Our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated condensed financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
The following discussion should be read in conjunction with our consolidated condensed financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly under "Part II, Item 1A. Risk Factors," and in other reports we file with the SEC. All references to years relate to the calendar year ended December 31 of the particular year.
Founded in 2006 and headquartered in Cupertino, California, we are an international renewable natural gas and renewable fuels company focused on the acquisition, development and commercialization of innovative negative carbon intensity products and technologies that replace traditional petroleum-based products. We operate in three reportable segments "California Ethanol", "Dairy Renewable Natural Gas", and "India Biodiesel". We have other operating segments determined not to be reportable segments, and are collectively represented by the "All Other" category. At Aemetis, our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this through leading the low-carbon fuels industry by building a circular bioeconomy utilizing agricultural waste to produce advanced renewable fuels that produce less greenhouse gas emissions and thereby improve air quality.
Our California Ethanol segment consists of a 65 million gallon per year ethanol production facility located in Keyes, California (the "Keyes Plant") that we own and operate. In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains ("WDG"), Distillers Corn Oil ("DCO"), and Condensed Distillers Solubles ("CDS"), all of which are sold as animal feed to local dairies and feedlots. In the fourth quarter of 2021, we installed and are commissioning an ethanol zeolite membrane dehydration system at the Keyes Plant. The installation is a key first step in the electrification of the Keyes Plant, which will significantly reduce the use of petroleum based natural gas as process energy. The electrification, along with the future installation of a two-megawatt zero carbon intensity solar microgrid system and a mechanical vapor recompression (MVR) system will greatly reduce GHG emissions and decreases the carbon intensity of fuel produced at the Keyes Plant, allowing us to realize a higher price for the ethanol produced and sold.
Our Dairy Renewable Natural Gas segment consists of our subsidiary, Aemetis Biogas, LLC ("ABGL"), which was formed to construct bio-methane anaerobic digesters at local dairies near the Keyes Plant, many of whom also purchase WDG produced at the Keyes Plant. The digesters are connected via an underground private pipeline owned by ABGL to a gas cleanup and compression unit being built at the Keyes Plant to produce RNG. Upon receiving the bio-methane from the dairies, impurities are removed, and the bio-methane is converted to negative carbon intensity RNG where it will be either injected into the statewide PG&E gas utility pipeline, supplied as compressed RNG that will service local trucking fleets, or used as renewable process energy at the Keyes Plant. ABGL has completed Phase 1 of our California biogas digester network and pipeline system that converts waste dairy methane gas into Dairy Renewable Natural Gas ("RNG"), including two operational dairy's and seven miles of pipeline. ABGL is now executing Phase 2 construction with the completion of sixteen miles of pipeline and the commissioning of the biogas-to-RNG upgrade unit at the Keyes plant as well as beginning construction of additional dairy digesters.
During the second quarter of 2022, Aemetis has completed construction of a third dairy digester and commissioning of the centralized gas cleanup facility and utility gas interconnect located at the Keyes Plant where dairy biogas will be upgraded to RNG and injected into the utility pipeline. Upon receiving pathway certification from the California Air Resources Board (CARB), the fuel is scheduled to be delivered into the Northern California gas delivery system.
Our "Carbon Zero" biofuels production plants are designed to produce biofuels, including sustainable aviation fuel ("SAF") and diesel fuel utilizing renewable hydrogen and non-edible renewable oils sourced from existing Aemetis biofuels plants and other sources. The first plant to be built, in Riverbank, California, "Carbon Zero 1", is expected to utilize hydroelectric and other renewable power available onsite to produce 90 million gallons per year of SAF, renewable diesel, and other byproducts. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels to reduce GHG emissions and other pollutants associated with conventional petroleum-based fuels. By producing ultra-low carbon renewable fuels, the Company expects to capture higher value D3 Renewable Identification Numbers ("RINs") and California's LCFS credits. D3 RINs have a higher value in the marketplace than D6 RINs due to D3 RINs' relative scarcity and mandated pricing formula from the United States Environmental Protection Agency ("EPA").
On April 1, 2021, Aemetis Carbon Capture, Inc. was established to build Carbon Capture and Sequestration (CCS) projects that generate LCFS and IRS 45Q credits by injecting CO? into wells which are monitored for emissions to ensure the long-term sequestration of carbon underground. California's Central Valley has been identified as the state's most favorable region for large-scale CO? injection projects due to the subsurface geologic formation that absorbs and retains gases. The CCS projects are expected to capture and sequester up to two million metric tons per year of CO? at the two Aemetis biofuels plant sites in Keyes and Riverbank, California. In July 2022, Aemetis purchased 24 acres, on the Riverbank Industrial Complex site in Riverbank, California, to develop a CCS injection well. The Company plans to construct a characterization well to obtain both the data and well design information required for the EPA Class VI CO? injection well permit application. The well is expected to sequester up to one million metric tons per year of CO.
Our India Biodiesel segment consist of the Kakinada Plant with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. We believe the Kakinada Plant is one of the largest biodiesel production facilities in India on a nameplate capacity basis. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meet international product standards. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive and other industries.
Our revenue development strategy for our California Ethanol segment relies upon supplying ethanol into the transportation fuel market in Northern California and supplying feed products to dairy and other animal feed operations in Northern California. We are actively seeking higher value markets for our ethanol in an effort to improve our overall margins and to add incremental income to the California Ethanol segment, including the development of the Carbon Zero Plants, the expansion of the biogas project, and the implementation of the Solar Microgrid System, the installation of the membrane dehydration system and other technologies. We are also actively working with local dairy and feed potential customers to promote the value of our WDG product in an effort to strengthen demand for this product.
During the second quarter of 2022, we produced five products at the Keyes Plant: denatured fuel ethanol, WDG, DCO, CO?, and CDS. During the first quarter of 2020, we transitioned from selling the ethanol we produce to J.D. Heiskell pursuant to the J.D. Heiskell Purchase Agreement, to a model where the ethanol is sold directly to our fuel marketing customers. We own the ethanol stored in our finished goods tank. WDG continues to be sold to A.L. Gilbert and DCO is sold to other customers under the J.D. Heiskell Purchase Agreement. Smaller amounts of CDS were sold to various local third parties. We began selling CO? to Messer Gas in the second quarter of 2020.
California Ethanol revenue is dependent on the price of ethanol, WDG, high-grade alcohol, and DCO. Ethanol pricing is influenced by local and national inventory levels, local and national ethanol production, imported ethanol, corn prices and gasoline demand, and is determined pursuant to a marketing agreement with a single fuel marketing customer and is generally based on daily and monthly pricing for ethanol delivered to the San Francisco Bay Area, California, as published by Oil Price Information Service ("OPIS"), as well as quarterly contracts negotiated by our marketing customer with local fuel blenders. The price for WDG is influenced by the price of corn, the supply and price of distillers dried grains, and demand from the local dairy and feed markets and determined monthly pursuant to a marketing agreement with A.L. Gilbert and is generally determined in reference to the local price of dried distillers' grains and other comparable feed products. Our revenue is further influenced by the price of natural gas, our decision to operate the Keyes Plant at various capacity levels, conduct required maintenance, and respond to biological processes affecting output.
Dairy Renewable Natural Gas Revenue
In December 2018, we utilized our relationships with California's Central Valley dairy farmers by signing leases and raising funds to construct dairy digesters, a 40 mile pipeline, and a biogas-to-RNG facility to initially use biogas to power our Keyes Plant and later deliver fuels for sale to utility gas pipeline. We are currently producing RNG from three digesters connected to 20 miles of pipeline, then flowing this gas to our RNG cleanup and compression hub at the Keyes Plant. The RNG upgrade unit at the Keyes Plant is designed to enable the production and delivery of utility-grade RNG for sale as transportation fuel to California customers via pipeline delivery.
In addition to the existing and operating dairy digesters, we currently have three additional dairy digesters that are under construction. We have 24 signed agreements with additional dairies to construct dairy digesters. Our revenue development strategy for the Dairy Renewable Natural Gas segment relies upon continuing to collect bio-methane gas from the existing dairy digesters, continuing to build out the network of dairy digesters, extending the pipeline in Northern California to grow the supply of RNG available for sale and utilizing the biogas-to-RNG upgrade unit to distribute utility-grade RNG to customers statewide. We plan to store the RNG until the LCFS credit pathway for each dairy has been established, after which we will sell the stored gas by delivering it into the utility gas pipeline.
Our revenue strategy in India is based on continuing to sell biodiesel to our bulk fuel customers, fuel station customers, mining customers, industrial customers and tender offers placed by Government Oil Marketing Companies ("OMCs") for bulk purchases of fuels. In 2020, the tenders were delayed due to COVID-19, and in 2021 the format was changed to allow for monthly bidding on volumes at a price set by the OMCs. The Company did not participate in tenders during 2021 due to low OMC offer prices. Recently, the government of India updated the national biofuels policy and adopted a new tax on diesel to promote biodiesel blending. As a result, the OMC's are pricing the tenders at economically viable levels, allowing for biodiesel producers in India to begin production.
Going forward, the Company expects to participate in offers made by the OMCs on economically reasonable terms.
To further promote the use of biodiesel in India, the India government implemented a program of imposing a penalty on blenders who fail to blend biodiesel into diesel product. This program is scheduled to take effect during the fourth quarter of 2022.
During the second quarter of 2022, a grant in the amount of $14.2 million was received from the USDA's Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic.
Three Months Ended June 30, 2022, Compared to Three Months Ended June 30, 2021
Our revenues are derived primarily from sales of ethanol and WDG for our California Ethanol segment, renewable natural gas for our Dairy Renewable Natural Gas segment, biodiesel and refined glycerin for our India Biodiesel, and sublease rental income from All Other.
*All Dairy Renewable Natural Gas revenue is intercompany.
California Ethanol. For the three months ended June 30, 2022, the Company generated 72% of revenue from sales of ethanol, 23% from sales of WDG, and 5% from sales of corn oil, CDS, CO?, and other sales. Plant production averaged 111% of the 55 million gallon per year nameplate capacity. The increase in revenues was due to the increase in price of ethanol per gallon sold to $3.13 for the three months ended June 30, 2022, compared to $2.78 for the same period ended June 30, 2021, while volume of ethanol gallons sold remained consistent at 15.2 million gallons. The average price of WDG increased by 39% to $145.74 per ton for the three months ended June 30, 2022 while WDG sales volume increased by 3% to 104 thousand tons in the three months ended June 30, 2022 compared to 101 thousand tons in the three months ended June 30, 2021.
Dairy Renewable Natural Gas. During the three months ended June 30, 2022 and 2021, we recognized revenue of $297 thousand and $694 thousand, respectively, to an intercompany party. The decrease in the three months ended June 30, 2022 revenue compared to the three months ended June 30, 2021 was due to LCFS pathway being approved in the second quarter of 2021, which applied retroactively since the inception of the first two dairy digesters. For revenue on a comparable basis the dairy digesters produced and sold MMBTU of 14.9 thousand and 13.1 thousand in the three months ended June 30, 2022 and 2021.
India Biodiesel. For the three months ended June 30, 2022, we generated 100% of our revenues from the other sales, compared to 70% of our revenues from the sale of biodiesel, 5% of our revenues from the sale of refined glycerin, and 25% of our sales from other sales for the three months ended June 30, 2021. The decrease in revenues was primarily attributable to the Kakinada Plant not bidding on the Indian government tenders due to higher feedstock costs making conversion to biodiesel unviable. Biodiesel sales volume decreased by 100% to 0 metric tons in the three months ended June 30, 2022 compared to 105 metric tons in the three months ended June 30, 2021. Refined glycerin sales volume decreased by 100% to 0 metric tons in the three months ended June 30, 2022, compared to 9 metric tons in the three months ended June 30, 2021.
California Ethanol. We ground 5.3 million and 5.2 million bushels of corn in the three months ended June 30, 2022 and 2021, respectively. Our average cost of feedstock per bushel increased to $10.21 per bushel during the three months ended June 30, 2022 compared to $8.04 per bushel for the three months ended June 30, 2021. In addition, for the three months ended June 30, 2022, we incurred $1.5 million more in natural gas costs, $0.1 million more in chemical costs, and $0.6 million more in transportation costs compared to the same period in 2021.
Dairy Renewable Natural Gas. Cost of Goods Sold expenses relate to dairy manure payments, maintenance on the dairy digesters, production bonuses, and depreciation.
India Biodiesel. The decrease in costs of goods sold was attributable to the decrease in biodiesel feedstock volume in the three months ended June 30, 2022.
California Ethanol. Gross profit decreased by 106% in the three months ended June 30, 2022 primarily due to increases in the prices of corn, natural gas and transportation costs partially offset by price increases in ethanol and WDG.
Dairy Renewable Natural Gas. Gross loss in the three months ended June 30, 2022 relates to increase in expenses in connection with ramp up of our Dairy Renewable Natural Gas business.
Operating (income)/expense and non-operating (income)/expense
Substantially all of our research and development expenses were related to research and development activities in Minnesota.
Selling, general, and administrative ("SG&A") expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, other corporate expenses, and related facilities expenses.
Other operating income consists of sublease rental income and a loss on lease termination.
Other (income) expense consists primarily of interest and amortization expense attributable to our debt facilities and those of our subsidiaries and accretion of our Series A preferred units. The debt facilities include stock or warrants issued as fees. The fair value of stock and warrants are amortized as amortization expense, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense.
The increase in SG&A expenses for the three months ended June 30, 2022 was principally due to increases in salaries and wages of $1.3 million, as part of the development of our ultra-low carbon initiatives. SG&A expenses as a percentage of revenue in the three months ended June 30, 2022 remained consistent compared to the comparable period in 2021 at 10%.
Other operating expense is related to a loss on lease termination caused by the termination of two finance leases, partially offset by Riverbank sublease rental income.
Interest expense increased in the three months ended June 30, 2022 due to obtaining and drawing on the Revolving Loans, partially offset by principal debt payments made to Third Eye Capital in the first and second quarter of 2022, coupled with capitalizing interest on our capital projects. Debt related fees and amortization increased due to debt issuance costs and extension fees being incurred in 2022 related to extending the Third Eye Capital debt and obtaining the Revolving Loans. The decrease in accretion and other expenses of the Series A Preferred Units was due to capitalized interest related to the ABGL project increasing and offsetting accretion expense. For the three months ended June 30, 2022 and 2021 capitalized interest was $2.0 million and $0.7 million, respectively. Gain on debt extinguishment was related to the PPP loan being forgiven in the 2021. Gain on litigation arose from the settlement of the EdenIQ lawsuit in the three months ended June 30, 2022. Other expense (income) change is related to a grant in the amount of $14.2 million received from the USDA's Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic.
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
*All Dairy Renewable Natural Gas revenue is intercompany.
California Ethanol. For the six months ended June 30, 2022, the Company generated 73% of revenue from sales of ethanol, 23% from sales of WDG, and 4% from sales of corn oil, CDS, CO?, and other sales. Plant production averaged 109% of the 55 million gallon per year nameplate capacity. The increase in revenues was due to an increase in price of ethanol to $2.86 per gallon for the six months ended June 30, 2022, compared to $2.34 per gallon for the same period ended June 30, 2021, which was partially offset by the decrease in volume of ethanol gallons sold from 30.8 million gallons for the six months ended June 30, 2021 to 29.9 million gallons for the six months ended June 30, 2022. The average price of WDG increased by 24% to $130 per ton for the six months ended June 30, 2022 while WDG sales volume decreased to 204 thousand tons in the six months ended June 30, 2022 compared to 205 thousand tons in the six months ended June 30, 2021.
Dairy Renewable Natural Gas. During the six months ended June 30, 2022 and 2021, we recognized revenue of $632 thousand and $735 thousand, respectively to an intercompany party.
India Biodiesel. For the six months ended June 30, 2022, we generated 100% of our revenues from the other sales, compared to 74% of our revenues from the sale of biodiesel, 20% of our revenues from the sale of refined glycerin, and 6% of our sales from other sales for the three months ended June 30, 2021. The decrease in revenues was primarily attributable to the Kakinada Plant not receiving orders from the Indian government due to higher feedstock costs making conversion to biodiesel unviable. Biodiesel sales volume decreased by 100% to 0 metric tons in the six months ended June 30, 2022 compared to 455 metric tons in the six months ended June 30, 2021. Refined glycerin sales volume decreased by 100% to 0 metric tons in the six months ended June 30, 2022, compared to 130 metric tons in the six months ended June 30, 2021.
California Ethanol. We ground 10.4 million and 10.7 million bushels of corn in the six months ended June 30, 2022 and 2021, respectively. Our average cost of feedstock per bushel increased to $9.50 per bushel during the six months ended June 30, 2022 compared to $7.44 per bushel for the six months ended June 30, 2021. In addition, for the six months ended June 30, 2022, we incurred $2.4 million more in natural gas costs, $0.3 million more in chemical costs, and $0.9 million more in transportation costs.
Dairy Renewable Natural Gas. Cost of Goods Sold expenses relate to dairy manure payments, maintenance on the dairy digesters, production bonuses, and depreciation.
India Biodiesel. The decrease in costs of goods sold was attributable to the decrease in biodiesel feedstock volume in the six months ended June 30, 2022.
California Ethanol. Gross profit decreased in the six months ended June 30, 2022 primarily due to increases in the prices of corn, natural gas, chemical costs, and transportation costs.
Dairy Renewable Natural Gas. Gross loss increased in the six months ended June 30, 2022 primarily due to increase in expenses in connection with ramp up of our Dairy Renewable Natural Gas business.
Operating (income)/expense and non-operating (income)/expense
The increase in SG&A expenses for the six months ended June 30, 2022 was due to increases in salaries and wages of $2.7 million, as part of the development of our ultra-low carbon initiatives. SG&A expenses as a percentage of revenue in the six months ended June 30, 2022 increased to 12% as compared to 11% in the corresponding period of 2021.
Other operating expense is related to a loss on lease termination caused by the termination of two finance leases, partially offset by Riverbank sublease rental income.
Interest expense decreased in the six months ended June 30, 2022 due to principal debt payments made to Third Eye Capital in the first and second quarter of 2022, coupled with capitalizing interest on our capital projects. Debt related fees and amortization increased due to debt issuance costs and extension fees being incurred in 2022 related to extending the Third Eye Capital debt and obtaining the Revolving Loans. The decrease in accretion and other expenses of the Series A Preferred Units was due to capitalized interest related to the ABGL project increasing and offsetting accretion. For the six months ended June 30, 2022 and 2021 capitalized interest was $3.6 million $1.2 million, respectively. Gain on debt extinguishment was related to the PPP loan being forgiven in the 2021. Gain on litigation arose from the settlement of the EdenIQ lawsuit in the three months ended June 30, 2022. Other expense (income) change is related to a grant in the amount of $14.2 million received from the USDA's Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID-19 pandemic.
Cash and cash equivalents were $3.6 million at June 30, 2022, of which $3.1 million was held in North America and the rest was held at our Indian subsidiary. Our current ratio at June 30, 2022 was 0.25, compared to a current ratio of 0.32 at December 31, 2021. We expect that our future available liquidity resources will consist primarily of cash generated from operations, remaining cash balances, borrowings available, if any, under our senior debt facilities and our subordinated debt facilities, and any additional funds raised through sales of equity. The use of proceeds from all equity raises and debt financings are subject to approval by our senior lender.
Cash and cash equivalents, current assets, current liabilities and debt at the end of each period were as follows (in thousands):
Our principal sources of liquidity have been cash provided by the sale of equity, operations, and borrowings under various debt arrangements.
We launched an EB-5 Phase II funding in 2016, under which we expect to issue $50.8 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under our EB-5 Phase I funding. On November 21, 2019, the minimum investment amount was raised from $0.5 million per investor to $0.9 million per investor. As of June 30, 2022, EB-5 Phase II funding in the amount of $4.0 million had been released from escrow to us. Our principal uses of cash have been to refinance indebtedness, fund operations, and for capital expenditures. We anticipate these uses will continue to be our principal uses of cash in the future. Global financial and credit markets have been volatile in recent years, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost, or at all.
We operate in a volatile market in which we have limited control over the major components of input costs and product revenues and are making investments in future facilities and facility upgrades that improve the overall margin while lessening the impact of these volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil and natural gas. To the extent that we experience periods in which the spread between ethanol prices, and corn and energy costs narrow or the spread between biodiesel prices and waste fats and oils or palm oil and energy costs narrow, we may require additional working capital to fund operations.
As a result of negative capital and negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the company will need to either refinance the company's debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the company's ability to continue as a going concern. The Company plans to pursue the following strategies to improve the course of the business.
For the Keyes Plant, we plan to operate the plant and continue to improve financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction or revenue enhancements, execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement.
For the ABGL project, we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the higher carbon credits available in California. Funding for continued construction is based upon, obtaining government guaranteed loans and executing on existing and new state grant programs.
For the Riverbank project, we plan to raise the funds necessary to construct and operate the Carbon Zero 1 plant using loan guarantees and public financings based upon the licensed technology that generate federal and state carbon credits available for ultra-low carbon fuels utilizing lower cost, non-food advanced feedstocks to significantly increase margins.
For the Kakinada Plant, we plan to develop sales channels for domestic products as the costs of feedstock normalize against the price of diesel, as recently announced governmental incentives take effect to promote the blending of biodiesel, and as feedstocks such as refined animal tallow are used domestically and exported. Additionally, we are in the process of obtaining approval to export refined animal tallow and biodiesel produced using animal tallow into international markets as the use of refined animal tallow received approval from the Pollution Control Board of India for production of biodiesel.
In addition to the above we plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, selling bonds in the taxable and tax-exempt markets, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, or by vendor financing arrangements.
At June 30, 2022, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes equaled $140 million. The maturity dates for the Third Eye Capital financing arrangements are April 1, 2023, for $100 million with the ability to extend to April 1, 2024, March 1, 2025, for $18 million and March 1, 2026, for $22 million.
As of June 30, 2022, we have $4.9 million available under our revolving credit lines.
As of the date of this report, the Company has $40.0 million additional borrowing capacity to fund future cash flow requirements under the Reserve Liquidity Notes due on April 1, 2023.
We also rely on our working capital lines with Gemini and Secunderabad Oils in India to fund our commercial arrangements for the acquisitions of feedstock. We currently provide our own working capital for the Keyes Plant; Gemini and Secunderabad Oils currently provide us with working capital for the Kakinada Plant. The ability of Gemini, and Secunderabad Oils to continue to provide us with working capital depends in part on both of their respective financial strength and banking relationships.
Change in Working Capital and Cash Flows
The below table (in thousands) describes the changes in current and long-term debt during the six months ended June 30, 2022:
Working capital changes resulted in (i) a $0.2 million decrease in inventories, (ii) a $0.3 million decrease in accounts receivable due to repayments of Murex accounts receivable, (iii) a $0.8 million decrease in prepaid expenses mainly due to the use of a $2.5 million J.D. Heiskell pre-payment, partially offset by an increase in prepaid guarantee fees of $1.7 million, (iv) a decrease in other current assets of $0.1, and (v) a $4.2 million decrease in cash.
Net cash used in operating activities during the six months ended June 30, 2022, was $6.5 million, consisting of non-cash charges of $12.2 million, net cash used by operating assets and liabilities of $0.3 million, and net loss of $18.5 million. The non-cash charges consisted of: (i) $3.6 million in amortization of debt issuance costs and other intangible assets, (ii) $2.7 million in depreciation expenses, (iii) $3.4 million in stock-based compensation expense, (iv) $3.1 million in preferred unit accretion and other expenses of Series A preferred units, (v) a loss on lease termination of $0.7 million, and (vi) a gain on litigation of $1.4 million. Net changes in operating assets and liabilities consisted primarily of a decrease in (i) inventories of $0.2 million, (ii) prepaid expenses of $2.1 million, (iii) an increase in accounts payable of $0.4 million, (iv) a decrease in accounts receivable of $0.3 million, (v) an increase in accrued interest of $8.5 million, partially offset by (vi) an increase in other assets of $1.6 million, and (vii) a decrease in other liabilities of $10.1.
Cash used by investing activities was $16.4 million, of which $22.5 million were used by capital projects, partially offset by grant proceeds and other reimbursements of $6.1 million.
Cash provided by financing activities was $18.7 million, consisting primarily of $0.2 million from exercises of stock options, $5.1 million from issuance of common stock and $30.6 million from proceeds from borrowings, partially offset by repayments of borrowings of $16.2 million, debt renewal and waiver fee payments of $0.9 million, and payments on finance leases of $0.2 million.
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. We believe that of our most significant accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain are: revenue recognition; recoverability of long-lived assets, and debt modification and extinguishment accounting. These significant accounting principles are more fully described in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies" in our Annual Report on Form 10-K for the year ended December 31, 2021.
None reported beyond those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
We had no off-balance sheet arrangements during the three months ended June 30, 2022.
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