Aemetis Inc. (NASDAQ:AMTX) Q3 2022 Earnings Conference Call November 3, 2022 2:00 PM ET CompanyParticipants Todd Waltz - Executive Vice President and Chief Financial Officer Eric McAfee - Founder, Chairman and Chief Executive Officer Andrew Foster - President of the Aemetis Biogas and Aemetis Advanced Fuels Conference Call Participants Derrick Whitfield - Stifel Jordan Levy - Truist Securities Amit Dayal - H.C. Wainwright Matthew Blair - TPH Dave Storms - Stonegate Edward Woo - Ascendiant Capital Operator W ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's Q2 2022 financial statements show increased assets and liabilities, a widened deficit, 20% revenue growth, and a reduced net loss due to grants and litigation gains [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets increased to **$178.5 million** by June 30, 2022, driven by property, plant, and equipment, while total liabilities rose to **$301.2 million**, widening the stockholders' deficit to **($122.7 million)** Balance Sheet Comparison (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $15,045 | $20,693 | | **Property, plant and equipment, net** | $156,790 | $135,101 | | **Total assets** | **$178,452** | **$160,831** | | **Total current liabilities** | $60,362 | $65,330 | | **Total long term liabilities** | $240,803 | $215,739 | | **Total liabilities** | $301,165 | $281,069 | | **Total stockholders' deficit** | **($122,713)** | **($120,238)** | [Consolidated Condensed Statements of Operations and Comprehensive (Loss)](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)) Q2 2022 revenues grew **20%** to **$65.9 million**, but higher costs led to a gross loss; a **$14.2 million** USDA grant and litigation gain reduced net loss to **$0.2 million** Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $65,901 | $54,884 | $117,950 | $97,691 | | **Gross profit (loss)** | ($214) | $3,646 | ($3,299) | $38 | | **Operating loss** | ($7,686) | ($2,128) | ($18,113) | ($11,141) | | **Net loss** | ($209) | ($10,557) | ($18,503) | ($28,669) | | **Net loss per share (Basic)** | ($0.01) | ($0.34) | ($0.54) | ($1.00) | - A **$14.2 million** grant from the USDA's Biofuel Producer Program and a **$1.4 million** gain on litigation significantly reduced the net loss in Q2 2022[15](index=15&type=chunk)[68](index=68&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operations decreased to **$6.5 million** for H1 2022, while investing cash use increased to **$16.4 million**, and financing provided **$18.7 million**, resulting in a **$4.2 million** cash decrease Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($6,483) | ($18,213) | | **Net cash used in investing activities** | ($16,371) | ($11,711) | | **Net cash provided by financing activities** | $18,705 | $36,526 | | **Net change in cash** | ($4,193) | $6,583 | [Notes to Consolidated Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Notes detail business segments, **$208.6 million** debt, financing, and management's substantial doubt about going concern due to reliance on its senior lender - The company operates in three reportable segments: California Ethanol, Dairy Renewable Natural Gas, and India Biodiesel, while developing 'Carbon Zero' sustainable aviation fuel (SAF) and Carbon Capture and Sequestration (CCS) projects[25](index=25&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Total debt stood at **$208.6 million** as of June 30, 2022, primarily from Third Eye Capital, with a new **$100 million** revolving credit facility secured in March 2022[84](index=84&type=chunk)[104](index=104&type=chunk) - Management plans to address the 'going concern' issue by improving plant efficiencies, executing grants, developing new projects, and securing additional funding[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Subsequent to quarter-end, the company extended its Third Eye Capital debt maturity option to April 2024 and amended its Series A Preferred Unit agreement for full redemption by December 31, 2022[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A)) MD&A highlights **20%** Q2 2022 revenue growth offset by **29%** higher costs, leading to a gross loss, and discusses liquidity concerns, including substantial doubt about going concern, and strategic initiatives in RNG and SAF [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q2 2022 revenues increased **20%** to **$65.9 million** due to higher ethanol prices, but a **29%** rise in cost of goods sold led to a gross loss, partially offset by a **$14.2 million** USDA grant Q2 2022 vs Q2 2021 Revenue by Segment (in thousands) | Segment | Q2 2022 | Q2 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **California Ethanol** | $65,891 | $54,730 | $11,161 | 20% | | **India Biodiesel** | $10 | $154 | ($144) | -93.5% | | **Total** | **$65,901** | **$54,884** | **$11,017** | **20%** | - The increase in California Ethanol revenue was driven by a higher average ethanol price of **$3.13/gallon** in Q2 2022 versus **$2.78/gallon** in Q2 2021[191](index=191&type=chunk) - Cost of goods sold increased primarily due to a rise in the average cost of corn feedstock to **$10.21 per bushel** in Q2 2022 from **$8.04** in Q2 2021[196](index=196&type=chunk) - A **$14.2 million** grant was received from the USDA's Biofuel Producer Program, created under the CARES Act, and recorded as other income[187](index=187&type=chunk)[203](index=203&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is constrained with **$3.6 million** cash, raising substantial doubt about going concern due to reliance on its senior lender; future liquidity depends on debt refinancing and new capital for strategic projects - The company's dependence on its senior lender raises substantial doubt about its ability to continue as a going concern[221](index=221&type=chunk)[168](index=168&type=chunk) Liquidity Snapshot (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $3,558 | $7,751 | | **Current assets** | $15,045 | $20,693 | | **Current liabilities** | $60,362 | $65,330 | | **Current Ratio** | 0.25 | 0.32 | - The company plans to fund operations and growth projects by working with its senior lender, restructuring debt, selling bonds, selling equity via its ATM program, and continuing its EB-5 Phase II offering[224](index=224&type=chunk)[171](index=171&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for the current quarterly report - The company has indicated that Quantitative and Qualitative Disclosures about Market Risk are not applicable for this quarterly report[234](index=234&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of June 30, 2022, due to material weaknesses identified in the 2021 Annual Report, with ongoing remediation plans - The CEO and CFO concluded that disclosure controls and procedures were not effective as of the end of the period[235](index=235&type=chunk) - The ineffectiveness is due to material weaknesses identified in the 2021 Form 10-K, with remediation plans currently in progress[236](index=236&type=chunk)[237](index=237&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[236](index=236&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a lawsuit with EdenIQ, Inc. for **$4.8 million** on May 6, 2022, resulting in a **$1.4 million** gain on litigation in Q2 2022 - On May 6, 2022, the company settled a lawsuit with EdenIQ, Inc. for **$4.8 million**[238](index=238&type=chunk)[127](index=127&type=chunk) - The settlement resulted in a gain on litigation of **$1.4 million**, recognized on the income statement in Q2 2022[238](index=238&type=chunk)[127](index=127&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors highlight the material impact of inflation on operations, with rising commodity prices for inputs like corn and natural gas compressing profit margins - A new risk factor was added regarding the adverse impact of inflation on key production inputs, wages, and other business expenses[239](index=239&type=chunk) - The war in Ukraine is cited as a driver of sharp rises in grain and energy prices, which are primary input commodities for the company[240](index=240&type=chunk) - The company may be unable to raise its product prices sufficiently to offset inflation, which would reduce profit margins[241](index=241&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - None reported[241](index=241&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No unresolved defaults on senior securities were reported during the six months ended June 30, 2022 - No unresolved defaults on senior securities occurred during the six months ended June 30, 2022[241](index=241&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - None[241](index=241&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No other information was reported for this item - None[241](index=241&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and material agreements like debt and preferred unit amendments - Exhibits include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act[242](index=242&type=chunk) - Material agreements filed as exhibits include Limited Waiver and Amendment No. 24 to the Amended and Restated Note Purchase Agreement and a Waiver and Amendment to the Series A Preferred Unit Purchase Agreement[242](index=242&type=chunk)

Aemetis, Inc. (NASDAQ:AMTX) Q2 2022 Results Conference Call August 4, 2022 2:00 PM ET Company Participants Todd Waltz - EVP and CFO Eric McAfee - Founder, Chairman and CEO Andy Foster - President, Aemetis Advanced Fuels and Aemetis Biogas Conference Call Participants Manav Gupta - Credit Suisse Jordan Levy - Truist Securities Derrick Whitfield - Stifel Amit Dayal - HC Wainwright Matthew Blair - Tudor, Pickering, Holt Marco Rodriguez - Stonegate Capital Edward Woo - Ascendiant Capital Operator Welcome to the ...

[PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I--FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201%20Financial%20Statements) This section presents the company's unaudited consolidated condensed financial statements, including balance sheets, statements of operations and comprehensive loss, cash flows, and stockholders' deficit, along with detailed notes explaining significant accounting policies, financial instrument details, and segment information for the quarter ended March 31, 2022 [Consolidated Condensed Balance Sheets](index=3&type=section&id=AEMETIS%2C%20INC.%20CONSOLIDATED%20CONDENSED%20BALANCE%20SHEETS) The balance sheet shows an increase in total assets driven by property, plant, and equipment, while current assets decreased. Total liabilities increased, and the stockholders' deficit deepened from December 31, 2021, to March 31, 2022 | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Total Current Assets | $16,153 | $20,693 | | Property, Plant and Equipment, net | $145,223 | $135,101 | | Total Assets | $166,486 | $160,831 | | Total Current Liabilities | $62,730 | $65,330 | | Total Long Term Liabilities | $232,347 | $215,739 | | Total Stockholders' Deficit | $(128,591) | $(120,238) | [Consolidated Condensed Statements of Operations and Comprehensive (Loss)](index=4&type=section&id=AEMETIS%2C%20INC.%20CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20(LOSS)) For the three months ended March 31, 2022, revenues increased compared to the prior year, but the company continued to report a net loss, with operating loss also increasing. Basic and diluted net loss per common share improved slightly | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenues | $52,049 | $42,807 | | Gross Loss | $(3,085) | $(3,608) | | Operating Loss | $(10,427) | $(9,013) | | Net Loss | $(18,294) | $(18,112) | | Basic Net Loss per Common Share | $(0.54) | $(0.69) | [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=AEMETIS%2C%20INC.%20CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operating activities decreased, while net cash used in investing activities increased. Net cash provided by financing activities significantly declined year-over-year, resulting in a net decrease in cash and cash equivalents for the period | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net Cash Used in Operating Activities | $(8,152) | $(14,073) | | Net Cash Used in Investing Activities | $(7,992) | $(5,369) | | Net Cash Provided by Financing Activities | $13,878 | $34,631 | | Net Change in Cash and Cash Equivalents | $(2,280) | $15,195 | | Cash and Cash Equivalents at End of Period | $5,471 | $15,787 | [Consolidated Statements of Stockholders' Deficit](index=5&type=section&id=AEMETIS%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20DEFICIT) The company's total stockholders' deficit increased from December 31, 2021, to March 31, 2022, primarily due to the net loss incurred during the period, partially offset by issuances of common stock and stock-based compensation | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Total Stockholders' Deficit | $(128,591) | $(120,238) | | Net Loss | $(18,294) | $(18,112) | | Issuance of Common Stock | $3,349 | $62,395 | | Stock-based Compensation | $2,040 | $835 | [Notes to Consolidated Condensed Financial Statements](index=6&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) The notes provide detailed disclosures on the company's business activities, significant accounting policies, and specific financial statement line items, including inventories, property, plant and equipment, debt, commitments, related party transactions, and management's plans [1. Nature of Activities and Summary of Significant Accounting Policies](index=6&type=section&id=1.%20Nature%20of%20Activities%20and%20Summary%20of%20Significant%20Accounting%20Policies) Aemetis is an international renewable natural gas, renewable fuels, and byproducts company operating a California ethanol plant, developing a dairy renewable natural gas segment, planning 'Carbon Zero' biofuels plants, and operating an India biodiesel facility. The section also outlines key accounting policies for revenue recognition, inventory, and segment reporting - Aemetis is an international renewable natural gas, renewable fuels, and byproducts company focused on the acquisition, development, and commercialization of **innovative negative carbon intensity products and technologies**[18](index=18&type=chunk)[146](index=146&type=chunk) - Operates a **65 million gallon per year** ethanol production facility in Keyes, California, producing ethanol, Wet Distillers Grains (WDG), Distillers Corn Oil (DCO), and Condensed Distillers Solubles (CDS)[19](index=19&type=chunk)[147](index=147&type=chunk) - Developing a Dairy Renewable Natural Gas (RNG) segment, converting waste dairy methane gas into RNG, with **Phase 1 completed** and **Phase 2 construction underway**[20](index=20&type=chunk)[148](index=148&type=chunk) - Planning 'Carbon Zero' biofuels production plants (e.g., Carbon Zero 1 in Riverbank, California) to produce **sustainable aviation fuel (SAF)** and **renewable diesel** utilizing renewable hydrogen and non-edible renewable oils[21](index=21&type=chunk)[149](index=149&type=chunk) - Owns and operates a **150 thousand metric tons per year** biodiesel production facility in Kakinada, India, producing high-quality distilled biodiesel and refined glycerin[22](index=22&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [2. Inventories](index=12&type=section&id=2.%20Inventories) Inventories, valued at the lower of cost or net realizable value, consisted of raw materials, work-in-process, and finished goods. The company recognized a $919 thousand impairment related to inventory as of March 31, 2022 | Inventory Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------- | :---------------------------- | :----------------------------- | | Raw materials | $1,057 | $727 | | Work-in-progress | $1,907 | $2,083 | | Finished goods | $1,896 | $2,316 | | Total inventories | $4,860 | $5,126 | | Impairment | $919 | $0 | [3. Property, Plant and Equipment](index=12&type=section&id=3.%20Property%2C%20Plant%20and%20Equipment) Property, plant, and equipment, net, increased to $145.2 million as of March 31, 2022. Construction in progress, including biogas, Riverbank, and energy efficiency projects, saw significant interest capitalization of $2.1 million during the quarter | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Property, Plant and Equipment, net | $145,223 | $135,101 | | Construction in progress | $65,383 | $55,859 | | Interest capitalized (Q1) | $2,100 | $600 | | Depreciation expense (Q1) | $1,300 | $1,400 | [4. Debt](index=13&type=section&id=4.%20Debt) Total debt increased to $203.2 million as of March 31, 2022, primarily due to new revolving credit facilities and accrued interest. The company extended the maturity of Third Eye Capital Notes to April 1, 2023, and secured new Fuels and Carbon Revolving Lines totaling up to $100 million | Debt Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Third Eye Capital Term Notes | $7,071 | $7,095 | | Third Eye Capital Revolving Credit Facility | $59,524 | $75,980 | | Third Eye Capital Fuels Revolving Line | $8,741 | $0 | | Third Eye Capital Carbon Revolving Line | $22,096 | $0 | | EB-5 Promissory Notes | $40,829 | $40,692 | | Total Debt | $203,223 | $188,767 | | Total Long Term Debt | $180,059 | $165,989 | - Third Eye Capital Notes maturity date extended to April 1, 2023, with various waivers and amendment fees (chunk 72)[72](index=72&type=chunk) - New Credit Facility with Third Eye Capital provides up to **$100 million** across Fuels Revolving Line (up to $50M, matures March 1, 2025) and Carbon Revolving Line (up to $50M, matures March 1, 2026)[84](index=84&type=chunk) | Scheduled Debt Repayments | Amount (in thousands) | | :------------------------ | :-------------------- | | Three months ended March 31, 2022 | $23,164 | | 2023 | $139,961 | | 2024 | $17,598 | | 2025 | $26,951 | | 2026 | $945 | | Thereafter | $1,407 | | Total Debt | $210,026 | [5. Commitments and Contingencies](index=18&type=section&id=5.%20Commitments%20and%20Contingencies) The company settled a legal dispute with EdenIQ, Inc. for $4.8 million in May 2022. Lease liabilities for operating and finance leases are detailed, and $6.1 million in past-due property taxes were paid in March 2022 - Settled a lawsuit with EdenIQ, Inc. for **$4.8 million** on May 6, 2022, resolving a dispute over a terminated merger agreement[105](index=105&type=chunk)[191](index=191&type=chunk) - Paid **$6.1 million** to Stanislaus County for past-due property taxes on March 3, 2022[105](index=105&type=chunk) | Lease Liabilities | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Total Operating Lease Liabilities | $2,501 | $2,578 | | Total Finance Lease Liabilities | $1,156 | $1,270 | [6. Aemetis Biogas LLC – Series A Preferred Financing and Variable Interest Entity](index=20&type=section&id=6.%20Aemetis%20Biogas%20LLC%20%E2%80%93%20Series%20A%20Preferred%20Financing%20and%20Variable%20Interest%20Entity) Aemetis Biogas LLC (ABGL) is classified as a Variable Interest Entity (VIE) and consolidated, with Aemetis as the primary beneficiary. ABGL's Series A Preferred Units, totaling $51.4 million in liabilities, are being accreted to their redemption value, and a covenant violation has increased redemption payments to 100% of free cash flows - Aemetis Biogas LLC (ABGL) is a Variable Interest Entity (VIE) and is consolidated into Aemetis's financial statements, with Aemetis determined to be the **primary beneficiary**[111](index=111&type=chunk) | Series A Preferred Units Liability | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Current Portion | $3,698 | $3,169 | | Long-Term Liabilities | $47,701 | $44,978 | | Total | $51,399 | $48,147 | - ABGL's failure to generate minimum quarterly operating cash flows resulted in a **covenant violation**, increasing redemption payments to **100% of free cash flows**[108](index=108&type=chunk) [7. Stock-Based Compensation](index=20&type=section&id=7.%20Stock-Based%20Compensation) The company recognized $2.0 million in stock-based compensation expense for Q1 2022, primarily from options granted under the 2019 Stock Plan. As of March 31, 2022, $12.0 million of unrecognized compensation expense remains | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Stock-based Compensation Expense | $2,040 | $835 | | Options Granted | 932,800 | 945,000 | | Weighted Average Fair Value per Option | $9.89 | $2.44 | - As of March 31, 2022, the company had **$12.0 million** of total unrecognized compensation expense for employees, to be amortized over a weighted average remaining term of **2.6 years**[121](index=121&type=chunk) [8. Outstanding Warrants](index=22&type=section&id=8.%20Outstanding%20Warrants) As of March 31, 2022, the company had 355 thousand outstanding warrants with a weighted average exercise price of $15.92. During Q1 2022, 413 thousand warrants were granted with a fair value of $11.01 per warrant | Metric | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Warrants Outstanding | 355 thousand | 55 thousand | | Weighted Average Exercise Price | $15.92 | $2.59 | | Warrants Granted (Q1) | 413 thousand | 292 thousand | | Fair Value per Warrant on Grant Date (Q1) | $11.01 | $2.48 | [9. Agreements](index=22&type=section&id=9.%20Agreements) The company maintains a Corn Procurement and Working Capital Agreement with J.D. Heiskell and transitioned its ethanol marketing from Kinergy to Murex LLC in October 2021. Ethanol sales to marketing partners increased to $37.9 million in Q1 2022 - Maintains a Corn Procurement and Working Capital Agreement with J.D. Heiskell for corn feedstock and sales of WDG and corn oil[125](index=125&type=chunk) - Terminated Ethanol Marketing Agreement with Kinergy and entered into a Fuel Ethanol Purchase and Sale Agreement with Murex LLC effective October 1, 2021[126](index=126&type=chunk) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Sales to Ethanol Marketing Partners | $37,900 | $29,900 | | Marketing Costs Expensed | $700 | $700 | [10. Segment Information](index=23&type=section&id=10.%20Segment%20Information) Aemetis operates in three reportable segments: California Ethanol, Dairy Renewable Natural Gas, and India Biodiesel. California Ethanol generated the vast majority of external revenues, which increased significantly year-over-year, while India Biodiesel revenues declined sharply - Aemetis recognizes three reportable segments: California Ethanol, Dairy Renewable Natural Gas, and India Biodiesel[128](index=128&type=chunk) | Segment | Revenues from External Customers (Q1 2022, in thousands) | Revenues from External Customers (Q1 2021, in thousands) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | California Ethanol | $52,041 | $42,328 | | Dairy Renewable Natural Gas | $0 | $0 | | India Biodiesel | $8 | $479 | | Total | $52,049 | $42,807 | | Segment | Intersegment Revenues (Q1 2022, in thousands) | Intersegment Revenues (Q1 2021, in thousands) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | Dairy Renewable Natural Gas | $335 | $41 | [11. Related Party Transactions](index=24&type=section&id=11.%20Related%20Party%20Transactions) The company disclosed a $2.0 million guarantee fee paid to McAfee Capital (owned by the CEO) in Q1 2022, settled by issuing 180,000 common shares. Board compensation fees of $0.1 million were expensed for the quarter - Approved a one-time guarantee fee of **$2.0 million** to McAfee Capital (owned by CEO Eric McAfee) on January 12, 2022, paid by issuing **180,000 shares of common stock**[135](index=135&type=chunk)[136](index=136&type=chunk) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Accrued Guaranty Fees | $200 | $300 | | Board Compensation Fees Expensed (Q1) | $100 | $100 | [12. Subsequent Events](index=25&type=section&id=12.%20Subsequent%20Events) Subsequent to the quarter end, Third Eye Capital agreed to Amendment No. 23 to the Note Purchase Agreement, waiving certain covenants for Q1 2023 and Q1 2022 in exchange for a $0.1 million fee - On May 11, 2022, Third Eye Capital agreed to Limited Waiver and Amendment No. 23, waiving the note indebtedness covenant for Q1 2023 and the unfunded capital expenditures covenant for Q1 2022, in exchange for a **$0.1 million fee**[137](index=137&type=chunk)[196](index=196&type=chunk) [13. Management's Plan](index=25&type=section&id=13.%20Management's%20Plan) Management outlines strategies to address going concern doubts, focusing on improving Keyes Plant performance, expanding the biogas project, funding the Riverbank Carbon Zero 1 plant, developing Kakinada Plant sales, and securing additional funding through various means - The company's ability to continue as a going concern raises **substantial doubt** due to negative capital, operating results, and reliance on its senior secured lender[138](index=138&type=chunk)[174](index=174&type=chunk) - Plans to improve Keyes Plant financial performance through **energy efficiency, cost reduction, revenue enhancements, and grant execution**[139](index=139&type=chunk)[175](index=175&type=chunk) - Strategies include expanding the ABGL biogas project to capture **higher carbon credits**, raising funds for the Riverbank Carbon Zero 1 plant, and developing sales channels for the Kakinada Plant[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - Seeks additional funding through working with its senior lender, restructuring existing loan agreements, selling equity, and vendor financing arrangements[142](index=142&type=chunk)[177](index=177&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and cash flows for the three months ended March 31, 2022, highlighting revenue drivers, cost changes, liquidity challenges, and strategic plans [Overview](index=26&type=section&id=Overview) Aemetis is an international renewable natural gas, renewable fuels, and byproducts company operating in three reportable segments: California Ethanol, Dairy Renewable Natural Gas, and India Biodiesel, focusing on innovative negative carbon intensity products and technologies - Aemetis is an international renewable natural gas, renewable fuels, and byproducts company focused on **innovative negative carbon intensity products and technologies**[146](index=146&type=chunk) - Operates a **65 million gallon per year** ethanol production facility in Keyes, California, producing ethanol and co-products, with ongoing electrification efforts to reduce GHG emissions[147](index=147&type=chunk) - Developing a Dairy Renewable Natural Gas segment (ABGL) to convert dairy methane into RNG, with **Phase 1 completed** and **Phase 2 construction underway**[148](index=148&type=chunk) - Planning 'Carbon Zero' biofuels plants (e.g., Carbon Zero 1 in Riverbank) to produce **sustainable aviation fuel (SAF)** and **renewable diesel**, aiming for ultra-low carbon fuels and higher value credits[149](index=149&type=chunk) - Operates a **150 thousand metric tons per year** biodiesel production facility in Kakinada, India, producing biodiesel and refined glycerin for Indian and European markets[150](index=150&type=chunk)[151](index=151&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenues increased by 22.0% year-over-year, primarily driven by higher ethanol prices in California Ethanol, despite a significant decline in India Biodiesel revenue. Gross loss decreased, but operating expenses, particularly SG&A and debt-related fees, increased [Revenues](index=27&type=section&id=Revenues) Total revenues increased by 22.0% to $52.0 million, mainly due to a 22.9% increase in California Ethanol revenue driven by higher ethanol prices. India Biodiesel revenue decreased by 98.3% due to high feedstock costs making production unviable | Segment | Q1 2022 (in thousands) | Q1 2021 (in thousands) | Inc/(dec) (in thousands) | % Change | | :-------------------------- | :--------------------- | :--------------------- | :----------------------- | :------- | | California Ethanol | $52,041 | $42,328 | $9,713 | 22.9% | | Dairy Renewable Natural Gas* | $335 | $41 | $294 | 717.1% | | India Biodiesel | $8 | $479 | $(471) | -98.3% | | Eliminations | $(335) | $(41) | $(294) | 717.1% | | Total | $52,049 | $42,807 | $9,242 | 22.0% | *All Dairy Renewable Natural Gas revenue is intercompany. - California Ethanol revenue increase was driven by an increase in ethanol price per gallon to **$2.58** (Q1 2022) from **$1.91** (Q1 2021), partially offset by a decrease in volume sold[159](index=159&type=chunk) - India Biodiesel sales volume decreased by **100%** to **0 metric tons** (Q1 2022) from **349 metric tons** (Q1 2021) due to high feedstock costs[161](index=161&type=chunk) [Cost of Goods Sold](index=28&type=section&id=Cost%20of%20Goods%20Sold) Total cost of goods sold increased by 19% to $55.1 million, primarily due to a 20.8% increase in California Ethanol's costs, driven by higher corn feedstock prices ($8.75/bushel vs. $6.87/bushel) and increased natural gas, chemical, and transportation costs. India Biodiesel's costs decreased by 100% due to reduced production | Segment | Q1 2022 (in thousands) | Q1 2021 (in thousands) | Inc/(dec) (in thousands) | % Change | | :-------------------------- | :--------------------- | :--------------------- | :----------------------- | :------- | | California Ethanol | $54,921 | $45,459 | $9,462 | 20.8% | | Dairy Renewable Natural Gas | $542 | $453 | $89 | 19.6% | | India Biodiesel | $0 | $534 | $(534) | -100.0% | | All other | $6 | $10 | $(4) | -40.0% | | Eliminations | $(335) | $(41) | $(294) | 717.1% | | Total | $55,134 | $46,415 | $8,719 | 19% | - Average cost of feedstock (corn) per bushel increased to **$8.75** (Q1 2022) from **$6.87** (Q1 2021)[162](index=162&type=chunk) - California Ethanol incurred **$1.0 million** more in natural gas costs, **$0.4 million** more in chemical costs, and **$0.3 million** more in transportation costs compared to Q1 2021[162](index=162&type=chunk) [Gross profit (loss)](index=29&type=section&id=Gross%20profit%20(loss)) The total gross loss decreased by 14% to $(3.1) million, primarily due to an 8% decrease in gross loss for the California Ethanol segment, driven by improved ethanol and WDG prices, partially offset by higher corn prices | Segment | Q1 2022 (in thousands) | Q1 2021 (in thousands) | Inc/(dec) (in thousands) | % Change | | :-------------------------- | :--------------------- | :--------------------- | :----------------------- | :------- | | California Ethanol | $(2,880) | $(3,131) | $251 | 8.0% | | Dairy Renewable Natural Gas | $(207) | $(412) | $205 | 49.8% | | India Biodiesel | $8 | $(55) | $63 | 114.5% | | All other | $(6) | $(10) | $4 | 40.0% | | Total | $(3,085) | $(3,608) | $523 | -14% | [Operating Expenses](index=29&type=section&id=Operating%20Expenses) Selling, general, and administrative (SG&A) expenses increased by 35.7% due to higher salaries, stock-based compensation, and professional fees. Interest expense decreased, but debt-related fees and amortization increased by 50.3% due to debt issuance and extension costs | Expense Category | Q1 2022 (in thousands) | Q1 2021 (in thousands) | Inc/(dec) (in thousands) | % Change | | :----------------------------------- | :--------------------- | :--------------------- | :----------------------- | :------- | | Research and Development Expenses | $36 | $23 | $13 | 56.5% | | Selling, General and Administrative Expenses | $7,306 | $5,382 | $1,924 | 35.7% | | Interest Rate Expense | $4,435 | $5,965 | $(1,530) | -25.6% | | Debt Related Fees and Amortization Expense | $1,826 | $1,215 | $611 | 50.3% | | Accretion and Other Expenses of Series A Preferred Units | $1,640 | $1,943 | $(303) | -15.6% | - Increase in SG&A expenses was primarily due to a **$1.4 million** increase in salaries and wages (mostly stock-based compensation), **$0.2 million** in professional fees, and **$0.3 million** in miscellaneous expenses[168](index=168&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and cash equivalents decreased, and its current ratio remains low, indicating liquidity challenges. Dependence on its senior secured lender and negative operating results raise substantial doubt about its going concern ability, necessitating debt refinancing or continued lender cooperation [Cash and Cash Equivalents](index=29&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased to $5.5 million as of March 31, 2022, from $7.8 million at December 31, 2021, with a current ratio of 0.26, indicating limited short-term liquidity | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Cash and Cash Equivalents | $5,471 | $7,751 | | Current Ratio | 0.26 | 0.32 | [Liquidity](index=30&type=section&id=Liquidity) The company's reliance on its senior secured lender, coupled with negative capital and operating results, raises substantial doubt about its ability to continue as a going concern. Management plans to refinance debt or secure continued lender cooperation to meet obligations - The company's dependence on its senior secured lender and negative capital/operating results raise **substantial doubt** about its ability to continue as a going concern[174](index=174&type=chunk) - Available liquidity resources include cash from operations, remaining cash balances, borrowings under senior and subordinated debt facilities, and additional funds from equity sales[170](index=170&type=chunk) | Available Borrowing Capacity | Amount (in thousands) | | :--------------------------- | :-------------------- | | Revolving Credit Lines | $14,200 | | Reserve Liquidity Notes | $40,000 | | Total | $54,200 | [Change in Working Capital and Cash Flows](index=31&type=section&id=Change%20in%20Working%20Capital%20and%20Cash%20Flows) Net cash used in operating activities decreased to $8.2 million, while cash used in investing activities increased to $8.0 million. Cash provided by financing activities significantly declined to $13.9 million, primarily due to lower proceeds from borrowings and equity offerings compared to the prior year | Cash Flow Activity | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | | Net Cash Used in Operating Activities | $(8,152) | $(14,073) | | Net Cash Used in Investing Activities | $(7,992) | $(5,369) | | Net Cash Provided by Financing Activities | $13,878 | $34,631 | - Total debt increased by **$14.5 million** during Q1 2022, driven by accrued interest, debt extension fees, and draws on Fuels and Carbon Revolving Lines, partially offset by principal payments[181](index=181&type=chunk) [Critical Accounting Policies](index=32&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies, including revenue recognition, recoverability of long-lived assets, and debt modification and extinguishment accounting, are consistent with those disclosed in its 2021 Annual Report on Form 10-K - Critical accounting policies include revenue recognition, recoverability of long-lived assets, and debt modification and extinguishment accounting[186](index=186&type=chunk) [Recently Issued Accounting Pronouncements](index=32&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) No new accounting pronouncements were reported beyond those disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No new accounting pronouncements reported beyond those disclosed in the 2021 Annual Report on Form 10-K[187](index=187&type=chunk) [Off Balance Sheet Arrangements](index=32&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company had no off-balance sheet arrangements during the three months ended March 31, 2022 - No off-balance sheet arrangements during the three months ended March 31, 2022[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for the current quarterly report - **Not Applicable**[187](index=187&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to an identified material weakness in financial reporting, with ongoing remediation efforts. No material changes in internal controls over financial reporting occurred during the quarter [Evaluation of Disclosure Controls and Procedures](index=32&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures, along with related internal controls over financial reporting, were not effective as of March 31, 2022, due to a material weakness identified in the prior annual report - Disclosure controls and procedures, along with related internal controls over financial reporting, were **not effective** as of March 31, 2022, due to a material weakness identified in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021[188](index=188&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in internal controls over financial reporting during the most recently completed fiscal quarter, and remediation efforts for the previously identified material weakness are ongoing - No material changes in internal controls over financial reporting during the most recently completed fiscal quarter[189](index=189&type=chunk) - Remediation plan to address the material weakness in internal control over financial reporting identified as of December 31, 2021, is ongoing[189](index=189&type=chunk) [PART II – OTHER INFORMATION](index=33&type=section&id=PART%20II--OTHER%20INFORMATION) This section addresses legal proceedings, risk factors, equity sales, defaults, and other relevant disclosures [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a lawsuit with EdenIQ, Inc. for $4.8 million on May 6, 2022, resolving a dispute over a terminated merger agreement - Settled a lawsuit with EdenIQ, Inc. for **$4.8 million** on May 6, 2022, regarding a wrongful termination of a merger agreement[191](index=191&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) New risk factors include the adverse impact of inflation, particularly commodity price inflation (corn, natural gas) and supply chain constraints due to the war in Ukraine, which could reduce profit margins if the company cannot raise product prices accordingly - Inflation, including commodity price inflation (corn, natural gas) and supply chain constraints due to the war in Ukraine, may **adversely impact** the company's results of operations[192](index=192&type=chunk)[193](index=193&type=chunk) - In an inflationary environment, the company may be unable to raise product prices to keep up with the rate of inflation, which would **reduce profit margins**[194](index=194&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2022, the company issued 113 thousand shares of common stock to subordinated promissory note holders upon warrant exercise, which was exempt from registration - Issued **113 thousand shares** of common stock to certain subordinated promissory note holders pursuant to warrant exercise at an exercise price of **$0.01 per share** in Q1 2022[195](index=195&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No unresolved defaults on senior securities occurred during the three months ended March 31, 2022 - No unresolved defaults on senior securities occurred during the three months ended March 31, 2022[195](index=195&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[195](index=195&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) Subsequent to the quarter end, Third Eye Capital agreed to Amendment No. 23 to the Note Purchase Agreement, waiving certain covenants for Q1 2023 and Q1 2022 in exchange for a $0.1 million fee - On May 11, 2022, Third Eye Capital agreed to Limited Waiver and Amendment No. 23, waiving the note indebtedness covenant for Q1 2023 and the unfunded capital expenditures covenant for Q1 2022, in exchange for a **$0.1 million fee**[196](index=196&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications pursuant to the Sarbanes-Oxley Act and the Limited Waiver and Amendment No. 23 to the Amended and Restated Note Purchase Agreement - Includes certifications (31.1, 31.2, 32.1, 32.2) and Limited Waiver and Amendment No. 23 to Amended and Restated Note Purchase Agreement (10.1)[197](index=197&type=chunk)[198](index=198&type=chunk) [Signatures](index=34&type=section&id=Signatures) The Form 10-Q report was duly signed on behalf of Aemetis, Inc. by Eric A. McAfee, Chief Executive Officer, and Todd Waltz, Executive Vice President and Chief Financial Officer, on May 13, 2022 - The report was signed by Eric A. McAfee (Chief Executive Officer) and Todd Waltz (Executive Vice President and Chief Financial Officer) on May 13, 2022[198](index=198&type=chunk)

Aemetis, Inc. (NASDAQ:AMTX) Q1 2022 Earnings Conference Call May 12, 2022 2:00 PM ET Company Participants Todd Waltz - EVP and CFO Eric McAfee - Founder, Chairman and CEO Andy Foster - President, Aemetis Advanced Fuels and Aemetis Biogas Conference Call Participants Manav Gupta - Credit Suisse Jordan Levy - Truist Amit Dayal - H.C. Wainwright Derrick Whitfield - Stifel Matthew Blair - Tudor, Pickering, Holt Ed Woo - Ascendiant Capital Operator Good afternoon, and welcome to the Aemetis First Quarter 2022 Ea ...

Aemetis, Inc. (NASDAQ:AMTX) Q4 2021 Earnings Conference Call March 10, 2022 2:00 PM ET Company Participants Todd Waltz – Executive Vice President and Chief Financial Officer Eric McAfee – Founder, Chairman and Chief Executive Officer Andy Foster – President, Aemetis Advanced Fuels and Aemetis Biogas Conference Call Participants Manav Gupta – Credit Suisse Amit Dayal – H.C. Wainwright Nate Pendleton – Stifel Matthew Blair – Tudor, Pickering, Holt Jordan Levy – Truist Ed Woo – Ascendiant Capital Marco Rodrigu ...

Call Start: 14:00 January 1, 0000 3:04 PM ET Aemetis, Inc.’s (NASDAQ:AMTX) Q3 Earnings Conference Call November 11, 2021, 14:00 PM ET Company Participants Eric McAfee – CEO Todd Waltz – CFO Andy Foster – President Conference Call Participants Manav Gupta – Credit Suisse Nate Pendleton – Stifel Jordan Levy – Truist Securities Amit Dayal, – H.C. Wainwright Ed Woo – Ascendiant Capital Marco Rodriguez – Stonegate Capital Operator Welcome to the Aemetis Third Quarter 2021 Earnings Review Conference Call. At thi ...

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I--FINANCIAL%20INFORMATION) [Item 1 - Financial Statements](index=3&type=section&id=Item%201%20-%20Financial%20Statements.) This section presents the company's unaudited consolidated financial statements for the period ended September 30, 2021 [Consolidated Condensed Balance Sheets](index=3&type=section&id=CONSOLIDATED%20CONDENSED%20BALANCE%20SHEETS) Total assets increased while liabilities decreased, significantly reducing the stockholders' deficit by September 30, 2021 | Metric | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :---------------------------------- | :-------------------------------- | :------------------------------- | | Total Assets | $146,979 | $125,139 | | Total Current Liabilities | $74,605 | $102,235 | | Total Long Term Liabilities | $204,467 | $207,648 | | Total Stockholders' Deficit | $(132,093) | $(184,744) | [Consolidated Condensed Statements of Operations and Comprehensive (Loss)](index=4&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20(LOSS)) Revenues increased, but higher costs led to gross and net losses for the three and nine-month periods | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $49,895 | $40,923 | $147,586 | $128,227 | | Cost of Goods Sold | $54,680 | $40,152 | $152,333 | $113,830 | | Gross Profit (Loss) | $(4,785) | $771 | $(4,747) | $14,397 | | Operating Income (Loss) | $(9,894) | $(3,829) | $(21,035) | $1,674 | | Net Loss | $(17,597) | $(12,217) | $(46,266) | $(22,077) | | Basic Net Loss per Common Share | $(0.55) | $(0.59) | $(1.55) | $(1.06) | [Consolidated Condensed Statements of Cash Flows](index=4&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS) Significant cash outflows from operations and investing were offset by substantial inflows from financing activities | Cash Flow Activity | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :---------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash (used in) provided by operating activities | $(19,993) | $7,056 | | Net cash used in investing activities | $(17,547) | $(18,608) | | Net cash provided by financing activities | $43,348 | $10,986 | | Net change in cash and cash equivalents | $5,797 | $(577) | | Cash and cash equivalents at end of period | $6,389 | $79 | [Consolidated Statements of Stockholders' Deficit](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20DEFICIT) The stockholders' deficit improved significantly due to common stock issuances, despite ongoing net losses | Metric | December 31, 2020 (in thousands) | September 30, 2021 (in thousands) | | :--------------------------------- | :------------------------------- | :-------------------------------- | | Total Stockholders' Deficit | $(184,744) | $(132,093) | | Issuance of common stock | - | $62,395 (March 31, 2021) + $24,774 (June 30, 2021) + $7,884 (Sep 30, 2021) | | Net Loss | $(274,080) (Accumulated Deficit) | $(320,346) (Accumulated Deficit) | [1. Nature of Activities and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Nature%20of%20Activities%20and%20Summary%20of%20Significant%20Accounting%20Policies) Aemetis operates as a renewable fuels company and outlines its significant accounting policies and segment sales - Aemetis is an international renewable natural gas, renewable fuels, and byproducts company, focused on **negative carbon intensity products**[26](index=26&type=chunk) - Operates a **65 million gallon/year ethanol plant** in Keyes, California, producing ethanol, WDG, DCO, and CDS[27](index=27&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - Owns and operates a **50 million gallon/year renewable chemical and advanced fuel production facility** (Kakinada Plant) in India, producing distilled biodiesel and refined glycerin[28](index=28&type=chunk)[33](index=33&type=chunk)[165](index=165&type=chunk) - Developing **'Carbon Zero' sustainable aviation fuel (SAF) and renewable diesel fuel biorefineries** in California[28](index=28&type=chunk)[30](index=30&type=chunk)[162](index=162&type=chunk) - Established Aemetis Carbon Capture, Inc in April 2021 to build **carbon sequestration projects**, generating LCFS and IRS 45Q credits[32](index=32&type=chunk)[163](index=163&type=chunk) North America Sales by Product Category (in thousands) | Product Category | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Ethanol and high-grade alcohol sales | $39,131 | $24,825 | $111,220 | $86,387 | | Wet distiller's grains sales | $8,919 | $7,143 | $30,584 | $22,983 | | Other sales | $1,782 | $1,163 | $5,086 | $4,856 | | **Total** | **$49,832** | **$33,131** | **$146,890** | **$114,226** | India Sales by Product Category (in thousands) | Product Category | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Biodiesel sales | $- | $7,325 | $465 | $12,267 | | Refined glycerin sales | $- | $449 | $125 | $909 | | PFAD sales | $- | $- | $- | $774 | | Other sales | $63 | $18 | $106 | $51 | | **Total** | **$63** | **$7,792** | **$696** | **$14,001** | - Allowance for doubtful accounts was **$1.4 million** as of September 30, 2021, up from $1.3 million at December 31, 2020[49](index=49&type=chunk) - Received **$877 thousand** from the California Energy Commission Low-Carbon Fuel Production Program (LCFPP) as of September 30, 2021[57](index=57&type=chunk) - Received all **$3.2 million** from the California Department of Food and Agriculture (CDFA) Dairy Digester Research and Development program by Q2 2021[58](index=58&type=chunk) - Awarded an additional **$7.8 million** in CDFA grants in October 2020 for six biogas capture systems, with $33 thousand received as of September 30, 2021[59](index=59&type=chunk) - Received **$115 thousand** in Q1 2021 from the California Energy Commission Low Carbon Advanced Ethanol Grant Program[60](index=60&type=chunk) Potentially Dilutive Shares Excluded from EPS Calculation (in thousands) | Category | As of September 30, 2021 | As of September 30, 2020 | | :--------------------------------------------------------------------------------- | :----------------------- | :----------------------- | | Series B preferred (post split basis) | 129 | 132 | | Common stock options and warrants | 3,929 | 5,846 | | Debt with conversion feature at $30 per share of common stock | 1,280 | 1,294 | | **Total potentially dilutive shares excluded** | **5,338** | **7,272** | [2. Inventories](index=13&type=section&id=2.%20Inventories) Total inventories increased from year-end 2020, with no impairment recognized during the period | Inventory Category | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------- | :-------------------------------- | :------------------------------- | | Raw materials | $1,363 | $1,382 | | Work-in-progress | $1,274 | $1,266 | | Finished goods | $2,225 | $1,321 | | **Total inventories** | **$4,862** | **$3,969** | - **No inventory impairment** was recognized as of September 30, 2021, compared to $0.7 million recognized at December 31, 2020[70](index=70&type=chunk) [3. Property, Plant and Equipment](index=13&type=section&id=3.%20Property,%20Plant%20and%20Equipment) Net property, plant and equipment increased due to significant construction in progress and capitalized interest | Category | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Total gross property, plant & equipment | $169,908 | $150,986 | | Less accumulated depreciation | $(44,993) | $(41,106) | | **Total net property, plant & equipment** | **$124,915** | **$109,880** | | Construction in progress | $44,322 | $25,397 | Interest Capitalized in Property, Plant, and Equipment (in millions) | Period | 2021 | 2020 | | :-------------------------------- | :--- | :--- | | Three months ended September 30 | $1.4 | $0.1 | | Nine months ended September 30 | $2.9 | $0.3 | - Construction in progress includes costs for the **ABGL biogas project, Riverbank project, and energy efficient upgrades** at the Keyes Plant[73](index=73&type=chunk) Depreciation Expense (in millions) | Period | 2021 | 2020 | | :-------------------------------- | :--- | :--- | | Three months ended September 30 | $1.3 | $1.3 | | Nine months ended September 30 | $4.1 | $3.5 | [4. Debt](index=14&type=section&id=4.%20Debt) Total debt decreased significantly due to repayments and PPP loan forgiveness, with key notes extended | Debt Category | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :------------------------------------- | :-------------------------------- | :------------------------------- | | Third Eye Capital term notes | $7,093 | $7,066 | | Third Eye Capital revolving credit facility | $71,732 | $80,310 | | Third Eye Capital revenue participation term notes | $11,914 | $11,864 | | Third Eye Capital acquisition term notes | $26,457 | $26,384 | | Third Eye Capital promissory note | $- | $1,444 | | Cilion shareholder seller notes payable | $6,386 | $6,274 | | Subordinated notes | $13,229 | $12,745 | | EB-5 promissory notes | $42,462 | $43,120 | | GAFI Term and Revolving loans | $- | $33,626 | | Term loans on capital expenditures | $5,705 | $5,652 | | PPP loans | $- | $1,134 | | **Total debt** | **$184,978** | **$229,619** | | Less current portion of debt | $23,863 | $59,515 | | **Total long term debt** | **$161,115** | **$170,104** | - Third Eye Capital Notes maturity date can be extended by the Company to **April 1, 2023**, classifying them as non-current debt[91](index=91&type=chunk) - The February 2019 promissory note from Third Eye Capital was **fully repaid in Q1 2021**[82](index=82&type=chunk) - Subordinated Notes were amended on July 1, 2021, **extending maturity to December 31, 2021**[96](index=96&type=chunk) - EB-5 Phase I funding: **$34.5 million in principal and $3.9 million in accrued interest** outstanding as of September 30, 2021[99](index=99&type=chunk) - EB-5 Phase II funding: **$4.0 million released from escrow** as of September 30, 2021, with $4.1 million outstanding[102](index=102&type=chunk) - GAFI Term loan and Revolving loan were **fully repaid in Q1 2021**[106](index=106&type=chunk) - PPP Loans of approximately **$1.1 million were forgiven in Q2 2021**, resulting in a gain on debt extinguishment[107](index=107&type=chunk) Scheduled Debt Repayments (in thousands) | Period | Debt Repayments | | :-------------------------------- | :-------------- | | Twelve months ended September 30, 2022 | $23,863 | | 2023 | $147,749 | | 2024 | $7,445 | | 2025 | $4,581 | | 2026 | $945 | | There after | $1,253 | | **Total debt** | **$185,836** | [5. Commitments and Contingencies](index=19&type=section&id=5.%20Commitments%20and%20Contingencies) The company holds lease liabilities and faces a significant property tax accrual and a legal judgment appeal Total Operating and Finance Lease Liabilities (in thousands) | Lease Type | September 30, 2021 | December 31, 2020 | | :-------------------------- | :----------------- | :---------------- | | Total operating lease liabilities | $2,667 | $2,894 | | Total finance lease liabilities | $1,381 | $1,581 | - Property tax accrual for the Keyes Plant site was **$6.8 million** as of September 30, 2021, with ongoing discussions for a payment plan[119](index=119&type=chunk) - A **$6.2 million legal judgment** was awarded against the company in July 2019 in a lawsuit against EdenIQ, which the company intends to appeal[120](index=120&type=chunk) [6. Biogas LLC – Series A Preferred Financing and Variable Interest Entity](index=21&type=section&id=6.%20Biogas%20LLC%20%E2%80%93%20Series%20A%20Preferred%20Financing%20and%20Variable%20Interest%20Entity) The consolidated VIE, ABGL, has Series A Preferred Units treated as liabilities and has not met cash flow covenants - ABGL is a **Variable Interest Entity (VIE)** consolidated by Aemetis, with Series A Preferred Units recorded as liabilities[127](index=127&type=chunk) - Series A Preferred Unit liabilities, net of issuance costs and inclusive of accretive preference, totaled **$46.9 million** ($8.7 million current, $38.3 million long-term) as of September 30, 2021[126](index=126&type=chunk) - ABGL has **not generated minimum quarterly operating cash flows**, leading to a covenant violation[123](index=123&type=chunk) Series A Preferred Units Accretion and Preference Payments Expense (in millions) | Period | Accretion Expense (2021) | Accretion Expense (2020) | Accrued Preference Payments Expense (2021) | Accrued Preference Payments Expense (2020) | | :-------------------------------- | :----------------------- | :----------------------- | :----------------------------------------- | :----------------------------------------- | | Three months ended September 30 | $2.3 | $1.8 | $0.8 | $- | | Nine months ended September 30 | $7.7 | $4.1 | $2.4 | $- | [7. Stock-Based Compensation](index=22&type=section&id=7.%20Stock-Based%20Compensation) Stock-based compensation expense increased year-over-year, with $2.1 million in unrecognized expense remaining - As of September 30, 2021, **3.9 million options are outstanding** under the Stock Plans, with 2.4 million vested[131](index=131&type=chunk)[133](index=133&type=chunk) Stock Compensation Expense (in thousands) | Period | 2021 | 2020 | | :-------------------------------- | :--- | :--- | | Three months ended September 30 | $285 | $191 | | Nine months ended September 30 | $1,400 | $826 | - Unrecognized compensation expense for employees totaled **$2.1 million** as of September 30, 2021, to be amortized over a weighted average remaining term of 2.1 years[139](index=139&type=chunk) [8. Agreements](index=24&type=section&id=8.%20Agreements) The company maintains a corn procurement agreement and executed a new ethanol marketing agreement - Corn Procurement and Working Capital Agreement with J.D. Heiskell for corn purchases and WDG/corn oil sales **expires December 31, 2021**[140](index=140&type=chunk) - Terminated Ethanol Marketing Agreement with Kinergy as of September 30, 2021 and executed a **new agreement with Murex LLC effective October 1, 2021**[142](index=142&type=chunk) J.D. Heiskell Sales and Purchases Activity (in thousands) | Activity | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Ethanol sales | $- | $- | $- | $26,049 | | Wet distiller's grains sales | $8,919 | $7,143 | $30,584 | $22,983 | | Corn oil sales | $1,515 | $827 | $4,252 | $2,806 | | Corn purchases | $39,058 | $25,513 | $119,217 | $77,268 | [9. Segment Information](index=24&type=section&id=9.%20Segment%20Information) North America revenues grew while India revenues declined sharply, with both segments reporting gross losses Revenues by Segment (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | North America | $49,832 | $33,131 | $146,890 | $114,226 | | India | $63 | $7,792 | $696 | $14,001 | | **Total Consolidated** | **$49,895** | **$40,923** | **$147,586** | **$128,227** | Gross Profit (Loss) by Segment (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | North America | $(4,832) | $(403) | $(4,724) | $12,995 | | India | $47 | $1,174 | $(23) | $1,402 | | **Total Consolidated** | **$(4,785)** | **$771** | **$(4,747)** | **$14,397** | Total Assets by Segment (in thousands) | Segment | As of September 30, 2021 | As of December 31, 2020 | | :---------------- | :----------------------- | :---------------------- | | North America | $135,720 | $112,312 | | India | $11,259 | $12,827 | | **Total Assets** | **$146,979** | **$125,139** | [10. Related Party Transactions](index=26&type=section&id=10.%20Related%20Party%20Transactions) The company has outstanding balances with its CEO and board members for compensation and fees - Owes Eric McAfee and McAfee Capital LLC **$0.5 million** for employment agreements and expense reimbursements[150](index=150&type=chunk) - Accrued **$0.2 million** for guaranty fees to Eric McAfee as of September 30, 2021[150](index=150&type=chunk) - Owes **$0.1 million** to Board members for compensation fees as of September 30, 2021[151](index=151&type=chunk) - Issued **$0.9 million of restricted stock awards** to pay off outstanding accounts payable owed to Board members during the nine months ended September 30, 2021[151](index=151&type=chunk) [11. Subsequent Events](index=26&type=section&id=11.%20Subsequent%20Events) The company received waivers for debt violations from its senior lender subsequent to the quarter end - Third Eye Capital agreed to Amendment No. 21 on November 5, 2021, **waiving Blocked Account Agreement and Subordinated Debt Violations**[152](index=152&type=chunk) - A **$0.1 million amendment and waiver fee** was paid to Third Eye Capital as consideration for Amendment No. 21[152](index=152&type=chunk) [12. Management's Plans](index=26&type=section&id=12.%20Management's%20Plans) Management outlines plans to improve performance and raise capital, acknowledging going concern uncertainty - Plans to improve Keyes Plant financial performance via **energy efficiency, cost reduction, and revenue enhancements**[154](index=154&type=chunk)[207](index=207&type=chunk) - Aims to operate and expand the **ABGL biogas project** to capture and monetize biogas[155](index=155&type=chunk)[207](index=207&type=chunk) - Intends to raise funds for the **Riverbank 'Carbon Zero 1' plant** and Cellulosic Ethanol Facility to produce ultra-low carbon fuels[155](index=155&type=chunk)[208](index=208&type=chunk) - Plans to secure **higher volumes of fuel shipments** at the India plant by developing sales channels[156](index=156&type=chunk)[209](index=209&type=chunk) - Seeks funding for existing and new business opportunities through its **senior lender, loan restructuring, equity sales, or vendor financing**[156](index=156&type=chunk)[209](index=209&type=chunk) - Dependence on the senior lender and negative financial results raise **substantial doubt about the company's ability to continue as a going concern**[153](index=153&type=chunk)[206](index=206&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an analysis of financial performance, liquidity, and strategic initiatives for the reporting period [Overview](index=27&type=section&id=Overview) Aemetis is an international renewable fuels company with key initiatives in biogas, ethanol, and carbon capture - Aemetis is an international renewable natural gas, renewable fuels, and byproducts company focused on **negative carbon intensity products**[159](index=159&type=chunk) - Operates a **65 million gallon/year ethanol plant** in Keyes, California, and commissioned an ethanol membrane dehydration system in Q4 2021[159](index=159&type=chunk)[160](index=160&type=chunk) - Expanding a California **biogas digester network** and pipeline system to convert dairy waste gas into Renewable Natural Gas (RNG)[159](index=159&type=chunk)[161](index=161&type=chunk) - Developing **'Carbon Zero' biofuels production plants** to produce renewable jet and diesel fuel[162](index=162&type=chunk) - Established Aemetis Carbon Capture, Inc in April 2021 to build **carbon sequestration projects**[163](index=163&type=chunk) - Operates a **50 million gallon/year Kakinada Plant** in India, producing distilled biodiesel and refined glycerin[165](index=165&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Revenues increased, but higher feedstock costs led to significant gross and net losses for the reported periods [Three Months Ended September 30, 2021, Compared to Three Months Ended September 30, 2020](index=29&type=section&id=Three%20Months%20Ended%20September%2030,%202021,%20Compared%20to%20Three%20Months%20Ended%20September%2030,%202020) Revenues grew 22% driven by North America, but a 99% drop in India sales led to a significant gross loss Revenues (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :----- | :----- | :-------- | :--------- | | North America | $49,832 | $33,131 | $16,701 | 50% | | India | $63 | $7,792 | $(7,729) | -99% | | **Total** | **$49,895** | **$40,923** | **$8,972** | **22%** | - North America ethanol average price **increased 79% to $2.84/gallon**, while sales volume decreased to 13.8 million gallons[172](index=172&type=chunk) - North America WDG average price **increased 26% to $96/ton**[172](index=172&type=chunk) - India biodiesel and refined glycerin sales volumes **decreased to zero** due to COVID-19 and high feedstock costs[173](index=173&type=chunk) Cost of Goods Sold (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :----- | :----- | :-------- | :--------- | | North America | $54,664 | $33,534 | $21,130 | 63% | | India | $16 | $6,618 | $(6,602) | -100% | | **Total** | **$54,680** | **$40,152** | **$14,528** | **36%** | - North America average cost of feedstock per bushel **increased to $7.99 from $4.92**[175](index=175&type=chunk) Gross Profit (Loss) (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :------- | :---- | :-------- | :--------- | | North America | $(4,832) | $(403) | $(4,429) | -1099% | | India | $47 | $1,174 | $(1,127) | -96% | | **Total** | **$(4,785)** | **$771** | **$(5,556)** | **-721%** | Selling, General and Administrative Expenses (SG&A) (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :----- | :----- | :-------- | :--------- | | North America | $4,637 | $4,340 | $297 | 7% | | India | $450 | $223 | $227 | 102% | | **Total** | **$5,087** | **$4,563** | **$524** | **11%** | Other Income and Expense (in thousands) | Category | 2021 | 2020 | Inc/dec | % change | | :----------------------------------------- | :----- | :----- | :------ | :--------- | | Interest rate expense (North America) | $4,408 | $5,787 | $(1,379) | -24% | | Debt related fees and amortization expense | $1,140 | $674 | $466 | 69% | | Accretion and other expenses of Series A preferred units | $2,185 | $1,765 | $420 | 24% | [Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020](index=31&type=section&id=Nine%20Months%20Ended%20September%2030,%202021%20Compared%20to%20Nine%20Months%20Ended%20September%2030,%202020) Revenues grew 15% from North America, but a 95% drop in India sales resulted in a significant gross loss Revenues (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :------- | :------- | :-------- | :--------- | | North America | $146,890 | $114,226 | $32,664 | 29% | | India | $696 | $14,001 | $(13,305) | -95% | | **Total** | **$147,586** | **$128,227** | **$19,359** | **15%** | - North America ethanol sales volume **increased to 44.6 million gallons** from 40.5 million gallons, and average price increased to $2.49/gallon[188](index=188&type=chunk) - India biodiesel sales volume **decreased 97%** to 455 metric tons due to COVID-19 and unfavorable feedstock pricing[189](index=189&type=chunk) Cost of Goods Sold (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :------- | :------- | :-------- | :--------- | | North America | $151,614 | $101,231 | $50,383 | 50% | | India | $719 | $12,599 | $(11,880) | -94% | | **Total** | **$152,333** | **$113,830** | **$38,503** | **34%** | - North America average corn cost per bushel **increased 56% to $7.62**[190](index=190&type=chunk) Gross Profit (Loss) (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :------- | :------- | :-------- | :--------- | | North America | $(4,724) | $12,995 | $(17,719) | -136% | | India | $(23) | $1,402 | $(1,425) | -102% | | **Total** | **$(4,747)** | **$14,397** | **$(19,144)** | **-133%** | Selling, General and Administrative Expenses (SG&A) (in thousands) | Segment | 2021 | 2020 | Inc/(dec) | % change | | :---------------- | :------- | :------- | :-------- | :--------- | | North America | $15,016 | $11,206 | $3,810 | 34% | | India | $1,206 | $1,342 | $(136) | -10% | | **Total** | **$16,222** | **$12,548** | **$3,674** | **29%** | Other Income and Expense (in thousands) | Category | 2021 | 2020 | Inc/dec | % change | | :----------------------------------------- | :------- | :------- | :-------- | :--------- | | Interest rate expense (North America) | $14,902 | $16,912 | $(2,010) | -12% | | Debt related fees and amortization expense | $3,045 | $2,578 | $467 | 18% | | Accretion and other expenses of Series A preferred units | $7,928 | $4,087 | $3,841 | 94% | | Gain on debt extinguishment | $(1,134) | $- | $(1,134) | -100% | | **Total** | **$25,224** | **$24,014** | **$1,210** | **5%** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Cash increased due to financing activities, but substantial doubt remains about the company's going concern status Cash and Cash Equivalents (in thousands) | Metric | As of September 30, 2021 | As of December 31, 2020 | | :-------------------------- | :----------------------- | :---------------------- | | Cash and cash equivalents | $6,389 | $592 | | Current assets | $17,013 | $8,683 | | Current and long term liabilities (excluding all debt) | $94,094 | $80,264 | | Total debt | $184,978 | $229,619 | - Current ratio at September 30, 2021, was **0.23**, up from 0.08 at December 31, 2020[202](index=202&type=chunk) - Principal sources of liquidity include **cash from equity sales, operations, and borrowings** under debt facilities[203](index=203&type=chunk) - **Substantial doubt** about the company's ability to continue as a going concern due to negative capital, negative operating results, and reliance on its senior secured lender[206](index=206&type=chunk) - Third Eye Capital Notes have an outstanding balance of **$117 million**, with a maturity date extendable to April 1, 2023[210](index=210&type=chunk) - As of the report date, the company has **$40.0 million additional borrowing capacity** under the Reserve Liquidity Notes[210](index=210&type=chunk) Net Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | | :---------------------------------------- | :----------------------------- | | Net cash used in operating activities | $(20,000) | | Net cash used in investing activities | $(17,500) | | Net cash provided by financing activities | $43,300 | | Proceeds from issuance of common stock in equity offering | $94,200 | | Repayments of borrowings | $(53,500) | [Critical Accounting Policies](index=36&type=section&id=Critical%20Accounting%20Policies) Key accounting policies involving significant estimates include revenue recognition and asset recoverability - Critical accounting policies include **revenue recognition, recoverability of long-lived assets, and debt modification and extinguishment accounting**[217](index=217&type=chunk) [Recently Issued Accounting Pronouncements](index=36&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) No new accounting pronouncements were reported beyond those disclosed in the 2020 Annual Report - No new accounting pronouncements reported beyond those in the **2020 Annual Report on Form 10-K**[218](index=218&type=chunk) [Off Balance Sheet Arrangements](index=36&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company had no off-balance sheet arrangements during the three months ended September 30, 2021 - **No off-balance sheet arrangements** during the three months ended September 30, 2021[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for the current report - **Not Applicable**[218](index=218&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed not effective due to an identified material weakness - Disclosure controls and procedures, and related internal controls over financial reporting, were **not effective** as of September 30, 2021[219](index=219&type=chunk) - A **material weakness** over financial reporting was identified, and remediation plans are ongoing[219](index=219&type=chunk)[221](index=221&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II--OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is appealing a $6.2 million legal judgment related to a terminated merger agreement - A **$6.2 million legal judgment** was awarded against the company in a lawsuit with EdenIQ, Inc, which the company plans to appeal[222](index=222&type=chunk) - The lawsuit stems from EdenIQ's **wrongful termination of a merger agreement** and alleged fraudulent inducement[222](index=222&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors.) No changes in risk factors were reported since the company's 2020 Annual Report on Form 10-K - **No change in risk factors** since the Annual Report on Form 10-K for the year ended December 31, 2020[223](index=223&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities or use of proceeds were reported during the period - **None**[223](index=223&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) No unresolved defaults on senior securities occurred during the third quarter of 2021 - **No unresolved defaults** on senior securities occurred during the three months ended September 30, 2021[223](index=223&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) There were no mine safety disclosures to report for the period - **None**[223](index=223&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information.) No other information was reported in this section - **None**[224](index=224&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including required certifications - Includes **Certifications** pursuant to Rule 13a-14(a) or 15d-14(a) and 18 U.S.C Section 1350[224](index=224&type=chunk) [Signatures](index=38&type=section&id=Signatures) The report was duly signed by the company's Chief Executive Officer and Chief Financial Officer - Signed by **Eric A McAfee (CEO) and Todd Waltz (EVP & CFO)** on November 12, 2021[224](index=224&type=chunk)