UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
AEMETIS, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction | (I.R.S. Employer |
| of incorporation or organization) | Identification No.) |
(Address of Principal Executive Offices, including zip code)
(
(Registrant’s telephone number, including area code)
| Title of each class of registered securities | Trading Symbol | Name of each exchange on which registered | ||
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares outstanding of the registrant’s Common Stock on October 31, 2023 was
FORM 10-Q
Quarterly Period Ended September 30, 2023
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
On one or more occasions, we may make forward-looking statements in this Quarterly Report on Form 10-Q, including statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events or other statements that are not historical facts. Forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding management’s plans; trends in market conditions with respect to prices for inputs for our products versus prices for our products; our ability to leverage approved feedstock pathways; our ability to leverage our location and infrastructure; our ability to incorporate lower-cost, non-food advanced biofuels feedstock at the Keyes plant; our ability to adopt value-add by-product processing systems; our ability to expand into alternative markets for biodiesel and its by-products, including continuing to expand our sales into international markets; our ability to maintain and expand strategic relationships with suppliers; our ability to continue to develop new and to maintain and protect new and existing intellectual property rights; our ability to adopt, develop and commercialize new technologies; our ability to extend or refinance our senior debt on terms reasonably acceptable to us or at all; our ability to continue to fund operations and our future sources of liquidity and capital resources; our ability to fund, develop, build, maintain and operate digesters, facilities and pipelines for our California Dairy Renewable Natural Gas segment; our ability to fund, develop and operate our carbon capture sequestration projects, including obtaining required permits; our ability to receive awarded grants by meeting all of the required conditions, including meeting the minimum contributions; our ability to sell additional notes under our EB-5 note program and our expectations regarding the release of funds from escrow under our EB-5 note program; our ability to generate and sell or utilize various credits, including LCFS and IRS 45Q tax credits; our ability to improve margins; and our ability to raise additional capital. Words or phrases such as “anticipates,” “may,” “will,” “should,” “could,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current assumptions and predictions and are subject to numerous markets and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain factors, including, without limitation, the risks set forth under the caption “Risk Factors” below, which are incorporated herein by reference, as well as those business risks and factors described elsewhere in this report and in our other filings with the Securities and Exchange Commission (the “SEC”), including without limitation, our most recent Annual Report on Form 10-K.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements.
AEMETIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, In thousands except for par value)
| September 30, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents ($ and $ respectively from VIE) | $ | $ | ||||||
| Accounts receivable ($ and $ respectively from VIE) | ||||||||
| Inventories, net of allowance for excess and obsolete inventory of $as of September 30, 2023, and December 31, 2022, respectively | ||||||||
| Tax Credit Sales receivable ($and $respectively from VIE) | ||||||||
| Prepaid expenses ($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 | ||||||||
| Short term borrowings ($and $respectively from VIE) | ||||||||
| Mandatorily redeemable Series B convertible preferred stock | ||||||||
| Accrued property taxes | ||||||||
| Current portion of operating lease liability ($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 $respectively from VIE) | ||||||||
| Operating lease liability ($and $respectively from VIE) | ||||||||
| Other long term liabilities | ||||||||
| Total long term liabilities | ||||||||
| Stockholders' deficit: | ||||||||
| Series B convertible preferred stock, $par value; authorized; and shares issued and outstanding each period, respectively (aggregate liquidation preference of $and $respectively) | ||||||||
| 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 LOSS
(Unaudited, in thousands except for loss per share)
| For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Revenues |
$ | $ | $ | $ | ||||||||||||
| Cost of goods sold |
||||||||||||||||
| Gross profit (loss) |
( |
) | ( |
) | ||||||||||||
| Research and development expenses |
||||||||||||||||
| Selling, general and administrative expenses |
||||||||||||||||
| Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
||||||||||||||||
| Debt related fees and amortization expense |
||||||||||||||||
| Accretion and other expenses of Series A preferred units |
||||||||||||||||
| Loss on debt extinguishment |
||||||||||||||||
| Gain on litigation |
( |
) | ||||||||||||||
| Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense (benefit) |
( |
) | ( |
) | ||||||||||||
| Net income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| Other comprehensive income (loss) |
||||||||||||||||
| Foreign currency translation loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| Net income (loss) per common share |
||||||||||||||||
| Basic |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| Diluted |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| Weighted average shares outstanding |
||||||||||||||||
| Basic |
||||||||||||||||
| Diluted |
||||||||||||||||
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, | ||||||||
| 2023 | 2022 | |||||||
| 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 | ||||||||
| Loss (gain) on debt extinguishment | ||||||||
| Warrants issued for working capital agreement | ||||||||
| Gain on litigation | ( | ) | ||||||
| Loss on lease termination | ||||||||
| 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 issuance of common stock | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents for period | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents 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 stock issued to a related party for guarantee fees | ||||||||
| Fair value of warrants issued to lender for debt issuance costs | ||||||||
| Fair value of stock issued to lender | ||||||||
| Lender debt extension, waiver, and other fees added to debt | ||||||||
| Cumulative capital expenditures in accounts payable, including net increase of $and $, respectively | ||||||||
| Payment of debt added to revolving lines | ||||||||
| Financing lease liabilities arising from obtaining right of use assets | ||||||||
| Capital expenditures purchased on financing | ||||||||
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, 2023 | ||||||||||||||||||||||||||||||||
| Series B Preferred Stock | Common Stock | Additional | Accumulated Other | Total | ||||||||||||||||||||||||||||
| Paid-in | Accumulated | Comprehensive | Stockholders' | |||||||||||||||||||||||||||||
| Description | Shares | Dollars | Shares | Dollars | Capital | Deficit | Gain (Loss) | deficit | ||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants | ||||||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| For the nine months ended September 30, 2022 |
||||||||||||||||||||||||||||||||
| Series B Preferred Stock |
Common Stock |
Additional |
Accumulated Other |
Total |
||||||||||||||||||||||||||||
| Paid-in |
Accumulated |
Comprehensive |
Stockholders' |
|||||||||||||||||||||||||||||
| Description |
Shares |
Dollars |
Shares |
Dollars |
Capital |
Deficit |
Loss |
deficit |
||||||||||||||||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Series B conversion to common stock |
( |
) | ||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at March 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at June 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
| Issuance of common stock |
||||||||||||||||||||||||||||||||
| Stock options exercised |
||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | ||||||||||||||||||||||||||||||
| Issuance and exercise of warrants |
||||||||||||||||||||||||||||||||
| Foreign currency translation loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at September 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||
The accompanying notes are an integral part of the financial statements.
1. Nature of Activities and Summary of Significant Accounting Policies
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 acquisition, development and commercialization of innovative low and negative carbon intensity products and technologies that replace traditional petroleum-based products. We operate in three reportable segments consisting of “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.” We have other operating segments determined not to be reportable segments and are collectively represented by the “All Other” category. At Aemetis, our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this by building a local circular bioeconomy using agricultural waste to produce low carbon, advanced renewable fuels that reduce greenhouse gas ("GHG") emissions and improve air quality by replacing traditional petroleum-based products.
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”), Carbon Dioxide (“CO₂”) and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to local dairies and feedlots, with CO₂ sold to food, beverage, and industrial customers. We have several energy efficiency initiatives at the Keyes Plant focused on significantly lowering the carbon intensity of our fuels. During the last two weeks of December 2022, we undertook an extended maintenance cycle and accelerated the implementation of several important ethanol plant energy efficiency upgrades. Our decision was partly driven by the high natural gas prices in California during the period. Furthermore, after monitoring natural gas pricing and margin profitability, we decided to extended the maintenance cycle into the first and second quarters of 2023 and restarted the plant near the end of the second quarter.
Our California Dairy Renewable Natural Gas segment, which consists of our subsidiary Aemetis Biogas LLC and its subsidiaries, ("Aemetis Biogas" or "ABGL"), constructs and operates bio-methane anaerobic digesters at local dairies near the Keyes Plant (many of whom also purchase WDG produced by the Keyes Plant as animal feed); transports the biogas via pipeline to the Keyes Plant site; and converts the biogas to Renewable Natural Gas (“RNG”) which is then delivered to customers through the PG&E natural gas pipeline.
Our India Biodiesel segment owns and operates a plant in Kakinada, India (“Kakinada Plant”) with a nameplate capacity of 150 thousand metric tons per year, or about
Our All Other segment consists of: the development of our Carbon Zero biofuels production plant to produce renewable diesel and sustainable aviation fuel; the development of Carbon Capture and Sequestration compression system and injection wells; operation of the Riverbank Industrial Complex; a research and development facility in Minneapolis Minnesota; and our corporate offices in Cupertino, California.
Our Carbon Zero biofuels production plants are designed to produce low or negative carbon intensity sustainable aviation fuel (“SAF”) and renewable diesel fuel (“RD”) using low carbon hydroelectric electricity, renewable hydrogen and non-edible renewable oils from existing Aemetis biofuels plants and other sources. The first Carbon Zero plant is scheduled to be built in Riverbank, California at the 125-acre former Riverbank Army ammunition plant.
Our Carbon Capture subsidiary was established to build Carbon Capture and Sequestration (“CCS”) projects that generate LCFS and IRS 45Q tax credits by compressing and injecting CO₂ into deep wells that are monitored for emissions to ensure the long-term sequestration of carbon underground.
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. ABGL was assessed to be a VIE and through the Company’s ownership interest in all of the outstanding common stock, the Company has been determined to be the primary beneficiary and 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, 2023, the consolidated condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022, the consolidated condensed statements of cash flows for the nine months ended September 30, 2023 and 2022, and the consolidated condensed statements of stockholders’ deficit for the three and nine months ended September 30, 2023 and 2022 are unaudited. The consolidated condensed balance sheet as of December 31, 2022, was derived from the 2022 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2022 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022. 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, 2023 and 2022 have been prepared on the same basis as the audited consolidated statements as of and for the year ended December 31, 2022 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, 2023 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition. We derive revenue primarily from sales of ethanol and related co-products in California, renewable natural gas and related environmental attributes in California, and biodiesel and refined glycerin in India pursuant to supply agreements and purchase order contracts. We assessed the following criteria under the Accounting Standards Codification (“ASC”) 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations.
California Ethanol Revenues: On May 13, 2020, we entered into an amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell (the “Corn Procurement and Working Capital”), pursuant to which we buy all corn from J.D. Heiskell and sell all WDG and corn oil we produce to J.D. Heiskell. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex LLC (“Murex”), pursuant to which we sold all our ethanol to Murex through individual sales transactions. On May 25, 2023, we entered into the second amendment to the Aemetis Keyes Grain Procurement and Working Capital Agreement with J.D. Heiskell, the second amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell, and the second amendment to the Keyes Ethanol and Corn Tank Lease with J.D. Heiskell. The amendments provide that (i) the Keyes Plant will receive a temporary increase to its working capital credit limit by an amount equal to four days of grain payables repayable in equal daily installments over 120 days, (ii) that J.D. Heiskell will buy all Ethanol, WDG, CDS, and Corn Oil produced by the Keyes Plant, sell all ethanol to certain designated purchasers and pay us the same price as it received from such sales, and (iii) J.D. Heiskell will lease certain ethanol product storage tanks from the Keyes Plant. Given the similarity of the individual sales transactions with J.D. Heiskell, we have assessed them as a portfolio of similar contracts. Prior to May 25, 2023, the performance obligation was satisfied by delivery of the physical product from our finished goods tank to our customer’s contracted trucks. Effective on May 25, 2023, the performance obligation is satisfied by delivery of the physical product to the finished goods tank leased by J.D. Heiskell. Upon delivery, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices for ethanol and 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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Ethanol sales | $ | $ | $ | $ | ||||||||||||
| Wet distillers grains sales | ||||||||||||||||
| Other sales | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year.
We also assessed principal versus agent criteria as we buy our feedstock from our customer and process and sell finished goods to that same customer. Specifically, we buy corn as feedstock in producing ethanol from our working capital partner J.D. Heiskell and we sell all ethanol, WDG, CDO, and CDS produced to J.D. Heiskell. Our ethanol finished goods tank is leased to J.D. Heiskell and legal title to the product is transferred upon transfer of our finished ethanol to this location. We consider the purchase of corn as a cost of goods sold and consider the sale of ethanol as revenue upon transfer to the finished goods tank and consider the sale of WDG, CDO, and CDS as revenue, upon trucks leaving the Keyes Plant with the product, on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have legal title to the goods during the processing time. The pricing for ethanol, WDG, CDO, and CDS is set independently. Revenues from ethanol and WDG are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. We have elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized in cost of goods sold and selling, general and administrative expenses, respectively, when revenue is recognized. Revenues are recorded at the gross invoiced amount. Hence, we are the principal in California Ethanol segment where our customer and vendor may be the same.
California Dairy Renewable Natural Gas Revenues: Since 2018, we have used our relationships with California’s Central Valley dairy farmers to sign leases and raise funds to construct dairy digesters, a 40-mile RNG collection pipeline, a centralized biogas upgrading hub, and a renewable natural gas interconnection with PG&E’s natural gas pipeline. As of September 30, 2023, we have seven operating dairy digesters that produce biomethane, five additional digesters under construction, and contracts with additional dairies planned for future construction of digesters. Our RNG upgrading hub converts the biomethane produced by the digesters into utility-grade RNG that is transported by PG&E’s pipeline to California customers for use as transportation fuel. Our revenue development strategy for the Dairy Renewable Natural Gas segment relies upon continuing to build new dairy digesters and extending the collection pipeline. We have been storing some of our RNG production and postponing the dispensing of RNG for transportation use in order to increase the quantity and value of LCFS credits. As of September 30, 2023, we have
India Biodiesel Revenues: We sell products pursuant to purchase orders or by contract with governmental or international parties, in which performance is satisfied by delivery and acceptance of the physical product. Given that the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined daily based on reference market prices for biodiesel, refined glycerin, and PFAD, net of taxes. Transaction price is allocated to one performance obligation.
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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Biodiesel sales | $ | $ | $ | $ | ||||||||||||
| Other sales | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
In India, we also assessed principal versus agent criteria as in some cases we buy feedstock from our customers and process and sell finished goods to those same customers. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel according to agreements when we enter into these situations. Hence, we are the principal in India sales scenarios where our customer and vendor may be the same.
Cost of Goods Sold. Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense.
Shipping and Handling Costs. Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations.
Research and Development. Research and development costs are expensed as incurred, unless they have alternative future uses to the Company.
Cash, Cash Equivalents, and Restricted Cash. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at various financial institutions domestically and abroad. The Federal Deposit Insurance Corporation insures domestic cash accounts. The Company’s accounts at these institutions may at times exceed federally insured limits. The Company has not experienced any losses in such accounts. Amounts included in restricted cash represent those required to be set aside by the Construction Loan Agreement with Greater Nevada Credit Union ("GNCU") for financing reserves and construction contingencies and will be released upon approval by GNCU. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheet to the total of the same such amounts shown in the statement of cash flows.
| As of | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| 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 | $ | $ | ||||||
Accounts Receivable. The Company sells ethanol and WDG through third-party marketing arrangements generally without requiring collateral directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO is marketed and sold to A.L. Gilbert and other customers under the J.D. Heiskell Purchasing Agreement. The Company sells CDS directly to customers on standard 30-day payment terms. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30 days on net terms. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable is presented at original invoice amount, net of any allowance for credit losses. We did not reserve any balance for allowances for credit losses as of September 30, 2023 and December 31, 2022.
Inventories. Finished goods, raw materials, and work-in-process inventories are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (“NRV”). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Variable Interest Entities. We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests in is considered a variable interest entity (“VIE”). We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in our interest or relationship with the entity affects our determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable U.S. GAAP.
Property, Plant and Equipment. Property, plant, and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of plant and buildings, furniture, machinery, equipment, land, and biogas dairy digesters. Capital expenses for in-process projects are capitalized as construction in progress and will be depreciated once the capital projects are finished and are in service. The Company’s plant in Goodland, Kansas (the "Goodland Plant") is partially completed and is not ready for operation. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.
The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment—Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its estimated fair value. The Company has not recorded any impairment during the three and nine months ended September 30, 2023 and 2022.
California Energy Commission Low-Carbon Fuel Production Program. The Company was awarded $
CDFA Dairy Digester Research and Development program. In October 2020, the Company was awarded $
California Energy Commission Low Carbon Advanced Ethanol Grant Program. In May 2019, the Company was awarded the right to receive reimbursements from the California Energy Commission Community-Scale and Commercial-Scale Advanced Biofuels Production Facilities grant under the Alternative and Renewable Fuel and Vehicle Technology Program in an amount up to $
U.S. Department of Food and Agriculture Forest Service Grant. Aemetis Advanced Products Keyes (“AAPK”) has been awarded $
California Energy Commission Grant for Solar Microgrid, DSC and Battery Backup System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded an $
California Department of Forestry and Fire Protection Grant. AAPK has been awarded $
California Department of Forestry and Fire Protection Grant. AAPK was awarded $
U.S Forest Service Community Wood Grant. Aemetis Advanced Products Riverbank (“AAPR”) was awarded $
California Energy Commission Grant for Mechanical Vapor Recompression System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded a $
Pacific Gas and Electric SEM Manufacturer’s Incentive Program. During the fourth quarter of 2022, AAFK received $
California Energy Commission PG&E A2313 Pipeline Interconnection Grant. The Company has received $
Investment Tax Credit. In the third quarter of 2023, the Company sold to a third-party purchaser certain transferrable Investment Tax Credits (ITCs) that had been generated by the Company from its investments in the California Dairy Renewable Natural Gas segment. The Company accounted for the ITC sale in accordance with ASC 740 by electing the flow-through method. The net value of tax credits sale of $
Basic and Diluted Net (Loss) per Share. Basic income (loss) per share is computed by dividing income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income/(loss) per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt and warrants to the extent the impact is dilutive. As the Company incurred net income for the three months ended September 30, 2023, potentially dilutive securities have been included in the diluted net income per share computations and any potentially anti-dilutive shares have been excluded and are shown in the second table below. As the Company incurred net losses for the three months ended September 30, 2022 and nine months ended September 30, 2023 and 2022, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.
| For the three months ended September 30, | For the nine months ended September 30, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Net income (loss) |
|
|
|
| ||||
| Shares: | ||||||||
| Weighted average shares outstanding—basic |
|
|
|
| ||||
| Weighted average dilutive share equivalents from preferred shares |
| - | - | - | ||||
| Weighted average dilutive share equivalents from stock options |
| - | - | - | ||||
| Weighted average dilutive share equivalents from common warrants | 26 | - | - | - | ||||
| Weighted average shares outstanding—diluted |
|
|
|
| ||||
| Income (loss) per share—basic |
|
|
|
| ||||
| Income (loss) per share—diluted |
|
|
|
| ||||
The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of September 30, 2023 and 2022:
| As of | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| Series B preferred (post split basis) | ||||||||
| Common stock options and warrants | ||||||||
| Debt with conversion feature at $per share of common stock | ||||||||
| Total number of potentially dilutive shares | ||||||||
Comprehensive Income (Loss). ASC 220 Comprehensive Income (Loss) requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive loss and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments.
Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date and the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. Transactional gains and losses from foreign currency transactions are recorded in other income.
Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company further evaluates its operating segments to determine its reportable segments. Aemetis recognizes three reportable segments “California Ethanol”, “California Dairy Renewable Natural Gas”, and “India Biodiesel.”
The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year Keyes Plant and the adjacent land leased for the production of CO₂.
The “California Dairy Renewable Natural Gas” reportable segment includes the dairy digesters, pipeline and gas condition hub for the production of renewable natural gas from dairies near Keyes, California.
The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, and associate administrative offices in Hyderabad, India.
The Company has additional operating segments that were determined not to be reportable segments, including the development of a Carbon Zero biofuels production plant to produce renewable diesel and sustainable aviation fuel; the development of Carbon Capture and Sequestration projects; a research and development facility in Minneapolis, Minnesota; and our corporate offices in Cupertino, California.
Fair Value of Financial Instruments. Financial instruments include accounts receivable, accounts payable, accrued liabilities, current and non-current portion of subordinated debt, notes receivable, notes payable, Series A preferred units, and long-term debt. Due to the unique terms of our notes payable and long-term debt and the financial condition of the Company, the fair value of the debt is not readily determinable. The fair value determined using level 3 inputs, of all other current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments.
Share-Based Compensation. The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation requiring the Company to recognize expenses related to the estimated fair value of the Company’s share-based compensation awards calculated as of the date the awards are granted.
Commitments and Contingencies. The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.
Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date.
Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-60 Troubled Debt Restructuring and ASC 470-50 Debt–Modification and Extinguishments for modification and extinguishment accounting. The evaluation for troubled debt restructuring includes assessing qualitative and quantitative factors such as whether the creditor granted a concession and if the Company is experiencing financial difficulties. The quantitative analysis includes the calculation of the post-restructuring effective interest rate by projecting cash flows on the new terms and comparing this calculation to the terms of prior amendments. If the post restructuring effective interest rate is less than the prior terms effective interest rate, we assess this as having been granted a concession. The troubled debt restructuring accounting would be applied to any debt which meets the qualitative factors and quantitative factor of concession granted. If the debt would not fall into Troubled Debt Restructuring then we apply ASC 470-50 Debt-Modification and Extinguishment. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.
For a complete summary of the Company’s significant accounting policies, please refer to the Company’s audited financial statements and notes thereto for the years ended December 31, 2022 and 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2023.
2. Inventories
Inventories consist of the following:
| As of | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
3. Property, Plant and Equipment
Property, plant and equipment consist of the following:
| As of | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| 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, 2023 and 2022, interest capitalized in property, plant, and equipment was $
Construction in progress includes costs for the biogas construction projects (dairy digesters and pipeline), Riverbank projects (sustainable aviation fuel and renewable diesel plant as well as carbon capture characterization well), and energy efficiency projects at the Keyes Plant. 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 | ||||
4. Debt
Debt consists of the following:
| September 30, 2023 | December 31, 2022 | |||||||
| 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 Loan | ||||||||
| Cilion shareholder seller notes payable | ||||||||
| Subordinated notes | ||||||||
| EB-5 promissory notes | ||||||||
| Term loans on capital expenditures | ||||||||
| Total debt | ||||||||
| Less current portion of debt | ||||||||
| Total long term debt | $ | $ | ||||||
Third Eye Capital Note Purchase Agreement
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 $
On March 8, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 22 to the Note Purchase Agreement (“Amendment No. 22”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by December 31, 2021, (ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender, and (iii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through December 31, 2021. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $
On May 11, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 23 to the Note Purchase Agreement (“Amendment No. 23”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by March 31, 2022, (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended March 31, 2023 and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended March 31, 2022 in which the Company exceeded the $
On August 8th, 2022, Third Eye Capital agreed to Limited Waiver and Amendment No. 24 to the Note Purchase Agreement ("Amendment No. 24") to: (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2024 in exchange for an extension fee equal to
On March 6, 2023, Third Eye Capital agreed to the Limited Waiver and Amendment No. 25 to the Note Purchase Agreement (“Amendment No. 25”) to: provide a waiver for the Keyes Plant Minimum Quarterly Production violation for the quarter ended March 31, 2023, in which the Borrowers will not meet the minimum production of 10 million gallons requirement. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $
On May 4, 2023, Third Eye Capital agreed to the Limited Waiver and Amendment No. 26 to the Note Purchase Agreement (“Amendment No. 26”) to: provide a waiver for (i) the Keyes Plant Minimum Quarterly Production violation for the quarter ended June 30, 2023, in which the Borrowers will not meet the minimum production of
On May 16, 2023, Third Eye Capital agreed to the Limited Waiver and Amendment No. 27 to the Note Purchase Agreement (“Amendment No. 27”) to: (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2025 in exchange for an extension fee equal to
According to ASC 470-10-45 Debt–Other Presentation Matters, if it is probable that the Company will not be able to cure the default at measurement dates within the next 12 months, the related debt needs to be classified as current. To assess this guidance, the Company performed ratio and cash flow analysis using its cash flow forecast and debt levels for plant to debt ratio covenant and obtained waivers for the minimum ethanol production covenant for Q1’23 and Q2'23 in Amendments No. 25 and No. 26. The Company forecasted sufficient cash flows over the next 12 months to reduce debt levels of Third Eye Capital and meet the operations of the Company. Based on this analysis, the Company believes that it is reasonably possible that through a combination of cash flows from operations, sales from EB-5 investments, and proceeds from the sale of common stock, it will be able to meet the ratio of the note indebtedness covenant over the next 12 months. As such, the notes are classified as long-term debt.
On March 6, 2020, we entered into a one-year reserve liquidity facility governed by a promissory note, payable to Third Eye Capital, in the principal amount of $
Terms of Third Eye Capital Notes
| A. | Term Notes. As of September 30, 2023, 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 Note bears interest at |
| E. | Acquisition Term Notes. The Acquisition Term Notes accrue interest at the prime rate plus |
| F. | Reserve Liquidity Notes. The Reserve Liquidity Notes, with available borrowing capacity in the amount of $ |
The note maturity dates marked with an "*" can be extended by the Company to April 2025. As a condition to any such extension, the Company would be required to pay a fee of
The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Third Eye Capital Notes allow the lender to accelerate the maturity in the occurrence of any event that could reasonably be expected to have a material adverse effect 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 terms of the notes allow interest to be capitalized.
The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from the Company’s North American subsidiaries. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $
Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, 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 facilities with aggregate availability of up to $
On August 1, 2023, Third Eye Capital agreed to the Amendment and Waiver No. 2 to Credit Agreement ("Amendment No. 2") to: (i) approve a special advance of $
On October 16, 2023, Third Eye Capital acknowledged receipt of $
As of September 30, 2023, GAFI had principal and interest outstanding of $
Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc. (“Cilion”), on July 6, 2012, the Company issued $
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 $
On July 1, 2023, the maturity on two Subordinated Notes’ was extended until the earlier of (i) December 31, 2023; (ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $
The Company evaluated the January 1, 2023 and July 1, 2023 amendments and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.
At September 30, 2023 and December 31, 2022, the Company had, in aggregate, the amount of $
EB-5 promissory notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 (as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a “Regional Center” to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB-5 Notes”) bearing interest at 2-3%. Each note was issued in the principal amount of $
The Company has sold an aggregate principal amount of $
On October 16, 2016, the Company launched its EB-5 Phase II funding (the “EB-5 Phase II Funding”), with plans to issue $50.0 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under the Company’s EB-5 Phase I funding, to refinance indebtedness and capital expenditures of Aemetis, Inc. and Goodland Advanced Fuels Inc., (“GAFI”). On November 21, 2019, the minimum investment was raised from $
The Company has sold an aggregate principal amount of $
Working capital loans. On July 26, 2022, the Company entered into a short-term loan with Secunderabad Oils Limited in an amount not to exceed $
Secured loans. In the first quarter of 2023, the Company entered into several short-term loans with IndusInd Bank and HDFC Bank. The loans are secured by fixed deposits made by the Company. The loans bear interest at rates that range from
Construction Loan Agreement. On October 4, 2022, the Company entered into a Construction Loan Agreement (“Loan Agreement”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the Loan Agreement, the lender has made available an aggregate principal amount not to exceed $
On July 28, 2023, the Company entered into a second Construction and Term Loan Agreement (“Loan Agreement 2") with Magnolia Bank, Incorporated. Pursuant to the Loan Agreement 2, the lender has made available an aggregate principal amount not to exceed $
Financing Agreement for capital expenditures. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase ZEBREXTM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company also entered into a financing agreement with Mitsubishi for $
Scheduled debt repayments for the Company’s loan obligations by year are as follows:
| Twelve Months ended September 30, | Debt Repayments | |||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total debt | ||||
| Debt issuance costs | ( | ) | ||
| Total debt, net of debt issuance costs | $ | |||
5. Commitments and Contingencies
Leases
We have identified assets as the corporate office, warehouse, monitoring equipment and laboratory facilities over which we have control and obtain economic benefits fully and classified these as operating leases after assessing the terms under classification guidance. We have entered into several leases for trailers and carbon units with purchase option at the end of the term. We have concluded that it is reasonably certain that we would exercise the purchase option at the end of the term, hence the leases were classified as finance leases. All of our leases have remaining term of years to years.
We made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses.
When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and measure lease liabilities and right-of-use (“ROU”) assets. The incremental borrowing rate used by the Company was 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 will be used.
On December 14, 2021, we entered into a real estate purchase agreements and lease disposition and development agreement with the City of Riverbank. We plan to utilize the purchased and leased properties, located at 5300 Claus Road in the city of Riverbank, California, for the construction of the Carbon Zero Facility. The lease commenced on April 1, 2022. The Company evaluated the lease in accordance with ASC 842 – Lease Accounting and classified the lease as a finance lease.
The components of lease expense and sublease income were as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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, 2023 and 2022:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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, 2023 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 was as follows:
| September 30, 2023 | December 31, 2022 | |||||||
| Operating leases | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Current portion of operating lease liability | ||||||||
| Long term operating lease liability | ||||||||
| Total operating lease liabilities | ||||||||
| Finance leases | ||||||||
| Property and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
| Other current liability | ||||||||
| Other long term liabilities | ||||||||
| Total finance lease liabilities | ||||||||
Maturities of operating lease liabilities were as follows:
| Twelve months ended September 30, | Operating leases | Finance leases | ||||||
| 2024 | $ | $ | ||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 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 a gross basis on the consolidated financial statements. This was recorded in the Selling, general and administrative expense section of the Consolidated Statements of Operations and Comprehensive Loss.
The components of lease income were as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Lease income | $ | $ | $ | $ | ||||||||||||
Future lease commitments to be received by the Company as of September 30, 2023 were as follows:
| Twelve months ended September 30, | ||||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total future lease commitments | $ |
Legal Proceedings
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. While the ultimate outcome of these matters is not presently determinable, it is in the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. The Company's view of the matters not listed may change in the future as the litigation and events related thereto unfold.
6. Aemetis Biogas LLC – Series A Preferred Financing and Variable Interest Entity
On December 20, 2018, 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
The Preferred Unit Agreement includes (i) preference payments of $
Triggering events occur upon ABGL’s failure to redeem units, comply with covenants, any other defaults or cross defaults, or to perform representations or warranties. Upon a triggering event: (i) the obligation of the Purchaser to purchase additional Series A Preferred Units is terminated, (ii) cash flow payments for redemption payments increases from
From inception of the agreement to date, ABGL issued
On August 8, 2022, ABGL, Protair-X America, Inc. (“Protair”), and Third Eye Capital entered into a Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Amendment") which amends that certain Series A Preferred Unit Purchase Agreement (“PUPA”) dated as of December 20, 2018. The PUPA Amendment provides for: (i) a waiver of certain covenants prohibiting the internal reorganization of ABGL subsidiaries and the incurrence of indebtedness by ABGL and its subsidiaries pursuant to a USDA loan, provided that, among other things, Third Eye Capital shall have received a repayment of at least $
On January 1, 2023, ABGL entered into the Second Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Second Amendment") providing for: (i) a waiver for not redeeming all Series A Preferred Units by December 31, 2022, and (ii) the right by ABGL to redeem all of the outstanding Series A Preferred Units by May 31, 2023 for an aggregate redemption price of $
On May 31, 2023, ABGL entered into the Third Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Third Amendment") providing: (i) a waiver to ABGL for not redeeming all Series A Preferred Units by May 31, 2023 and (ii) the right by ABGL to redeem all of the outstanding Series A Preferred Units by August 31, 2023, for an aggregate redemption price of $
On November 8, 2023, ABGL entered into a Fourth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Fourth Amendment") with Third Eye Capital Corporation and Protair-X Americas, Inc. providing for: (i) extending the deadline to redeem Series A Preferred Units from August 31, 2023 to December 31, 2023 and (ii) setting the price to redeem all outstanding Series A Preferred Units at $
The Company recorded Series A Preferred Unit liabilities, net of debt discounts pursuant to these agreements, classified as long-term Series A Preferred Units, of $
Variable interest entity assessment
After consideration of ABGL’s operations and the above agreement, we concluded that ABGL did not have enough equity to finance its activities without additional subordinated financial support. ABGL is capitalized with Series A Preferred Units that are recorded as liabilities under U.S. GAAP. Hence, we concluded that ABGL is a VIE. Through the Company's ownership interest in all of the outstanding common stock, its current ability to control the board of directors, the management fee paid to Aemetis and control of subordinated financing decisions, Aemetis has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company. Total assets, before intercompany eliminations, of ABGL as of September 30, 2023 were $
7. Stock-Based Compensation
2019 Stock Plan
The Aemetis Amended and Restated 2019 Stock Plan (the “2019 Stock Plan”) allows the Company 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 as the Company’s Board may determine in its discretion. Option grants made under the Second Amended and Restated 2007 Stock Plan prior to the adoption of the 2019 Stock Plan remain in place according to their terms. The number of shares authorized for issuance under the 2019 Stock Plan increases on January 1 of each year according to the terms of the plan. In addition, shares associated with stock options that expire or are forfeited without being exercised become available again for issuance.
The following table summarizes activity under the 2019 Stock Plan and prior plan during the nine-month period ending September 30, 2023:
| Shares Available for Grant | Number of Shares Outstanding | Weighted-Average Exercise Price | ||||||||||
| Balance as of December 31, 2022 | * | $ | ||||||||||
| Authorized | - | - | ||||||||||
| Options Granted | ( | ) | ||||||||||
| RSAs Granted | ( | ) | - | - | ||||||||
| Exercised | - | ( | ) | |||||||||
| Forfeited/expired | ( | ) | ||||||||||
| Balance as of September 30, 2023 | $ | |||||||||||
The number of outstanding option shares as of September 30, 2023, includes
*The 2015 Employment Inducement Stock Plan (the “2015 Inducement Plan”) authorizes issuance of options for
Valuation and Expense Recorded for Stock Option Issuances
Stock-based compensation is accounted for in accordance with the provisions of ASC 718 Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.
All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. Under ASU 2016-09 Improvements to Employee Share-Based Payments Accounting, we have elected to recognize forfeitures as they occur. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants.
The weighted average fair value calculations for the options granted during the nine months ended 2023 and 2022 are based on the following assumptions:
| For the nine months ended September 30, | ||||||||
| Description | 2023 | 2022 | ||||||
| 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, 2023 and 2022, the Company granted 3,850 and
As of September 30, 2023, the Company had $
8. Warrants
During the three months ending September 30, 2023, the Company granted warrants to subordinated lenders in connection with debt extensions. The warrants were exercisable for
The weighted average fair value calculations for issued warrants are based on the following weighted average factors:
| For the nine months ended September 30, | ||||||||
| Description | 2023 | 2022 | ||||||
| Dividend-yield | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected life (years) | ||||||||
| Exercise price per warrant | $ | $ | ||||||
| Market value per share on grant date | $ | $ | ||||||
| Fair value per warrant on grant date | $ | $ | ||||||
The following table summarizes warrant activity during the nine months ending September 30, 2023:
| Warrants Outstanding & Exercisable | Weighted - Average Exercise Price | Average Remaining Term in Years | ||||||||||
| Outstanding December 31, 2022 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Outstanding September 30, 2023 | $ | |||||||||||
The warrants outstanding as of September 30, 2023 are vested and exercisable as of September 30,2023. As of September 30, 2023 and 2022, the Company had no unrecognized compensation expense related to warrants, respectively.
9. Agreements
Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2023, and the term can be automatically renewed for additional one-year terms. J.D. Heiskell further agreed to sell all ethanol to Murex or other marketing purchasers, all WDG and corn oil to A.L Gilbert, and DCO to other customers under the J.D. Heiskell Purchase Agreement. The Company’s relationships with J.D. Heiskell, and A.L. Gilbert are well established, and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. These Agreements are ordinary purchase and sale agency agreements for the Keyes Plant. On May 25, 2023, we entered into the second amendment to the Aemetis Keyes Grain Procurement and Working Capital agreement with J.D. Heiskell, the second amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell, and the second amendment to the Keyes Ethanol and Corn Tank Lease with J.D. Heiskell. The amendments provide that (i) the Keyes Plant will receive a temporary increase in the credit limit equivalent to four days of grain payables repayable in equal daily installments over 120 days, (ii) that J.D. Heiskell agrees to buy all Ethanol, WDGS, CDS, and Corn Oil produced by the Keyes Plant, sell all ethanol to certain designated purchasers and pay us the same price as it received from such sales, and (iii) J.D. Heiskell would lease certain ethanol product storage tanks from the Keyes Plant.
As of September 30, 2023 and December 31, 2022, Aemetis made prepayments to J.D. Heiskell of and $
The J.D. Heiskell 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, 2023 and 2022 were as follows:
| As of and for the three months ended September 30, | As of and for the nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Ethanol Sales | $ | $ | $ | $ | ||||||||||||
| Wet distiller's grains sales | ||||||||||||||||
| Corn oil sales | ||||||||||||||||
| CDS Sales | ||||||||||||||||
| Corn purchases | ||||||||||||||||
| Accounts receivable | ||||||||||||||||
| Accounts Payable | ||||||||||||||||
| Working Capital | ||||||||||||||||
Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into a Fuel Ethanol Purchase and Sale Agreement with Murex, which matures on October 31, 2023, with automatic one-year renewals thereafter. On May 30, 2023 the Company entered into Amendment No. 1 to the Fuel Ethanol Purchase and Sale Agreement that provides (i) the Company temporarily suspend the agreement for the duration of the Company's Working Capital Agreement with J.D. Heiskell, and (ii) the initial term shall be automatically renewed beginning on October 1, 2023 and ending on March 31, 2025. The Company also entered into a Wet Distillers Grains Marketing Agreement with A.L. Gilbert, which matures on December 31, 2023, with automatic one-year renewals thereafter.
Accounts receivable associated with our marketing partners was
For the three months ended September 30, 2023 and 2022, 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”). Under this agreement, Gemini agreed to provide the Company with a supply of feedstock up to a credit limit of $
As of September 30, 2023 and 2022, the Company has
10. Segment Information
Aemetis recognizes reportable segments: “California Ethanol”, “California Dairy Renewable Natural Gas”, and “India Biodiesel.”
The “California Ethanol” reportable segment includes the Company’s
The “California Dairy Renewable Natural Gas” reportable segment includes dairy digesters, biogas pipeline, gas conditioning unit for the production of renewable natural gas, and interconnection facility to PG&E’s pipeline.
The “India Biodiesel” reportable segment includes the Company’s
The Company has additional operating segments that were determined not to be reportable segments, including the development of the Carbon Zero facility in Riverbank, and development of Carbon Capture and Sequestration projects in California. Additionally, the corporate offices, Riverbank Industrial Complex, Goodland Plant in Kansas, and the 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, 2023 and 2022 follows:
| 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 | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| California Ethanol | California Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest expense including amortization of debt fees | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
A reconciliation of reportable segment revenues to total consolidated revenue for the three months ended September 30, 2023 and 2022 follows:
| 2023 | 2022 | |||||||
| Total revenues for reportable segments | $ | $ | ||||||
| Elimination of intersegment revenues | ( | ) | ||||||
| Total consolidated revenues | $ | $ | ||||||
Summarized financial information by reportable segment for the nine months ended September 30, 2023 and 2022 follows:
| 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 | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| California Ethanol | California Dairy Renewable Natural Gas | India Biodiesel | All other | Total | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest expense including amortization of debt fees | ||||||||||||||||||||
| Accretion and other expenses of Series A preferred units | ||||||||||||||||||||
| Capital expenditures | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
A reconciliation of reportable segment revenues to total consolidated revenue for the nine months ended September 30, 2023 and 2022 follows:
| 2023 | 2022 | |||||||
| Total revenues for reportable segments | $ | $ | ||||||
| Elimination of intersegment revenues | ( | ) | ||||||
| Total consolidated revenues | $ | $ | ||||||
Total assets by reportable segments as of September 30, 2023 and December 31, 2022 follows:
| September 30, 2023 | December 31, 2022 | |||||||
| California Ethanol | $ | $ | ||||||
| California Dairy Renewable Natural Gas | ||||||||
| India Biodiesel | ||||||||
| All other | ||||||||
| Total consolidated assets | $ | $ | ||||||
California Ethanol: The Company amended the Corn Procurement and Working Capital Agreement and the J.D. Heiskell Purchasing Agreement to procure corn from J.D. Heiskell and sell all WDG and corn oil the Company produces to J.D. Heiskell. Sales of ethanol to customer accounted for
California Dairy Renewable Natural Gas: Our California Dairy Renewable Natural Gas segment revenues during the three and nine months ended September 30, 2023 were from sales of biogas to customer and sales of D3 RINs to a separate customer. For the three and nine months ended September 30, 2022, all sales were from sale of biogas to the Keyes Plant as fuel in boilers, which allowed qualification of carbon credits for the ethanol produced in the Keyes Plant.
India Biodiesel: Three biodiesel customers accounted for
11. Related Party Transactions
The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital LLC (“McAfee Capital”), owned by Eric McAfee, $
In the first quarter of 2023, the Audit Committee of the Company approved a one-time guarantee fee of $
The Company owes various members of the Board amounts totaling $
12. Subsequent Events
On October 6, 2023, the Company received the $
On November 8, 2023, ABGL entered into a Fourth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Fourth Amendment") with Third Eye Capital Corporation and Protair-X Americas, Inc. providing for: (i) extending the deadline to redeem Series A Preferred Units from August 31, 2023 to December 31, 2023 and (ii) setting the price to redeem all outstanding Series A Preferred Units at $
13. Management's Plan
The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. As a result of negative capital, negative market conditions resulting in prolonged idling of the Keyes Plant, negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the Company will need to either refinance the Company’s debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the Company’s ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we restarted the plant during the second quarter after completing an extended maintenance cycle and accelerating the implementation of several important ethanol plant energy efficiency upgrades. We plan to operate the plant and continue to improve its financial performance by completing the existing upgrades and adopting new technologies or process changes that allow for energy efficiency, cost reduction or revenue enhancements, as well as, executing upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement.
For Aemetis Biogas we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the carbon credits available in California. Funding for continued construction is based upon obtaining government guaranteed loans and executing on existing and new state grant programs.
For the Kakinada Plant, we plan to continue to develop sales channels for domestic products as the costs of feedstock normalize against the price of diesel, as recently announced governmental incentives take effect to promote the blending of biodiesel, and as feedstocks such as refined animal tallow are used domestically and exported. Additionally, we are in the process of obtaining approval to export refined animal tallow and biodiesel produced using animal tallow into international markets as the use of refined animal tallow received approval from the Pollution Control Board of India for production of biodiesel. The repatriation of funds from India to the parent company in the U.S. is reliant on favorable governmental approvals.
For the Riverbank project, we plan to continue project development and raise the funds necessary to construct and operate the Carbon Zero plant in Riverbank, California to produce renewable diesel and sustainable aviation fuel for transportation use as well as generate federal and state carbon credits available for the production and sale of low carbon fuels.
For all facilities in the United States, we plan to utilize the provision of the Inflation Reduction Act of 2022 by qualifying for tax credits in the form of an Investment Tax Credits, Production Tax Credits, and other credits, and to monetize the credits using the provisions of this congressional act.
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, selling bonds in the taxable and tax-exempt markets, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, or by vendor financing arrangements.
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, 2023 and 2022. |
| ● |
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 is an international renewable natural gas and renewable fuels company focused on the acquisition, development and commercialization of innovative low and negative carbon intensity products and technologies that replace traditional petroleum-based products. Our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this by building a local circular bioeconomy utilizing agricultural and waste to produce low and negative carbon, advanced renewable fuels that reduce greenhouse gas (“GHG”) emissions by replacing traditional petroleum-based products.
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”), Carbon Dioxide (“CO2”) and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to more than 80 local dairies and feedlots, with CO₂ sold to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives focused on significantly lowering the carbon intensity of our ethanol, primarily by decreasing use of natural gas at the Keyes plant. These energy efficiency projects include high efficiency heat exchangers; a two-megawatt solar microgrid with battery storage; an Allen Bradley Decision Control System (DCS) to manage and optimize energy use and other plant operations; and a Mechanical Vapor Recompression (MVR) system to reuse steam. These projects are expected to reduce natural gas use by converting key processes to use electricity rather than natural gas and by using low-carbon-intensity hydroelectric electricity or electricity produced onsite from solar panels. This will reduce GHG emissions and decrease the carbon intensity (CI) of fuel produced at the Keyes Plant. The lower CI of ethanol produced at the Keyes Plant will allow us to realize a higher price for the ethanol produced and sold at the Keyes Plant. During the last two weeks of December 2022, we undertook an extended maintenance cycle and accelerated the implementation of the ethanol plant energy efficiency upgrades noted above. Our decision was partly driven by the high natural gas prices in California during the period. Furthermore, after monitoring natural gas pricing and margin profitability, we decided to extend the maintenance cycle into the second quarter of 2023. With natural gas pricing in a reasonable range and the maintenance turn-around complete, we restarted the plant in the second quarter of 2023.
Our California Dairy Renewable Natural gas segment built, operates, and is actively expanding a network of anaerobic digesters at local dairies near the Keyes Plant (many of whom also purchase WDG produced by the Keyes Plant as animal feed); transports biogas by pipeline to an upgrading up located at the Keyes Plant site; converts the biogas to Renewable Natural Gas (“RNG”); and delivers the RNG to customers through the PG&E natural gas pipeline.
Our India Biodiesel segment owns and operates a plant in Kakinada, India (“Kakinada Plant”) with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. We believe the Kakinada Plant is one of the largest biodiesel production facilities in India on a nameplate capacity basis. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meets international 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 All Other segment consists of: the development of our Carbon Zero biofuels production plant to produce renewable diesel and sustainable aviation fuel; the development of our Carbon Capture and Sequestration compression system and injection wells; operation of the Riverbank Industrial Complex; a research and development facility in Minneapolis, Minnesota; and our corporate offices in Cupertino, California.
Our Carbon Zero biofuels production plant is designed to produce low carbon intensity sustainable aviation fuel (“SAF”) and renewable diesel fuel (“RD”) using low carbon hydroelectric electricity, renewable hydrogen and non-edible renewable oils sourced from existing Aemetis biofuels plants and other sources. Our first Carbon Zero plant is scheduled to be built in Riverbank, California at the 125-acre former Riverbank Army ammunition plant. The Riverbank plant is expected to utilize zero carbon hydroelectric power to produce 90 million gallons per year of SAF and RD. The plant is expected to supply the aviation and truck markets with low carbon renewable fuels to reduce GHG emissions and other pollutants associated with conventional petroleum-based fuels. By producing low carbon renewable fuels, the Company will generate Renewable Identification Numbers (“RINs”) under the federal Renewable Fuel Standard (“RFS”), generate California Low Carbon Fuel Standard (“LCFS”) credits, and produce Inflation Reduction Act tax credits.
Our Carbon Capture subsidiary was established to build Carbon Capture and Sequestration (“CCS”) projects that generate LCFS and IRS 45Q tax credits by compressing and injecting 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 CCS injection projects are expected 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 located at the Riverbank Industrial Complex site in Riverbank, California to develop a CCS injection well with more than 1 million metric tons per year of CO₂ sequestration capacity. We plan to construct a characterization well at each site to characterize the geology to provide information for permitting and planning the projects.
Our Minneapolis, Minnesota research and development laboratory develops efficient conversion technologies using low carbon intensity 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 utilize the remaining biomass to produce low carbon renewable hydrogen for the production of sustainable aviation fuel, renewable diesel and potential sale of renewable hydrogen to third parties as transportation fuel.
California Ethanol Revenue
Revenue generation for our California Ethanol segment relies upon supplying ethanol into the transportation fuel market in California and supplying feed products to dairy and other animal feed operations in California. We are actively implementing plans that will bring higher value for our fuel ethanol in an effort to improve our overall margins and to add incremental income to the California Ethanol segment, including, the implementation of the Solar Microgrid System, the installation of mechanical vapor recompression, and other energy efficiency technologies. The energy efficiency upgrades to the Keyes Plant will result in higher LCFS value through the reduction of the carbon intensity of the fuel ethanol produced at the plant.
We sell all ethanol, WDG, CDO, and CDS produced in this process to J.D. Heiskell. Our ethanol finished goods tank is leased by J.D. Heiskell and legal title to the product is transferred upon transfer of our finished ethanol to this location. The CO₂ produced by the Keyes Plant is sold to Messer Gas.
California Ethanol revenue is dependent on the price of ethanol, WDG, CDS, CO₂, and DCO. Ethanol pricing is influenced by local and national production and inventory levels, imported ethanol, corn prices, and gasoline demand, and is determined pursuant to a marketing agreement with a single fuel marketing customer and is generally based on daily and monthly pricing for ethanol delivered to the San Francisco Bay Area, California, as published by Oil Price Information Service (“OPIS”), as well as quarterly contracts negotiated by our marketing company with local fuel blenders. The price for WDG is influenced by the price of corn, the supply and price of distillers dried grains, and demand from the local dairy and feed markets and determined monthly pursuant to a marketing agreement with A.L. Gilbert and is generally determined in reference to the local price of dried distillers’ grains and other comparable feed products. Our revenue is further influenced by the price of natural gas, and our decision to operate the Keyes Plant at various capacity levels, conduct required maintenance, and respond to biological processes affecting output.
California Dairy Renewable Natural Gas Revenue
Since December 2018, we have utilized our relationships with California’s Central Valley dairy farmers by signing leases and raising funds to construct dairy digesters, a 40-mile pipeline, and a biogas-to-RNG upgrading facility that delivers RNG to a utility gas pipeline. We are currently producing RNG from seven digesters connected by our pipeline and have five additional dairy digesters under construction. We have a total of approximately 34 agreements with dairies to construct dairy digesters. Our revenue development strategy for the Dairy Renewable Natural Gas segment relies upon continuing to collect bio-methane gas from the existing dairy digesters, continuing to build out the network of dairy digesters, extending the pipeline to grow the supply of RNG available for sale, and utilizing the biogas-to-RNG upgrade unit to distribute utility-grade RNG to customers statewide.
Inflation Reduction Act of 2022
For all facilities in the United States, we plan to continue to use the provisions of the Inflation Reduction Act of 2022 by qualifying for renewable energy credits in the form of an Investment Tax Credits, Production Tax Credit, and other credits, and to monetize the credits using the provisions of this congressional act.
India Biodiesel Revenue
Our revenue strategy in India is based on continuing to sell biodiesel to our bulk fuel customers, fuel station customers, mining customers, industrial customers and tender offers placed by Government-owned Oil Marketing Companies (“OMCs”) for bulk purchases of fuels. During the first quarter, the government of India updated the national biofuels policy and adopted a new tax on diesel fuel to promote biodiesel blending. As a result, the OMCs are pricing the tenders at economically viable levels, allowing for biodiesel producers in India to begin production.
During the third quarter of 2023, we fulfilled an OMC tender offer for 17,066 metric tons of which 1596 metric tons of biodiesel revenue was in transit as of September 30, 2023 and would be recognized as revenue during the fourth quarter.
Results of Operations
Three Months Ended September 30, 2023, Compared to Three Months Ended September 30, 2022
Revenues
Our revenues are derived primarily from sales of ethanol and WDG for our California Ethanol segment, renewable natural gas for our Dairy Renewable Natural Gas segment, and biodiesel for our India Biodiesel segment.
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 47,439 | $ | 60,908 | $ | (13,469 | ) | (22.1 | )% | |||||||
| California Dairy Renewable Natural Gas |
1,107 | 308 | 799 | 259.4 | % | |||||||||||
| India Biodiesel |
20,144 | 10,923 | 9,221 | 84.4 | % | |||||||||||
| Eliminations |
- | (308 | ) | 308 | (100.0 | )% | ||||||||||
| Total |
$ | 68,690 | $ | 71,831 | $ | (3,141 | ) | (4.4 | )% | |||||||
California Ethanol. 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. For the three months ended September 30, 2022, the Company sold 15.7 gallons of ethanol at an average price of $2.85 per gallon and 102 thousand tons of WDG at a price of $127 per ton. The decrease in revenue was attributable to decrease in sales volume by 12% coupled with decrease in average price by 7%.
California Dairy Renewable Natural Gas. During the three months ended September 30, 2023, we produced and sold 66.6 thousand MMBtu of renewable natural gas to an external party, at an average price of $2.13 per MMBtu and we also sold 271 thousand D3 RINs at average price of $2.97 per RIN. During the three months ended September 30, 2022, we produced 16.8 thousand MMBtus of dairy biogas that we used at the Keyes plant.
India Biodiesel. For the three months ended September 30, 2023, we generated 96% of our revenues from the sale of biodiesel, and 4% of our sales from other sales compared to 99% of our sales from biodiesel, and 1% of our sale from other sales for the three months ended September 30, 2022. The increase in revenues was primarily attributable to obtaining the tender offers from India's Oil Market Companies, making the production of biodiesel commercially viable for the Company. Biodiesel sales volume increased to 15.5 thousand metric tons in the three months ended September 30, 2023 compared to 7.0 thousand metric tons in the three months ended September 30, 2022 while price per ton decreased by 27%.
Cost of Goods Sold
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 48,912 | $ | 64,671 | $ | (15,759 | ) | (24.4 | )% | |||||||
| California Dairy Renewable Natural Gas |
1,914 | 487 | 1,427 | 293.0 | % | |||||||||||
| India Biodiesel |
17,372 | 8,082 | 9,290 | 114.9 | % | |||||||||||
| All other |
- | 3 | (3 | ) | (100.0 | )% | ||||||||||
| Eliminations |
- | (308 | ) | 308 | (100.0 | )% | ||||||||||
| Total |
$ | 68,198 | $ | 72,935 | $ | (4,737 | ) | (6.5 | )% | |||||||
California Ethanol. For the three months ended September 30, 2023, we ground 5.0 million bushels of corn at $7.48 per bushel and incurred $1.9 million in chemicals and denaturant costs, $2.2 million in natural gas costs, and $2.2 million in transportation costs. For the three months ended September 30, 2022, we ground 5.5 million bushels of corn at $9.59 per bushel and incurred $1.7 million in chemicals and denaturant costs, $3.8 million in natural gas costs, and $2.5 million in transportation costs.
California Dairy Renewable Natural Gas. Cost of Goods Sold expenses relate to dairy manure payments, maintenance on the dairy digesters, and depreciation. Cost of Goods Sold increased with seven operating dairies as of September 30, 2023, compared to two operating dairies in the three months ended September 30, 2022.
India Biodiesel. The increase in costs of goods sold was attributable to the increase in production of biodiesel. In the three months ended September 30, 2023 we consumed 15.6 thousand metric tons of feedstock, compared to 9.4 thousand metric tons of feedstock in the same period in 2022. During the three months ended September 30, 2023 the average price of biodiesel feedstock was $752 per metric ton compared to $889 per metric ton in the same period as in 2022.
Gross profit (loss)
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | (1,473 | ) | $ | (3,763 | ) | $ | 2,290 | (60.9 | )% | ||||||
| California Dairy Renewable Natural Gas |
(807 | ) | (179 | ) | (628 | ) | 350.8 | % | ||||||||
| India Biodiesel |
2,772 | 2,841 | (69 | ) | (2.4 | )% | ||||||||||
| All other |
- | (3 | ) | 3 | (100.0 | )% | ||||||||||
| Total |
$ | 492 | $ | (1,104 | ) | $ | 1,596 | (144.6 | )% | |||||||
California Ethanol. The decrease in gross loss was attributable to lower corn prices and natural gas prices in 2023 compared to higher corn prices and natural gas prices in the 2022.
California Dairy Renewable Natural Gas. The increase in gross loss in the three months ended September 30, 2023 relates to an increase in manure and maintenance costs associated with having seven dairies producing biogas, compared to two dairies in the same period ended September 30, 2022.
India Biodiesel. The slight decrease in gross profit was attributable to decrease in the average sales price of biodiesel by 27% and refined glycerin by 33% offset by decrease of feedstock price by 15%.
Operating (income)/expense and non-operating (income)/expense
Substantially all of our research and development expenses were related to research and development activities in Minnesota.
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 Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, insurance, other corporate expenses, and related facilities expenses. Also included was of sublease rental income which was included as an offset to the SG&A expenses.
Other expense (income) expense consists primarily of interest and amortization expense attributable to our debt facilities and accretion of Series A preferred units. The debt facilities sometimes include stock or warrants issued as fees. The fair value of stock and warrants are amortized as amortization expense, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense.
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| Research and development expenses |
$ | 36 | $ | 52 | $ | (16 | ) | (30.8 | )% | |||||||
| Selling, general and administrative expenses |
8,985 | 6,439 | 2,546 | 39.5 | % | |||||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
$ | 8,749 | $ | 5,456 | $ | 3,293 | 60.4 | % | ||||||||
| Debt related fees and amortization expense |
1,433 | 1,633 | (200 | ) | (12.2 | )% | ||||||||||
| Accretion and other expenses of Series A preferred units |
7,739 | 2,774 | 4,965 | 179.0 | % | |||||||||||
| Gain on debt extinguishment |
- | 49,386 | (49,386 | ) | (100.0 | )% | ||||||||||
| Other (income) expense |
(1,853 | ) | (2 | ) | (1,851 | ) | 92550.0 | % | ||||||||
The increase in SG&A expenses for the three months ended September 30, 2023 was due to increases in (i) stock compensation, salaries and wages of $0.4 million, (ii) professional fees of $1.8 million and (iii) miscellaneous expense of $0.6 million due to reclassifying cost of goods sold depreciation, maintenance costs and plant services to SG&A during the extended maintenance cycle and the accelerated implementation of several important ethanol plant energy efficiency upgrades to the Keyes Plant.
Interest expense increased in the three months ended September 30, 2023 due to Construction Loan debt, additional borrowings 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 increase in accretion and other expenses of the Series A Preferred Units was due to provisions of the PUPA Amendments.
Nine Months Ended September 30, 2023, Compared to Nine Months Ended September 30, 2022
Revenues
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 59,246 | $ | 178,840 | $ | (119,594 | ) | (66.9 | )% | |||||||
| California Dairy Renewable Natural Gas |
1,523 | 940 | 583 | 62.0 | % | |||||||||||
| India Biodiesel |
55,184 | 10,941 | 44,243 | 404.4 | % | |||||||||||
| All other |
- | - | - | 0.0 | % | |||||||||||
| Eliminations |
- | (940 | ) | 940 | (100.0 | )% | ||||||||||
| Total |
$ | 115,953 | $ | 189,781 | $ | (73,828 | ) | (38.9 | )% | |||||||
California Ethanol. For the nine months ended September 30, 2023, the Company sold 16.7 million gallons of ethanol at a price of $2.72 per gallon and 122 thousand tons of WDG at a price of $98 per ton. The decrease in revenues was due to an extended maintenance cycle and accelerated the implementation of several important ethanol plant energy efficiency upgrades to the Keyes Plant during the first five months of 2023 coupled with decrease in average price of ethanol by 5% and WDG by 24%.
California Dairy Renewable Natural Gas. During the nine months ended September 30, 2023, we produced and sold 142 thousand MMBtu of physical molecules to an external party, at an average price of $5.06 per MMBtu. Also, we started selling D3 RINs during the quarter and we sold 271 thousand D3 RINS at an average price of $2.97 per RIN. During the nine months ended September 30, 2022, we produced and sold dairy biogas of $940 thousand to an intercompany party.
India Biodiesel. For the nine months ended September 30, 2023, we generated 97% of our revenues from the sale of biodiesel, and 3% of our sales from other sales compared to 100% of our sales from other sales for the nine months ended September 30, 2022. The increase in revenues was primarily attributable to receiving the tender offer from the India Oil Marketing Companies, which made the production of biodiesel commercially viable for the Company. Biodiesel sales volume increased to 43.7 thousand metric tons in the nine months ended September 30, 2023 compared to 7.0 thousand metric tons in the nine months ended September 30, 2022, while price per ton decreased to $1,219 per metric ton from $1,550 per metric ton.
Cost of Goods Sold
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | 63,053 | $ | 185,635 | $ | (122,582 | ) | (66.0 | )% | |||||||
| California Dairy Renewable Natural Gas |
4,167 | 1,394 | 2,773 | 198.9 | % | |||||||||||
| India Biodiesel |
47,580 | 8,082 | 39,498 | 100.0 | % | |||||||||||
| All other |
- | 13 | (13 | ) | (100.0 | )% | ||||||||||
| Eliminations |
- | (940 | ) | 940 | (100.0 | )% | ||||||||||
| Total |
$ | 114,800 | $ | 194,184 | $ | (79,384 | ) | (40.9 | )% | |||||||
California Ethanol. For the nine months ended September 30, 2023, we ground 6.4 million bushels of corn at $7.34 per bushel. This decrease from the same period in 2022 was due to an extended maintenance period at the Keyes Plant. As a result of the Keyes Plant shutdown, our corn costs decreased by $105.0 million, natural gas costs decreased by $8.0 million, chemical and denaturant costs decreased by $2.5 million, and transportation costs decreased by $3.9 million compared to the same period in 2022.
California Dairy Renewable Natural Gas. Cost of Goods Sold expenses relate to dairy manure payments, maintenance on the dairy digesters, and depreciation. Cost of goods sold will continue to increase as we expand the business.
India Biodiesel. The increase in costs of goods sold was attributable to increased production. In the nine months ended September 30, 2023 biodiesel feedstock volume was 43.7 thousand metric tons, compared to 9.4 thousand metric tons in the same period as in 2022. During the nine months ended September 30, 2023 the average price of biodiesel feedstock was $797 per metric ton compared to $889 per metric ton in the same period as in 2022.
Gross profit (loss)
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| California Ethanol |
$ | (3,807 | ) | $ | (6,795 | ) | $ | 2,988 | (44.0 | )% | ||||||
| California Dairy Renewable Natural Gas |
(2,644 | ) | (454 | ) | (2,190 | ) | 482.4 | % | ||||||||
| India Biodiesel |
7,604 | 2,859 | 4,745 | 166.0 | % | |||||||||||
| All other |
- | (13 | ) | 13 | (100.0 | )% | ||||||||||
| Total |
$ | 1,153 | $ | (4,403 | ) | $ | 5,556 | (126.2 | )% | |||||||
California Ethanol. The decrease in gross loss was attributable to an extended maintenance cycle for first five months of 2023 coupled with decrease in corn price by 23% and natural gas prices by 52%.
California Dairy Renewable Natural Gas. The increase in gross loss in the nine months ended September 30, 2023 relates to an increase in manure and maintenance costs associated with having seven dairies producing biogas, compared to two dairies in the same period ended September 30, 2022.
India Biodiesel. The increase in gross profit was attributable to the increase in production and sales of biodiesel to meet the government of India's tender offer as the tender offer was received at the start of the first quarter.
Operating (income)/expense and non-operating (income)/expense
| 2023 |
2022 |
Inc/(dec) |
% change |
|||||||||||||
| Research and development expenses |
$ | 115 | $ | 139 | $ | (24 | ) | (17.3 | )% | |||||||
| Selling, general and administrative expenses |
29,480 | 21,166 | 8,314 | 39.3 | % | |||||||||||
| Other expense (income): |
||||||||||||||||
| Interest expense |
||||||||||||||||
| Interest rate expense |
$ | 24,126 | $ | 14,819 | $ | 9,307 | 62.8 | % | ||||||||
| Debt related fees and amortization expense |
4,732 | 5,199 | (467 | ) | (9.0 | )% | ||||||||||
| Accretion and other expenses of Series A preferred units |
20,188 | 5,920 | 14,268 | 241.0 | % | |||||||||||
| Loss on debt extinguishment |
- | 49,386 | (49,386 | ) | (100.0 | )% | ||||||||||
| Gain on litigation |
- | (1,400 | ) | 1,400 | (100.0 | )% | ||||||||||
| Other expense (income) |
(2,020 | ) | (14,297 | ) | 12,277 | (85.9 | )% | |||||||||
The increase in SG&A expenses for the nine months ended September 30, 2023 was due to increases in (i) stock compensation, salaries and wages of $2.8 million due to issuing a grant of RSAs, (ii) Depreciation and Amortization of $1.7 million due to reclassifying cost of goods sold depreciation to SG&A depreciation, (iii) Taxes, Insurances, Rent and Utilities increase of $1.1 million, (iv) supplies, other services and professional fees of $2.3 million and (v) Miscellaneous expense increase of $1.8 million as we reclassified cost of goods sold to SG&A as we were not operating the Keyes Plant until the end of May.
Interest expense increased in the nine months ended September 30, 2023 additional Construction Loan debt, additional borrowings 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 increase in accretion and other expenses of the Series A Preferred Units was due to provisions of the recent PUPA Amendments.
Liquidity and Capital Resources
Cash and Cash Equivalents
Cash and cash equivalents were$3.9 million at September 30, 2023, of which $0.8 million was held in North America and the rest was held at our Indian subsidiary. Our current ratio at September 30, 2023 was 0.21 which stayed same as at December 31, 2022. We expect that our future available liquidity resources will consist primarily of cash generated from operations, remaining cash balances, borrowings available, if any, under our senior debt facilities and our subordinated debt facilities, and any additional funds raised through sales of equity. The use of proceeds from all equity raises and debt financings are subject to approval by our senior lender.
Liquidity
Cash and cash equivalents, current assets, current liabilities and debt at the end of each period were as follows:
| As of |
||||||||
| September 30, 2023 |
December 31, 2022 |
|||||||
| Cash and cash equivalents |
$ | 3,899 | $ | 4,313 | ||||
| Current assets (including cash, cash equivalents, and deposits) |
78,491 | 18,136 | ||||||
| Current and long-term liabilities (excluding all debt) |
190,897 | 162,728 | ||||||
| Current & long-term debt |
286,534 | 246,240 | ||||||
Our principal sources of liquidity have been cash provided by the sale of equity, operations, and borrowings under various debt arrangements.
Our principal uses of cash have been to refinance indebtedness, fund operations, and for capital expenditures. We anticipate these uses will continue to be our principal uses of cash in the future. Global financial and credit markets have been volatile in recent years, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost, or at all.
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 the overall margin 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 federal RINs and LCFS credits. To the extent that we experience periods in which the spread between ethanol prices, and corn and energy costs narrow or the spread between biodiesel prices and waste fats and oils or palm oil and energy costs narrow, we may require additional working capital to fund operations.
As a result of negative capital, negative market conditions, negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the Company will need to either refinance the Company’s debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the Company’s ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we restarted the plant during the second quarter after completing an extended maintenance cycle and accelerating the implementation of several important ethanol plant energy efficiency upgrades. We plan to operate the plant and continue to improve its financial performance by completing the existing upgrades and adopting new technologies and process changes that allow for energy efficiency, cost reduction or revenue enhancements, as well as, executing upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement.
For Aemetis Biogas, we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the carbon credits available in California. Funding for continued construction is based upon obtaining government guaranteed loans and executing on existing and new state grant programs.
For the Kakinada Plant, we plan to continue to develop sales channels for domestic products as the costs of feedstock normalize against the price of diesel, as recently announced governmental incentives take effect to promote the blending of biodiesel, and as feedstocks such as refined animal tallow are used domestically and exported. Additionally, we are in the process of obtaining approval to export refined animal tallow and biodiesel produced using animal tallow into international markets as the use of refined animal tallow received approval from the Pollution Control Board of India for production of biodiesel. The repatriation of funds from India to the parent company in the U.S. is reliant on favorable governmental approvals.
For the Riverbank project, we plan to continue project development and raise the funds necessary to construct and operate the Carbon Zero plant in Riverbank, California to produce renewable diesel and sustainable aviation fuel for transportation use as well as generate federal and state carbon credits available for the production and sale of low carbon fuels.
For all facilities in the United States, we plan to utilize the provision of the Inflation Reduction Act of 2022 by qualifying for tax credits in the form of an Investment Tax Credits, Production Tax Credits, and other credits, and to monetize the credits using the provisions of this congressional act.
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, selling bonds in the taxable and tax-exempt markets, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, and by vendor financing arrangements.
At September 30, 2023, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes equaled $182 million. The maturity dates for the Third Eye Capital financing arrangements are August 31, 2023, for $11.5 million which was paid off subsequently, April 1, 2025, for $125.8 million, March 1, 2025, for $25.0 million and March 1, 2026, for $24.9 million.
As of the date of this report, the Company has $50.0 million additional borrowing capacity to fund future cash flow requirements under the Reserve Liquidity Notes with a maturity date April 1, 2024.
Change in Working Capital and Cash Flows
The following table (in thousands) describes the changes in current and long-term debt during the nine months ended September 30, 2023:
| Increases to debt: |
||||||||
| Accrued interest |
$ | 24,619 | ||||||
| Maturity date extension fee and other fees added to senior debt |
2,330 | |||||||
| Sub debt extension fees |
680 | |||||||
| Revolving Notes Series B draw |
800 | |||||||
| Fuels Revolving Line draw |
6,598 | |||||||
| Construction Loan draw |
13,598 | |||||||
| Working capital loan draw |
22,427 | |||||||
| Total increases to debt |
$ | 71,052 | ||||||
| Decreases to debt: |
||||||||
| Principal, fees, and interest payments to senior lender |
$ | (5,445 | ) | |||||
| Principal and interest payments to EB-5 investors |
(148 | ) | ||||||
| Change in debt issuance costs, net of amortization |
(1,254 | ) | ||||||
| Term loan payments |
(7 | ) | ||||||
| Construction Loan Payments |
(1,228 | ) | ||||||
| Working capital loan payments |
(22,676 | ) | ||||||
| Total decreases to debt |
$ | (30,758 | ) | |||||
| Change in total debt |
$ | 40,294 |
Working capital changes resulted in (i) a $3.5 million increase in inventories due to the Keyes Plant restarting operations and built up of inventory for production for winter months in India (ii) a $3.3 million increase in accounts receivable due to UBPL fulfilling a government tender in the third quarter of 2023, and (iii) a slight increase in other current assets of $0.2 million due to receipt of the restricted cash from the Construction loan. This was partially offset by (i) a $1.4 million decrease in prepaid expenses mainly due to the use of a J.D. Heiskell pre-payment, and (iii) a $0.4 million decrease in cash.
Net cash used in operating activities during the nine months ended September 30, 2023, was $19.2 million, consisting of non-cash charges of $36.7 million, net cash used by operating assets and liabilities of $34.8 million, and net loss of $21.0 million. The non-cash charges consisted of: (i) $4.8 million in amortization of debt issuance costs and other intangible assets, (ii) $5.2 million in depreciation expenses, (iii) $6.2 million in stock-based compensation expense and a warrant grant to our working capital partner, (iv) $20.2 million in preferred unit accretion and other expenses of Series A preferred units. Net changes in operating assets and liabilities consisted primarily of (i) an increase in accrued interest of $18.5 million, (ii) an increase in accounts payable of $4.7 million, (iii) an increase in other liabilities of $3.3 million, and (iv) a decrease in prepaid expenses of $2.4 million. This was partially offset by an increase in other assets of $56.8 million, (ii) an increase in inventories of $3.6 million and (iii) an increase in accounts receivable of $3.3 million.
Cash used by investing activities was $10.9 million, of which $18.6 million were used by capital projects, partially offset by grant proceeds and other reimbursements of $7.7 million.
Cash provided by financing activities was $30.6 million, consisting of $14.8 million from issuance of common stock and $41.4 million from proceeds from borrowings, partially offset by repayments of borrowings of $22.6 million, payment of debt renewal and waiver fees of $1.7 million and payments on finance leases of $1.4 million.
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations are based upon 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, 2022.
Recently Issued Accounting Pronouncements
None reported beyond those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.
Off Balance Sheet Arrangements
We had no off-balance sheet arrangements during the three months ended September 30, 2023.
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, 2022, 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
There were no changes in our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our 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, 2022, we initiated a remediation plan to address the material weakness in our internal control related to information technology general controls and information technology systems.
For a more comprehensive discussion of the material weaknesses in internal control over financial reporting identified by management as of December 31, 2022, and the remedial measures undertaken to address these material weaknesses, investors are encouraged to review Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2022.
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. For additional information regarding such matters, see “Part I, Item 1. Financial Statements – Note 5. Commitments and Contingencies - Legal Proceedings.”
There has been no change in risk factors since the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 9, 2023. We urge you to read the risk factors contained therein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the third quarter of 2023, we issued two-year warrants to purchase 113 thousand shares of our common stock to subordinated lenders in connection with a extension of their debt, and we also issued 113 thousand shares of common stock in connection with their exercise of the warrants. These issuances were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as issuances of securities not involving any public offering.
Item 3. Defaults Upon Senior Securities.
No unresolved defaults on senior securities occurred during the nine months ended September 30, 2023.
Item 4. Mine Safety Disclosures.
None.
None.
| 10.1 | Fourth Waiver and Amendment to Series A Preferred Unit Purchase Agreement, dated as of November 8, 2023, by and among Aemetis Biogas LLC, Protair-X Americas, 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 9, 2023 | By: |
/s/ Eric A. McAfee |
| Eric A. McAfee Chief Executive Officer (Principal Executive Officer) |
||
| Date: November 9, 2023 | By: |
/s/ Todd Waltz |
| Todd Waltz Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
||
Exhibit 10.1
FOURTH WAIVER AND AMENDMENT TO
SERIES A PREFERRED UNIT PURCHASE AGREEMENT
This Fourth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (this “Amendment”), effective as of November 8, 2023 (“Effective Date”) , is made by and among (i) AEMETIS BIOGAS LLC, a Delaware limited liability company (“ABGL” or “COMPANY”), (ii) PROTAIR-X AMERICAS, INC., a Delaware corporation and wholly owned subsidiary of Protair-X Technologies Inc., a Canadian corporation (the “Purchaser”), and (iii) THIRD EYE CAPITAL CORPORATION, an Ontario corporation, as agent for the Purchaser (“Agent”).
RECITALS
A. ABGL, the Agent, and the Purchaser entered into the Series A Preferred Unit Purchase Agreement and a Security Agreement, each dated as of December 20, 2018 (as amended, the “Agreement”). Capitalized terms used but not defined in this Amendment shall have the meaning given to them in the Agreement.
B. Prior to the effectiveness of this Amendment, Section 6.9(b) required ABGL to redeem the outstanding Series A Preferred Units by August 31, 2023, or, if not redeemed, to enter into a Credit Agreement with Purchaser and Agent.
C. ABGL has not redeemed all of the outstanding Series A Preferred Units, and the Parties hereto desire to extend the deadline for such redemption, pursuant to ABGL’s ongoing negotiations with certain strategic investors in order to conclude an optimal transaction by the dates indicated herein and in advance of the Final Redemption Date, and the parties have agreed to amend the Agreement and to provide certain consents and waivers on the terms and conditions contained herein to contemplate the foregoing.
AGREEMENT
SECTION 1. Waiver and Amendments. The Agent and Purchaser hereby waive, as of the date hereof, non-compliance with Section 6.9(b) the Agreement that occurred prior to the Effective Date and agree that the following sections of the Agreement shall be and hereby are amended as follows:
(A) Section 6.9(b) (Full Redemption). Subsection 6.9(b) of the Agreement is deleted in its entirety and replaced with the following:
“Full Redemption. On or before 2:00pm EST on December 31, 2023 (the “Final Redemption Date”), the Company shall redeem all of the outstanding Series A Preferred Units by paying to the Purchaser, in immediately available funds, an aggregate amount equal to $102,500,000 (being equal to $132,500,000 less $30,000,000 received by the Purchaser on October 13, 2023) (the “Final Redemption Price”). The payment and receipt of the Final Redemption Price shall be in full and complete satisfaction of the requirement of the Company to pay the Obligations under the Agreement, and upon receipt of such payment and the payment of any outstanding fees or other amounts, the Purchaser shall deliver to the Company for cancellation, the certificate or certificates representing the then issued and outstanding Series A Preferred Units held by the Purchaser or on its behalf, and the Agreement and other Transaction Documents shall be deemed terminated (except for any provisions thereof that, by their specific terms, survive termination). Notwithstanding the foregoing, the Parties acknowledge that they shall continue negotiations, in good faith, towards ensuring the redemption transaction noted herein on the Final Redemption Date is done on a tax efficient basis, including giving consideration to a transaction involving the sale of the Purchaser to the Company or its shareholder or other affiliates.
Credit Agreement. In the event that the Final Redemption Price is not paid by the date indicated above, such failure shall constitute a Trigger Event, and in addition to the remedies indicated in Section 7.2 of the Agreement, the Company agrees that effective as of January 1, 2024, it will execute and agree to be bound by, and shall irrevocably be deemed to have entered into, a credit agreement with the Agent and the Purchaser in substantially the form attached as Schedule “A” to the Fourth Amendment (with any revisions required and agreed to by the parties in order to ensure such transaction is done on a tax efficient basis, the “Credit Agreement”), and together with any ancillary agreements, documents, certificates, guarantees or deliverables contemplated by such Credit Agreement (collectively, the “Credit Documents”), and such Credit Agreement shall be a modification and replacement of this Agreement, and the liabilities, obligations, covenants and requirements of this Agreement shall be replaced by the liabilities, obligations, covenants and requirements of the Credit Agreement and all such security, liens and registrations provided pursuant to this Agreement (or ancillary agreements) shall continue and remain in place unaffected. Further, upon execution of the Credit Agreement and all Credit Documents (including without limitation any guarantees which the Credit Agreement contemplates to be signed by affiliates of ABGL, including those signatories to the Fourth Amendment), the Purchaser shall deliver to the Company for cancellation, the certificate or certificates representing the then issued and outstanding Series A Preferred Units held by the Purchaser or on its behalf, and the Agreement and other Transaction Documents shall be deemed terminated (except for any provisions thereof that, by their nature, survive termination).”
(B) Section 1.1 Defined Terms. The following defined term is added into Section 1.1 of the Agreement in its applicable alphabetical order:
“Fourth Amendment” means that Fourth Waiver and Amendment to Series A Preferred Unit Purchase Agreement dated as of November 8, 2023, by and between the Company, the Purchaser and the Agent.”
SECTION 2. Conditions to Effectiveness. This Amendment shall be subject to satisfaction of the following conditions precedent:
(a) ABGL shall have performed and complied with all of the covenants and conditions required by this Amendment and the Transaction Documents to be performed and complied with upon the effective date of this Amendment.
(b) ABGL shall pay, on the Final Redemption Date, a closing fee of $5,500,000, payable to or at the direction of, the Purchaser (and for, purposes of clarity, this closing fee may be paid by entry of the Credit Agreement, and the closing fee is included in the $108,000,000 principal referred to in the form of Credit Agreement).
(c) Agent shall have received all other approvals, opinions, documents, agreements, instruments, certificates, schedules and materials as the Agent may reasonably request, including tax advice to ensure that the transactions contemplated herein are done on a tax efficient manner.
SECTION 3. Acknowledgement. ABGL acknowledges and agrees that the failure to perform, or to cause the performance of, the covenants and agreements in this Amendment will constitute a Trigger Event under the Agreement.
SECTION 4. Agreement in Full Force and Effect as Amended. Except as specifically amended or waived hereby, the Agreement and other Transaction Documents shall remain in full force and effect and are hereby ratified and confirmed as so amended. Except as expressly set forth herein, this Amendment shall not be deemed to be a waiver, amendment or modification of, or consent to or departure from, any provisions of the Agreement or any other Transaction Document or any right, power or remedy of the Agent or Purchaser thereunder, nor constitute a waiver of any provision of the Agreement or any other Transaction Document, or any other document, instrument or agreement executed or delivered in connection therewith or of any Trigger Event under any of the foregoing, in each case whether arising before or after the execution date of this Amendment or as a result of performance hereunder or thereunder. This Amendment shall not preclude the future exercise of any right, remedy, power, or privilege available to the Agent or Purchaser whether under the Agreement, the other Transaction Documents, at law or otherwise. All references to the Agreement shall be deemed to mean the Agreement as modified hereby. This Amendment shall not constitute a novation or satisfaction and accord of the Agreement or any other Transaction Document but shall constitute an amendment thereof. The parties hereto agree to be bound by the terms and conditions of the Agreement and Transaction Documents as amended by this Amendment, as though such terms and conditions were set forth herein. Each reference in the Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Agreement as amended by this Amendment, and each reference herein or in any other Transaction Documents to “the Agreement” shall mean and be a reference to the Agreement as amended and modified by this Amendment.
SECTION 5. Representations by ABGL. ABGL hereby represents and warrants to the Agent and Purchaser as of the execution date of this Amendment as follows: (a) it is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (b) the execution, delivery and performance by it of this Amendment are within its powers, have been duly authorized, and do not contravene (i) its articles of incorporation, bylaws or other organizational documents, or (ii) any applicable law; (c) no consent, license, permit, approval or authorization of, or registration, filing or declaration with any Governmental Authority or other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Amendment; (d) this Amendment has been duly executed and delivered by it; (e) this Amendment constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity; (f) it is not in default under the Agreement or any other Transaction Documents and no Trigger Event exists, has occurred and is continuing or would result by the execution, delivery or performance of this Amendment; and (g) the representations and warranties contained in the Agreement and the other Transaction Documents are true and correct in all material respects as of the execution date of this Amendment as if then made, except for such representations and warranties limited by their terms to a specific date.
SECTION 6. Miscellaneous.
(A) This Amendment may be executed in any number of counterparts (including by facsimile or email), and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement. Each party agrees that it will be bound by its own facsimile or scanned signature and that it accepts the facsimile or scanned signature of each other party. The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof or thereof. The use of the word “including” in this Amendment shall be by way of example rather than by limitation. The use of the words “and” or “or” shall not be inclusive or exclusive.
(B) This Amendment may not be changed, amended, restated, waived, supplemented, discharged, canceled, terminated or otherwise modified without the written consent of the parties hereto. This Amendment shall be considered part of the Agreement and shall be a Transaction Document for all purposes.
(C) This Amendment, the Agreement and the Transaction Documents constitute the final, entire agreement and understanding between the parties with respect to the subject matter hereof and thereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties, and shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto and thereto. There are no unwritten oral agreements between the parties with respect to the subject matter hereof and thereof.
(D) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE AGREEMENT.
(E) ABGL may not assign, delegate or transfer this Amendment or any of its rights or obligations hereunder. No rights are intended to be created under this Amendment for the benefit of any third-party donee, creditor or incidental beneficiary. Nothing contained in this Amendment shall be construed as a delegation to Agent or the Purchaser of ABGL’s duty of performance, including any duties under any account or contract in which the Agent or Purchaser have a security interest or lien. This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
(F) ABGL ACKNOWLEDGES THAT ITS PAYMENT OBLIGATIONS ARE ABSOLUTE AND UNCONDITIONAL WITHOUT ANY RIGHT OF RECISSION, SETOFF, COUNTERCLAIM, DEFENSE, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE “OBLIGATIONS” OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR PURCHASER. ABGL HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENT AND PURCHASER AND THEIR RESPECTIVE PREDECESSORS, ADMINISTRATIVE AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”) FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SUCH PERSON MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, INCLUDING ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE AGREEMENT OR OTHER TRANSACTION DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
{Signatures appear on following pages.}
IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date first noted above.
AEMETIS BIOGAS, LLC
By: /s/ Eric A. McAfee
Name: Eric A. McAfee
Title: Chief Executive Officer
THIRD EYE CAPITAL CORPORATION
By: /s/ Arif N. Bhalwani
Name: Arif N. Bhalwani
Title: Managing Director
PROTAIR-X AMERICAS, INC.
By: /s/ Dev Bhangui
Name: Dev Bhangui
Title: Chief Executive Officer
Acknowledged and agreed, specifically with respect to the obligation to provide the Guarantees and security agreements, in a form to be agreed to by the parties thereto, to be provided pursuant to the Credit Agreement, if and when required:
AEMETIS, INC.
GOODLAND ADVANCED FUELS, INC.
AEMETIS CARBON CAPTURE, INC.
AEMETIS ADVANCED PRODUCTS KEYES, INC.,
AEMETIS ADVANCED FUELS KEYES, INC.,
AEMETIS PROPERTY KEYES, INC.,
AEMETIS RIVERBANK, INC.,
AEMETIS PROPERTIES RIVERBANK, INC.,
AEMETIS ADVANCED PRODUCTS RIVERBANK, INC.,
AEMETIS HEALTH PRODUCTS, INC.,
AEMETIS INTERNATIONAL, INC.,
AEMETIS TECHNOLOGIES, INC.,
AE ADVANCED FUELS, INC.,
AEMETIS BIOFUELS, INC.,
AEMETIS AMERICAS, INC.,
AEMETIS ADVANCED FUELS, INC.,
AEMETIS FACILITY KEYES, INC.,
ENERGY ENZYMES, INC.,
AE BIOFUELS, INC.,
AEMETIS ADVANCED BIOREFINERY KEYES, INC.
By: /s/ Eric A. McAfee
Name: Eric A. McAfee
Title: Chief Executive Officer
Schedule “A”
Form of Credit Agreement
(See attached)
CREDIT AGREEMENT
January 1, 2024
FOR VALUE RECEIVED, the undersigned AEMETIS BIOGAS LLC, a Delaware limited liability company (the “Borrower”), promises to pay to the order of THIRD EYE CAPITAL CORPORATION, an Ontario Corporation, as administrative agent and collateral agent (together with its successors and assigns, the “Agent”) for and on behalf of PROTAIR-X AMERICAS, INC. (including its successors and assigns, the “Lender”), at its offices or such other place as the Agent may designate in writing the amounts that may be outstanding from time to time hereunder pursuant to the term loan facility (the “Facility”), as indicated pursuant to the records of the Agent with respect to such amounts, together with interest on the amount remaining unpaid from time to time from the date of this credit agreement (“Credit Agreement”) until due and payable, at the Interest Rate (defined below), as more particularly set out in Section 3 hereto. The Lender’s obligation hereunder shall be limited to the maximum commitment equal to $108,000,000, to be drawn in a single advance on the date hereof. All references to “$” or “dollars” is to the lawful currency of the United States and all capitalized terms shall have the definitions indicated herein or in Section 19(h) below.
1. Use of Proceeds. The Borrower shall use the proceeds of the advance made under the Facility on the date hereof to repurchase for cancellation 100% of those Series A Preferred Shares issued by the Borrower pursuant to that Series A Preferred Unit Purchase Agreement dated December 20, 2018 between the Borrower, the Lender and Third Eye Capital Corporation, as agent thereunder (as may be amended from time to time, the “PUPA”).
2. Repayments. The full outstanding principal balance of the indebtedness evidenced hereby under the Facility, together with all accrued but then unpaid and compounded interest thereon and any other sums due hereunder, shall be due and payable in full at the earlier to occur of: (i) December 31, 2024 (the “Maturity Date”), and (ii) the occurrence of an Event of Default.
3. Interest.
(a) The outstanding principal under the Facility shall bear interest at a per annum rate equal to the greater of (i) the Prime Rate plus 10.0% and (ii) 16.0%, compounded daily in arrears (the “Interest Rate”).
(b) If an Event of Default shall have occurred, all outstanding principal of and, to the fullest extent permitted by law, all past due interest and any other past due amounts owing under the Facility shall bear interest at a rate per annum equal to the Interest Rate plus ten percent (10%) per annum (the “Default Rate”). Interest payable at the Default Rate shall be payable from time to time on demand.
(c) Interest shall be payable on the outstanding obligations in arrears for the preceding calendar month on the first Business Day of each calendar month, commencing on February 1, 2024. For greater certainty, interest on the unpaid principal balance shall accrue from the date hereof.
(d) So long as no Event of Default has occurred and is continuing, on each applicable monthly interest payment date, subject to Section 4 hereto, up to 100% of the amount of interest then owing on the Facility may be capitalized to the principal amount outstanding, at the Borrower’s option.
4. Mandatory Repayments. Within 5 days of the last day of March, June, September and December of each calendar year, the Borrower shall repay to the Facility all of that amount (if positive) which is equal to one hundred percent (100%) of Free Cash Flow (as defined below) which it or any of its subsidiaries receives during the applicable preceding calendar quarter. Mandatory repayments pursuant to this Section 4 shall be made in immediately available funds.
5. Prepayments. The Borrower may, at any time and from time to time, prepay the indebtedness in whole under the Facility without premium or penalty, but with accrued and compounded interest to the date of such prepayment on the amount prepaid. Any notice of optional prepayment is irrevocable and shall be effective only if received by the Agent by 2:00 p.m. (Toronto, Ontario time) on the date that is five (5) Business Days prior to the proposed prepayment. Any notice of optional prepayment shall specify the amount to be prepaid and the date of prepayment.
6. Record Keeping. All borrowings and all payments made on account of the principal hereof shall be endorsed by the Agent in its internal records and shall be made a part hereof, provided however that any failure to endorse such information shall not in any manner affect the obligation of the Borrower to make payments of principal and interest in accordance with the terms hereof. All notations on such Agent’s internal records as to borrowings and repayments made shall constitute conclusive evidence of such borrowings or repayments.
7. Increased Costs. If, due to either (i) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements but excluding the imposition of, or any change in the rate of, any income tax payable by the Agent or any Lender) in or in the interpretation of any law or regulation or (ii) the compliance by the Agent or any Lender with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Agent of funding or maintaining the loans or obligations under this Credit Agreement, then the Borrower shall from time to time, upon demand by the Agent, pay to the Agent and/or the Lenders additional amounts sufficient to indemnify the Agent and the Lenders against such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower by the Agent, shall be conclusive and binding for all purposes, absent manifest error.
8. Illegality. Notwithstanding any other provision hereof, if, in the reasonable opinion of the Agent, it becomes unlawful for a Lender to make or maintain its loan hereunder, then such Lender will promptly so notify the Borrower and the other Lenders and the Borrower will promptly prepay the balance in full together with accrued interest thereon and all other amounts then due and Lenders will have no further obligation to make or maintain the loan hereunder.
9. Payments and Computations.
(a) The Borrower shall make each payment hereunder not later than 2:00 p.m. (Toronto, Ontario time) on the day when due to the Agent at its address referred to in Section 19(g) or at such other location as may be specified by the Agent to the Borrower, in immediately available funds without setoff, compensation, counterclaim, recoupment or other defense. Any payments received after 2:00 p.m. (Toronto time) will be considered for all purposes as having been made on the next following Business Day.
(b) Agent and Lenders will maintain in accordance with their usual practice one or more accounts evidencing the indebtedness of the Borrower to the Agent hereunder. Such account(s) will be prima facie evidence of the obligations recorded therein, provided that any failure by Agent to maintain any account or any error therein shall not affect the obligation of the Borrower to repay its indebtedness to the Agent in accordance with this Credit Agreement.
(c) Each determination of a rate of interest or fee by Agent will be conclusive evidence of such rate or fee in the absence of manifest error. Interest and fees will be calculated on the basis of a year of 365 days for the actual number of days (including the first day but excluding the last day) elapsed in the period for which such interest or fees are payable. For the purposes of disclosure pursuant to the Interest Act (Canada) and not for any other purpose, where in this Credit Agreement a rate is to be calculated on the basis of a year of 365 days, the yearly rate to which the 365-day rate is equivalent is such rate multiplied by the number of days in the year for which such calculation is made and divided by 365.
(d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest.
10. Taxes. The Borrower agrees that all payments to be made by it hereunder and the other Loan Documents shall be made without setoff, compensation or counterclaim and free and clear of, and without deduction for, any taxes, levies, imposts, duties, charges, fees, deductions, withholdings or restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed by any country or by any political subdivision or taxing authority thereof or therein (“Taxes”). If any Taxes are required to be withheld from any amounts payable to the Agent hereunder, the amounts so payable to the Agent shall be increased to the extent necessary to yield to the Agent (after payment of all Taxes) the amounts payable hereunder in the full amounts so to be paid. Whenever any Tax is paid by the Borrower, as promptly as possible thereafter, the Borrower shall send the Agent an official receipt showing payment thereof, together with such additional documentary evidence as may be required from time to time by the Agent.
11. Maximum Interest Rate. Notwithstanding any other provisions hereof or any other Loan Document: (i) in no event shall the aggregate “interest” payable to Agent and Lenders hereunder or the other Loan Documents exceed the effective annual rate of interest legally permitted under any Law in any relevant jurisdiction; and (ii) if any provision of this Credit Agreement or any other Loan Document would obligate the Borrower to make any payment of interest or other amount payable to Agent and Lenders in an amount or calculated at a rate which would be prohibited by Law or would result in a receipt by Agent or any Lender of interest at a criminal rate, then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Law or so result in a receipt by Agent or any Lender of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (A) first, by reducing on a pro rata basis the amount or rates of interest required to be paid under Section 3 hereof, and (B) thereafter, by reducing any fees, commissions, premiums and other amounts which would constitute interest for purposes of any Law.
12. Application of Payments. Prior to the occurrence of an Event of Default, all amounts received by the Agent or the Lenders from the Borrower in respect hereof shall be applied pro tanto to the obligations hereunder as follows: first, to pay any fees, indemnities or expense reimbursements then due to the Agent and the Lenders under the Loan Documents, until paid in full, second, to pay interest due, and third, to pay or prepay the principal amount and all outstanding obligations hereunder until paid in full. Upon the occurrence and during the continuance of an Event of Default, all amounts received by the Agent from the Borrower or any other Person shall be applied pro tanto to the obligations hereunder in such manner as the Agent shall determine in its sole discretion.
13. Representations and Warranties. The Borrower represents and warrants to the Agent as follows:
(a) It (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the power and authority, and the legal right, to own and operate its property and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (iv) is in compliance with all requirements of Law in all material respects.
(b) It has the power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party, to consummate the transactions contemplated thereby and, as the case may be, to obtain extensions of credit hereunder. It has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and to authorize the extensions of credit on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the extension of credit hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents. Each Loan Document to which it is a party has been duly executed and delivered on behalf of it. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of it, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
(c) The execution, delivery, and performance by it of this Agreement and the other Loan Documents to which it is a party and compliance with the terms and provisions hereof and thereof will not (i) violate or conflict with, or result in a breach of, or require any consent under (A) its constating documents, (B) any Law, or (C) any material agreement or instrument to which it is a party or by which it or any of its properties is bound or subject, or (ii) result in the creation or imposition of any lien upon any of its revenues or assets other than the liens arising under the Loan Documents.
(d) It is in compliance in all material respects with the Foreign Corrupt Practices Act, as amended, and rules and regulations thereunder ("FCPA"). No part of the proceeds of any advance will be used directly or indirectly for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA.
(e) There are no actions, suits, litigation or proceedings, at law or in equity, pending by or against it before any court, administrative agency, or arbitrator in which a likely adverse decision could reasonably be expected to have a material adverse effect.
(f) It has filed all federal and other material tax returns required to be filed, including all income, franchise, employment, property, and sales tax returns, and has paid all of their respective federal and other material taxes, assessments, governmental charges, and other levies that are due and payable, except to the extent such taxes are contested in good faith by proper proceedings which stay the imposition of any penalty, fine or lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof. It has no knowledge of any pending investigation by any taxing authority or of any pending unassessed tax liability (other than taxes which are not yet due and payable).
14. Conditions to Closing. The Lender’s obligation to provide the Facility is subject to the following conditions being satisfied to the satisfaction of the Agent:
(a) the Agent shall be satisfied with its tax structuring and planning with respect to the Facility and the repayment and satisfaction of the PUPA;
(b) delivery of original Loan Documents, each duly executed by the applicable guarantors and affiliates of the Borrower, and applicable financing statements and registrations;
(c) a copy of the annual budget for the remainder of fiscal year 2023 and first 6 months of 2024 and a copy of the annual monthly cash flow budget for each month prior to the Maturity Date (“Project Budget”);
(d) no Event of Default shall have occurred and be continuing or result from the execution of this Agreement and the other Loan Documents or the advance of funds hereunder; and
(e) the Agent and the Lender shall have received such other documents, instruments and information as reasonably requested.
15. Covenants.
|
(1) |
So long as any of the indebtedness or obligations hereunder shall remain unpaid, the Borrower will not, directly or indirectly, without the prior written consent of the Agent, in its sole and absolute discretion: |
(i) Liens. Create, incur, assume or suffer to exist any Lien upon any of its property (whether real, personal, tangible or intangible, whether now owned or hereafter acquired.
(ii) Indebtedness. Create, incur, assume or suffer to exist any Indebtedness except Permitted Indebtedness. Without the consent of the Agent, amend, modify or change any term or condition of any documentation entered into in connection with any Indebtedness (i) in any manner (i) if the effect of such amendment, modification or change is to restrict in any manner the ability of any Agent or the Lenders to exchange, extend, renew, replace or refinance, in whole or part, any indebtedness under this Agreement or any other Loan Document, or (ii) in any other manner that could be adverse to the interests, rights or remedies of the Agent or any Lender under the Loan Documents.
(iii) Capital Stock, Dividends, Etc. (i) Declare or make any distribution or other dividend payment or distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class, (ii) issue, purchase, redeem or otherwise acquire for value any shares of any class or any warrants, rights or options to acquire any such shares, now or hereafter outstanding or (iii) make any distributions, remuneration or payment in violation of the terms of any applicable subordination terms applicable to any Permitted Indebtedness. Notwithstanding any other term of this Agreement, Borrower and its Subsidiaries shall not, without the prior written consent of the Agent, make any transfer of funds, transfer of Property, or any distributions, remuneration or payment (including any distributions) to any Person, other than payments on account of the indebtedness in accordance with the terms hereof.
(iv) Investments. Make any Investment except Permitted Investments.
(v) Business, Management, Mergers, etc. (i) make any change in (A) its board of directors or managers, or (B) its capital structure, (ii) make any material change in the nature of the business presently conducted by it; (iii) make any payments on account of new retainers greater than $50,000 or establish or create any trust accounts, (iv) change its name; (v) change its jurisdiction of incorporation or its type of organization (that is, from a corporation) or otherwise amend, modify or change any of its constating documents, as in effect on the date hereof, except any such amendments, modifications or changes that either individually or in the aggregate could not reasonably be expected to have a material adverse effect; (vi) merge, amalgamate or consolidate with or into, or convey, transfer, lease or otherwise dispose of or alienate (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, or dissolve or liquidate or terminate its legal existence, or (vii) make any change in its accounting policies or reporting practices, except as required or permitted by GAAP, or its fiscal year.
(vi) Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any subsidiary to (a) make dividends or distributions in respect of such subsidiaries Free Cash Flow or capital stock or equity held by, or pay any indebtedness owed to, the Borrower, (b) make loans or advances to, or other investments in the Borrower, or (c) transfer any of its assets to the Borrower, except for such encumbrances or restrictions existing under or by reason of any restrictions existing under the Loan Documents.
(vii) Change of Control. Cause, permit or suffer, directly or indirectly, any Change of Control to occur, or incorporate or create any new subsidiaries.
(viii) Disposition of Property. Dispose or alienate of any of its property or equity interests in its subsidiaries, whether now owned or hereafter acquired, except dispositions of inventory made in the ordinary course of its business.
(ix) Affiliate Transactions and Intercompany Loans. Enter into any transaction with any affiliate or subsidiary or any of its directors or senior or executive officers or senior management, or enter into or assume any employment, consulting or analogous agreement or arrangement with any of its directors or senior or executive officers or senior management or make any payment to any of its directors or senior or executive officers or senior management, except in the ordinary course.
(x) Bank Accounts. Open any new bank account.
(xi) Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits its ability to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, other than this Agreement and the other Loan Documents.
(xii) Place of Business. Change the location of its respective chief executive office, principal place of business and registered office.
|
(2) |
So long as any of the indebtedness or obligations hereunder shall remain unpaid, the Borrower will provide, as soon as available, and in any event within ten (10) days after the end of each calendar month, a monthly report prepared by it and reviewed by the Third Party Consultant on the progress of development of the Project and achievement of Milestones in substantially the form of Exhibit E to the PUPA and in detail reasonably satisfactory to the Agent, including: (i) Milestone schedules, Milestones met and not met and, in the case of Milestones not met, the reasons why such Milestones were not met, targeted Milestones for the next month, and targeted Milestones for the next ninety (90) days, (ii) a report as to the progress of the Project, (iii) in the event of any material deviation or variance from the Project Budget, the reason for such material deviation and such other information reasonably requested by the Agent in connection therewith; (iv) any factors or events which have had, are having or could reasonably be expected to have a material adverse effect; (v) the status of all permits, licenses, franchises, approvals, authorizations, registrations, certificates, licenses, variances and similar rights obtained, or required to be obtained for the development of the Project, including with respect to those which have not been obtained, the dates of applications submitted or to be submitted and the anticipated dates of actions by applicable Governmental Authorities with respect thereto; (vi) a reporting on the number of WCE for each of the dairies, manure collection methods and quantum of supply to each dairy covered lagoon digester, and (vii) the status of all grants (including DDRDP grants) by Governmental Authorities for the Project, including with respect to grants that have not been obtained, the dates of applications submitted or to be submitted and the anticipated dates of action by applicable Governmental Authorities with respect to such grants. |
16. Events of Default. Each of the following events (each an “Event of Default”) shall constitute an Event of Default:
(i) the Borrower fails to make any payment when due hereunder, whether upon demand by the Agent or Lenders, or otherwise;
(ii) the Borrower fails to comply with, to perform, or to cause to perform, any other term, obligation, covenant or condition contained herein, any Loan Document or any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Agent and/or Lender and the Borrower;
(iii) any warranty, representation or statement made or furnished to Agent and/or Lender by Borrower or on Borrower’s behalf hereunder or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter;
(iv) the Borrower or any of its affiliates or subsidiaries defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favour of any other creditor or person that may materially affect any of Borrower’s property or the Borrower’s ability to repay this Credit Agreement or perform Borrower’s obligations hereunder or any of the related documents;
(v) the Borrower (i) becomes insolvent or generally not able to pay its debts as they become due, (ii) admits in writing its inability to pay its debts generally or makes a general assignment for the benefit of creditors, (iii) institutes or has instituted against it any proceeding seeking (x) to adjudicate it a bankrupt or insolvent, (y) liquidation, winding up, administration, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any applicable law relating to bankruptcy, insolvency, reorganization or relief of debtors including any proceeding under applicable corporate law seeking a compromise or arrangement of, or stay of proceedings to enforce, some or all of the debts of such person, or (z) the entry of an order for relief or the appointment of a receiver, receiver-manager, administrator, custodian, monitor, trustee or other similar official for it or for any substantial part of its assets, and in the case of any such proceeding instituted against it (but not instituted by it), either the proceeding remains undismissed or unstayed for a period of 30 days, such person fails to diligently and actively oppose such proceeding, or any of the actions sought in such proceeding (including the entry of an order for relief against it or the appointment of a receiver, receiver-manager, administrator, custodian, monitor, trustee or other similar official for it or for any substantial part of its properties and assets) occurs, or (iv) takes any corporate action to authorize any of the above actions; or
(vi) a material adverse change occurs in Borrower’s financial condition, or Agent and/or Lender believes the prospect of payment or performance of the obligations under this Credit Agreement is impaired.
17. Remedies. If any Event of Default shall have occurred and be continuing, then, and in any such event, the Agent may, without notice to the Borrower, declare all outstanding principal (and all accrued and unpaid interest thereon) and all other amounts owing hereunder and under the other Loan Documents to be forthwith due and payable, whereupon all outstanding principal hereof, all such accrued and unpaid interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest, notice of acceleration, notice of intent to accelerate, or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the case of any event described in Section 16(e), all outstanding principal hereof, all accrued and unpaid interest thereon and all other amounts owing hereunder and the other Loan Documents shall automatically become and be due and payable, without presentment, demand, protest, notice of acceleration, notice of intent to accelerate, or any notice of any kind, all of which are hereby expressly waived by the Borrower.
18. Costs and Expenses. The Borrower agrees to pay the Agent all normal and customary fees, charges and expenses relating to the establishment and operation of this Credit Agreement and the Loan Documents and for services that may be provided to the Borrower by the Agent or Lender, including, but not limited to, debit fees, over-advance fees and wire transfer fees. The Borrower also agrees to reimburse the Agent, prior to and during the term hereof, for all reasonable out-of-pocket expenses incurred by the Agent or Lender in connection with the Loan Documents, including, but not limited to, filing fees, lien and judgment search fees, due diligence and collateral exam and inspection expenses, travel expenses, fees of outside auditors, bank fees, outside attorneys’ fees, fees of appraisers and any other reasonable fees or expenses. The Borrower hereby agrees to indemnify the Agent and Lender forthwith upon demand therefor in respect of all such costs and expenses.
19. Security. The Borrower and any other obligor under any Loan Document have granted or agreed to grant to the Agent (including, as may be applicable, for itself and/or in its capacity as administrative agent, collateral agent and representative for itself and other creditors), security interests, assignments or other interests as collateral security for the indebtedness hereunder, all of which secure the obligations owing hereunder. Each Lender irrevocably appoints the Agent to act on its behalf as administrative agent and collateral agent and, to the extent necessary, ratifies such appointment, and designates and authorizes the Agent as its attorney to take such actions on its behalf under the provisions of the Loan Documents and any ancillary document or security therefore and to exercise such powers and perform such duties as have been or may be delegated to the Agent.
20. Miscellaneous.
(a) Waiver of Notice. The Borrower waives presentment, protest, notice of dishonour, days of grace and the right of set-off. The failure of the Agent to exercise any rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
(b) Waiver and Amendment. Any provision of this Credit Agreement may be waived, amended or modified only upon the written consent of both the Borrower and Agent.
(c) Restriction on Transfer. This Credit Agreement may only be transferred in compliance with applicable provincial and federal laws. All rights and obligations of the Borrower and Agent shall be binding upon and benefit the successors, assigns, heirs, and administrators of the parties.
(d) No Assignment. This Credit Agreement or the rights or obligations hereunder may be transferred or assigned by the Agent or any Lender, provided that, unless a Default has occurred and is continuing, the Agent or applicable Lender shall be obliged to give the Borrower written notice of such transfer. The Borrower may not transfer or assign all or any part of its obligations hereunder without the prior written consent of Agent.
(e) Governing Law and Attornment. This Credit Agreement shall be governed by and interpreted in accordance with the laws of the State of New York (without regard to the conflict of laws principles thereof). Without prejudice to the ability of the Agent to enforce this Credit Agreement in any other proper jurisdiction, the Borrower hereby irrevocably submits and attorns to the non-exclusive jurisdiction of the courts of the State of New York in connection herewith.
(f) Severability. If any of the provisions of this Credit Agreement is held invalid, such invalidity shall not affect the other provisions hereof that can be given effect without the invalid provision, and to this end the provisions hereof are intended to be and shall be deemed severable.
(g) Notices. All notices and other communications given to or made upon any party hereto shall, except as otherwise expressly herein provided, be in writing and mailed via certified mail, faxed or delivered to the respective parties in accordance with any subsequent written direction from the recipient party to the sending party delivered in accordance with this Section, or at such parties last known address or email or fax number. All such notices and other communications shall, except as otherwise expressly herein provided, be effective upon (i) delivery if delivered by hand; (ii) the third (3rd) Business Day after the date sent, in the case of certified mail; (iii) receipt, in the case of a fax or email.
(h) Definitions. The following terms shall have the meanings set forth below.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in Toronto, Ontario are closed.
“Change of Control” means any situation or event by which Aemetis, Inc. (or its affiliate) is not the legal and beneficial holder, directly or indirectly, of 100% of the capital stock and equity interests (inc. warrants or options or convertible instruments) of the Borrower.
“Free Cash Flow” means, for any period, for the Borrower and each subsidiary, the sum of Operating Cash Flow plus (i) California Department of Food and Agriculture Dairy Digester Research and Development Program, California Department of Food and Agriculture, or any such alternative government grants; plus (ii) proceeds from any debt or equity financings or sales of Inflation Reduction Act credits; less (iii) interest or mandatory payments under Permitted Indebtedness (including hereunder which the Borrower pays in cash), less (iv) a working capital reserve of $1,000,000, in each case calculated for such period in accordance with GAAP.
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Governmental Authority” means any nation or government, any state, province, territory or other political subdivision thereof (whether federal, state, local or otherwise), any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies), any securities exchange and any self-regulatory organization.
“Indebtedness” means all obligations for borrowed money and all obligations evidenced by bonds, debentures, notes, loan agreement or other similar instruments, letters of credit, bankers’ acceptances, guaranties, sureties and similar instruments, deferred purchase price arrangements (other than trade accounts in the ordinary course), capitalized amounts under capital leases, obligations under conditional sales agreements or other title retention agreements.
“Investment” means any beneficial ownership interest in any Person (including stock, partnership interest or other securities or other equity interests), and any loan, advance or capital contribution to any Person, or the acquisition of all or substantially all of the assets or properties of another Person.
“Law” any law, treaty, rule or regulation or determination of an arbitrator or a court of competent jurisdiction or Governmental Authority, in each case applicable to the applicable Person.
“Lien” means: (a) any mortgage, deed to secure debt, deed of trust, lien, hypothec, pledge, charge, lease constituting a capital lease obligation, conditional sale or other title retention agreement (or other lease having a substantially similar economic effect), or other security interest, hypothec, privilege, priority, security title, deposit arrangement or encumbrance of any kind in respect of any property of such Person, or upon the income or profits therefrom, (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person, (c) the filing of, or any agreement to give, any financing statement, publication or registration (or any of its equivalent in any jurisdiction) in respect of any of the foregoing (including any such precautionary filings), and (d) any other lien, charge, privilege, secured claim, title retention, garnishment right, deemed trust, encumbrance, hypothec, servitude, right-of-way, easement, privilege, priority or other right affecting Property, choate or inchoate, arising by any statute, act of law of any jurisdiction at common law or in equity or by agreement.
“Loan Document” means this Credit Agreement all other documents, instruments and agreements executed and delivered pursuant to or in connection with this Credit Agreement, (including without limitation certificates, guarantees, mortgages, security or collateral agreements) together with any and all extensions, renewals, amendments and modifications of any of the foregoing.
“Milestones” means the activities to be performed by the Borrower and its subsidiaries in relation to the Project, including the delivery of equipment, construction of the Project, entering into contracts with dairy farms for manure supply, biogas collection and discharge of effluents, obtaining pipeline rights of way, application and receipt of government grants from the State of California, the application for and receipt of permits, and budgets and time frames for all such activities.
“Operating Cash Flow” means for any period the sum of (i) all revenues of the Borrower and its subsidiaries, including revenues from the sale of natural gas production, sales of Low Carbon Fuel Standard (LCFS) credits, and sales of Renewable Identification Number (RIN) credits; less (ii) all operating costs, operating and maintenance fees, insurance costs, engineering and construction bonuses, taxes, in each case of the Borrower and its subsidiaries, and calculated for such period in accordance with GAAP.
“Permitted Indebtedness” means: (a) Borrower’s Indebtedness under this Agreement and the other Loan Documents; (b) Indebtedness existing on the date hereof owing to Greater Commercial Lending; (c) unsecured Indebtedness to trade creditors incurred in the ordinary course of business, except for trade payables overdue by more than 120 days; (d) Indebtedness by a subsidiary of the Borrower to the Borrower; (e) Indebtedness incurred in the ordinary course of business under performance bonds, bid bonds, appeal bonds, surety bonds, performance and completion guarantees and similar obligations or in respect of worker’s compensation claims, and reimbursement obligations in respect of any of the foregoing;.
“Permitted Investments” means: (a) Investments consisting of deposit accounts in which the Agent has a perfected security interest; (b) Investments by Borrower in Subsidiaries not to exceed $250,000 in the aggregate in any fiscal year Borrower; (c) Investments, in an aggregate amount not to exceed $250,000 in any fiscal year, consisting of travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business; (d) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; (e) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not affiliates, in the ordinary course of business, (f) Investments consisting of amounts receivable and credit extensions by a Borrower to a subsidiary, (g) Investments consisting of the endorsement of negotiable instruments for deposit or collection in the ordinary course of business, and (h) so long as no Event of Default has occurred and is continuing or would result therefrom, any other Investments in an aggregate amount not to exceed $500,000 in the aggregate in any fiscal year.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
"Prime Rate” means that rate of interest reported daily in the Wall Street Journal (or any successor publication) as the Prime Rate, as such rate may vary from time to time; provided that if such rate of interest becomes unavailable for any reason as determined by the Agent, such other rate of interest publicly announced by a reputable global bank in New York as its Prime Rate.
“Project” means the development, construction, completion and operation by the Borrower and its subsidiaries of a cluster of dairy covered lagoon digesters, H2S conditioning skids and related biogas pipelines, centralized HUB gas-cleanup and compression to RNG, any temporary boiler equipment, utility pipeline injection units, electricity conversion systems and RNG dispensing facilities to collect biogas from manure ponds located in California, which will be purified and compressed into utility-grade renewable natural gas and/or converted into other products for use Aemetis Inc.’s ethanol facility located in Keyes, California and for sale to transport fleets and utilities.
“property” means any interest in any kind of property or asset, whether real, personal or mixed, movable or immovable, tangible or intangible, including cash, securities, accounts and contract rights.
“Third Party Consultant” means Biogas Engineering Inc. or an equivalent partner providing similar guidance with respect to the Project.
“WCE” means a lactating dairy cow excreting Volatile Solids (VS) of 7.76kgs/day, with dry cows and heifers each considered approximately 0.5 times WCE.
(i) Further Assurances. The Borrower shall, as reasonably requested by the Agent, from time to time promptly execute and deliver further documents and take further action reasonably necessary or appropriate to give effect to the provisions and intent of this Credit Agreement.
[Signature Pages follows]
IN WITNESS WHEREOF, the Borrower has duly executed this Credit Agreement.
AEMETIS BIOGAS LLC,
as Borrower[1]
By:________________
Name: Eric McAfee
Title: President
[1] Applicable Guarantors to be added at time of execution
(Agent and Lender Signature Pages follow)
ACKNOWLEDGED AND AGREED:
THIRD EYE CAPITAL CORPORATION
as Agent
Per: _________________________
Name: Arif N. Bhalwani
Title: Managing Director
PROTAIR-X AMERICAS, INC., as Lender
Per: _________________________
Name: Dev Bhangui
Title: President
EXHIBIT 31.1
CERTIFICATIONS
I, Eric A. McAfee, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of Aemetis, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 9, 2023
| By: | /s/ Eric A. McAfee | |
|
Eric A. McAfee Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, Todd Waltz, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of Aemetis, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 9, 2023
| By: | /s/ Todd Waltz | |
|
Todd Waltz Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aemetis, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eric A. McAfee, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Eric A. McAfee | |
|
Eric A. McAfee Chief Executive Officer |
Date: November 9, 2023
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aemetis, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Todd Waltz, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ Todd Waltz | |
|
Todd Waltz Executive Vice President and Chief Financial Officer |
Date: November 9, 2023