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1. Notes of Activities and Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2012
Notes Of Activities And Summary Of Significant Accounting Policies Policies  
Nature of Activities

 

Nature of Activities. These consolidated financial statements include the accounts of Aemetis, Inc. (formerly AE Biofuels, Inc.), a Nevada corporation, and its wholly owned subsidiaries (collectively, “Aemetis” or the “Company”):

·Aemetis Americas, Inc. (formerly “American Ethanol, Inc.”), a Nevada corporation and its subsidiary AE Biofuels, Inc., a Delaware corporation;
·Biofuels Marketing, a Delaware corporation;
·Aemetis International, Inc. (formerly International Biodiesel, Inc.), a Nevada corporation and its subsidiary International Biofuels, Ltd., a Mauritius corporation and its subsidiary Universal Biofuels Private, Ltd., an India company;
·Aemetis Technologies, Inc. (formerly AE Zymetis, Inc.), a Delaware corporation;
·Aemetis Biochemicals, Inc., a Nevada corporation;
·Aemetis Biofuels, Inc. (formerly AE Biofuels Technologies, Inc.), a Delaware corporation and its subsidiary Energy Enzymes, Inc., a Delaware corporation;
·AE Advanced Fuels, Inc., a Delaware corporation and its subsidiaries Aemetis Advanced Fuels Keyes, Inc. (formerly AE Advanced Fuels Keyes, Inc.), a Delaware corporation and Aemetis Facility Keyes, Inc., a Delaware corporation, and its subsidiary, EE Leasing, Inc., a California corporation.
·Aemetis Advanced Fuels, Inc., a Nevada corporation.

Aemetis, Inc. is an international advanced fuels and specialty chemical company focused on the production of renewable fuels and chemicals and the acquisition, development and commercialization of innovative technologies that are substitutes for traditional petroleum-based products. In 2010, the Company began retrofitting an ethanol production facility in Keyes, California and in April 2011 began high volume production of ethanol and wet distiller’s grain (WDG). In July 2012 the Company purchased the ethanol plant in Keyes, California.
Basis of Presentation and Consolidation

 

Basis of Presentation and Consolidation. The consolidated condensed financial statements include the accounts of Aemetis, Inc. and its majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated condensed balance sheet as of September 30, 2012, the consolidated condensed statements of operations for the three and nine months ended September 30, 2012 and 2011, and the consolidated condensed statements of cash flows for the nine months ended September 30, 2012 and 2011 are unaudited. The consolidated condensed balance sheet as of December 31, 2011 was derived from the 2011 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2011 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2011.

The accompanying unaudited interim consolidated condensed financial statements as of September 30, 2012 and 2011 and for the three and nine months ended September 30, 2012 and 2011 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, 2012 and 2011 have been prepared on the same basis as the audited consolidated statements as of December 31, 2011 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, 2012 are not necessarily indicative of the operating results for any subsequent quarter or the full fiscal year or any future periods.
Use of Estimates

 

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 and 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.
Basic and Diluted Net Loss per Share

 

 

Basic and Diluted Net Income (Loss) per Share.  Basic income/(loss) per share is computed by dividing income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period.  Diluted income/(loss) per share reflects the potential dilutive effect that could occur from common stock equivalents such as options, convertible debt, convertible preferred stock and warrants to the extent the impact is dilutive.  As the Company incurred net income for the three and nine months ended September 30, 2012, potentially dilutive securities have been included in the diluted net income per share computations. As the Company incurred net losses for the three and nine months ended September 30, 2011, 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, 2012 and 2011:

 

 

 

    September 30, 2012     September 30, 2011  
Aemetis Series B preferred     -       3,125,008  
Aemetis Series B warrants     3,008       429,609  
Aemetis Common stock options and warrants     1,776,067       7,187,734  
Convertible interest & fees on related party note     1,029,973       33,734,053  
Total number of potentially dilutive shares excluded from the diluted net income/(loss) per share calculation     2,809,048       44,476,404  
Comprehensive Income

 Comprehensive Income. ASC 220 Comprehensive Income requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive income and accumulated other comprehensive income consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiaries. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments.

Foreign Currency Translation/Transactions

 

Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiaries that operate 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 income. Income and expense accounts are translated at average exchange rates during the year. Gains and losses from foreign currency transactions are recorded in other income (loss), net.
Operating Segments

 

 

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 (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The operations in India as well as the retrofit of the Keyes, California ethanol plant resulted in the Company’s reevaluation of its management structure and reporting around business segments.

 

Aemetis recognized three reportable geographic segments: “India”, “North America” and “Other.”

 

 

●   The “India” operating segment encompasses the Company’s 50 MGY capacity biodiesel plant in Kakinada, India, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius.

 

●   The “North America” operating segment includes the Company’s owned 60 MGY capacity ethanol plant in Keyes, CA and research and development labs in College Park, Maryland.

 

●   The “Other” segment encompasses the Company’s costs associated with new market development, company-wide fund raising, formation, and other corporate expenses.

 

 

 

 
Fair Value of Financial Instruments

  

Fair Value of Financial Instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, other current liabilities, mandatorily redeemable Series B preferred stock and debt.  The fair value of the Company’s debt approximates its carrying value due to the extinguishment accounting that occurred during the quarter, which was based upon the borrowing rates the Company believes it could receive on comparable debt instruments. Fair value calculations are level 3 measures. The Company evaluates fair value on a regular bases. The fair value of all other financial instruments is estimated to be approximately the carrying value due to the short-term nature of these instruments.
Share-Based Compensation

 

Share-Based Compensation. The Company recognizes share based compensation in accordance with ASC 718 Stock Compensation requiring the Company to recognize expense related to the estimate fair value of the Company’s share-based compensation awards at the time the awards are granted adjusted to reflect only those shares that are expected to vest.