Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document Document And Entity Information Abstract | ||
Entity Registrant Name | AEMETIS, INC. | |
Entity Central Index Key | 738,214 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 19,822,962 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,749 | $ 1,486 |
Accounts receivable | 2,199 | 1,557 |
Inventories | 5,742 | 3,241 |
Prepaid expenses | 2,717 | 555 |
Other current assets | 233 | 206 |
Total current assets | 12,640 | 7,045 |
Property, plant and equipment, net | 79,360 | 66,370 |
Intangible assets, net of accumulated amortization of $485 and $424, respectively | 1,239 | 1,300 |
Other assets | 3,092 | 3,095 |
Total assets | 96,331 | 77,810 |
Current liabilities: | ||
Accounts payable | 9,367 | 7,842 |
Current portion of long term debt | 1,822 | 2,027 |
Short term borrowings | 12,737 | 9,382 |
Mandatorily redeemable Series B convertible preferred stock | 2,920 | 2,844 |
Accrued property taxes | 3,658 | 2,648 |
Other current liabilities | 3,312 | 2,473 |
Total current liabilities | 33,816 | 27,216 |
Long term liabilities: | ||
Senior secured notes | 70,865 | 61,631 |
EB-5 notes | 34,000 | 33,000 |
GAFI secured and revolving notes | 23,373 | 0 |
Long term subordinated debt | 5,786 | 5,674 |
Other long term liabilities | 37 | 102 |
Total long term liabilities | 134,061 | 100,407 |
Stockholders' deficit: | ||
Series B convertible preferred stock, $0.001 par value; 7,235 authorized; 1,328 shares issued and outstanding each period, respectively (aggregate liquidation preference of $3,984 respectively) | 1 | 1 |
Common stock, $0.001 par value; 40,000 authorized; 19,710 and 19,858 shares issued and outstanding, respectively | 20 | 20 |
Additional paid-in capital | 84,128 | 83,441 |
Accumulated deficit | (151,911) | (129,887) |
Accumulated other comprehensive loss | (3,077) | (3,388) |
Total stockholders' deficit attributable to Aemetis, Inc. | (70,839) | (49,813) |
Non-controlling interest - GAFI | (707) | 0 |
Total stockholders' deficit | (71,546) | (49,813) |
Total liabilities and stockholders' deficit | $ 96,331 | $ 77,810 |
CONSOLIDATED CONDENSED BALANCE3
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Intangible assets, accumulated amortization | $ 485 | $ 424 |
Series B Preferred stock, par value | $ 0.001 | $ 0.001 |
Series B Preferred stock, authorized | 7,235 | 7,235 |
Series B Preferred stock, shares issued | 1,323 | 1,328 |
Series B Preferred stock, shares outstanding | 1,323 | 1,328 |
Aggregate Liquidation Preference | $ 3,969 | $ 3,984 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 19,823 | 19,858 |
Common stock, shares outstanding | 19,823 | 19,858 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenues | $ 38,935 | $ 39,377 | $ 111,273 | $ 105,762 |
Cost of goods sold | 36,980 | 35,711 | 108,200 | 98,066 |
Gross profit | 1,955 | 3,666 | 3,073 | 7,696 |
Research and development expenses | 1,876 | 87 | 2,072 | 290 |
Selling, general and administrative expenses | 3,182 | 3,222 | 9,739 | 9,123 |
Operating income (loss) | (3,103) | 357 | (8,738) | (1,717) |
Interest expense | ||||
Interest rate expense | 3,867 | 3,046 | 9,873 | 8,679 |
Amortization expense | 1,265 | 1,425 | 4,112 | 4,269 |
Other (income) expense | (18) | (19) | 2 | (480) |
Loss before income taxes | (8,217) | (4,095) | (22,725) | (14,185) |
Income tax expense | 0 | 0 | 6 | 6 |
Net loss | (8,217) | (4,095) | (2,731) | (14,191) |
Less: Net loss attributable to non-controlling interest | (707) | 0 | (707) | 0 |
Net loss attributable to Aemetis, Inc. | (7,510) | (4,095) | (22,024) | (14,191) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | (87) | 56 | 311 | (50) |
Comprehensive loss | $ (8,304) | $ (4,039) | $ (22,420) | $ (14,241) |
Net loss per common share | ||||
Basic | $ (0.38) | $ (0.21) | $ (1.11) | $ (0.72) |
Diluted | $ (0.38) | $ (0.21) | $ (1.11) | $ (0.72) |
Weighted average shares outstanding | ||||
Basic | 19,804 | 19,833 | 19,760 | 19,741 |
Diluted | 19,804 | 19,833 | 19,760 | 19,741 |
CONSOLIDATED CONDENSED STATEME5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities: | ||
Net loss | $ (22,731) | $ (14,191) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 800 | 573 |
Depreciation | 3,471 | 3,523 |
Debt related amortization expense | 4,112 | 4,269 |
Intangibles and other amortization expense | 98 | 95 |
Change in fair value of warrant liability | 3 | 34 |
Loss on sale/disposal of assets | 0 | 11 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (932) | 150 |
Inventories | (2,456) | 795 |
Prepaid expenses | 89 | 82 |
Other current assets and other assets | (41) | (175) |
Accounts payable | 1,507 | (1,315) |
Accrued interest expense and fees, net of payments | 8,091 | 5,910 |
Other liabilities | 1,633 | 683 |
Net cash provided by (used in) operating activities | (6,356) | 444 |
Investing activities: | ||
Capital expenditures | (681) | (479) |
Net cash used in investing activities | (681) | (479) |
Financing activities: | ||
Proceeds from borrowings | 13,146 | 8,535 |
Repayments of borrowings | (8,889) | (8,091) |
GAFI proceeds from borrowings | 2,810 | 0 |
Net cash provided by financing activities | 7,067 | 444 |
Effect of exchange rate changes on cash and cash equivalents | 233 | (40) |
Net cash and cash equivalents increase (decrease) for period | 263 | 369 |
Cash and cash equivalents at beginning of period | 1,486 | 283 |
Cash and cash equivalents at end of period | 1,749 | 652 |
Supplemental disclosures of cash flow information, cash paid: | ||
Interest paid | 1,875 | 2,518 |
Income taxes paid | 6 | 6 |
Supplemental disclosures of cash flow information, non-cash transactions: | ||
Subordinated debt extension fees added to debt | 680 | 680 |
Fair value of warrants issued to subordinated debt holders | 321 | 578 |
Repurchase of common stock added to TEC promissory note | 451 | 0 |
Senior debt extension and waiver fees added to debt | 4,446 | 4,940 |
TEC promissory note fees and fees for Goodland transaction | 1,169 | 0 |
Settlement of accounts payable through transfer of equipment | 0 | 66 |
GAFI plant, property & equipment acquired | 15,431 | 0 |
Payment of TEC bridge loan added to GAFI Revolving loan | 3,669 | 0 |
Prepaid interest on GAFI Term loan | $ 2,250 | $ 0 |
1. Nature of Activities and Sum
1. Nature of Activities and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
1. Nature of Activities and Summary of Significant Accounting Policies | Nature of Activities Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis, Inc., a Nevada corporation, and its wholly owned subsidiaries (collectively, “Aemetis” or the “Company”). Additionally, we consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, there are situations in which an enterprise is required to consolidate a variable interest entity (VIE), even though the enterprise does not own a majority of the voting interests. An enterprise must consolidate a VIE if the enterprise is the primary beneficiary of the VIE. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. In July 2017, we closed on a transaction with Goodland Advanced Fuels, Inc. (GAFI). Upon application of consolidation guidance in ASC 810 Consolidation All intercompany balances and transactions have been eliminated in consolidation including any transactions between GAFI and Aemetis, Inc. The accompanying consolidated condensed balance sheet as of September 30, 2017, the consolidated condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016, and the consolidated condensed statements of cash flows for the nine months ended September 30, 2017 and 2016 are unaudited. The consolidated condensed balance sheet as of December 31, 2016 was derived from the 2016 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2016 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited interim consolidated condensed financial statements for the three and nine months ended September 30, 2017 and 2016 have been prepared on the same basis as the audited consolidated statements as of December 31, 2016 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods. Use of Estimates Revenue Recognition Cost of Goods Sold Accounts Receivable. The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We did not reserve any balance for allowance for doubtful accounts as of September 30, 2017 and December 31, 2016. Inventories Property, Plant and Equipment The Company evaluates the recoverability of long-lived assets with finite lives in accordance with Accounting Standards Codification (ASC) Subtopic 360-10-35 Property, Plant and Equipment –Subsequent Measurements, Basic and Diluted Net Income (Loss) per Share. The following table shows the number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation as of September 30, 2017 and 2016: September 30, 2017 September 30, 2016 Series B preferred (post split basis) 132 133 Common stock options and warrants 2,554 1,965 Debt with conversion feature at $30 per share of common stock 1,194 861 Total number of potentially dilutive shares excluded from the diluted net loss per share calculation 3,880 2,959 Comprehensive Loss. Comprehensive Income Foreign Currency Translation/Transactions. Operating Segments. The “North America” operating segment includes the Company’s 60 million gallons per year capacity Keyes plant in Keyes, California, the GAFI plant in Goodland, Kansas and the research and development facility. The “India” operating segment encompasses the Company’s 50 million gallon per year capacity biodiesel plant in Kakinada, India, its administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. Fair Value of Financial Instruments. Share-Based Compensation. Stock Compensation, Commitments and Contingencies. Contingencies Debt Modification Accounting Debt – Modification and Extinguishments Convertible Instruments Recently Issued Accounting Pronouncements In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance stated that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company’s adoption of this accounting standard begins with the first quarter of fiscal year 2018. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations regarding whether an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and financial condition and will be providing guidance in its Form 10-K for the year ended December 31, 2017. |
2. Inventories
2. Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
2. Inventories | Inventory consists of the following: September 30, 2017 December 31, 2016 Raw materials $ 2,306 $ 1,044 Work-in-progress 1,946 1,360 Finished goods 1,490 837 Total inventories $ 5,742 $ 3,241 |
3. Property, Plant and Equipmen
3. Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
3. Property, Plant and Equipment | Property, plant and equipment consist of the following: September 30, 2017 December 31, 2016 Land $ 2,734 $ 2,713 Plant and buildings 82,390 81,755 Furniture and fixtures 983 572 Machinery and equipment 3,951 4,308 Construction in progress 522 88 GAFI property, plant & equipment 15,431 0 Total gross property, plant & equipment 106,011 89,436 Less accumulated depreciation (26,651 ) (23,066 ) Total net property, plant & equipment $ 79,360 $ 66,370 Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Years Plant and buildings 20 - 30 Machinery and equipment 5 - 7 Furniture and fixtures 3 - 5 For the three months ended September 30, 2017 and 2016, the Company recorded depreciation expense of $1.2 million for each period. For the nine months ended September 30, 2017 and 2016, the Company recorded depreciation expense of $3.5 million for each period. Management is required to evaluate these long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Management determined there was no impairment of long-lived assets during the three and nine months ended September 30, 2017 and 2016. |
4. Debt
4. Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
4. Debt | Debt consists of the following: September 30, 2017 December 31, 2016 Third Eye Capital term notes $ 6,832 $ 6,577 Third Eye Capital revolving credit facility 32,778 24,927 Third Eye Capital revenue participation term notes 11,473 11,042 Third Eye Capital acquisition term notes 19,782 19,085 Cilion shareholder seller notes payable 5,786 5,674 Subordinated notes 8,445 7,565 EB-5 long term promissory notes 35,822 35,027 Unsecured working capital loans 4,292 1,817 GAFI Term and Revolving loans 23,373 - Total debt 148,583 111,714 Less current portion of debt 14,559 11,409 Total long term debt $ 134,024 $ 100,305 Third Eye Capital Note Purchase Agreement On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement with Third Eye Capital (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $7.2 million to replace existing notes held by Third Eye Capital (the “Term Notes”); (ii) senior secured revolving loans in an aggregate principal amount of $18.0 million (“Revolving Credit Facility”); (iii) senior secured term loans in the principal amount of $10.0 million to convert the prior revenue participation agreement to a note (“Revenue Participation Term Notes”); and (iv) senior secured term loans in an aggregate principal amount of $15.0 million (“Acquisition Term Notes”) used to fund the cash portion of the acquisition of Cilion, Inc. (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the Original Third Eye Capital Notes). After this financing transaction, Third Eye Capital obtained sufficient equity ownership in the Company to be considered a related party. The Original Third Eye Capital Notes have a maturity date of April 1, 2018. On January 31, 2017, a Promissory Note (the “January 2017 Note”, together with the Original Third Eye Capital Notes, the “Third Eye Capital Notes”) for $2.1 million was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14% per annum maturing on the earlier of (a) receipt of proceeds from any financing, refinancing, or other similar transaction, (b) extension of credit by payee, as lender or as agent on behalf of certain lenders, to the Company or its affiliates, or (c) May 30, 2017. In addition, as part of the January 2017 Note agreement, Aemetis used $0.5 million of the total proceeds to buy back 275 thousand common shares that were held by Third Eye Capital. In consideration of the January 2017 Note, $133 thousand of the total proceeds were paid to Third Eye Capital as financing charges. As of June 30, 2017, the outstanding balance on the January 2017 Note was $2.1 million. On July 10, 2017, the January 2017 Note was paid in full. On March 1, 2017, Third Eye Capital agreed to Amendment No. 13 to the Note Purchase Agreement to: (i) extend the maturity date of the Third Eye Capital Notes to April 1, 2018 in exchange for a 5% extension fee consisting of adding $3.1 million to the outstanding principal balance of the Note Purchase Agreement and allowing for the further extension of the maturity date of the Third Eye Capital Notes to April 1, 2019, at the Company’s election, for an additional extension fee of 5% of the then outstanding Third Eye Capital Notes outstanding balance, (ii) waive the free cash flow financial covenant under the Note Purchase Agreement for the three months ended December 31, 2016, (iii) provide that such covenant will be deleted prospectively from the Note Purchase Agreement, (iv) waive the default under the Note Purchase Agreement relating to indebtedness outstanding to Laird Cagan and (v) waive the covenant under the Note Purchase Agreement to permit the Company to pay off the defaulted Laird Cagan subordinated note by issuing stock. The borrowers agreed to use their best efforts to close the transaction to purchase assets in Goodland, Kansas from Third Eye Capital as described in a non-binding offer to purchase letter between an affiliate of the Company and Third Eye Capital, which closed on July 10, 2017. As consideration for such amendment and waiver, the borrowers agreed to pay Third Eye Capital an amendment and waiver fee of $750 thousand to be added to the outstanding principal balance of the Revolving Credit Facility. As a result of the extension of the maturity date in Amendment No. 13, the Third Eye Capital Notes are classified as non-current debt. We evaluated the Amendment of the Notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment On April 28, 2017, a Promissory Note (the “April 2017 Note”, and together with the Original Third Eye Capital Notes, the “Third Eye Capital Notes”) for $1.5 million was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14% per annum maturing on the earliest of (a) closing of the Financing, (b) receipt of proceeds from any financing, refinancing or other similar transaction, (c) extension of credit by the Lender, or Agent on behalf of certain lenders or the Noteholders, to the Debtors or their affiliates, and (d) June 15, 2017. In addition, $1.0 million of this note represents fees payable by Goodland Advanced Fuels, Inc. upon the closing of the Goodland transaction. On July 10, 2017, the April 2017 Note was paid in full and the fees payable by Goodland Advanced Fuels, Inc., were paid. Terms of Third Eye Capital Notes A. Term Notes B. Revolving Credit Facility C. Revenue Participation Term Notes D. Acquisition Term Notes E . January 2017 Note. F . April 2017 Note. The Company can extend the maturity date of the Term Notes, Revolving Credit Facility Notes, Revenue Participation Notes, and Acquisition Term Notes to April 2019. As a condition to any such extension, the Company would be required to pay a fee of 5% of the carrying value of the debt. By this ability to extend the maturity at the Company’s will, the Third Eye Capital Notes are classified as non-current debt. The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from government grants and guarantees from Aemetis, Inc. The Third Eye Capital Notes contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee for $8.0 million. Cilion shareholder seller notes payable Subordinated Notes Interest is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full. On January 1, 2017, the Subordinated Notes were amended to extend the maturity date until the earlier of (i) June 30, 2017; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; or (iii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10% cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. We evaluated the January 1, 2017 amendment and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment On July 1, 2017, the Subordinated Notes were amended to extend the maturity date until the earlier of (i) December 31, 2017; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; or (iii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10% cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. We evaluated the July 1, 2017 amendment and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment On January 14, 2013, Laird Cagan, a related party, loaned $0.1 million through a promissory note maturing on December 31, 2016 with a five percent annualized interest rate and the right to exercise 5 thousand warrants exercisable at $0.01 per share. At September 30, 2017, the Company owed, in aggregate, the amount of $8.4 million in principal and interest net of $0.3 million in debt issuance costs under the Subordinated Notes. EB-5 long-term promissory notes Advanced BioEnergy, LP arranges investments with foreign investors, who each make loans to the Keyes plant in increments of $0.5 million. As of September 30, 2017, the Company has sold an aggregate principal amount of $36.0 million of EB-5 Notes under the EB-5 Phase I funding since 2012, of which $34.5 million have been released from the escrow account to the Company, with $1.0 million remaining in escrow and $0.5 million to be funded to escrow. As of September 30, 2017, $34.5 million in principal and $1.3 million in accrued interest remained outstanding. On October 16, 2016, the Company launched its EB-5 Phase II funding, with plans to issue $50.0 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under the Company’s EB-5 Phase I funding to refinance indebtedness and capital expenditures of Aemetis, Inc.. Unsecured working capital loans On April 16, 2017, the Company entered into a similar operating agreement with Gemini Edibles and Fats India Private Limited (“Gemini”). Under this agreement, Gemini agreed to provide the Company with working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for its Kakinada biodiesel facility. Working capital advances bear interest at the actual bank-borrowing rate of Gemini of twelve percent (12%). In return, the Company agreed to pay Gemini an amount equal to 30% of the plant’s monthly net operating profit and recognized these as operational support charges in the financials. In the event that the Company’s biodiesel facility operates at a loss, Gemini owes the Company 30% of the losses as operational support charges. Either party can terminate the agreement at any time without penalty. Additionally, Gemini received a first priority lien on the assets of the Kakinada biodiesel facility. Since the inception of this agreement, the Company made principal and interest payments to Gemini of approximately $6.2 million. As of September 30, 2017, the Company had $3.6 million outstanding on this raw material purchase agreement. In October 2016, the Company made an agreement with a supplier of palm stearin to its Kakinada plant to pay 12% interest on an unpaid balance under the raw material purchase agreement of $1.9 million. As of September 30, 2017 and December 31, 2016, the Company had nil and $1.5 million outstanding on this raw material purchase agreement, respectively. Variable Interest Entity (GAFI) Term loan and Revolving loan On July 10, 2017, GAFI entered into a Note Purchase Agreement (“VIE Note Purchase Agreement”) with Third Eye Capital Corporation. See further discussion regarding GAFI in Note 6. Pursuant to the VIE Note Purchase Agreement, the Noteholders agreed, subject to the terms and conditions of the VIE Note Purchase Agreement and relying on each of the representations and warranties set forth therein, to make (i) a single term loan to GAFI in an aggregate amount of fifteen million dollars (“Term Loan”) and (ii) revolving advances not to exceed ten million dollars in the aggregate (“Revolving Loan”). The interest rate per annum applicable to the Term Loan is equal to ten percent (10%). The interest rate per annum applicable to the Revolving Loans is the greater of (a) the Prime Rate plus seven and three quarters percent (7.75%) and (b) twelve percent (12%). The maturity date of the Loans (“Maturity Date”) is July 10, 2019, provided that the Maturity Date may be extended at the option of GAFI for up to two additional one-year periods upon prior written notice and upon satisfaction of certain conditions and the payment of a renewal fee for such extension. An initial advance under the Revolving Loan was made for $2.2 million as a prepayment of interest on the Term Loan for the first eighteen months of interest payments. In addition, a fee of $1.0 million was paid in consideration to Noteholders. GAFI, the Company and its subsidiary Aemetis Advanced Products Keyes, Inc. (“AAPK”) also entered into separate Intercompany Revolving Promissory Notes, dated July 10, 2017 (“Intercompany Revolving Notes”), pursuant to which GAFI may, from time to time, lend a portion of the proceeds of the Revolving Loan borrowed under the VIE Note Purchase Agreement. In consideration for the direct and indirect benefits from the transactions contemplated by the VIE Note Purchase Agreement and the Intercompany Revolving Notes, Aemetis, Inc. and AAPK “Guarantors” agreed to enter into a Limited Guaranty. Pursuant to the Limited Guaranty, the Guarantors guarantee the prompt payment and performance of all unpaid principal and interest on the Loans and all other obligations and liabilities of GAFI to any Noteholders in connection with the VIE Note Purchase Agreement. The obligations of the Guarantors pursuant to the Limited Guaranty are secured by a first priority lien over all assets of the Guarantors subject to lien existing in connection with the Existing Note Purchase Agreement of Guarantors. Each Guarantor agreed to make the following regulatory and financial covenants: i) maintenance of existence and compliance, ii) payment of obligations; iii) reporting requirements on financials of Guarantors annually, quarterly; iv) delivery of cellulosic ethanol project progress reports within 15 days of the month end, v) ensuring the ratio of: (a) the sum of (i) the most recent Mortgaged Property Market Value, and (ii) the most recent AAPK’s cellulosic ethanol project value to (b) the Note Indebtedness, to be less than 2.00:1.00, tested as of the last day of each fiscal quarter, and (iv) permit the amount of trade payables due to exceed the sum of the amount of the GAFI’s Cash Equivalents plus the revolving advances available to be advanced under the Revolving Loan, tested as of the last day of each month. As of September 30, 2017, GAFI obligations are as follows: As of September 30, 2017 Term loan $ 15,000 Revolving loan 9,248 Total debt $ 24,248 Less: Debt issuance costs (875 ) Total debt $ 23,373 Scheduled debt repayments for loan obligations follow: Twelve months ended September 30, Debt Repayments 2018 $ 14,559 2019 119,381 2020 5,000 2021 12,536 Total debt 151,476 Discounts (2,643 ) Total debt, net of discounts $ 148,833 |
5. Stock-Based Compensation
5. Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' deficit: | |
5. Stock Based Compensation | Plan Stock Options Aemetis authorized the issuance of 2.6 million shares of common stock under its Zymetis 2006 Stock Plan and Amended and Restated 2007 Stock Plan (together, the “Company Stock Plans”), which include both incentive and non-statutory stock options. These options generally expire five to ten years from the date of grant with a general vesting term of 1/12th every three months and are exercisable at any time after vesting subject to continuation of employment. On January 19, 2017, 637 thousand stock option grants were issued to employees and directors under the Company Stock Plans. As of September 30, 2017, 2.2 million options are outstanding under the Company Stock Plans. Non-Plan Stock Options In November 2012, the Company issued 98 thousand stock options to board members and consultants outside of any Company stock option plan. As of September 30, 2017, all options are vested and 89 thousand options are outstanding. Inducement Equity Plan Options In March 2016, the Board of Directors of the Company approved an Inducement Equity Plan authorizing the issuance of 100 thousand non-statutory stock options to purchase common stock. As of September 30, 2017, 37 thousand options were outstanding. Common Stock Reserved for Issuance The following is a summary of options granted under the Company Stock Plans: Shares Available for Grant Number of Shares Outstanding Weighted-Average Exercise Price Balance as of December 31, 2016 98 1,632 $ 4.37 Authorized 655 - - Granted (637 ) 637 1.72 Forfeited/expired 46 (46 ) 21.04 Balance as of September 30, 2017 162 2,223 $ 3.27 Stock-based compensation for employees Stock-based compensation is accounted for in accordance with the provisions of ASC 718, Compensation-Stock Compensation For the three months ended September 30, 2017 and 2016, the Company recorded stock compensation expense in the amount of $196 thousand and $172 thousand, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded stock compensation expense in the amount of $800 thousand and $573 thousand, respectively. Valuation and Expense Information All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. We also estimate forfeitures of unvested stock options. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. No compensation cost is recorded for options that do not vest. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed zero due to the small number of plan participants and the plan. There were no stock options granted during the three months ended September 30, 2017. As of September 30, 2017, the Company had $1.1 million of total unrecognized compensation expense for employees that the Company will amortize over the 1.81 years of weighted average remaining term. |
6. Variable Interest Entity
6. Variable Interest Entity | 9 Months Ended |
Sep. 30, 2017 | |
Variable Interest Entity | |
6. Variable Interest Entity | Goodland Advanced Fuels, Inc., (GAFI) was formed to acquire the Goodland plant in Goodland, Kansas. On July 10, 2017, GAFI entered into the VIE Note Purchase Agreement with Third Eye Capital Corporation. GAFI, the Company and its subsidiary Aemetis AAPK also entered into separate Intercompany Revolving Notes, pursuant to which GAFI may, from time to time, lend a portion of the proceeds of the Revolving Loan incurred under the VIE Note Purchase Agreement. Guarantors also agreed to enter into that certain Limited Guaranty. Pursuant to which the Guarantors guarantee the prompt payment and performance of all unpaid principal and interest on the Loans and all other obligations and liabilities of GAFI to Noteholders in connection with the VIE Note Purchase Agreement. The obligations of the Guarantors pursuant to the Limited Guaranty are secured by a first priority lien over all assets of the Guarantors pursuant to separate general security agreements entered into by each Guarantor. The aggregate obligations and liabilities of each Guarantor is limited to the sum of (i) the aggregate amount advanced by GAFI to such Guarantor under and in accordance with the Intercompany Revolving Notes and (ii) the obligation of the Guarantor pursuant to its indemnity and expense obligations under the Limited Guaranty prior to the date on which the Option is exercised. Additionally, on July 10, 2017, the Company entered into an Option Agreement by and between GAFI and the sole shareholder of GAFI, pursuant to which Aemetis was granted an irrevocable option to purchase all, but not less than all, of the capital stock of GAFI for an aggregate purchase price equal to $0.01 per share (total purchase price of $10.00). This Option provides for automatic triggering in the event of certain default circumstances. After the automatic exercise upon default, the Limited Guaranty no longer applies and the Guarantors are responsible for the outstanding balances of the GAFI term and revolving loan. After consideration of the above agreements, we concluded that GAFI did not have enough equity to finance its activities without additional subordinated support. Additionally, GAFI’s shareholder did not have a controlling financial interest in the entity. Hence, we concluded that GAFI is VIE. GAFI is also not a business since it also does not have processes or inputs that have the ability to create an output and in turn provide the return to the investor. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly affect the economic performance of the VIE and the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. In determining whether Aemetis is the primary beneficiary, a number of factors are considered, including the structure of the entity, contractual provisions that grant any additional rights to influence or control the economic performance of the VIE, and obligation to absorb significant losses. Through providing Limited Guaranty and signing the Option Agreement, the Company took the risks related to operations, financing the Goodland plant, and agreed to meet the financial covenants to GAFI to be in existence. Based upon this assessment, Aemetis has enough power to direct the activities of GAFI and has been determined to be the primary beneficiary of the GAFI and accordingly the assets, liabilities, and operations of GAFI are consolidated into those of the Company. The assets and liabilities were recognized at fair value. In addition, the interest for 18 months was prepaid which can be used to pay the interest on GAFI term loan only and the Goodland plant is collateral for the term loan obligation. The following are the Balance Sheet and Statement of Operations of GAFI: As of September 30, 2017 Assets Current assets: Cash and cash equivalents $ 482 Prepaid expenses 1,978 Total current assets 2,460 Property, plant and equipment, net 15,408 Promissory note receivable from Aemetis 4,802 Total assets $ 22,670 Liabilities and stockholder's deficit Accounts Payable $ 4 Secured and Revolving notes 23,373 Total liabilities 23,377 Accumulated deficit (707 ) Total liabilities and stockholder's deficit $ 22,670 From July 10, 2017 to September 30, 2017 Selling, general and administrative expenses $ 131 Operating loss (131 ) Interest expense Interest rate expense 584 Amortization expense 125 Other (income) expense (133 ) Net loss $ (707 ) Aemetis, Inc. borrowed $4.8 million under the Intercompany Revolving Notes to pay off agent advances and pay costs associated with the testing of cellulosic ethanol production. Aemetis paid GAFI fees of $1.0 million associated with the entry into the VIE Note Purchase Agreement, and accordingly holds an account receivable from GAFI. In the consolidation process, these intercompany borrowings were eliminated. |
7. Agreements
7. Agreements | 9 Months Ended |
Sep. 30, 2017 | |
Agreements | |
7. Agreements | Working Capital Arrangement. The J.D. Heiskell sales activity associated with the Purchasing Agreement, Corn Procurement and Working Capital Agreements during the three and nine months ended September 30, 2017 and 2016 are as follows: As of and for the three months ended September 30, As of and for the nine months ended September 30, 2017 2016 2017 2016 Ethanol sales $ 26,394 $ 24,687 $ 75,695 $ 68,993 Wet distiller's grains sales 5,735 6,114 15,523 16,918 Corn oil sales 1,043 788 2,693 2,232 Corn/milo purchases 25,751 23,098 75,478 67,766 Accounts receivable 776 345 776 345 Accounts payable 1,976 1,241 1,976 1,241 Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into forward purchase contracts for approximately 0.9 million bushels of corn, which is the principal raw material for ethanol production. The delivery of this grain will be expected through December 2017. In addition, the Company has forward sales commitments for approximately 56 thousand tons of WDG. These committed sales will be expected through December 2017. Unrealized gains and losses on forward contracts and commitments, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment. |
8. Segment Information
8. Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
8. Segment Information | Aemetis recognizes two reportable geographic operating segments: “North America” and “India.” The “North America” operating segment includes the Company’s owned ethanol plant in Keyes, California, the GAFI plant in Goodland , Kansas and its technology research and development lab. As the Company’s technology gains market acceptance, this business segment will initially include its domestic commercial application of cellulosic ethanol technology, its plant construction projects and any acquisitions of ethanol or ethanol related technology facilities in North America. The “India” operating segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing plant in Kakinada, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly. Summarized financial information by reportable segment for the three and nine months ended September 30, 2017 and 2016 follows: For the three months ended September 30, For the nine months ended September 30, 2017 2016 2017 2016 Revenues North America $ 36,012 $ 33,889 $ 101,430 $ 93,979 India 2,923 5,488 9,843 11,783 Total revenues $ 38,935 $ 39,377 $ 111,273 $ 105,762 Cost of goods sold North America $ 33,995 $ 30,391 $ 99,003 $ 86,174 India $ 2,985 5,320 9,197 11,892 Total cost of goods sold $ 36,980 $ 35,711 $ 108,200 $ 98,066 Gross profit (loss) North America $ 2,017 $ 3,498 $ 2,427 $ 7,805 India (62 ) 168 646 (109 ) Total gross profit (loss) $ 1,955 $ 3,666 $ 3,073 $ 7,696 North America. During the three and nine months ended September 30, 2016, the Company’s revenues from ethanol, WDG, and corn oil were earned pursuant to the Corn Procurement and Working Capital Agreement established between the Company and J.D. Heiskell. Sales of ethanol, WDG, and corn oil to J.D. Heiskell accounted for 93% and 94% of the Company’s North America segment revenues for the three and nine months ended September 30, 2016, respectively. India During the nine months ended September 30, 2017, two biodiesel customers accounted for 47% and 12% and no refined glycerin customers accounted for more than 10% of consolidated India segment revenues, compared to two biodiesel customers accounted for 55% and 11% and no refined glycerin customers accounted for more than 10% of consolidated India segment revenues during the nine months ended September 30, 2016. Total assets consist of the following: As of September 30, December 31, 2017 2016 North America $ 82,036 $ 67,279 India 14,295 10,531 Total Assets $ 96,331 $ 77,810 |
9. Related Party Transactions
9. Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
9. Related Party Transactions | The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital, owned by Eric McAfee, $0.4 million in connection with employment agreements and expense reimbursements previously accrued as salaries expense and accrued liabilities. The balance accrued related to these employment agreements was $0.4 million as of September 30, 2017 and December 31, 2016. For the three months ended September 30, 2017 and 2016, the Company expensed $5 thousand and $16 thousand, respectively, to reimburse actual expenses incurred by McAfee Capital and related entities. For the nine months ended September 30, 2017 and 2016, the Company expensed $28 thousand and $57 thousand, respectively, to reimburse actual expenses incurred by McAfee Capital and related entities. The Company previously prepaid $0.2 million to Redwood Capital, a company controlled by Eric McAfee, for the Company’s use of flight time on a corporate jet. As of September 30, 2017, $0.1 million remained as a prepaid expense related to Redwood Capital. As consideration for the reaffirmation of guaranties required by Amendment No. 12 to the Note Purchase Agreement, which the Company entered into with Third Eye Capital on March 21, 2016, the Company also agreed to pay $0.2 million in consideration to McAfee Capital in exchange for their willingness to provide the guarantees. The balance of $156 thousand for guarantee fee remained as accrued liability as of September 30, 2017 and December 31, 2016. |
10. Management's Plan
10. Management's Plan | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
10. Management's Plan | The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. The Company has been reliant on their senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. Management’s plans for the Company include, but are not limited to: ● Operating the Keyes plant; ● Continuing to incorporate lower-cost, non-food advanced biofuels feedstock at the Keyes plant when economical; ● Obtaining the remaining $1.0 million of EB-5 Phase I funding from escrow and $0.5 million from fundraising; ● Obtaining $50.0 million in funding from EB-5 Phase II funding currently being offered to investors; ● Pursuing a refinancing of the senior debt with a lender who is able to offer terms conducive to the long term financing of the Keyes plant; ● Use the Company’s India facility as collateral for additional working capital or for reducing current financing costs; ● Securing higher volumes of shipments from the Kakinada, India biodiesel and refined glycerin facility; and ● Offering the Company’s common stock by the ATM Registration Statement. Management believes that through the above-mentioned actions it will be able to fund company operations and continue to operate the secured assets for the foreseeable future. There can be no assurance that the existing credit facilities and cash from operations will be sufficient nor that the Company will be successful at maintaining adequate relationships with the senior lenders or significant shareholders. Should the Company require additional financing, there can be no assurances that the additional financing will be available on terms satisfactory to the Company. |
1. Nature of Activities and S16
1. Nature of Activities and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Proceeds from borrowing under secured debt facilities | |
Nature of Activities | Headquartered in Cupertino, California, Aemetis is an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products through the conversion of second-generation ethanol and biodiesel plants into advanced biorefineries. Founded in 2006, the Company owns and operates a 60 million gallon per year ethanol production facility in the California Central Valley near Modesto where it manufactures and produces ethanol, wet distillers’ grains (“WDG”), condensed distillers solubles (“CDS”) and distillers’ corn oil. The Company also owns and operates a 50 million gallon per year renewable chemical and advanced fuel production facility on the East Coast of India producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. It also operates a research and development laboratory and holds a portfolio of patents and related technology licenses for the production of renewable fuels and biochemicals. |
Basis of Presentation and Consolidation | These consolidated financial statements include the accounts of Aemetis, Inc., a Nevada corporation, and its wholly owned subsidiaries (collectively, “Aemetis” or the “Company”). Additionally, we consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, there are situations in which an enterprise is required to consolidate a variable interest entity (VIE), even though the enterprise does not own a majority of the voting interests. An enterprise must consolidate a VIE if the enterprise is the primary beneficiary of the VIE. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. In July 2017, we closed on a transaction with Goodland Advanced Fuels, Inc. (GAFI). Upon application of consolidation guidance in ASC 810 Consolidation All intercompany balances and transactions have been eliminated in consolidation including any transactions between GAFI and Aemetis, Inc. The accompanying consolidated condensed balance sheet as of September 30, 2017, the consolidated condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016, and the consolidated condensed statements of cash flows for the nine months ended September 30, 2017 and 2016 are unaudited. The consolidated condensed balance sheet as of December 31, 2016 was derived from the 2016 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2016 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016. The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited interim consolidated condensed financial statements for the three and nine months ended September 30, 2017 and 2016 have been prepared on the same basis as the audited consolidated statements as of December 31, 2016 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, revenues, and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. |
Revenue recognition | The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed or determinable and collection is reasonably assured. The Company records revenues based upon the gross amounts billed to its customers. Revenue from nonmonetary transactions, principally in-kind by-products received in exchange for material processing where the by-product is contemplated by contract to provide value, is recognized at the quoted market price of those goods received or by-products. |
Cost of Goods Sold | Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense. |
Accounts Receivable | The Company sells ethanol, WDG, CDS, and distillers’ corn oil through third-party marketing arrangements generally without requiring collateral. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advance payment based on the size and creditworthiness of the customer. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. We did not reserve any balance for allowance for doubtful accounts as of September 30, 2017 and December 31, 2016. |
Inventories | Finished goods and work-in-process are valued using methods, which approximate the lower of cost (first-in, first-out) or net realizable value (NRV). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. |
Property, Plant and Equipment | Property, plant and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of buildings, furniture, machinery, equipment, land, and the plants in Keyes, California, Goodland, Kansas and Kakinada, India. As part of our variable interest entity, the plant in Kansas is partially completed and is not ready for operation; hence, we are not depreciating these assets yet. Otherwise, it is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method. The Company evaluates the recoverability of long-lived assets with finite lives in accordance with Accounting Standards Codification (ASC) Subtopic 360-10-35 Property, Plant and Equipment –Subsequent Measurements, |
Basic and Diluted Net Income (Loss) per Share | Basic net income (loss) per share is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three and nine months ended September 30, 2017 and 2016, potentially dilutive securities have been excluded from the diluted net loss per share computations, as their effect would be anti-dilutive. The following table shows the number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation as of September 30, 2017 and 2016: September 30, 2017 September 30, 2016 Series B preferred (post split basis) 132 133 Common stock options and warrants 2,554 1,965 Debt with conversion feature at $30 per share of common stock 1,194 861 Total number of potentially dilutive shares excluded from the diluted net loss per share calculation 3,880 2,959 |
Comprehensive Loss | ASC 220 Comprehensive Income |
Foreign Currency Translation/Transactions | Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates. Gains and losses from other foreign currency transactions are recorded in other income (expense). |
Operating Segments | Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Aemetis recognizes two reportable geographic operating segments: “North America” and “India.” The “North America” operating segment includes the Company’s 60 million gallons per year capacity Keyes plant in Keyes, California, the GAFI plant in Goodland , Kansas and the research and development facility. The “India” operating segment encompasses the Company’s 50 million gallon per year capacity biodiesel plant in Kakinada, India, its administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. |
Fair Value of Financial Instruments | The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate their estimated fair values due to the short-term maturities of those financial instruments. These financial instruments are considered Level 1 measurements under the fair value hierarchy. Due to the unique terms of our notes payable and lines of credit and the financial condition of the Company, the fair value of the debt is not readily determinable. |
Share-Based Compensation | The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation, |
Commitments and Contingencies | The Company records and/or discloses commitments and contingencies in accordance with ASC 450 Contingencies |
Debt Modification Accounting | The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt – Modification and Extinguishments |
Convertible Instruments | The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date. |
Recently Issued Accounting Pronouncements | In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance stated that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company’s adoption of this accounting standard begins with the first quarter of fiscal year 2018. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations regarding whether an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and financial condition and will be providing guidance in its Form 10-K for the year ended December 31, 2017. |
1. Nature of Activities and S17
1. Nature of Activities and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Proceeds from sale of land | |
Schedule of dilutive securities | September 30, 2017 September 30, 2016 Series B preferred (post split basis) 132 133 Common stock options and warrants 2,554 1,965 Debt with conversion feature at $30 per share of common stock 1,194 861 Total number of potentially dilutive shares excluded from the diluted net loss per share calculation 3,880 2,959 |
2. Inventories (Tables)
2. Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory, Net [Abstract] | |
Schedule of Inventories | September 30, 2017 December 31, 2016 Raw materials $ 2,306 $ 1,044 Work-in-progress 1,946 1,360 Finished goods 1,490 837 Total inventories $ 5,742 $ 3,241 |
3. Property, Plant and Equipm19
3. Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Statement of Operations Data | |
Schedule of Property, plant and equipment | September 30, 2017 December 31, 2016 Land $ 2,734 $ 2,713 Plant and buildings 82,390 81,755 Furniture and fixtures 983 572 Machinery and equipment 3,951 4,308 Construction in progress 522 88 GAFI property, plant & equipment 15,431 0 Total gross property, plant & equipment 106,011 89,436 Less accumulated depreciation (26,651 ) (23,066 ) Total net property, plant & equipment $ 79,360 $ 66,370 |
Depreciation of property, plant, and equipment | Years Plant and buildings 20 - 30 Machinery and equipment 5 - 7 Furniture and fixtures 3 - 5 |
4. Debt (Tables)
4. Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Wet distiller's grains sales | |
Schedule of Notes Payable | September 30, 2017 December 31, 2016 Third Eye Capital term notes $ 6,832 $ 6,577 Third Eye Capital revolving credit facility 32,778 24,927 Third Eye Capital revenue participation term notes 11,473 11,042 Third Eye Capital acquisition term notes 19,782 19,085 Cilion shareholder seller notes payable 5,786 5,674 Subordinated notes 8,445 7,565 EB-5 long term promissory notes 35,822 35,027 Unsecured working capital loans 4,292 1,817 GAFI Term and Revolving loans 23,373 - Total debt 148,583 111,714 Less current portion of debt 14,559 11,409 Total long term debt $ 134,024 $ 100,305 |
GAFI obligations | As of September 30, 2017 Term loan $ 15,000 Revolving loan 9,248 Total debt $ 24,248 Less: Debt issuance costs (875 ) Total debt $ 23,373 |
Maturities of Long-term Debt | Twelve months ended September 30, Debt Repayments 2018 $ 14,559 2019 119,381 2020 5,000 2021 12,536 Total debt 151,476 Discounts (2,643 ) Total debt, net of discounts $ 148,833 |
5. Stock-Based Compensation (Ta
5. Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Third Eye Capital Revenue Participation Term Notes | |
Schedule of options granted under employee stock plans | Shares Available for Grant Number of Shares Outstanding Weighted-Average Exercise Price Balance as of December 31, 2016 98 1,632 $ 4.37 Authorized 655 - - Granted (637 ) 637 1.72 Forfeited/expired 46 (46 ) 21.04 Balance as of September 30, 2017 162 2,223 $ 3.27 |
6. Variable Interest Entity (Ta
6. Variable Interest Entity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Variable Interest Entity Tables | |
Variable interest entity, balance sheet and operations | As of September 30, 2017 Assets Current assets: Cash and cash equivalents $ 482 Prepaid expenses 1,978 Total current assets 2,460 Property, plant and equipment, net 15,408 Promissory note receivable from Aemetis 4,802 Total assets $ 22,670 Liabilities and stockholder's deficit Accounts Payable $ 4 Secured and Revolving notes 23,373 Total liabilities 23,377 Accumulated deficit (707 ) Total liabilities and stockholder's deficit $ 22,670 From July 10, 2017 to September 30, 2017 Selling, general and administrative expenses $ 131 Operating loss (131 ) Interest expense Interest rate expense 584 Amortization expense 125 Other (income) expense (133 ) Net loss $ (707 ) |
7. Agreements (Tables)
7. Agreements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Agreements Tables | |
Schedule of working capital agreement activity | As of and for the three months ended September 30, As of and for the nine months ended September 30, 2017 2016 2017 2016 Ethanol sales $ 26,394 $ 24,687 $ 75,695 $ 68,993 Wet distiller's grains sales 5,735 6,114 15,523 16,918 Corn oil sales 1,043 788 2,693 2,232 Corn/milo purchases 25,751 23,098 75,478 67,766 Accounts receivable 776 345 776 345 Accounts payable 1,976 1,241 1,976 1,241 |
8. Segment Information (Tables)
8. Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information Tables | |
Schedule of segment information | For the three months ended September 30, For the nine months ended September 30, 2017 2016 2017 2016 Revenues North America $ 36,012 $ 33,889 $ 101,430 $ 93,979 India 2,923 5,488 9,843 11,783 Total revenues $ 38,935 $ 39,377 $ 111,273 $ 105,762 Cost of goods sold North America $ 33,995 $ 30,391 $ 99,003 $ 86,174 India $ 2,985 5,320 9,197 11,892 Total cost of goods sold $ 36,980 $ 35,711 $ 108,200 $ 98,066 Gross profit (loss) North America $ 2,017 $ 3,498 $ 2,427 $ 7,805 India (62 ) 168 646 (109 ) Total gross profit (loss) $ 1,955 $ 3,666 $ 3,073 $ 7,696 |
Schedule of segment assets | As of September 30, December 31, 2017 2016 North America $ 82,036 $ 67,279 India 14,295 10,531 Total Assets $ 96,331 $ 77,810 |
1. Nature of Activities and S25
1. Nature of Activities and Summary of Significant Accounting Policies (Details) - shares | Sep. 30, 2017 | Sep. 30, 2016 |
Accounting Policies [Abstract] | ||
Series B preferred (1:10 post split basis) | 132 | 133 |
Common stock options and warrants | 2,554 | 1,965 |
Debt with conversion feature at $30 per share of common stock | 1,194 | 861 |
Total number of potentially dilutive shares excluded from the diluted net loss per share calculation | 3,880 | 2,959 |
2. Inventories (Details)
2. Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
RepaymentsOfBorrowingsUnderShortTermFacilities | ||
Raw materials | $ 2,306 | $ 1,044 |
Work-in-progress | 1,946 | 1,360 |
Finished goods | 1,490 | 837 |
Total inventory | $ 5,742 | $ 3,241 |
3. Property, Plant and Equipm27
3. Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of warrant activity | ||
Land | $ 2,734 | $ 2,713 |
Plant and Buildings | 82,390 | 81,755 |
Furniture and fixtures | 983 | 572 |
Machinery and equipment | 3,951 | 4,308 |
Construction in progress | 522 | 88 |
GAFI property, plant & equipment | 15,431 | 0 |
Total gross property, plant & equipment | 106,011 | 89,436 |
Less accumulated depreciation | (26,651) | (23,066) |
Total net property, plant & equipment | $ 79,360 | $ 66,370 |
3. Property, Plant and Equipm28
3. Property, Plant and Equipment (Details 1) | 9 Months Ended |
Sep. 30, 2017 | |
Plant and Buildings | Minimum | |
Depreciation (years) | 20 years |
Plant and Buildings | Maximum [Member] | |
Depreciation (years) | 30 years |
Machinery and Equipment | Minimum | |
Depreciation (years) | 5 years |
Machinery and Equipment | Maximum [Member] | |
Depreciation (years) | 7 years |
Furniture and Fixtures | Minimum | |
Depreciation (years) | 3 years |
Furniture and Fixtures | Maximum [Member] | |
Depreciation (years) | 5 years |
3. Property, Plant and Equipm29
3. Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Disclosure 3.Property Plant And Equipment Details Narrative Abstract | ||||
Depreciation expense | $ 1,200 | $ 1,200 | $ 3,471 | $ 3,523 |
4. Debt (Details)
4. Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Total revenues | ||
Third Eye Capital term notes | $ 6,832 | $ 6,577 |
Third Eye Capital revolving credit facility | 32,778 | 24,927 |
Third Eye Capital revenue participation term notes | 11,473 | 11,042 |
Third Eye Capital acquisition term notes | 19,782 | 19,085 |
Cilion shareholder Seller note payable | 5,786 | 5,674 |
Subordinated notes | 8,445 | 7,565 |
EB-5 long term promissory notes | 35,822 | 35,027 |
Unsecured working capital loans | 4,292 | 1,817 |
GAFI Term and Revolving loans | 23,373 | 0 |
Total debt | 148,583 | 111,714 |
Less current portion of debt | 14,559 | 11,409 |
Total long term debt | $ 134,024 | $ 100,305 |
4. Debt (Details 1)
4. Debt (Details 1) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Details 1 | ||
Term loan | $ 15,000 | |
Revolving loan | 9,248 | |
Total debt | 24,248 | |
Less: Debt issuance costs | (875) | |
Total debt | $ 23,373 | $ 0 |
4. Debt (Details 2)
4. Debt (Details 2) $ in Thousands | Sep. 30, 2017USD ($) |
Twelve months ended September 30, | |
2,018 | $ 14,559 |
2,019 | 119,381 |
2,020 | 5,000 |
2,021 | 12,536 |
Total debt | 151,476 |
Discounts | (2,643) |
Total debt, net of discounts | $ 148,833 |
4. Debt (Details Narrative)
4. Debt (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Third Eye Capital Term Notes | |||
Principal and interest outstanding | $ 6,800 | ||
Unamortized discount | 200 | ||
Third Eye Capital Revolving Credit Facility | |||
Principal and interest outstanding | 32,800 | ||
Unamortized debt issuance costs | 800 | ||
Third Eye Capital Revenue Participation Term Note | |||
Principal and interest outstanding | 11,500 | ||
Unamortized discount | 300 | ||
Third Eye Capital Acquisition Term Notes | |||
Principal and interest outstanding | 19,800 | ||
Unamortized discount | 500 | ||
Cilion shareholder Seller notes payable | |||
Principal and interest outstanding | 5,800 | ||
Subordinated Notes | |||
Principal and interest outstanding | 8,400 | $ 7,600 | |
Unamortized debt issuance costs | 300 | ||
EB-5 long-term promissory notes | |||
Principal and interest outstanding | 34,500 | ||
Outstanding accrued interest | 1,300 | ||
Unsecured working capital loans | |||
Principal and interest outstanding | 0 | $ 15,000 | |
Principal and interest payments made | 2,300 | $ 4,500 | |
Unsecured working capital loans - Gemini | |||
Principal and interest outstanding | 3,600 | ||
Principal and interest payments made | $ 6,200 |
5. Stock-Based Compensation (De
5. Stock-Based Compensation (Details) - Employee Stock Plan | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Shares Available for Grant, Beginning | 98 |
Shares Available for Grant, Authorized | 655 |
Shares Available for Grant, Granted | (637) |
Shares Available for Grant, Forfeited/Expired | 46 |
Shares Available for Grant, Ending | 162 |
Number of Shares Outstanding, Beginning | 1,632 |
Number of Shares Authorized | 0 |
Number of Shares Granted | 637 |
Number of Shares Forfeited/Expired | (46) |
Number of Shares Outstanding, Ending | 2,223 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 4.37 |
Weighted Average Exercise Price Authorized | $ / shares | 0 |
Weighted Average Exercise Price Granted | $ / shares | 1.72 |
Weighted Average Exercise Price Forfeited/Expired | $ / shares | 21.04 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 3.27 |
5. Stock-Based Compensation (35
5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock-based Compensation Details Narrative | ||||
Stock compensation expense | $ 196 | $ 172 | $ 800 | $ 573 |
Unrecognized compensation expense | $ 1,100 | $ 1,100 |
6. Variable Interest Entity (De
6. Variable Interest Entity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current assets: | ||||||
Cash and cash equivalents | $ 1,749 | $ 652 | $ 1,749 | $ 652 | $ 1,486 | $ 283 |
Prepaid expenses | 2,717 | 2,717 | 555 | |||
Total current assets | 12,640 | 12,640 | 7,045 | |||
Property, plant and equipment, net | 79,360 | 79,360 | 66,370 | |||
Total assets | 96,331 | 96,331 | 77,810 | |||
Liabilities and stockholder's deficit | ||||||
Accumulated deficit | (151,911) | (151,911) | (129,887) | |||
Total liabilities and stockholder's deficit | 96,331 | 96,331 | $ 77,810 | |||
Selling, general and administrative expenses | 3,182 | 3,222 | 9,739 | 9,123 | ||
Operating loss | (3,103) | 357 | (8,738) | (1,717) | ||
Interest expense | ||||||
Interest rate expense | 3,867 | 3,046 | 9,873 | 8,679 | ||
Amortization expense | 1,265 | 1,425 | 4,112 | 4,269 | ||
Other (income) expense | (18) | $ (19) | 2 | (480) | ||
Net loss | (22,731) | $ (14,191) | ||||
GAFI | ||||||
Current assets: | ||||||
Cash and cash equivalents | 482 | 482 | ||||
Prepaid expenses | 1,978 | 1,978 | ||||
Total current assets | 2,460 | 2,460 | ||||
Property, plant and equipment, net | 15,408 | 15,408 | ||||
Promissory note receivable from Aemetis | 4,802 | 4,802 | ||||
Total assets | 22,670 | 22,670 | ||||
Liabilities and stockholder's deficit | ||||||
Accounts Payable | 4 | 4 | ||||
Secured and Revolving notes | 23,373 | 23,373 | ||||
Total liabilities | 23,377 | 23,377 | ||||
Accumulated deficit | (707) | (707) | ||||
Total liabilities and stockholder's deficit | 22,670 | $ 22,670 | ||||
Selling, general and administrative expenses | 131 | |||||
Operating loss | (131) | |||||
Interest expense | ||||||
Interest rate expense | 584 | |||||
Amortization expense | 125 | |||||
Other (income) expense | (133) | |||||
Net loss | $ (707) |
7. Agreements (Details)
7. Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Agreements Details | ||||
Ethanol sales | $ 26,394 | $ 24,687 | $ 75,695 | $ 68,993 |
Wet distiller's grains sales | 5,735 | 6,114 | 15,523 | 16,918 |
Corn oil sales | 1,043 | 788 | 2,693 | 2,232 |
Corn/Milo purchases | 25,751 | 23,098 | 75,478 | 67,766 |
Accounts receivable | 776 | 345 | 776 | 345 |
Accounts payable | $ 1,976 | $ 1,241 | $ 1,976 | $ 1,241 |
7. Agreements (Details Narrativ
7. Agreements (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Agreements | ||||
Marketing costs | $ 600 | $ 600 | $ 1,800 | $ 1,700 |
8. Segment Information (Details
8. Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
North America | $ 36,012 | $ 33,889 | $ 101,430 | $ 93,979 |
India | 2,923 | 5,488 | 9,843 | 11,783 |
Total revenues | 38,935 | 39,377 | 111,273 | 105,762 |
Cost of goods sold | ||||
North America | 33,995 | 30,391 | 99,003 | 86,174 |
India | 2,985 | 5,320 | 9,197 | 11,892 |
Total cost of goods sold | 36,980 | 35,711 | 108,200 | 98,066 |
Gross profit (loss) | ||||
North America | 2,017 | 3,498 | 2,427 | 7,805 |
India | (62) | 168 | 646 | (109) |
Total gross profit (loss) | $ 1,955 | $ 3,666 | $ 3,073 | $ 7,696 |
8. Segment Information (Detai40
8. Segment Information (Details 1) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Segment Information Details 1 | ||
North America | $ 82,036 | $ 67,279 |
India | 14,295 | 10,531 |
Total Assets | $ 96,331 | $ 77,810 |
9. Related Party Transactions (
9. Related Party Transactions (Details Narrative) - Eric McAfee and McAfee Capital - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Related party debt | $ 400 | $ 400 | |||
Related party transaction | $ 5 | $ 16 | $ 28 | $ 57 |