Aemetis(AMTX) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Q1 2021 financials report $143.7 million total assets, $42.8 million revenues, $18.1 million net loss, and $14.1 million negative operating cash flow Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $24,216 | $8,683 | | Total Assets | $143,733 | $125,139 | | Total Current Liabilities | $66,366 | $102,235 | | Total Liabilities | $282,100 | $309,883 | | Total Stockholders' Deficit | $(138,367) | $(184,744) | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenues | $42,807 | $39,480 | | Gross Loss | $(3,608) | $(433) | | Operating Loss | $(9,013) | $(4,486) | | Net Loss | $(18,112) | $(12,052) | | Net Loss Per Share (Basic & Diluted) | $(0.69) | $(0.58) | Consolidated Statement of Cash Flows Highlights (in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,073) | $610 | | Net cash used in investing activities | $(5,369) | $(2,372) | | Net cash provided by financing activities | $34,631 | $1,420 | | Net change in cash and cash equivalents | $15,195 | $(353) | Note 1. Nature of Activities and Summary of Significant Accounting Policies Aemetis operates renewable fuel plants in California and India, producing ethanol and biodiesel, and developing RNG, cellulosic ethanol, and 'Carbon Zero' fuels - The company operates a 65 million gallon/year ethanol plant in Keyes, CA and a 50 million gallon/year biodiesel plant in Kakinada, India[20][22] - Aemetis is developing several new projects, including: Aemetis Biogas (ABGL) to produce Renewable Natural Gas (RNG) from dairy digesters, with the first two completed in Q3 2020; A 'Carbon Zero 1' plant to produce 45 million gallons/year of renewable jet and diesel fuel; Aemetis Carbon Capture, Inc., a new subsidiary formed in April 2021 to sequester CO₂[23][29][30] - In response to the COVID-19 pandemic, Aemetis began producing and selling high-grade alcohol for hand sanitizer in March 2020 under its Aemetis Health Products subsidiary[26][27] Revenue by Product Category (in thousands) | Region / Product | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | North America | | | | Ethanol & high-grade alcohol | $29,920 | $25,322 | | Wet distiller's grains | $11,035 | $8,374 | | India | | | | Biodiesel | $358 | $2,793 | | Refined glycerin | $116 | $90 | Note 4. Debt Total debt decreased to $199.4 million by March 31, 2021, mainly from GAFI loan repayment, with Third Eye Capital notes as the primary outstanding debt Debt Composition (in thousands) | Debt Category | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Third Eye Capital Notes (all) | $130,576 | $125,624 | | EB-5 promissory notes | $42,769 | $43,120 | | GAFI Term and Revolving loans | $0 | $33,626 | | Total Debt | $199,415 | $229,619 | - The maturity date for the significant Third Eye Capital notes was extended to April 1, 2022, and the reserve liquidity facility increased to $70.0 million[84][87] - The company fully repaid the GAFI Term and Revolving loans during the first quarter of 2021[111] Note 5. Commitments and Contingencies The company faces a $6.2 million legal loss contingency from EdenIQ, which it plans to appeal, and a $6.1 million property tax liability - The company is involved in a legal proceeding with EdenIQ, Inc. and has recorded a $6.2 million loss contingency related to a court award for EdenIQ's legal fees, which the company intends to appeal[129] - As of March 31, 2021, the company had an accrued property tax liability of $6.1 million with Stanislaus County and is negotiating a payment plan[127] Note 9. Segment Information Q1 2021 segment results show North America with $42.3 million revenues and $3.6 million gross loss, while India had $0.5 million revenues and $55 thousand gross loss Segment Financial Summary for Q1 2021 (in thousands) | Metric | North America | India | Total Consolidated | | :--- | :--- | :--- | :--- | | Revenues | $42,328 | $479 | $42,807 | | Gross (Loss) Profit | $(3,553) | $(55) | $(3,608) | | Loss before income taxes | $(17,710) | $(395) | $(18,105) | | Capital Expenditures | $6,443 | $117 | $6,560 | - In North America, sales to two customers accounted for 71% and 29% of segment revenues, respectively, for Q1 2021[150][155] Note 12. Management's Plans Management acknowledges substantial doubt about going concern, outlining plans to improve plant performance, expand biogas, fund new projects, and secure higher sales - The company's dependence on its senior lender raises substantial doubt about its ability to continue as a going concern[162] - Strategic plans include: Keyes Plant: Adopt new technologies for energy efficiency and cost reduction; Biogas Project: Build new dairy digesters and extend the pipeline; Riverbank Project: Raise funds to construct the 'Carbon Zero 1' plant; India Plant: Secure higher sales volumes and expand domestic markets[163][164] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Q1 2021 revenues grew 8% to $42.8 million, but 26% higher COGS led to a $3.6 million gross loss, with liquidity improving to $15.8 million cash from equity Results of Operations Q1 2021 North America revenues grew 18% to $42.3 million (higher ethanol prices), but 32% higher corn costs widened gross loss to $3.6 million, while India's revenues plummeted 87% Revenue Comparison (in thousands) | Segment | Q1 2021 | Q1 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | North America | $42,328 | $35,872 | $6,456 | 18% | | India | $479 | $3,608 | $(3,129) | -87% | | Total | $42,807 | $39,480 | $3,327 | 8% | - The increase in North America revenue was driven by a 22% increase in the average price of ethanol ($1.91/gallon vs. $1.56/gallon), while the average price of WDG increased 36% ($106/ton vs. $78/ton)[189] - North America's cost of goods sold increased 26%, primarily because the average cost of corn feedstock increased to $6.87 per bushel from $5.20 per bushel in the prior-year period[191] Gross Loss Comparison (in thousands) | Segment | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | North America | $(3,553) | $(541) | $(3,012) | | India | $(55) | $108 | $(163) | | Total | $(3,608) | $(433) | $(3,175) | Liquidity and Capital Resources Cash increased to $15.8 million by March 31, 2021, from $62.4 million equity proceeds, enabling $30.2 million net debt reduction, despite $14.1 million cash used in operations - Cash and cash equivalents increased to $15.8 million at March 31, 2021, from $0.6 million at December 31, 2020[203][205] - Cash provided by financing activities was $34.6 million, driven by $62.4 million from a common stock issuance, which was partially used to repay $31.6 million of debt[219] - Total debt decreased by a net of $30.2 million during the quarter, primarily from the repayment of $34.8 million in GAFI interest and principal[215] - Subsequent to the quarter-end, the company raised an additional $23.9 million through its ATM offering and used the proceeds to repay approximately $22.0 million of Third Eye Capital notes[161] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, this section on market risk disclosures is not applicable - Not Applicable[223] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of March 31, 2021, due to a material weakness in internal control over financial reporting, with remediation ongoing - Management concluded that disclosure controls and procedures were not effective as of the end of the period covered by this report[224] - The ineffectiveness is due to a material weakness over financial reporting identified in the company's 2020 Form 10-K, for which remediation efforts are ongoing[224][225] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is in an ongoing legal dispute with EdenIQ, Inc., recording a $6.2 million liability for awarded fees, which it plans to appeal - The company is in a legal dispute with EdenIQ, Inc. following a terminated merger agreement[228] - A court awarded EdenIQ approximately $6.2 million in fees and costs, which the company has recorded as a liability and plans to appeal[228] Item 1A. Risk Factors No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2020 - No change in risk factors from the Annual Report on Form 10-K for the year ended December 31, 2020[229] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2021, the company issued 113 thousand common shares from warrant exercises at $0.01 per share, exempt under Section 4(2) of the Securities Act of 1933 - In Q1 2021, the company issued 113 thousand shares of common stock from the exercise of warrants at $0.01 per share[229]