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Note 5 - Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Commitments and Contingencies Disclosure [Text Block] | 5. Commitments and Contingencies Leases We have identified assets as the corporate office, warehouse, monitoring equipment and laboratory facilities over which we have control and obtain economic benefits fully. We classified these identified assets as operating leases after assessing the terms under classification guidance. We have entered into several leases for trailers and carbon units with purchase option at the end of the term. We have concluded that it is reasonably certain that we would exercise the purchase option at the end of the term, hence the leases were classified as finance leases. All of our leases have remaining term of less than a year to 15 years. We made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses. When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and measure lease liabilities and right-of-use (“ROU”) assets. The incremental borrowing rate used by the Company was based on weighted average baseline rates commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period, when there is a new lease initiated, the rates established for that quarter will be used. On December 14, 2021, we entered into a real estate purchase agreements and lease disposition and development agreement with the City of Riverbank. We plan to utilize the purchased and leased properties, located at 5300 Claus Road in the city of Riverbank, California, for the construction of the Carbon Zero 1 Facility. The lease commenced on April 1, 2022. The Company evaluated the lease in accordance with ASC 842 – Lease Accounting and classified the lease as a finance lease. The components of lease expense and sublease income were as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Operating lease cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease expense |  | $ | 159 |  |  | $ | 204 |  |  | $ | 506 |  |  | $ | 612 |
Short term lease expense |  |  | 44 |  |  |  | 28 |  |  |  | 146 |  |  |  | 138 |
Variable lease expense |  |  | 23 |  |  |  | 30 |  |  |  | 68 |  |  |  | 84 |
Total operating lease cost |  | $ | 226 |  |  | $ | 262 |  |  | $ | 720 |  |  | $ | 834 |
Finance lease cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | $ | 26 |  |  | $ | 58 |  |  | $ | 115 |  |  | $ | 168 |
Interest on lease liabilities |  |  | 98 |  |  |  | 20 |  |  |  | 217 |  |  |  | 61 |
Total finance lease cost |  | $ | 124 |  |  | $ | 78 |  |  | $ | 332 |  |  | $ | 229 |
Cash paid for amounts included in the measurement of lease liabilities:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Operating cash flows used in operating leases |  | $ | 184 |  |  | $ | 179 |  |  | $ | 522 |  |  | $ | 519 |
Operating cash flows used in finance leases |  |  | 98 |  |  |  | 20 |  |  |  | 216 |  |  |  | 61 |
Financing cash flows used in finance leases |  | $ | 132 |  |  | $ | 126 |  |  | $ | 314 |  |  | $ | 373 |
Supplemental non-cash flow information related to ROU asset and lease liabilities was as follows for the three and nine months ended September 30, 2022 and 2021:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Operating leases |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accretion of the lease liability |  | $ | 83 |  |  | $ | 93 |  |  | $ | 262 |  |  | $ | 288 |
Amortization of right-of-use assets |  |  | 76 |  |  |  | 111 |  |  |  | 244 |  |  |  | 324 |
Weighted Average Remaining Lease Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases (in years) |  |  | 5.6 |  |  |  |  |  |  |  |  |  |  |  |  |
Finance leases (in years) |  |  | 14.2 |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted Average Discount Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases |  |  | 14.0 | % |  |  |  |  |  |  |  |  |  |  |  |
Finance leases |  |  | 13.2 | % |  |  |  |  |  |  |  |  |  |  |  |
Supplemental balance sheet information related to leases was as follows:
|  | September 30, 2022 |  |  | December 31, 2021 |
Operating leases |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | $ | 2,227 |  |  | $ | 2,462 |
Current portion of operating lease liability |  |  | 267 |  |  |  | 260 |
Long term operating lease liability |  |  | 2,120 |  |  |  | 2,318 |
Total operating lease liabilities |  |  | 2,387 |  |  |  | 2,578 |
Finance leases |  |  |  |  |  |  |  |
Property and equipment, at cost |  | $ | 3,045 |  |  | $ | 2,317 |
Accumulated depreciation |  |  | (79 | ) |  |  | (376 | )
Property and equipment, net |  |  | 2,966 |  |  |  | 1,941 |
Other current liability |  |  | 118 |  |  |  | 550 |
Other long term liabilities |  |  | 2,854 |  |  |  | 720 |
Total finance lease liabilities |  |  | 2,972 |  |  |  | 1,270 |
Maturities of operating lease liabilities were as follows:
Twelve months ended September 30, |  | Operating leases |  |  | Finance leases |
2023 |  | $ | 572 |  |  | $ | 479 |
2024 |  |  | 586 |  |  |  | 204 |
2025 |  |  | 603 |  |  |  | 176 |
2026 |  |  | 622 |  |  |  | 145 |
2027 |  |  | 641 |  |  |  | 145 |
There after |  |  | 442 |  |  |  | 11,000 |
Total lease payments |  |  | 3,466 |  |  |  | 12,149 |
Less imputed interest |  |  | (1,079 | ) |  |  | (9,177 | )
Total lease liability |  | $ | 2,387 |  |  | $ | 2,972 |
The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on a gross basis on the consolidated financial statements. This was recorded in the other operating income section of the Consolidated Statements of Operations and Comprehensive Loss. The components of lease income for the three and nine months ended September 30, 2022 and September 30, 2021 were as follows:
|  | September 30, 2022 |  |  | September 30, 2021 |
Lease income |  | $ | 804 |  |  | $ | - |
Future lease commitments to be received by the Company as of September 30, 2022 were as follows:
Twelve months ended September 30, |  |  |  |
2023 |  | $ | 858 |
2024 |  |  | 643 |
2025 |  |  | 521 |
2026 |  |  | 474 |
2027 |  |  | 474 |
There after |  |  | 1,184 |
Total future lease commitments |  | $ | 4,154 |
Property taxes On March 3, 2022, the Company paid $6.1 million to Stanislaus County for property taxes past due. Legal Proceedings On August 31, 2016, the Company filed a lawsuit in Santa Clara County Superior Court against defendant EdenIQ, Inc. (“EdenIQ”). The lawsuit was based on EdenIQ’s wrongful termination of a merger agreement that would have effectuated the merger of EdenIQ into a new entity that would be primarily owned by Aemetis. On July 24, 2019, the court awarded EdenIQ a portion of the fees and costs it had sought in the amount of approximately $6.2 million and the Company recorded these fees based on the court order. On May 6, 2022 the parties settled the dispute for $4.8 million by entering into a settlement agreement. The settlement was paid and a gain on litigation of $1.4 million was recognized on the income statement in the second quarter of 2022.

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