of these contracts as of March 31, 2021 and December 31, 2020, are summarized in the following table. The notional amount is equal to the total net volumetric derivative position during the period indicated. The fair value of the crude oil swap agreements is based on the difference between the strike price and the New York Mercantile Exchange futures price for the applicable trading months.
The carrying values of the Company's derivatives positions and their locations on the consolidated balance sheets as of March 31, 2021 and December 31, 2020 are presented in the table below.
For the three months ended March 31, 2021 and 2020, we recognized a $721,531 loss and a $4,427,782 gain, respectively, on commodity derivative contracts on the consolidated statements of operations as part of our cost of revenues.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES Finance Leases Finance leases are included in finance lease right-of-use lease assets and finance lease liability current and long-term liabilities on the unaudited consolidated balance sheets. The associated amortization expenses for the three months ended March 31, 2021 and 2020 were $103,983 and $53,121, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the three months ended March 31, 2021 and 2020 were $26,623 and $10,919, respectively, and are included in interest expense on the unaudited consolidated statements of operations. Please see “Note 6. Line of Credit and Long-Term Debt” for more details. Operating Leases Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three months ended March 31, 2021 and 2020. Total operating lease costs for the three months ended March 31, 2021 and 2020 were $1.5 million and $1.5 million, respectively. Cash Flows An initial right-of-use asset of $37.8 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for amounts included in operating lease liabilities, including some small leases with initial terms less than twelve months was $0.3 million during the three months ended March 31, 2021 and 2020, and is included in operating cash flows. Cash paid for amounts included in finance lease was $122,052 and $53,119 during the three months ended March 31, 2021 and 2020, respectively, and is included in financing cash flows. Maturities of our lease liabilities for all operating leases are as follows as of March 31, 2021:
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 31, 2021:
Significant Judgments Significant judgments include the discount rates applied, the expected lease terms, lease renewal options and residual value guarantees. There are several leases with renewal options or purchase options. Using the practical expedient, the Company utilized existing lease classifications as of March 31, 2021 and 2020. The purchase options are not expected to have a material impact on the lease obligation. There are several facility and plant leases which have lease renewal options from to twenty years. The largest facility lease has an initial term through 2032. That lease does not have an extension option. The two plant leases both have multiple 5-year extension options for a total of 20 years. Two extension options have been included in the lease right-of-use asset and lease obligation at January 1, 2019. The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so.
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LEASES | LEASES Finance Leases Finance leases are included in finance lease right-of-use lease assets and finance lease liability current and long-term liabilities on the unaudited consolidated balance sheets. The associated amortization expenses for the three months ended March 31, 2021 and 2020 were $103,983 and $53,121, respectively, and are included in depreciation and amortization on the unaudited consolidated statements of operations. The associated interest expense for the three months ended March 31, 2021 and 2020 were $26,623 and $10,919, respectively, and are included in interest expense on the unaudited consolidated statements of operations. Please see “Note 6. Line of Credit and Long-Term Debt” for more details. Operating Leases Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three months ended March 31, 2021 and 2020. Total operating lease costs for the three months ended March 31, 2021 and 2020 were $1.5 million and $1.5 million, respectively. Cash Flows An initial right-of-use asset of $37.8 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for amounts included in operating lease liabilities, including some small leases with initial terms less than twelve months was $0.3 million during the three months ended March 31, 2021 and 2020, and is included in operating cash flows. Cash paid for amounts included in finance lease was $122,052 and $53,119 during the three months ended March 31, 2021 and 2020, respectively, and is included in financing cash flows. Maturities of our lease liabilities for all operating leases are as follows as of March 31, 2021:
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 31, 2021:
Significant Judgments Significant judgments include the discount rates applied, the expected lease terms, lease renewal options and residual value guarantees. There are several leases with renewal options or purchase options. Using the practical expedient, the Company utilized existing lease classifications as of March 31, 2021 and 2020. The purchase options are not expected to have a material impact on the lease obligation. There are several facility and plant leases which have lease renewal options from to twenty years. The largest facility lease has an initial term through 2032. That lease does not have an extension option. The two plant leases both have multiple 5-year extension options for a total of 20 years. Two extension options have been included in the lease right-of-use asset and lease obligation at January 1, 2019. The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so.
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SHARE PURCHASE AND SUBSCRIPTION AGREEMENTS |
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SHARE PURCHASE AND SUBSCRIPTION AGREEMENTS | COMMON STOCK The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of March 31, 2021, there were 51,742,499 common shares issued and outstanding. During the three months ended March 31, 2021, the Company issued 6,164,666 shares of common stock in connection with the conversions and exercises of Series B and B1 Convertible Preferred Stock and warrants into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 22,992 shares of common stock in connection with the exercise of options. During the three months ended March 31, 2020, the Company issued 2,159,278 shares of common stock in connection with the conversion of Series B1 Convertible Preferred Stock into common stock of the Company, pursuant to the terms of such securities. Series B Exchange Agreements On February 23, 2021, the Company entered into a Series B Preferred Stock Exchange Agreement with Pennington Capital LLC, the holder of shares of Series B Preferred Stock, pursuant to which the holder exchanged 822,824 shares of the Series B Preferred Stock of the Company which it held, which had an aggregate liquidation preference of $2,550,754 ($3.10 per share), for 1,261,246 shares of the Company's common stock (based on an exchange ratio equal to approximately the five-day volume-weighted average price per share of the Company's common stock on the date the Exchange Agreement was entered into). The Series B Preferred Stock shares were subsequently returned to the Company and cancelled in consideration for the issuance of the 1,261,246 shares of common stock. The Exchange Agreement included customary representations and warranties of the parties. This could result in gain or loss recognition due to more shares being issued than were provided in the original agreement. On March 2, 2021, the Company entered into a Series B Preferred Stock Exchange Agreement with Carrhae & Co FBO Wasatch Micro Cap Value Fund, the holder of shares of Series B Preferred Stock, pursuant to which the holder exchanged 708,547 shares of the Series B Preferred Stock of the Company which it held, which had an aggregate liquidation preference of $2,196,496 ($3.10 per share), for 1,098,248 shares of the Company's common stock (based on an exchange ratio equal to $2.00 per share of common stock). The Series B Preferred Stock are in the process of being returned to the Company and cancelled in consideration for the issuance of the 1,098,248 shares of common stock (which have not been issued to date). The Exchange Agreement included customary representations and warranties of the parties. This could result in gain or loss recognition due to more shares being issued than were provided in the original agreement. As described in ASC 260-10-S99-2, when preferred stock is redeemed, the difference between fair value of the consideration transferred to the holders of the preferred stock and (2) the carrying amount of the preferred stock in the registrant’s balance sheet (net of issuance costs) should be subtracted from (or added to) net income to arrive at income available to common shareholders in the calculation of earnings per share. As a result, the Company recorded a credit to retained earnings with a corresponding debit to APIC of $630,321 and added to net income to arrive to net income available to common shareholders. PREFERRED STOCK AND DETACHABLE WARRANTSThe total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5,000,000 (“Series A Preferred”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10,000,000. The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17,000,000. As of March 31, 2021 and December 31, 2020, there were 419,859 shares of Series A Preferred Stock issued and outstanding. As of March 31, 2021 and December 31, 2020, there were 2,035,666 and 4,102,690 shares of Series B Preferred Stock issued and outstanding, respectively. As of March 31, 2021 and December 31, 2020, there were 5,497,450 and 7,399,649 shares of Series B1 Preferred Stock issued and outstanding, respectively. Series B Preferred Stock and Temporary Equity The following table represents the activity related to the Series B Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, during the three months ended March 31, 2021 and 2020:
At March 31, 2021 and December 31, 2020, a total of $157,778 and $317,970 of dividends were accrued on our outstanding Series B Preferred Stock, respectively. During the three months ended March 31, 2021 and 2020, we paid dividends in-kind in additional shares of Series B Preferred Stock of $317,970 and $177,921, respectively. Because such preferred stock was not redeemed on June 24, 2020, the preferred stock accrues a 10% per annum dividend (payable in-kind at the option of the Company), until such preferred stock is redeemed or converted into common stock. Series B1 Preferred Stock and Temporary Equity The following table represents the activity related to the Series B1 Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, for the three months ended March 31, 2021 and 2020:
The Series B1 Warrants were revalued at March 31, 2021 and December 31, 2020 using the Dynamic Black Scholes model that computes the impact of a possible change in control transaction upon the exercise of the warrant shares at approximately $1,004,680 and $330,412, respectively. The Dynamic Black Scholes Merton inputs used were: expected dividend rate of 0%, expected volatility of 66%-114%, risk free interest rate of 0.06% and expected term of 0.75 years. The Series B Warrants expired pursuant to their terms on December 24, 2020. As of March 31, 2021 and December 31, 2020, respectively, a total of $214,405 and $288,594 of dividends were accrued on our outstanding Series B1 Preferred Stock. During the three months ended March 31, 2021 and 2020, we paid dividends in-kind in additional shares of Series B1 Preferred Stock of $288,594 and $211,269, respectively. Because such preferred stock was not redeemed on June 24, 2020, the preferred stock accrues a 10% per annum dividend (payable in-kind at the option of the Company), until such preferred stock is redeemed or converted into common stock. The following is an analysis of changes in the derivative liability for the three months ended March 31:
Myrtle Grove Share Purchase and Subscription Agreement Amounts received by MG SPV from its direct sale of Class B Units to Tensile-Myrtle Grove Acquisition Corporation (“Tensile-MG”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“Tensile”) may only be used for additional investments in the Company’s former Belle Chasse, Louisiana, re-refining complex (the “MG Refinery”) or for day to day operations at the MG refinery. At March 31, 2021, $0.6 million reported as cash and cash equivalents on the balance sheet is restricted to MG Refinery investments or operating expenses. The Class B Unit holders may force MG SPV to redeem the outstanding Class B Units at any time on or after the earlier of (a) the fifth anniversary of July 26, 2019 (the "MG Closing Date") and (ii) the occurrence of a Triggering Event (defined below)(an “MG Redemption”). The cash purchase price for such redeemed Class B Units is the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking an MG Redemption and Vertex Operating (provided that Vertex Operating still owns Class A Units on such date) and (z) the original per-unit price for such Class B Units plus any unpaid Class B preference. The preference is defined as the greater of (A) the aggregate unpaid “Class B Yield” (equal to an annual return of 22.5% per annum) and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class B Unit holders. The Company did not pay the preferential yield during the three months ended March 31, 2021. “Triggering Events” mean (a) any dissolution, winding up or liquidation of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (b) any sale, lease, license or disposition of any material assets of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (c) any transaction or series of related transactions (whether by merger, exchange, contribution, recapitalization, consolidation, reorganization, combination or otherwise) involving the Company, Vertex Operating or any significant subsidiary of Vertex Operating, the result of which is that the holders of the voting securities of the relevant entity as of the Closing Date are no longer the beneficial owners, in the aggregate, after giving effect to such transaction or series of transactions, directly or indirectly, of more than fifty percent (50%) of the voting power of the outstanding voting securities of the entity, subject to certain other requirements set forth in the MG Company Agreement, (d) the failure to consummate the Heartland Closing (defined below) by June 30, 2020 (a “Failure to Close”), provided that such Heartland Closing was consummated by June 30, 2020, (e) the failure of Vertex Operating to operate MG SPV in good faith with appropriate resources, or (f) the material failure of the Company and its affiliates to comply with the terms of the contribution agreement, whereby the Company contributed assets and operations to MG SPV. No triggering events occurred during the three months ended March 31, 2021. Myrtle Grove Redeemable Noncontrolling Interest As a result of the Share Purchase and Subscription Agreement (the “MG Share Purchase”), Tensile, through Tensile-Myrtle Grove Acquisition Corporation, acquired an approximate 15.58% ownership interest in Vertex Refining Myrtle Grove LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions. This is considered a redeemable noncontrolling equity interest, as it is redeemable in the future and not solely within our control. The initial carrying amount that is recognized in temporary equity for redeemable noncontrolling interests is the initial carrying amount determined in accordance with the accounting requirements for noncontrolling interests in ASC 810-10. In accordance with ASC 810-10-45-23, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, the Company recognized no gain or loss in consolidated net income and the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest of the subsidiary. The difference of $970,809 between the fair value of the consideration received of $3,150,000 and the carrying amount of the noncontrolling interest determined in accordance with ASC 810-10 of $2,179,191, was recognized in additional paid in capital. After initial recognition, in accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with MG SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary's net loss of $65,901 to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. Pursuant to ASC 480-10-S99-3A, for a security that is probable of becoming redeemable in the future, the Company adjusted the carrying amount of the redeemable noncontrolling interests to what would be the redemption value assuming the security was redeemable at the balance sheet date. This adjustment of $373,749 increased the carrying amount of redeemable noncontrolling interests to the redemption value as of March 31, 2021 of $5,780,689. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of March 31, 2021 and 2020.
Heartland Share Purchase and Subscription Agreement On January 17, 2020 (the “Heartland Closing Date”), Vertex Operating, Tensile-Heartland Acquisition Corporation (“Tensile-Heartland”), an affiliate of Tensile, and solely for the purposes of the Heartland Guaranty (defined below), the Company, and HPRM LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions, described in greater detail below (“Heartland SPV”), entered into a Share Purchase and Subscription Agreement (the “Heartland Share Purchase”). Prior to entering into the Heartland Share Purchase, the Company transferred 100% of the ownership of Vertex Refining OH, LLC, its indirect wholly-owned subsidiary (“Vertex OH”) to Heartland SPV in consideration for 13,500 Class A Units, 13,500 Class A-1 Preferred Units and 11,300 Class B Units of Heartland SPV and immediately thereafter contributed 248 Class B Units to the Company’s wholly-owned subsidiary, Vertex Splitter Corporation, a Delaware corporation (“Vertex Splitter”), as a contribution to capital. Vertex OH owned the Company’s Columbus, Ohio, Heartland facility, which produces a base oil product that is sold to lubricant packagers and distributors. Pursuant to the Heartland Share Purchase, Vertex Operating sold Tensile-Heartland the 13,500 Class A Units and 13,500 Class A-1 Preferred Units of Heartland SPV in consideration for $13.5 million. Also, on the Heartland Closing Date, Tensile-Heartland purchased 7,500 Class A Units and 7,500 Class A-1 Units in consideration for $7.5 million (less the expenses of Tensile-Heartland in connection with the transaction) directly from Heartland SPV. The approximate $7.5 million purchase amount and future free cash flows from the operation of Heartland SPV are planned to be available for investments at the Heartland facility to increase self-collections, maximize the throughput of the refinery, enhance the quality of the output and complete other projects. Concurrently with the closing of the transactions described above, and pursuant to the terms of the Heartland Share Purchase, the Company, through Vertex Operating, purchased 1,000 newly issued Class A Units from MG SPV at a cost of $1,000 per unit ($1 million in aggregate). As a result of this transaction, MG SPV is owned 85.00% by Vertex Operating and 15.00% by Tensile-MG. The Heartland Share Purchase provides Tensile-Heartland an option, exercisable at its election, at any time, subject to the terms of the Heartland Share Purchase, to purchase up to an additional 7,000 Class A-2 Preferred Units at a cost of $1,000 per Class A-2 Preferred Unit from Heartland SPV. The Heartland SPV is currently owned 35% by Vertex Operating and 65% by Tensile-Heartland. Heartland SPV is managed by a five-member Board of Managers, of which three members are appointed by Tensile-Heartland and two are appointed by the Company. The Class A Units held by Tensile-Heartland are convertible into Class B Units as provided in the Limited Liability Company Agreement of Heartland SPV (the “Heartland Company Agreement”), based on a conversion price (initially one-for-one) which may be reduced from time to time if new Units of Heartland SPV are issued and will automatically convert into Series B Units upon certain events described in the Heartland Company Agreement. The Class A-1 and A-2 Preferred Units (“Class A Preferred Units”), which are 100% owned by Tensile-Heartland, accrue a 22.5% per annum preferred return subject to terms of the Heartland Company Agreement (the “Class A Yield”). Additionally, the Class A Unit holders (common and preferred) may force Heartland SPV to redeem the outstanding Class A Units at any time on or after the earlier of (a) the fifth anniversary of the Heartland Closing Date and (ii) the occurrence of a Heartland Triggering Event (defined below)(a “Heartland Redemption”). The cash purchase price for such redeemed Class A Unit will be the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking Heartland Redemption and Vertex Operating (provided that Vertex Operating still owns Class B Units on such date) and (z) the original per-unit price for such Class A Units plus any unpaid Class A preference. The Class A preference is defined as the greater of (A) the aggregate unpaid Class A yield and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class A Unit holders through such Heartland Redemption date. “Heartland Triggering Events” include (a) any termination of an Administrative Services Agreement entered into with Tensile, pursuant to its terms and/or any material breach by us of the environmental remediation and indemnity agreement entered into with Tensile, (b) any dissolution, winding up or liquidation of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, (c) any sale, lease, license or disposition of any material assets of the Company, Vertex Operating or any significant subsidiary of Vertex Operating, or (d) any transaction or series of related transactions (whether by merger, exchange, contribution, recapitalization, consolidation, reorganization, combination or otherwise) involving the Company, Vertex Operating or any significant subsidiary of Vertex Operating, the result of which is that the holders of the voting securities of the relevant entity as of the Heartland Closing Date are no longer the beneficial owners, in the aggregate, after giving effect to such transaction or series of transactions, directly or indirectly, of more than fifty percent (50%) of the voting power of the outstanding voting securities of the entity, subject to certain other requirements set forth in the Heartland Company Agreement. In the event that Heartland SPV fails to redeem such Class A Units within 180 days after a redemption is triggered, the Class A Yield is increased to 25% until such time as such redemption is completed (with such increase being effective back to the original date of a notice of redemption). In addition, in such event, the Class A Unit holders may cause Heartland SPV to initiate a process intended to result in a sale of Heartland SPV. Distributions of available cash of Heartland SPV pursuant to the Heartland Company Agreement (including pursuant to liquidations of Heartland SPV), subject to certain exceptions set forth therein, are to be made (a) first, to the holders of the Class A Preferred Units, in an amount equal to the Class A preference; (b) second, the Class A Preferred Unit holders, together as a separate and distinct class, are entitled to receive an amount equal to the aggregate Heartland Invested Capital; (c) third, the Class B Unitholders (other than Class B Unitholders which received Class B Units upon conversion of Class A Preferred Units), together as a separate and distinct class, are entitled to receive all or a portion of any distribution equal to the sum of all distributions made under sections (a) and (b) above; and (d) fourth, to the holders of Units who are eligible to receive such distributions in proportion to the number of Units held by such holders. Heartland Variable interest entity The Company has assessed the Heartland SPV under the variable interest guidance in ASC 810. The Company determined that the Class A Units are not at risk due to a 22.5% preferred return and a redemption provision that, if elected, would require Heartland SPV to repurchase the Class A Units at their original cost plus the preferred return. The Company further determined that as a minority shareholder, holding only 35% of the voting rights, the Company does not have the ability to direct the activities of Heartland SPV that most significantly impact the entity’s performance. Based on this assessment, the Company concluded that Heartland SPV is a variable interest entity. In assessing if the Company is the primary beneficiary of Heartland SPV, the Company determined that certain provisions of the Heartland Company Agreement prohibiting the transfer of its Class B Units result in the Class A Unit holders being related parties under the de facto agents criteria in ASC 810. The Company and the Class A Unit holders, as a group, have the power to direct the significant activities of Heartland SPV and the obligations to absorb the losses and the right to receive the benefits that could potentially be significant to Heartland SPV. The Company concluded that substantially all of the activities of Heartland SPV are conducted on its behalf, and not on behalf of the Class A Unit holders, the decision maker, thus the Company is the primary beneficiary and required to consolidate Heartland SPV in accordance with ASC 810. The Company's consolidated financial statements include the assets, liabilities and results of operations of Heartland SPV for which the Company is the primary beneficiary. The other equity holders’ interests are reflected in net loss attributable to noncontrolling interests and redeemable noncontrolling interest in the consolidated statements of income and noncontrolling interests in the consolidated balance sheets. The following table summarizes the carrying amounts of Heartland SPV's assets and liabilities included in the Company’s consolidated balance sheets at March 31, 2021 and 2020:
The assets of Heartland SPV may only be used to settle the obligations of Heartland SPV, and may not be used for other consolidated entities. The liabilities of Heartland SPV are non-recourse to the general credit of the Company’s other consolidated entities. Heartland Redeemable Noncontrolling Interest As a result of the Heartland Share Purchase (as defined and discussed above), Tensile, through Tensile-Heartland, acquired an approximate 65.00% ownership interest in Heartland SPV, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions. This is considered a redeemable noncontrolling equity interest, as it is redeemable in the future and not solely within our control. The initial carrying amount that is recognized in temporary equity for redeemable noncontrolling interests is the initial carrying amount determined in accordance with the accounting requirements for noncontrolling interests in ASC 810-10. In accordance with ASC 810-10-45-23, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, the Company recognized no gain or loss in consolidated net income and the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest of the subsidiary. The difference of $9,091,068 between the fair value of the consideration received of $21,000,000 and the carrying amount of the noncontrolling interest determined in accordance with ASC 810-10 of $11,908,932, was recognized in additional paid in capital. After initial recognition, in accordance with ASC 480-10-S99-3A, the Company applied a two-step approach to measure noncontrolling interests associated with Heartland SPV at the balance sheet date. First, the Company applied the measurement guidance in ASC 810-10 by attributing a portion of the subsidiary's net income of $1,608,303 to the noncontrolling interest. Second, the Company applied the subsequent measurement guidance in ASC 480-10-S99-3A, which indicates that the noncontrolling interest’s carrying amount is the higher of (1) the cumulative amount that would result from applying the measurement guidance in ASC 810-10 in the first step or (2) the redemption value. At March 31, 2021, the cumulative amount resulting form the application of the measurement guidance in ASC 810-10 exceeded the redemption value of $27,609,142. The carrying amount of redeemable noncontrolling interests to the redemption value as of March 31, 2021 of $27,747,136. Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value are reflected in retained earnings. The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of March 31, 2021 and 2020.
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Issuance of Series B and B1 Preferred Stock Shares In-Kind and Common Stock We paid the accrued dividends on our Series B Preferred Stock and Series B1 Preferred Stock, which were accrued as of March 31, 2021, in-kind by way of the issuance of 50,896 restricted shares of Series B Preferred Stock pro rata to each of the then holders of our Series B Preferred Stock in April 2021 and the issuance of 137,439 restricted shares of Series B1 Preferred Stock pro rata to each of the then holders of our Series B1 Preferred Stock in April 2021. If converted in full, the 50,896 shares of Series B Preferred Stock would convert into 50,896 shares of common stock and the 137,439 shares of Series B1 Preferred Stock would convert into 137,439 shares of common stock.
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SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES (Policies) |
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Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted CashThe Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Inventory | Inventory Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals and are reported at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. The Company reviews its inventory commodities for impairment whenever events or circumstances indicate that the value may not be recoverable.
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Impairment of long-lived assets | Impairment of long-lived assetsThe Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") regarding long-lived assets. It requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company determined that no long-lived asset impairment existed during the three months ended March 31, 2021. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Any effects on the business, financial position or results of operations from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.
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Reclassification of Prior Year Presentation | Reclassification of Prior Year PresentationCertain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations. |
Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interests As more fully described in "Note 14. Share Purchase and Subscription Agreements", the Company is party to put/call option agreements with the holder of MG SPV’s and Heartland SPV's non-controlling interests. The put options permit MG SPV's and Heartland SPV's non-controlling interest holders, at any time on or after the earlier of (a) the fifth anniversary of the applicable closing date of such issuances and (ii) the occurrence of certain triggering events (an “MG Redemption” and "Heartland Redemption", as applicable) to require MG SPV and Heartland SPV to redeem the non-controlling interest from the holder of such interest. Per the agreements, the cash purchase price for such redeemed Class B Units (MG SPV) and Class A Units (Heartland SPV) is the greater of (y) the fair market value of such units (without discount for illiquidity, minority status or otherwise) as determined by a qualified third party agreed to in writing by a majority of the holders seeking an MG SPV Redemption and Heartland SPV Redemption and Vertex Operating, LLC, our wholly-owned subsidiary (“Vertex Operating”) (provided that Vertex Operating still owns Class A Units (as to MG SPV) or Class B Units (as to Heartland SPV) on such date, as applicable) and (z) the original per-unit price for such Class B Units/Class A Units plus any unpaid Class A/Class B preference. The preference is defined as the greater of (A) the aggregate unpaid “Class B/Class A Yield” (equal to an annual return of 22.5% per annum) and (B) an amount equal to fifty percent (50%) of the aggregate capital invested by the Class B/Class A Unit holders. The agreements also permit the Company to acquire the non-controlling interest from the holders thereof upon certain events. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. Based on this guidance, the Company has classified the MG SPV and Heartland SPV non-controlling interests between the liabilities and equity sections of the accompanying March 31, 2021 and December 31, 2020 consolidated balance sheets. If an equity instrument subject to the guidance is currently redeemable, the instrument is adjusted to its maximum redemption amount at the balance sheet date. If the equity instrument subject to the guidance is not currently redeemable but it is probable that the equity instrument will become redeemable (for example, when the redemption depends solely on the passage of time), the guidance permits either of the following measurement methods: (a) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, or (b) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The amount presented in temporary equity should be no less than the initial amount reported in temporary equity for the instrument. Because the MG SPV and Heartland SPV equity instruments will become redeemable solely based on the passage of time, the Company determined that it is probable that the MG SPV and Heartland SPV equity instruments will become redeemable. The Company has elected to apply the second of the two measurement options described above. An adjustment to the carrying amount of a non-controlling interest from the application of the above guidance does not impact net income or loss in the consolidated financial statements. Rather, such adjustments are treated as equity transactions.
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Variable Interest Entities | Variable Interest Entities The Company accounts for the investments it makes in certain legal entities in which equity investors do not have (1) sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support, (2) as a group (the holders of the equity investment at risk), either the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impacts the entity’s economic performance, or (3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity. These certain legal entities are referred to as “variable interest entities” or “VIEs.” The Company consolidates the results of any such entity in which it determines that it has a controlling financial interest. The Company has a “controlling financial interest” in such an entity if the Company has both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive benefits from, the VIE that could be potentially significant to the VIE. On a quarterly basis, the Company reassesses whether it has a controlling financial interest in any investments it has in these certain legal entities.
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SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restrictions on cash and cash equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows.
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CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of concentrations | At March 31, 2021 and 2020 and for each of the three months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations:
For each of the three months ended March 31, 2021 and 2020, the Company's segment revenues were comprised of the following customer concentrations:
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REVENUES (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of revenue | The following tables present our revenues disaggregated by geographical market and revenue source:
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ACCOUNTS RECEIVABLE (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts receivable | Accounts receivable, net, consists of the following at March 31, 2021 and December 31, 2020:
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LINE OF CREDIT AND LONG-TERM DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding debt facilities | The Company's outstanding debt facilities as of March 31, 2021 and December 31, 2020 are summarized as follows:
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Schedule of future maturities of notes payable | Future contractual maturities of notes payable as of March 31, 2021 are summarized as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of basic and diluted earnings per share | The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the three months ended March 31, 2021 and 2020:
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PREFERRED STOCK AND DETACHABLE WARRANTS (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of temporary equity | The following table represents the activity related to the Series B Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, during the three months ended March 31, 2021 and 2020:
The following table represents the activity related to the Series B1 Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, for the three months ended March 31, 2021 and 2020:
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Schedule of liabilities with unobservable inputs | The following is an analysis of changes in the derivative liability for the three months ended March 31:
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SEGMENT REPORTING (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the company's reportable segment information | Segment information for the three months ended March 31, 2021 and 2020 is as follows:
(1) Distillates are finished fuel products such as gasoline and diesel fuels. (2) Metals consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing. (3) Other re-refinery products include the sales of asphalt, condensate, recovered products, and other petroleum products.
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COMMODITY DERIVATIVE INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | The fair value of the crude oil swap agreements is based on the difference between the strike price and the New York Mercantile Exchange futures price for the applicable trading months.
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Schedule of fair value of derivative instruments within balance sheet | The carrying values of the Company's derivatives positions and their locations on the consolidated balance sheets as of March 31, 2021 and December 31, 2020 are presented in the table below.
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LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of maturities of operating lease liabilities | Maturities of our lease liabilities for all operating leases are as follows as of March 31, 2021:
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Schedule of operating lease weighted average remaining lease terms and discount rates | The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 31, 2021:
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SHARE PURCHASE AND SUBSCRIPTION AGREEMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of changes in redeemable noncontrolling interest | The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to MG SPV as of March 31, 2021 and 2020.
The table below presents the reconciliation of changes in redeemable noncontrolling interest relating to Heartland SPV as of March 31, 2021 and 2020.
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Schedule of variable interest entities | The following table summarizes the carrying amounts of Heartland SPV's assets and liabilities included in the Company’s consolidated balance sheets at March 31, 2021 and 2020:
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BASIS OF PRESENTATION AND NATURE OF OPERATIONS (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Hydrocarbons | |
Product Information | |
Percentage of decrease in prices (as a percent) | 67.00% |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 12,426,704 | $ 10,895,044 | $ 16,295,062 | |
Restricted cash | 100,125 | 100,125 | 100,134 | |
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows | $ 12,526,829 | $ 10,995,169 | $ 16,395,196 | $ 4,199,825 |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
New Accounting Pronouncements or Change in Accounting Principle | |
Asset impairment | $ 0 |
Common Class B and Class A | |
New Accounting Pronouncements or Change in Accounting Principle | |
Annual return (as a percent) | 22.50% |
Percentage of aggregate capital investment to be added to original per-unit price to determine cash purchase price (as a percent) | 50.00% |
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES - Narrative (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021
USD ($)
|
Mar. 31, 2020
USD ($)
|
Feb. 12, 2016
lawsuit
|
|
Revenue, Major Customer | |||
Related party payments | $ | $ 33,228 | $ 24,689 | |
Vertex Refining LA, LLC | |||
Revenue, Major Customer | |||
Number of lawsuits named as defendant | lawsuit | 5 |
ACCOUNTS RECEIVABLE (Details) - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | ||
Accounts receivable trade | $ 13,593,869 | $ 11,751,679 |
Allowance for doubtful accounts | (598,131) | (612,746) |
Accounts receivable trade, net | $ 12,995,738 | $ 11,138,933 |
LINE OF CREDIT AND LONG-TERM DEBT - Long Term Debt (Details) - EBC Credit Agreement - Capex Loan - USD ($) |
Aug. 07, 2020 |
Mar. 31, 2021 |
Jan. 01, 2021 |
Nov. 27, 2020 |
Nov. 26, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|---|---|
Debt Instrument | ||||||
Line of credit, maximum borrowing capacity | $ 2,000,000 | |||||
Minimum advance request | 500,000 | |||||
Advance request multiples | 100,000 | |||||
Debt instrument interest rate effective percentage | 1.15% | |||||
Daily availability requirements | $ 1,000,000 | |||||
Line of credit capital expenditure limitation | $ 3,000,000 | $ 4,000,000 | $ 3,000,000 | $ 3,000,000 | ||
Line of credit, minimum required availability | $ 2,000,000 | $ 1,000,000 | $ 2,000,000 | |||
LIBOR | ||||||
Debt Instrument | ||||||
Interest rate (percentage) | 7.00% | |||||
Prime Rate | ||||||
Debt Instrument | ||||||
Interest rate (percentage) | 0.50% | |||||
Federal fund rate | ||||||
Debt Instrument | ||||||
Interest rate (percentage) | 6.00% |
LINE OF CREDIT AND LONG-TERM DEBT - Loan Agreement (Details) - USD ($) |
May 27, 2020 |
May 04, 2020 |
---|---|---|
Secured debt | Contract Security Agreement | ||
Debt Instrument | ||
Amount borrowed | $ 152,643 | |
Debt instrument, stated rate (as a percent) | 2.45% | |
Unsecured Debt | Paycheck Protection Program | ||
Debt Instrument | ||
Amount borrowed | $ 4,220,000 | |
Debt instrument, stated rate (as a percent) | 1.00% |
LINE OF CREDIT AND LONG-TERM DEBT - Insurance Premiums (Details) - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Instrument | ||
Long-term debt | $ 12,631,875 | $ 13,923,954 |
Insurance premiums financed | Various institutions | ||
Debt Instrument | ||
Long-term debt | $ 473,417 | $ 1,183,543 |
Insurance premiums financed | Various institutions | Minimum | ||
Debt Instrument | ||
Debt instrument, stated rate (as a percent) | 4.00% | |
Insurance premiums financed | Various institutions | Maximum | ||
Debt Instrument | ||
Debt instrument, stated rate (as a percent) | 4.90% |
LINE OF CREDIT AND LONG-TERM DEBT - Finance Leases (Details) |
3 Months Ended | ||||
---|---|---|---|---|---|
Jul. 28, 2020
USD ($)
|
May 22, 2020
USD ($)
contract
|
Apr. 02, 2020
USD ($)
contract
|
Mar. 31, 2021
USD ($)
|
Mar. 31, 2020
USD ($)
|
|
Lessee, Lease, Description | |||||
Finance lease payment | $ 122,052 | $ 53,119 | |||
Secured debt | AVT Equipment Lease-Ohio | |||||
Lessee, Lease, Description | |||||
Number of finance leases assumed | contract | 1 | ||||
Finance lease payment | $ 9,322 | ||||
Finance lease term | 3 years | ||||
Secured debt | Finance Lease Originated July 28, 2020 | |||||
Lessee, Lease, Description | |||||
Finance lease payment | $ 3,545 | ||||
Finance lease term | 3 years | ||||
Secured debt | AVT Equipment Lease-HH | |||||
Lessee, Lease, Description | |||||
Number of finance leases assumed | contract | 1 | ||||
Finance lease payment | $ 15,078 | ||||
Finance lease term | 3 years |
EARNINGS PER SHARE - Narrative (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Options to purchase (in shares) | 4,065,059 | 4,418,250 |
Warrants to purchase (in shares) | 1,983,510 | 8,633,193 |
Series B Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Convertible preferred stock, common stock issuable upon conversion (in shares) | 2,035,666 | 3,883,449 |
Series B1 Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Convertible preferred stock, common stock issuable upon conversion (in shares) | 5,497,450 | 7,004,236 |
Series A Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Conversion of stock, shares issued (in shares) | 419,859 | 419,859 |
EARNINGS PER SHARE - Schedule of Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Numerator: | ||
Net income (loss) available to common shareholders | $ 635,032 | $ (9,453,991) |
Denominator: | ||
Weighted-average common shares outstanding (in shares) | 47,709,450 | 45,372,358 |
Basic loss per share (in dollars per share) | $ 0.01 | $ (0.21) |
Numerator: | ||
Net income (loss) available to common shareholders | $ 635,032 | $ (9,453,991) |
Denominator: | ||
Weighted-average common shares outstanding (in shares) | 47,709,450 | 45,372,358 |
Effect of dilutive securities | ||
Stock options and warrants (in shares) | 876,886 | 0 |
Preferred stock (in shares) | 419,859 | 0 |
Diluted weighted-average shares outstanding (in shares) | 49,006,195 | 45,372,358 |
Diluted loss per share (in dollars per share) | $ 0.01 | $ (0.21) |
PREFERRED STOCK AND DETACHABLE WARRANTS - Activity in Preferred Stock (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Increase (Decrease) in Temporary Equity | ||
Balance at beginning of period | $ 55,366,186 | |
Plus: discount accretion | 223,727 | $ 932,003 |
Balance at end of period | 48,130,860 | |
Series B Preferred Stock | ||
Increase (Decrease) in Temporary Equity | ||
Balance at beginning of period | 12,718,339 | 11,006,406 |
Less: conversions of shares to common | (1,978,494) | 0 |
Less: exchanges of shares to common | (4,747,250) | 0 |
Plus: discount accretion | 0 | 413,889 |
Plus: dividends in kind | 317,970 | 177,921 |
Balance at end of period | 6,310,565 | 11,598,216 |
Series B1 Preferred Stock | ||
Increase (Decrease) in Temporary Equity | ||
Balance at beginning of period | 11,036,173 | 12,743,047 |
Less: conversions of shares to common | (3,256,024) | (3,368,474) |
Plus: discount accretion | 223,727 | 518,114 |
Plus: dividends in kind | 288,594 | 211,269 |
Balance at end of period | $ 8,292,470 | $ 10,103,956 |
PREFERRED STOCK AND DETACHABLE WARRANTS - Changes in Derivative Liability (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance at beginning of period | $ 330,412 | $ 1,969,216 |
Value of warrants exercised | (1,105,935) | 0 |
Change in valuation of warrants | 1,780,203 | (1,698,747) |
Balance at end of period | $ 1,004,680 | $ 270,469 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | 0.00% | |
Operating loss carryforwards | $ 49,100,000 | |
Before income tax | $ 2,965,338 | $ 2,390,251 |
COMMODITY DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2021
USD ($)
$ / bbl
bbl
|
Dec. 31, 2020
USD ($)
$ / bbl
bbl
|
|
Derivative | ||
Fair Value | $ 342,031 | $ (94,214) |
Mar. 2021- Jun. 2021 | ||
Derivative | ||
Weighted average strike price (in usd per barrel) | $ / bbl | 74.39 | |
Remaining Volume (Barrels) | bbl | 75,000 | |
Fair Value | $ 342,031 | |
Dec. 2020-Mar. 2021 | ||
Derivative | ||
Weighted average strike price (in usd per barrel) | $ / bbl | 62.33 | |
Remaining Volume (Barrels) | bbl | 55,000 | |
Fair Value | $ (94,214) |
COMMODITY DERIVATIVE INSTRUMENTS - Fair Value of Derivative Instruments within Balance Sheet (Details) - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Derivative | ||
Derivative commodity asset (liability) | $ 342,031 | $ (94,214) |
Crude oil futures | ||
Derivative | ||
Derivative commodity asset (liability) | $ 342,031 | $ (94,214) |
COMMODITY DERIVATIVE INSTRUMENTS - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Derivative | ||
Gain (loss) on sale of commodity contracts | $ 1,306,344 | $ (4,507,370) |
Cost of Revenues | ||
Derivative | ||
Gain (loss) on sale of commodity contracts | $ (721,531) | $ 4,427,782 |
LEASES - Narrative (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021
USD ($)
renewal_option
lease
|
Mar. 31, 2020
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle | ||
Finance lase cost | $ 103,983 | $ 53,121 |
Finance lease, interest expense | 26,623 | 10,919 |
Operating lease cost | 1,500,000 | 1,500,000 |
Operating lease payments | 300,000 | 300,000 |
Finance lease payment | $ 122,052 | $ 53,119 |
Number of extension options | renewal_option | 2 | |
Plant | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Lease renewal term | 5 years | |
Number of operating leases | lease | 2 | |
Lease renewal term, total | 20 years | |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Lease renewal term | 1 year | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Lease renewal term | 20 years | |
Cumulative Effect, Period of Adoption, Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Right-of-use asset | $ 37,800,000 |
LEASES - Schedule of Operating Lease Weighted Average Remaining Lease Terms and Discount Rates (Details) |
Mar. 31, 2021 |
---|---|
Lease facilities | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 5 years 8 months 4 days |
Weighted average discount rate (as a percent) | 9.17% |
Lease equipment | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 11 months 1 day |
Weighted average discount rate (as a percent) | 8.00% |
Lease plant | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 12 years 3 days |
Weighted average discount rate (as a percent) | 9.37% |
Lease railcar | |
Lessee, Lease, Description | |
Weighted average remaining lease terms (years) | 1 year 1 month 6 days |
Weighted average discount rate (as a percent) | 8.00% |
SHARE PURCHASE AND SUBSCRIPTION AGREEMENTS - Myrtle Grove Share Purchase and Subscription Agreement (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Common Class B and Class A | |
Class of Stock | |
Annual return (as a percent) | 22.50% |
Percentage of aggregate capital investment to be added to original per-unit price to determine cash purchase price (as a percent) | 50.00% |
Tensile-MG | Common Class B | |
Class of Stock | |
Percentage of voting power of the outstanding voting securities (more than) (as a percent) | 50.00% |
Tensile-MG | MG SPV | Common Class B | |
Class of Stock | |
Restricted cash and cash equivalents | $ 0.6 |
SUBSEQUENT EVENTS (Details) |
3 Months Ended |
---|---|
Mar. 31, 2021
shares
| |
Series B Preferred Stock | |
Subsequent Event [Line Items] | |
Restricted shares issued (in shares) | 50,896 |
Number of shares converted into common stock (in shares) | 50,896 |
Series B1 Preferred Stock | |
Subsequent Event [Line Items] | |
Restricted shares issued (in shares) | 137,439 |
Number of shares converted into common stock (in shares) | 137,439 |
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