Core Viewpoint - Brooge Energy Ltd is currently facing compliance issues with Nasdaq due to the failure to file its Form 20-F for the year ended December 31, 2023, but has a timeframe to rectify this situation [1][2][3] Company Overview - Brooge Energy Ltd is a Cayman Islands-based infrastructure provider engaged in Clean Petroleum Products, Biofuels, and Crude Oil storage services [1][4] - The company operates through its subsidiary, Brooge Petroleum and Gas Investment Company FZE (BPGIC), located strategically at the Port of Fujairah in the UAE [1][4] - BPGIC differentiates itself by offering fast order processing, excellent customer service, and high accuracy blending services with low product losses [4] Compliance and Regulatory Issues - The company received a notice from Nasdaq indicating non-compliance with Listing Rule 5250(c)(1) due to the late filing of its Form 20-F [1][2] - Brooge Energy has 60 calendar days to submit a plan to regain compliance, with a potential extension of up to 180 days if the plan is accepted [2] - The delay in filing is attributed to a board restructure and involvement in a proposed acquisition process [3] Proposed Acquisition - Brooge Energy is evaluating a proposal from a company listed on the Dubai Financial Market to acquire all its businesses and assets [3] - If the acquisition is successful, the closing is estimated to occur in the 3rd or 4th quarter of 2024 [3]

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Financial Data and Key Metrics Changes - Revenue for the first six months ending June 30, 2023, totaled $62.9 million, an increase of 122% compared to $28.4 million for the same period in 2022 [10] - Gross profit for the first half of 2023 was $51.8 million, a 191% increase from $17.8 million in the first half of 2022, with a gross profit margin improvement to 82% from 63% [28] - Net profit for the first six months of 2023 was $37.4 million or $0.42 per share, compared to $3.9 million or $0.04 per share for the same period in 2022 [29] - Total equity attributable to shareholders was $142.5 million as of June 30, 2023, up from $105.1 million as of December 31, 2022 [11] Business Line Data and Key Metrics Changes - Revenue primarily consists of fixed storage and handling fees, with variable fees for ancillary services contributing to a lesser extent [10] - The company provided storage capacity of 1,001,388 cubic meters to various oil traders and producers [10] Market Data and Key Metrics Changes - The company is strategically located in a high-demand oil storage geography, which has been key to its growth and profitability [12] Company Strategy and Development Direction - The company plans to expand its storage facilities at the Fujairah terminal, aiming to become one of the largest independent oil storage facilities in the region [13] - The company is developing a Green Ammonia plant to contribute to global decarbonization targets, recognizing the potential of Green Ammonia as a clean carrier of Green Hydrogen [15] - A partnership with Siemens Energy is underway to build a photovoltaic solar farm to supply renewable energy for the Green Ammonia project [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the proposed acquisition by Gulf Navigation Holdings PJSC, which aims to enhance growth and provide integrated logistical services [18] - The proposed acquisition is still in the early stages, with due diligence being conducted [37] Other Important Information - The Board of Directors is searching for a permanent CEO while an office of the CEO has been established to temporarily assume the role [31] - The Green Ammonia project is expected to have a production capacity of up to 1,950 tons per day, with a focus on securing off-take agreements in Europe and Asia [34][35] Q&A Session Summary Question: How will public warrant holders be treated if the Gulf Navigation deal moves forward? - The treatment of public warrant holders will be discussed with advisors before and if a transaction occurs, as the proposal is still in the initial stages of evaluation [39]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 95% year-over-year to USD 81.5 million in 2022, up from USD 41.8 million in 2021 [9][40] - Adjusted EBITDA increased to USD 54 million in 2022, compared to USD 32.4 million in 2021, representing 66% of revenue [58] - Net profit for 2022 was USD 27.2 million, a 6% increase from USD 25.7 million in 2021 [20] Business Line Data and Key Metrics Changes - The company provided storage capacity of 1,001,388 CBM and related services to 14 customers, generating USD 76 million in storage revenue and USD 1.9 million in ancillary revenue [9][17] - Gross profit increased to USD 56.8 million in 2022, up from USD 26.8 million in 2021, primarily due to the availability of Phase II storage [18] Market Data and Key Metrics Changes - The company regained compliance with NASDAQ listing standards, allowing it to continue trading on the exchange [8][13] - The company is in advanced stages of planning a green hydrogen and green ammonia project, aiming to produce up to 700,000 metric tonnes of green ammonia per annum [35] Company Strategy and Development Direction - The company is considering expanding its storage facilities with a feasibility study for Fujairah Phase III, which would position it as one of the largest independent oil storage facilities in the region [34] - The management is focused on innovation and strategic partnerships, including a partnership with Siemens Energy [11] Management Comments on Operating Environment and Future Outlook - Management provided revenue guidance for over USD 125 million for 2023, an increase of at least 53% year-over-year, based on near 100% contracted storage capacity [36] - The company is addressing material weaknesses in internal controls over financial reporting and has implemented a remediation plan [50] Other Important Information - The company ended 2022 with USD 8.3 million in cash and cash equivalents, total assets of USD 473.7 million, and total liabilities of USD 88.5 million [44] - General and administrative expenses increased by 111% to USD 15.7 million in 2022, primarily due to legal and professional fees [42] Q&A Session Summary Question: When shall we expect the 2022 company financials and restated financials to be filed? - The company filed the audited financials for 2021 and 2022 on April 26, 2023, including restatement of prior years [45] Question: How much debt is on your balance sheet at the end of 2022? - The company had USD 280 million in total current liabilities, with USD 171.7 million related to borrowings [60] Question: Have the bondholders called an event of default or exercised their put option? - The bondholders have not called an event of default, and the company is in constant communication with them to seek waivers on certain technical breaches [61] Question: What steps has the company taken to remedy identified material weaknesses? - The company has put in place a remediation plan to address the identified material weaknesses in internal controls [50] Question: What is the status of the proposed go-private transaction? - The company engaged Grant Thornton for a fairness opinion, and any transaction will require approval from the Board and key stakeholders [52]

Financial Obligations and Structure - BPGIC's obligations under the Bond Financing Facility are secured by substantially all of its assets, with a maximum issue size of $250 million and an initial issuance of $200 million [195]. - The Phase II Financing Facility amounts to $95.3 million, aimed at funding capital expenditures for Phase II [259]. - The company has established a liquidity account with a balance of $8,500,000 to cover interest payments due on the first interest payment date [223]. - The company’s capital structure includes shareholders' equity and debt, with borrowings under the Financing Facilities disclosed in the audited financial information for the period ended December 31, 2022 [1161]. - Total borrowings as of December 31, 2022, amounted to $173.52 million, a decrease from $182.78 million in 2021, representing a reduction of approximately 4.5% [1175]. - Lease liabilities increased to $90.87 million in 2022 from $89.78 million in 2021, reflecting a growth of about 1.2% [1175]. - Accounts payable and other payables (excluding accrued interest) rose to $93.90 million in 2022, up from $86.30 million in 2021, indicating an increase of approximately 8.5% [1175]. - Total due from related parties decreased slightly to $358.30 million in 2022 from $358.86 million in 2021, a decline of about 0.2% [1175]. Operational Risks and Challenges - The Company expects a large portion of future expenses related to the operation of the BPGIC Terminal to be relatively fixed, impacting profit margins if costs change [176]. - If the Company is unable to maintain its margins, it could have a material adverse effect on its business and financial condition [179]. - The Company relies on third-party vendors for its information technology systems, which could pose risks if these vendors cease operations or fail to meet the Company's needs [180]. - The Company’s business continuity procedures may not adequately prevent or mitigate network failures or disruptions [180]. - The Company’s profit margins could be affected by wage increases before it can amend its storage and ancillary service fees [177]. Compliance and Reporting - The Company has not filed required Annual Reports on Form 20-F for fiscal years ended December 31, 2021, and December 31, 2022, due to an ongoing investigation by the SEC [189]. - The Company is classified as an emerging growth company and may take advantage of reduced reporting requirements under the JOBS Act until it no longer meets the criteria [193]. - The company’s financial reporting is prepared in accordance with International Financial Reporting Standards [185]. Insurance and Risk Management - The company maintains a comprehensive insurance program covering property damage, business interruption, and various liabilities, ensuring adequate protection for its operations [1176]. - Premiums for the insurance program are allocated based on insured values and claims history, ensuring compliance with statutory requirements [1177]. Strategic Projects - The company is focused on developing a Green Hydrogen and Green Ammonia Project in Abu Dhabi, utilizing solar power for renewable fuel production [221]. - The Phase I of the BPGIC Terminal consists of 14 oil storage tanks with an aggregate capacity of approximately 0.399 million m [227]. Currency and Liquidity Management - The company does not anticipate changes in interest rates affecting its bonds, as they are not linked to fluctuating rates [1163]. - The company’s contracts, cash activities, and financing arrangements are primarily denominated in US dollars or AED, minimizing currency risk [1169]. - The company is managing liquidity risk through a recurring liquidity planning tool that considers projected financing requirements during the construction phase [1170]. Customer and Credit Risk - The company has a low credit risk exposure with only five customers as of December 31, 2022, and the expected credit loss on trade and other receivables is considered insignificant for 2022 [1166]. - The company has entered into multiple commercial storage agreements with various customers, enhancing its operational capacity [262].

Financial Performance and Costs - BPGIC's fixed costs for Phase I, Phase II, and the BIA Refinery are expected to be covered by fixed storage fees from BIA and other customers[235]. - The Company anticipates that future expenses related to the BPGIC Terminal will remain relatively fixed, impacting profit margins if costs increase[235]. - Wage increases in the oil storage industry may necessitate faster employee compensation adjustments, potentially reducing profit margins if not offset by customer utilization[236]. - BPGIC may only increase storage and ancillary service fees every two years, which could lead to lower margins if costs rise before a fee review[237]. - BPGIC III's fixed costs will also be covered by storage fees, with profit margins subject to change based on wage costs[240]. - The Company may need to utilize a combination of internally generated cash and external borrowings for future capital investments, which could be affected by market conditions[249]. - The Company has not committed to paying cash dividends, and future dividend payments will depend on financial conditions and distributions from BPGIC and BPGIC III[257]. - The issuance of additional Ordinary Shares may dilute existing shareholders' ownership and potentially depress the market price of the Company's shares[258]. - The Company is subject to higher costs due to public company compliance requirements, which may impact financial performance[255]. Corporate Governance and Structure - BPGIC Holdings holds approximately 85.6% of the Company's voting equity, giving it substantial influence over significant corporate actions[288]. - The Company is incorporated in the Cayman Islands, which may provide less protection to investors compared to U.S. law[263]. - The Company is classified as an "emerging growth company," allowing it to take advantage of reduced disclosure requirements[285]. - The Company's financial statements are prepared in accordance with IFRS and it is not required to file reconciliations to U.S. GAAP[275]. - The Company may temporarily lower the exercise price of its Warrants, which could lead to substantial dilution for investors[262]. - The Company's directors have discretion over the inspection of corporate records, potentially limiting shareholders' access to information[270]. - The Company is not required to comply with certain NASDAQ rules due to its status as a foreign private issuer[276]. - The Cayman Islands law may limit shareholders' ability to bring actions against the Company or its directors[268]. - The Company's Amended and Restated Memorandum and Articles of Association contain provisions that may inhibit takeovers, affecting the price investors might be willing to pay for its securities[272]. Economic and Market Conditions - The UAE has experienced slower economic growth in recent years, influenced by the global financial crisis and volatile oil prices, which remain below historic highs[290]. - The Company's operations are entirely located in the UAE, making it susceptible to political and economic conditions in the region, which could adversely affect its business and financial performance[290][292]. - The Company is subject to risks from geopolitical developments in the MENA region, which could escalate and materially impact its operations[297]. - The UAE's wealth is largely based on oil and gas, and fluctuations in energy prices significantly affect economic growth, which in turn impacts the Company's performance[290]. Risk Management and Compliance - The Company has insurance in place for certain catastrophic events, but there is no assurance that it will cover all costs associated with operational disruptions[301]. - Compliance with environmental regulations may require significant capital expenditures, which could adversely affect the Company's financial condition[307][309]. - Changes to indirect tax regulations in Fujairah could increase costs for the Company, potentially impacting its financial performance[311][313]. - The Company is subject to anti-corruption laws and economic sanctions, with potential violations leading to substantial penalties and reputational damage[310]. - The Company’s business could be adversely affected by climate change regulations, which may increase operating costs and reduce demand for its services[302][306]. - The Company’s operations could be disrupted by natural disasters or terrorist attacks, impacting logistics and overall business volumes[300][299]. - The Company faces risks from arbitrary governmental actions, which could adversely affect its business and financial condition[318]. - Legal and regulatory uncertainties in the UAE may impact the Company's ability to enforce contracts and defend against claims[319]. Financial Position and Liabilities - As of December 31, 2020, the Company had total liabilities of approximately USD 1.19 billion, including term loans and lease liabilities[1032]. - The Company had a low credit risk exposure with only five customers as of December 31, 2020, indicating a concentrated customer base[1034]. - The Company does not have significant currency risk as most contracts and financing are denominated in US dollars or AED, which is pegged to the US dollar[1035]. - The Company monitors liquidity risk using a planning tool that considers projected financing requirements and cash projections from operations[1036]. - The Company’s capital structure includes shareholders' equity and debt, with a focus on maintaining an optimal capital structure to reduce the cost of capital[1023]. - The Company’s exposure to interest rate risk is primarily related to variable rate loans, but current bonds are not linked to fluctuating rates[1026]. - Total liabilities increased to $377,082,706 from $336,793,530, reflecting a growth of approximately 12%[1038]. - Accounts payable, accruals, and other payables (excluding accrued interest) rose to $57,819,739, up from $8,093,107, indicating a significant increase[1038]. - The company maintains comprehensive insurance coverage, including property damage and business interruption, administered by Lockton Insurance Brokers[1040]. - The insurance program covers major risks such as terrorism, political violence, and environmental liability, ensuring robust protection for operations[1040]. - Premiums for the insurance program are allocated based on insured values and claims history, ensuring appropriate coverage for the company's business type[1041].

Revenue and Growth - Brooge Energy Limited's revenues for the year ended December 31, 2019, were entirely derived from the Initial Phase I End User and BIA, accounting for 100% of total revenues [425]. - The Group's monthly revenue is primarily driven by fixed storage fees charged to BIA and the Super Major, with a total committed capacity of 129,000 m as of April 2020 [421]. - The operational commencement of the BIA Refinery is anticipated in the Third Quarter of 2021, which is expected to generate additional revenue for the Group [428]. - The Group's revenues are expected to diversify into three types of fees once the BIA Refinery is operational: refinery operations fees, fixed fees for storage, and variable fees for ancillary services [431]. - Revenue increased from $35.8 million in 2018 to $44.1 million in 2019, primarily due to operating Phase I at full storage capacity for the entire year [478]. - Ancillary services fee revenue increased from $15.1 million in 2018 to $20.1 million in 2019, representing a growth of 33% [479]. - Storage fee revenue increased from $20.7 million in 2018 to $23.9 million in 2019, reflecting the full operational capacity of Phase I [479]. Financial Performance - The Group incurred cash expenses of $3.2 million related to its Nasdaq listing and recorded a non-cash expense of $98.6 million due to the business combination, significantly impacting profitability for the year [432]. - The company experienced a net loss of $76.6 million in 2019, a significant decline from a net profit of $16.1 million in 2018, mainly due to a non-cash expense of $98.6 million related to a business combination [473]. - Adjusted EBITDA improved from $29.9 million (83.48% of revenue) in 2018 to $37.1 million (84.1% of revenue) in 2019, after adding back one-time listing expenses [517]. - The company reported a net loss of $76.6 million for the year ended December 31, 2019, primarily due to a non-cash listing expense of $98.6 million related to the business combination [497][514]. - General and administrative expenses increased by 28.6% from $2.0 million in 2018 to $2.6 million in 2019, with employee costs rising by 24.9% to $1.5 million [502]. Costs and Expenses - The Group's cost structure is primarily composed of employee costs and depreciation, with direct costs remaining stable across activity levels at the terminal [431]. - Direct costs rose by 6.2% from $9.6 million in 2018 to $10.2 million in 2019, primarily due to increased operational activity [489]. - Employee costs and related benefits increased by 9.5% from $2.8 million in 2018 to $3.1 million in 2019, driven by a higher number of staff [490]. - Listing expenses incurred in 2019 amounted to $101.8 million, impacting the financial results for that year [471]. - The company incurred total listing expenses of $101.8 million, which included $3.2 million in actual expenses related to the Nasdaq listing [514][517]. Capital Expenditures and Financing - Capital expenditures in 2019 amounted to $87.3 million, primarily for the construction of Phase II, with expectations of approximately $79.3 million in additional capital expenditures in 2020 [547][548]. - The Company obtained a Phase II Financing Facility amounting to $95.3 million (AED 350.0 million) in 2018 to partially finance the construction of Phase II, with an interest rate of 3 month EIBOR + 3% margin [587]. - The company anticipates funding future capital requirements through cash generated from operations and potential additional borrowings [523]. Debt and Financial Distress - As of December 31, 2019, the Group's current liabilities exceeded its current assets by $57 million, indicating financial distress [580]. - The company was not in compliance with its debt covenants, including the debt service coverage ratio, during the year ended December 31, 2019, which could have led to immediate repayment demands from lenders [550]. - The company had a total loan amount of $88.7 million as of December 31, 2019, with various term loans due in 2020 [549]. - BPGIC failed to make a payment of principal and interest totaling $6.6 million due on February 28, 2020, and $2.2 million due on April 30, 2020, constituting events of default [563]. Future Outlook and Expansion - The Group's future revenue growth will depend on securing additional land and developing or acquiring new facilities, which are capital-intensive endeavors [435]. - BPGIC is pursuing a major expansion (Phase III) with a new land lease of approximately 450,000 m and plans for storage capacity of up to 3.5 million m and refinery production of up to 180,000 bpd [437]. - The Phase II facility is expected to become operational in the Fourth Quarter of 2020, with the Phase II End User utilizing the facility as a sub-lessee of BIA [423]. - The Company expects to generate significant operating cash flows from Phase 2 operations, scheduled to start in Q4 2020 [583]. Management and Governance - The Group's management has expressed significant doubt about its ability to continue as a going concern due to uncertainties in cash flow timing and quantum [584]. - The Business Combination Agreement was consummated on December 20, 2019, resulting in the merger of Twelve Seas and Brooge Energy Limited, with BPGIC becoming a wholly-owned subsidiary [448].