☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Commission file number 001-40282 FORM 10-Q (Mark One) LanzaTech Global, Inc. (Exact name of registrant as specified in its charter) Securities registered pursuant to Section 12(b) of the Act: | Title of each cl ...

[Item 1.01 Entry into a Material Definitive Agreement](index=2&type=section&id=Item%201.01%20Entry%20into%20a%20Material%20Definitive%20Agreement) Details LanzaTech Global, Inc.'s entry into At Market Issuance Sales Agreements (ATM Agreements) with B. Riley Securities for common stock offerings [At Market Issuance Sales Agreement (ATM Agreements)](index=2&type=section&id=At%20Market%20Issuance%20Sales%20Agreement%20(ATM%20Agreements)) LanzaTech Global, Inc. entered into At Market Issuance Sales Agreements (ATM Agreements) with B. Riley Securities on May 9, 2024, enabling the company to offer and sell up to $100 million of its common stock through 'at the market offerings' - On May 9, 2024, LanzaTech Global, Inc. entered into an At Market Issuance Sales Agreement and a Terms Agreement (collectively, 'ATM Agreements') with B. Riley Securities, Inc.[4](index=4&type=chunk) - The ATM Agreements allow the Company to offer and sell shares of its common stock with an aggregate offering price of up to **$100 million**[4](index=4&type=chunk)[5](index=5&type=chunk) - Sales can be made as 'at the market offerings' with B. Riley Securities acting as agent or principal, with specific daily, weekly, and twelve-month principal purchase limits for B. Riley Securities[5](index=5&type=chunk) B. Riley Securities Commission Structure | Transaction Type | Commission Rate | | :--------------- | :-------------- | | Agency transactions | Up to 3.0% of gross sales price | | Principal transactions | 5.0% of purchase price | - The issuance and sale of shares are subject to the effectiveness of the Company's registration statement on Form S-3, filed on May 9, 2024[7](index=7&type=chunk) [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) Reports LanzaTech Global, Inc.'s announcement of Q1 2024 financial results and related stakeholder communications [Q1 2024 Financial Results Announcement](index=2&type=section&id=Q1%202024%20Financial%20Results%20Announcement) LanzaTech Global, Inc. announced its financial results for the quarter ended March 31, 2024, via a press release and will host a conference call, providing an earnings presentation to stakeholders - LanzaTech Global, Inc. issued a press release on May 9, 2024, announcing financial results for the quarter ended March 31, 2024[10](index=10&type=chunk) - A conference call was scheduled for May 9, 2024, to discuss the Q1 2024 financial results, accompanied by an earnings presentation[11](index=11&type=chunk) - The press release (Exhibit 99.1) and earnings presentation (Exhibit 99.2) are furnished with the Form 8-K and are not deemed 'filed' for Section 18 of the Exchange Act[11](index=11&type=chunk)[12](index=12&type=chunk) [Forward-looking Statements](index=3&type=section&id=Forward-looking%20Statements) Provides a cautionary disclaimer regarding forward-looking statements, outlining inherent risks and uncertainties [Forward-looking Statements Disclaimer](index=3&type=section&id=Forward-looking%20Statements%20Disclaimer) This section provides a standard cautionary statement regarding forward-looking statements made in the report, highlighting inherent risks, uncertainties, and assumptions that could cause actual results to differ materially from projections - Forward-looking statements are based on management's beliefs and assumptions but are not guarantees of future performance and involve known and unknown risks and uncertainties[13](index=13&type=chunk) - Risks and uncertainties are detailed in LanzaTech's Annual Report on Form 10-K for 2023 and Quarterly Report on Form 10-Q for Q1 2024[13](index=13&type=chunk) - LanzaTech undertakes no obligation to update or revise any forward-looking statements, except as required by law[13](index=13&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=3&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) Lists all financial statements and exhibits furnished as part of the Form 8-K filing [Exhibits List](index=3&type=section&id=Exhibits%20List) This section lists the documents furnished as exhibits to the Form 8-K, which include the Q1 2024 earnings press release, the earnings presentation, and the interactive data file Exhibits to Form 8-K | Exhibit Number | Description | | :------------- | :---------- | | 99.1 | LanzaTech 1Q24 Earnings Press Release, dated May 9, 2024 | | 99.2 | LanzaTech 1Q24 Earnings Presentation, dated May 9, 2024 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [FORM 8-K Filing Details and Signatures](index=1&type=section&id=FORM%208-K%20Filing%20Details%20and%20Signatures) Outlines the registrant's identification details and formalizes the Form 8-K filing with required signatures [Registrant and Filing Details](index=1&type=section&id=Registrant%20and%20Filing%20Details) Provides the basic identification details of LanzaTech Global, Inc. as the registrant for this Form 8-K filing, including its jurisdiction, SEC file number, and registered securities - Registrant: LanzaTech Global, Inc., a Delaware corporation[1](index=1&type=chunk)[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbols | Name of each exchange on which registered | | :------------------ | :-------------- | :---------------------------------------- | | Common Stock, par value $0.0001 per share | LNZA | The Nasdaq Stock Market LLC | | Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 | LNZAW | The Nasdaq Stock Market LLC | [Signatures](index=4&type=section&id=Signatures) This section formally concludes the Form 8-K filing with the required signatures, certifying that the registrant has duly caused the report to be signed on its behalf - The report was signed on May 9, 2024, by Joseph Blasko, General Counsel and Corporate Secretary of LanzaTech Global, Inc.[16](index=16&type=chunk)[17](index=17&type=chunk)

CHICAGO, April 18, 2024 (GLOBE NEWSWIRE) -- LanzaTech Global, Inc. (Nasdaq: LNZA) (“LanzaTech” or the “Company”), the carbon recycling company transforming waste carbon into sustainable raw materials, today announced that it will issue its first quarter 2024 financial results before the market opens on Thursday, May 9, 2024. A conference call will be held that same day at 8:30 A.M. ET to review the Company's financial results, discuss recent events and conduct a question-and-answer session. The conference c ...

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) LanzaTech is a carbon refining company, transforming waste carbon into sustainable fuels, fabrics, and packaging - LanzaTech is a nature-based carbon refining company that transforms waste carbon into chemical building blocks for sustainable fuels, fabrics, and packaging, aiming to reduce reliance on virgin fossil fuels and create a circular carbon economy[21](index=21&type=chunk) - The company's proprietary gas fermentation technology uses microbes to convert waste carbon (industrial gases, biomass, municipal solid waste) into ethanol and other chemicals, with six commercial plants operating globally (China, India, Belgium) and demonstration facilities in Canada and Japan[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - LanzaTech employs a dual business model: a capital-light licensing model (generating licensing, royalty, and service fees from customer-owned plants) and a co-development model (minority investment in select projects to accelerate new feedstock/product integration and capture additional value)[29](index=29&type=chunk) - The technology has produced over **75 million gallons** of fuel-grade ethanol, mitigating over **380,000 tons of CO2** since May 2018, and is also developing biocatalysts for acetone, isopropanol, and precursors for SAF, sustainable diesel, ethylene, and PET[25](index=25&type=chunk) - Key competitive advantages include a proven, differentiated, adaptable proprietary technology platform, low-carbon enabling technology, validation through partnerships with industry leaders, third-party sustainability certifications (RSB, ISCC PLUS, CORSIA), strong intellectual property (**1,473 granted patents, 634 pending applications**), and extensive industry experience[44](index=44&type=chunk)[45](index=45&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) - The global addressable market for SAF from recycled carbon is estimated at **$180 billion**, with additional markets in single-cell protein (**$16 billion**), MEG (**$28 billion**), and PET packaging (**$44 billion**)[37](index=37&type=chunk)[38](index=38&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) LanzaTech faces risks from continued operating losses, partner dependency, market volatility, intense competition, and financing needs - LanzaTech has incurred net losses of **$134.1 million** in 2023 and **$76.4 million** in 2022, with an accumulated deficit of **$831.9 million** as of December 31, 2023, and anticipates continued losses until operations scale sufficiently[199](index=199&type=chunk)[403](index=403&type=chunk) - The company's growth strategy heavily relies on industry partners for plant operations, technology deployment, and commercialization; failure to maintain or establish these relationships could prevent profitability[202](index=202&type=chunk) - Fluctuations in prices of waste-based feedstocks and fossil fuels, as well as feedstock availability, can significantly impact cost structure, gross margins, and competitiveness[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[223](index=223&type=chunk) - LanzaTech operates in an industry with rapidly advancing technologies and intense competition, facing indirect competition from companies with greater resources and brand recognition, which could render its technology obsolete[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - The company may require substantial additional financing to fund operations and commercialize its process technologies, and there is no guarantee such financing will be available on favorable terms[232](index=232&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - LanzaTech holds a minority (approximately **23%**) stake in LanzaJet and has granted LanzaJet an exclusive license for certain SAF-related intellectual property, limiting LanzaTech's direct participation in new SAF production opportunities[248](index=248&type=chunk)[249](index=249&type=chunk) - The company's operations in China are subject to political and economic uncertainties, including potential changes in government policies, trade restrictions, and regulatory interventions, which could adversely affect revenue and business operations[311](index=311&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[319](index=319&type=chunk)[322](index=322&type=chunk) - Material weaknesses in internal control over financial reporting were identified in 2023, particularly concerning complex transactions and revenue recognition, which could adversely affect financial reporting accuracy and timeliness, and potentially lead to sanctions or litigation[369](index=369&type=chunk)[370](index=370&type=chunk)[373](index=373&type=chunk)[766](index=766&type=chunk)[768](index=768&type=chunk) [Item 1B. Unresolved Staff Comments](index=69&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[383](index=383&type=chunk) [Item 1C. Cybersecurity](index=70&type=section&id=Item%201C.%20Cybersecurity) LanzaTech has implemented a cybersecurity program aligned with NIST CSF, integrated into its enterprise risk management framework - LanzaTech has a cybersecurity program aligned with NIST CSF, integrating risk management into its enterprise framework, and employing administrative, technical, and physical safeguards[384](index=384&type=chunk) - The company engages external consultants for oversight and conducts periodic risk assessments, including annual third-party penetration tests, and assesses critical third-party information security capabilities[385](index=385&type=chunk) - The Audit Committee of the Board oversees cybersecurity, receiving quarterly updates from the CISO, who has over **30 years of experience** and CISSP certification[386](index=386&type=chunk)[387](index=387&type=chunk) - No cybersecurity incidents with a material impact on the business or financial statements have been identified to date[388](index=388&type=chunk) [Item 2. Properties](index=71&type=section&id=Item%202.%20Properties) LanzaTech's global headquarters and R&D center are in Skokie, Illinois, with a biorefinery in Soperton, Georgia, for scale-up and production - Global headquarters and R&D center are in Skokie, Illinois, with laboratories for synthetic biology, product synthesis, and analytics[389](index=389&type=chunk) - The LanzaTech Freedom Pines Biorefinery in Soperton, Georgia, is used for scaling up and production, including multiple >100L gas fermentation systems and ATJ process scale-up[389](index=389&type=chunk)[194](index=194&type=chunk) [Item 3. Legal Proceedings](index=71&type=section&id=Item%203.%20Legal%20Proceedings) LanzaTech may be involved in legal proceedings, but no pending matters are expected to materially impact its financial position - The company may be involved in legal proceedings and claims in the normal course of business[390](index=390&type=chunk) - No pending legal matters are expected to have a material adverse impact on financial position, results of operations, or cash flows[390](index=390&type=chunk) [Item 4. Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) LanzaTech has no disclosures related to mine safety - No mine safety disclosures[391](index=391&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=73&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) LanzaTech's common stock and warrants are listed on Nasdaq, with no cash dividends paid, and future earnings retained for operations - Common stock (LNZA) and warrants (LNZAW) are listed on the Nasdaq Capital Market[393](index=393&type=chunk) Holders of Record (December 31, 2023) | Class | Holders of Record | | :------------------ | :---------------- | | Common Stock | 105 | | Warrants | 2 | - The company has never declared or paid cash dividends and anticipates retaining all future earnings for business operations and expansion[395](index=395&type=chunk) [Item 6. [Reserved]](index=73&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=74&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) LanzaTech's net loss increased in 2023 despite revenue growth, driven by higher operating expenses and the impact of the Business Combination - LanzaTech is a nature-based carbon refining company focused on converting waste carbon into sustainable fuels and chemicals, primarily ethanol, through a licensing business model[401](index=401&type=chunk)[402](index=402&type=chunk) Key Financial Metrics (2023 vs. 2022) (in thousands) | Metric | 2023 | 2022 | Change | % Change | | :-------------------- | :-------- | :-------- | :-------- | :------- | | Revenue | $62,631 | $37,343 | $25,288 | 68% | | Net Loss | $(134,098) | $(76,356) | $(57,742) | 76% | | One-Time Revenue | $57,754 | $33,764 | $23,990 | 71% | | Recurring Revenue | $4,877 | $3,579 | $1,298 | 36% | | Cost of Revenues | $(44,979) | $(28,287) | $(16,692) | 59% | | SG&A | $(50,438) | $(26,804) | $(23,634) | 88% | | Adjusted EBITDA | $(80,144) | $(69,220) | $(10,924) | 16% | Capacity (in thousands of tonnes per annum) | Metric | Value | | :--------------------- | :---- | | Capacity as of Dec 31, 2022 | 150 | | Additions | 94 | | Capacity as of Dec 31, 2023 | 244 | - Revenue increased by **$25.3 million (68%)** in 2023, primarily due to a **$16.6 million** increase in engineering and other services from existing customers, **$3.6 million** from new customers, **$2.4 million** from joint development agreements, and **$1.3 million** from licensing fees[434](index=434&type=chunk) - R&D expense increased by **$15.0 million (28%)** in 2023, mainly due to higher stock compensation (**$4.1 million** incremental, **$1.2 million** RSA vesting), increased personnel and contractor expenses (**$4.1 million**), and consumables (**$2.8 million**)[436](index=436&type=chunk) - SG&A expense increased by **$23.6 million (88%)** in 2023, driven by one-time professional services fees related to the Business Combination (**$13.0 million**), RSA vesting and employee transition arrangements (**$3.9 million**), and incremental stock compensation (**$5.3 million**)[437](index=437&type=chunk) - Net cash used in operating activities was **$(97.3) million** in 2023, primarily due to the net loss, partially offset by non-cash charges like fair value changes in financial instruments and share-based compensation[457](index=457&type=chunk) - Net cash provided by financing activities was **$148.2 million** in 2023, driven by **$213.4 million** from the Business Combination and PIPE financing, partially offset by a **$60.1 million** Forward Purchase Agreement prepayment and **$7.7 million** in equity instrument repurchases[461](index=461&type=chunk) - LanzaTech became a large accelerated filer and lost its emerging growth company status as of December 31, 2023, requiring non-scaled larger company disclosures starting Q1 2024[492](index=492&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=90&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) LanzaTech is exposed to market risks including interest rate, foreign currency, and commodity pricing, with credit risk concentrated among key customers - Primary market risk exposure is interest rate sensitivity, managed by investing in short-term money market funds, U.S. Treasury obligations, and high-quality corporate bonds[500](index=500&type=chunk) - Subject to foreign currency exchange risk from translation of foreign subsidiaries' financial statements and transactions with foreign vendors[501](index=501&type=chunk) - CarbonSmart products are not directly impacted by commodity prices due to unique feedstock (recycled carbon emissions), but demand is indirectly influenced by fossil and first-generation biofuel prices[502](index=502&type=chunk)[503](index=503&type=chunk) - Credit risk exists due to revenue concentration with a limited number of significant customers[504](index=504&type=chunk) - Equity price risk affects the ability to raise additional funding through common stock sales, given past and potential future volatility[505](index=505&type=chunk) - Inflation increases costs of labor, laboratory supplies, consumables, and equipment, materially affecting cost of revenues[506](index=506&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=90&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents LanzaTech's consolidated financial statements and detailed notes for 2023 and 2022, covering key accounting policies and financial instruments [Report of Independent Registered Public Accounting Firm](index=93&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on financial statements but an adverse opinion on internal control over financial reporting due to material weaknesses - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for 2023 and 2022[511](index=511&type=chunk) - An adverse opinion was expressed on the company's internal control over financial reporting as of December 31, 2023, due to identified material weaknesses[512](index=512&type=chunk) - Critical audit matters included the identification and evaluation of relevant terms and conditions in new or amended customer contracts for revenue recognition (ASC 606)[516](index=516&type=chunk)[518](index=518&type=chunk) - Another critical audit matter was the accounting for the Forward Purchase Agreement (FPA) Put Option, requiring significant judgment on the appropriate accounting model[519](index=519&type=chunk)[520](index=520&type=chunk) - The valuation of the Brookfield SAFE Liability, specifically the assumption regarding conversion to equity, was also a critical audit matter due to its subjectivity and sensitivity[521](index=521&type=chunk)[525](index=525&type=chunk)[526](index=526&type=chunk) [Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting](index=96&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20on%20Internal%20Control%20over%20Financial%20Reporting) Deloitte & Touche LLP issued an adverse opinion on LanzaTech's internal control over financial reporting due to material weaknesses in complex transactions and revenue recognition - An adverse opinion was issued on LanzaTech's internal control over financial reporting as of December 31, 2023[530](index=530&type=chunk) - Material weaknesses were identified in controls related to accounting for complex transactions and estimates requiring significant judgment[536](index=536&type=chunk) - Controls over revenue recognition were not designed and operating at the appropriate level of precision to address complexity[536](index=536&type=chunk) [Consolidated Balance Sheets](index=98&type=section&id=Consolidated%20Balance%20Sheets) LanzaTech's total assets increased to **$241.62 million** in 2023, with shareholders' deficit improving significantly to a positive **$114.47 million** due to the Business Combination Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :------------------------- | :----------- | :----------- | | Total Assets | $241,624 | $176,856 | | Total Liabilities | $127,153 | $124,947 | | Total Shareholders' Equity (Deficit) | $114,471 | $(428,722) | | Cash and cash equivalents | $75,585 | $83,045 | | Held-to-maturity investment securities | $45,159 | - | | FPA Put Option liability | $37,523 | - | | Brookfield SAFE liability | $25,150 | $50,000 | [Consolidated Statements of Operations and Comprehensive Loss](index=99&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) LanzaTech reported a net loss of **$(134.1) million** in 2023, an increase from 2022, driven by higher operating expenses despite revenue growth Consolidated Statements of Operations Highlights (in thousands) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :------------------------- | :---------------------- | :---------------------- | | Total revenue | $62,631 | $37,343 | | Cost of revenues | $(44,979) | $(28,287) | | Research and development | $(68,142) | $(53,191) | | Selling, general and administrative expense | $(50,438) | $(26,804) | | Loss from operations | $(106,380) | $(75,599) | | Interest income, net | $4,572 | $8 | | Other expense, net | $(29,388) | $(2,757) | | Net loss | $(134,098) | $(76,356) | | Comprehensive loss | $(134,474) | $(77,805) | | Net loss per common share - basic and diluted | $(0.79) | $(12.37) | [Consolidated Statements of Changes in Redeemable Preferred Stock and Shareholders' Equity/ Deficit](index=100&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Preferred%20Stock%20and%20Shareholders%27%20Equity%2F%20Deficit) The Business Combination in 2023 transformed LanzaTech's equity, converting preferred stock to common and shifting total shareholders' equity to a positive **$114.5 million** Shareholders' Equity/Deficit Changes (in thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :------------------------- | :----------- | :----------- | | Redeemable Convertible Preferred Stock | $0 | $480,631 | | Common Stock Outstanding (shares) | 196,642,451 | 10,422,051 | | Additional Paid-in Capital | $943,960 | $24,782 | | Accumulated Deficit | $(831,872) | $(456,245) | | Total Shareholders' Equity (Deficit) | $114,471 | $(428,722) | - The Business Combination led to the conversion of all preferred stock into common stock, an in-kind dividend payment of **$241.5 million** (resulting in **24.15 million** additional common shares), and a **$237.0 million** increase in additional paid-in capital from recapitalization[543](index=543&type=chunk) [Consolidated Statements of Cash Flows](index=102&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) LanzaTech's 2023 cash flows show a net decrease of **$(7.4) million**, with significant operating outflows offset by financing inflows from the Business Combination Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(97,296) | $(84,703) | | Net cash used in investing activities | $(57,911) | $(10,686) | | Net cash provided by financing activities | $148,185 | $50,545 | | Net decrease in cash, cash equivalents, and restricted cash | $(7,426) | $(45,022) | | Cash, cash equivalents and restricted cash at end of period | $76,284 | $83,710 | - Operating cash outflow was primarily driven by a net loss of **$(134.1) million**, adjusted for non-cash items like fair value changes in FPA Put Option liability (**$44.3 million**) and share-based compensation (**$15.2 million**)[457](index=457&type=chunk)[458](index=458&type=chunk) - Investing cash outflow was mainly due to **$93.9 million** in debt security purchases and **$8.6 million** in property, plant, and equipment, partially offset by **$50 million** from debt security maturities[460](index=460&type=chunk) - Financing cash inflow included **$213.4 million** from the Business Combination and PIPE financing, offset by a **$60.1 million** FPA prepayment and **$7.7 million** in equity repurchases[461](index=461&type=chunk) [Notes to Consolidated Financial Statements](index=104&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail LanzaTech's accounting policies, the reverse recapitalization, revenue recognition, and valuation of complex financial instruments and investments - LanzaTech is a nature-based carbon refining company, headquartered in Skokie, Illinois, that transforms waste carbon into sustainable fuels and chemicals using proprietary gas fermentation technology[553](index=553&type=chunk) - The Business Combination on February 8, 2023, was accounted for as a reverse recapitalization, with Legacy LanzaTech deemed the accounting acquirer[559](index=559&type=chunk) - The company operates as a single reportable operating segment, with revenue disaggregated by contract type (licensing, engineering, joint development, CarbonSmart) and customer location (North America, EMEA, Asia, Australia)[572](index=572&type=chunk)[653](index=653&type=chunk) Disaggregated Revenue by Contract Type (in thousands) | Contract Type | 2023 | 2022 | | :----------------------------- | :------ | :------ | | Biorefining revenue | $42,645 | $21,221 | | Joint development and contract research revenue | $14,649 | $12,122 | | CarbonSmart product | $5,337 | $4,000 | | **Total Revenue** | **$62,631** | **$37,343** | Disaggregated Revenue by Customer Location (in thousands) | Region | 2023 | 2022 | | :--------------------- | :------ | :------ | | North America | $17,618 | $17,149 | | Europe, Middle East, Africa (EMEA) | $37,447 | $11,500 | | Asia | $3,570 | $5,752 | | Australia | $3,996 | $2,942 | | **Total Revenue** | **$62,631** | **$37,343** | - The Forward Purchase Agreement (FPA) involves a prepayment, an FPA Put Option liability (derivative measured at fair value), and a Fixed Maturity Consideration (debt-like instrument measured at fair value)[603](index=603&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk) - The Brookfield SAFE liability, initially **$50 million**, was valued at **$25.15 million** as of December 31, 2023, based on the expectation of conversion to equity through qualifying projects[675](index=675&type=chunk)[701](index=701&type=chunk) - The company holds equity method investments in LanzaJet (**23%** interest) and an equity security investment in SGLT (**9.31%** interest), with LanzaJet being a significant related party for revenue and loan commitments[660](index=660&type=chunk)[661](index=661&type=chunk)[666](index=666&type=chunk)[737](index=737&type=chunk)[742](index=742&type=chunk) - Total deferred tax assets were **$176.4 million** as of December 31, 2023, with a full valuation allowance of **$171.2 million**, indicating uncertainty in realizing future tax benefits[714](index=714&type=chunk)[716](index=716&type=chunk) - Share-based compensation includes time-based and market-based RSUs, and stock options, with significant expense recognized in 2023 due to the Business Combination and new grants[723](index=723&type=chunk)[724](index=724&type=chunk)[728](index=728&type=chunk)[729](index=729&type=chunk)[731](index=731&type=chunk)[733](index=733&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=140&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[756](index=756&type=chunk) [Item 9A. Controls and Procedures](index=140&type=section&id=Item%209A.%20Controls%20and%20Procedures) LanzaTech's disclosure controls were ineffective as of December 31, 2023, due to material weaknesses in complex transactions and revenue recognition - LanzaTech's disclosure controls and procedures were deemed ineffective as of December 31, 2023[760](index=760&type=chunk) - Material weaknesses in internal control over financial reporting were identified, specifically in accounting for complex transactions and estimates, and in revenue recognition[766](index=766&type=chunk)[767](index=767&type=chunk)[768](index=768&type=chunk) - The company is implementing remediation efforts, but the material weaknesses were not fully remediated as of December 31, 2023[769](index=769&type=chunk)[770](index=770&type=chunk) - Despite the material weaknesses, management concluded that the consolidated financial statements are fairly stated in all material respects[771](index=771&type=chunk) [Item 9B. Other Information](index=145&type=section&id=Item%209B.%20Other%20Information) Two executive officers adopted Rule 10b5-1 trading plans in late 2023 for common stock sales commencing in early 2024 - Freya Burton, Chief Sustainability Officer, adopted a Rule 10b5-1 trading plan on November 13, 2023, for the sale of up to **131,239 shares** of common stock, commencing February 29, 2024[774](index=774&type=chunk) - Robert Conrado, VP of Engineering Design and Development, adopted a Rule 10b5-1 trading plan on December 11, 2023, for the sale of up to **696,553 shares** of common stock, commencing March 11, 2024[775](index=775&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=143&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on LanzaTech's directors, executive officers, and corporate governance, including the Code of Conduct and Ethics, is incorporated by reference - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement[778](index=778&type=chunk) - LanzaTech has a Code of Conduct and Ethics applicable to all officers, directors, and employees, emphasizing business and ethical principles[779](index=779&type=chunk) [Item 11. Executive Compensation](index=143&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2024 definitive proxy statement - Executive compensation information is incorporated by reference from the 2024 Proxy Statement[780](index=780&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=143&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference, detailing shares to be issued upon exercise of options and shares available under equity compensation plans - Security ownership information is incorporated by reference from the 2024 Proxy Statement[781](index=781&type=chunk) Equity Compensation Plan Information (December 31, 2023) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | Weighted-average exercise price of all outstanding options, warrants, and rights | Number of securities available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | :------------------------------------------ | :--------------------------------------------------------------------------------------- | :------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 23,491,945 | $1.96 | 12,006,935 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **23,491,945** | **$1.96** | **12,006,935** | - The 2023 Long-Term Incentive Plan includes an 'evergreen' provision, automatically increasing shares reserved for issuance annually by **3%** of outstanding common stock[785](index=785&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=144&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement[786](index=786&type=chunk) [Item 14. Principal Accountant Fees and Services](index=144&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Deloitte & Touche LLP serves as LanzaTech's independent registered public accounting firm, with fee information incorporated by reference - Deloitte & Touche LLP (PCAOB ID No. 34) is the independent registered public accounting firm[787](index=787&type=chunk) - Information on principal accountant fees and services is incorporated by reference from the 2024 Proxy Statement[787](index=787&type=chunk) PART IV [Item 15. Exhibit and Financial Statement Schedules](index=148&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists financial statements and a comprehensive array of exhibits, many incorporated by reference, filed as part of the Annual Report on Form 10-K - The consolidated financial statements are included under Item 8 of this report[790](index=790&type=chunk) - All financial statement schedules are omitted as they are not applicable, not required, or the information is included in the consolidated financial statements or notes[791](index=791&type=chunk) - A comprehensive list of exhibits, including merger agreements, bylaws, warrant agreements, subscription agreements, SAFE agreements, license agreements, and employment agreements, is provided, with many incorporated by reference[792](index=792&type=chunk)[793](index=793&type=chunk)[794](index=794&type=chunk)[795](index=795&type=chunk)[796](index=796&type=chunk)[799](index=799&type=chunk) [Item 16. Form 10–K Summary](index=153&type=section&id=Item%2016.%20Form%2010%E2%80%93K%20Summary) This item is reserved and contains no information - No Form 10-K Summary is provided[800](index=800&type=chunk) SIGNATURES [SIGNATURES](index=151&type=section&id=SIGNATURES) The Annual Report on Form 10-K was duly signed by LanzaTech Global, Inc.'s CEO, CFO, and VP of Finance, along with other directors, on February 29, 2024 - The Annual Report was signed by Jennifer Holmgren, Ph.D. (CEO and Director), Geoff Trukenbrod (CFO), and George Dimitrov (VP, Finance) on February 29, 2024[803](index=803&type=chunk)

LanzaTech Global, Inc. (NASDAQ:LNZA) Q4 2023 Earnings Conference Call February 28, 2024 8:30 AM ET Company Participants Omar El-Sharkawy - VP, Corporate Development Jennifer Holmgren - CEO Geoff Trukenbrod - CFO Conference Call Participants Leo Mariani - ROTH MKM Pavel Molchanov - Raymond James Ryan Pfingst - B. Riley FBR Jeffrey Campbell - Seaboard Partners Operator Good day, and welcome to the LanzaTech Global, Inc. Fourth Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mo ...

Nasdaq: LNZA 4Q AND FY 2023 EARNINGS PRESENTATION February 28, 2024 SAFE HARBOR STATEMENT This presentation includes data obtained from third-party studies and internal company surveys prepared for other purposes. The company has not independently verified the data obtained from these sources. Forward-looking information obtained from these sources is subject to the same qualification and the additional uncertainties regarding the other forward-looking statements in this presentation. | --- | --- | --- | |- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 28, 2024 ☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2( ...

LanzaTech Global, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-40282 (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Emp ...

PART I - FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201%2E%20Financial%20Statements%2E) This section presents LanzaTech Global, Inc.'s unaudited condensed consolidated financial statements and detailed notes for specified periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%20%28unaudited%29%20and%20December%2031%2C%202022) This section provides a snapshot of assets, liabilities, and equity for June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :-------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $110,719 | $83,045 | | Debt security investments | $49,704 | — | | Total current assets | $208,917 | $123,897 | | Total assets | $302,337 | $176,856 | | **Liabilities** | | | | Total current liabilities | $32,615 | $55,981 | | Total liabilities | $90,699 | $124,947 | | **Shareholders' Equity (Deficit)** | | | | Total shareholders' equity (deficit) | $211,638 | $(428,722) | | Accumulated deficit | $(787,872) | $(456,245) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202023%20and%202022%20%28unaudited%29) This section details revenue, expenses, and net loss for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $12,917 | $9,852 | $22,563 | $17,709 | | Loss from operations | $(30,618) | $(19,121) | $(63,140) | $(35,591) | | Net loss | $(26,786) | $(15,929) | $(90,098) | $(32,707) | | Net loss per common share - basic and diluted | $(0.14) | $(2.77) | $(0.60) | $(5.63) | | Weighted-average common shares outstanding | 195,537,601 | 9,222,214 | 156,472,730 | 9,222,870 | [Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Shareholders' Equity/Deficit](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Shareholders%27%20Equity%2FDeficit%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202023%20and%202022%20%28unaudited%29) This section outlines changes in preferred stock and shareholders' equity/deficit for the reported periods - As of June 30, 2023, the company had no redeemable convertible preferred stock outstanding, a significant change from December 31, 2022, when 129,148,393 shares were outstanding with a carrying amount of **$480,631 thousand**[12](index=12&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) - Additional paid-in capital increased substantially from **$24,782 thousand** at December 31, 2022, to **$996,704 thousand** at June 30, 2023, primarily due to the reverse recapitalization and conversion of preferred stock[12](index=12&type=chunk)[16](index=16&type=chunk) - Accumulated deficit increased from **$(456,245) thousand** at December 31, 2022, to **$(787,872) thousand** at June 30, 2023, reflecting net losses and in-kind dividend payments on preferred stock[12](index=12&type=chunk)[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202023%20and%202022%20%28unaudited%29) This section presents cash flow activities from operations, investing, and financing for the six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(59,116) | $(42,505) | | Net cash used in investing activities | $(120,017) | $(4,894) | | Net cash provided by financing activities | $206,808 | $7 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $27,675 | $(47,392) | | Cash, cash equivalents and restricted cash at end of period | $111,389 | $81,269 | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) This section provides detailed explanations of the company's accounting policies and financial statement items [Note 1 — Description of the Business](index=10&type=section&id=Note%201%20%E2%80%94%20Description%20of%20the%20Business) This note describes LanzaTech's business, its recent business combination, and proprietary carbon refining technology - LanzaTech Global, Inc. (formerly AMCI Acquisition Corp. II) completed its business combination with Legacy LanzaTech on **February 8, 2023**, with Legacy LanzaTech continuing as the surviving wholly-owned subsidiary[21](index=21&type=chunk)[22](index=22&type=chunk) - The company is a nature-based carbon refining company that converts waste carbon into sustainable fuels, fabrics, and packaging using proprietary gas fermentation technology[23](index=23&type=chunk) - As of June 30, 2023, the company's partners operate **three commercial-scale waste-to-gas ethanol plants** in China, an increase from two plants as of June 30, 2022[23](index=23&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=10&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's key accounting policies, including revenue recognition and the reverse recapitalization - The Business Combination was accounted for as a **reverse recapitalization**, with Legacy LanzaTech identified as the accounting acquirer[26](index=26&type=chunk)[27](index=27&type=chunk) - The company operates as a **single operating segment**, with revenue disaggregated by contract type (Biorefining, Joint Development and Contract Research, CarbonSmart) and customer location[36](index=36&type=chunk)[37](index=37&type=chunk)[56](index=56&type=chunk) - Revenue recognition follows ASC 606, with services recognized over time (milestone completion, cost-to-cost input, percentage of completion) and tangible product sales (CarbonSmart) recognized at a point in time when control transfers[56](index=56&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk)[63](index=63&type=chunk) - The company had an accumulated deficit of **$(787,872) thousand** as of June 30, 2023, and cash outflows from operations of **$(59,116) thousand** for the six months ended June 30, 2023, but projects sufficient liquidity for the next twelve months due to proceeds from the Business Combination[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 3 — Reverse Recapitalization](index=18&type=section&id=Note%203%20%E2%80%94%20Reverse%20Recapitalization) This note explains the accounting treatment and financial impact of the business combination - The Business Combination closed on **February 8, 2023**, resulting in **196,222,737 shares** of common stock outstanding and **12,574,200 outstanding warrants**[75](index=75&type=chunk) - The transaction was accounted for as a **reverse recapitalization**, with Legacy LanzaTech as the accounting acquirer, and its financial statements continuing as the historical financial statements of the Company[76](index=76&type=chunk) - Upon closing, Legacy LanzaTech shareholders held **85.3%** of common stock, public stockholders **5.3%**, and PIPE investors **9.4%**, with the Business Combination and PIPE financing providing **$213,381 thousand** in cash, net of transaction costs[77](index=77&type=chunk)[78](index=78&type=chunk) [Note 4 — Net Loss Per Share](index=20&type=section&id=Note%204%20%E2%80%94%20Net%20Loss%20Per%20Share) This note presents the calculation of net loss per common share and factors affecting dilution Net Loss Per Common Share (Basic and Diluted) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss allocated to common shareholders | $(26,786) | $(25,583) | $(94,215) | $(51,884) | | Weighted-average common shares outstanding | 195,537,601 | 9,222,214 | 156,472,730 | 9,222,870 | | Net loss per common share | $(0.14) | $(2.77) | $(0.60) | $(5.63) | - All potential common shares (options, RSUs, Brookfield SAFE, warrants) were excluded from diluted EPS calculation due to their **anti-dilutive effect** in periods of net loss[83](index=83&type=chunk)[84](index=84&type=chunk) - Preferred shares converted into common shares upon the Business Combination, with cumulative accrued dividends paid in-kind, resulting in an additional **24,152,942 common shares**[84](index=84&type=chunk) [Note 5 — Revenues](index=21&type=section&id=Note%205%20%E2%80%94%20Revenues) This note disaggregates revenue by contract type and customer location, detailing contract assets and liabilities Disaggregated Revenue by Contract Type (in thousands) | Contract Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Biorefining revenue | $9,693 | $5,907 | $16,047 | $10,755 | | Joint development and contract research revenue | $2,217 | $2,963 | $5,509 | $5,232 | | CarbonSmart (tangible product) | $1,007 | $982 | $1,007 | $1,722 | | Total Revenue | $12,917 | $9,852 | $22,563 | $17,709 | Disaggregated Revenue by Customer Location (in thousands) | Region | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $2,314 | $3,910 | $6,547 | $7,949 | | Europe, Middle East, Africa (EMEA) | $9,646 | $3,784 | $14,356 | $6,607 | | Asia | $418 | $1,853 | $468 | $2,263 | | Australia | $539 | $305 | $1,192 | $890 | | Total Revenue | $12,917 | $9,852 | $22,563 | $17,709 | - Contract assets increased to **$21,776 thousand** at June 30, 2023, from **$18,000 thousand** at January 1, 2023, primarily due to unbilled accounts receivable from engineering and other services[91](index=91&type=chunk) - Contract liabilities decreased to **$2,952 thousand** (current) and **$9,480 thousand** (non-current) at June 30, 2023, from **$3,101 thousand** and **$10,760 thousand** respectively at January 1, 2023, mainly due to revenue recognition from advance payments[91](index=91&type=chunk)[94](index=94&type=chunk) [Note 6 — Investments](index=23&type=section&id=Note%206%20%E2%80%94%20Investments) This note details the company's debt security and equity investments, including LanzaJet and SGLT - The company holds **$49,704 thousand** in held-to-maturity U.S. Treasury debt securities as of June 30, 2023, all maturing within one year[95](index=95&type=chunk)[96](index=96&type=chunk) - Equity investments total **$25,154 thousand** as of June 30, 2023, comprising an equity method investment in LanzaJet (**$10,164 thousand**) and an equity security investment in SGLT (**$14,990 thousand**)[97](index=97&type=chunk) - LanzaTech's ownership in LanzaJet was diluted to approximately **23.15%** as of June 30, 2023, from an original **37.5%**, due to additional investment rounds and proportionally fewer warrants received[100](index=100&type=chunk) - The company ceased applying the equity method for SGLT from **October 1, 2022**, due to a significant decrease in SGLT's technological dependence on LanzaTech, now accounting for it at fair value (practicability exception)[104](index=104&type=chunk) [Note 7 — Warrants](index=26&type=section&id=Note%207%20%E2%80%94%20Warrants) This note describes the treatment and fair value of various warrants, including public and private placement warrants - All warrants on preferred shares were exercised on a **cashless basis** on **February 8, 2023**, converting into **594,309 shares** of preferred stock, which then converted to common stock[106](index=106&type=chunk) - The AM SAFE warrant converted to an **equity-classified instrument** on the Closing Date, becoming exercisable for **300,000 common shares** at **$10.00 per share**, and was reclassified to additional paid-in capital[108](index=108&type=chunk) - Shortfall Warrants (**4,083,486 total**) were issued on **March 27, 2023**, and subsequently amended on **May 13, 2023**, to meet equity classification criteria, resulting in a **$2,042 thousand gain** and reclassification to additional paid-in capital[109](index=109&type=chunk) - Public Warrants (**7,499,924**) and Private Placement Warrants (**4,774,276**) remained outstanding as of June 30, 2023, and are recognized as **derivative liabilities at fair value**, with changes recorded in other expense, net[110](index=110&type=chunk)[113](index=113&type=chunk) [Note 8 — Forward Purchase Agreement](index=27&type=section&id=Note%208%20%E2%80%94%20Forward%20Purchase%20Agreement) This note explains the components and fair value of the Forward Purchase Agreement - The Forward Purchase Agreement (FPA) consists of a **prepaid forward contract** (derivative asset) and **Fixed Maturity Consideration** (debt instrument)[53](index=53&type=chunk)[54](index=54&type=chunk)[114](index=114&type=chunk) - As of June 30, 2023, the fair value of the prepaid forward contract was **$33,804 thousand**, and the Fixed Maturity Consideration was valued at **$6,737 thousand**[115](index=115&type=chunk) - The FPA involved a prepayment of **$60,096 thousand** for **5,916,514 common shares**, with the company obligated to pay Maturity Consideration and Share Consideration at the 3-year maturity date, unless early terminated[50](index=50&type=chunk)[51](index=51&type=chunk) [Note 9 — Fair Value](index=28&type=section&id=Note%209%20%E2%80%94%20Fair%20Value) This note provides fair value measurements for financial instruments using a three-level hierarchy Fair Value Measurement Hierarchy (in thousands) as of June 30, 2023 | Instrument | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :------ | | **Assets:** | | | | | | Cash equivalents | $31,665 | — | — | $31,665 | | Prepaid forward contract | — | — | $33,804 | $33,804 | | **Liabilities:** | | | | | | Fixed Maturity Consideration | — | — | $6,737 | $6,737 | | Brookfield SAFE liability | — | — | $34,150 | $34,150 | | Private placement warrants | — | — | $5,347 | $5,347 | | Public warrants | $3,075 | — | — | $3,075 | - The fair value of the FPA (prepaid forward contract and Fixed Maturity Consideration) was estimated using a **Monte-Carlo Simulation**, with key inputs including stock price (**$6.83**), term (**2.61 years**), expected volatility (**50.0%**), and risk-free interest rate (**4.59%**)[119](index=119&type=chunk)[120](index=120&type=chunk) - The Brookfield SAFE liability's fair value decreased to **$34,150 thousand** as of June 30, 2023, from **$50,000 thousand** at December 31, 2022, based on the as-converted value (initial purchase amount divided by liquidity price, times stock price)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Private Placement Warrants were valued using a **Black-Scholes option pricing model**, with key inputs including stock price (**$6.83**), exercise price (**$11.50**), term (**4.61 years**), and expected volatility (**32.5%**)[132](index=132&type=chunk)[133](index=133&type=chunk) [Note 10 — Income Taxes](index=32&type=section&id=Note%2010%20%E2%80%94%20Income%20Taxes) This note discusses income tax expense, effective tax rate, and valuation allowance against deferred tax assets - The company recorded **$0 income tax expense** for the three and six months ended June 30, 2023 and 2022, resulting in an effective tax rate of **0%**[136](index=136&type=chunk) - The difference from the U.S. federal statutory rate of **21%** is primarily due to a **full valuation allowance** against the company's U.S. and foreign deferred tax assets[136](index=136&type=chunk) - The company is subject to audits for tax years **2017 and onward** for federal purposes, and various other state and foreign jurisdictions[138](index=138&type=chunk) [Note 11 — Share-Based Compensation](index=33&type=section&id=Note%2011%20%E2%80%94%20Share-Based%20Compensation) This note details share-based compensation plans, expenses, and unrecognized costs for various equity awards - The **LanzaTech 2023 Long-Term Incentive Plan (LTIP)** was adopted, providing for various equity-based awards including stock options, RSUs, and SARs[139](index=139&type=chunk) - Total compensation expense related to RSUs was **$2,677 thousand** for the three and six months ended June 30, 2023, with unrecognized RSU compensation costs of **$14,068 thousand** as of June 30, 2023[143](index=143&type=chunk) - Total compensation expense related to stock options was **$2,445 thousand** for the three months ended June 30, 2023 (vs. **$676 thousand** in 2022) and **$3,209 thousand** for the six months ended June 30, 2023 (vs. **$1,414 thousand** in 2022)[145](index=145&type=chunk) - The Business Combination triggered the vesting of all outstanding, unvested Restricted Stock Awards (RSAs), resulting in **$2,741 thousand** in compensation expense for the six months ended June 30, 2023, and a cash payment of **$7,650 thousand** for tax withholding[147](index=147&type=chunk)[148](index=148&type=chunk) - Phantom RSUs and Phantom SARs are **liability-classified awards** for non-US employees, settled in cash, with graded vesting schedules[149](index=149&type=chunk)[150](index=150&type=chunk) [Note 12 — Related Party Transactions](index=35&type=section&id=Note%2012%20%E2%80%94%20Related%20Party%20Transactions) This note outlines financial transactions and balances with related parties, including LanzaJet and SGLT Related Party Balances (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :---------------- | :-------------- | :---------------- | | Accounts receivable | $913 | $1,821 | | Notes receivable | $5,267 | — | | Accounts payable | $1,879 | $3,195 | - The company recognized revenue from LanzaJet for transition services and engineering services for a gas-to-jet demonstration plant, totaling approximately **$169 thousand** for the three months ended June 30, 2023[153](index=153&type=chunk)[154](index=154&type=chunk) - LanzaTech committed to purchase **$5.5 million** of Subordinated Secured Notes in LanzaJet's subsidiary, FPF, which was funded on May 1, 2023, and received warrants to purchase **316,250 shares** of LanzaJet common stock[155](index=155&type=chunk)[156](index=156&type=chunk) - Revenue from SGLT for water-soluble organic compounds, equipment, and consulting services was approximately **$75 thousand** for the three months ended June 30, 2023, and sublicensing revenue from SGLT was **$249 thousand** for the three and six months ended June 30, 2023[158](index=158&type=chunk)[159](index=159&type=chunk) [Note 13 — Redeemable, Convertible Preferred Stock](index=36&type=section&id=Note%2013%20%E2%80%94%20Redeemable%2C%20Convertible%20Preferred%20Stock) This note describes the conversion of preferred stock into common shares following the Business Combination - Prior to the Business Combination, LanzaTech had six outstanding series of contingently redeemable convertible preferred stock, totaling **129,148,393 shares** with a carrying value of **$480,631 thousand** as of December 31, 2022[161](index=161&type=chunk) - All preferred stock converted into common shares on a **1:1 basis** on the Closing Date of the Business Combination, with cumulative dividends of **$241,529 thousand** declared and paid in-kind, converting into an additional **24,152,942 common shares**[161](index=161&type=chunk) [Note 14 — Commitments and Contingencies](index=37&type=section&id=Note%2014%20%E2%80%94%20Commitments%20and%20Contingencies) This note addresses potential legal proceedings and future lease commitments - The company does not have any reasonably possible or probable losses from legal proceedings as of June 30, 2023[164](index=164&type=chunk) - A new lease for headquarters expansion in Skokie, Illinois, commencing May 1, 2024, is expected to incur total lease payments of **$3,287 thousand** in 2024, 2025, and 2026[165](index=165&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=35&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) This section analyzes LanzaTech's financial performance, condition, and operational results for the reported periods [Overview](index=38&type=section&id=Overview) This section provides a general description of LanzaTech's business model, financial status, and near-term expectations - LanzaTech is a nature-based carbon refining company converting waste carbon into sustainable fuels and chemicals using proprietary gas fermentation technology[168](index=168&type=chunk) - The company primarily uses a **licensing business model**, earning royalty fees from customers operating facilities with its technology[169](index=169&type=chunk) - LanzaTech has not achieved operating profitability since its formation, reporting net losses of **$(26.8) million** for Q2 2023 and **$(90.1) million** for H1 2023, with an accumulated deficit of **$(787.9) million** as of June 30, 2023[170](index=170&type=chunk) - Near-term, the company expects higher revenues from engineering services, equipment package sales, and its CarbonSmart business, driven by new plants and brand partnerships[171](index=171&type=chunk) [The Business Combination](index=38&type=section&id=The%20Business%20Combination) This section confirms the completion of the merger between LanzaTech NZ, Inc. and AMCI Acquisition Corp. II - LanzaTech NZ, Inc. completed its merger with AMCI Acquisition Corp. II on **February 8, 2023**, with the combined entity renamed LanzaTech Global, Inc[172](index=172&type=chunk) [Accounting Impact of the Business Combination](index=39&type=section&id=Accounting%20Impact%20of%20the%20Business%20Combination) This section explains the reverse recapitalization accounting treatment for the Business Combination - The Business Combination was accounted for as a **reverse recapitalization**, with LanzaTech NZ, Inc. deemed the accounting acquirer and its financial statements becoming the historical financial statements of the Company[173](index=173&type=chunk)[174](index=174&type=chunk) [Basis of Presentation](index=39&type=section&id=Basis%20of%20Presentation) This section states that the condensed consolidated financial statements adhere to US GAAP - LanzaTech's condensed consolidated financial statements were prepared in accordance with **US GAAP**[175](index=175&type=chunk) [Key Operational and Business Metrics](index=39&type=section&id=Key%20Operational%20and%20Business%20Metrics) This section presents key financial and operational metrics for the three and six months ended June 30, 2023 and 2022 Key Financial Metrics (in thousands, except percentages) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change (2023 vs. 2022) | % Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------------------- | :------- | | Revenue | $12,917 | $9,852 | $3,065 | 31% | | Net Loss | $(26,786) | $(15,929) | $(10,857) | 68% | | One-Time Revenue | $11,459 | $8,982 | $2,477 | 28% | | Recurring Revenue | $1,458 | $870 | $588 | 68% | | Cost of Revenues (ex. Depreciation) | $(10,827) | $(7,427) | $(3,400) | 46% | | Selling, general & administrative | $(12,452) | $(7,146) | $(5,306) | 74% | | Adjusted EBITDA | $(23,823) | $(17,886) | $(5,937) | 33% | Key Financial Metrics (in thousands, except percentages) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change (2023 vs. 2022) | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :--------------------- | :------- | | Revenue | $22,563 | $17,709 | $4,854 | 27% | | Net Loss | $(90,098) | $(32,707) | $(57,391) | 175% | | One-Time Revenue | $20,348 | $15,939 | $4,409 | 28% | | Recurring Revenue | $2,215 | $1,770 | $445 | 25% | | Cost of Revenues (ex. Depreciation) | $(18,617) | $(13,256) | $(5,361) | 40% | | Selling, general & administrative | $(29,287) | $(12,224) | $(17,063) | 140% | | Adjusted EBITDA | $(47,336) | $(32,645) | $(14,691) | 45% | - Installed capacity increased from **90 thousand tonnes per annum** as of June 30, 2022, to **150 thousand tonnes per annum** as of June 30, 2023, driven by 60 thousand tonnes of additions[184](index=184&type=chunk) [Components of Operating Results](index=40&type=section&id=Components%20of%20Operating%20Results) This section defines the various revenue streams, cost categories, and other financial components impacting operating results - Revenue streams include Biorefining (feasibility studies, engineering, licensing), Joint Development and Contract Research (R&D services), and CarbonSmart (sale of tangible products)[191](index=191&type=chunk) - Cost of revenues includes R&D costs for external projects, engineering, and direct service costs, encompassing materials, supplies, labor, and fringe benefits[193](index=193&type=chunk) - R&D expenses cover personnel, consultants, materials, and indirect overhead, expected to remain stable over time as a percentage of overall cost[194](index=194&type=chunk) - Selling, General and Administrative (SG&A) expenses include personnel, corporate development, travel, and professional services, expected to increase due to public company operations[195](index=195&type=chunk)[196](index=196&type=chunk) - Other expense, net, includes mark-to-market adjustments on liability-classified warrants, prepaid forward contract derivative, Fixed Maturity Consideration, and SAFE liabilities, as well as foreign currency gains/losses[197](index=197&type=chunk) - The company accounts for its interest in LanzaJet under the **equity method**, while its investment in SGLT is accounted for at **cost** (with adjustments for observable price changes) since September 30, 2022, due to loss of significant influence[199](index=199&type=chunk)[201](index=201&type=chunk) - A full valuation allowance is maintained against net deferred tax assets due to management's belief that recoverability is not more likely than not[204](index=204&type=chunk) [Results of Operations — Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022](index=44&type=section&id=Results%20of%20Operations%20%E2%80%94%20Three%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202022) This section compares financial performance for the three months ended June 30, 2023, against the same period in 2022 Three Months Ended June 30, 2023 vs. 2022 (in thousands, except percentages) | Metric | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | Total revenue | $12,917 | $9,852 | $3,065 | 31% | | Cost of revenue | $(10,827) | $(7,427) | $(3,400) | 46% | | Gross Profit | $2,090 | $2,425 | $(335) | (14)% | | Research and development | $(18,908) | $(13,237) | $(5,671) | 43% | | Selling, general and administrative expense | $(12,452) | $(7,146) | $(5,306) | 74% | | Loss from operations | $(30,618) | $(19,121) | $(11,497) | 60% | | Interest income, net | $1,701 | $(5) | $1,706 | N/M | | Other income (expense), net | $2,001 | $102 | $1,899 | N/M | | Net loss | $(26,786) | $(15,929) | $(10,857) | 68% | - Revenue increase was primarily driven by a **$3.3 million** increase in engineering and other services from existing customers and a **$0.3 million** increase in licensing revenue[207](index=207&type=chunk) - R&D expense increased by **$5.7 million**, mainly due to a **$2.6 million** increase in personnel and consumables, **$1.6 million** in stock compensation, and **$1.0 million** in external R&D services[210](index=210&type=chunk) - SG&A expense increased by **$5.3 million**, primarily due to **$2.2 million** in external services (insurance, professional fees), **$2.1 million** in stock compensation, and **$0.8 million** in personnel expenses[211](index=211&type=chunk) - Other income (expense), net, increased by **$1.9 million**, driven by a **$18.1 million gain** on the FPA and a **$2.0 million gain** on shortfall warrants, partially offset by a **$(14.8) million loss** on Brookfield SAFE liability and a **$(3.6) million loss** on SPAC warrant liabilities[213](index=213&type=chunk) [Results of Operations — Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022](index=46&type=section&id=Results%20of%20Operations%20%E2%80%94%20Six%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202022) This section compares financial performance for the six months ended June 30, 2023, against the same period in 2022 Six Months Ended June 30, 2023 vs. 2022 (in thousands, except percentages) | Metric | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | Total revenue | $22,563 | $17,709 | $4,854 | 27% | | Cost of revenues | $(18,617) | $(13,256) | $(5,361) | 40% | | Gross Profit | $3,946 | $4,453 | $(507) | (11)% | | Research and development | $(35,194) | $(25,598) | $(9,596) | 37% | | Selling, general and administrative expense | $(29,287) | $(12,224) | $(17,063) | 140% | | Loss from operations | $(63,140) | $(35,591) | $(27,549) | 77% | | Interest income, net | $1,915 | $(5) | $1,920 | N/M | | Other income (expense), net | $(28,395) | $76 | $(28,471) | N/M | | Net loss | $(90,098) | $(32,707) | $(57,391) | 175% | - Revenue increase was primarily driven by a **$3.9 million** increase in engineering and other services from existing customers and a **$1.1 million** increase from new customers[216](index=216&type=chunk) - R&D expense increased by **$9.6 million**, mainly due to a **$4.3 million** increase in personnel and consumables, **$1.7 million** in 2023 stock compensation, and **$1.2 million** from RSA vesting[219](index=219&type=chunk) - SG&A expense increased by **$17.1 million**, primarily due to **$8.3 million** in external services (one-time Business Combination fees), **$2.3 million** in 2023 stock compensation, and **$1.6 million** from RSA vesting[220](index=220&type=chunk) - Other income (expense), net, decreased by **$(28.5) million**, primarily due to a **$(33.5) million net loss** from the Forward Purchase Agreement and related expenses, and a **$(3.8) million net loss** from warrant fair value changes[222](index=222&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, investment activities, and financing sources - Cash, cash equivalents, and restricted cash increased by **$27.7 million (33%)** to **$111.4 million** as of June 30, 2023, primarily due to the Business Combination and PIPE financing, net of Forward Purchase Agreement funding[224](index=224&type=chunk) - The company holds **$49.7 million** in held-to-maturity U.S. Treasury debt securities as of June 30, 2023, all maturing within twelve months[225](index=225&type=chunk) - Net cash used in operating activities was **$(59.1) million** for the six months ended June 30, 2023, an increase from **$(42.5) million** in the prior year[239](index=239&type=chunk)[240](index=240&type=chunk) - Net cash used in investing activities was **$(120.0) million** for the six months ended June 30, 2023, significantly higher than **$(4.9) million** in the prior year, driven by debt security investments and the Forward Purchase Agreement prepayment[239](index=239&type=chunk)[242](index=242&type=chunk) - Net cash provided by financing activities was **$206.8 million** for the six months ended June 30, 2023, primarily from **$213.4 million** in proceeds from the Business Combination and PIPE financing[239](index=239&type=chunk)[244](index=244&type=chunk) - The company believes existing cash and cash equivalents will be sufficient to fund operations for at least the next **12 months**[236](index=236&type=chunk) [Off-Balance Sheet Arrangements](index=51&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements during the reported periods - As of June 30, 2023, and December 31, 2022, the company did not engage in any off-balance sheet arrangements[246](index=246&type=chunk) [Critical Accounting Policies and Management Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Management%20Estimates) This section highlights key accounting policies and estimates, including valuation of financial instruments and stock-based compensation - Key critical accounting policies and estimates include the valuation of the **Forward Purchase Agreement** (prepaid forward contract derivative and Fixed Maturity Consideration) using a **Monte-Carlo Simulation**[248](index=248&type=chunk)[249](index=249&type=chunk) - Stock-based compensation accounting involves estimating fair values for various equity-based awards (options, RSUs, SARs, RSAs) using models like **Black-Scholes and Monte Carlo simulation**, and recognizing expense over the requisite service period[250](index=250&type=chunk)[251](index=251&type=chunk)[254](index=254&type=chunk) - Compensation expense for performance awards is recognized when it is **probable** that the performance condition will be met, such as the occurrence of a liquidity event for RSAs[252](index=252&type=chunk)[253](index=253&type=chunk) [Emerging Growth Company Status](index=52&type=section&id=Emerging%20Growth%20Company%20Status) This section explains LanzaTech's status as an emerging growth company and its implications for financial reporting - LanzaTech is an **'emerging growth company'** and has elected to take advantage of the **extended transition period** for complying with new or revised financial accounting standards[256](index=256&type=chunk) - The company will remain an EGC until the earliest of specific criteria related to market value, annual gross revenue, non-convertible debt issuance, or **December 31, 2026**[257](index=257&type=chunk)[258](index=258&type=chunk) [Implications of being a Smaller Reporting Company](index=53&type=section&id=Implications%20of%20being%20a%20Smaller%20Reporting%20Company) This section discusses LanzaTech's status as a smaller reporting company and its reduced disclosure obligations - LanzaTech is a **'smaller reporting company'** and can take advantage of reduced disclosure obligations, such as providing only two years of audited financial statements[259](index=259&type=chunk) - The company will remain an SRC until specific criteria related to market value of non-affiliate held common stock and annual revenues are exceeded[259](index=259&type=chunk) [Recently Issued and Adopted Accounting Standards](index=53&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Standards) This section states that no recent accounting pronouncements are expected to materially impact the company - There are no recently adopted or issued accounting pronouncements that are expected to have a **material impact** on the Company[73](index=73&type=chunk)[260](index=260&type=chunk) [Non-GAAP Financial Measures](index=53&type=section&id=Non-GAAP%20Financial%20Measures) This section presents Adjusted EBITDA as a non-GAAP measure, reconciling it to net loss - **Adjusted EBITDA** is presented as a non-GAAP financial measure to supplement US GAAP financial statements, excluding depreciation, interest income, stock-based compensation, changes in fair value of warrant/SAFE/FPA liabilities, and one-time Business Combination costs[262](index=262&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(26,786) | $(15,929) | $(90,098) | $(32,707) | | Depreciation | $1,348 | $1,163 | $2,605 | $2,222 | | Interest income, net | $(1,701) | $5 | $(1,915) | $5 | | Stock-based compensation expense and change in fair value of SAFE and warrant liabilities | $21,526 | $(30) | $4,052 | $648 | | Change in fair value of the prepaid forward contract derivative and Fixed Maturity Consideration | $(18,080) | — | $33,029 | — | | Transaction costs on issuance of Forward Purchase Agreement | — | — | $451 | — | | (Gain) loss from equity method investees, net | $(130) | $(3,095) | $478 | $(2,813) | | One-time costs related to the Business Combination and initial securities registration | — | — | $4,062 | — | | Adjusted EBITDA | $(23,823) | $(17,886) | $(47,336) | $(32,645) | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=55&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk%2E) This section outlines LanzaTech's exposure to various market risks, including interest rate fluctuations, foreign currency exchange risks, and inflation - The company's primary market risk exposure is **interest rate sensitivity**, particularly from short-term U.S. Treasury and government obligations, but a **100 basis point change** is not expected to have a **material impact**[270](index=270&type=chunk) - Foreign currency exchange risk arises from foreign subsidiaries and vendors, with foreign currency translation adjustments reported as a **$0.10 million (gain)** for Q2 2023 and **$(0.36) million (loss)** for Q2 2022[271](index=271&type=chunk) - Inflation affects labor, supplies, consumables, and equipment costs, but has not had a **material effect** on the business during the three and six months ended June 30, 2023[273](index=273&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=56&type=section&id=Item%204%2E%20Controls%20and%20Procedures%2E) This section addresses the effectiveness of LanzaTech's disclosure controls and procedures - Management concluded that the company's disclosure controls and procedures were **effective** as of **June 30, 2023**[275](index=275&type=chunk) - No **material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[276](index=276&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=57&type=section&id=Item%201%2E%20Legal%20Proceedings%2E) This section states that LanzaTech may be involved in legal proceedings in the normal course of business but does not believe the outcome of any pending legal matters will have a material adverse impact on its consolidated financial position, results of operations, or cash flows - The company does not believe any pending legal proceedings will have a **material adverse impact** on its financial position, results of operations, or cash flows[278](index=278&type=chunk) [ITEM 1A. RISK FACTORS](index=57&type=section&id=Item%201A%2E%20Risk%20Factors%2E) This section refers to the risk factors disclosed in the company's Annual Report on Form 10-K, noting no material changes during the six months ended June 30, 2023, except for the addition of a new risk factor concerning customer concentration - No **material changes** to risk factors from the Annual Report on Form 10-K, except for the addition of a new risk factor[279](index=279&type=chunk) - New risk factor: Revenue is concentrated within a small number of key customers, with the largest customer accounting for **42% of revenue** for the six months ended June 30, 2023, posing a risk if such relationships terminate[279](index=279&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=57&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%2E) This section confirms that the company did not sell any unregistered securities during the period covered by this Form 10-K, except as previously reported - No unregistered sales of equity securities occurred during the period covered by this Form 10-K, other than those previously reported[280](index=280&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=57&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities%2E) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[281](index=281&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=57&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures%2E) This section indicates that there are no mine safety disclosures to report - There are no mine safety disclosures[282](index=282&type=chunk) [ITEM 5. OTHER INFORMATION](index=57&type=section&id=Item%205%2E%20Other%20Information%2E) This section reports that none of the company's directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - No directors or officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2023[283](index=283&type=chunk) [ITEM 6. EXHIBITS](index=57&type=section&id=Item%206%2E%20Exhibits%2E) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications from executive officers, and financial information formatted in Inline XBRL - Exhibit 3.1 and 3.2 refer to the Amended and Restated Certificate of Incorporation and Bylaws, respectively, previously filed[284](index=284&type=chunk) - Exhibits 31.1 and 31.2 are Certifications of Principal Executive Officer and Principal Financial Officer, respectively, filed herewith[284](index=284&type=chunk) - Exhibit 32.1 is a Certification of Principal Executive Officers and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, furnished herewith[284](index=284&type=chunk) - Exhibit 101 includes financial information formatted in **Inline XBRL**, and Exhibit 104 is the Cover Page Interactive Data File[286](index=286&type=chunk) [SIGNATURES](index=60&type=section&id=Signatures) This section contains the signatures of the registrant's authorized officers, Jennifer Holmgren, Ph.D. (Chief Executive Officer and Principal Executive Officer), and Geoff Trukenbrod (Chief Financial Officer and Principal Financial Officer), certifying the report on August 9, 2023 - The report was signed by Jennifer Holmgren, Ph.D., Chief Executive Officer and Principal Executive Officer, and Geoff Trukenbrod, Chief Financial Officer and Principal Financial Officer, on **August 9, 2023**[290](index=290&type=chunk)[292](index=292&type=chunk)

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20-%20Financial%20Information) This section presents LanzaTech Global, Inc.'s unaudited condensed consolidated financial information for Q1 2023 and Q1 2022 [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents LanzaTech Global, Inc.'s unaudited condensed consolidated financial statements and related notes for Q1 2023 and Q1 2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of LanzaTech's financial position, detailing assets, liabilities, and shareholders' equity as of March 31, 2023, and December 31, 2022 **Condensed Consolidated Balance Sheets (Unaudited, in thousands):** | Item | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $145,118 | $83,045 | | Debt security investments | $49,103 | — | | Total current assets | $240,647 | $123,897 | | Total assets | $307,957 | $176,856 | | **Liabilities** | | | | Total current liabilities | $34,077 | $55,981 | | Total liabilities | $78,145 | $124,947 | | **Shareholders' Equity (Deficit)** | | | | Total shareholders' equity (deficit) | $229,812 | $(428,722) | | Accumulated deficit | $(761,086) | $(456,245) | - Total assets increased by **$131.1 million** (74%) from December 31, 2022, to March 31, 2023, primarily due to a significant increase in cash and cash equivalents and the introduction of debt security investments[13](index=13&type=chunk) - Total liabilities decreased by **$46.8 million** (37.5%) from December 31, 2022, to March 31, 2023, largely due to the conversion of AM SAFE liability and redeemable convertible preferred stock[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines LanzaTech's financial performance, including revenue, expenses, and net loss for the three months ended March 31, 2023, and 2022 **Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited, in thousands):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenue | $9,646 | $7,857 | | Total cost and operating expenses | $(42,168) | $(24,327) | | Loss from operations | $(32,522) | $(16,470) | | Total other expense, net | $(30,182) | $(26) | | Net loss | $(63,312) | $(16,778) | | Net loss per common share - basic and diluted | $(0.58) | $(2.85) | | Weighted-average number of common shares outstanding | 116,530,963 | 9,219,499 | - Total revenue increased by **$1.8 million** (23%) year-over-year[15](index=15&type=chunk) - Net loss significantly widened to **$(63.3) million** in Q1 2023 from **$(16.8) million** in Q1 2022, primarily due to a substantial increase in 'Total other expense, net' related to the Forward Purchase Agreement and fair value adjustments[15](index=15&type=chunk)[199](index=199&type=chunk) - Despite the increased net loss, net loss per common share decreased from **$(2.85)** to **$(0.58)** due to a significant increase in the weighted-average number of common shares outstanding following the Business Combination[15](index=15&type=chunk)[83](index=83&type=chunk) [Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Shareholders' Equity/Deficit](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Shareholders'%20Equity%2FDeficit) This section details changes in LanzaTech's preferred stock and shareholders' equity/deficit, reflecting the impact of the Business Combination and net loss - The Business Combination on February 8, 2023, led to the conversion of all **129,148,393** outstanding redeemable convertible preferred shares into common stock, eliminating the preferred stock balance[17](index=17&type=chunk)[155](index=155&type=chunk) - Additional paid-in capital increased significantly from **$24.8 million** at December 31, 2022, to **$988.2 million** at March 31, 2023, primarily due to the recapitalization from the Business Combination and PIPE financing[17](index=17&type=chunk)[80](index=80&type=chunk) - Accumulated deficit increased from **$(456.2) million** to **$(761.1) million**, reflecting the net loss for the period and the in-kind payment of preferred dividends[17](index=17&type=chunk)[155](index=155&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents LanzaTech's cash inflows and outflows from operating, investing, and financing activities for Q1 2023 and Q1 2022 **Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands):** | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(33,810) | $(18,118) | | Net cash used in investing activities | $(110,566) | $(1,891) | | Net cash provided by financing activities | $206,477 | $7 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $62,101 | $(20,002) | | Cash, cash equivalents and restricted cash at end of period | $145,786 | $108,627 | - Net cash used in operating activities increased by **87%** to **$(33.8) million** in Q1 2023, primarily due to a higher net loss, partially offset by non-cash adjustments[217](index=217&type=chunk) - Net cash used in investing activities significantly increased to **$(110.6) million** in Q1 2023, driven by investments in debt securities (**$49.1 million**) and the Forward Purchase Agreement prepayment (**$60.1 million**)[219](index=219&type=chunk) - Net cash provided by financing activities was **$206.5 million** in Q1 2023, mainly from the Business Combination and PIPE financing proceeds (**$213.4 million**), partially offset by equity instrument repurchases[220](index=220&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of LanzaTech's accounting policies, financial instruments, and significant transactions impacting the financial statements [Note 1 — Description of the Business](index=10&type=section&id=Note%201%20%E2%80%94%20Description%20of%20the%20Business) LanzaTech Global, Inc. completed its business combination on February 8, 2023, and converts waste carbon into sustainable fuels and chemicals - LanzaTech Global, Inc. completed its business combination with Legacy LanzaTech on **February 8, 2023**, becoming the reporting entity[24](index=24&type=chunk) - The company utilizes proprietary gas fermentation technology to transform waste carbon into sustainable fuels and chemicals[25](index=25&type=chunk) - As of March 31, 2023, LanzaTech's partners operate **three commercial-scale waste-to-gas ethanol plants** in China, an increase from two plants as of March 31, 2022[25](index=25&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=10&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note details LanzaTech's significant accounting policies, including reverse recapitalization, VIEs, and revenue recognition methods - The Business Combination was accounted for as a **reverse recapitalization**, with Legacy LanzaTech identified as the accounting acquirer[28](index=28&type=chunk)[29](index=29&type=chunk) - The company operates as a **single operating segment**, with most service offerings delivered and supported globally[39](index=39&type=chunk)[40](index=40&type=chunk) - Revenue is primarily earned from Biorefining (feasibility studies, engineering, licensing, biocatalyst sales), Joint Development and Contract Research, and CarbonSmart product sales[58](index=58&type=chunk) [Note 3 — Reverse Recapitalization](index=18&type=section&id=Note%203%20%E2%80%94%20Reverse%20Recapitalization) This note explains the Business Combination as a reverse recapitalization, impacting common shares and additional paid-in capital - The Business Combination on **February 8, 2023**, was treated as a **reverse recapitalization**, with Legacy LanzaTech as the accounting acquirer[76](index=76&type=chunk) - Immediately after the Business Combination, **196,222,737 shares** of common stock were outstanding[75](index=75&type=chunk) **Reconciliation of Business Combination and PIPE Financing to Additional Paid-in Capital (in thousands):** | Item | Amount | | :------------------------------------------------ | :----- | | Cash - AMCI trust account | $64,090 | | Public Warrants and Private Placement Warrants recorded | $(4,624) | | Cash - PIPE financing | $155,000 | | Conversion of the AM SAFE | $29,730 | | Transaction costs allocated to equity | $(7,223) | | Less: par value of shares held by PIPE investors and public stockholders | $(3) | | **Total additional paid-in capital from recapitalization** | **$236,970** | [Note 4 — Net Loss Per Share](index=20&type=section&id=Note%204%20%E2%80%94%20Net%20Loss%20Per%20Share) This note details net loss per common share, which improved to $(0.58) in Q1 2023 due to increased shares outstanding **Net Loss Per Common Share (Unaudited, in thousands, except per share amounts):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss allocated to common shareholders | $(67,429) | $(26,301) | | Weighted-average shares outstanding | 116,530,963 | 9,219,499 | | Net loss per common share - basic and diluted | $(0.58) | $(2.85) | - Potential common shares, including options, warrants, and the Brookfield SAFE, were excluded from diluted EPS calculation due to their **anti-dilutive effect** in periods of net loss[84](index=84&type=chunk)[86](index=86&type=chunk) - The preferred shares automatically converted into common shares upon the Business Combination at a **1:1 ratio**, and cumulative accrued dividends were paid in-kind, resulting in an additional **24,152,942 common shares**[84](index=84&type=chunk) [Note 5 — Revenues](index=21&type=section&id=Note%205%20%E2%80%94%20Revenues) Total revenue increased by 23% to $9.6 million in Q1 2023, driven by engineering and joint development services **Disaggregated Revenue by Contract Type (Unaudited, in thousands):** | Contract Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Biorefining: carbon capture and transformation revenue | $6,354 | $4,848 | | Joint development and Contract research revenue | $3,292 | $2,269 | | CarbonSmart (tangible product) | — | $740 | | **Total Revenue** | **$9,646** | **$7,857** | **Disaggregated Revenue by Customer Location (Unaudited, in thousands):** | Region | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | North America | $4,232 | $4,039 | | Europe, Middle East, Africa (EMEA) | $4,711 | $2,823 | | Asia | $50 | $410 | | Australia | $653 | $585 | | **Total Revenue** | **$9,646** | **$7,857** | - Contract assets increased to **$18.5 million** (from $18.0 million) due to unbilled accounts receivable from engineering and other services, while contract liabilities decreased to **$3.0 million** (from $3.1 million) due to revenue recognition from advance payments[89](index=89&type=chunk) [Note 6 — Investments](index=22&type=section&id=Note%206%20%E2%80%94%20Investments) This note details LanzaTech's investments, including U.S. Treasury debt securities and equity stakes in LanzaJet and SGLT - Held-to-maturity debt securities, consisting of U.S. Treasury securities, totaled **$49.1 million** as of March 31, 2023, with all maturing within one year[93](index=93&type=chunk) **Equity Investments (Unaudited, in thousands):** | Investment | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Equity Method Investment in LanzaJet | $9,835 | $10,561 | | Equity Security Investment in SGLT | $14,990 | $14,990 | | **Total Investment** | **$24,825** | **$25,551** | - The company accounts for its **25% interest in LanzaJet** using the equity method, recognizing revenue from licensing and technical support services[96](index=96&type=chunk)[97](index=97&type=chunk) [Note 7 — AM SAFE](index=24&type=section&id=Note%207%20%E2%80%94%20AM%20SAFE) This note explains the AM SAFE liability's conversion into 3 million common shares on February 8, 2023, at $29.7 million fair value - The AM SAFE liability converted into **3,000,000 shares of common stock** on the Business Combination Closing Date (**February 8, 2023**)[104](index=104&type=chunk) - The fair value of the AM SAFE was **$29.730 million** at conversion, up from **$28.986 million** as of December 31, 2022[104](index=104&type=chunk) [Note 8 — Warrants](index=25&type=section&id=Note%208%20%E2%80%94%20Warrants) This note details the accounting and fair value changes for various warrants, including preferred, AM SAFE, Shortfall, Public, and Private Placement - Warrants on preferred shares were **cashless-exercised** on February 8, 2023, for **594,309 preferred shares**, which then converted to common stock[106](index=106&type=chunk) - The AM SAFE warrant was reclassified from a liability to additional paid-in capital on the Closing Date (**February 8, 2023**) as it became exercisable for a fixed number of **300,000 common shares** at **$10.00 per share**[108](index=108&type=chunk) - Shortfall Warrants (**4,083,486 warrants**) were issued on March 27, 2023, as derivative liabilities with a fair value of **$5.104 million**, but were reclassified to equity on May 13, 2023[109](index=109&type=chunk)[110](index=110&type=chunk) [Note 9 — Forward Purchase Agreement](index=26&type=section&id=Note%209%20%E2%80%94%20Forward%20Purchase%20Agreement) This note describes the Forward Purchase Agreement, comprising a prepaid forward contract and Fixed Maturity Consideration, valued at $16.0 million and $7.0 million respectively - The FPA, entered on **February 3, 2023**, involves a prepayment of **$60.096 million** for **5,916,514 common shares**[53](index=53&type=chunk)[116](index=116&type=chunk) - The FPA is comprised of a prepaid forward contract (derivative asset) and Fixed Maturity Consideration (debt instrument)[56](index=56&type=chunk)[57](index=57&type=chunk) **Fair Value of Prepaid Forward Contract (in thousands):** | Item | March 31, 2023 | | :------------------------------------ | :------------- | | Prepayment Amount | $60,096 | | Less: Value of derivative and Variable Maturity Consideration | $(44,142) | | **Fair value of prepaid forward contract** | **$15,954** | **Fixed Maturity Consideration:** $6,967 (as of March 31, 2023) [Note 10 — Fair Value](index=27&type=section&id=Note%2010%20%E2%80%94%20Fair%20Value) This note outlines the fair value hierarchy for assets and liabilities, detailing Level 3 valuations for key financial instruments **Fair Value Measurement as of March 31, 2023 (in thousands):** | Item | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :------ | :------ | :------ | :------ | | **Assets:** | | | | | | Cash equivalents | $31,397 | $— | $— | $31,397 | | Prepaid forward contract | $— | $— | $15,954 | $15,954 | | **Total assets** | **$31,397** | **$—** | **$15,954** | **$47,351** | | **Liabilities:** | | | | | | Fixed Maturity Consideration | $— | $— | $6,967 | $6,967 | | Shortfall Warrants | $— | $— | $5,104 | $5,104 | | Brookfield SAFE liability | $— | $— | $19,400 | $19,400 | | Private placement warrants | $— | $— | $2,626 | $2,626 | | Public warrants | $2,189 | $— | $— | $2,189 | | **Total liabilities** | **$2,189** | **$—** | **$34,097** | **$36,286** | - The fair value of the FPA (prepaid forward contract and Fixed Maturity Consideration) was estimated using a **Monte-Carlo Simulation**, with a stock price of **$3.88** and expected volatility of **55.0%** as of March 31, 2023[120](index=120&type=chunk)[121](index=121&type=chunk) - The Brookfield SAFE liability, a Level 3 liability, was valued at **$19.4 million** as of March 31, 2023, based on the expectation of conversion into shares at the liquidity price[129](index=129&type=chunk)[130](index=130&type=chunk) [Note 11 — Income Taxes](index=31&type=section&id=Note%2011%20%E2%80%94%20Income%20Taxes) This note explains the 0% effective tax rate due to a full valuation allowance against deferred tax assets - Income tax expense was **$0** for both Q1 2023 and Q1 2022, resulting in a **0% effective tax rate**[136](index=136&type=chunk) - The 0% effective tax rate is primarily due to a **full valuation allowance** against the company's U.S. and foreign deferred tax assets[137](index=137&type=chunk) [Note 12 — Share-Based Compensation](index=32&type=section&id=Note%2012%20%E2%80%94%20Share-Based%20Compensation) This note details share-based compensation expense of $3.5 million in Q1 2023, including stock options and RSA vesting - Total share-based compensation expense was **$3.505 million** for Q1 2023, compared to **$738 thousand** for Q1 2022[22](index=22&type=chunk) - Stock option compensation expense was **$764 thousand** for Q1 2023, with **$4.321 million** in unrecognized costs to be expensed over a weighted average of **2.37 years**[141](index=141&type=chunk) - The vesting of Restricted Stock Awards (RSAs) due to the Business Combination resulted in a compensation expense of **$2.741 million** in Q1 2023[144](index=144&type=chunk) [Note 13 — Related Party Transactions](index=33&type=section&id=Note%2013%20%E2%80%94%20Related%20Party%20Transactions) This note outlines related party transactions, primarily with LanzaJet and SGLT, including revenue and future note purchases **Related Party Transactions (Unaudited, in thousands):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenues | $973 | $654 | | Accounts receivable (as of period end) | $626 | $1,821 | | Purchases and open accounts payable (as of period end) | $3,048 | $3,195 | - The company recognized **$338 thousand** in revenue from LanzaJet for engineering and other services in Q1 2023, a significant increase from **$23 thousand** in Q1 2022[148](index=148&type=chunk) - LanzaTech committed to purchase **$5.5 million** of Subordinated Secured Notes from LanzaJet Freedom Pines Fuels LLC, with funding occurring on May 1, 2023[149](index=149&type=chunk)[160](index=160&type=chunk) [Note 14 — Redeemable, Convertible Preferred Stock](index=34&type=section&id=Note%2014%20%E2%80%94%20Redeemable,%20Convertible%20Preferred%20Stock) This note details the conversion of all preferred stock into common shares on the Business Combination Closing Date, including in-kind dividend payments - All **129,148,393 shares** of redeemable convertible preferred stock were converted into common shares on a **1:1 basis** on the Business Combination Closing Date[155](index=155&type=chunk) - Cumulative dividends totaling **$241.529 million** were declared and paid in-kind, resulting in the issuance of an additional **24,152,942 common shares**[155](index=155&type=chunk) **Redeemable, Convertible Preferred Stock as of December 31, 2022 (in thousands, except share and per share amounts):** | Series | Shares Issued and Outstanding | Carrying Amount | | :------- | :---------------------------- | :-------------- | | Series A | 20,414,445 | $12,230 | | Series B | 7,582,934 | $18,000 | | Series C | 18,121,698 | $60,850 | | Series D | 44,452,681 | $188,402 | | Series E | 22,678,139 | $118,076 | | Series F | 15,898,496 | $83,073 | | **Total** | **129,148,393** | **$480,631** | [Note 15 — Commitments and Contingencies](index=35&type=section&id=Note%2015%20%E2%80%94%20Commitments%20and%20Contingencies) This note covers commitments, including a new real estate lease and a note purchase agreement, with no material litigation losses - No reasonably possible or probable losses from legal proceedings as of March 31, 2023[158](index=158&type=chunk) - Entered into a new real estate lease for headquarters expansion in Skokie, Illinois, commencing **May 1, 2024**[159](index=159&type=chunk) - Expected total lease payments for the new headquarters are **$3.287 million** for 2024, 2025, and 2026[159](index=159&type=chunk) [Note 16 — Subsequent Events](index=35&type=section&id=Note%2016%20%E2%80%94%20Subsequent%20Events) This note details subsequent events, including a $5.5 million note purchase and the reclassification of Shortfall Warrants to equity - On **May 1, 2023**, the company purchased **$5.5 million** in Subordinated Secured Notes as part of the LanzaJet Note Purchase Agreement[160](index=160&type=chunk) - On **May 13, 2023**, the Shortfall Warrant agreement was amended, leading to the reclassification of these warrants to equity, to be reflected in the period ended June 30, 2023[161](index=161&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses LanzaTech's financial condition and operational results for Q1 2023, highlighting the Business Combination's impact and key metrics [Overview](index=34&type=section&id=Overview) This section provides an overview of LanzaTech's business as a carbon refining company and its historical operating profitability - LanzaTech is a nature-based carbon refining company that converts waste carbon into sustainable fuels and chemicals using proprietary gas fermentation technology[164](index=164&type=chunk) - The company primarily employs a **licensing business model**, earning royalty fees based on revenue generated from customers using its technology[165](index=165&type=chunk) - LanzaTech has not achieved operating profitability since its formation, reporting net losses of **$(63.3) million** for Q1 2023 and **$(16.8) million** for Q1 2022, with an accumulated deficit of **$(761.1) million** as of March 31, 2023[166](index=166&type=chunk) [The Business Combination](index=36&type=section&id=The%20Business%20Combination) This section details the merger of AMCI Acquisition Corp. II with LanzaTech NZ, Inc. on February 8, 2023 - On **February 8, 2023**, AMCI Acquisition Corp. II completed its merger with LanzaTech NZ, Inc., with LanzaTech NZ, Inc. surviving as a wholly-owned subsidiary and the combined company renamed 'LanzaTech Global, Inc.'[167](index=167&type=chunk) [Accounting Impact of the Business Combination](index=36&type=section&id=Accounting%20Impact%20of%20the%20Business%20Combination) This section explains the Business Combination's accounting as a reverse recapitalization, with Legacy LanzaTech as the accounting acquirer - The Business Combination was accounted for as a **reverse recapitalization**, with LanzaTech NZ, Inc. deemed the accounting acquirer and its financial statements continuing as the historical financial statements of the Company[168](index=168&type=chunk)[169](index=169&type=chunk) - AMCI's net assets were recognized at **carrying value**, with no goodwill or other intangible assets recorded[169](index=169&type=chunk) [Basis of Presentation](index=37&type=section&id=Basis%20of%20Presentation) This section states that LanzaTech's condensed consolidated financial statements are prepared in accordance with US GAAP - LanzaTech's condensed consolidated financial statements are prepared in accordance with **US GAAP**[170](index=170&type=chunk) [Key Operational and Business Metrics](index=37&type=section&id=Key%20Operational%20and%20Business%20Metrics) This section presents key financial and non-financial metrics, including revenue, net loss, and cumulative capacity additions **Key Financial Metrics (Unaudited, in thousands, except percentages):** | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (2023 vs. 2022) | Percentage Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------------------- | :---------------- | | Revenue | $9,646 | $7,857 | $1,789 | 23 % | | Net Loss | $(63,312) | $(16,778) | $(46,534) | 277 % | | One-Time Revenue | $8,889 | $6,957 | $1,932 | 28 % | | Recurring Revenue | $757 | $900 | $(143) | (16) % | | Cost of Revenues (ex. Depreciation) | $(7,790) | $(5,829) | $(1,961) | 34 % | | Selling, general & administrative | $(16,835) | $(5,078) | $(11,757) | 232 % | | Adjusted EBITDA | $(27,575) | $(14,759) | $(12,816) | 87 % | **Key Non-Financial Metrics (in thousands of tonnes per annum):** | Metric | As of March 31, 2023 | As of March 31, 2022 | Change (2023 vs. 2022) | Percentage Change | | :-------------------------- | :------------------- | :------------------- | :--------------------- | :---------------- | | New Capacity Additions | 60 | 0 | 60 | N/M | | Cumulative Capacity Additions | 150 | 90 | 60 | 67 % | - Installed capacity, including equity and cost method investees and customers, is a key driver for licensing revenues[175](index=175&type=chunk) [Components of Operating Results](index=38&type=section&id=Components%20of%20Operating%20Results) This section breaks down LanzaTech's operating results, analyzing revenue, cost of revenues, and various expense categories [Revenue](index=38&type=section&id=Revenue) Revenue is generated from biorefining, joint development, and CarbonSmart product sales, with recognition varying by contract type - Revenue streams include Biorefining (feasibility studies, engineering, licensing, equipment/microbe sales), Joint Development and Contract Research, and CarbonSmart product sales[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk) - Licensing revenue, a recurring component, is recognized when customers deploy carbon capture and transformation plants, based on fixed consideration or royalties[179](index=179&type=chunk) [Cost of Revenues](index=39&type=section&id=Cost%20of%20Revenues) Cost of revenues includes direct service costs for R&D, engineering, and customer agreements, covering materials, labor, and benefits - Costs of revenues include internal and third-party fixed and variable costs such as materials, supplies, labor, and fringe benefits, associated with R&D, engineering, and direct services[183](index=183&type=chunk) [Research and Development Expenses](index=39&type=section&id=Research%20and%20Development%20Expenses) R&D expenses cover personnel, materials, and laboratory activities, with substantial increases expected for technology scaling and new products - R&D expenses consist of personnel costs, consultants, materials, supplies for internal projects, and laboratory activities, including indirect overhead[184](index=184&type=chunk) - The company expects R&D activities and associated expenses to increase substantially with technology scaling and new product development[184](index=184&type=chunk) [Selling, General and Administrative Expenses](index=39&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) SG&A expenses include personnel, business development, and public company operating costs, with expected increases due to growth and compliance - SG&A expenses include personnel costs, business development, travel, and indirect overhead[185](index=185&type=chunk) - Expected increases in SG&A are driven by expanding sales, commercial capabilities, brand awareness, and public company operating costs (compliance, legal, audit, investor relations, IP protection)[186](index=186&type=chunk) [Other Expense, Net](index=40&type=section&id=Other%20Expense,%20Net) Other expense, net, includes mark-to-market adjustments for warrants, derivatives, and SAFE liabilities, with expected increased interest income - Other expense, net, includes mark-to-market adjustments on liability-classified warrants, the prepaid forward contract derivative, Fixed Maturity Consideration, and SAFE liabilities[187](index=187&type=chunk) - Interest income is expected to increase after the Business Combination due to investments in capital preservation financial instruments[187](index=187&type=chunk) [Gain from Equity Investees, Net](index=40&type=section&id=Gain%20from%20Equity%20Investees,%20Net) This section details equity investments in LanzaJet (equity method) and SGLT (cost method), both classified as VIEs - LanzaTech holds non-controlling equity interests in LanzaJet and SGLT, both determined to be VIEs where the company is not the primary beneficiary[188](index=188&type=chunk) - The investment in LanzaJet is accounted for under the **equity method** due to significant influence[189](index=189&type=chunk) - As of September 30, 2022, the investment in SGLT is accounted for at **cost** (with adjustments for observable changes) due to a loss of significant influence[190](index=190&type=chunk) [Income Tax Expense (Benefit)](index=40&type=section&id=Income%20Tax%20Expense%20(Benefit)) Income tax expense is zero due to a full valuation allowance against deferred tax assets, as future taxable income is not probable - Deferred tax assets are recognized only to the extent that future taxable income is probable[192](index=192&type=chunk) - A **full valuation allowance** is maintained against the net deferred tax assets, as management believes recoverability is not more likely than not[193](index=193&type=chunk) [Results of Operations — Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022](index=41&type=section&id=Results%20of%20Operations%20%E2%80%94%20Three%20Months%20Ended%20March%2031,%202023%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202022) This section provides a comparative analysis of LanzaTech's operational results for Q1 2023 versus Q1 2022, detailing revenue, expenses, and net loss changes **Consolidated Results of Operations (Unaudited, in thousands, except per share amounts):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (2023 vs. 2022) | Percentage Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------------------- | :---------------- | | Total revenue | $9,646 | $7,857 | $1,789 | 23 % | | Cost of revenues | $(7,790) | $(5,829) | $(1,961) | 34 % | | Gross Profit | $1,856 | $2,028 | $(172) | (8)% | | Research and development | $(16,286) | $(12,361) | $(3,925) | 32 % | | Depreciation expense | $(1,257) | $(1,059) | $(198) | 19 % | | Selling, general and administrative expense | $(16,835) | $(5,078) | $(11,757) | 232 % | | Loss from operations | $(32,522) | $(16,470) | $(16,052) | 97 % | | Total other expense, net | $(30,182) | $(26) | $(30,156) | N/M | | Net loss | $(63,312) | $(16,778) | $(46,534) | 277 % | | Net loss per share - basic and diluted | $(0.58) | $(2.85) | | | - Total revenue increased by **$1.8 million** (23%) due to higher engineering and other services revenue (**$1.5 million**) and joint development agreements (**$1.0 million**), partially offset by a decrease in CarbonSmart product sales (**$(0.7) million**)[195](index=195&type=chunk) - Cost of revenue increased by **$2.0 million** (34%), outpacing revenue growth, primarily due to increased customer projects and a shift in sales mix for engineering and other services[196](index=196&type=chunk) - SG&A expense surged by **$11.8 million** (232%), mainly driven by one-time professional services fees and employee transition arrangements related to the Business Combination, as well as increased personnel costs and an allowance for a customer receivable[198](index=198&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses LanzaTech's liquidity and capital resources, including cash, debt investments, and funding sources post-Business Combination [Cash and Cash Equivalents](index=42&type=section&id=Cash%20and%20Cash%20Equivalents) Cash, cash equivalents, and restricted cash increased by **$62.1 million** to **$145.8 million** in Q1 2023, driven by Business Combination proceeds **Cash, Cash Equivalents, and Restricted Cash (Unaudited, in thousands):** | Item | March 31, 2023 | December 31, 2022 | Change (2023 vs. 2022) | Percentage Change | | :------------------------------------ | :------------- | :---------------- | :--------------------- | :---------------- | | Total cash, cash equivalents, and restricted cash | $145,786 | $83,710 | $62,076 | 74 % | - The increase in cash was primarily driven by the closing of the Business Combination and PIPE financing, which provided **$153.3 million** in cash proceeds[201](index=201&type=chunk)[212](index=212&type=chunk) [Debt Security Investments](index=43&type=section&id=Debt%20Security%20Investments) LanzaTech held **$49.1 million** in short-term U.S. Treasury debt securities as of March 31, 2023, enhancing liquidity - Debt security investments, consisting of held-to-maturity U.S. Treasury securities, totaled **$49.1 million** as of March 31, 2023[202](index=202&type=chunk) - All debt securities mature within **twelve months**, providing additional liquidity[202](index=202&type=chunk) [Sources and Uses of Capital](index=43&type=section&id=Sources%20and%20Uses%20of%20Capital) This section details LanzaTech's capital structure, including **$153.3 million** from the Business Combination and future commitments - The company's capital structure as of March 31, 2023, consists of equity and the Brookfield SAFE[205](index=205&type=chunk) - The Business Combination and PIPE financing provided **$153.3 million** in cash proceeds to LanzaTech[212](index=212&type=chunk) - Obligations under the Forward Purchase Agreement include potential future payments of Maturity Consideration and Share Consideration, totaling **$5.1 million**, which could pose financial exposure[210](index=210&type=chunk)[211](index=211&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) Cash flows show **$(33.8) million** used in operations, **$(110.6) million** in investing, and **$206.5 million** provided by financing in Q1 2023 **Summary of Cash Flows (Unaudited, in thousands):** | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (2023 vs. 2022) | Percentage Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------------------- | :---------------- | | Operating activities | $(33,810) | $(18,118) | $(15,692) | 87 % | | Investing activities | $(110,566) | $(1,891) | $(108,675) | 5,747 % | | Financing activities | $206,477 | $7 | $206,470 | N/M | - Net cash used in operating activities increased by **87%** to **$(33.8) million**, primarily due to a higher net loss[217](index=217&type=chunk) - Investing activities saw a substantial increase in cash usage, primarily due to **$49.1 million** in debt security investments and a **$60.1 million** prepayment for the Forward Purchase Agreement[219](index=219&type=chunk) [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) LanzaTech had no off-balance sheet arrangements as of March 31, 2023, or December 31, 2022 - The company did not engage in any off-balance sheet arrangements as of March 31, 2023, and December 31, 2022[222](index=222&type=chunk) [Critical Accounting Policies and Management Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Management%20Estimates) This section outlines LanzaTech's critical accounting policies and management estimates, including the valuation of the Forward Purchase Agreement [Forward Purchase Agreement Valuation](index=46&type=section&id=Forward%20Purchase%20Agreement%20Valuation) This section details the valuation of the FPA's prepaid forward contract and Fixed Maturity Consideration using a Monte-Carlo Simulation - The prepaid forward contract within the FPA is classified as a **derivative asset** and valued using a **Monte-Carlo Simulation**[224](index=224&type=chunk) - The Share Consideration and Minimum Maturity Consideration are accounted for as **debt-like instruments** (Fixed Maturity Consideration) under the Fair Value Option (ASC 825) and valued within the same Monte-Carlo simulation[225](index=225&type=chunk) [Emerging Growth Company Status](index=46&type=section&id=Emerging%20Growth%20Company%20Status) LanzaTech maintains its 'emerging growth company' status, utilizing extended transition periods for accounting standards until 2026 or threshold changes - LanzaTech is an **'emerging growth company'** and has elected to use the extended transition period for new or revised financial accounting standards[226](index=226&type=chunk) - This status allows for reduced compliance requirements but may impact comparability with other public companies[226](index=226&type=chunk) - The company will remain an emerging growth company until the earliest of reaching **$700 million market value**, **$1.235 billion annual revenue**, issuing over **$1 billion in non-convertible debt**, or **December 31, 2026**[227](index=227&type=chunk) [Implications of being a Smaller Reporting Company](index=46&type=section&id=Implications%20of%20being%20a%20Smaller%20Reporting%20Company) LanzaTech's 'smaller reporting company' status allows reduced disclosure obligations, including two years of audited financial statements - LanzaTech is a **'smaller reporting company,'** which allows for reduced disclosure obligations, including providing only two years of audited financial statements[228](index=228&type=chunk) - This status will be maintained until the market value of common stock held by non-affiliates exceeds **$250 million**, or annual revenues exceed **$100 million** and market value exceeds **$700 million**[228](index=228&type=chunk) [Recently Issued and Adopted Accounting Standards](index=47&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Standards) No recently adopted or issued accounting pronouncements are expected to materially impact LanzaTech's financial statements - No recently adopted or issued accounting pronouncements are expected to have a **material impact** on the company[73](index=73&type=chunk)[229](index=229&type=chunk) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, specifically Adjusted EBITDA, to provide additional insight into operating performance - **Adjusted EBITDA** is presented as a non-GAAP financial measure to supplement US GAAP financial statements and provide additional insight into operating performance[230](index=230&type=chunk)[231](index=231&type=chunk) - Adjusted EBITDA is calculated as net loss, excluding depreciation, interest income (expense), stock-based compensation, changes in fair value of warrant and SAFE liabilities, changes in fair value of the prepaid forward contract derivative and Fixed Maturity Consideration, transaction costs on FPA issuance, and loss/(gain) from equity method investees[174](index=174&type=chunk)[231](index=231&type=chunk) **Reconciliation of Net Loss to Adjusted EBITDA (Unaudited, in thousands):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Loss | $(63,312) | $(16,778) | | Depreciation | $1,257 | $1,059 | | Interest income | $(214) | $— | | Stock-based compensation expense and change in fair value of SAFE and warrant liabilities | $(17,474) | $678 | | Change in fair value of the prepaid forward contract derivative and Fixed Maturity Consideration | $51,109 | $— | | Transaction costs on issuance of Forward Purchase Agreement | $451 | $— | | Loss from equity method investees, net | $608 | $282 | | **Adjusted EBITDA** | **$(27,575)** | **$(14,759)** | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) LanzaTech faces market risks from interest rate fluctuations and foreign currency, with no material impact from inflation in Q1 2023 - Primary market risk exposure is **interest rate sensitivity**, particularly from short-term U.S. Treasury and government obligations[237](index=237&type=chunk) - A **100 basis point change** in market interest rates would not materially impact the fair market value of cash and cash equivalents or financial results[237](index=237&type=chunk) - Foreign currency translation adjustments resulted in losses of **$(0.05) million** in Q1 2023 and **$(0.03) million** in Q1 2022[238](index=238&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded LanzaTech's disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2023[242](index=242&type=chunk) - Controls and procedures provide only **reasonable assurance** of achieving objectives and do not prevent all errors or fraud due to inherent limitations and resource constraints[241](index=241&type=chunk) - No **material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[243](index=243&type=chunk) [PART II - OTHER INFORMATION](index=48&type=section&id=Part%20II%20-%20Other%20Information) This section provides additional information beyond the financial statements, including legal proceedings, risk factors, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=48&type=section&id=Item%201.%20Legal%20Proceedings.) LanzaTech does not anticipate any material adverse impact from pending legal proceedings on its financial position or operations - The company does not believe the outcome of any pending legal proceedings will have a **material adverse impact** on its consolidated financial position, results of operations, or cash flows[245](index=245&type=chunk) [ITEM 1A. RISK FACTORS](index=48&type=section&id=Item%201A.%20Risk%20Factors.) No material changes or updates to the risk factors previously discussed in the Annual Report on Form 10-K for Q1 2023 - No **material changes or updates** to the risk factors discussed in the Annual Report on Form 10-K for the three months ended March 31, 2023[246](index=246&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities occurred during the period, other than those previously reported on Form 8-K - No unregistered sales of equity securities occurred during the period, other than those previously reported on Form 8-K[247](index=247&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities[248](index=248&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) No mine safety disclosures are required or reported - No mine safety disclosures[249](index=249&type=chunk) [ITEM 5. OTHER INFORMATION](index=48&type=section&id=Item%205.%20Other%20Information.) No other information is reported in this section - No other information to report[250](index=250&type=chunk) [ITEM 6. EXHIBITS](index=48&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL documents **Key Exhibits Filed:** | Exhibit | Description | | :------ | :---------- | | 31.1* | Certification of Principal Executive Officer | | 31.2* | Certification of Principal Financial Officer | | 32.1*+ | Certification of Principal Executive Officers and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 | | 101.INS | XBRL Instance Document | | 104 | Cover Page Inline XBRL File | [SIGNATURES](index=52&type=section&id=Signatures) The Form 10-Q was signed by LanzaTech's CEO and CFO on May 15, 2023 - The Form 10-Q was signed by Jennifer Holmgren, Ph.D., CEO and Director, and Geoff Trukenbrod, CFO, on **May 15, 2023**[256](index=256&type=chunk)