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Form 10-Q Gevo, Inc. For: Jun 30

August 8, 2022 4:10 PM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 001-35073
GEVO, INC.
(Exact name of registrant as specified in its charter)
Delaware87-0747704
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
345 Inverness Drive South,
Building C, Suite 310
Englewood, CO
80112
(Address of principal executive offices)(Zip Code)
(303) 858-8358
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareGEVOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
    
Non-accelerated filerSmaller reporting company
    
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 5, 2022, 235,165,951 shares of the registrant’s common stock were outstanding.


GEVO, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
TABLE OF CONTENTS
  Page
   
 
 
 
 
 
 
   
   
   
   
 
2


PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.
GEVO, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)

 NoteAs of June 30, 2022As of December 31, 2021
Assets  
Current assets  
Cash and cash equivalents$172,984 $40,833 
Marketable securities (current)5297,631 275,340 
Restricted cash (current)125,894 25,032 
Accounts receivable, net188 978 
Inventories72,649 2,751 
Prepaid expenses and other current assets45,275 3,607 
Total current assets484,621 348,541 
Property, plant and equipment, net8176,054 139,141 
Long-term marketable securities5 64,396 
Long-term restricted cash1270,256 70,168 
Operating right-of-use assets62,098 2,414 
Finance right-of-use assets627,477 27,297 
Intangible assets, net98,364 8,938 
Deposits and other assets5,741 5,581 
Total assets$774,611 $666,476 
Liabilities
Current liabilities
Accounts payable and accrued liabilities11$18,750 $28,288 
Operating lease liabilities (current)6423 772 
Finance lease liabilities (current)66,293 3,413 
Loans payable - other (current)12158 158 
Total current liabilities25,624 32,631 
2021 Bonds payable (long-term)1266,853 66,486 
Loans payable - other (long-term)12238 318 
Operating lease liabilities (long-term)61,786 1,902 
Finance lease liabilities (long-term)616,342 17,797 
Other long-term liabilities 87 
Total liabilities110,843 119,221 
Stockholders' Equity
Common stock, $0.01 par value per share; 500,000,000 and 250,000,000 shares authorized at June 30, 2022, and December 31, 2021, respectively; 235,165,951 and 201,988,662 shares issued and outstanding at June 30, 2022, and December 31, 2021, respectively.
2,353 2,020 
Additional paid-in capital1,249,880 1,103,224 
Accumulated other comprehensive loss(2,256)(614)
Accumulated deficit(586,209)(557,375)
Total stockholders' equity663,768 547,255 
Total liabilities and stockholders' equity$774,611 $666,476 
See the accompanying Notes to the Consolidated Financial Statements.
3

GEVO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share amounts)

 NoteThree months Ended June 30,Six Months Ended June 30,
 2022202120222021
Revenue and cost of goods sold  
Ethanol sales and related products, net2$71 $ $240 $ 
Hydrocarbon revenue218 346 81 359 
Total revenues2, 1889 346 321 359 
Cost of production (including stock-based compensation)132,640 1,617 5,730 2,518 
Depreciation and amortization8, 91,088 1,177 2,179 2,270 
Total cost of goods sold3,728 2,794 7,909 4,788 
Gross loss(3,639)(2,448)(7,588)(4,429)
Operating expenses
Research and development expense (including stock-based compensation)131,966 1,332 3,158 2,710 
Selling, general and administrative expense (including stock-based compensation)139,209 4,846 18,576 8,660 
Preliminary stage project costs314 5,472 821 8,199 
Other operations (including stock-based compensation)13601  1,190  
Loss on disposal of assets 4,954  4,954 
Depreciation and amortization8, 9386 46 737 104 
Total operating expenses12,476 16,650 24,482 24,627 
Loss from operations18(16,115)(19,098)(32,070)(29,056)
Other income (expense)
Gain (loss) from change in fair value of derivative warrant liability 43 16 (10)
Interest expense(2)(6)(4)(11)
Investment income (loss)578  330  
Gain on forgiveness of SBA loan 641  641 
Other income (expense), net2,878 167 2,894 126 
Total other income (expense), net2,954 845 3,236 746 
Net loss$(13,161)$(18,253)$(28,834)$(28,310)
Net loss per share - basic and diluted3$(0.06)$(0.09)$(0.14)$(0.15)
Weighted-average number of common shares outstanding - basic and diluted209,809,994 198,137,420 205,889,651 190,892,223 

See the accompanying Notes to the Consolidated Financial Statements.
4

GEVO, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, in thousands)
 NoteThree months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net loss$(13,161)$(18,253)$(28,834)$(28,310)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities, net of tax5(669)(307)(1,643)(307)
Adjustment for net gain (loss) realized on available-for-sale securities and included in net income, net of tax5  1  
Total change in other comprehensive income (loss) (669)(307)(1,642)(307)
Comprehensive loss$(13,830)$(18,560)$(30,476)$(28,617)
See the accompanying Notes to the Consolidated Financial Statements.
5

GEVO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share amounts)
For the three months ended June 30, 2022 and 2021
Common StockPaid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitStockholders’ Equity
NoteSharesAmount
Balance, March 31, 2022201,752,722 $2,019 $1,107,051 $(1,587)$(573,048)$534,435 
Issuance of common stock and common stock warrants, net of issuance costs17 33,333,336 333 138,675 — — 139,008 
Non-cash stock-based compensation13 — — 4,220 — — 4,220 
Issuance of common stock under stock plans, net of taxes17 79,893 1 (66)— — (65)
Other comprehensive loss— — — (669)— (669)
Net loss— — — — (13,161)(13,161)
Balance, June 30, 2022235,165,951 $2,353 $1,249,880 $(2,256)$(586,209)$663,768 
Balance, March 31, 2021198,050,449 $1,981 $1,101,939 $ $(508,229)$595,691 
Issuance of common stock and common stock warrants, net of issuance costs17 — — (45)— — (45)
Issuance of common stock upon exercise of warrants17 3,700 — 4 — — 4 
Non-cash stock-based compensation13 — — 858 — — 858 
Issuance of common stock under stock plans, net of taxes17 (89,673)(1)(1,824)— — (1,825)
Other comprehensive loss— — — (307)— (307)
Net loss— — — — (18,253)(18,253)
Balance, June 30, 2021197,964,476 $1,980 $1,100,932 $(307)$(526,482)$576,123 
See the accompanying Notes to the Consolidated Financial Statements.
6

GEVO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share amounts)
For the six months ended June 30,2022 and 2021
Common StockPaid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitStockholders’ Equity
NoteSharesAmount
Balance, December 31, 2021201,988,662 $2,020 $1,103,224 $(614)$(557,375)$547,255 
Issuance of common stock and common stock warrants, net of issuance costs17 33,333,336 333 138,675 — — 139,008 
Issuance of common stock upon exercise of warrants17 4,677 — 3 — — 3 
Non-cash stock-based compensation13 — — 8,264 — — 8,264 
Issuance of common stock under stock plans, net of taxes17 (160,724)— (286)— — (286)
Other comprehensive loss— — — (1,642)— (1,642)
Net loss— — — — (28,834)(28,834)
Balance, June 30, 2022235,165,951 $2,353 $1,249,880 $(2,256)$(586,209)$663,768 
Balance, December 31, 2020128,138,311 $1,282 $643,269 $ $(498,172)$146,379 
Issuance of common stock, net of issuance costs17 68,170,579 682 456,963 — — 457,645 
Issuance of common stock upon exercise of warrants17 1,866,758 18 1,103 — — 1,121 
Non-cash stock-based compensation13 — — 1,420 — — 1,420 
Issuance of common stock under stock plans, net of taxes17 (211,172)(2)(1,823)— — (1,825)
Other comprehensive loss— — — (307)— (307)
Net loss— — — — (28,310)(28,310)
Balance, June 30, 2021197,964,476 $1,980 $1,100,932 $(307)$(526,482)$576,123 

See the accompanying Notes to the Consolidated Financial Statements.
7

GEVO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 NoteSix Months Ended June 30,
 20222021
Operating Activities
Net loss$(28,834)$(28,310)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of assets 4,954 
(Gain) on forgiveness of SBA Loans (641)
Stock-based compensation137,945 1,617 
Depreciation and amortization8, 92,916 2,372 
Noncash interest expense2,637  
Other noncash (income) expense352 (41)
Changes in operating assets and liabilities:
Accounts receivable790 (320)
Inventories7102 275 
Prepaid expenses and other current assets, deposits and other assets4(1,828)(3,142)
Accounts payable, accrued expenses and long-term liabilities5, 6, 11, 12, 13(1,194)3,768 
Net cash used in operating activities(17,114)(19,468)
Investing Activities
Acquisitions of property, plant and equipment8(46,165)(14,167)
Acquisition of patent portfolio9(10) 
Proceeds from sale and maturity of marketable securities5169,082  
Purchase of marketable securities5(131,257)(422,362)
Net cash used in investing activities(8,350)(436,529)
Financing Activities
Proceeds from issuance of 2021 Bonds12 68,995 
Debt and equity offering costs17(10,993)(34,757)
Proceeds from issuance of common stock and common stock warrants17150,000 487,549 
Proceeds from exercise of warrants173 1,119 
Net settlement of common stock under stock plans13(286) 
Payment of loans payable - other12(72)(53)
Payment of finance lease liabilities6(87) 
Net cash provided by financing activities138,565 522,853 
Net increase (decrease) in cash and cash equivalents113,101 66,856 
Cash, cash equivalents and restricted cash at beginning of period136,033 78,338 
Cash, cash equivalents and restricted cash at end of period249,134 145,194 

Six Months Ended June 30,
Schedule of cash, cash equivalents and restricted cash20222021
Cash and cash equivalents$172,984 $17,085 
Restricted cash (current)5,894 57,645 
Long-term restricted cash70,256 70,464 
Total cash, cash equivalents and restricted cash$249,134 $145,194 

See the accompanying Notes to the Consolidated Financial Statements.
8

GEVO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended June 30,
Supplemental disclosures of cash and non-cash investing and financing transactions20222021
Cash paid for interest$757 $9 
Cash paid for interest capitalized to construction in progress$752 $ 
Non-cash interest capitalized to construction in progress$511 $ 
Non-cash purchase of property, plant and equipment$11,643 $5,052 
Right-of-use asset purchased with financing leases$834 $27,775 
Right-of-use asset purchased with operating lease$ $1,562 

See the accompanying Notes to the Consolidated Financial Statements.
9

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)

1.Nature of Business, Financial Condition and Basis of Presentation

Nature of business. Gevo, Inc. (Nasdaq: GEVO) ("Gevo" or the "Company," which, unless otherwise indicated, refers to Gevo, Inc. and its subsidiaries), a Delaware corporation founded in 2005, is a growth-oriented company with the mission of solving greenhouse gas emissions for those sectors of the transportation industry that are not amenable to electrification or hydrogen.

The Company is focused on transforming renewable energy into energy-dense liquid drop-in hydrocarbons that can be used as renewable fuels, such as sustainable aviation fuel ("SAF") and other fuels and chemicals, with the potential to achieve a “net-zero” greenhouse gas ("GHG") footprint. The Company uses the Argonne National Laboratory’s GREET (Greenhouse gases, Regulated Emissions, and Energy use in Transportation) model (the "GREET Model") to measure, predict and verify GHG emissions across the life-cycle of its products. The “net-zero” concept means Gevo expects that by using sustainably grown feedstock (i.e., low till, no-till and dry corn cultivation), renewable and substantially decarbonized energy sources, drop-in hydrocarbon fuels can be produced that have a net-zero, full life cycle footprint measured from the capture of renewable carbon through the burning of the fuel.

Gevo's primary market focus, given current demand and growing customer interest, is SAF. The Company believes it also has commercial opportunities for other renewable hydrocarbon products, such as (i) renewable natural gas (“RNG”), (ii) hydrocarbons for gasoline blendstocks and diesel fuel, and (iii) plastics, materials and other chemicals.

The Company believes it has the technology and know-how to convert various carbohydrate feedstocks through a fermentation process into alcohols and then transform the alcohols into renewable fuels and materials. While the Company expects its major capital deployments to focus on the production of SAF, Gevo recognizes there are opportunities to operate in several different markets, and it will pursue those opportunities when appropriate based on customer interest, access to capital and expected investment returns.

Gevo currently operates a wholly-owned development plant in Luverne, Minnesota (the "Luverne Facility"). The Luverne Facility was originally constructed in 1998 and is located on approximately 55 acres of land, which contains approximately 50,000 square feet of building space. Our Luverne Facility is a scale up and development site. Gevo intends to use the Luverne Facility to prove our processes, process concepts, unit operations and for other purposes in order to optimize feedstocks and the processes used for producing hydrocarbons from alcohols.

Gevo's renewable natural gas ("RNG") project in Northwest Iowa ("NW Iowa RNG") owned by Gevo NW Iowa RNG, LLC, generates RNG captured from dairy cow manure. The manure is supplied by three local dairies that have over 20,000 milking cows in total with additional milking cows expected, pursuant to agreements executed during the second quarter of 2022. Animal manure can be digested anaerobically to produce biogas, which is then upgraded to pipeline quality gas referred to as RNG. Gevo NW Iowa RNG, LLC then sells the RNG to the California market through an agreement with BP Canada Energy Marketing Corp. and BP Products North America Inc. (collectively, "BP").

In 2021, Gevo began construction on NW Iowa RNG under a self-perform project delivery format. Most of the construction efforts were completed at the end of 2021, and in January 2022, Gevo began the process of commissioning the project. One of the three digesters is fully operational, and the others are currently in the start-up phase.

Ultimately, the Company believes that the attainment of profitable operations is dependent upon future events, including, but not limited to (i) the successful development of the Company's initial Net-Zero Project (the "Net-Zero 1 Project"); future projects for the production of energy-dense liquid hydrocarbons using renewable energy and our proprietary technology; and (ii) the achievement of a level of revenues adequate to support its cost structure.

Basis of presentation. The unaudited consolidated financial statements of the Company have been prepared, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company as of, and for the six months ended, June 30, 2022, and are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company’s audited consolidated financial
10

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
statements and notes thereto included under the heading “Financial Statements and Supplementary Data” in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The financial statements at December 31, 2021, have been derived from the audited financial statements as of that date. For further information, refer to our audited financial statements and notes thereto included for the year ended December 31, 2021 (the "2021 Annual Report").

Reclassifications. The Company reclassified certain prior period amounts to conform to the current period presentation, including the categorization of depreciation and amortization on the Consolidated Statements of Operations. These reclassifications had no impact on total revenues, total cost of goods sold, total operating expenses, net loss or stockholders' equity for any period.

2.Revenues from Contracts with Customers and Other Revenues

The Company's limited revenues are derived from its development-scale plant, the Luverne Facility. These revenues are promotional in nature and from customer contracts for ethanol sales and related products and hydrocarbon revenues, which include SAF, isooctene, and isooctane. These products are sold mostly on a free-on-board, shipping point basis (recognized at a point in time), are independent transactions, do not provide post-sale support or promises to deliver future goods, and are single performance obligations.

3.Net loss Per Share

Basic net loss per share is calculated based on the weighted average number of common shares outstanding for the period. Diluted net loss per share is calculated based on the assumption that stock options and other dilutive securities outstanding, which have an exercise price less than the average market price of the Company's common shares during the period, would have been exercised on the later of the beginning of the period or the date granted and that the funds obtained from the exercise were used to purchase common shares at the average market price during the period. None of the Company's stock options or other dilutive securities are considered to be dilutive in periods with net losses.

The effect of the Company’s dilutive securities is calculated using the treasury stock method and only those instruments that result in a reduction in net income per common share are included in the calculation. Diluted net loss per share for the six months ended June 30, 2022, and 2021 excluded 22,464,715 and 202,356, respectively, of common stock equivalents because the effect of their inclusion would be anti-dilutive or would decrease the reported net loss per share.

Basic and diluted net loss per share is calculated as follows (net loss in thousands):
Three months Ended June 30,Six Months Ended June 30,
2022202120222021
Net loss$(13,161)$(18,253)$(28,834)$(28,310)
Basic weighted-average shares outstanding209,809,994 198,137,420 205,889,651 190,892,223 
Basic net loss per share$(0.06)$(0.09)$(0.14)$(0.15)

11

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
4.Prepaid and Other Current Assets

The following table sets forth the components of the Company’s prepaid and other current assets (in thousands) as of:

June 30, 2022December 31, 2021
Prepaid insurance$1,543 $805 
Interest receivable1,022 1,530 
Prepaid engineering (1)
900 409 
Tax refunds401  
Prepaid other1,409 863 
Total Prepaid and other current assets$5,275 $3,607 

(1)Related to the Net-Zero 1 Project development.

5.Marketable Securities

The Company's investments in marketable securities are stated at fair value and are available-for-sale. The following table summarizes the Company's investments in marketable securities (in thousands) as of:

June 30, 2022
MaturityAmortized Cost BasisGross Unrealized LossesFair Value
Short-term marketable securities
U.S. Treasury notesWithin one year$162,238 $(800)$161,438 
U.S. Government-sponsored enterprise securitiesWithin one year137,649 (1,456)136,193 
Total short-term marketable securities$299,887 $(2,256)$297,631 

December 31, 2021
MaturityAmortized Cost BasisGross Unrealized LossesFair Value
Short-term marketable securities
U.S. Treasury notesWithin one year$226,136 $(344)$225,792 
U.S. Government-sponsored enterprise securitiesWithin one year49,618 (70)49,548 
Total short-term marketable securities$275,754 $(414)$275,340 
Long-term marketable securities
U.S. Government-sponsored enterprise securitiesWithin two years64,596 (200)64,396 
Total long-term marketable securities$64,596 $(200)$64,396 

The cost of securities sold is based upon the specific identification method. Interest receivable related to the marketable securities of $1.0 million was included within "Prepaid expenses and other current assets" on the Consolidated Balance Sheets as of June 30, 2022.

12

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
Interest income from marketable securities totaled $1.2 million and $2.7 million for the three and six months ended June 30, 2022, respectively and nil for the three and six months ended June 30, 2021. Interest income from marketable securities is included in "Investment income (loss)" in the Consolidated Statements of Operations.

Future maturities of the Company's marketable securities are $131.4 million in 2022 and $168.6 million in 2023.

6.Leases, Right-of-Use Assets and Related Liabilities
The Company is party to an operating lease contract for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029. The lease contains an option to extend the lease which management does not reasonably expect to exercise, so it is not included in the length of the term. The Company also has one production line piece of equipment with an operating lease that expires in 2024. As of June 30, 2022, right-of-use assets under operating leases totaling $2.1 million are included in "Operating right-of use assets," and related lease liabilities totaling $2.2 million ($0.4 million in current and $1.8 million in long-term) are included in the Consolidated Balance Sheets.
The Company also has four finance leases for land under arrangements related to NW Iowa RNG. Under these contracts, the Company leases land from dairy farmers on which it has built three anaerobic digesters, and related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. The partially conditioned biogas is transported from the three digester sites to a central gas upgrade system located at the fourth site that will upgrade the biogas to pipeline quality RNG for sale. These leases expire at various dates between 2031 and 2050. The Company amended one of its leases in June 2022, which the Company treated as an existing lease modification due to an increase in the price per unit, resulting in an increase of the lease liability and right-of-use-asset by $0.8 million.

Since the Company elected the practical expedient to combine lease and non-lease components, all amounts paid to the lessors under these arrangements for cow manure and non-lease services are classified as lease payments and are included in the calculation of the right-of-use assets and lease liabilities. This results in significantly higher right-of-use assets and lease liabilities than if the Company did not elect this practical expedient. As of June 30, 2022, right-of-use assets under finance leases totaling $27.5 million are included in "Finance right-of-use assets," and related lease liabilities totaling $22.6 million are included in the Consolidated Balance Sheets.
The following four tables present the (a) costs by lease category, (b) other quantitative information, and (c) future minimum payments under non-cancelable financing and operating leases as they relate to the Company’s leases (in thousands), except for weighted averages:
 Three months Ended June 30,
 20222021
Finance lease cost:  
Amortization of right-of-use assets (1)
$488 $447 
Interest on lease liabilities (1)
251 316 
Operating lease cost139 67 
Short-term lease cost572 495 
Variable lease cost (2)
73 31 
Total lease cost $1,523 $1,356 
1.Amortization and interest on finance lease liabilities of $0.7 million and $0.8 million was capitalized as construction-in-progress for the three months ended June 30, 2022, and June 30, 2021, respectively.
2.Represents amounts incurred in excess of minimum payments, including payments for common area expenses under our office and research facility lease, and additional amounts due under our NW Iowa RNG leases based on the number of cows maintained by the owners above the minimum required by the contracts of the respective facilities.
13

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
Six Months Ended June 30,
20222021
Finance lease cost:
Amortization of right-of use assets (1)
$949 $458 
Interest on lease liabilities (1)
525 316 
Operating lease cost277 67 
Short-Term lease cost1,449 495 
Variable lease cost (2)
951 31 
Total lease cost$4,151 $1,367 

1.$1.5 million and $0.8 million of amortization and interest expense for the six months ended June 30, 2022, and 2021, respectively, were capitalized as part of construction in progress. The accumulated capitalized amounts of $3.7 million is included in "Property, plant and equipment, net" in the Consolidated Balance Sheets as the related NW Iowa RNG facilities were still under construction on June 30, 2022.
2.Represents amounts incurred in excess of minimum payments, including payments for common area expenses under our office and research facility lease, and additional amounts due under our NW Iowa RNG leases based on the number of cows maintained by the owners above the minimum required by the contracts of the respective facilities.

 Six Months Ended June 30,
 20222021
Other Information


Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows from finance leases$241$321
Operating cash flows from operating leases$359$128
Finance cash flows from finance leases$87$3,046
Right-of-use asset obtained in exchange for new finance lease liabilities
$834$27,775
Right-of-use asset obtained in exchange for new operating lease liabilities$$1,562
Weighted-average remaining lease term, finance lease (months)216218
Weighted-average remaining lease term, operating leases (months)6891
Weighted-average discount rate - finance leases (1)
10%5%
Weighted-average discount rate - operating leases (1)
5%5%
(1)Our leases do not provide an implicit interest rate, we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

14

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)

Year ending December 31,
Operating Leases
Finance Leases
2022 (remaining)$376 $7,282 
2023529 1,554 
2024306 2,730 
2025315 1,744 
2026325 1,760 
2027 and thereafter707 29,583 
Total2,558 44,653 
Less: Amounts representing present value discounts349 22,018 
Total lease liabilities2,209 22,635 
Less: current portion423 6,293 
Long-term portion$1,786 $16,342 

7.Inventories
The following table sets forth the components of the Company’s inventory balances (in thousands) as of:
 June 30, 2022December 31, 2021
Raw materials:  
Corn$179 $301 
Enzymes and other inputs57 186 
Palladium203 265 
Finished goods:
SAF, Isooctane, Isooctene and other504 335 
Isobutanol124 223 
Ethanol146 96 
Work in process:
Agri-Energy51 83 
Gevo71  
Spare parts1,314 1,262 
Total inventories$2,649 $2,751 
Work in process inventory includes unfinished SAF, isooctane, and isooctene inventory.
During the six months ended June 30, 2022, the Company adjusted its finished goods and work in process inventory to net realizable value and recorded a $0.8 million loss in cost of goods sold. There were no net realizable losses recorded during the six months ended June 30, 2021, as the Luverne Facility was temporarily shut down due to the COVID-19 pandemic.

15

GEVO, INC.
Notes to Consolidated Financial Statements
(unaudited)
8.Property, Plant and Equipment
The following table sets forth the Company’s property, plant and equipment by classification (in thousands) as of:
 Useful Life (in years)June 30, 2022December 31, 2021
Land$410 $410 
Plant facilities and infrastructure5to2084,117 84,117 
Machinery and equipment5to10