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2024年10月31日，登记公司普通股的流通股数为
表格10-Q
截至2024年9月30日的季度周期
关于前瞻性特别提示-展望性声明
我们在本季度10-Q表格中发出前瞻性声明，包括有关我们对未来事件或其他非历史事实的假设、预测、期望、目标、意图或信念的声明。本季度10-Q报告中的前瞻性声明包括但不限于有关管理计划的声明；关于我们产品投入物价格和产品价格的市场条件趋势；我们利用核准的原料途径的能力；我们利用我们的位置和基础设施的能力；我们能够在Keyes Plant使用成本更低、非食用爱文思生物燃料原料的能力；我们能够扩大进入生质柴油和其副产品的其他市场，包括继续将销售扩展至国际市场的能力；我们与供应商保持和扩大战略关系的能力；我们可以获得政府碳减排奖励的能力；我们可以向交通市场供应燃料币的能力；我们可以继续发展、维护和保护新旧知识产权的能力；我们可以采用、开发和商业化新技术的能力；我们可以合理接受或在所有情况下延长或再融资我们的债券的能力；我们可以继续为资金、发展、建设、维护和运营我们加州乳制品可再生天然气部门的消化器、设施和管道提供资金的能力；我们可以资助、开发和运营我们的碳捕集储存专案，包括获取所需许可的能力；我们可以以符合所有所需条件，包括达到最低贡献额，获得获奖补助的能力；我们可以在 Eb-5 计划下获得额外融资的能力；我们可以生成和卖出或利用各种积分，包括 LCFS、D3 RINs、生产税额抵扣和投资税额抵免的能力；我们可以改善利润的能力；以及我们可以在母公司、子公司或专案层面筹集额外的债务和股本资金的能力。如“预期”、“可能”、“将”、“应当”、“可能”、“相信”、“估计”、“期望”、“打算”、“计划”、“预测”、“预览”、“标的”、“可能导致”的字词或片语旨在识别前瞻性声明。这些前瞻性声明基于目前的假设和预测，并且受到众多风险和不确定性的影响。实际结果可能与所述或由这样的前瞻性声明和相关假设所暗示的结果有实质差异，这是由于某些因素，包括但不限于下文标题“风险因素”下所述的风险，这些风险已经合并，以及其他风险和因素在本报告中和我们向证券交易委员会（SEC）的其他文件中描述的风险。未来的事件或结果可能与此类前瞻性声明相一致。我们不承担公开更新或修订任何前瞻性声明的责任，无论是基于新信息、未来事件或其他原因。
PART I - FINANCIAL INFORMATION
AEMETIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except for par value)
| September 30, 2024 | December 31, 2023 | |||||||
| Unaudited | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents ($ and $ respectively from VIE) | $ | $ | ||||||
| Accounts receivable ($ and $ respectively from VIE) | ||||||||
| Inventories | ||||||||
| Prepaid expenses ($ and $ respectively from VIE) | ||||||||
| Other current assets ($ and $ respectively from VIE) | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net ($ and $ respectively from VIE) | ||||||||
| Operating lease right-of-use assets ($ and $ respectively from VIE) | ||||||||
| Other assets ($ and $ respectively from VIE) | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable ($ and $ respectively from VIE) | $ | $ | ||||||
| Current portion of long term debt ($ and $ respectively from VIE) | ||||||||
| Short term borrowings ($ and $ respectively from VIE) | ||||||||
| Other current liabilities ($ and $ respectively from VIE) | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Senior secured notes and revolving notes | ||||||||
| EB-5 notes | ||||||||
| Other long term debt ($ and $, respectively from VIE) | ||||||||
| Series A preferred units ($ and $ respectively from VIE) | ||||||||
| Other long term liabilities ($ and $ respectively from VIE) | ||||||||
| Total long term liabilities | ||||||||
| Stockholders' deficit: | ||||||||
| Common stock, $ par value; authorized; and shares issued and outstanding each period, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
The accompanying notes are an integral part of the financial statements.
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands except for loss per share)
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Revenues |
$ | $ | $ | $ | ||||||||||||
| Cost of goods sold |
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| Gross profit |
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| Selling, general and administrative |
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| Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other expense (income): |
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| Interest expense |
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| Interest rate expense |
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| Debt related fees and amortization expense |
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| Accretion and other expenses of Series A preferred units |
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| Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense (benefit) |
( |
) | ( |
) | ||||||||||||
| Net income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
| Other comprehensive income (loss) |
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| Foreign currency translation loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
| Net income (loss) per common share |
||||||||||||||||
| Basic |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
| Diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
| Weighted average shares outstanding |
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| Basic |
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| Diluted |
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The accompanying notes are an integral part of the financial statements.
AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based compensation | ||||||||
| Depreciation | ||||||||
| Debt related fees and amortization expense | ||||||||
| Intangibles and other amortization expense | ||||||||
| Accretion and other expenses of Series A preferred units | ||||||||
| Loss on asset disposals | ||||||||
| Gain on debt extinguishment | ( | ) | ||||||
| Warrants issued for working capital agreement | ||||||||
| Deferred tax expense | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepaid expenses | ||||||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued interest expense and fees | ||||||||
| Other liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities: | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Grant proceeds and other reimbursements received for capital expenditures | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Proceeds from borrowings | ||||||||
| Repayments of borrowings | ( | ) | ( | ) | ||||
| Lender debt renewal and waiver fee payments | ( | ) | ( | ) | ||||
| Payments on finance leases | ( | ) | ( | ) | ||||
| Proceeds from sales of common stock | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ) | ||||||
| Net change in cash, cash equivalents, and restricted cash for period | ( | ) | ||||||
| Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information, cash paid: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Income taxes paid | ||||||||
| Supplemental disclosures of cash flow information, non-cash transactions: | ||||||||
| Subordinated debt extension fees added to debt | ||||||||
| Debt fees added to revolving lines | ||||||||
| Fair value of warrants issued to subordinated debt holders | ||||||||
| Fair value of warrants issued to lender for debt issuance costs | ||||||||
| Lender debt extension, waiver, and other fees added to debt | ||||||||
| Cumulative capital expenditures in accounts payable, including net increase of $ and $ | ||||||||
The accompanying notes are an integral part of the financial statements.
AEMETIS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited, in thousands)
| For the nine months ended September 30, 2024 |
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| Common Stock |
Additional |
Accumulated Other |
Total |
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| Paid-in |
Accumulated |
Comprehensive |
Stockholders' |
|||||||||||||||||||||
| Description |
Shares |
Dollars |
Capital |
Deficit |
Loss |
deficit |
||||||||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | ||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Issuance and exercise of warrants |
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| Foreign currency translation loss |
- | ( |
) | ( |
) | |||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance at March 31, 2024 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Foreign currency translation gain |
- | |||||||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||
| Stock-based compensation |
- | |||||||||||||||||||||||
| Issuance and exercise of warrants |
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| Foreign currency translation loss |
- | ( |
) | ( |
) | |||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance at September 30, 2024 |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||
| For the nine months ended September 30, 2023 |
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| Series B Preferred Stock |
Common Stock |
Additional |
Accumulated Other |
Total |
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| Paid-in |
Accumulated |
Comprehensive |
Stockholders' |
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| Description |
Shares |
Dollars |
Shares |
Dollars |
Capital |
Deficit |
Loss |
deficit |
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| Balance at December 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
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| Stock options exercised |
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| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation gain |
- | - | ||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at March 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Series B conversion to common stock |
( |
) | ||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
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| Foreign currency translation gain |
- | - | ||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
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| Stock options exercised |
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| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
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| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net income |
- | - | ||||||||||||||||||||||||||||||
| Balance at September 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
The accompanying notes are an integral part of the financial statements.
1. General
Nature of Activities
Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis referred to herein as “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas and renewable fuels company focused on the operation, acquisition, development, and commercialization of innovative technologies to produce low and negative carbon intensity renewable fuels that replace fossil-based products. We do this by building a local circular bioeconomy using agricultural products and waste to produce low carbon, advanced renewable fuels that reduce greenhouse gas ("GHG") emissions and improve air quality. Our current operations include:
► California Ethanol - We own and operate a 65 million gallon per year capacity ethanol production facility in Keyes, California (the “Keyes Plant”). In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to local dairies and feedlots. The Keyes Plant also produces and sells CO₂ to Messer Gas who converts it to liquid and sells it to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives at the Keyes Plant focused on reducing operating costs and lowering the carbon intensity of our fuel by reducing fossil fuel inputs.
► California Dairy Renewable Natural Gas - We produce Renewable Natural Gas (RNG) in central California. Our facilities include nine anaerobic digesters that produce biogas from dairy waste, a 36-mile biogas collection pipeline leading to a central upgrading hub, and a utility interconnection to inject the RNG into the natural gas pipeline for delivery to customers for use as transportation fuel. We are actively expanding our RNG production dairies, with five additional digesters under construction, agreements with a total of 48 dairies, and environmental review completed for an additional 24 miles of pipeline. We are also building our own RNG dispensing station, which is planned to begin operating in Q1 2025.
► India Biodiesel - We own and operate a plant in Kakinada, India ("Kakinada Plant" or "India Plant") with a capacity to produce 60 million gallons per year of high-quality distilled biodiesel from a variety of vegetable oil and animal waste feedstocks. The Kakinada Plant is one of the largest biodiesel production facilities in India. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive, and other industries.
In addition, we are actively growing our business by seeking to develop or acquire new facilities, including the following key projects:
► Sustainable Aviation Fuel and Renewable Diesel – We are developing a sustainable aviation fuel and renewable diesel (“SAF/RD”) production plant to be located at the Riverbank Industrial Complex in Riverbank, CA. The plant is currently designed to produce an expected 90 million gallons per year of SAF/RD from renewable oil and fats obtained from the Company’s biofuels plants and other sources. The plant will use low-carbon hydroelectric electricity and renewable hydrogen that is generated within the plant’s own processes using byproducts of the SAF/RD production. In 2023, we received approval of the Use Permit and California Environmental Quality Act ("CEQA") evaluation for the development of the plant, and in March 2024, we received the Authority to Construct air permits for the plant. We are continuing with the engineering and other required development activities for the plant.
► Carbon Capture and Underground Sequestration – We are developing Carbon Capture and Underground Sequestration (“CCUS”) facilities that will inject carbon dioxide captured from our biofuel production facilities and other sources deep into the ground for geologic storage to reduce emissions to the atmosphere of greenhouse gases that contribute to global warming. In May 2023, we received a permit from the State of California to build a geologic characterization well that will provide information for the permitting and design of a CCUS well located in Riverbank, California. We drilled the first phase of the characterization well in September 2024, and plan to complete the drilling in 2025 while at the same time continuing engineering, permitting and other development activities for the sequestration well.
The Company’s current and planned businesses produce renewable fuels and reduce carbon emissions, while generating valuable Renewable Fuel Standard credits, California Low Carbon Fuel Standard credits, and federal tax credits.
Basis of Presentation and Consolidation
These consolidated financial statements include the accounts of Aemetis, Inc. and its subsidiaries. We consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, an enterprise must consolidate a variable interest entity (“VIE”) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We consider Aemetis Biogas LLC ("ABGL") to be a VIE because the Company owns all of the outstanding common units of ABGL and is the primary beneficiary of ABGL's operations; accordingly, the assets, liabilities, and operations of ABGL are consolidated in these financial statements.
All intercompany balances and transactions have been eliminated in consolidation.
The accompanying consolidated condensed balance sheet as of September 30, 2024, the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023, the consolidated condensed statements of cash flows for the nine months ended September 30, 2024 and 2023, and the consolidated condensed statements of stockholders’ deficit for the three and nine months ended September 30, 2024 and 2023, are unaudited. The consolidated condensed balance sheet as of December 31, 2023, is derived from the 2023 audited consolidated financial statements and notes thereto.
The consolidated condensed financial statements in this report should be read in conjunction with the 2023 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of Company’s management, the unaudited interim consolidated condensed financial statements as of and for the three and nine months ended September 30, 2024 and 2023, have been prepared on the same basis as the audited consolidated statements as of and for the year ended December 31, 2023 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year, or any future periods.
There have been no material changes to our significant accounting policies disclosed in Note 1 - Nature of Activities and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
2. Revenue
We derive revenue primarily from sales of ethanol and related co-products in California, renewable natural gas ("RNG") and related environmental attributes in California, and biodiesel and refined glycerin in India.
California Ethanol Revenues: We sell most of our ethanol to J.D. Heiskell Holdings, LLC ("J.D. Heiskell"), who sells it to a customer designated by us, Murex, LLC, who markets the product. We also buy our corn feedstock from J.D. Heiskell, and J.D. Heiskell pays us the net balance between the sales of ethanol and other products we sell to J.D. Heiskell and the cost of our corn purchases from J.D. Heiskell. Our accounting (i) treats us as the purchaser/customer for corn purchases from J.D. Heiskell and accordingly we record the full purchase cost in cost of goods sold, and (ii) treats us as the seller for ethanol and other product sales and accordingly we recognize the full amount as revenue.
Given the similarity of the individual sales transactions with J.D. Heiskell, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to our finished goods tank that is leased by J.D. Heiskell. The transaction price is determined based on daily market prices and quarterly contract pricing negotiated by Murex for its customers for ethanol and based on dry distillers' market and local demand by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation.
The following table shows sales in our California Ethanol segment by product category:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Ethanol sales | $ | $ | $ | $ | ||||||||||||
| Wet distiller's grains sales | ||||||||||||||||
| Other sales | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
From December 2022 until May 2023, we undertook an extended maintenance cycle and accelerated the implementation of several important ethanol plant energy efficiency upgrades, which accounts for lower revenue amounts shown in the table above for the nine months ending September 30, 2023.
California Dairy Renewable Natural Gas Revenues: As of September 30, 2024, we operate nine anaerobic digesters that process feedstock from ten dairies into biogas, a 36-mile collection pipeline leading to a central upgrading hub, and an interconnect to inject the RNG into the utility natural gas pipeline for delivery to customers for use as transportation fuel. In connection with dispensing the RNG, we generate sellable credits under the federal Renewable Fuel Standard (referred to as "D3 RINs") and the California Low Carbon Fuel Standard ("LCFS"). We began selling D3 RINs in the third quarter of 2023 and began selling LCFS credits in the first quarter of 2024. We recognize revenue from sales of RNG concurrently with our production and injection into the pipeline. We recognize revenue from sales of D3 RINs and LCFS credits at the time we sell the credits.
The following table represents sales in our Renewable Natural Gas segment:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| RNG, LCFS and D3 RIN sales | $ | $ | $ | $ | ||||||||||||
India Biodiesel Revenues:
The following table shows our sales in our India Biodiesel segment by product category:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Biodiesel sales | $ | $ | $ | $ | ||||||||||||
| Other sales | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
3. Cash and Cash Equivalents
The following table reconciles cash, cash equivalents, and restricted cash reported in the consolidated condensed balance sheet to the statement of cash flows:
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash included in other current assets | ||||||||
| Restricted cash included in other assets | ||||||||
| Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | $ | ||||||
Restricted cash shown in the table above includes amounts required to be set aside by the Aemetis Biogas 1 LLC Term Loan Agreement and Aemetis Biogas 2 LLC Construction and Term Loan Agreement for financing reserves and construction contingencies.
4. Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per share reflects the dilution of common stock equivalents such as options, debt and warrants to the extent the impact is dilutive.
The following table shows the number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation as of September 30, 2024 and 2023:
|
| ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Common stock options and warrants | ||||||||
| Debt with conversion feature at $ per share of common stock | ||||||||
| Total number of potentially dilutive shares | ||||||||
5. Inventories
Inventories consist of the following:
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
6. Property, Plant and Equipment
Property, plant and equipment consist of the following:
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Land | $ | $ | ||||||
| Plant and buildings | ||||||||
| Furniture and fixtures | ||||||||
| Machinery and equipment | ||||||||
| Construction in progress | ||||||||
| Property held for development | ||||||||
| Finance lease right of use assets | ||||||||
| Total gross property, plant & equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Total net property, plant & equipment | $ | $ | ||||||
For the three months ended September 30, 2024 and 2023, interest capitalized in property, plant and equipment was $
Construction in progress includes costs for biogas digesters that are under construction, the Riverbank sustainable aviation fuel and renewable diesel plant, the carbon capture and sequestration characterization well, and energy efficiency projects at the Keyes Plant. Property held for development is the partially completed Goodland Plant which is not ready for operation. Depreciation will begin for each project when the project is operational and placed into service. Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:
| Years | ||||
| Plant and buildings | ||||
| Machinery and equipment | ||||
| Furniture and fixtures | ||||
For the three months ended September 30, 2024 and 2023, the Company recorded depreciation expense of $
7. Debt
Debt consists of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| Third Eye Capital term notes | $ | $ | ||||||
| Third Eye Capital revolving credit facility | ||||||||
| Third Eye Capital revolving notes Series B | ||||||||
| Third Eye Capital revenue participation term notes | ||||||||
| Third Eye Capital acquisition term notes | ||||||||
| Third Eye Capital Fuels Revolving Line | ||||||||
| Third Eye Capital Carbon Revolving Line | ||||||||
| Construction and term loans | ||||||||
| Cilion shareholder purchase obligation | ||||||||
| Subordinated notes | ||||||||
| EB-5 promissory notes | ||||||||
| EB-5 broker promissory note | ||||||||
| Working capital loans | ||||||||
| Term loans on capital expenditures | ||||||||
| Total debt | ||||||||
| Less current portion of debt | ||||||||
| Total long term debt | $ | $ | ||||||
Third Eye Capital Keyes Notes
On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement (the “Note Purchase Agreement”) with Third Eye Capital Corporation (“Third Eye Capital”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $
| A. | Term Notes. As of September 30, 2024, the Company had $ |
| B. | Revolving Credit Facility. The Revolving Credit Facility accrues interest at the prime rate plus |
| C. | Revolving Notes Series B. The Revolving Notes Series B accrues interest at the prime rate plus |
| D. | Revenue Participation Term Notes. The Revenue Participation Term Notes bear interest at |
| E. | Acquisition Term Notes. The Acquisition Term Notes accrue interest at the prime rate plus |
On July 31, 2024, the Company and Third Eye Capital entered into Amendment 29 to Amended and Restated Note Purchase Agreement ("Amendment 29") that provides the Company with a right to extend the maturity dates of the Third Eye Capital Keyes Notes by one year from April 1, 2025, to April 1, 2026, by providing written notice to Third Eye Capital. As a condition of such extension, the Company would pay a fee of
The Third Eye Capital Keyes Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the notes allow the lender to accelerate the maturity in the event of any default that could reasonably be expected to have a material adverse effect on the Company, such as any change in the business, operations, or financial condition. The Company has evaluated the likelihood of such an acceleration event and determined such an event to not be probable in the next twelve months. The notes allow interest to be added to the outstanding principal balance. The notes are secured by first priority liens on all real and personal property of, assignment of proceeds from all government grants and guarantees from the Company’s North American subsidiaries except for Aemetis Biogas LLC and its subsidiaries, and contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chair and CEO, provided a guaranty of payment and performance secured by all Company shares owned by McAfee Capital and additional assets, and Mr. McAfee has also provided a personal guaranty of up to $
Third Eye Capital Reserve Facility. On March 6, 2020, we entered into a reserve liquidity facility governed by a promissory note, payable to Third Eye Capital Corporation, in the principal amount of $
Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, Goodland Advanced Fuels, Inc. ("GAFI") and Aemetis Carbon Capture, Inc. (“ACCI”) entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital, as administrative agent and collateral agent, and the lender party thereto (the “New Credit Facility”). The New Credit Facility provides for two credit lines with aggregate availability of up to $
Cilion Shareholder Purchase Obligation. In connection with the Company’s merger with Cilion, Inc. (“Cilion”), on July 6, 2012, the Company incurred a $
Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $
EB-5 Promissory Notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act that is designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 (as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized by U.S. Citizenship and Immigration Services as a “Regional Center” to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB-5 Notes”) bearing interest at 2 to 3%. The EB-5 Notes are convertible into Aemetis, Inc. common stock at a conversion price of $
On October 16, 2016, the Company launched its EB-5 Phase II funding (the “EB-5 Phase II Funding”) and entered into certain Note Purchase Agreements with Advanced BioEnergy II, LP, a California limited partnership authorized to receive EB-5 equity funding investments. The Company received $
EB-5 Broker Promissory Note. In July 2024 we signed a promissory note with a broker engaged by Advanced BioEnergy in an agreement to pay the broker certain of Advanced BioEnergy's obligations. The note principal was $
India Biodiesel Secured and Unsecured Loans. On November 13, 2023, the Company entered into a secured loan agreement with Secunderabad Oils Limited in an amount not to exceed $
Aemetis Biogas 1 LLC Term Loan. On October 4, 2022, the Company entered into a Construction Loan Agreement ("AB1 Construction Loan") with Greater Nevada Credit Union (“GNCU”). Pursuant to the AB1 Construction Loan, the lender made available an aggregate principal amount of $
Aemetis Biogas 2 LLC Construction and Term Loan. On July 28, 2023, the Company entered into a Construction and Term Loan Agreement ("AB2 Loan") with Magnolia Bank, Incorporated. Pursuant to the AB2 Loan, the lender has made available an aggregate principal amount not to exceed $
Financing Agreement for Capital Expenditures. In 2018, the Company entered into an agreement with Mitsubishi Chemical America, Inc. ("MCA") to purchase ZEBREXTM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company is no longer operating the equipment, and in June 2024, entered into an Agreement with MCA to amicably resolve all differences and terminate the 2018 equipment purchase agreement. As a result, the Company derecognized $
Maturity Date Schedule
Scheduled debt repayments for the Company’s loan obligations by year are as follows:
| Twelve Months ended September 30, | Debt Repayments | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total debt | ||||
| Debt issuance costs | ( | ) | ||
| Total debt, net of debt issuance costs | $ | |||
8. Leases
The Company is a party to operating leases for the Company's corporate office in Cupertino, modular offices at the Keyes Plant and Biogas operations center, and laboratory facilities. We have also entered into several finance leases for mobile equipment and for the Riverbank Industrial Complex. These finance leases have a purchase option at the end of the term that we are reasonably certain we will exercise, so the leases are classified as finance leases. Our leases have remaining terms of year to
The Company evaluates leases in accordance with ASC 842 – Lease Accounting. When discount rates implicit in leases cannot be readily determined, we use the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and right of use (ROU) assets. The incremental borrowing rate used by the Company is based on weighted average baseline rates commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter are used.
The components of lease expense are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating lease cost | ||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Short term lease expense | ||||||||||||||||
| Variable lease expense | ||||||||||||||||
| Total operating lease cost | $ | $ | $ | $ | ||||||||||||
| Finance lease cost | ||||||||||||||||
| Amortization of right-of-use assets | $ | $ | $ | $ | ||||||||||||
| Interest on lease liabilities | ||||||||||||||||
| Total finance lease cost | $ | $ | $ | $ | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating cash flows used in operating leases | $ | $ | $ | $ | ||||||||||||
| Operating cash flows used in finance leases | ||||||||||||||||
| Financing cash flows used in finance leases | $ | $ | $ | $ | ||||||||||||
Supplemental non-cash flow information related to ROU asset and lease liabilities was as follows for the three and nine months ended September 30, 2024 and 2023:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating leases | ||||||||||||||||
| Accretion of the lease liability | $ | $ | $ | $ | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||||||
| The weighted average remaining lease term and weighted average discount rate as of September 30, 2024 are as follows: | ||||||||||||||||
| Weighted Average Remaining Lease Term | ||||||||||||||||
| Operating leases (in years) | ||||||||||||||||
| Finance leases (in years) | ||||||||||||||||
| Weighted Average Discount Rate | ||||||||||||||||
| Operating leases | % | % | ||||||||||||||
| Finance leases | % | % | ||||||||||||||
Supplemental balance sheet information related to leases is as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| Operating leases | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
|
| ||||||||
|
| ||||||||
| Total operating lease liabilities | ||||||||
| Finance leases | ||||||||
| Property and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
|
| ||||||||
|
| ||||||||
| Total finance lease liabilities | ||||||||
Maturities of operating lease liabilities are as follows:
| Twelve months ended September 30, | Operating leases | Finance leases | ||||||
| 2025 | $ | $ | ||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less imputed interest | ( | ) | ( | ) | ||||
| Total lease liability | $ | $ | ||||||
The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on net basis on the consolidated financial statements. Sublease income is recorded in the General and Administrative Expense section of the Consolidated Statements of Operations and Comprehensive Loss.
The components of lease income are as follows for the three and nine months ended September 30, 2024 and 2023, respectively:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Lease income | $ | $ | $ | $ | ||||||||||||
Future lease commitments to be received by the Company as of September 30, 2024, are as follows:
| Twelve months ended September 30, | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total future lease commitments | $ |
9. Aemetis Biogas LLC – Series A Preferred Financing
On December 20, 2018, Aemetis Biogas LLC ("ABGL") entered into a Series A Preferred Unit Purchase Agreement for the sale of Series A Preferred Units to Protair-X Americas, Inc., with Third Eye Capital acting as an agent. ABGL is authorized to issue
On November 6, 2024, ABGL entered into an agreement entitled Seventh Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Seventh Amendment") with an Effective Date of August 31, 2024, that provides, among other provisions, the right for ABGL to redeem all of the outstanding Series A Preferred Units by January 31, 2025, for an aggregate redemption price of $
10. Stock-Based Compensation
2019 Stock Plan
On August 26, 2021, the stockholders of the Company approved the Aemetis, Inc. Amended and Restated 2019 Stock Plan (the “2019 Stock Plan”) which allows our Board or delegated Board committee to grant Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, and other stock or cash awards to employees, Directors, and consultants. The Company did not issue any stock options or RSAs during the three months ending September 30, 2024. The following table summarizes activity under the 2019 Stock Plan during the nine-month period ending September 30, 2024:
| Shares Available for Grant | Number of Shares Outstanding | Weighted-Average Exercise Price | ||||||||||
| Balance as of December 31, 2023 | $ | |||||||||||
| Authorized | ||||||||||||
| Options Granted | ( | ) | $ | |||||||||
| RSAs Granted | ( | ) | - | $ | - | |||||||
| Exercised | - | ( | ) | $ | ||||||||
| Forfeited/expired | ( | ) | $ | |||||||||
| Balance as of September 30, 2024 | $ | |||||||||||
The number of outstanding option shares as of September 30, 2024, includes
Inducement Equity Plan
In March 2016, the Board of Directors of the Company approved an Inducement Equity Plan authorizing the issuance of
Stock-based Compensation Expense
Stock-based compensation is accounted for in accordance with ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and consultants based on estimated fair value on the grant date. We estimate the fair value using the Black-Scholes option pricing model and recognize that fair value as an expense over the vesting period of each grant using the straight-line method. We only record compensation cost for vested options. The Black-Scholes valuation model for stock-based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, expected dividends, and expected forfeitures. We use the simplified calculation of expected term described in SEC Staff Accounting Bulletin Topic 14, Share-Based Payment. Volatility is based on an average of the historical volatility of Aemetis, Inc. common stock during the period of time preceding the date of option issuance that matches the term of the option grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the treasury maturity term corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants. To the extent actual forfeitures occur, the difference is recorded as an adjustment in the scheduled expense during the period of the forfeiture.
The weighted average fair value calculations for the options granted during the nine months ended September 30, 2024 and 2023, are based on the following assumptions:
| For the nine months ended September 30, | ||||||||
| Description | 2024 | 2023 | ||||||
| Dividend-yield | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected life (years) | ||||||||
| Market value per share on grant date | $ | $ | ||||||
| Fair value per option on grant date | $ | $ | ||||||
During the nine months ended September 30, 2024 and 2023, the Company granted
As of September 30, 2024, the Company had $
11. Warrants
On July 1, 2024, the maturity dates on two accredited investor's Subordinated Notes were extended to December 31, 2024. In connection with the extension, the Company issued the noteholders warrants exercisable for the purchase of
| Warrants Outstanding & Exercisable | Weighted - Average Exercise Price | Average Remaining Term in Years | ||||||||||
| Outstanding December 31, 2023 | $ | 5.77 | ||||||||||
| Granted | $ | |||||||||||
| Exercised | ( | ) | $ | |||||||||
| Outstanding September 30, 2024 | $ | |||||||||||
All of the above outstanding warrants are fully vested and exercisable as of September 30, 2024.
The fair value calculations for issued warrants are based on the following weighted average factors:
| For the nine months ended September 30, | ||||||||
| Description | 2024 | 2023 | ||||||
| Dividend-yield | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected life (years) | ||||||||
| Exercise price per share | $ | $ | ||||||
| Market value per share on grant date | $ | $ | ||||||
| Fair value per share on grant date | $ | $ | ||||||
12. Agreements
J.D. Heiskell Working Capital Agreements. The Company procures whole yellow corn from J.D. Heiskell pursuant to a Corn Procurement and Working Capital Agreement. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. Pursuant to a separate agreement entered in May 2023, J.D. Heiskell also purchases all of our ethanol and other products and sells them to customers designated by us. We have designated Murex to purchase ethanol and A.L Gilbert to purchase WDG. The Company’s relationships with J.D. Heiskell, Murex, and A.L. Gilbert are well established, and the Company believes that the relationships are beneficial to all parties involved by utilizing distribution logistics to reach our customer base, managing inventory, and providing working capital relationships.
The sales and purchases activity associated with the J.D. Heiskell Purchase Agreement and J.D. Heiskell Procurement Agreement during the three and nine months ended September 30, 2024 and 2023, was as follows:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Ethanol sales | $ | $ | $ | $ | ||||||||||||
| Wet distiller's grains sales | ||||||||||||||||
| Corn oil sales | ||||||||||||||||
| CDS sales | ||||||||||||||||
| Corn purchases | ||||||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Accounts receivable | ||||||||
| Accounts payable | ||||||||
Ethanol and Wet Distillers Grains Marketing Arrangement. On May 30, 2023, the Company entered into Amendment No. 1 to the Fuel Ethanol Purchase and Sale Agreement with Murex that suspends the agreement for the duration of the Company's Working Capital Agreement with J.D. Heiskell and extends the term to March 31, 2025. While the Murex agreement is suspended, Murex remains as our marketing partner to market the ethanol we sold to J.D Heiskell. The Company has a Wet Distillers Grains Marketing Agreement with A.L. Gilbert that matures on December 31, 2024, with automatic one-year renewals thereafter.
The agreements with J.D. Heiskell, Murex, and A.L. Gilbert include marketing and transportation services. For the three months ended September 30, 2024 and 2023, the Company expensed marketing costs of $
Supply Trade Agreement. On July 1, 2022, the Company entered into an operating agreement with Gemini Edibles and Fats India Private Limited (“Gemini”) pursuant to which Gemini supplies the Company with feedstock up to a credit limit of $
Forward Sale Commitments. As of September 30, 2024, we have
Natural Gas Purchase Agreement. As of September 30, 2024, we have forward purchase agreement in place to buy approximately 394 thousand MMBtu of natural gas at a fixed price from July through October 2024, which aligns with our expected natural gas usage at the Keyes Plant. The Company has elected to apply the normal purchases and normal sales scope exception under ASC 815, hence the natural gas purchased under this agreement is accounted for and presented as cost of goods sold in the Company's financial statements.
13. Segment Information
Aemetis recognizes reportable segments: “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.”
● The “California Ethanol” segment includes the Company’s
● The “California Dairy Renewable Natural Gas” segment includes the production and sale of Renewable Natural Gas ("RNG") and associated environmental attributes, consisting of nine anaerobic digesters processing waste from ten dairies, a 36 mile biogas collection pipeline, a biogas upgrading hub that produces RNG from the biogas, a pipeline interconnect, and ongoing construction of additional digesters.
● The “India Biodiesel” segment includes the Company’s
The Company has additional operating segments that have been determined not to be separately reportable so are reported in the "All Other" category, including our key projects for the development of a sustainable aviation fuel and renewable diesel production plant in Riverbank, California, and Carbon Capture and Underground Sequestration wells in California. Additionally, our corporate offices, Goodland Plant in Kansas, and research and development facility in Minnesota are included in the “All Other” category.
Summarized financial information by reportable segment for the three months ended September 30, 2024 and 2023, follows:
| For the three months ended September 30, 2024 | ||||||||||||||||||||
| California Ethanol | California Dairy Renewable Natural Gas | India Biodiesel | All Other | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Gross profit | ||||||||||||||||||||
| Interest expense including amortization of debt fees | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| For the three months ended September 30, 2023 | ||||||||||||||||||||
| California Ethanol | California Dairy Renewable Natural Gas | India Biodiesel | All Other | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||||||
| Interest expense including amortization of debt fees | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
The following table summarizes financial information by reportable segment for the nine months ended September 30, 2024 and 2023:
| For the nine months ended September 30, 2024 | ||||||||||||||||||||
| California Ethanol | California Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Gross profit (loss) | ( | ) | ||||||||||||||||||
| Interest expense including amortization of debt fees | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||
| Loss on asset disposals | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| For the nine months ended September 30, 2023 | ||||||||||||||||||||
| California Ethanol | California Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||||||
| Interest expense including amortization of debt fees | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
Total assets by reportable segment as of September 30, 2024, and December 31, 2023, are as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| California Ethanol | $ | $ | ||||||
| California Dairy Renewable Natural Gas | ||||||||
| India Biodiesel | ||||||||
| All Other | ||||||||
| Total consolidated assets | $ | $ | ||||||
14. Related Party Transactions
The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital LLC (“McAfee Capital”), owned by Eric McAfee, $
The Company owes various members of the Board amounts totaling $
15. Subsequent Events
Series A Preferred Unit Purchase Agreement
On November 6, 2024, ABGL, Third Eye Capital Corporation, and Protair-X Technologies Inc. entered into an agreement entitled Seventh Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Seventh Amendment") with an Effective Date of August 31, 2024, that provides, among other provisions, that ABGL will redeem all of the outstanding Series A Preferred Units by January 31, 2025, for an aggregate redemption price of $
16. Liquidity
The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. As a result of negative capital, negative operating results, and collateralization of substantially all of the Company assets, the Company has been reliant on its senior secured lender to provide extensions to the maturity dates of its debt and loan facilities and was required in 2023 to remit excess cash from operations to our senior secured lender. In order to meet our obligations during the next twelve months, we will need to refinance debt with our senior lender for amounts becoming due in the next twelve months or receive the continued cooperation of our senior lender. This dependence on our senior lender raises substantial doubt about the Company's ability to continue as a going concern. While we believe our India biodiesel and California RNG businesses will generate positive cash flow from operations and reduce cash demands and allows payments against other obligations, we will also continue to sell equity through our at-the-market registration and pursue the following strategies to improve liquidity:
Operations and Project Development
For the Keyes Plant, we plan to operate the plant and continue to improve its financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction, or revenue enhancements, as well as execute upon awarded grants that support investments in equipment to improve energy and operational efficiencies resulting in lower cost, lower carbon emissions, and overall margin improvement.
For Aemetis Biogas, we plan to operate our existing biogas digesters to produce and sell Renewable Natural Gas (RNG) and the associated Federal D3 RINs and California LCFS credits. We are continuing to build new dairy digesters and pipeline extensions. We began generating revenue from biogas operations in 2023 and we expect that this revenue will continue for the full year 2024, as well as increase as we build new digesters. We also expect revenue to increase when the California Air Resource Board processes our LCFS pathway applications and approves a provisional carbon intensity that is lower than the temporary carbon intensity we currently use to calculate the quantity of LCFS credits that we generate. We are seeking debt financing from a variety of sources to accelerate the construction of additional digesters.
For the Kakinada Plant, we plan to continue to sell our biodiesel to India Oil Marketing Companies ("OMCs") pursuant to cost-plus contracts. We are also continuing to upgrade the plant to increase feedstock flexibility (and thereby lower feedstock costs), increase production capacity, and produce new products. Additionally, we are in the process of negotiating contractual arrangements for the export of refined animal tallow into international markets.
Financing
We plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, entering into additional debt agreements for specific projects, obtaining project specific equity and debt for development projects, and obtaining additional debt from the current EB-5 Phase II offering.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated condensed financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
| ● |
Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A. |
| ● |
Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2024 and 2023. |
| ● |
Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition. |
| ● |
Critical Accounting Policies and Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
The following discussion should be read in conjunction with our consolidated condensed financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly under “Part II, Item 1A. Risk Factors,” and in other reports we file with the SEC. All references to years relate to the calendar year ended December 31 of the particular year.
Overview
Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis referred to herein as “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas and renewable fuels company focused on the operation, acquisition, development, and commercialization of innovative technologies to produce low and negative carbon intensity renewable fuels that replace fossil-based products. We do this by building a local circular bioeconomy using agricultural products and waste to produce low carbon, advanced renewable fuels that reduce greenhouse gas ("GHG") emissions and improve air quality.
Our California Ethanol segment consists of a 65 million gallon per year capacity ethanol production facility located in Keyes, California (the “Keyes Plant”) that we own and operate. In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to more than 80 local dairies and feedlots. We also capture the Carbon Dioxide (“CO2”) emissions from our fermenters and sell it to Messer Gas for use to produce liquid CO₂ that it sells to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives focused on lowering the carbon intensity of our fuels, primarily by decreasing the use of fossil natural gas. These energy efficiency projects include high efficiency heat exchangers; a two-megawatt solar microgrid with battery storage that became operational in the second quarter; a Decision Control System (DCS) to manage and optimize energy use and other plant operations; and a Mechanical Vapor Recompression (MVR) system that is expected to replace about 80% of our natural gas consumption with low carbon electricity. These changes are expected to lower the carbon intensity (CI) of the ethanol we produce and allow us to sell it for a correspondingly higher price.
Our California Dairy Renewable Natural Gas segment, Aemetis Biogas or “ABGL,” operates anaerobic digesters at local dairies near the Keyes Plant (many of whom also purchase WDG produced by the Keyes Plant as animal feed) to produce biogas from dairy waste; transports the biogas by pipeline to the Keyes Plant site; and converts the biogas to Renewable Natural Gas (“RNG”) that is delivered to customers through the PG&E regional natural gas pipeline. As of September 30, 2024, we had nine operating digesters that receive dairy waste from ten dairies, and we are actively growing with an additional five digesters currently under construction that are expected to receive dairy waste from eight dairies. We expect to initiate construction on several additional digesters in the fourth quarter when we close on currently planned debt financing. We have constructed 36 miles of collection pipeline and have received environmental approval to construct an additional 24 miles. We currently have agreements with a total of 44 dairies and are seeking to increase that number.
Our India Biodiesel segment includes a biodiesel production plant in Kakinada, India (“Kakinada Plant”) with a nameplate production capacity of about 60 million gallons per year. It produces high quality distilled biodiesel and refined glycerin for customers in India. We believe the Kakinada Plant is one of the largest biodiesel production facilities in India on a nameplate capacity basis. The Kakinada Plant can process a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meets applicable product standards. Our Kakinada Plant can also distill the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive, and other industries.
Our planned sustainable aviation fuel (SAF) and renewable diesel (RD) production plant is currently designed to produce 90 million gallons per year of combined SAF and RD from feedstocks consisting of renewable waste oils and fats. Our planned facility will be located at the Riverbank Industrial Complex in Riverbank, California. We signed a lease with an option to purchase for the Riverbank Industrial Complex in 2021 and took possession of the site in 2022. In 2023, we received a Use Permit and CEQA approval for the SAF/RD plant, and in March 2024, we received Authority to Construct air permits for the plant. We are continuing with development activities, including permitting, engineering, and financing. The site has access to low carbon hydroelectric power, and our plant is designed to use renewable hydrogen that will be produced from byproducts of the SAF/RD production process.
Our planned CCUS projects will compress and inject CO₂ into deep wells that are monitored to ensure the long-term sequestration of carbon underground. California’s Central Valley has been identified as one of the world’s most favorable regions for large-scale CO₂ injection projects due to the subsurface geologic formation that absorbs and retains CO₂ gas. The two initial Aemetis CCUS injection projects are being designed to capture and sequester more than two million metric tons per year of CO₂ at the Aemetis biofuels plant sites in Keyes and Riverbank, California. In July 2022, Aemetis purchased 24 acres at the Riverbank Industrial Complex in Riverbank, California to develop a CCUS injection well with more than 1 million metric ton per year of CO₂ sequestration capacity. In 2023, we obtained a permit to construct a geologic characterization well at the Riverbank site to obtain information to support an EPA Class VI CO₂ injection well permit application. Once operational, we expect that these projects will generate revenue by selling California LCFS credits and federal Internal Revenue Code Section 45Q tax credits.
Our Minneapolis, Minnesota research and development laboratory evaluates and develops technologies that would use low carbon intensity biomass and waste feedstocks to produce low or below zero carbon intensity biofuels and biochemicals. We are focused on processes that extract sugar from cellulosic feedstocks and then use the remaining biomass to produce low carbon ethanol, renewable hydrogen, sustainable aviation fuel, and renewable diesel.
Results of Operations
Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023
Revenues
Our revenues are derived primarily from sales of ethanol and WDG for our California Ethanol segment, renewable natural gas ("RNG") for our California Dairy Renewable Natural Gas segment, and biodiesel for our India Biodiesel segment.
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 44,934 | $ | 47,439 | $ | (2,505 | ) | (5.3 | )% | |||||||
| California Dairy Renewable Natural Gas |
4,250 | 1,107 | 3,143 | 283.9 | % | |||||||||||
| India Biodiesel |
32,257 | 20,144 | 12,113 | 60.1 | % | |||||||||||
| Total |
$ | 81,441 | $ | 68,690 | $ | 12,751 | 18.6 | % | ||||||||
California Ethanol. For the three months ended September 30, 2024, the Company sold 15.5 million gallons of ethanol at an average price of $2.12 per gallon and 106 thousand tons of WDG at a price of $84 per ton. For the three months ended September 30, 2023, the Company sold 13.8 million gallons of ethanol at an average price of $2.64 per gallon and 98 thousand tons of WDG at a price of $96 per ton. The change in revenue primarily was attributable to a 20% reduction in the ethanol average sales price and a 12.3% reduction in the WDG sales price.
California Dairy Renewable Natural Gas. During the three months ended September 30, 2024, we produced 86.6 thousand MMBtu of RNG and sold 86.0 thousand MMBtu at an average price of $2.77 per MMBtu. In the third quarter of 2024, we also sold 935 thousand D3 RINs at an average price of $3.37 per RIN and 20,000 LCFS credits at an average price of $43 per metric ton. As of September 30, 2024, we had 67.6 thousand MMBtu of RNG available for dispensing. During the three months ended September 30, 2023, we produced and sold 66.6 thousand MMBtu of RNG at an average price of $2.13 per MMBtu and we also sold 271 thousand D3 RINs at an average price of $2.97 per RIN and we did not sell any LCFS credits.
India Biodiesel. For the three months ended September 30, 2024, we generated 97% of our revenues from the sale of biodiesel, and 3% of our revenue from other sales compared to 96% of our revenue from biodiesel, and 4% of our revenue from other sales for the three months ended September 30, 2023. The increase in revenues was primarily due to an increase in biodiesel sales volume to 26.0 thousand metric tons in the three months ended September 30, 2024, compared to 15.5 thousand metric tons in the three months ended September 30, 2023, and offset by decrease in the sales price per metric ton by 4%.
Cost of Goods Sold
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 44,849 | $ | 48,912 | $ | (4,063 | ) | (8.3 | )% | |||||||
| California Dairy Renewable Natural Gas |
2,353 | 1,914 | 439 | 22.9 | % | |||||||||||
| India Biodiesel |
30,361 | 17,372 | 12,989 | 74.8 | % | |||||||||||
| Total |
$ | 77,563 | $ | 68,198 | $ | 9,365 | 13.7 | % | ||||||||
California Ethanol. For the three months ended September 30, 2024, we purchased 5.5 million bushels of corn at $6.07 per bushel and incurred $ 1.6 million in chemicals and denaturant costs, $ 2.2 million in natural gas costs, and $ 2.6 million in transportation costs. The decrease in cost of goods sold was due to 19% decrease in corn costs offset by 10% increase in bushels of corn grind.
California Dairy Renewable Natural Gas. Cost of goods sold includes dairy manure payments, equipment maintenance, and depreciation. The increase from the third quarter of 2023 to the third quarter of 2024 was primarily due to the increase in the number of operating digesters.
India Biodiesel. In the three months ended September 30, 2024, we processed 26.0 thousand metric tons of feedstock, compared to 15.6 thousand metric tons of feedstock in the same period in 2023. During the three months ended September 30, 2024, the average price of biodiesel feedstock was $984 per metric ton compared to $752 per metric ton in the same period as in 2023. The increase was attributable to the increase in biodiesel production along with 31% increase in the average price per ton for feedstock.
Gross profit (loss)
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 85 | $ | (1,473 | ) | $ | 1,558 | (105.8 | )% | |||||||
| California Dairy Renewable Natural Gas |
1,897 | (807 | ) | 2,704 | (335.1 | )% | ||||||||||
| India Biodiesel |
1,896 | 2,772 | (876 | ) | (31.6 | )% | ||||||||||
| Total |
$ | 3,878 | $ | 492 | $ | 3,386 | 688.2 | % | ||||||||
California Ethanol. The increase in gross income during the period ended September 30, 2024, was attributable primarily to lower corn costs.
California Dairy Renewable Natural Gas. The increase in gross income in the three months ended September 30, 2024, compared to the same period in 2023 is due to the substantial increase in sales of RNG, D3 RINs, and LCFS credits without a corresponding increase in costs.
India Biodiesel. The decrease in gross profit was attributable to an increase in the feedstock costs by 31% and a 4% decrease in biodiesel price.
Operating (income)/expense and non-operating (income)/expense
Selling, general, and administrative (“SG&A”) expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California and biodiesel and other products in India, as well as professional fees, insurance, other corporate expenses, and related facilities expenses. Total SG&A also includes receipts of lease payments as an offset to expenses. Research and development expenses are also included in the SG&A expenses. Other expense (income) consists primarily of interest and amortization expense attributable to our debt facilities and accretion of Series A preferred units.
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| Selling, general and administrative |
7,750 | 9,021 | (1,271 | ) | (14.1 | )% | ||||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
$ | 10,096 | $ | 8,749 | $ | 1,347 | 15.4 | % | ||||||||
| Debt related fees and amortization expense |
1,651 | 1,433 | 218 | 15.2 | % | |||||||||||
| Accretion and other expenses of Series A preferred units |
3,267 | 7,739 | (4,472 | ) | (57.8 | )% | ||||||||||
| Other income |
(1,225 | ) | (1,853 | ) | 628 | (33.9 | )% | |||||||||
The decrease in SG&A expenses for the three months ended September 30, 2024, was due to decrease in (i) a $2.0 million in professional fees, (ii) decreases in utilities, penalties, and insurance of $0.2 million, offset by increase in (iii) salaries, supplies, and other of $0.9 million.
Interest expense increased in the three months ended September 30, 2024, due to an increases in principal under the Revolving Loans and Revolving Credit Facilities, and the impact of rising interest rates on our variable interest rate debt compared to the same period in the prior year. The lower accretion and other expenses of the Series A Preferred Units was due to a decrease in the effective interest rate on the PUPA redemption obligation in the recent PUPA amendments. The decrease in other income was due to receiving USDA grant income of $1.8 million during the 2023 compared to a $1.0 million of income recognized in the sale of unused feedstock at higher prices than the acquisition costs.
Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023
Revenues
Our revenues are derived primarily from sales of ethanol and WDG for our California Ethanol segment, RNG for our California Dairy Renewable Natural Gas segment, and biodiesel for our India Biodiesel segment.
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 121,155 | $ | 59,246 | $ | 61,909 | 104.5 | % | ||||||||
| California Dairy Renewable Natural Gas |
9,640 | 1,523 | 8,117 | 533.0 | % | |||||||||||
| India Biodiesel |
89,841 | 55,184 | 34,657 | 62.8 | % | |||||||||||
| Total |
$ | 220,636 | $ | 115,953 | $ | 104,683 | 90.3 | % | ||||||||
California Ethanol. For the nine months ended September 30, 2024, the Company sold 44.4 million gallons of ethanol at an average price of $1.97 per gallon and 305 thousand tons of WDG at a price of $90 per ton. For the nine months ended September 30, 2023, the Company sold 16.7 million gallons of ethanol at an average price of $2.72 per gallon. The increase in revenue was attributable to operating the Keyes Plant for nine full months during 2024 compared to 2023 when the Keyes Plant operated during only four of the nine months due to an extended maintenance period.
California Dairy Renewable Natural Gas. During the nine months ended September 30, 2024, we produced 236.3 thousand MMBtu of RNG and sold 234.8 thousand MMBtu at an average price of $2.88 per MMBtu. During this period, we also sold 2.0 million D3 RINs at an average price of $3.23 per RIN and 43 thousand metric tons of California LCFS credits at an average price of $55.16 per metric ton. As of September 30, 2024, we had 67.6 thousand MMBtu of RNG available for dispensing. During the nine months ended September 30, 2023, we produced and sold 142.0 thousand MMBtu of RNG at an average price of $5.06 per MMBtu. We also sold 270.7 thousand D3 RINs at an average price of $2.97 per RIN and did not sell any LCFS credits.
India Biodiesel. For the nine months ended September 30, 2024, we generated 96% of our revenues from the sale of biodiesel, and 4% of our revenue from other sales compared to 97% of our revenue from biodiesel, and 3% of our revenue from other sales for the nine months ended September 30, 2023. The increase in revenues was primarily attributable to fulfilling the demand from India's Oil Marketing Companies during the first nine months of the 2024 compared to absence of OMC contracts in the first three months of 2023. Biodiesel sales volume increased to 73.5 thousand metric tons in the nine months ended September 30, 2024 compared to 43.7 thousand metric tons in the nine months ended September 30, 2023 while price per metric ton decreased by 4%.
Cost of Goods Sold
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 130,649 | $ | 63,053 | $ | 67,596 | 107.2 | % | ||||||||
| California Dairy Renewable Natural Gas |
5,669 | 4,167 | 1,502 | 36.0 | % | |||||||||||
| India Biodiesel |
82,858 | 47,580 | 35,278 | 100.0 | % | |||||||||||
| Total |
$ | 219,176 | $ | 114,800 | $ | 104,376 | 90.9 | % | ||||||||
California Ethanol. For the nine months ended September 30, 2024, we purchased 15.6 million bushels of corn at $6.25 per bushel and incurred $4.6 million in chemicals and denaturant costs, $7.0 million in natural gas costs, and $7.0 million in transportation costs. For the nine months ended September 30, 2023, we incurred corn or other chemical costs for four months due to the extended maintenance at the Keyes Plant, which was offset by costs incurred for starting up the Keyes Plant along with resuming full operation of plant during third quarter of 2023 with 15% higher corn costs.
California Dairy Renewable Natural Gas. The cost of goods sold includes dairy manure payments, equipment maintenance, and depreciation. The increase in the cost of goods sold was primarily due to the increase in the number of operating digesters.
India Biodiesel. The increase in costs of goods sold was attributable to the increase in production and sales of biodiesel. In the nine months ended September 30, 2024, we processed 74.0 thousand metric tons of feedstock, compared to 43.7 thousand metric tons of feedstock in the same period in 2023. During the nine months ended September 30, 2024, the average price of feedstock was $835 per metric ton compared to $797 per metric ton in the same period as in 2023.
Gross profit (loss)
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | (9,494 | ) | $ | (3,807 | ) | $ | (5,687 | ) | 149.4 | % | |||||
| California Dairy Renewable Natural Gas |
3,971 | (2,644 | ) | 6,615 | (250.2 | )% | ||||||||||
| India Biodiesel |
6,983 | 7,604 | (621 | ) | (8.2 | )% | ||||||||||
| Total |
$ | 1,460 | $ | 1,153 | $ | 307 | 26.6 | % | ||||||||
California Ethanol. The increase in gross loss during the period ended September 30, 2024, was attributable to a 28% decrease in the price of ethanol. During the maintenance cycle in 2023, the fixed expenses that would have normally been accounted for in gross profit/(loss) in that period were charged to SG&A.
California Dairy Renewable Natural Gas. The increase in gross profit in the nine months ended September 30, 2024, is due to an increased RNG production and sales quantities and sales of D3 RINs and LCFS credits after June 30, 2023, compared to sales of only RNG in the six-month period ended September 30, 2023.
India Biodiesel. The decrease in gross profit was attributable to an increase in feedstock usage by 69%, an increase in average feedstock price per metric ton by 5%, and a decrease in average sales price of biodiesel by 4%.
Operating (income)/expense and non-operating (income)/expense
Selling, general, and administrative (“SG&A”) expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California and biodiesel and other products in India, as well as professional fees, insurance, other corporate expenses, and related facilities expenses. Total SG&A also includes receipts of lease payments as an offset to expenses. Research and development expenses are also included in the SG&A expenses.
Other expense (income) consists primarily of interest and amortization expense attributable to our debt facilities and accretion of Series A preferred units.
| 2024 |
2023 |
Inc/(dec) |
% change |
|||||||||||||
| Selling, general and administrative expenses |
28,400 | 29,595 | (1,195 | ) | (4.0 | )% | ||||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
$ | 29,092 | $ | 24,126 | 4,966 | 20.6 | % | |||||||||
| Debt related fees and amortization expense |
4,892 | 4,732 | 160 | 3.4 | % | |||||||||||
| Accretion and other expenses of Series A preferred units |
10,055 | 20,188 | (10,133 | ) | (50.2 | )% | ||||||||||
| Other income |
(1,176 | ) | (2,020 | ) | 844 | (41.8 | )% | |||||||||
The slight decrease in SG&A expenses for the nine months ended September 30, 2024, was due to (i) a $3.6 million loss on an asset write-off during 2024 and increase salaries and supplies of $1.4 million offset by (ii) decreases in expenses of $2.5 million that had been reclassified from cost of goods sold due to maintenance at the Keyes Plant during the five months half of 2023, (iii) decreases in professional fees of $2.4 million, and (iv) decreases in utilities, penalties, and insurance of $1.3 million.
Interest expense increased in the nine months ended September 30, 2024, due to the new Construction and Term Loan debt, increases in principal under the Revolving Loans and Revolving Credit Facilities, and the impact of rising interest rates on our variable interest rate debt compared to the same period in the prior year. The lower accretion and other expenses of the Series A Preferred Units was due to a decrease in the effective interest rate on the PUPA redemption obligation in the recent PUPA amendments. Other income consists of USDA grants of $1.8 million during 2023 and the recognition of $1.0 million from the purchase and sale of feedstock.
Liquidity and Capital Resources
Cash and Cash Equivalents
Cash and cash equivalents were$ 296 thousand at September 30, 2024. Our current ratio at September 30, 2024, was $0.26 compared to $0.43 at December 31, 2023. We expect that our future available liquidity resources will consist primarily of cash generated from operations, borrowings under debt arrangements, and sales of equity.
Liquidity
Cash and cash equivalents, current assets, current liabilities, and debt at the end of each period were as follows:
| As of |
||||||||
| September 30, 2024 |
December 31, 2023 |
|||||||
| Cash and cash equivalents |
$ | 296 | $ | 2,667 | ||||
| Current assets (including cash, cash equivalents, and deposits) |
34,900 | 36,400 | ||||||
| Current and long-term liabilities (excluding all debt) |
184,128 | 165,662 | ||||||
| Current & long-term debt |
322,206 | 294,721 | ||||||
Our principal sources of liquidity have been cash provided by operations, the sale of equity, and borrowings under various debt arrangements. Our principal uses of cash have been to fund operations, fund capital expenditures, and pay indebtedness. We anticipate these uses will continue to be our principal uses of cash in the future.
We operate in a volatile market in which we have limited control over the major components of input costs and product revenues and are making investments in future facilities and facility upgrades that improve overall margins while lessening the impact of these volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil, natural gas, LCFS credits, and D3 RINs as well as the timing of the sales of environmental attributes held in inventory. To the extent that we experience periods in which the spread between ethanol prices and corn and energy costs narrows or the spread between biodiesel prices and waste fats and oils or palm oil and energy costs narrow, we require additional working capital to fund operations.
As a result of negative capital and negative operating results, and collateralization of substantially all the Company assets, we have been reliant on our senior secured lender to extend the maturity dates of our debt and loan facilities. In order to meet obligations during the next twelve months, we will need to either refinance our debt or receive the continued cooperation of its senior lender. We plan to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we plan to operate the plant and continue to improve its financial performance by adopting new technologies or process changes that increase energy efficiency, reduce costs, and enhance revenue, as well as execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon intensity, and overall margin improvement.
For our dairy RNG production, we plan to continue to operate our existing digesters as well as continue to build new dairy digesters and extend the existing pipeline. Funding for continued construction has been based on government guaranteed debt financing and grant programs. We are seeking multiple sources of additional project funding to allow us to accelerate the addition of new digesters. We began generating revenue from D3 RIN sales in 2023 and first generated revenue from the sale of LCFS credits in January 2024. We expect to have a full year of revenue from both sources in 2024, which will provide increased liquidity.
For the Kakinada Plant, we plan to continue to enter cost-plus contracts with the OMCs as our primary customers. We also plan to continue to upgrade our plant to increase capacity and expand feedstock flexibility. We are also evaluating the production of additional products and developing channels for the export of allow. The Kakinada plant has had positive gross income during the last two years and we expect this to continue. We also will continue to rely on our working capital lines with Gemini and Secunderabad Oils to fund our commercial arrangements for the acquisitions of feedstock.
For the Riverbank SAF/RD production plan, we are continuing with engineering and other development activities and seeking both debt and equity funds needed for development and construction.
In addition to the above, we plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, seeking project specific debt and equity, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, and by vendor financing arrangements.
At September 30, 2024, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes was $205.3 million. The maturity dates for the Third Eye Capital financing arrangements are March 1, 2025, for $39.3 million; March 1, 2026, for $140.6 million; and, April 1, 2026, for $25.4 million based on the Company's option to extend the maturity.
Change in Working Capital and Cash Flows
The following table describes the changes in current and long-term debt (in thousands) during the nine months ended September 30, 2024:
| Increases to debt: |
||||||||
| Accrued interest |
$ | 30,024 | ||||||
| Maturity date extension fee and other fees added to senior debt |
1,446 | |||||||
| Sub debt extension fees |
680 | |||||||
| Fuels Revolving Line draw |
3,848 | |||||||
| Change in debt issuance costs, net of amortization |
965 | |||||||
| Construction Loan draw |
5,525 | |||||||
| Secured loans and Working capital loan draw |
3,156 | |||||||
| EB-5 broker promissory note settlement |
3,305 | |||||||
| Total increases to debt |
$ | 48,949 | ||||||
| Decreases to debt: |
||||||||
| Principal, fees, and interest payments to senior lender |
$ | (3,486 | ) | |||||
| Principal and interest payments and reductions to EB-5 promissory note |
(3,915 | ) | ||||||
| Principal paid to EB-5 broker's promissory note |
(530 | ) | ||||||
| Term loan payments |
(7 | ) | ||||||
| Construction Loan Payments |
(3,041 | ) | ||||||
| Secured loans working capital loan payments |
(4,667 | ) | ||||||
| Extinguishment of Zebrex |
(5,818 | ) | ||||||
| Total decreases to debt |
$ | (21,464 | ) | |||||
| Change in total debt |
$ | 27,485 |
Working capital changes resulted from (i) a $1.5 million increase in inventories (ii) a $0.7 million decrease in accounts receivable due to the last day of quarter falling on a weekend, offset by $85 thousand increase in India accounts receivable, and (iii) a decrease in other current assets of $0.5 million in North America and an increase in India current assets by $2 million due to tax receivables. This was partially offset by a $2.3 million decrease in cash.
Net cash used in operating activities during the nine months ended September 30, 2024, was $20.4 million, which was calculated based on non-cash charges of $31.5 million, net cash provided by operating assets and liabilities of $19.5 million, and net loss of $71.3 million. The non-cash charges consisted of: (i) $4.9 million in amortization of debt issuance costs and other intangible assets, (ii) $6.1 million in depreciation expenses, (iii) $6.9 million in stock-based compensation expense, (iv) $10.1 million in accretion expense of Series A preferred units and (v) $3.6 million in loss on asset write-off. Net changes in operating assets and liabilities consisted primarily of (i) an increase in accrued interest of $20.9 million, (ii) an increase in accounts payable of $3.5 million, (iii) an increase in other liabilities of $1.5 million, (iv) an increase in inventories of $1.6 million and (v) a decrease in prepaid expenses of $1.6 million, (vi) an increase in other assets of $6.9 million, and (vii) an decrease in accounts receivable of $0.6 million.
Cash used in investing activities included $13.5 million used for capital projects, partially offset by grant proceeds and other reimbursements of $3.0 million.
Cash provided by financing activities was $27.8 million, consisting of $21.7 million from sales of common stock and proceeds from exercises of stock options and $12.5 million proceeds from borrowings, partially offset by repayments of borrowings of $4.8 million, payment of debt renewal and waiver fees of $1.4 million and payment on finance leases of $0.2 million.
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. We believe that of our most significant accounting policies and estimates, defined as those policies and estimates that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain are: revenue recognition; recoverability of long-lived assets, Series A Preferred unit liability, and debt modification and extinguishment accounting. These significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Recently Issued Accounting Pronouncements
None reported beyond those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Off Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
Management (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our CEO and CFO concluded that, although remediation plans were initiated to address the material weaknesses over financial reporting as identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the disclosure controls and procedures along with the related internal controls over financial reporting were not effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is compiled and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
As discussed in greater detail under Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2023, we continued implementing a remediation plan to address the material weakness in our internal control related to information technology general controls and information technology systems.
None.
There has been no change in risk factors since the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 2024. We urge you to read the risk factors contained therein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
No unresolved defaults on senior securities occurred during the nine months ended September 30, 2024.
Item 4. Mine Safety Disclosures.
None.
Current Reports
Item 1.01 Entry into a Material Definitive Agreement.
On November 6, 2024, ABGL and Third Eye Capital entered a Seventh Waiver and Amendment to Series A Purchase Agreement (the "PUPA Seventh Amendment"). The PUPA Seventh Amendment is attached at Exhibit 10.1 and is described in the notes to the Financial Statements under 9. Aemetis Biogas LLC – Series A Preferred Financing and 15. Subsequent Events, and those descriptions are incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Todd A. Waltz, Executive Vice President and Chief Financial Officer of Aemetis, Inc., has informed the Company of his desire to retire from the position of Executive Vice President and Chief Financial Officer, provided that Mr. Waltz has indicated that he will remain in his current position until the Company has identified a successor, he will assist with transition to a new Chief Financial Officer, and he will remain with the Company in an employee or consulting capacity following the transition to provide continuity of operations. Mr. Waltz has also indicated that he does not have any specific date by which he needs to retire, and the Company expects the transition to a new Chief Financial Officer will take from six to twelve months. Mr. Waltz has further indicated that his retirement is for personal reasons and is not a result of any Company activities.
| 10.1 | Seventh Waiver and Amendment to Series A Preferred Unit Purchase Agreement, effective as of August 31, 2024, and entered by Aemetis Biogas LLC, Protair-X Technologies Inc., and Third Eye Capital Corporation. |
| 31.1 | Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 |
|
| 32.1 |
|
| 32.2 |
|
| 101.INS * |
Inline XBRL Instance Document |
| 101.SCH * |
Inline XBRL Taxonomy Extension Schema |
| 101.CAL * |
Inline XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF * |
Inline XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB * |
Inline XBRL Taxonomy Extension Label Linkbase |
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Aemetis, Inc. |
||
| Date: November 12, 2024 | By: |
/s/ Eric A. McAfee |
| Eric A. McAfee Chair of the Board and Chief Executive Officer (Principal Executive Officer) |
||
| Date: November 12, 2024 | By: |
/s/ Todd A. Waltz |
| Todd A. Waltz Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
||