Benson Hill, Inc. (Form: 8-K/A, Received: 03/16/2022 16:18:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 16, 2022 (December 29, 2021)

BENSON HILL, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-39835

85-3374823

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

1001 North Warson Rd.

St. Louis, Missouri 63132

(Address of principal executive offices)

(314) 222-8218

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value

BHIL

The New York Stock Exchange

Warrants exercisable for one share of common stock at an exercise price of $11.50

BHIL WS

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

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. ☐

Explanatory Note

On January 4, 2022, Benson Hill, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”) to report the completion of its acquisition of ZFS Creston, LLC (“ZFS Creston”) on December 30, 2021, pursuant to which ZFS Creston became an indirect wholly-owned subsidiary of the Company. This Current Report on Form 8-K/A (this “8-K/A”) amends the Initial Form 8-K in order to include the historical financial statements of the Company and the pro forma financial information required by Item 9.01 of Form 8-K. The pro forma financial information included in this 8-K/A has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that the Company and ZFS Creston would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after the Company’s acquisition of ZFS Creston. Except as described above, all other information in the Initial Form 8-K remains unchanged.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The historical audited financial statements of ZFS Creston as of October 31, 2020 and 2019 and for each of the years in the two-year period ended October 31, 2020, are filed herewith as Exhibit 99.1 and incorporated herein by reference.

The historical unaudited condensed financial statements of ZFS Creston as of July 31, 2021 and for the nine months ended July 31, 2021 and 2020 are filed herewith as Exhibit 99.2 and incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial statements of the Company and ZFS Creston for the year ended December 31, 2020 and as of and for the nine months ended September 30, 2021 are filed herewith as Exhibit 99.3 and incorporated herein by reference.

(d) Exhibits


Exhibit No.						Description
23.1						Consent of Crowe LLP.
99.1						The audited financial statements of ZFS Creston, LLC a s of October 31, 2020 and 2019 and for each of the years in the two-year period ended October 31, 2020 .
99.2						The unaudited condensed financial statements of ZFS Creston, LLC a s of July 31, 2021 and for the nine months ended July 31, 2021 and July 31, 2020 .
99.3						Unaudited pro forma condensed combined financial statements of Benson Hill, Inc. and ZFS Creston, LLC for the year ended December 31, 2020 and as of and for the nine months ended September 30, 2021.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


BENSON HILL, INC.

By:			/s/ DeAnn Brunts
			DeAnn Brunts
			Chief Financial Officer

Date: March 16, 2022

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the Registration Statements on Form S-1 of Benson Hill, Inc. (file nos. 333-260447 and 333-259679) of our report dated December 22, 2021, on the October 31, 2020 and 2019 financial statements of ZFS Creston, LLC, which is included in this Current Report on Form 8-K/A.

/s/ Crowe LLP

Indianapolis, Indiana

March 16, 2022

Exhibit 99.1

ZFS CRESTON, LLC

Creston, Iowa

FINANCIAL STATEMENTS

October 31, 2020 and 2019

ZFS CRESTON, LLC

Creston, Iowa

FINANCIAL STATEMENTS

October 31, 2020 and 2019

CONTENTS


			Page #
INDEPENDENT AUDITOR’S REPORT			1

FINANCIAL STATEMENTS
STATEMENTS OF INCOME AND MEMBERS’ EQUITY			2
BALANCE SHEETS			3
STATEMENTS OF CASH FLOWS			4
NOTES TO FINANCIAL STATEMENTS			5



			Crowe LLP Independent Member Crowe Global

INDEPENDENT AUDITOR’S REPORT

Members

ZFS Creston, LLC

Creston, Iowa

Report on the Financial Statements

We have audited the accompanying financial statements of ZFS Creston, LLC, which comprise the balance sheets as of October 31, 2020 and 2019, and the related statements of income and members’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ZFS Creston, LLC as of October 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Crowe LLP

Indianapolis, Indiana

December 22, 2021

ZFS CRESTON, LLC

STATEMENTS OF INCOME AND MEMBERS’ EQUITY

Years ended October 31, 2020 and 2019


	2020		2019

Sales	$	101,734,333	$	87,254,256

Cost of sales	96,396,933		81,211,327

Gross profit	5,337,400		6,042,929

Selling, general, and administrative expenses	2,144,299		2,374,423

Income before other income (expense)	3,193,101		3,668,506

Other income (expense)
Interest expense	(321,239)		(347,455)
Interest and investment income	9,362		16,340
	(311,877)		(331,115)

Net income	2,881,224		3,337,391

Members' equity at beginning of year	9,881,592		6,544,201

Member distributions	(120,005)		—

Members' equity at end of year	$	12,642,811	$	9,881,592

See accompanying notes to financial statements.

ZFS CRESTON, LLC

BALANCE SHEETS

October 31, 2020 and 2019


	2020		2019

ASSETS
Current assets
Accounts receivable (Note 1)	$	12,847,010	$	12,244,219
Inventories (Note 2)	10,956,227		9,684,070
Gains on open forward contracts (Notes 6 and 7)	375,066		289,343
Brokerage account (Notes 6 and 7)	1,046,333		247,022
Prepaid expenses	77,536		205,849
Total current assets	25,302,172		22,670,503

Property, plant, and equipment, net (Note 3)	17,852,801		12,132,850

Spare parts (Note 1)	1,522,785		872,579

Debt issuance costs (Note 5)	271,978		—

Total assets	$	44,949,736	$	35,675,932

LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Unfunded checks	$	18,037	$	7,285
Current maturities of long-term debt (Note 5)	70,392		—
Related party advances (Note 9)	—		21,350,895
Accounts payable	6,430,280		3,407,875
Losses on open forward contracts (Notes 6 and 7)	1,766,621		490,636
Customer deposits	481,391		3,841
Other current liabilities	807,652		533,808
Total current liabilities	9,574,373		25,794,340

Long-term debt (Note 5)	1,201,595		—
Long-term related party advances (Note 9)	21,530,957		—

Members' equity	12,642,811		9,881,592

Total liabilities and members' equity	$	44,949,736	$	35,675,932

See accompanying notes to financial statements.

ZFS CRESTON, LLC

STATEMENTS OF CASH FLOWS

Years ended October 31, 2020 and 2019



	2020		2019

Cash flows from operating activities
Net income	$	2,881,224	$	3,337,391
Adjustments to reconcile net income to net cash from (used in) operating activities:
Depreciation	1,504,208		1,117,029
Change in assets and liabilities:
Accounts receivable	(602,791)		(8,523,662)
Inventories	(1,272,157)		(5,815,969)
Brokerage account	(799,311)		309,380
Gains on open forward contracts	(85,723)		43,198
Prepaid expenses	128,313		344,112
Spare parts	(650,206)		(872,579)
Accounts payable	3,022,405		2,786,184
Losses on open forward contracts	1,275,985		(409,257)
Customer deposits	477,550		(58,486)
Other current liabilities	273,844		184,105
Net cash from (used in) operating activities	6,153,341		(7,558,554)

Cash flows used in investing activities
Purchase of property and equipment	(7,224,159)		(5,554,659)
Net cash used in investing activities	(7,224,159)		(5,554,659)

Cash flows from financing activities
Unfunded checks	10,752		(6,732)
Cash paid for debt issuance costs	(271,978)		—
Borrowings on long-term debt	1,317,534		—
Principal repayment of long-term debt	(45,547)		—
Net advances received from related parties	180,062		13,119,945
Distributions paid in cash	(120,005)		—
Net cash from financing activities	1,070,818		13,113,213

Net change in cash	—		—

Cash at beginning of year	—		—

Cash at end of year	$	—	$	—

Supplemental disclosures of cash flow information
Cash paid for interest	$	316,946	$	347,455

See accompanying notes to financial statements.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Operations: ZFS Creston, LLC (the Company) was established as a Limited Liability Company in January 2018 and has a perpetual term. The Company processes soybeans to manufacture consumer food ingredients, high protein soybean meal, and soybean oil located in Creston, Iowa.

Cash and Unfunded Checks: Cash is held at a national bank which is insured up to $250,000 by agencies of the federal government. The Company utilizes a bank cash management program that delays funding for checks until they are presented for clearing. The resulting bank overdraft position is included in current liabilities as unfunded checks.

Accounts Receivable and Revenue: The Company sells to customers using credit terms customary to its industry. Past due receivables are determined based on contractual terms. The Company accrues interest on past due receivables. The Company recognizes revenue in accordance with its sales terms, which is normally when the product is delivered and ownership has transferred or services are complete.

Allowance for Doubtful Accounts: The allowance for doubtful accounts is determined by management based on the Company’s historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have failed. Management has not recorded an allowance for doubtful accounts at October 31, 2020 or 2019 as they believe the amounts are collectible.

Recently Issued Accounting Guidance Not Yet Effective: In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). This standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive. In May 2020, the FASB issued ASU 2020-05 which defers the effective date of Topic 606 one year making it effective for annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of the guidance on each of its significant revenue streams for the fiscal year ending October 31, 2021.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequently issued clarifying ASUs 2018-01, 2018-10, 2018-20, 2019-01, 2019-10, 2020-20, and 2020-05, hereafter referred to as “the clarifying ASUs”. The provisions of ASU 2016-02 and the clarifying ASUs require that lessees recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The ASU is effective for periods beginning after December 15, 2021. Early adoption is permitted; however, the Company has not chosen to do so. The Company has yet to select a transition method and is currently evaluating the effect that the updated standard will have on the financial statements.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and earlier adoption is permitted. We are currently evaluating the impact of the pending adoption of ASU 2016-13 on the financial statements.

Concentration of Credit Risk: The majority of the Company’s receivables are from commercial agribusiness and food companies. The Company grants credit to its customers based on their credit worthiness. The Company’s ability to collect these receivables is dependent to some degree on the economic conditions in the agribusiness sector within its market area. Significant concentrations of accounts receivable and sales, as of October 31, 2020 and 2019, and for the years then ended, respectively, are as follows:


	2020		2019
	% of Sales	% of Accounts Receivable	% of Sales	% of Accounts Receivable
Customer A	20%	39%	17%	56%
Customer B	14%	—%	12%	—%
Customer C	13%	12%	—%	—%
Customer D	—%	—%	12%	—%

Inventories: Inventories, consisting primarily of soybeans, soybean oil, soybean flakes, soybean flour, and soybean meal, are stated at market value.

Brokerage Account: Brokerage account represents uninsured deposits with a broker and the unrealized hedging gains and losses on open futures contracts. At October 31, the brokerage account consisted of the following:


	2020		2019

Uninsured deposits with broker	$	3,585,078	$	199,966
Unrealized gains on open futures contracts	1,463,573		153,068
Unrealized losses on open futures contracts	(4,002,318)		(106,012)

	$	1,046,333	$	247,022

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, Plant, and Equipment: Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided by use of straight-line methods over the estimated useful lives of the assets; periods of 15-30 years for soybean processing facilities, 3-10 years for machinery and equipment, and 15 years for land improvements. When properties are retired or otherwise disposed of, the appropriate accounts are relieved of cost and accumulated depreciation, and any resulting gain or loss is recognized. These assets are reviewed for impairment by management when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. Management determined no impairment was necessary in the current year.

Spare Parts: The Company has accumulated a supply of spare parts at its facility for use in repairs in the normal course of operations to minimize downtime. The spare parts are recorded at cost and assessed for obsolescence periodically. There was no obsolescence recorded for the current year. The majority of spare parts are not expected to be utilized within 12 months from the balance sheet dates; accordingly the balance is reflected as a long-term asset in the balance sheets.

Fair Value of Financial Instruments: The Company’s carrying amount for its financial instruments, which include accounts receivable, accounts payable and long-term debt, approximates their fair values based on the current interest rate environment and the terms of the instruments. Commodity derivative contracts are recorded at fair value in the balance sheets.

Income Taxes: The Company is not subject to federal income taxes. Instead, the members of the Company report their proportionate share of the Company’s taxable income or loss on their income tax returns.

Under guidance issued by the Financial Accounting Standards Board (“FASB”) with respect to accounting for uncertainty in income taxes as a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and penalties related to unrecognized tax benefits in interest and income tax expense. The Company has no amounts accrued for interest or penalties as of October 31, 2020 or 2019.

The Company is not subject to examination by U.S. federal or state tax authorities for years before 2018. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates in the Preparation of Financial Statements: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts reported in the financial statements and the accompanying footnotes. Significant estimates at October 31, 2020 include economic lives of property and equipment, allowance for doubtful accounts, and market prices utilized to value ending inventories and derivative instruments. Actual results could differ from those estimates. The Company’s ability to realize the $375,066 of gains on open forward contracts at October 31, 2020 is dependent on the ability of the customers to fulfill the contracts.

Risks and Uncertainties: In December 2019, a novel strain of coronavirus surfaced and has spread around the world, with resulting business and social disruption. The coronavirus was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020. The extent to which the coronavirus may impact business activity will depend on future developments, which are highly uncertain and cannot be predicted. Significant estimates, as previously disclosed, may be materially impacted by global events designed to contain the coronavirus. The operations and business results of the Company have not been materially affected as of the date these financial statements were available to be issued.

NOTE 2 – INVENTORIES

Inventories consist of the following at October 31:


	2020		2019

Soybeans	$	8,728,571	$	6,411,423
Soybean flakes	460,433		186,304
Soybean flour	930,304		885,615
Soybean oil	327,535		1,702,630
Soybean meal	422,323		442,333
Other	87,061		55,765

	$	10,956,227	$	9,684,070

Inventory shown on the balance sheets at October 31, 2020 and 2019 does not include 254,483 and 76,981, respectively, grain bushels held in storage for others. The Company is liable for any deficiencies of grade or shortage of quantity that may arise in connection with the above grain held in storage for others. The Company has not realized and does not expect material losses on any deficiencies.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following at October 31:


	2020		2019

Soybean processing facilities, machinery and equipment	$	20,175,425	$	12,904,685
Land and land improvements	263,187		263,187
Office furniture and fixtures	147,492		129,072
Construction in progress	137,845		202,845
	20,723,949		13,499,789
Accumulated depreciation	(2,871,148)		(1,366,939)

	$	17,852,801	$	12,132,850

Depreciation expense for the years ended October 31, 2020 and 2019 was $1,504,208 and $1,117,029, respectively.

NOTE 4 – LEASE COMMITMENTS

The Company leases railcars under operating leases through September 2022. Total lease expense for the years ended October 31, 2020 and 2019 was $777,293 and $899,784, respectively. Minimum annual lease commitments for the years subsequent to 2020 and in the aggregate are as follows:


2021	$	176,145
2022	6,985

	$	183,130

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 5 – LONG-TERM DEBT

Long-term debt consists of the following at October 31:


	2020		2019

PPP Loan	$	780,500	$	—
Fixed rate note payable due in monthly installments of $7,238 including interest through February 1, 2027; secured by specific equipment	491,487		—

	1,271,987		—
Less, current maturities	(70,392)		—

	$	1,201,595	$	—

PPP Loan: In April 2020, the Company entered into a loan agreement for $780,500 under the Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Securities Act (“CARES Act”). The PPP loan requires no collateral or guarantees and may be fully forgiven if the funds are used as prescribed under the PPP. The PPP loan has a maturity of two years and an interest rate of 1%, with loan payments deferred to either the date the Small Business Administration (“SBA”) remits the loan forgiveness amounts to the lender or ten months after the end of the loan forgiveness covered period. On March 8, 2021, the Company received approval for full forgiveness of the loan and recorded a gain on forgiveness of debt on that date.

Maturities of debt, excluding the PPP Loan that was forgiven, are as follows:


2021	$	70,392
2022	72,957
2023	75,616
2024	78,371
2025	81,227
Thereafter	112,924

	$	491,487

10.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 5 – LONG-TERM DEBT (continued)

In June 2019, the Company entered into a loan agreement along with other entities related through common ownership as co-borrowers. The loan agreement contains a revolving line of credit in the amount of $110,000,000 and a construction loan for $140,000,000. The revolving line of credit and construction loan are due in June 2024. The interest rate on the loan agreement is variable and is priced based on the one month London Interbank Offered Rate (LIBOR) plus a variable percentage based on certain financial ratios of the co-borrowers, as defined in the loan agreement. Interest is accrued and payable monthly. The borrowings are secured by substantially all assets of the co-borrowers. Availability under the revolving line of credit is subject to a borrowing base formula. Subsequent to October 31, 2020, the loan agreement was amended to increase the revolving line of credit to $210,000,000.

The loan agreement requires the co-borrowers to comply with certain financial covenants quarterly. At October 31, 2020, the co-borrowers were in compliance with these financial covenants.

The Joint and Several terms of the loan agreement require the Borrowers, including the Company, to guarantee the payment and performance of the Loans. As of October 31, 2020 and 2019, the total amount outstanding under the arrangement by other Borrowers was approximately $206,000,000 and $122,000,000, respectively. Substantially all of the assets of the Company serve as collateral for the loans.

On November 11, 2020, the Company, along with entities related through common ownership, collectively as co-borrowers, entered into a promissory note in the amount of $31,000,000 with a financial institution. Monthly payments, including interest, of $124,000 are due through August 2040. Interest is payable monthly at a fixed rate. The note is guaranteed by the Company and entities related through common ownership as co-borrowers and is secured by substantially all assets of the Company. The loan agreement requires the co-borrowers to comply with certain financial covenants quarterly. A portion of the proceeds from the promissory note were deposited with the Company and utilized to pay down the related party advances disclosed in Note 9. As a result of refinancing the related party advances on a long-term basis subsequent to the balance sheet date, the Company has presented the 2020 related party advances as long-term. The Company paid $271,978 in debt issuance costs associated with this promissory note in October 2020, which has been classified as a long-term asset in the balance sheet.

NOTE 6 – FAIR VALUE MEASUREMENT

FASB issued guidance defines fair value as the price that would be received or paid for an asset or paid to transfer a liability (an exit price) in the Company’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

11.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 6 – FAIR VALUE MEASUREMENT (continued)

The Company determines the fair market values of its futures contracts and certain inventories based on the fair value hierarchy established in the FASB issued guidance, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the Company’s own assumptions based on market data and on assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The standard describes three levels within its hierarchy that may be used to measure fair value.


Level 1 inputs -						Quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs -						Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and
Level 3 inputs -						Unobservable inputs (e.g., a reporting entity’s own data).

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

This guidance excludes inventories measured at market as market is similar to, but not intended to measure fair value. Management has included inventories in the table below as the FASB encourages disclosure information about measurements similar to fair value, which includes the valuation of inventories. Valuation of the Company’s inventories is based upon exchange quoted prices, adjusted for observable quotes for local basis adjustments, which management believes analogizes the FASB issued guidance.

12.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 6 – FAIR VALUE MEASUREMENT (continued)

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis under FASB guidance at October 31, 2020:


	Level 1 Inputs		Level 2 Inputs		Total

Assets:
Inventories	$	—	$	10,869,166	$	10,869,166
Brokerage account	(2,538,745)		—		(2,538,745)
Gains on open forward contracts	—		375,066		375,066

Total assets	$	(2,538,745)	$	11,244,232	$	8,705,487

Liabilities:
Losses on open forward contracts	$	—	$	1,766,621	$	1,766,621

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis under FASB guidance at October 31, 2019:


	Level 1 Inputs		Level 2 Inputs		Total

Assets:
Inventories	$	—	$	9,628,305	$	9,628,305
Brokerage account	47,056		—		47,056
Gains on open forward contracts	—		289,343		289,343

Total assets	$	47,056	$	9,917,648	$	9,964,704

Liabilities:
Losses on open forward contracts	$	—	$	490,636	$	490,636

The Company uses the market approach valuation technique to measure the majority of its assets carried at fair value. The value for inventories carried at market price are based on exchange-quoted prices, adjusted for observable quotes for local basis adjustments (Level 2).

Brokerage account reflects the fair value of futures contracts through the Chicago Board of Trade, which are included in the brokerage account and valued based on unadjusted quoted prices in active markets (Level 1).

13.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 6 – FAIR VALUE MEASUREMENT (continued)

The Company’s gains and losses on open forward contracts that are measured at fair value include forward commodity purchase and sale contracts related to grain and ingredients. Fair value for forward commodity purchase and sales contracts is estimated based on exchange-quoted prices as well as observable quotes for local basis adjustments (the difference between the futures price and local cash price). When observable inputs are available for substantially the full term of the asset or liability, the gains and losses are classified in Level 2.

NOTE 7 – DERIVATIVES AND HEDGING ACTIVITIES

Accounting principles generally accepted in the United States of America require companies with derivative instruments to disclose information that will enable users of financial statements to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect a company’s financial position, financial performance and cash flows.

To reduce the exposure to market price risk on owned inventories and forward purchase and sale contracts, the Company may enter into regulated commodity futures or options contracts. The forward contracts are for physical delivery of the commodity in a future period. These forward contracts generally relate to the current or future crop years for delivery periods quoted by regulated commodity exchanges. The terms of the forward contracts are consistent with industry standards. Company policy limits the Company’s “unhedged” commodity position (the amount that does not have an offsetting derivative contract to lock in the price). The Company’s operating results can be affected by factors such as the volatility of the relationship between the value of exchange traded futures and the cash prices of the underlying commodities and counterparty contract defaults.

These futures, options, and forward contracts are considered derivatives under accounting principles generally accepted in the United States of America. While the Company considers its commodity contracts to be effective economic hedges, the Company does not designate or account for its commodity contracts as hedges. All such contracts are recorded at fair value in the balance sheets. The Company records forward commodity contracts gains and losses to the balance sheets, as appropriate, based on the local market. The regulated commodity contracts are recorded on a net basis (offset against cash collateral posted or received) within the brokerage account. Management determines fair value based on exchange-quoted prices and in the case of its forward purchase and sale contracts, fair value is adjusted for differences in local markets and non-performance risk.

14.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 7 – DERIVATIVES AND HEDGING ACTIVITIES (continued)

The following table presents the fair value of the Company’s commodity derivatives as of October 31 and the balance sheet line item in which they are located:


Balance Sheet Location	2020		2019

Brokerage account (unrealized gains)	$	1,463,573	$	153,068
Brokerage account (unrealized losses)	(4,002,318)		(106,012)
Gains on open forward contracts	375,066		289,343
Losses on open forward contracts	(1,766,621)		(490,636)

	$	(3,930,300)	$	(154,237)

Accounting principles generally accepted in the United States of America require the Company to disclose the location and amount of the gains and losses from its derivative instruments reported in the statements of income and members’ equity. The Company uses various derivative instruments, as described above, as well as non-derivative instruments (commodity inventory) in its risk management strategies and activities. Substantially all of the Company’s sales are the result of physical delivery of commodities against forward cash contracts and substantially all of the Company’s cost of sales, are the result of purchases of commodities on forward cash contracts, gains and losses from all other commodity derivatives along with the change in value of the Company’s inventories.

Therefore, the statements of income and members’ equity are directly impacted by the use of derivatives and absent their use, gross margins would likely be significantly different, either higher or lower, than those reported depending on the directional movement of commodity markets. It is also likely that the Company would not operate at the same level of activity without the use of derivatives as management uses derivatives to reduce risk and absent the availability of derivatives, would be exposed to a much greater degree of volatility which would likely require a much higher capital to revenue correlation. Management expects derivative markets to continue to operate efficiently and effectively.

Realized and unrealized gains and losses in the value of the commodity contracts (whether due to changes in commodity prices, changes in performance or credit risk, or due to sale, maturity or extinguishment of the commodity contract) and inventories valued at market are included in sales (forward sales contracts) and cost of sales (all other commodity contracts and inventory) in the statements of income and members’ equity.

15.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 7 – DERIVATIVES AND HEDGING ACTIVITIES (continued)

The following table includes the alternative disclosures about gains and losses from activities that include non-designated derivative instruments as well as non-derivative instruments and their reporting in the statements of income and members’ equity:


	2020		2019

Sales	$	101,734,333	$	87,254,256
Cost of sales	85,851,481		70,965,532

	$	15,882,852	$	16,288,724

The items disclosed above include realized and unrealized gains and losses on both derivative instruments and non-derivative instruments.

At October 31, the Company had the following quantities outstanding (on a gross basis) on commodity derivative contracts:


Commodity	Unit of Measure	2020	2019

Soybeans	Bushels	3,789,722	1,126,124
Soybean oil	Pounds	80,493,833	39,396,100
Soybean meal	Tons	118,617	41,511
Soybean flour	Tons	17,215	1,806
Soybean flakes	Tons	323	1,230

NOTE 8 – COMMITMENTS

The Company has natural gas purchase commitments through December 2022. The agreements obligate the Company to pay for a minimum amount of natural gas even if it is not required for operations. Natural gas purchased under the agreements amounted to approximately $489,000 and $413,000 for the years ended October 31, 2020 and 2019, respectively. The Company has elected to account for these agreements under the normal purchase normal sales exception under ASC 815.

16.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 8 – COMMITMENTS (continued)

The future minimum natural gas purchases under the above commitments are as follows:


Year	Amount

2021	$	480,157
2022	478,138
2023	79,910

	$	1,038,205

Management does not anticipate any significant losses from these agreements.

On August 6, 2018, the Company (seller) entered into a supply agreement with an unrelated third party (buyer) which expired in December 2020. Concentrations of sales and accounts receivable with the buyer are noted in the Concentrations of Credit Risk policy in Note 1. Revenue recognized from minimum volume shortfalls under the agreement amounted to approximately 5% and 8% of sales for the years ended October 31, 2020 and 2019, respectively. The Company does not anticipate any losses from this arrangement.

The Company entered into an Industrial New Jobs Training Agreement (Agreement) with Southwestern Community College (SWCC), Creston Iowa, under Chapter 260E Code of Iowa, as amended, for purposes of establishing a project to educate and train certain persons employed by the Company in new jobs within Creston, Iowa. The agreement commenced in June 2020 and has a maximum term of 10 years. Under the terms of the agreement the Company is committed at a minimum to reimburse SWCC for its estimated project costs of $316,350 for administering the program. Reimbursement of these costs will be paid through state payroll tax withholding diversions to SWCC.

The Company is also eligible to receive up to $633,650 in funds directly from SWCC to be used for wages related to new jobs created and training for such jobs during the term of the agreement. Funds received from SWCC are to be repaid through state payroll tax withholding diversions to SWCC over the term of the agreement. At October 31, 2020, the Company had not received any funds directly from SWCC. In December 2021, the Company received $316,825 of funds from SWCC. The Company believes it will meet its requirements over the term of the agreement based on its current wage base in Creston, IA.

17.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 9 – RELATED PARTY TRANSACTIONS

Related party transactions and balances as of and for the years ended October 31 are as follows:


	2020		2019

Sales	$	2,449,347	$	2,412,575
Management fee expense	945,000		900,000
Related party advances, current	—		21,350,895
Related party advances, long-term	21,530,957		—
Accounts receivable	20,919		34,107
Accounts payable	109,845		83,239
Interest expense	309,796		347,455

On April 1, 2018 the Company entered into a management services agreement with an entity related through common ownership under which the related party provides various management and administrative services such as accounting, tax, legal, human resources, and operational support. The agreement had an initial term of six months and automatically continues in effect until either party gives the other party at least thirty days’ prior written notice of its intent to terminate the agreement. The agreement provides for a base annual fee of $900,000. This fee may be adjusted annually as mutually agreed to by the two parties. The fee paid for the management services provided under this agreement is not representative of the cost the Company would incur on a stand-alone basis.

At October 31, 2020 and 2019, the Company has advances from related parties through common ownership in the amount of $20,530,957 and $18,747,506 respectively, due on demand, and bearing interest on variable rates based on one month LIBOR or the Prime rate. Interest on the advances are due and payable monthly.

At October 31, 2020 and 2019, the Company has advances from related parties through common ownership in the amount of $1,000,000 and $2,603,389, respectively, which are due on demand and non-interest bearing.

As described in Note 5, on November 11, 2020, the Company, along with entities related through common ownership, collectively as co-borrowers, entered into a promissory note in the amount of $31,000,000 with a financial institution. The $31,000,000 of proceeds from the note were deposited with the Company. During 2021 the Company paid the 2020 related party advances in full and advanced a co-borrower approximately $8,300,000. As described in Note 5, the 2020 balance of related party advances was classified as long-term term due to the refinancing on a long-term basis.

18.

ZFS CRESTON, LLC

NOTES TO FINANCIAL STATEMENTS

October 31, 2020 and 2019

NOTE 10 – SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of October 31, 2020 for items that should be recognized or disclosed in these financial statements. The evaluation was conducted through December 22, 2021, which is the date these financial statements were available to be issued.

19.

Exhibit 99.2

ZFS CRESTON, LLC

Creston, Iowa

CONDENSED FINANCIAL STATEMENTS

(Unaudited)

ZFS CRESTON, LLC

Creston, Iowa

CONDENSED FINANCIAL STATEMENTS

(Unaudited)

CONTENTS


			Page #
FINANCIAL STATEMENTS
CONDENSED STATEMENTS OF INCOME			1
CONDENSED BALANCE SHEET			2
CONDENSED STATEMENTS OF CHANGES IN MEMBERS' EQUITY			3
CONDENSED STATEMENTS OF CASH FLOWS			4
NOTES TO CONDENSED FINANCIAL STATEMENTS			6

CONDENSED FINANCIAL STATEMENTS


ZFS CRESTON, LLC
CONDENSED STATEMENTS OF INCOME
(Unaudited)

	Nine Months Ended July 31,
	2021		2020

Sales	$	94,960,611	$	77,045,558

Cost of sales	88,646,444		71,273,217

Gross profit	6,314,167		5,772,341

Selling, general, and administrative expenses	1,800,539		1,529,644

Income before other income (expense)	4,513,628		4,242,697

Other income (expense)
Interest expense	(659,969)		(300,770)
Interest and investment income	128,635		8,478
PPP loan forgiveness	780,500		—
	249,166		(292,292)

Net income	$	4,762,794	$	3,950,405

See accompanying notes to condensed financial statements.


ZFS CRESTON, LLC
CONDENSED BALANCE SHEET
(Unaudited)

	July 31, 2021
ASSETS
Current assets
Accounts receivable (Note 1)	$	7,938,714
Inventories (Note 2)	14,849,884
Gains on open forward contracts (Notes 5 and 6)	2,460,974
Brokerage account (Notes 5 and 6)	672,112
Advances to related parties (Note 8)	7,141,982
Prepaid expenses	188,745
Total current assets	33,252,411

Property, plant, and equipment, net (Note 3)	16,981,211

Spare parts (Note 1)	1,640,529

Total assets	$	51,874,151

LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Unfunded checks	$	24,751
Current maturities of long-term debt (Note 4)	1,560,136
Accounts payable	1,875,052
Losses on open forward contracts (Notes 5 and 6)	571,597
Customer deposits	49,192
Other current liabilities	988,043
Total current liabilities	5,068,771

Long-term debt (Note 4)	29,451,783

Members' equity	17,353,597

Total liabilities and members' equity	$	51,874,151

See accompanying notes to condensed financial statements.


ZFS CRESTON, LLC
CONDENSED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
(Unaudited)

Nine Months ended July 31, 2020

Balances at October 31, 2019	$	9,881,592

Net income	3,950,405

Member distributions	(100,005)

Balances at July 31, 2020	$	13,731,992

Nine Months ended July 31, 2021

Balances at October 31, 2020	$	12,642,811

Net income	4,762,794

Members distributions	(52,008)

Balances at July 31, 2021	$	17,353,597

See accompanying notes to condensed financial statements.


ZFS CRESTON, LLC
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended July 31,
	2021		2020
Cash flows from operating activities
Net income	$	4,762,794	$	3,950,405
Adjustments to reconcile net income to net cash (used in) from operating activities:
Depreciation	1,359,430		1,062,306
Amortization of debt issuance costs	11,031		—
PPP loan forgiveness	(780,500)		—
Provision for losses on receivables	433,922		—
Change in assets and liabilities:
Accounts receivable	4,474,374		1,046,280
Inventories	(3,893,657)		1,080,713
Brokerage account	374,221		(268,214)
Gains on open forward contracts	(2,085,908)		79,915
Prepaid expenses	(111,209)		82,198
Spare parts	(117,744)		(459,561)
Accounts payable	(4,555,228)		(1,507,265)
Losses on open forward contracts	(1,195,024)		471,309
Customer deposits	(432,199)		741,210
Other current liabilities	180,391		298,429
Net cash (used in) from operating activities	(1,575,306)		6,677,725

Cash flows used in investing activities
Purchase of property and equipment	(487,840)		(2,179,360)
Advances to related party	(7,141,982)		—
Net cash used in investing activities	(7,629,822)		(2,179,360)

Cash flows from financing activities
Unfunded checks	6,714		88,918
Cash paid for debt issuance costs	(42,064)		—
Borrowings on long-term debt	31,000,000		1,317,535
Principal repayment of long-term debt	(176,557)		(28,340)
Net (repayments to) advances received from related parties	(21,530,957)		(5,676,473)
Distributions paid in cash	(52,008)		(100,005)
Net cash from financing activities	9,205,128		(4,398,365)

See accompanying notes to condensed financial statements.


ZFS CRESTON, LLC
CONDENSED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)

	Nine Months Ended July 31,
	2021		2020
Net change in cash	—		—

Cash at beginning of period	—		—

Cash at end of period	$	—	$	—

Supplemental disclosures of cash flow information
Cash paid for interest	$	653,231	$	300,770

See accompanying notes to condensed financial statements.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company using the same accounting principles, methods and practices that are used in the preparation of the Company’s annual statements. In the opinion of management, the information furnished reflects all adjustments, and other normal recurring adjustments, which are necessary for a fair presentation of the results of the interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. However, the Company believes that the disclosures are adequate to make the information presented understandable. The Company’s operations are subject to seasonality. Consequently, the operating results for the nine-months ended July 31, 2021 and 2020 are not necessarily indicative of the results that may be expected for the year. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the years ended October 31, 2020 and 2019.

Allowance for Doubtful Accounts: The allowance for doubtful accounts is determined by management based on the Company’s historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have failed. Management has recorded an allowance for doubtful accounts of $433,922 at July 31, 2021.

Recently Adopted Accounting Policies: On November 1, 2020, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, and all subsequent amendments thereto (collectively, “Topic 606”). Topic 606 supersedes virtually all existing revenue recognition guidance, including industry-specific guidance, and replaces it with a single, comprehensive framework for recognizing revenue from contracts with customers. Topic 606 requires a company to recognize revenue when it transfers goods or services to

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

customers in an amount that reflects the consideration that the company expects to receive and requires enhanced disclosure about the Company’s revenue from contracts with customers. The implementation did not have a material impact on the Company’s financial statements, other than increased disclosures regarding revenues related to contracts with customers.

Revenue Recognition: The Company’s revenue consists of sales from commodity contracts that are accounted for under ASC 815, Derivatives and Hedging (ASC 815) and sales of soybean hulls, soybean grits, and revenue received under a take or pay arrangement, which are accounted for under ASC 606, Revenue from Contracts with Customers (ASC 606).

Revenue from commodity contracts (ASC 815)

Revenue from commodity contracts primarily relates to forward sales of commodities, such as soybeans and processed soybean products, which are accounted for as derivatives at fair value under ASC 815. These forward sales meet the definition of a derivative under ASC 815 as they have an underlying (e.g. the price of soybeans or soybean meal), a notional amount (e.g. bushels or tons), no initial net investment and can be net settled since the commodity is readily convertible to cash. The Company does not apply the normal purchase and normal sale exception available under ASC 815 to these contracts.

Revenue from commodity contracts is recognized in sales revenues for the contractually stated amount when the contracts are settled. Settlement of the commodity contracts generally occurs upon shipment or delivery of the product, when title and risks and rewards of ownership transfers to the customer. Prior to settlement, these forward sales contracts are recognized at fair value with the unrealized gains or losses recorded within cost of sales. Additional information about the fair value of the Company's commodity derivatives is presented in Notes 6 and 7 to the financial statements.

The Company may receive deposits or prepayments for product prior to delivery. The sales and gross profit related to these transactions are not recognized until the product is shipped in accordance with the previously stated revenue recognition policy. These amounts are classified as a current liability and are recorded in customer deposits within the balance sheets. Shipping and handling fees are included in revenue and the associated costs included in cost of goods sold in the statements of income.

Revenue from contracts with customers (ASC 606)

Revenue from contracts with customers accounted for under ASC 606 is primarily generated from sales of soybean hulls, soybean grits, and a sales supply agreement which contains a take or pay provision for minimum volume commitment shortfalls. Revenue from the sales of soybean hulls and soybean grits is recognized when control of the promised goods transfers to the customer. This generally occurs when the product is transferred in accordance with agreed-upon shipping terms. Revenue from the take or pay supply agreement is recorded over the minimum commitment time period at an amount of consideration the Company expects to be entitled to as a result of the minimum volume shortfalls.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

The breakdown of revenues between ASC 606 and other standards is as follows for the nine months ended July 31, 2021:


Revenues under ASC 815	$	91,540,991
Revenues under ASC 606	3,419,620

	$	94,960,611

Recently Issued Accounting Guidance Not Yet Effective: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequently issued clarifying ASUs 2018-01, 2018-10, 2018-20, 2019-01, 2020-10, 2020-20, and 2020-05, hereafter referred to as “the clarifying ASUs”. The provisions of ASU 2016-02 and the clarifying ASUs require that lessees recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The ASU is effective for periods beginning after December 15, 2021. Early adoption is permitted; however, the Company has not chosen to do so. Based on preliminary calculations, the Company estimates the adoption of this standard will result in recording a right of use asset and lease liability of approximately $850,000.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and earlier adoption is permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2016-13 on the financial statements.

Concentration of Credit Risk: The majority of the Company’s receivables are from commercial agribusiness and food companies. The Company grants credit to its customers based on their credit worthiness. The Company’s ability to collect these receivables is dependent to some degree on the economic conditions in the agribusiness sector within its market area. Significant concentrations of accounts receivable as of July 31, 2021 and sales for the nine months ended July 31, 2021 and 2020, respectively, are as follows:


	July 31, 2021				July 31, 2020
	% of Sales		% of Accounts Receivable		% of Sales
Customer A	—	%	—	%	21	%
Customer B	14	%	—	%	13	%
Customer C	10	%	19	%	16	%
Customer D	—	%	13	%	—	%

Inventories: Inventories, consisting primarily of soybeans, soybean oil, soybean flakes, soybean flour, and soybean meal, are stated at market value.

Brokerage Account: Brokerage account represents uninsured deposits with a broker and the unrealized hedging gains and losses on open futures contracts. At July 31, 2021 the brokerage account consisted of the following:

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)


Uninsured deposits with broker	$	1,854,871
Unrealized gains on open futures contracts	202,734
Unrealized losses on open futures contracts	(1,385,493)

	$	672,112

Spare Parts: The Company has accumulated a supply of spare parts at its facility for use in repairs in the normal course of operations to minimize downtime. The spare parts are recorded at cost and assessed for obsolescence periodically. There was no obsolescence recorded for the current year. The majority of spare parts are not expected to be utilized within 12 months from the balance sheet date; accordingly the balance is reflected as a long-term asset in the balance sheet.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates in the Preparation of Financial Statements: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts reported in the financial statements and the accompanying footnotes. Significant estimates at July 31, 2021 include economic lives of property and equipment, allowance for doubtful accounts, and market prices utilized to value ending inventories and derivative instruments. Actual results could differ from those estimates. The Company’s ability to realize the $2,460,974 of gains on open forward contracts at July 31, 2021 is dependent on the ability of the customers to fulfill the contracts.

Risks and Uncertainties: In December 2019, a novel strain of coronavirus surfaced and has spread around the world, with resulting business and social disruption. The coronavirus was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020. The extent to which the coronavirus may impact business activity will depend on future developments, which are highly uncertain and cannot be predicted. The supply and demand of soybeans and soybean products are sensitive to factors outside of the Company’s control, such as unfavorable weather, geopolitical issues, and other factors. Adverse price movements as a result of such factors could negatively affect the Company’s results of operations and financial position. Significant estimates, as previously disclosed, may be materially impacted by such global events. The operations and business results of the Company have not been materially affected as of the date these financial statements were available to be issued.

NOTE 2 – INVENTORIES

At July 31, 2021 inventories consist of the following:


Soybeans	$	9,361,296
Soybean flakes	539,303
Soybean flour	975,851
Soybean oil	2,797,942
Soybean meal	1,103,308
Other	72,184

	$	14,849,884

In the normal course of business, the Company will store grain in its facilities for others. The Company is liable for any deficiencies of grade or shortage of quantity that may arise in connection with grain held in storage for others. The Company did not have any grain held in storage for others at July 31, 2021. The Company has not realized and does not expect any material losses on any deficiencies.

10.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following at July 31, 2021:


Soybean processing facilities, machinery and equipment	$	20,469,978
Land and land improvements	263,187
Office furniture and fixtures	147,492
Construction in progress	331,133
	21,211,790
Accumulated depreciation	(4,230,579)

	$	16,981,211

Depreciation expense for the nine months ended July 31, 2021 and 2020 was $1,359,430 and $1,062,306, respectively.

NOTE 4 – LONG-TERM DEBT

Long-term debt consists of the following at July 31, 2021:


Fixed rate note payable, due in monthly principal installments of $124,000 commencing on August 1, 2021 through maturity on August 1, 2040, at which time the remaining principal is due; accrued interest on the outstanding principal balance is due monthly commencing on December 1, 2020 through maturity; secured by substantially all assets of the Company and guaranteed by certain entities related through common ownership as co-borrowers	$	30,876,000

Fixed rate note payable due in monthly installments of $7,238 including interest through February 1, 2027; secured by specific equipment	$	438,930

	31,314,930
Less, current maturities	(1,560,136)
Less, unamortized debt issuance costs	(303,011)

	$	29,451,783

11.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 – LONG-TERM DEBT (continued)

In June 2019, the Company entered into a loan agreement along with certain entities related through common ownership as co-borrowers. The loan agreement contains a revolving line of credit in the amount of $210,000,000 and a construction loan for $140,000,000. The revolving line of credit and construction loan are due in June 2024. The interest rate on the loan agreement is variable and is priced based on the one month London Interbank Offered Rate (LIBOR) plus a variable percentage based on certain financial ratios of the co-borrowers, as defined in the loan agreement. Interest is accrued and payable monthly. The borrowings are secured by substantially all assets of the co-borrowers. Availability under the revolving line of credit is subject to a borrowing base formula.

The Joint and Several terms of the loan agreement require the Borrowers, including the Company, to guarantee the payment and performance of the Loans. As of July 31, 2021 the total amount outstanding under the arrangement by other Borrowers was approximately $177,000,000. Substantially all of the assets of the Company serve as collateral for the loans.

On November 11, 2020, the Company, along with certain entities related through common ownership, collectively as co-borrowers, entered into a fixed rate promissory note in the amount of $31,000,000 with a financial institution due in August 2040. The note is guaranteed by the Company and certain entities related through common ownership as co-borrowers and is secured by substantially all assets of the Company. The proceeds from the promissory note were deposited with the Company.

The loan agreements described above require the co-borrowers to comply with certain financial covenants quarterly. At July 31, 2021, the co-borrowers were in compliance with these financial covenants. In connection with the Company’s acquisition by a third party on December 30, 2021 as described in Note 9, the Company was released from the loan agreements described above.

NOTE 5 – FAIR VALUE MEASUREMENT

Unobservable inputs are inputs that reflect the Company’s own assumptions based on market data and on assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

12.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – FAIR VALUE MEASUREMENT (continued)

The standard describes three levels within its hierarchy that may be used to measure fair value.


Level 1 inputs -						Quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs -						Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and

Level 3 inputs -						Unobservable inputs (e.g., a reporting entity’s own data).

This guidance excludes inventories measured at market as market is similar to, but not intended to measure fair value. Management has included inventories in the table below as the FASB encourages disclosure of information about measurements similar to fair value, which includes the valuation of inventories. Valuation of the Company’s inventories is based upon exchange quoted prices, adjusted for observable quotes for local basis adjustments, which management believes analogizes the FASB issued guidance.

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis under FASB guidance at July 31, 2021:


	Level 1 Inputs		Level 2 Inputs		Total
Assets:
Inventories	$	—	$	14,777,700	$	14,777,700
Brokerage account	(1,182,759)		—		(1,182,759)
Gains on open forward contracts	—		2,460,974		2,460,974

Total assets	$	(1,182,759)	$	17,238,674	$	16,055,915

Liabilities:
Losses on open forward contracts	$	—	$	571,597	$	571,597

13.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – FAIR VALUE MEASUREMENT (continued)

NOTE 6 – DERIVATIVES AND HEDGING ACTIVITIES

These futures, options, and forward contracts are considered derivatives under accounting principles generally accepted in the United States of America. While the Company considers its commodity contracts to be effective economic hedges, the Company does not designate or account for its commodity contracts as hedges. All such contracts are recorded at fair value in the balance sheet. The Company records forward commodity contracts gains and losses to the balance sheet, as appropriate, based on the local market. The regulated commodity contracts are recorded on a net basis (offset against cash collateral posted or received) within the brokerage account. Management determines fair value based on exchange-quoted prices and in the case of its forward purchase and sale contracts, fair value is adjusted for differences in local markets and non-performance risk.

14.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6 – DERIVATIVES AND HEDGING ACTIVITIES (continued)

The following table presents the fair value of the Company’s commodity derivatives as of July 31, 2021 and the balance sheet line item in which they are located:


Balance Sheet Location
Brokerage account (unrealized gains)	$	202,734
Brokerage account (unrealized losses)	(1,385,493)
Gains on open forward contracts	2,460,974
Losses on open forward contracts	(571,597)

	$	(706,618)

15.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6 – DERIVATIVES AND HEDGING ACTIVITIES (continued)


	2021		2020

Sales	$	91,540,991	$	71,327,312
Cost of sales	80,447,602		63,935,220

	$	11,093,389	$	7,392,092

The items disclosed above include realized and unrealized gains and losses on both derivative instruments and non-derivative instruments.

At July 31, 2021, the Company had the following quantities outstanding (on a gross basis) on commodity derivative contracts:

Commodity

Unit of Measure

Quantity

Soybeans

Bushels

2,278,865

Soybean oil

Pounds

48,143,320

Soybean meal

Tons

43,601

Soybean flour

Tons

22,835

Soybean flakes

Tons

11,539

NOTE 7 – COMMITMENTS

The Company has aggregate natural gas purchase commitments of approximately $680,000 from August 2021 through December 2022. The agreements obligate the Company to pay for a minimum amount of natural gas even if it is not required for operations. Natural gas purchased under the agreements amounted to approximately $359,656 and $365,165 for the nine months ended July 31, 2021 and 2020, respectively. The Company has elected to account for these agreements under the normal purchase normal sales exception under ASC 815. Management does not anticipate any significant losses from these agreements.

On August 6, 2018, the Company (seller) entered into a supply agreement with an unrelated third party (buyer) which expired in December 2020. Concentrations of sales and accounts receivable with the buyer are noted in the Concentrations of Credit Risk policy in Note 1. Revenue recognized from minimum volume shortfalls under the supply agreement amounted to approximately 1% and 5% of sales for the nine months ended July 31, 2021 and 2020, respectively. The Company does not anticipate any losses from this arrangement.

16.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7 – COMMITMENTS (continued)

The Company entered into an Industrial New Jobs Training Agreement (Agreement) with Southwestern Community College (SWCC), Creston Iowa, under Chapter 260E Code of Iowa, as amended, for purposes of establishing a project to educate and train certain persons employed by the Company in new jobs within Creston, Iowa. The agreement commenced in June 2021 and has a maximum term of 10 years. Under the terms of the agreement the Company is committed at a minimum to reimburse SWCC for its estimated project costs of $316,350 for administering the program. Reimbursement of these costs will be paid through state payroll tax withholding diversions to SWCC.

The Company is also eligible to receive up to $633,650 in funds directly from SWCC to be used for wages related to new jobs created and training for such jobs during the term of the agreement. Funds received from SWCC are to be repaid through state payroll tax withholding diversions to SWCC over the term of the agreement. At July 31, 2021, the Company had not received any funds directly from SWCC. In December 2021, the Company received $316,825 of funds from SWCC. The Company believes it will meet its requirements over the term of the agreement based on its current wage base in Creston, IA.

NOTE 8 – RELATED PARTY TRANSACTIONS

Related party balances at July 31, 2021 are as follows:


Advance to related parties	$	7,141,982
Accounts receivable	84,629
Accounts payable	7,895

Related party transactions for the nine months ended July 31, 2021 and 2020 are as follows:


	2021		2020

Sales	$	552,833	$	834,293
Management fee expense	748,572		708,750
Interest expense	—		300,770
Interest income	119,637		—

17.

ZFS CRESTON, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8 – RELATED PARTY TRANSACTIONS (continued)

At July 31, 2021 the Company had a fixed rate advance, due on demand, from a related party through common ownership in the amount $7,141,982. The advance was repaid in full on December 22, 2021.

NOTE 9 – SUBSEQUENT EVENTS

On December 30, 2021, the Company executed a Membership Interest Purchase Agreement with a third party pursuant to which all of the outstanding membership interests in the Company were sold to the third party for aggregate cash consideration of approximately $102 million, subject to the adjustments set forth in the Purchase Agreement for cash, debt and working capital.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of July 31, 2021 for items that should be recognized or disclosed in these financial statements. The evaluation was conducted through March 16, 2022, which is the date these financial statements were available to be issued.

18.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On December 30, 2021, Benson Hill, Inc. (“Benson Hill” or the “Company”) and its wholly owned subsidiary DDB Holdings, Inc. (“DDB Holdings”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with ZFS Creston, LLC (“ZFS Creston”), the sellers party to the Purchase Agreement (the “Sellers”), and ZFS Solutions, LLC, as representative of the Sellers. Pursuant to the Purchase Agreement, and concurrently with the execution thereof, the Company acquired all of the outstanding membership interests in ZFS Creston from the Sellers for aggregate cash consideration of approximately $102 million, subject to the adjustments set forth in the Purchase Agreement for cash, debt and working capital (the “Acquisition”).

On December 29, 2021, in connection with the acquisition of ZFS Creston described above, the Company and its directly or indirectly wholly-owned subsidiaries Benson Hill Holdings, Inc., BHB Holdings, LLC, DDB Holdings, Inc., Dakota Dry Bean Inc., Benson Hill Seeds Holding, Inc., Benson Hill Seeds, Inc., Benson Hill Fresh Holdings, LLC, Benson Hill Fresh, LLC, J&J Produce, Inc., J&J Southern Farms, Inc., and Trophy Transport, LLC (the Company and such subsidiaries are each individually referred to as a “Borrower” and are all collectively referred to as the “Borrowers”), entered into a Loan and Security Agreement (the “Loan Agreement”) with Avenue Capital Management II, L.P. (the “Agent”), as administrative agent and collateral agent for several funds managed by the Agent (each such fund is individually referred to as a “Lender” and all such funds are collectively referred to as the “Lenders”), wherein on such date the Lenders loaned to the Borrowers the aggregate sum of $80 million and committed to loan to the Borrowers an additional aggregate sum of $20 million between April 30, 2022 and June 30, 2022 upon the Company’s achievement of certain milestones (the “Loan”).

The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the Acquisition and Loan based on the historical financial statements and accounting records of Benson Hill and ZFS Creston after giving effect to the Acquisition and the Acquisition-related pro forma adjustments as described in the notes included below.

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the nine months ended September 30, 2021 combine the historical consolidated statements of operations of Benson Hill for the year ended December 31, 2020 and the nine months ended September 30, 2021 and ZFS Creston for the year ended October 31, 2020 and the nine months ended July 31, 2021, respectively, giving effect to the Acquisition and Loan as if they had occurred on January 1, 2020, the first day of the fiscal year ended December 31, 2020. The unaudited pro forma condensed combined balance sheet as of September 30, 2021, combines the historical consolidated balance sheets of Benson Hill as of September 30, 2021 and ZFS Creston as of July 31, 2021, giving effect to the Acquisition and Loan as if they had occurred on September 30, 2021.

The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (i) directly attributable to the Acquisition and Loan, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined company’s results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements.

In addition, the unaudited pro forma condensed combined financial information was based on, and should be read in conjunction with, the following historical consolidated financial statements and accompanying notes:

•separate audited historical consolidated financial statements of Benson Hill as of and for the year ended December 31, 2020, and the related notes included in Benson Hill’s Registration Statement on Form S-4, filed with the SEC on August 30, 2021;

•separate unaudited historical condensed consolidated financial statements of Benson Hill as of and for the nine month period ended September 30, 2021, and the related notes included in Benson Hill’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021;

•separate audited historical financial statements of ZFS Creston as of October 31, 2020 and 2019, and for the years ended October 31, 2020 and 2019, and the related notes filed as Exhibit 99.1 to this Amendment No. 1 to Current Report on Form 8-K/A; and

•separate unaudited historical condensed financial statements of ZFS Creston as of and for the nine month period ended July 31, 2021, and the related notes filed as Exhibit 99.2 to this Amendment No. 1 to Current Report on Form 8-K/A.

The unaudited pro forma condensed combined financial information has been prepared by Benson Hill using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles. The assets acquired and liabilities assumed by Benson Hill in the Acquisition have been measured at their respective estimated fair values. Differences between these estimates of fair value and the final acquisition accounting will occur, and those differences could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position. The pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Benson Hill will finalize the acquisition accounting (including the necessary valuation and other studies) as soon as practicable within the required measurement period, but in no event later than one year following completion of the Acquisition. The Company expressly disclaims any duty to update the unaudited pro forma condensed combined financial information, except as otherwise required by law.

The unaudited pro forma condensed combined financial information has been presented for informational purposes only. The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Benson Hill and ZFS Creston would have achieved had the companies been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the Acquisition. The unaudited pro forma condensed combined financial information does not reflect any potential cost savings that may be realized as a result of the Acquisition and also does not reflect any integration-related costs. Material intercompany transactions between Benson Hill and ZFS Creston during the periods presented in the unaudited pro forma condensed combined financial statements have been eliminated (see Note 5. Income Statement Pro Forma Adjustments and Note 6. Balance Sheet Pro Forma Adjustments).

Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2020
(In Thousands, Except Per Share Information)


	Historical				Pro Forma Adjustments (Note 5)			Pro Forma Combined
	Benson Hill		ZFS Creston
Revenues	$	114,348	$	101,734	$	—		$	216,082
Cost of sales	102,430		96,397		1,936		(b)	200,763
Gross profit	11,918		5,337		(1,936)			15,319
Operating expenses:
Research and development	29,457		—		—			29,457
Selling, general and administrative expenses	37,446		2,144		624		(c)	40,214
Impairment of goodwill	4,832		—		—			4,832
Total operating expenses	71,735		2,144		624			74,503
(Loss) income from operations	(59,817)		3,193		(2,560)			(59,184)
Other expense (income):
Interest expense, net	6,708		312		17,967		(d)	24,987
Change in fair value of warrants(1)	661		—		—			661
Other (income) expense, net	(75)		—		—			(75)
Total other expense (income), net	7,294		312		17,967			25,573
Net (loss) income before income tax	(67,111)		2,881		(20,527)			(84,757)
Income tax expense	48		—		—			48
Net (loss) income	$	(67,159)	$	2,881	$	(20,527)		$	(84,805)
Net loss per common share:
Basic and diluted loss per common share	$	(0.81)						$	(1.02)
Weighted average shares outstanding:
Basic and diluted weighted average shares outstanding	83,295							83,295

(1) The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 does not include pro forma adjustments for the change in fair value of the warrants issued in connection with the Loan as outlined in Note 1. Description of Transaction.

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments shown above are explained in Note 5. Income Statement Pro Forma Adjustments.

Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2021
(In Thousands, Except Per Share Information)


	Historical				Pro Forma Adjustments (Note 5)			Pro Forma Combined
	Benson Hill		ZFS Creston
Revenues	$	103,494	$	94,961	$	(743)	(a)	$	197,712
Cost of sales	102,546		88,647		5,135		(b)	196,328
Gross profit	948		6,314		(5,878)			1,384
Operating expenses:
Research and development	26,403		—		—			26,403
Selling, general and administrative expenses	57,570		1,800		438		(c)	59,808
Total operating expenses	83,973		1,800		438			86,211
(Loss) income from operations	(83,025)		4,514		(6,316)			(84,827)
Other expense (income):
Interest expense (income), net	4,033		(249)		11,276		(d)	15,060
Loss on extinguishment of debt	11,742		—		—			11,742
Change in fair value of warrants(2)	(12,525)		—		—			(12,525)
Other (income) expense, net	(2,453)		—		—			(2,453)
Total other expense (income), net	797		(249)		11,276			11,824
Net (loss) income before income tax	(83,822)		4,763		(17,592)			(96,651)
Income tax expense	218		—		—			218
Net (loss) income	$	(84,040)	$	4,763	$	(17,592)		$	(96,869)
Net loss per common share:
Basic and diluted loss per common share	$	(0.71)						$	(0.82)
Weighted average shares outstanding:
Basic and diluted weighted average shares outstanding	117,714							117,714

(2) The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2021 does not include pro forma adjustments for the change in fair value of the warrants issued in connection with the Loan as outlined in Note 1. Description of Transaction.

Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2021
(In Thousands)


	Historical				Pro Forma Adjustments (Note 6)			Pro Forma Combined
	Benson Hill		ZFS Creston
Assets
Current assets:
Cash and cash equivalents	$	257,036	$	—	$	(18,247)	(e)	$	238,789
Marketable securities	—		—		—			—
Accounts receivable, net	11,595		7,939		—			19,534
Inventories, net	22,422		14,850		—			37,272
Prepaid expenses and other current assets	10,627		10,463		(6,485)		(f & m)	14,605
Total current assets	301,680		33,252		(24,732)			310,200
Property and equipment, net	64,952		16,981		43,019		(g)	124,952
Right of use asset, net	32,628		—		853		(h)	33,481
Goodwill and intangible assets, net	25,967		—		17,588		(i & j)	43,555
Other assets	1,514		1,641		—			3,155
Total Assets	$	426,741	$	51,874	$	36,728		$	515,343

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	23,391	$	1,900	$	—		$	25,291
Revolving line of credit	—		—		—			—
Current lease liability	1,961		—		605		(h)	2,566
Current maturities of long-term debt	1,872		1,560		3,440		(k)	6,872
Accrued expenses and other current liabilities	22,881		1,608		2,048		(l)	26,537
Total current liabilities	50,105		5,068		6,093			61,266
Long-term debt	9,317		29,452		38,893		(k)	77,662
Long-term lease liability	33,831		—		248		(h)	34,079
Warrant liabilities	43,541		—		2,113		(m)	45,654
Conversion option liability	—		—		8,783		(m)	8,783
Total liabilities	136,794		34,520		56,130			227,444
Stockholders’ equity:
Common stock(3)	18		—		—			18
Additional paid-in capital	528,640		17,354		(19,402)		(n)	526,592
Accumulated deficit	(238,363)		—		—			(238,363)
Accumulated other comprehensive loss	(348)		—		—			(348)
Total stockholders’ equity	289,947		17,354		(19,402)			287,899
Total liabilities and stockholders’ equity	$	426,741	$	51,874	$	36,728		$	515,343

(3) On an historical and pro forma combined basis, share information of Benson Hill is as follows: 440 million shares of common stock authorized; 178 million shares of common stock issued and outstanding.

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

(Dollar Amounts in Thousands)

1. Description of Transaction

On December 30, 2021, Benson Hill, Inc. (“Benson Hill” or the “Company”) and its wholly owned subsidiary DDB Holdings, Inc. (“DDB Holdings”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with ZFS Creston, LLC (“ZFS Creston”), the sellers party to the Purchase Agreement (the “Sellers”), and ZFS Solutions, LLC, as representative of the Sellers. Pursuant to the Purchase Agreement, and concurrently with the execution thereof, Benson Hill acquired all of the outstanding membership interests in ZFS Creston from the Sellers for aggregate cash consideration of approximately $102 million, subject to the adjustments set forth in the Purchase Agreement for cash, debt and working capital.

On December 29, 2021, in connection with the acquisition of ZFS Creston described above, the Company and certain of its directly or indirectly wholly-owned subsidiaries (the Company and such subsidiaries are each individually referred to as a “Borrower” and are all collectively referred to as the “Borrowers”), entered into a Loan and Security Agreement wherein on such date the lenders party thereto (the “Lenders”) loaned to the Borrowers the aggregate sum of $80 million and committed to loan to the Borrowers an additional aggregate sum of $20 million between April 30, 2022 and June 30, 2022 upon the Company’s achievement of certain milestones (the “Loan”).

Upon maturity or other satisfaction of the Loan, a “Final Payment” (in addition to other payments of principal and interest) equal to $10.7 million is payable by the Borrowers to the Lenders, but in the event all or any part of any Loan is outstanding when a “Change of Control” as defined in the Loan Agreement occurs the required “Final Payment” is $14.2 million. In the event the Loan is prepaid, a “Prepayment Fee” is due, ranging from 1% to 6% of the principal amount of the Loan, based upon the time from the initial closing to the prepayment date.

At any time after 6-months from initial loan closing and before the 42-month anniversary of the initial loan closing, up to $20.0 million of the principal amount of the Loan then outstanding may be converted (at a Lender’s option) into shares of the Company’s Common Stock (the “Conversion Option”).

As additional consideration for the Loan, the Lenders received warrants exercisable or exchangeable for, at a Lender’s option, up to such aggregate number of shares of the Company’s Common Stock determined by dividing $3.0 million by the exercise price.

The foregoing summary of the transactions contemplated by the Purchase Agreement is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, a copy of which was attached as Exhibit 2.1 to the Current Report on Form 8-K filed by Benson Hill with the SEC on January 4, 2022.

2. Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and is based on the historical consolidated financial statements of Benson Hill and ZFS Creston.

The acquisition method of accounting is based on Accounting Standards Codification (“ASC”) 805, Business Combinations, and uses the fair value concepts defined in ASC 820, Fair Value Measurement.

ASC 805 requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

ASC 820 defines the term “fair value,” and sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for

an asset assume the highest and best use by these market participants. Fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded, as of the completion of the Acquisition, primarily at their respective fair values and added to those of Benson Hill. Financial statements and reported results of operations of Benson Hill issued after completion of the Acquisition will reflect these values, but will not be retroactively restated to reflect the historical financial position or results of operations of ZFS Creston.

Under ASC 805, acquisition-related transaction costs (e.g., advisory, legal and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred. Total acquisition-related transaction costs expected to be incurred by Benson Hill and ZFS Creston are estimated to be $2,078, of which $30 was incurred through September 30, 2021. Certain acquisition-related transaction costs incurred in the nine months ended September 30, 2021 are reflected as a pro forma adjustment to the unaudited pro forma condensed combined statement of operations for the same period as a reduction in selling, general and administrative expenses because those net costs are not expected to have a continuing impact on the combined company’s results.

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 is required to include adjustments which give effect to events that are directly attributable to the Acquisition regardless of whether they are expected to have a continuing impact on the combined company’s results or are non-recurring. Therefore, acquisition-related transaction costs expected to be incurred by Benson Hill and ZFS Creston subsequent to September 30, 2021 of $2,048 million are reflected as pro forma adjustments to the unaudited pro forma condensed combined balance sheet as of September 30, 2021, with the impact presented as an increase to accrued expenses and other current liabilities and a decrease to retained earnings.

The unaudited pro forma condensed combined financial information does not reflect any potential cost savings that may be realized as a result of the Acquisition. Additionally, the unaudited pro forma condensed combined financial information does not reflect any integration-related costs associated with the acquisition. The integration-related costs will be expensed in the appropriate accounting periods after completion of the Acquisition as incurred.

Certain ZFS Creston balances have been reclassified to conform to Benson Hill’s financial statement presentation.

3. Accounting Policies

With the exception of the following three accounting policies Benson Hill is not aware of any significant differences between the accounting policies of the two companies that would have a material impact on the combined company’s financial statements.

•Benson Hill adopted the recently issued lease accounting guidance, ASC 842, in the first quarter of 2020 while ZFS Creston had not yet adopted the new standard at the time of the Acquisition (see Note 6(h)).

•Benson Hill carries its inventories at the lower of cost or net realizable value while ZFS Creston carries its inventories at market (see Note 5(b)).

•Benson Hill designates all commodity purchase and sales contracts as normal purchases and normal sales and as a result does not account for them as derivatives under ASC 815 while ZFS Creston has not elected this exemption and therefore carries its commodity purchase and sales contracts at market value (see Note 5(b)).

Therefore, the unaudited pro forma condensed combined financial statements assume there are no other differences in accounting policies other than the three described above and in Note 6(h) and Note 5(b), respectively. As Benson Hill completes its review of ZFS Creston’s accounting policies, it is possible that other policy differences may be identified that, when conformed, could have a material impact on the combined company’s financial statements.

4. Estimate of Assets Acquired and Liabilities Assumed

The following summarizes a preliminary estimate of the assets acquired and the liabilities assumed by Benson Hill in the Acquisition assuming the Acquisition took place on September 30, 2021, and includes a reconciliation to the total consideration transferred:


	Estimated Fair Value at September 30, 2021
Assets:
Cash and cash equivalents	$	—
Accounts receivable, net	7,939
Inventories, net	14,850
Prepaid expenses and other current assets	3,555
Property and equipment, net	60,000
Right of use asset, net	853
Other non-current assets	1,641
Intangible assets	11,000
Goodwill	6,588
Total assets acquired	$	106,426
Liabilities:
Accounts payable	1,900
Current lease liability	605
Long-term lease liability	248
Accrued expenses and other current liabilities	1,608
Total liabilities assumed	$	4,361
Consideration transferred	$	102,065

The allocation, which was primarily based on historical acquisitions and benchmark studies, has been used to prepare pro forma adjustments in the pro forma balance sheet and statements of operations. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments and may result in changes in allocations to the property and equipment, intangible assets, goodwill and other assets and liabilities.

5. Income Statement Pro Forma Adjustments

This note should be read in conjunction with Note 1. Description of Transaction; Note 2. Basis of Presentation; and Note 4. Estimate of Assets Acquired and Liabilities Assumed. Adjustments included in the column under the heading “Pro Forma Adjustments” represent the following:

(a) To eliminate revenue from sales between Benson Hill and ZFS Creston for the periods presented:


	Year Ended December 31, 2020		Nine Months Ended September 30, 2021
Eliminate revenue on sales from Benson Hill to ZFS Creston	$	—	$	(402)
Eliminate revenue on sales from ZFS Creston to Benson Hill	—		(341)
Total elimination	$	—	$	(743)

(b) Cost of sales is adjusted, as follows:


	Year Ended December 31, 2020		Nine Months Ended September 30, 2021
Eliminate cost of sales on sales from Benson Hill to ZFS Creston	$	—	$	(382)
Eliminate cost of sales on sales from ZFS Creston to Benson Hill	—		(319)
Estimated depreciation expense related to property and equipment fair value adjustment	2,811		2,108
Estimated amortization expense related to intangible asset fair value adjustment	250		187
Adjustment to value ZFS Creston’s inventory at cost to align with Benson Hill’s accounting policy	65		260
Adjustment to align ZFS Creston’s accounting for commodity purchase and sales contract with Benson Hill’s accounting policy	(1,190)		$	3,281
Estimated adjustment to cost of sales	$	1,936	$	5,135


	Year Ended December 31, 2020		Nine Months Ended September 30, 2021
Eliminate Benson Hill and ZFS Creston transaction costs incurred	$	—	$	(30)
Estimated depreciation expense related to property and equipment fair value adjustment	57		43
Estimated amortization expense related to intangible asset fair value adjustment	567		425
Estimated adjustment to selling, general and administrative expenses	$	624	$	438

(d) Interest expense has been adjusted, as follows:


	Year Ended December 31, 2020		Nine Months Ended September 30, 2021
Additional interest expense associated with the issuance of an $80.0 million convertible note payable to partially fund the Acquisition	$	12,335	$	7,460
Additional interest expense associated with the issuance of a $5.0 million note payable to partially fund the Acquisition	57		—
Amortization of debt issuance costs, debt discounts and commitment assets associated with the convertible note payable and note payable issued to partially fund the Acquisition	5,887		3,567
Elimination of ZFS Creston interest expense, including PPP loan forgiveness, on debt not assumed by Benson Hill in the Acquisition	(312)		249
Estimated adjustment to interest expense	$	17,967	$	11,276

6. Balance Sheet Pro Forma Adjustments

(e) To reflect the use of available cash to partially fund the Acquisition. The components of such available cash were:



To record issuance of Benson Hill convertible note payable to partially fund the Acquisition	$	80,000
To record issuance of Benson Hill note payable to partially fund the Acquisition	5,000
Debt issuance costs to be paid after September 30, 2021	(1,182)
To record the cash consideration of the Acquisition	(102,065)
Total	$	(18,247)

(f) Prepaid and other current assets is adjusted by the following:



To record the estimated fair value of natural gas purchase commitments(2)	$	234
To remove the intercompany receivable between ZFS Creston and a related party not acquired by Benson Hill in the Acquisition	(7,142)
Total	$	(6,908)

(2) At the time of the Acquisition ZFS Creston had natural gas purchase commitments through December 2022. As ZFS Creston elected to account for these agreements under the normal purchase normal sales exemption under ASC 815 they are not included in the condensed balance sheet as of September 30, 2021. In accordance with ASC 805 Benson Hill estimated the fair value of the purchase commitments based on the fixed contract price and natural gas forward pricing curves.

(g) As of the completion of the Acquisition, ZFS Creston’s property and equipment is required to be measured at fair value. The fair value of ZFS Creston’s property and equipment reflects the value that a market participant would spend to replace the assets, which takes into account changes in technology, usage and relative obsolescence and depreciation of the assets.

(h) At the time of the Acquisition ZFS Creston had not adopted the new lease accounting standard, ASC 842, which requires lessees to recognize assets and liabilities for all leases. To align ZFS Creston's accounting policies with Benson Hill’s all leases with a remaining term of one year or more were valued in accordance with ASC 842 and included in the unaudited pro forma condensed combined financial statements.

(i) As of the completion of the Acquisition, identifiable intangible assets are required to be measured at fair value. For purposes of these unaudited pro forma condensed combined financial statements and consistent with the ASC 820 requirements for fair value measurements, it is assumed that all acquired assets will be used, and that all acquired assets will be used in a manner that represents the highest and best use of those acquired assets.

The fair value of identifiable intangible assets was preliminarily determined using a benchmarking approach based on prior Benson Hill acquisitions as well as recent comparable transactions in the industry.

Benson Hill is gathering information as to the amount, timing and risk of the cash flows from all of ZFS Creston’s identifiable intangible assets to determine their fair value.

Some of the more significant assumptions inherent in the development of intangible asset values, from the perspective of a market participant, include, but are not limited to, the amount and timing of projected future cash flows (including revenue and profitability); the discount rate selected to measure the risks inherent in the future cash flows; the assessment of the asset’s life cycle; and the competitive trends impacting the asset. However, for purposes of these unaudited pro forma condensed combined financial statements, the components of the fair value of ZFS Creston’s identifiable intangible assets and their useful lives have been preliminarily estimated as follows:


	Estimated Fair Value		Estimated Useful Life
Customer relationships	$	5,500	15 years
Acquired technology	3,000		15 years
Trade names	2,000		10 years
Permits	500		10 years
	$	11,000

These preliminary estimates of fair value and useful life may be different from the amounts included in the final acquisition accounting, and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements. Once sufficient information has been gathered about ZFS Creston’s identifiable intangible assets, additional insight may be gained that could impact (i) the estimated total value assigned to identifiable intangible assets, (ii) the estimated allocation of value between finite-lived and indefinite-lived intangible assets and/or (iii) the estimated useful life of each category of intangible assets.

(j) Goodwill is calculated as the difference between the total consideration transferred and the aggregate estimated fair values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized.

(k) To record the issuance of Benson Hill’s note payable and convertible note payable to effect the Acquisition and related estimated debt issuance costs and debt discounts, as well as the extinguishment of ZFS Creston debt not assumed by Benson Hill in the Acquisition:



To record issuance of Benson Hill’s convertible note payable to partially fund the Acquisition	$	80,000
To record issuance of Benson Hill’s note payable to partially fund the Acquisition	5,000
To record debt issuance costs and debt discounts	(11,655)
To record the extinguishment of the current portion of ZFS Creston’s debt not assumed by Benson Hill in the Acquisition	(1,560)
To record the extinguishment of the long-term portion of ZFS Creston’s debt not assumed by Benson Hill in the Acquisition	(29,452)
Total	$	42,333

(l) To accrue acquisition-related transaction costs projected to be incurred after September 30, 2021.

(m) To record the issuance of the warrants and conversion option in connection with the Benson Hill convertible note payable issued to effect the Acquisition and related commitment asset at estimated fair value:



To record the commitment asset on the convertible note payable Benson Hill issued to partially fund the Acquisition	$	423
To record the warrants issued in connection with the convertible note payable Benson Hill issued to partially fund the Acquisition	2,113
To record the conversion feature on the convertible note payable Benson Hill issued to partially fund the Acquisition	8,783
Total	$	11,319

(n) To eliminate ZFS Creston’s historical equity and to record the estimated acquisition related transaction costs projected to be incurred after September 30, 2021:



Elimination of ZFS Creston's historical equity	$	(17,354)
Acquisition-related transaction costs estimated to be incurred after September 30, 2021	(2,048)
Total	$	(19,402)