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Financial report summary
?Competition
Archer Daniels Midland • Valero Energy • Green Plains • Synthetic Genomics • Amyris • POET • Montauk RenewablesRisks
- We have a history of net losses, and we may not achieve or maintain profitability.
- We will require substantial additional financings to achieve our goals, and a failure to obtain this capital when needed or on acceptable terms could force us to delay, limit, reduce or terminate our development and commercialization efforts.
- Our business is capital-intensive in nature and we rely on external financing to fund our growth strategy, including the development and construction of our Net-Zero Projects and other similar growth projects. Limitations on access to external financing could adversely affect our operating results.
- Our proposed growth projects may not be completed or, if completed, may not perform as expected or achieve profitability. Our project development activities may consume a significant portion of our management’s focus, and if not successful, reduce our profitability.
- We may be unable to successfully perform under current or future offtake agreements to provide our products, which could harm our commercial prospects.
- Our offtake agreements, including our take-or-pay purchase agreements, are subject to significant conditions precedent and, as a result, the revenues that we expect from such contracts may never be realized.
- Fluctuations in the price of corn and other feedstocks may affect our cost structure.
- Fluctuations in petroleum prices and customer demand patterns may reduce demand for renewable fuels.
- Any decline in the value of carbon credits associated with our products could have a material adverse effect on our results of operations, cash flow and financial condition.
- We may not be successful in the commercialization of alcohol-to-SAF projects utilizing Axens technology.
- The technological and logistical challenges associated with producing, marketing, selling and distributing renewable hydrocarbon products are complex, and we may not be able to resolve any difficulties that arise in a timely or cost-effective manner, or at all.
- Our actual costs may be greater than expected in developing our growth projects, causing us to realize significantly lower profits or greater losses on our projects.
- We may be unable to produce renewable hydrocarbon products in accordance with customer specifications.
- Our experience may not be sufficient to operate commercial-scale facilities and we may encounter substantial difficulties operating commercial plants or expanding our business.
- Even if we are successful in producing our products on a commercial scale, we may not be successful in negotiating additional fuel offtake agreements or pricing terms to support the growth of our business.
- If we engage in acquisitions, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
- If we engage in joint ventures, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
- If we lose key personnel, including key management personnel, or are unable to attract and retain additional personnel, it could delay our product development programs and harm our research and development efforts, make it more difficult to pursue partnerships or develop our own products or otherwise have a material adverse effect on our business.
- We may face substantial competition from companies with greater resources and financial strength, which could adversely affect our performance and growth.
- Business interruptions may have an adverse impact on our business and our financial results.
- Our business and operations would suffer in the event of IT system failures or a cyber-attack.
- We may engage in hedging transactions, which could adversely impact our business.
- Ethical, legal and social concerns about genetically engineered products and processes, and similar concerns about feedstocks grown on land that could be used for food production, could limit or prevent the use of our products, processes and technologies and limit our revenues.
- As our products have not previously been used as a commercial fuel in significant amounts, their use subjects us to product liability risks.
- We may not be able to use some or all of our net operating loss carry-forwards to offset future income.
- Competitiveness of our products for fuel use (including RNG) depends in part on government economic incentives for renewable energy projects or other related policies that could change.
- In order to benefit from RINs and LCFS credits, our RNG projects are required to be registered and are subject to regulatory audit.
- Our RNG project has, and any future digester project may not be able to achieve the operating results we expect from these projects.
- Our ability to compete may be adversely affected if we are unsuccessful in defending against any claims by competitors or others that we are infringing upon their intellectual property rights.
- Our ability to compete may be adversely affected if we do not adequately protect our proprietary technologies or if we lose some of our intellectual property rights through costly litigation or proceedings.
- We may not be able to enforce our intellectual property rights throughout the world.
- Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.
- We have received funding from U.S. government agencies, which could negatively affect our intellectual property rights.
- The U.S. renewable fuels industry is highly dependent upon certain federal and state legislation and regulation and any changes in legislation or regulation could have a material adverse effect on our results of operations, cash flows and financial condition.
- Reductions or changes to existing regulations and policies may present technical, regulatory and economic barriers, which may significantly reduce demand for renewable fuels or our ability to supply our products.
- Negative attitudes toward renewable energy projects from the U.S. government, other lawmakers and regulators, and activists could adversely affect our business, financial condition and results of operations.
- Any claims relating to improper handling, storage or disposal of hazardous materials or noncompliance with applicable laws and regulations could be time consuming and costly and could adversely affect our business and results of operations.
- Our international activities may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations.
- We may not be able to comply with all applicable listing requirements or standards of The Nasdaq Capital Market and Nasdaq could delist our common stock.
- The market price of our common stock may be adversely affected by the future issuance and sale of additional shares of our common stock or by our announcement that such issuances and sales may occur.
- Future issuances of our common stock or instruments convertible or exercisable into our common stock may materially and adversely affect the price of our common stock and cause dilution to our existing stockholders.
- Raising capital at a subsidiary, or project, level would result in lower revenues attributable back to us.
- Our stock price may be volatile, and your investment in our securities could suffer a decline in value.
- The estimates and assumptions on which our financial projections are based may prove to be inaccurate.
- Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.
- We do not anticipate paying cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their investment.
- If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us or our business.
- We are subject to anti-takeover provisions in our certificate of incorporation, our bylaws and under Delaware law that could delay or prevent an acquisition of the Company, even if the acquisition would be beneficial to our stockholders.
- Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Management Discussion
- Operating revenue. During the three months ended March 31, 2024, operating revenue decreased $0.1 million compared to the three months ended March 31, 2023, primarily due to sales of RNG and environmental attributes from our RNG project. During the three months ended March 31, 2024, we sold 88,967 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.2 million and environmental attribute sales of $3.8 million, see Key Operating Metrics above.
- Cost of production. Cost of production decreased $1.8 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023 primarily due to the production and sales from our RNG project, which significantly increased in 2023, after the ramp-up phase.
- Depreciation and amortization. Depreciation and amortization remained consistent during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.