Benson Hill, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| (Unaudited) | | |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 103,977 | | | $ | 78,963 | |
| Marketable securities | 105,934 | | | 103,689 | |
| Accounts receivable, net | 34,818 | | | 31,729 | |
| Inventories, net | 54,700 | | | 48,724 | |
| Prepaid expenses and other current assets | 20,687 | | | 20,253 | |
| Total current assets | 320,116 | | | 283,358 | |
| Property and equipment, net | 126,696 | | | 126,885 | |
| Right of use asset, net | 74,521 | | | 77,452 | |
| Goodwill and intangible assets, net | 43,181 | | | 42,664 | |
| Other assets | 4,514 | | | 4,538 | |
| Total assets | $ | 569,028 | | | $ | 534,897 | |
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| (Unaudited) | | |
| Liabilities and stockholders’ equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 31,171 | | | $ | 35,508 | |
| Revolving line of credit | 1,857 | | | 47 | |
| Current lease liability | 2,490 | | | 2,422 | |
| Current maturities of long-term debt | 14,178 | | | 6,934 | |
| Accrued expenses and other current liabilities | 21,484 | | | 26,771 | |
| Total current liabilities | 71,180 | | | 71,682 | |
| Long-term debt | 75,696 | | | 77,170 | |
| Long-term lease liability | 78,357 | | | 79,154 | |
| Warrant liabilities | 36,809 | | | 46,051 | |
| Conversion option liability | 12,888 | | | 8,783 | |
| Deferred tax liabilities | 287 | | | 294 | |
| Other non-current liabilities | 317 | | | 316 | |
| Total liabilities | 275,534 | | | 283,450 | |
| Stockholders’ equity: | | | |
Redeemable convertible preferred stock, $0.0001 par value; 1,000 and 1,000 shares authorized, 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | — | | | — | |
Common stock, $0.0001 par value, 440,000 and 440,000 shares authorized, 205,069 and 178,089 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 21 | | | 18 | |
| Additional paid-in capital | 594,345 | | | 533,101 | |
| Accumulated deficit | (297,145) | | | (280,569) | |
| Accumulated other comprehensive loss | (3,727) | | | (1,103) | |
| Total stockholders’ equity | 293,494 | | | 251,447 | |
Total liabilities and stockholders’ equity | $ | 569,028 | | | $ | 534,897 | |
See accompanying notes to the condensed consolidated financial statements (unaudited).
Benson Hill, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Per Share Information)
| | | | | | | | | | | |
| Three Months
Ended March 31, |
| 2022 | | 2021 |
| Revenues | $ | 92,445 | | | $ | 31,802 | |
| Cost of sales | 97,667 | | | 31,233 | |
| Gross (loss) profit | (5,222) | | | 569 | |
| Operating expenses: | | | |
| Research and development | 12,306 | | | 7,127 | |
| Selling, general and administrative expenses | 23,124 | | | 13,733 | |
| Total operating expenses | 35,430 | | | 20,860 | |
| Loss from operations | (40,652) | | | (20,291) | |
| Other (income) expense: | | | |
| Interest expense, net | 6,388 | | | 1,258 | |
| Change in fair value of warrants and conversion option | (31,741) | | | 1,016 | |
| Other expense (income), net | 1,316 | | | (218) | |
| Total other (income) expense, net | (24,037) | | | 2,056 | |
| Net loss before income tax | (16,615) | | | (22,347) | |
| Income tax (benefit) expense | (39) | | | — | |
| Net loss | $ | (16,576) | | | $ | (22,347) | |
| Net loss per common share: | | | |
| Basic and diluted loss per common share | $ | (0.10) | | | $ | (0.21) | |
| Weighted average shares outstanding: | | | |
| Basic and diluted weighted average shares outstanding | 160,711 | | | 108,757 | |
See accompanying notes to the condensed consolidated financial statements (unaudited).
Benson Hill, Inc.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In Thousands)
| | | | | | | | | | | |
| Three Months
Ended March 31, |
| 2022 | | 2021 |
| Net loss | $ | (16,576) | | | $ | (22,347) | |
| Foreign currency: | | | |
| Comprehensive loss | (65) | | | (71) | |
| (65) | | | (71) | |
| Marketable securities: | | | |
| Comprehensive loss | (3,766) | | | (87) | |
| Adjustment for net income (losses) realized in net loss | 1,207 | | | (47) | |
| (2,559) | | | (134) | |
| Total other comprehensive loss | (2,624) | | | (205) | |
| Total comprehensive loss | $ | (19,200) | | | $ | (22,552) | |
See accompanying notes to the condensed consolidated financial statements (unaudited).
Benson Hill, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redeemable Convertible
Preferred Stock | | | Common Stock | | Additional
Paid-In
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Loss | | Total
Stockholders’
Equity |
| Shares | | Amount | | | Shares | | Amount | | | | |
| Balance as of December 31, 2021 | — | | | $ | — | | | | 178,089 | | | $ | 18 | | | $ | 533,101 | | | $ | (280,569) | | | $ | (1,103) | | | $ | 251,447 | |
Issuance of common stock upon exercise of stock options and warrants | — | | | — | | | | 830 | | | — | | | 636 | | | — | | | — | | | 636 | |
| Stock-based compensation expense | — | | | — | | | | — | | | — | | | 5,683 | | | — | | | — | | | 5,683 | |
PIPE Investment, net of issuance costs of $3,456 | — | | | — | | | | 26,150 | | | 3 | | | 54,925 | | | — | | | — | | | 54,928 | |
| Comprehensive loss | — | | | — | | | | — | | | — | | | — | | | (16,576) | | | (2,624) | | | (19,200) | |
| Balance as of March 31, 2022 | — | | | $ | — | | | | 205,069 | | | $ | 21 | | | $ | 594,345 | | | $ | (297,145) | | | $ | (3,727) | | | $ | 293,494 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redeemable Convertible
Preferred Stock | | | Common Stock | | Additional
Paid-In
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Loss | | Total
Stockholders’
Equity (Deficit) |
| Shares | | Amount | | | Shares | | Amount | | | | |
| Balance as of December 31, 2020 | 102,899 | | | $ | 287,323 | | | | 5,798 | | | $ | 1 | | | $ | 5 | | | $ | (154,322) | | | $ | (325) | | | $ | (154,641) | |
| Retroactive application of recapitalization | (102,899) | | | (287,323) | | | | 102,899 | | | 10 | | | 287,313 | | | — | | | — | | | 287,323 | |
| Adjusted balance, beginning of period | — | | | — | | | | 108,697 | | | 11 | | | 287,318 | | | (154,322) | | | (325) | | | 132,682 | |
Issuance of common stock upon exercise of stock options | — | | | — | | | | 136 | | | — | | | 85 | | | — | | | — | | | 85 | |
| Stock-based compensation expense | — | | | — | | | | — | | | — | | | 647 | | | — | | | — | | | 647 | |
| Other | — | | | — | | | | — | | | — | | | (15) | | | (1) | | | — | | | (16) | |
| Comprehensive loss | — | | | — | | | | — | | | — | | | — | | | (22,347) | | | (205) | | | (22,552) | |
| Balance as of March 31, 2021 | — | | | $ | — | | | | 108,833 | | | $ | 11 | | | $ | 288,035 | | | $ | (176,670) | | | $ | (530) | | | $ | 110,846 | |
See accompanying notes to the condensed consolidated financial statements (unaudited).
Benson Hill, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
| Operating activities | | | |
| Net loss | $ | (16,576) | | | $ | (22,347) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | |
| Depreciation and amortization | 5,404 | | | 2,591 | |
| Stock-based compensation expense | 5,683 | | | 647 | |
| Bad debt expense | 156 | | | — | |
| Change in fair value of warrants and conversion option | (31,741) | | | 1,016 | |
| Accretion and amortization related to financing activities | 2,907 | | | 344 | |
| Other | 4,026 | | | 81 | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | (3,245) | | | (3,980) | |
| Inventories | (5,054) | | | (2,508) | |
| Prepaid expenses and other current assets | (540) | | | (4,231) | |
| Accounts payable | (7,540) | | | 641 | |
| Accrued expenses | (6,672) | | | 203 | |
| Net cash used in operating activities | (53,192) | | | (27,543) | |
| Investing activities | | | |
| Purchases of marketable securities | (84,991) | | | (34,666) | |
| Proceeds from maturities of marketable securities | 4,575 | | | 1,755 | |
| Proceeds from sales of marketable securities | 73,196 | | | 76,064 | |
| Payments for acquisitions of property and equipment | (3,360) | | | (13,713) | |
| Payment made in connection with business acquisitions | (1,034) | | | — | |
| Net cash (used in) provided by investing activities | (11,614) | | | 29,440 | |
| Financing activities | | | |
| Principal payments on debt | (1,316) | | | (618) | |
| Proceeds from issuance of debt | 4,078 | | | — | |
| Borrowing under revolving line of credit | 5,726 | | | 6,676 | |
| Repayments under revolving line of credit | (3,916) | | | (2,352) | |
| Repayments of financing lease obligations | (290) | | | (85) | |
| Payment of deferred offering costs | — | | | (408) | |
Contributions from PIPE Investment, net of transaction costs paid of $18 | 84,967 | | | — | |
| Proceeds from the exercise of stock options and warrants | 636 | | | 52 | |
| Net cash provided by financing activities | 89,885 | | | 3,265 | |
| Effect of exchange rate changes on cash | (65) | | | (71) | |
| Net increase in cash and cash equivalents | 25,014 | | | 5,091 | |
| Cash and cash equivalents, beginning of period | 78,963 | | | 9,743 | |
| Cash and cash equivalents, end of period | $ | 103,977 | | | $ | 14,834 | |
| | | |
| Supplemental disclosure of cash flow information | | | |
| Cash paid for taxes | $ | — | | | $ | — | |
| Cash paid for interest | $ | 2,473 | | | $ | 1,488 | |
| Supplemental disclosure of non-cash activities | | | |
| PIPE Investment issuance costs included in accrued expenses and other current liabilities | $ | 4,143 | | | $ | — | |
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities | $ | 3,104 | | | $ | 802 | |
| Purchases of inventory included in accounts payable and accrued expenses and other current liabilities | $ | 2,776 | | | $ | — | |
See accompanying notes to the condensed consolidated financial statements (unaudited).
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
(Dollar and Share Amounts in Thousands)
1. Description of Business
Benson Hill, Inc. and subsidiaries (collectively, “Benson Hill”, the “Company”, “we”, “us”, or “our”) are a values-driven food technology company with a vision to build a healthier and happier world by unlocking nature’s genetic diversity with our food innovation engine. Our purpose is to catalyze and broadly empower innovation from plant to plate so great tasting, more nutritious, affordable, and sustainable food choices are available to everyone. We combine cutting-edge technology with an innovative business approach to bring product innovations to customers and consumers. Our CropOS® technology platform uniquely combines data science, plant science, and food science to create innovative food, ingredient, and feed products — starting with a better seed. We are incorporated in Delaware and headquartered in St. Louis, Missouri, where the majority of our research and development activities are managed. We operate a soy crushing and food-grade white flake and soy flour manufacturing operation in Creston, Iowa and a soy crushing facility in Seymour, Indiana to sell our proprietary products and non-proprietary products in North America and in select international markets. We also process yellow peas in North Dakota and supply fresh produce through packing, distribution, and growing locations in the southeastern states of the United States.
Merger with Star Peak Corp II
On September 29, 2021 (the “Closing Date”), Star Peak Corp II (“STPC”), a special purpose acquisition company, consummated a merger (the “Closing”) pursuant to that certain Agreement and Plan of Merger, dated May 8, 2021 (the “Merger Agreement”), by and among STPC, STPC Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of STPC (“Merger Sub”), and Benson Hill, Inc., a Delaware corporation (“Legacy Benson Hill”).
Pursuant to the terms of the Merger Agreement, a business combination between STPC and Legacy Benson Hill was effected through the merger of Merger Sub with and into Legacy Benson Hill, with Legacy Benson Hill surviving the transaction as a wholly-owned subsidiary of STPC (the “Merger”). On the Closing Date, STPC changed its name to Benson Hill, Inc (“New Benson Hill”) and Legacy Benson Hill changed its name to Benson Hill Holdings, Inc.
The Merger was accounted for as a reverse recapitalization (the “Reverse Recapitalization”) in accordance with U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”). Under this method of accounting, STPC is treated as the “acquired” company and Legacy Benson Hill is treated as the acquirer for financial reporting purposes. The Reverse Recapitalization was treated as the equivalent of Legacy Benson Hill issuing stock for the net assets of STPC, accompanied by a recapitalization. The net assets of STPC are stated at historical cost, with no goodwill or other intangible assets recorded. This accounting treatment determination was primarily based on the following:
•Legacy Benson Hill’s existing stockholders hold the majority of voting rights in New Benson Hill and are the largest single voting interest block in New Benson Hill;
•Legacy Benson Hill’s senior management comprises all of the senior management of New Benson Hill;
•The directors nominated by Legacy Benson Hill represent the majority of the directors on the board of directors of New Benson Hill; and
•Legacy Benson Hill’s operations comprise the ongoing operations of New Benson Hill.
The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Legacy Benson Hill. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the exchange ratio established in the Merger. Activity within the Consolidated Statements of Stockholders’ Equity for the issuance and repurchases of Legacy Benson Hill redeemable convertible preferred stock (the “Legacy Benson Hill Preferred Stock”) was also retroactively converted to Legacy Benson Hill common stock (the “Legacy Benson Hill Common Stock”).
Liquidity and Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP for interim financial reporting and Securities and Exchange Commission regulations, assuming the Company will continue as a going concern. For the three months ended March 31, 2022, the Company incurred a net loss of $16,576, had negative cash flows from operating activities of $53,192 and capital expenditures of $3,360. Furthermore, as of March 31,
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
2022, the Company had term debt and notes payable of $89,874, and an accumulated deficit of $297,145. However, as of March 31, 2022 the Company had cash and cash equivalents of $103,977 and marketable securities of $105,934. As such, the Company believes that its cash position is sufficient to meet capital and liquidity requirements for at least the next 12 months after the date that the financial statements are available to be issued.
The Company’s business prospects are subject to risks, expenses, and uncertainties frequently encountered by companies in the early stages of commercial operations. As of March 31, 2022 the Company has multiple debt instruments (see Note 11 — Debt), including term loans, notes payable and a revolving line of credit, certain of which require adherence to financial covenants, including maintaining minimum liquidity and maintenance of a minimum cash balance. If the Company breaches these covenants, the holder of the debt may declare all amounts immediately due and payable. If the covenants are breached, the Company plans to attempt to secure a waiver of the covenants or an amendment that modifies the covenants but there are no assurances that the Company will be able to comply with its future covenants without such a waiver or that the Company will be successful in obtaining a waiver or an amendment during 2022 or 2023.
The attainment of profitable operations is also dependent upon future events, including obtaining adequate financing to complete and commercialize the Company’s research and development activities, obtaining adequate grower relationships, building its customer base, successfully executing its business and marketing strategy, and hiring appropriate personnel.
Failure to generate sufficient revenues, achieve planned gross margins and operating profitability, control operating costs, maintain existing debt arrangements or secure additional funding may require the Company to modify, delay, or abandon some of its planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on the Company’s business, operating results, financial condition, and ability to achieve its intended business objectives.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and Securities and Exchange Commission regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. A description of the Company’s significant accounting policies is included in the notes to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2021 audited consolidated financial statements and the notes thereto.
Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Certain prior period balances have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements and the accompanying notes.
All dollar and share amounts are in thousands, except per share and per unit amounts, unless otherwise noted. Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise specified.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
Emerging Growth Company and Smaller Reporting Company Status
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We expect to remain an emerging growth company at least through the end of the 2022 fiscal year and expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. We expect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and non-public companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.
We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2026, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.07 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common equity held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common equity held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Redeemable Convertible Preferred Stock
Prior to the Merger, the Company recorded shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The Company applied the guidance in ASC 480-10-S99-3A, Accounting for Redeemable Equity Instruments, and therefore classified all outstanding redeemable convertible preferred stock as temporary equity. The redeemable convertible preferred stock was recorded outside of stockholders’ equity because, in the event of certain deemed liquidation events considered not solely within the Company’s control, such as a merger, acquisition, and sale of all or substantially all of the Company’s assets, the preferred stock would become redeemable at the option of the holders. In the event of a change of control of the Company, proceeds received from the sale of such shares would be distributed in accordance with the liquidation preferences set forth in the Company’s Amended and Restated Certificate of Incorporation then in effect.
All redeemable convertible preferred stock previously classified as temporary equity was retroactively adjusted and reclassified to permanent equity as a result of the Merger. As a result of the Merger, each share of Legacy Benson Hill Preferred Stock that was then issued and outstanding was automatically converted into Legacy Benson Hill Common Stock, such that each converted share of Legacy Benson Hill Preferred Stock was no longer outstanding and ceased to exist. Each share of Legacy Benson Hill Common Stock, including the Legacy Benson Hill Common Stock issued upon conversion of Legacy
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
Benson Hill Preferred Stock, was converted into and exchanged for 1.0754 (“the Exchange Ratio”) shares of New Benson Hill common stock (“New Benson Hill Common Stock”). The Exchange Ratio was established pursuant to the terms of the Merger Agreement.
Business Combinations
The Company allocates the purchase price of its acquisitions to the assets acquired and liabilities assumed based upon their respective fair values at the acquisition date. We utilize management estimates and an independent third-party valuation firm to assist in determining these fair values. When necessary based on the timing of an acquisition, we will utilize a benchmarking approach based on our historical acquisitions and similar industry acquisitions to determine the preliminary fair values for certain acquired assets. The excess of the acquisition price over the estimated fair value of the net assets acquired is recorded as goodwill. Goodwill is adjusted for any changes to acquisition date fair value amounts made within the measurement period. Acquisition-related transaction costs are recognized separately from the business combination and expensed as incurred.
Recently Adopted Accounting Guidance
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (“ASU 2016-13” or “CECL”), which requires measurement and recognition of expected credit losses for financial assets held. The standard requires the measurement of expected credit losses to be based on relevant information, including historical experience, current conditions and a forecast that is supportable. The Company adopted the standard in the first quarter of 2022, with minimal impact to our condensed consolidated financial statements.
As part of the adoption, the Company reviewed its’ portfolio of available-for-sale debt securities in an unrealized loss position, and assessed whether it intends to sell, or it is more likely than not that it will be required to sell before recovery of its’ amortized cost basis. Additionally, the Company evaluated whether the decline in fair value has resulted from credit losses or other factors by considering the extent to which the fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the Company compares the present value of the cash flows expected to be collected against the amortized cost basis. A credit loss is recorded if the present value of the cash flows is less than the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. Upon adoption, the Company did not record an allowance for credit losses on its available-for-sale debt securities.
Additionally, the Company reviewed its open trade receivables arising from contractual sales. As part of its analysis, the Company performs periodic credit reviews of all active customers, reviews all trade receivables greater than 90 days past due, calculates historical loss rates and reviews current payment trends of all customers.
Recently Issued Accounting Guidance Not Yet Effective
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating our contracts and the optional expedients provided by the new standard.
In August 2020, the FASB issued ASU 2020-06, Debt (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. The Company is currently evaluating the impact ASU 2020-06 will have on its consolidated financial statements.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
3. Business Combinations
Merger with Star Peak Corp II
As discussed in Note 1, on September 29, 2021, STPC completed the business combination with Legacy Benson Hill through the Merger, with Legacy Benson Hill surviving the Merger as a wholly-owned subsidiary of STPC. At the effective time of the Merger (the “Effective Time”), each outstanding share of Legacy Benson Hill Common Stock, par value $0.001 per share, including Legacy Benson Hill Common Stock held by prior owners of Legacy Benson Hill Preferred Stock (in each case, other than shares owned by Legacy Benson Hill as treasury stock, dissenting shares and restricted shares) was canceled and converted into the right to receive the number of shares of New Benson Hill Common Stock, par value $0.0001 per share, in a ratio equal to 1.0754. In addition, as of the Effective Time, each stock option to purchase shares of Legacy Benson Hill Common Stock (each, a “Legacy Benson Hill Option”), whether vested or unvested, and each warrant issued by Legacy Benson Hill to purchase Legacy Benson Hill Common Stock and/or Legacy Benson Hill Preferred Stock (each, a “Legacy Benson Hill Warrant”) that was outstanding immediately prior to the Effective Time was, by virtue of the occurrence of the Effective Time and without any action on the part of Legacy Benson Hill, STPC or any holder of Legacy Benson Hill equity thereof, assumed and converted into a New Benson Hill Option or a New Benson Hill Warrant. Each Legacy Benson Hill Option was converted into an option to purchase a number of shares of New Benson Hill Common Stock equal to the number of shares of Legacy Benson Hill Common Stock subject to such Legacy Benson Hill Option immediately prior to the Effective Time multiplied by 1.0754 (rounded down to the nearest whole share) and at an exercise price per share of New Benson Hill Common Stock equal to the exercise price per share of Legacy Benson Hill Common Stock subject to such Legacy Benson Hill Option divided by 1.0754 (rounded up to the nearest whole cent) (each, a “New Benson Hill Option”). Each Legacy Benson Hill Warrant was converted into a warrant to purchase a number of shares of New Benson Hill Common Stock equal to the number of shares of Legacy Benson Hill Common Stock subject to such Legacy Benson Hill Warrant immediately prior to the Effective Time multiplied by 1.0754 (rounded down to the nearest whole share) and at an exercise price per share of New Benson Hill Common Stock equal to the exercise price per share of Legacy Benson Hill Common Stock and/or Legacy Benson Hill Preferred Stock subject to such Legacy Benson Hill Warrant divided by 1.0754 (rounded up to the nearest whole cent).
In connection with the execution of the Merger Agreement, STPC entered into separate subscription agreements (each, a “Subscription Agreement”) with a number of investors (each a “Subscriber”), pursuant to which the Subscribers agreed to purchase, and STPC agreed to sell to the Subscribers, an aggregate of 22,500 shares of common stock (the “PIPE Shares”), for a purchase price of $10 per share and an aggregate purchase price of $225.0 million, in a private placement pursuant to the subscription agreements (the “PIPE”). The PIPE investment closed simultaneously with the consummation of the Merger.
Prior to the Merger, STPC had outstanding 10,063 Public Warrants (the “Public Warrants”) and 6,553 Private Placement Warrants (the “Private Placement Warrants”) which were listed on the New York Stock Exchange under the symbol “STPC WS.” Upon the closing of the Merger, they became listed on the New York Stock Exchange under the symbol “BHIL WS.” The Warrants remain subject to the same terms and conditions as prior to the Merger.
Upon the closing of the Merger, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 441,000 shares, of which 440,000 shares were designated Common Stock, $0.0001 par value per share, and 1,000 shares designated Preferred Stock, $0.0001 par value per share.
Acquisition of Soy Processing Facilities
ZFS Creston
On December 30, 2021, we completed the acquisition of a food-grade white flake and soy flour manufacturing operation and related assets from ZFS Creston, LLC, an Indiana corporation (“ZFS Creston”) for aggregate cash consideration of $103,099 which includes a working capital adjustment payment of $1,034 in Q1 2022. The soybean processing facility will process the Company’s proprietary soybean varieties for distribution to end customers. The acquisition of the food-grade white flake and soy flour manufacturing facility was accounted for as a business combination, and accordingly, the acquired assets and liabilities were recorded at their preliminary estimated fair value, as presented below:
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
| | | | | |
| Estimated Fair Value at December 30, 2021 |
| Assets: | |
| Cash and cash equivalents | $ | 56 | |
| Accounts receivable | 10,729 | |
| Inventories | 18,209 | |
| Prepaid expenses and other current assets | 3,627 | |
| Property and equipment | 60,000 | |
| Right of use asset | 853 | |
| Other assets | 2,000 | |
| Identified intangible assets | 11,000 | |
| Goodwill | 7,079 | |
| Total assets acquired | $ | 113,553 | |
| Liabilities: | |
| Accounts payable | 4,661 | |
| Lease liability | 853 | |
| Accrued expenses and other liabilities | 4,940 | |
| Total liabilities assumed | $ | 10,454 | |
| Total purchase price | $ | 103,099 | |
The fair values of the assets acquired and liabilities assumed are based on a preliminary estimate, which is subject to change within the measurement period. Given the timing of the acquisition, the Company utilized a benchmarking approach based on the Company’s prior acquisitions and similar industry acquisitions to determine the preliminary fair values for property and equipment and identified intangible assets. Upon completion of the final fair value assessment, the fair values of the assets acquired, liabilities assumed and resulting goodwill may differ materially from the preliminary assessment. Any changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded to those assets and liabilities and residual amounts will be allocated to goodwill.
Goodwill largely consists of expected growth synergies through the continued vertical integration of the Company within our Ingredients segment. Based on the preliminary valuation analysis, the identified intangible assets consist of customer relationships of $5,500, trade name of $2,000, acquired technology of $3,000 and permits of $500, respectively. The identified intangible assets are amortized using the straight-line method over their preliminary estimated useful lives of 15 years for customer relationships and acquired technology and 10 years for trade name and permits.
Effective December 30, 2021, results from the operations of the soybean processing facility have been included in our consolidated statements of operations and comprehensive loss and incorporated in our Ingredients reporting unit and segment.
Rose Acre Farms
On September 17, 2021, we completed the acquisition of a soybean processing facility and related assets from Rose Acre Farms, Inc., an Indiana corporation for cash consideration of $14,567 and entered into a long-term ground lease for the real estate upon which such soybean processing facility is located. The soybean processing facility will process the Company’s proprietary soybean varieties for distribution to end customers.
Effective September 17, 2021, results from the operations of the soybean processing facility have been included in our condensed consolidated statements of operations and comprehensive loss and incorporated in our Ingredients reporting unit and segment.
4. Fair Value Measurements
Assets and liabilities recorded at fair value on a recurring basis on the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows
Level 1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Our financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, commodity derivatives, commodity contracts, accounts payable, accrued liabilities, warrant liabilities, conversion option liabilities, and notes payable. As of March 31, 2022 and December 31, 2021, we had cash and cash equivalents of $103,977 and $78,963, respectively, which includes money market funds with maturities of less than three months. As of March 31, 2022 and December 31, 2021, the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their fair value due to their short maturities.
The following tables provide the financial instruments measured at fair value on a recurring basis based on the fair value hierarchy:
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2022 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | |
| U.S. treasury securities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Corporate bonds | — | | | 80,058 | | | — | | | 80,058 | |
| Preferred Stock | — | | | 25,876 | | | — | | | 25,876 | |
| Marketable securities | $ | — | | | $ | 105,934 | | | $ | — | | | $ | 105,934 | |
| Liabilities | | | | | | | |
| Warrant Liabilities | $ | 4,528 | | | $ | — | | | $ | 32,281 | | | $ | 36,809 | |
| Conversion option liability | — | | | — | | | 12,888 | | | 12,888 | |
| Total liabilities | $ | 4,528 | | | $ | — | | | $ | 45,169 | | | $ | 49,697 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | |
| U.S. treasury securities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Corporate bonds | — | | | 82,086 | | | — | | | 82,086 | |
| Preferred Stock | — | | | 21,603 | | | — | | | 21,603 | |
| Marketable securities | $ | — | | | $ | 103,689 | | | $ | — | | | $ | 103,689 | |
| Liabilities | | | | | | | |
| Warrant Liabilities | $ | 12,377 | | | $ | — | | | $ | 33,674 | | | $ | 46,051 | |
| Conversion option liability | — | | | — | | | 8,783 | | | 8,783 | |
| Total liabilities | $ | 12,377 | | | $ | — | | | $ | 42,457 | | | $ | 54,834 | |
There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for 2022 or 2021.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
All of the Company’s derivative contracts are centrally cleared and therefore are cash-settled on a daily basis. This results in the derivative contracts having a fair value that approximates zero on a daily basis. Therefore, there are no derivative assets or liabilities included in the table above. Refer to Note 6 for further discussion.
The Company acquired commodity purchase and sales contracts in the acquisition of ZFS Creston which were recorded at their estimated fair value. As outlined in Note 2, the Company designates all commodity purchase and sales contracts as normal purchases and normal sales and as a result do not account for them as derivatives under ASC 815. As of December 31, 2021 the Company had a contract asset of $2,354 and a contract liability of $2,652. The contract asset and liability is excluded from the table above as the contracts will not be measured at fair value on a recurring basis. Contract fair values were based upon forward commodity prices, which fall into Level 2 in the fair value hierarchy. The contract asset and liability will be amortized as the remaining volume of the commodity purchase and sales contracts is physically settled.
The warrant liabilities consist of PIPE Investment Warrants, Convertible Notes Payable Warrants, Notes Payable Warrants and Private Placement Warrants valued based on a Monte Carlo simulation that values the warrants using a probability weighted discounted cash flow model which are considered Level 3 liabilities as well as Public Warrants which are separately listed on the NYSE and traded under the symbol “BHIL WS” and are considered Level 1 liabilities. Generally, increases or decreases in the fair value of the underlying common stock would result in a directionally similar impact in the fair value measurement of the associated Level 3 warrant liabilities.
The following table summarizes the change in the warrant and conversion option liabilities categorized as Level 3 for the three months ended March 31, 2022 and 2021.
| | | | | |
| Three Months Ended
March 31, 2022 |
| Balance, beginning of period | $ | 42,457 | |
| Change in estimated fair value | (23,892) | |
| Issuance of PIPE Investment warrants | 26,604 | |
Ending balance, March 31, 2022 | $ | 45,169 | |
| | | | | |
| Three Months Ended
March 31, 2021 |
| Balance, beginning of period | $ | 5,241 | |
| Change in estimated fair value | 1,016 | |
Ending balance, March 31, 2021 | $ | 6,257 | |
Fair Value of Long-Term Debt
As of March 31, 2022 and December 31, 2021, the fair value of the Company’s debt, including amounts classified as current, was $90,641 and $85,163, respectively. Fair values are based upon valuation models using market information, which fall into Level 3 in the fair value hierarchy.
5. Investments in Available-for-Sale Securities
The Company has invested in marketable debt securities, primarily investment grade corporate bonds, preferred stock, and highly liquid U.S Treasury securities, which are held in the custody of a major financial institution. These securities are classified as available-for-sale and, accordingly, the unrealized gains and losses are recorded through other comprehensive income and loss.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2022 |
| Cost Basis | | Gross
Unrealized
Gains | | Gross
Unrealized
Losses | | Fair Value |
| U.S government and agency securities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Corporate notes and bonds | 83,603 | | | 22 | | | (3,566) | | | 80,059 | |
| Preferred stock | 27,292 | | | — | | | (1,417) | | | 25,875 | |
| Total investments | $ | 110,895 | | | $ | 22 | | | $ | (4,983) | | | $ | 105,934 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Cost Basis | | Gross
Unrealized
Gains | | Gross
Unrealized
Losses | | Fair Value |
| U.S government and agency securities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Corporate notes and bonds | 82,007 | | | 572 | | | (493) | | | 82,086 | |
| Preferred stock | 21,553 | | | 126 | | | (76) | | | 21,603 | |
| Total investments | $ | 103,560 | | | $ | 698 | | | $ | (569) | | | $ | 103,689 | |
The aggregate fair value of investments with unrealized losses that had been owned for less than a year was $101,091 and $48,098 as of March 31, 2022 and December 31, 2021, respectively. The Company had no unrealized losses on investments owned for more than one year as of March 31, 2022 and December 31, 2021, respectively.
Available-for-sale investments outstanding as of March 31, 2022, classified as marketable securities in the consolidated balance sheets, have maturity dates ranging from the third quarter of 2022 through the second quarter of 2028. The fair value of marketable securities as of March 31, 2022 with maturities within one year, one to five years, and more than five years is $28,823, $73,533, and $3,578, respectively. The Company classifies available-for-sale investments as current based on the nature of the investments and their availability to provide cash for use in current operations, if needed.
In accordance with ASC 326, the Company reviews its’ portfolio of available-for-sale debt securities in an unrealized loss position quarterly to determine whether the decline in fair value has resulted from credit losses or other factors. This includes considering the extent to which the fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the Company compares the present value of the cash flows expected to be collected against the amortized cost basis. A credit loss is recorded if the present value of the cash flows is less than the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. As of March 31, 2022 the Company determined that the unrealized losses were a result of market and other factors rather than the result of credit losses and therefore no allowance for credit loss was recorded.
6. Derivatives
Corporate Risk Management Activities
The Company uses exchange-traded futures to manage price risk of fluctuating Chicago Board of Trade (“CBOT”) prices related to forecasted purchases and sales of soybean and soybean related products in the normal course of business. These risk management activities are actively monitored for compliance with the Company’s risk management policies.
As of March 31, 2022, the Company held financial futures related to a portion of its forecasted purchases of soybeans for an aggregate notional volume of 3,595 bushels of soybeans. 3,470 bushels of the aggregate notional volume will settle in 2022 with the remaining 125 settling in 2023. As of March 31, 2022, the Company held financial futures related to a portion of its forecasted sales of soybean oil for an aggregate notional volume of 732 pounds of soybean oil all of which will settle in 2022. As of March 31, 2022, the Company held financial futures related to a portion of its forecasted sales of soybean meal for an aggregate notional volume of 193 tons of soybean meal all of which will settle in 2022.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
Tabular Derivatives Disclosures
The Company has master netting agreements with its counterparties which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce the Company’s credit exposure related to these counterparties. As all of the Company’s derivative contracts are centrally cleared and therefore are cash-settled on a daily basis the fair value approximates zero.
The Company’s derivative contracts as of March 31, 2022 were as follows:
| | | | | | | | | | | |
| Asset Derivative | | Liability Derivative |
| Soybeans | $ | 2,225 | | | $ | 2,217 | |
| Soybean oil | — | | | 1,553 | |
| Soybean meal | 798 | | | 2,293 | |
| Effect of daily cash settlement | (3,023) | | | (6,063) | |
| Net derivatives as classified in the balance sheet | $ | — | | | $ | — | |
The Company’s derivative contracts as of December 31, 2021 were as follows:
| | | | | | | | | | | |
| Asset Derivative | | Liability Derivative |
| Soybeans | $ | 18 | | | $ | 48 | |
| Soybean oil | 5 | | | 1 | |
| Soybean meal | — | | | 1,228 | |
| Effect of daily cash settlement | (23) | | | (1,277) | |
| Net derivatives as classified in the balance sheet | $ | — | | | $ | — | |
The Company had a current asset representing cash collateral posted to a margin account of $5,808 and $2,504 as of March 31, 2022 and December 31, 2021, respectively. These amounts are not included with the derivatives presented in the table above and are included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.
Currently, the Company does not seek cash flow hedge accounting treatment for its derivative financial instruments and thus changes in fair value are reflected in current earnings.
The tables below show the amounts of pre-tax gains and losses related to the Company’s derivatives:
| | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| Revenues | | Cost of sales |
| Consolidated statement of operations | $ | 92,445 | | | $ | (97,667) | |
| | | |
| Soybeans | — | | | (5,347) | |
| Soybean oil | (6,423) | | | — | |
| Soybean meal | (776) | | | — | |
| Total (loss) gain recognized in income | $ | (7,199) | | | $ | (5,347) | |
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
| | | | | | | | | | | |
| Three Months Ended March 31, 2021 |
| Revenues | | Cost of sales |
| Consolidated statement of operations | $ | 31,802 | | | $ | (31,233) | |
| | | |
| Soybeans | — | | | (1,105) | |
| Soybean oil | 540 | | | — | |
| Total gain (loss) recognized in income | $ | 540 | | | $ | (1,105) | |
The Company’s soybean positions are designed to hedge risk related to inventory purchases, therefore the gains and losses on soybean instruments are recorded in cost of sales in the accompanying condensed consolidated statements of operations. The Company’s soybean oil and soybean meal positions are designed to hedge risk related to sales transactions therefore the gains and losses on soybean oil and soybean meal instruments are recorded in revenues in the accompanying condensed consolidated statements of operations.
The Company classifies the cash effects of its derivatives within the “Cash Flows From Operating Activities” section of the condensed consolidated statements of cash flows.
7. Inventories
Inventories consist of the following:
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| Raw materials and supplies | $ | 28,752 | | | $ | 20,578 | |
| Work-in-process | 9,212 | | | 11,580 | |
| Finished goods | 16,736 | | | 16,566 | |
| Total inventories | $ | 54,700 | | | $ | 48,724 | |
Work-in-process inventory consists of seed provided to contracted seed producers and growers with which we hold a purchase option for, or are required to purchase, the future harvested seeds or grain as well as crops under production which represents the direct costs of land preparation, seed, planting, growing, and maintenance.
8. Property and Equipment
Components of property and equipment consist of the following:
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| Land | $ | 8,026 | | | $ | 8,026 | |
| Furniture and fixtures | 3,215 | | | 3,116 | |
| Machinery, field, and laboratory equipment | 81,147 | | | 81,119 | |
| Computer equipment | 2,642 | | | 2,545 | |
| Vehicles | 3,091 | | | 2,660 | |
| Buildings and building improvements | 25,862 | | | 26,911 | |
| Construction in progress | 20,786 | | | 18,158 | |
| 144,769 | | | 142,535 | |
| Less accumulated depreciation | (18,073) | | | (15,650) | |
| Property and equipment, net | $ | 126,696 | | | $ | 126,885 | |
Depreciation expense was $3,282 and $1,532 for the three months ended March 31, 2022 and 2021, respectively. The Company capitalized $397 and $255 of interest costs during the three months ended March 31, 2022 and 2021, respectively.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
9. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| Prepaid expenses | $ | 8,368 | | | $ | 9,325 | |
| Contract asset | 1,665 | | | 2,588 | |
| Derivative margin asset | 5,808 | | | 3,273 | |
| Tax receivable | 913 | | | 2,254 | |
| Deposits | 730 | | | 650 | |
| Commitment asset | 310 | | | 416 | |
| Other | 2,893 | | | 1,747 | |
| $ | 20,687 | | | $ | 20,253 | |
10. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| Payroll and employee benefits | $ | 6,476 | | | $ | 9,144 | |
| Insurance premiums | 2,562 | | | 4,099 | |
| Professional services | 1,527 | | | 2,517 | |
| Research and development | 1,109 | | | 1,043 | |
| Inventory | 2,776 | | | 3,168 | |
| Interest | 691 | | | 178 | |
| Contract liability | 1,541 | | | 2,652 | |
| PIPE Investment transaction costs | 430 | | | — | |
| Other | 4,372 | | | 3,970 | |
| $ | 21,484 | | | $ | 26,771 | |
11. Debt
| | | | | | | | | | | |
| March 31,
2022 | | December 31,
2021 |
| DDB Term loan, due April 2024 | $ | 8,247 | | | $ | 8,531 | |
| DDB Equipment loan, due July 2024 | 1,750 | | | 1,925 | |
| Convertible Notes Payable, due January 2025 | 81,259 | | | 80,000 | |
| Creston Note Payable, due August 2022 | 4,167 | | | 5,000 | |
| Equipment financing, due March 2025 | 4,078 | | | — | |
| Notes payable, varying maturities through June 2026 | 495 | | | 313 | |
| DDB Revolver | 1,857 | | | 47 | |
| Less: unamortized debt discount and debt issuance costs | (10,122) | | | (11,665) | |
| 91,731 | | | 84,151 | |
| Less: DDB Revolver | (1,857) | | | (47) | |
| Less: current maturities of long-term debt | (14,178) | | | (6,934) | |
| Long-term debt | $ | 75,696 | | | $ | 77,170 | |
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
Term Loan, Equipment Loan and Revolver
In April 2019, our wholly owned subsidiary, Dakota Dry Bean, Inc. (“DDB”) entered into a credit agreement comprised of a $14,000 aggregate principal amount of a floating rate, five-year term loan (“DDB Term Loan”), a $3,500 floating rate, five-year loan to be used for facility expansion (“DDB Equipment Loan”), and a $6,000 floating rate revolving credit facility (“DDB Revolver”), which is renewed annually (together the “DDB Credit Agreement”).
The DDB Credit Agreement is secured by substantially all the real and personal property of DDB and is guaranteed, in part, by Benson Hill, the parent company, to a maximum of $7,000. The DDB Term Loan is payable in equal quarterly installments of $284 plus interest with the remaining balance of 5,972 due in April 2024. The DDB Equipment Loan is payable in equal quarterly installments of $175 plus interest through July 2024.
The interest rate on the DDB Term Loan and DDB Equipment Loan is equal to U.S. prime rate plus 0.75%, or 4.25% as of March 31, 2022. The interest rate on the DDB Revolver is equal to U.S. prime rate plus 0.25%, or 3.60% as of March 31, 2022.
Under the DDB Credit Agreement, DDB and the Company must comply with certain financial covenants based on DDB’s operations, including a minimum working capital covenant, a minimum net worth covenant, a funded debt to EBITDA ratio covenant, and a fixed charge coverage ratio covenant.
Benson Hill as guarantor must also comply with a minimum cash covenant. The DDB Credit Agreement also contains various restrictions on our activities, including restrictions on indebtedness, liens, investments, distributions, acquisitions and dispositions, control changes, transactions with affiliates, establishment of bank and brokerage accounts, sale-leaseback transactions, margin stocks, hazardous substances, hedging, and management agreements. During the first quarter of 2021, we were in violation of certain financial covenants under the DDB Credit Agreement, which were subsequently waived by the lender.
In the first quarter of 2021, the DDB Credit Agreement was amended to clarify the definitions of net worth and EBITDA as used in the calculation of certain financial covenants.
In the second quarter of 2021, the DDB Credit Agreement was further amended to adjust the non-financial covenants. In the fourth quarter of 2021, the DDB Revolver maturity date was extended to November 2022. While the Company is currently in compliance with the amended covenants, there is a risk that the Company will not maintain compliance with such covenants as discussed further in Note 1.
Convertible Notes Payable
In December 2021, the Company entered into a financing agreement with an investment firm which included a commitment by the lender to make term loans available to the Company in an amount of up to $100,000 with $80,000 available immediately and a second tranche of $20,000 available between April 2022 and June 2022 upon the Company’s achievement of the following milestones: (i) at least 85% of the Company’s projected revenue for the three months ending March 31, 2022; (ii) gross margin for the three months ending March 31, 2022 greater than -1.5%; and (iii) an average public market capitalization of at least $650 million during the trailing thirty days prior to the date the Lenders make the second tranche loan (together the “Convertible Loan and Security Agreement”). The Company failed to achieve all of the milestones outlined and therefore the availability of the second tranche expired.
The Company executed term notes with the lender in December 2021 in the aggregate amount of $80,000 with an initial term of 36 months payable in interest only, at the greater of (a) the prime rate of interest as published in the Wall Street Journal or 3.25% per annum, plus (b) 5.75% per annum in the average amount of $623 for the first 12 months and principal and interest payments in the average amount of $3,632 for the remaining 24 months. The term notes are secured by substantially all of the Company’s assets.
The interest-only period may be extended from 12 to 24 months upon the Company’s full draw of the second tranche of $20,000 and achievement of certain milestones based on the Company’s market capitalization and financial performance for the nine months ending September 30, 2022. Additionally, the term of the term notes may be extended from 36 to 42 months upon the Company’s achievement of certain milestones based on the Company’s market capitalization and financial performance for
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
the nine months ending September 30, 2022 and compliance with all debt covenants. As the Company did not achieve the milestones required to draw on the second tranche, the extension of the interest-only period expired.
Upon maturity or other satisfaction of the term notes, a final payment (in addition to other payments of principal and interest) equal to $10,700 is payable by the Company to the lenders, however in the event all or any part of any term notes are outstanding when a change of control as defined in the Convertible Loan and Security Agreement occurs the required final payment is $14,200. In the event the term notes are prepaid, a prepayment fee is due, ranging from 1% to 6% of the principal amount of the term notes, based upon the time from the initial closing to the prepayment date.
At any time after 6 months and before 42 months from the closing date of the initial term loans, up to $20,000 of the principal amount of the term loans then outstanding may be converted (at the lender’s option) into shares of the Company’s common stock at a price per share equal to the lower of (a) $8.22; (b) a 15% premium to the 5-day volume weighted average price (“VWAP”) determined as of June 30, 2022; or (c) in the case of any “equity purchase commitments” and/or “at-the-market” or similar transactions which result in the realization by the Company of gross proceeds of $20,000 or more over any period of 14 consecutive trading days prior to September 30, 2022, the VWAP of the common stock on the last trading day of such 14 day period; and (d) the effective price per share of any bona fide equity offering prior to September 30, 2022. The PIPE Investment (as defined below) that closed in March 2022 qualified as a bona fide equity offering and therefore resulted in the repricing of the conversion option. Changes in the conversion price could have a material impact to the valuation.
The conversion option is subject to: (a) the closing sales price of the Company’s common stock for each of the 7 consecutive trading days immediately preceding the conversion, being greater than or equal to the conversion price; (b) the shares of the Company’s common stock issued in connection with any such conversion not exceeding 20% of the total trading volume of the Company’s common stock for the 22 consecutive trading days immediately prior to and including the effective date of the conversion; and (c) all lenders’ pro forma shares of the Company’s common stock resulting from the conversion option, when added to all lenders’ pro forma shares of the Company’s common stock resulting from the exercise of the warrants (as outlined in note 12), not exceeding 2.5% of the number of shares of the Company’s common stock outstanding at the time of the conversion.
As six months have not elapsed from the closing date of the initial term loans, the conversion option is not yet exercisable by the lender. The fair value of the conversion option, estimated at $8,783 at issuance, was recorded as a debt discount, which is amortized over the life of the term notes using the effective interest method and recorded as interest expense.
Under the terms of the Convertible Loan and Security Agreement, we must comply with certain affirmative, negative, and financial covenants. These covenants are primarily restrictions on our activities, including restrictions on indebtedness, liens, dividends, and significant business changes as well as a requirement to maintain at all times required minimum liquidity equal to or greater than six months. We were in compliance with these covenants in 2021 and the first quarter of 2022.
Creston Note Payable
In connection with the acquisition of ZFS Creston in December 2021, the Company entered into a note payable with Zeeland Farm Services, Inc., a Michigan corporation, in the amount of $5,000 (the “Creston Note Payable”). The Creston Note Payable is payable in monthly installments equal to the greater of the reduction in the inventory value at ZFS Creston in the preceding month or $833 plus interest at 3% per annum from March 2022 to August 2022.
Equipment Financing
In March 2022 the Company entered into a sale-leaseback transaction on some of the Company’s equipment. The Company evaluated whether the transaction qualified as a sale under ASC 606 and ultimately determined that as the leases are classified as financing leases under ASC 842 the transaction did not qualify as a sale and therefore control of the equipment was not transferred. Therefore, the proceeds from the sales of $4,078 were recorded as a financing liability (“Equipment financing”). The Company will make monthly payments of $133 under the financing arrangement for a term of 36 months.
12. Warrant Liabilities
Notes Payable Warrants
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
In February 2020 in connection with the issuance of notes payable with an original principal amount of $20,000 along with a commitment to extend an additional $15,000 upon the achievement of certain financial conditions, the Company issued 1,077 warrants to purchase Series C-1 preferred shares or any subsequent preferred share round of Benson Hill Preferred Stock. The preferred stock warrant remained outstanding at the close of the Merger and, therefore, converted into a New Benson Hill Warrant without any action on the part of the Company or the warrant holder. Each warrant was converted based on the Exchange Ratio of 1.0754 resulting in 1,158 warrants to purchase New Benson Hill Common Stock outstanding as of March 31, 2022 at an adjusted stock purchase price of $3.43. The fair value of the warrants attributable to the funds loaned to the Company, estimated at $3,332 at issuance, were recorded as a debt discount, which is amortized over the life of the term notes using the effective interest method and recorded as interest expense. The fair value of the warrants attributable to the commitment to fund the second tranche, estimated at $1,248 at issuance, were recorded as a current asset and amortized through the date of commitment expiration (December 2020) using the straight-line method and recorded as interest expense.
The warrants are exercisable at the warrant holder’s discretion at any time before the expiration date of December 2035. If the New Benson Hill Warrant is held to expiration or if a change of control occurs, the warrants shall automatically exercise at no cost to the holder. Should the Company consummate a bridge financing prior to a change of control, the holders of the warrants may surrender their warrants to the Company and receive in exchange all of the same consideration, securities, instruments and rights as if the holder participated in the bridge financing with a loan in an amount equal to the shares issuable upon exercise of the warrants multiplied by the stock purchase price.
In September 2021 and in connection with the issuance of notes payable with an original principal amount of $20,000 and a commitment to extend an additional $20,000, the Company issued warrants to purchase common stock, Series D preferred shares, or any subsequent preferred share round of Benson Hill. The fair value of the warrants attributable to the funds loaned to the Company, estimated at $3,523 at issuance, were recorded as a debt discount, which is amortized over the life of the term notes using the effective interest method and recorded as interest expense. The fair value of the warrants attributable to the remaining commitment, estimated at $1,028 at issuance, were recorded as a current asset and amortized through the date of commitment expiration using the straight-line method and recorded as interest expense. The option to draw down on the remaining commitment of $20,000 was terminated upon extinguishment of the note as outlined above.
The warrants are exercisable in the following scenarios and at the following purchase prices: (1) at the warrant holder’s discretion at any time before the expiration date (September 2036) at $10.00 if the holder chooses to exercise for common stock and $4.1416 if the holder chooses to exercise for Series D preferred stock, or (2) automatically exchanged without need for notice to the Company upon the earlier to occur of (i) the expiration date or (ii) a Liquidity Event at no cost to the holder.
Immediately prior to the closing of the Merger with STPC on September 29, 2021, which qualified as a Liquidity Event, the warrant was automatically exchanged for 325 shares of Legacy Benson Hill Common Stock at no cost to the holder and a stock purchase warrant for 225 shares of the Company’s common stock was issued to the holder at an exercise price of $10.00. The Legacy Benson Hill Common Stock issued was converted at the Exchange Ratio resulting in 350 shares of New Benson Hill Common Stock and the stock purchase warrant was converted at the Exchange Ratio resulting in 242 warrants to purchase New Benson Hill Common Stock at an adjusted stock purchase price of $9.30. The stock purchase warrant was determined to be equity classified in accordance with U.S. GAAP and was outstanding as of March 31, 2022.
In September 2021 the Company repaid all amounts outstanding on the notes payable associated with these warrants. In conjunction with this repayment, the Company expensed the remaining unamortized debt discounts, commitment assets and debt issuance costs associated with these warrants.
Convertible Notes Payable Warrants
In December 2021 and in connection with the issuance of Convertible Notes Payable with an original principal amount of $80,000 along with a commitment to extend an additional $20,000 upon the achievement of certain milestones (see Note 11 — Debt), the Company issued warrants exercisable or exchangeable for up to such aggregate number of shares of the Company’s common stock determined by dividing $3.0 million by the Exercise Price (as defined below). The warrants remained outstanding as of March 31, 2022.
The per share exercise price of the warrants (the “Exercise Price”) will equal the lower of (a) $7.86; (b) a 10% premium to the 5-day VWAP determined as of June 30, 2022; (c) in the case of any “equity purchase commitments” and/or “at-the-market” or similar transactions which result in the realization by the Company of gross proceeds of $20.0 million or more over any
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
period of 14 consecutive trading days prior to September 30, 2022, the VWAP of the common stock on the last trading day of such 14 day period; or (d) the effective price per share of any bona fide equity offering prior to September 30, 2022. The PIPE Investment that closed in March 2022 qualified as a bona fide equity offering and therefore resulted in the repricing of the warrants. Changes in the exercise price could have a material impact to the valuation.
The fair value of the warrants attributable to the funds loaned to the Company, estimated at $1,690 at issuance, were recorded as a debt discount, which is amortized over the life of the convertible term notes using the effective interest method and recorded as interest expense. The fair value of the warrants attributable to the commitment to fund the second tranche, estimated at $423 at issuance, were recorded as a current asset and will be amortized through the date of commitment expiration (June 2022) using the straight-line method and recorded as interest expense.
The warrants are exercisable at the warrant holder’s discretion at any time before the expiration date of December 2026. Upon a change in control the warrants would be automatically exchanged for shares of the Company’s common stock at no cost to the holder.
PIPE Investment Warrants
In March 2022, the Company entered into definitive subscription agreements with certain investors providing for the private placement of an aggregate of 26,150 units at a price of $3.25 per unit (“PIPE Investment”). Each unit consists of (i) one share of the Company’s common stock, par value $0.0001 per share, and (ii) a warrant to purchase one-third of one share of common stock for an aggregate purchase price of $85.0 million. In connection with the private placement, the Company incurred transactions costs of $4,161, $705 of which was allocated to the warrants and expensed. As of March 31, 2022, $4,143 of the transaction costs were unpaid. The 8,716 warrants remained outstanding as of March 31, 2022.
Each warrant to purchase common stock has an exercise price of $3.90 per share and may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed a specified threshold set forth therein, subject to increase to up to 19.99% at the option of the holder. Each warrant is redeemable by the Company for $0.10 if the closing price of the Company’s common stock exceeds $9.75 per share for any 20 trading days within a 30-trading day period.
The warrants are exercisable at the warrant holder’s discretion at any time before the expiration date of March 2027.
Public and Private Placement Warrants
On January 8, 2021, Star Peak Corp II consummated its IPO of 40,250 units. Each unit consists of one share of Class A common stock and one-fourth of one Public Warrant for a total of 10,063 Public Warrants. Simultaneously with the closing of STPC’s IPO, STPC consummated the private placement of 6,553 Private Placement Warrants. Upon the completion of the Merger, the Company assumed each of these warrants, which remain outstanding in whole as of March 31, 2022.
Public Warrants may only be exercised for a whole number of shares of common stock. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants are publicly traded under the ticker BHIL WS. The Public Warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination (September 2026) or earlier upon redemption or liquidation. The Public Warrants became exercisable on January 8, 2022. The Private Placement Warrants are identical to the Public Warrants, except the Private Placement Warrants will be non-redeemable so long as they are held by Star Peak Sponsor II LLC (“the Sponsor”) or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemption of Public Warrants and Private Placement Warrants when the price per share of common stock equals or exceeds $18.00:
Once the Public Warrants and Private Placement Warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days’ prior written notice of redemption; and if, and only if, the last reported sale price (the “closing price”) of common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
The Company will not redeem the warrants as described above unless a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period. Any such exercise would not be on a “cashless” basis and would require the exercising holder to pay the exercise price for each warrant being exercised.
Redemption of Public Warrants and Private Placement Warrants when the price per share of common stock equals or exceeds $10.00:
Commencing 90 days after the warrants become exercisable, the Company may redeem the outstanding warrants: in whole and not in part; at $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of common stock; if, and only if, the closing price of the common stock equals or exceeds $10.00 per Public Share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and if the closing price of the common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
The “fair market value” of common stock for the above purpose shall mean the volume weighted average price of common stock during the 10 trading days ending on the third trading day immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of common stock per warrant (subject to adjustment).
13. Income Taxes
The Company’s effective tax rate was 0% and 0% for the three months ended March 31, 2022 and 2021, respectively. The 2022 and 2021 effective tax rates differed from the statutory rate of 21% primarily due to the fact that the Company recorded no income tax benefit on the Company’s pretax losses as the Company recorded a full valuation allowance globally.
14. Comprehensive Loss
The Company’s other comprehensive income (loss) consists of foreign currency translation adjustments from its Brazil subsidiary, which does not use the U.S. dollar as its functional currency, and unrealized gains and losses on marketable debt securities classified as available for sale.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
The following table shows changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the three months ended March 31, 2022 and 2021:
| | | | | | | | | | | | | | | | | |
| Cumulative Foreign Currency Translation | | Unrealized (Losses)/Gains on Marketable Securities | | Total |
Balance as of December 31, 2021 | $ | (376) | | | $ | (727) | | | $ | (1,103) | |
| Other comprehensive loss before reclassifications | (65) | | | (3,766) | | | (3,831) | |
| Amounts reclassified from AOCI | — | | | 1,207 | | | 1,207 | |
| Other comprehensive loss | (65) | | | (2,559) | | | (2,624) | |
Balance as of March 31, 2022 | $ | (441) | | | $ | (3,286) | | | $ | (3,727) | |
| | | | | |
Balance as of December 31, 2020 | $ | (380) | | | $ | 55 | | | $ | (325) | |
| Other comprehensive loss before reclassifications | (71) | | | (87) | | | (158) | |
| Amounts reclassified from AOCI | — | | | (47) | | | (47) | |
| Other comprehensive loss | (71) | | | (134) | | | (205) | |
Balance as of March 31, 2021 | $ | (451) | | | $ | (79) | | | $ | (530) | |
Amounts reclassified from AOCI were reported within “Other (income) expense, net” on the condensed consolidated statement of operations. The Company’s accounting policy is to release the income tax effects (if applicable) from AOCI when the individual units of account are sold.
15. Loss Per Common Share
The Company computes basic net loss per share using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities may consist of warrants, stock options and restricted stock units. The dilutive effect of outstanding warrants, stock options and restricted stock units are reflected in diluted earnings per share by application of the treasury stock method. The weighted average share impact of warrants, stock options, and restricted stock units that were excluded from the calculation of diluted shares outstanding due to the Company incurring a net loss for the three month periods ending March 31, 2022 and 2021 were as follows:
| | | | | | | | | | | |
| Three Months
Ended March 31, |
| Anti-dilutive common share equivalents: | 2022 | | 2021 |
| Warrants | 208 | | | — | |
| Stock options | 4,719 | | | 3,964 | |
| Restricted stock units | 2,907 | | | — | |
| Total anti-dilutive common share equivalents | 7,834 | | | 3,964 | |
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
The following table provides the basis for basic and diluted EPS by outlining the numerators and denominators of the computations:
| | | | | | | | | | | |
| Three Months
Ended March 31, |
| 2022 | | 2021 |
| Numerator: | | | |
| Net loss | $ | (16,576) | | | $ | (22,347) | |
| Denominator: | | | |
| Weighted average common shares outstanding, basic and diluted | 160,711 | | | 108,757 | |
| Net loss per common share, basic and diluted | $ | (0.10) | | | $ | (0.21) | |
16. Share-Based Compensation
On June 12, 2012, the shareholders of Legacy Benson Hill approved the 2012 Equity Incentive Plan (the “2012 Plan”), which has been subsequently amended. The 2012 Plan provides for the issuance of up to 17,464 equity-based awards in the form of restricted common stock or stock options awards to eligible employees, directors, and consultants.
On September 29, 2021, the Company’s stockholders approved the 2021 Omnibus Incentive Plan, (the “Plan”), replacing the 2012 Plan, pursuant to which the Company’s Board of Directors (the “Board”) may grant stock awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards, to officers, employees, and directors. The Plan allows for non-employee director grants, which are accounted for in the same manner as employee awards. The Plan provides for the issuance of up to 16,502 stock awards as of March 31, 2022.
Stock Options
Under the 2012 Plan, the Company granted stock options which typically vest over two years for board members and four years for all other grants with a contractual life of ten years. The exercise price of stock options granted under the 2012 Plan were set at the fair market value of such shares on the date of grant.
The grant date fair value for the Company’s stock options granted under the 2012 Plan in the three months ended March 31, 2021, were based on the following assumptions used within the Black-Scholes option pricing model:
| | | | | |
| Expected dividend yield | 0 | % |
| Expected volatility | 63 | % |
| Risk-free interest rate | 0.6 | % |
| Expected term in years | 6.1 years |
| Weighted average grant date fair value | $ | 1.21 |
As of March 31, 2022 and 2021 the Company had 5,797 and 3,865 non-vested options under the 2012 Plan, respectively.
There are 10,317 registered shares of common stock reserved for issuance upon exercise or settlement, as applicable, of awards made under the 2012 Plan. While no further awards may be granted under the 2012 Plan, the plan continues to govern all outstanding awards previously issued under it.
Restricted Stock Units
The Company’s restricted stock units (“RSUs”) are convertible into shares of the Company’s common stock upon vesting on a one-to-one basis. As of March 31, 2022 the Company had 5,035 RSUs outstanding subject to only time-based vesting conditions and 4,568 RSUs outstanding subject to time and market based performance vesting conditions. Any unvested portion
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
of the RSUs shall be terminated and forfeited upon termination of employment or service of the grantee or the failure to achieve market based performance vesting conditions within the award term.
As of March 31, 2022, 1,543 of the market based performance awards were subject to the following vesting conditions (the “Earnout Awards”): (i) 50% of the Earnout Awards will vest if the closing price of the Company’s publicly traded common stock is greater than or equal to $14.00 over any 20 trading days within any thirty consecutive trading day period within 36 months following the closing of the Merger and (ii) 50% of the Earnout Awards will vest if the closing price of the Company’s publicly traded common stock is greater than or equal to $16.00 over any 20 trading days within any thirty consecutive trading day period within 36 months following the closing of the Merger. Any portion of the Earnout Awards that have not vested as of the third anniversary of the closing of the Merger will be forfeited. Additionally, the vesting of the Earnout Awards is subject to the award recipients continued service to the Company through the applicable vesting date. Therefore, should the award recipients service terminate prior to the Earnout Awards vesting, the Earnout Awards will be forfeited.
As of March 31, 2022, 1,025 of the market based performance awards were subject to the following vesting conditions (the “Executive Founders Grants”): (i) 50% of the Executive Founders Grants will performance vest if the 30-day VWAP of the Company’s publicly traded common stock is greater than or equal to $15.00 after September 29, 2022 but on or prior to September 29, 2024 and (ii) 50% of the Executive Founders Grants will performance vest if the 30-day VWAP of the Company’s publicly traded common stock is greater than or equal to $20.00 after September 29, 2022 but on or prior to September 29, 2026. If the $15.00 VWAP target is not achieved on or prior to September 29, 2024 the target will be increased by 10% to $16.50 and be eligible to performance vest on or prior to September 29, 2025. The Executive Founders Grants will become 100% time vested on September 29, 2024. Any performance vested portion of the Executive Founders Grants that has not time vested will remain outstanding. Any portion of the Executive Founders Grants that has not both time and performance vested as of September 29, 2026 will be forfeited.
As of March 31, 2022, 2,000 of the market based performance awards were subject to the following vesting conditions (the “CEO Founders Grant”): (i) 25% of the CEO Founders Grant will performance vest if the 30-day VWAP of the Company’s publicly traded common stock is greater than or equal to $15.00 after September 29, 2022 but on or prior to September 29, 2024, (ii) 25% of the CEO Founders Grant will performance vest if the 30-day VWAP of the Company’s publicly traded common stock is greater than or equal to $20.00 after September 29, 2022 but on or prior to September 29, 2025, (iii) 25% of the CEO Founders Grant will performance vest if the 30-day VWAP of the Company’s publicly traded common stock is greater than or equal to $25.00 after September 29, 2022 but on or prior to September 29, 2026, and (iv) 25% of the CEO Founders Grant will performance vest if the 30-day VWAP of the Company’s publicly traded common stock is greater than or equal to $30.00 after September 29, 2022 but on or prior to September 29, 2027. If any of the VWAP targets in the foregoing clauses (i)-(iv) are not achieved on or prior to the respective specified deadlines, such VWAP target will be increased by 10% and the applicable 25% tranche of the RSUs with respect to that VWAP target (as increased) will vest if and when such increased VWAP target is achieved at any time within the 12-month period following the original deadline for such VWAP target. The CEO Founders Grant will become 100% time vested on September 29, 2024. Any performance vested portion of the CEO Founders Grant that has not time vested will remain outstanding. Any portion of the CEO Founders Grant that has not both time and performance vested as of September 29, 2028 will be forfeited.
The closing price and 30-day VWAP thresholds of the Company’s common stock are considered market conditions under ASC 718 and are estimated on the grant date using a Monte Carlo simulation. Recognition of stock-based compensation expense of all vesting tranches commenced on the date of grant, as the probability of meeting the price thresholds are not considered in determining the timing of expense recognition. Key assumptions for estimating the market based performance awards fair value at the date of grant included the closing price of the Company’s common stock on the grant date, historical volatilities of the common stock of comparable publicly traded companies, the risk free interest rate, and the grant term.
The time based awards grant date fair value was determined based on the closing price of the Company’s common stock on the date of grant.
Stock-Based Compensation Expense
The Company recognized $5,683 and $647 of compensation expense related to grants for the three months ended March 31, 2022 and 2021, respectively.
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
17. Commitments and Contingencies
Litigation
The Company accrues for cost related to contingencies when a loss is probable, and the amount is reasonably determinable. Disclosure of contingencies is included in the consolidated financial statements when it is at least reasonably possible that a material loss or an additional material loss in excess of amounts already accrued may be incurred.
For all litigation matters, the Company accrued $0 as of March 31, 2022 and December 31, 2021.
Other Commitments
As of March 31, 2022, the Company has committed to purchase from seed producers and growers at dates throughout 2022 and 2023 at fixed prices aggregating to $83.6 million based on commodity futures or market prices, other payments to growers, and estimated yields per acre. In addition to the obligations for which the price is fixed or determinable, the Company has committed to purchase from seed producers and growers 282 bushels throughout 2022 and 2023 for which the pricing is currently variable. These amounts are not recorded in the condensed consolidated financial statements because the Company has not taken delivery of the grain or seed as of March 31, 2022 and due to the fact that the grain or seed are subject to specified quality standards prior to delivery.
18. Segment Information
The Company’s reportable business segments reflect the manner in which its chief operating decision maker (“CODM”) allocates resources and assesses performance, which is at the operating segment level. The Ingredients reportable segment delivers healthy food ingredients derived from soybean seeds, meal and oil and processed yellow peas. The Fresh reportable segment is a grower, packer and distributor of year-round fresh produce located in the southeastern United States. Financial results associated with legacy licensing arrangements that are not allocated to the Fresh or Ingredients reportable segment and costs associated with centralized operations are reported as Unallocated and other. Centralized operations represent corporate and headquarter-related expenses, which include legal, finance, human resources, and other research and development and administrative expenses that are not allocated to individual reporting operating segments.
Our CODM reviews segment performance and allocates resources based upon segment revenue and Adjusted EBITDA. The Company defines Adjusted EBITDA as consolidated net loss before net interest expense, income tax provision and depreciation and amortization, further adjusted to exclude stock-based compensation, and the impact of significant non-recurring items. Adjusted EBITDA is a non-GAAP financial measure of performance. A reconciliation of the Company’s consolidated net loss to Adjusted EBITDA is presented below.
The Company had no intersegment revenues. Operating segment results and revenues for the three month periods ended March 31, 2022 and 2021 are presented below.
| | | | | | | | | | | | | | | | | | | | | | | |
| Ingredients | | Fresh | | Unallocated and other | | Total |
| Three Months Ended March 31, 2022 | | | | | | | |
| Domestic | $ | 64,422 | | | $ | 26,319 | | | $ | 52 | | | $ | 90,793 | |
| International | 1,652 | | | — | | | — | | | 1,652 | |
| Total | $ | 66,074 | | | $ | 26,319 | | | $ | 52 | | | $ | 92,445 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Ingredients | | Fresh | | Unallocated and other | | Total |
| Three Months Ended March 31, 2021 | | | | | | | |
| Domestic | $ | 14,195 | | | $ | 17,564 | | | $ | 43 | | | $ | 31,802 | |
| International | — | | | — | | | — | | | — | |
| Total | $ | 14,195 | | | $ | 17,564 | | | $ | 43 | | | $ | 31,802 | |
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Ingredients | | Fresh | | Unallocated and other | | Total |
| Three Months Ended March 31, 2022 | | | | | | | |
| Point in time | $ | 66,074 | | | $ | 26,319 | | | $ | — | | | $ | 92,393 | |
| Over time | — | | | — | | | 52 | | | 52 | |
| Total | $ | 66,074 | | | $ | 26,319 | | | $ | 52 | | | $ | 92,445 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Ingredients | | Fresh | | Unallocated and other | | Total |
| Three Months Ended March 31, 2021 | | | | | | | |
| Point in time | $ | 14,195 | | | $ | 17,564 | | | $ | 10 | | | $ | 31,769 | |
| Over time | — | | | — | | | 33 | | | 33 | |
| Total | $ | 14,195 | | | $ | 17,564 | | | $ | 43 | | | $ | 31,802 | |
| | | | | | | | | | | |
| Revenue | | Adjusted
EBITDA |
| Three Months Ended March 31, 2022 | | | |
| Ingredients | $ | 66,074 | | | $ | (14,783) | |
| Fresh | 26,319 | | | 2,228 | |
| Unallocated and other | 52 | | | (16,293) | |
| Total segment results | $ | 92,445 | | | $ | (28,848) | |
Adjustments to reconcile consolidated net loss from to Adjusted EBITDA:
| | | | | |
| Consolidated net loss | $ | (16,576) | |
| Interest expense, net | 6,388 | |
| Income tax expense (benefit) | (39) | |
| Depreciation and amortization | 5,404 | |
| Stock-based compensation | 5,683 | |
| Change in fair value of warrants and conversion option | (31,741) | |
| Other nonrecurring costs, including acquisition and integration costs | 18 | |
| Non-recurring SOX readiness costs | 212 | |
| PIPE Investment transaction costs | 705 | |
| Severance expense | 165 | |
| Fresh segment restructuring expense | 933 | |
| Total Adjusted EBITDA | $ | (28,848) | |
| | | | | | | | | | | |
| Revenue | | Adjusted
EBITDA |
| Three Months Ended March 31, 2021 | | | |
| Ingredients | $ | 14,195 | | | $ | (6,788) | |
| Fresh | 17,564 | | | (337) | |
| Unallocated and other | 43 | | | (7,722) | |
| Total segment results | $ | 31,802 | | | $ | (14,847) | |
Benson Hill, Inc.
Notes to the Condensed Consolidated Financial Statements (continued)
(Unaudited)
(Dollar and Share Amounts in Thousands)
Adjustments to reconcile consolidated net loss to Adjusted EBITDA:
| | | | | |
| Consolidated net loss | $ | (22,347) | |
| Interest expense, net | 1,258 | |
| Income tax expense (benefit) | — | |
| Depreciation and amortization | 2,591 | |
| Stock-based compensation | 647 | |
| Change in fair value of warrants | 1,016 | |
| Other nonrecurring items | (218) | |
| Non-recurring public company readiness costs | 2,206 | |
| Total Adjusted EBITDA | $ | (14,847) | |
As the CODM does not evaluate the operating segments nor make decisions regarding the operating segments based on total assets, we have excluded this disclosure.
19. Subsequent Events
We consider events or transactions that occur after the balance sheet date but prior to the date the financial statements are available to be issued for potential recognition or disclosure in the financial statements. The Company has completed an evaluation of all subsequent events after the balance sheet date of March 31, 2022 through the date the accompanying financial statements were available to be issued, to ensure that these financial statements include appropriate disclosure of events both recognized in the financial statements as of March 31, 2022, and events that occurred subsequently but were not recognized in the financial statements. No reportable subsequent events were identified during this period.