SEC Filing - LanzaTech

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lnza-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-40282

LanzaTech Global, Inc.

(Exact name of registrant as specified in its charter)


Delaware						92-2018969
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

8045 Lamon Avenue, Suite 400

Skokie, IL 60077

(847) 324-2400

(Registrant's telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	LNZA	Nasdaq Capital Market
Warrants	LNZAW	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had outstanding 196,055,228 shares of common stock as of September 30, 2023.

Table of Contents


Part I - Financial Information			3
Item 1. Financial Statements.			3
Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022			3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 (unaudited)			4
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Shareholders’ Equity/Deficit for the three and nine months ended September 30, 2023 and 2022 (unaudited)			5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)			7
Notes to the Condensed Consolidated Financial Statements (unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			38
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			54
Item 4. Controls and Procedures.			55
Part II - Other Information
Item 1. Legal Proceedings.			57
Item 1A. Risk Factors.			57
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			57
Item 3. Defaults Upon Senior Securities.			57
Item 4. Mine Safety Disclosures.			57
Item 5. Other Information.			57
Item 6. Exhibits.			57
Signatures			59

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q filed by LanzaTech Global, Inc. together with its consolidated subsidiaries, contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, LanzaTech’s management.

Forward-looking statements may include, for example, statements about:

•our anticipated growth rate and market opportunities;

•our ability to maintain the listing of our securities on the Nasdaq Stock Market;

•the potential liquidity and trading of our securities;

•our ability to raise financing in the future;

•our assessment of the competitive landscape;

•our ability to comply with laws and regulations applicable to our business;

•our ability to enter into, successfully maintain and manage relationships with industry partners;

•our receipt of substantial additional financing to fund our operations and complete the development and commercialization of our process technologies;

•the availability of governmental programs designed to incentivize the production and consumption of low-carbon fuels and carbon capture and utilization;

•our ability to adequately protect our intellectual property rights;

•our ability to attract, retain and motivate qualified personnel and to manage our growth effectively;

•our future financial performance and capital requirements; and

•our ability to implement and maintain effective internal controls.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report.

These forward-looking statements are only predictions based on our current expectations and projections about future events and are subject to a number of risks, uncertainties and assumptions, including the risk factors discussed in Part II, Item 1A of this Quarterly Report in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, and in other documents as we filed from time to time with the Securities and Exchange Commission (“SEC”). Moreover, we operate in a competitive industry, and new risks emerge from time to time. It is not possible for the management of LanzaTech to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements in this Quarterly Report.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANZATECH GLOBAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share data)


	As of
	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	91,397	$	83,045
Held-to-maturity investment securities	35,011		—
Trade and other receivables, net of allowance	10,085		11,695
Contract assets	24,313		18,000
Other current assets	16,677		11,157
Total current assets	177,483		123,897
Property, plant and equipment, net	22,818		19,689
Non-current held-to-maturity investment securities	9,780		—
Right-of-use assets	6,023		6,969
Equity method investment	9,594		10,561
Equity security investment	14,990		14,990
Other non-current assets	5,659		750
Total assets	$	246,347	$	176,856
Liabilities, Contingently Redeemable Preferred Stock, and Shareholders’ Deficit
Current liabilities:
Accounts payable	$	5,779	$	7,455
Other accrued liabilities	6,049		4,502
AM SAFE liability	—		28,986
Warrants	9,636		4,108
Contract liabilities	3,132		3,101
Accrued salaries and wages	7,196		7,031
Current lease liabilities	1,951		798
Total current liabilities	33,743		55,981
Non-current lease liabilities	5,250		6,615
Non-current contract liabilities	8,671		10,760
Fixed Maturity Consideration	7,020		—
FPA Put Option liability	38,092		—
Brookfield SAFE liability	23,350		50,000
Other long-term liabilities	1,746		1,591
Total liabilities	117,872		124,947


Contingently Redeemable Preferred Stock
Redeemable convertible preferred stock, $0.0001 par value; 20,000,000 and 130,133,670 shares authorized, — and 129,148,393 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	—		480,631
Shareholders’ Deficit
Common stock, $0.0001 par value; 400,000,000 and 158,918,093 shares authorized, 196,055,228 and 10,422,051 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	19		1
Additional paid-in capital	939,868		24,782
Accumulated other comprehensive income	1,786		2,740
Accumulated deficit	(813,198)		(456,245)
Total shareholders’ equity (deficit)	$	128,475	$	(428,722)
Total liabilities, contingently redeemable preferred stock, and shareholders' equity	$	246,347	$	176,856

See the accompanying Notes to the Condensed Consolidated Financial Statements.

LANZATECH GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

(Unaudited, in thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Revenue:
Revenue from contracts with customers - services	$	14,162	$	4,917	$	32,119	$	18,519
Revenue from contracts with customers - tangible products	2,258		1,691		3,265		3,413
Revenue from collaborative arrangements	1,566		760		3,116		1,733
Revenue from related party transactions	1,619		704		3,668		2,116
Total revenue	19,605		8,072		42,168		25,781

Cost and operating expenses:
Cost of revenue from contracts with customers - services (exclusive of depreciation shown below)	(11,862)		(3,694)		(28,835)		(15,307)
Cost of revenue from contracts with customers - tangible products (exclusive of depreciation shown below)	(1,772)		(1,979)		(2,499)		(2,855)
Cost of revenue from collaborative arrangements (exclusive of depreciation shown below)	(678)		(256)		(1,504)		(727)
Cost of revenue from related party transactions (exclusive of depreciation shown below)	(59)		(46)		(150)		(342)
Research and development expense	(16,645)		(14,260)		(51,839)		(39,858)
Depreciation expense	(1,376)		(1,211)		(3,981)		(3,433)
Selling, general and administrative expense	(11,808)		(7,258)		(41,095)		(19,482)
Total cost and operating expenses	(44,200)		(28,704)		(129,903)		(82,004)
Loss from operations	(24,595)		(20,632)		(87,735)		(56,223)
Other income (expense):
Interest income, net	1,249		8		3,164		3
Other expense, net	(1,517)		(1,176)		(29,912)		(1,100)
Total other income (expense), net	(268)		(1,168)		(26,748)		(1,097)
Loss before income taxes	(24,863)		(21,800)		(114,483)		(57,320)
Income tax expense	—		—		—		—
(Loss) gain from equity method investees, net	(463)		(467)		(941)		2,346
Net loss	$	(25,326)	$	(22,267)	$	(115,424)	$	(54,974)

Other comprehensive loss:
Foreign currency translation adjustments	(1,001)		(384)		(954)		(767)
Comprehensive loss	$	(26,327)	$	(22,651)	$	(116,378)	$	(55,741)

Unpaid cumulative dividends on preferred stock	—		(9,748)		(4,117)		(28,925)
Net loss allocated to common shareholders	$	(25,326)	$	(32,015)	$	(119,541)	$	(83,899)

Net loss per common share - basic and diluted	$	(0.13)	$	(3.47)	$	(0.70)	$	(9.10)
Weighted-average number of common shares outstanding - basic and diluted	195,869,537		9,229,781		169,797,443		9,223,884

See the accompanying Notes to the Condensed Consolidated Financial Statements.

LANZATECH GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY /DEFICIT

(Unaudited, all amounts in thousands, except share data)


	Redeemable Convertible Preferred Stock			Common Stock Outstanding			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders' Equity / (Deficit)
	Shares	Amount		Shares	Amount
Balance as of December 31, 2022	29,521,810	$	480,631	2,382,358	$	—	$	24,783	$	(456,245)	$	2,740	$	(428,722)
Retroactive application of recapitalization	99,626,583	—		8,039,693	1		(1)		—		—		—
Adjusted balance, beginning of period	129,148,393	480,631		10,422,051	1		24,782		(456,245)		2,740		(428,722)
Stock-based compensation expense	—	—		—	—		3,505		—		—		3,505
RSA vesting	—	—		2,535,825	—		—		—		—		—
Repurchase of equity instruments	—	—		(771,141)	—		(7,650)		—		—		(7,650)
Net loss	—	—		—	—		—		(63,312)		—		(63,312)
Issuance of common stock upon exercise of options	—	—		470,843	—		746		—		—		746
Exercise of a warrant, Series C and D Preferred Stock	594,309	5,890		—	—		—		—		—		—
In-kind payment of preferred dividend	—	241,529		—	—		—		(241,529)		—		(241,529)
Conversion of preferred stock into common stock	(129,742,702)	(728,050)		153,895,644	15		728,035		—		—		728,050
Recapitalization, net of transaction expenses (Note 3)	—	—		28,898,374	3		236,970		—		—		236,973
Forward Purchase Agreement prepayment	—	—		—	—		(60,547)		—		—		(60,547)
Reclassification of warrants to equity	—	—		—	—		1,800		—		—		1,800
Foreign currency translation	—	—		—	—		—		—		(49)		(49)
Balance as of March 31, 2023	—	$	—	195,451,596	$	19	$	927,641	$	(761,086)	$	2,691	$	169,265
Stock-based compensation expense	—	—		—	—		5,122		—		—		5,122
Net loss	—	—		—	—		—		(26,786)		—		(26,786)
Issuance of common stock upon exercise of options	—	—		222,906	—		331		—		—		331
Reclassification of warrants to equity	—	—		—	—		3,063		—		—		3,063
Foreign currency translation	—	—		—	—		—		—		96		96
Balance as of June 30, 2023	—	$	—	195,674,502	$	19	$	936,157	$	(787,872)	$	2,787	$	151,091
Stock-based compensation expense	—	—		—	—		3,151		—		—		3,151
Net loss	—	—		—	—		—		(25,326)		—		(25,326)
Issuance of common stock upon exercise of options	—	—		380,726	—		560		—		—		560
Foreign currency translation	—	—		—	—		—		—		(1,001)		(1,001)
Balance as of September 30, 2023	—	$	—	196,055,228	$	19	$	939,868	$	(813,198)	$	1,786	$	128,475

LANZATECH GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY /DEFICIT

(Unaudited, all amounts in thousands, except share data)


	Redeemable Convertible Preferred Stock			Common Stock Outstanding			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders' Equity / (Deficit)
	Shares	Amount		Shares	Amount
Balance as of December 31, 2021	29,521,810	$	480,631	2,106,934	$	—	$	21,711	$	(379,889)	$	3,261	$	(354,917)
Retroactive application of recapitalization	99,626,583	—		7,110,226	1		(1)		—		—		—
Adjusted balance, beginning of period	129,148,393	480,631		9,217,160	1		21,710		(379,889)		3,261		(354,917)
Share-based compensation expense	—	—		—	—		738		—		—		738
Repurchase of equity instruments	—	—		—	—		—		—		—		—
Net loss	—	—		—	—		—		(16,778)		—		(16,778)
Issuance of common stock upon exercise of options	—	—		5,031	—		7		—		—		7
Foreign currency translation	—	—		—	—		—		—		(28)		(28)
Balance at Balance as of March 31, 2022	129,148,393	$	480,631	9,222,191	$	1	$	22,455	$	(396,667)	$	3,233	$	(370,978)
Share-based compensation expense	—	—		—	—		676		—		—		676
Repurchase of equity instruments	—	—		—	—		—		—		—		—
Net loss	—	—		—	—		—		(15,929)		—		(15,929)
Issuance of common stock upon exercise of options	—	—		271	—		—		—		—		—
Foreign currency translation	—	—		—	—		—		—		(355)		(355)
Balance as of June 30, 2022	129,148,393	$	480,631	9,222,462	$	1	$	23,131	$	(412,596)	$	2,878	$	(386,586)
Share-based compensation expense	—	—		—	—		653		—		—		653
Repurchase of equity instruments	—	—		—	—		—		—		—		—
Net loss	—	—		—	—		—		(22,267)		—		(22,267)
Issuance of common stock upon exercise of options	—	—		9,624	—		16		—		—		16
Transfer from foreign currency translation to investment	—	—		—	—		—		—		928		928
Foreign currency translation	—	—		—	—		—		—		(384)		(384)
Balance as of September 30, 2022	129,148,393	$	480,631	9,232,086	$	1	$	23,800	$	(434,863)	$	3,422	$	(407,640)

See the accompanying Notes to the Condensed Consolidated Financial Statements.

LANZATECH GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash Flows From Operating Activities:
Net loss	$	(115,424)	$	(54,974)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense	11,933		2,067
Gain on change in fair value of SAFE and warrant liabilities	(14,249)		(330)
Loss on change in fair value of the FPA Put Option and the Fixed Maturity Consideration liabilities	44,661		—
Provision for losses on trade and other receivables	700		—
Depreciation of property, plant and equipment	3,981		3,433
Amortization of discount on debt security investment	(933)		—
Non-cash lease expense	946		1,343
Non-cash recognition of licensing revenue	(1,700)		(1,620)
Loss (gain) from equity method investees, net	941		(2,346)
Net foreign exchange loss (gain)	423		1,311
Changes in operating assets and liabilities:
Accounts receivable, net	1,088		(8,710)
Contract assets	(6,488)		(3,270)
Accrued interest on debt investment	(178)		—
Other assets	(6,723)		(5,981)
Accounts payable and accrued salaries and wages	(1,484)		463
Contract liabilities	29		(471)
Operating lease liabilities	(212)		(1,518)
Other liabilities	1,124		(733)
Net cash used in operating activities	$	(81,565)	$	(71,336)
Cash Flows From Investing Activities:
Purchase of property, plant and equipment	(7,137)		(6,530)
Purchase of debt securities	(93,858)		—
Proceeds from maturity of debt securities	50,000		—
Forward Purchase Agreement prepayment	(60,096)		—
Purchase of additional interest in equity method investment	(288)		—
Origination of related party loan	(5,212)		—
Net cash used in investing activities	$	(116,591)	$	(6,530)
Cash Flows From Financing Activities:
Proceeds from issue of equity instruments of the Company	—		23
Proceeds from the Business Combination and PIPE, net of transaction expenses (Note 3)	213,381		—
Proceeds from exercise of options	1,637		—
Repurchase of equity instruments of the Company	(7,650)		—
Net cash provided by financing activities	$	207,368	$	23
Net increase (decrease) in cash, cash equivalents and restricted cash	9,212		(77,843)
Cash, cash equivalents and restricted cash at beginning of period	83,710		128,732
Effects of currency translation on cash, cash equivalents and restricted cash	(852)		145
Cash, cash equivalents and restricted cash at end of period	$	92,070	$	51,034
Supplemental disclosure of non-cash investing and financing activities:

Acquisition of property, plant and equipment under accounts payable	219		107
Reclassification of capitalized costs related to the business combination to equity	1,514		—
Cashless conversion of warrants on preferred shares	5,890		—
Recognition of public and private warrant liabilities in the Business Combination	4,624		—
Reclassification of AM SAFE warrant to equity	1,800		—
Conversion of AM SAFE liability into common stock	29,730		—
Conversion of Legacy LanzaTech NZ, Inc. preferred stock and in-kind dividend into common stock	722,160		—
Reclassification of Shortfall warrant to equity	3,063		—

See the accompanying Notes to the Condensed Consolidated Financial Statements.

LANZATECH GLOBAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Description of the Business

LanzaTech Global, Inc., formerly known as AMCI Acquisition Corp. II (“AMCI”) prior to February 8, 2023 (the “Closing Date”) was incorporated as a Delaware corporation on January 28, 2021.

On March 8, 2022, LanzaTech NZ, Inc. ("Legacy LanzaTech") entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AMCI and AMCI Merger Sub, Inc. a Delaware corporation and a wholly owned subsidiary of AMCI (“Merger Sub”). On February 8, 2023, Legacy LanzaTech completed its business combination with AMCI by which the Merger Sub merged with and into Legacy LanzaTech, with Legacy LanzaTech continuing as the surviving corporation and as a wholly owned subsidiary of AMCI (the “Business Combination”). The reporting entity is LanzaTech Global, Inc. and its subsidiaries (collectively referred to herein as “the Company” or "LanzaTech").

The Company is headquartered in Skokie, Illinois. The Company is a nature-based carbon refining company that transforms waste carbon into the chemical building blocks for consumer goods such as sustainable fuels, fabrics, and packaging that people use in their daily lives. The Company’s customers leverage its proven proprietary gas fermentation technology platform to convert certain feedstock, including waste carbon gases, into sustainable fuels and chemicals such as ethanol. The Company performs related services such as feasibility studies, engineering services, and research and development ("R&D") in biotechnology for commercial and government customers. The Company also purchases low carbon chemicals produced at customer facilities employing the Company’s technology and sells it under the brand name CarbonSmart. We have also been developing the capabilities to produce single cell protein as a primary product from our gas fermentation platform.

As of September 30, 2023, licensees of the Company’s technology operate four commercial-scale waste-to-gas ethanol plants in China and started operations of another one in India, with others currently in development in various countries, compared to three commercial scale waste-to-gas ethanol plants in China as of September 30, 2022.

The Company has reclassified its warrants on preferred shares as of December 31, 2022 from other accrued liabilities to warrants on the condensed consolidated balance sheet to conform with current period presentation. This reclassification resulted in a decrease to other accrued liabilities and corresponding increase to warrants of $2,119 as of December 31, 2022.

As a result of the Business Combination, the Company’s common stock trades under the ticker symbol “LNZA” and its Public Warrants trade under the ticker symbol “LNZAW” on the Nasdaq Stock Market. Prior to the consummation of the Business Combination, the Company’s common shares were listed on Nasdaq Stock Market under the symbol “AMCI” and the Public Warrants were listed on the Nasdaq Stock Market under the symbol “AMCI-W”.

Unless otherwise indicated, amounts in these financial statements are presented in thousands, except for share and per share amounts.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("US GAAP"), the accounting principles, standards, and procedures adopted by the U.S. Securities and Exchange Commission, for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods. For further information refer to the Consolidated Financial Statements and Footnotes thereto included in Legacy LanzaTech's Annual Report for the year ended December 31, 2022 included in the Company’s prospectus filed with the SEC on May 25, 2023.

The Business Combination is accounted for as a reverse recapitalization as Legacy LanzaTech was determined to be the accounting acquirer under Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”) based on the evaluation of the following facts and circumstances:

•Legacy LanzaTech stockholders have the largest portion of voting rights (85.3% at the closing of the Business Combination) in the Company;

•Legacy LanzaTech’s existing senior management team comprise senior management of the Company;

•The operations of the Company primarily represent operations of Legacy LanzaTech; and

•In comparison with AMCI, Legacy LanzaTech has significantly more revenue and total assets.

Accordingly, for accounting purposes, the financial statements of the Company represent a continuation of the financial statements of Legacy LanzaTech with the acquisition being treated as the equivalent of Legacy LanzaTech issuing stock for the net assets of AMCI, accompanied by a recapitalization. The net assets of AMCI were stated at historical cost, with no goodwill or other intangible assets recorded. Legacy LanzaTech was deemed to be the predecessor, and the consolidated assets and liabilities and results of operations prior to February 8, 2023 are those of Legacy LanzaTech. Reported shares and earnings per share available to common stockholders, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Merger Agreement. The number of shares of preferred stock was also retroactively restated based on the exchange ratio.

Variable Interest Entity (“VIE”)

The Company makes judgments in determining whether an entity is a VIE and, if so, whether it is the primary beneficiary of the VIE and is thus required to consolidate the entity. A VIE is a legal entity that has a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. The Company’s variable interest arises from contractual, ownership or other monetary interests in the entity, which changes with fluctuations in the fair value of the entity’s net assets. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates a VIE when the Company is deemed to be the primary beneficiary. The Company assesses whether or not the Company is the primary beneficiary of a VIE on an ongoing basis. If the Company is not deemed to be the primary beneficiary in a VIE, the Company accounts for the investment or other variable interests in a VIE in accordance with applicable US GAAP.

The Company holds interests in certain VIEs for which it has been determined the Company is not the primary beneficiary. The Company's variable interests primarily relate to entities in which the Company has a non-controlling equity interest. Although these financial arrangements resulted in holding variable interests in these entities, they do not empower the Company to direct the activities of the VIEs that most significantly impact the VIEs' economic performance. The Company's interests in the VIEs are, therefore, accounted for under the equity method of accounting or at fair value (including, when applicable, the practicability exception to fair value under ASC 321-10-35). Refer to Note 6 - Investments, for further information. The Company is exposed to the VIEs’ losses and other impairment indicators up to the carrying value of each investment and any amounts receivable from the VIE, less amounts payable. Refer to Note 12, Related Party Transactions, for further details on the transactions with VIEs.

Going Concern

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with US GAAP and assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company had cash and cash equivalents of $91,397, short and long-term held-to-maturity debt investments of $44,791 and an accumulated deficit of $(813,198) as of September 30, 2023 and cash outflows

from operations of $(81,565) and a net loss of $(115,424) for the nine months ended September 30, 2023. As a result of the Business Combination described in Note 1 closing on February 8, 2023, the Company received $153,285, which represents the proceeds from the Business Combination received net of (1) transaction expenses, (2) the PIPE investment and (3) the amount paid to ACM ARRT H LLC (“ACM”) and Vellar Opportunity Fund SPV LLC - Series 10 (“Vellar”) in relation to the Forward Purchase Agreement (see below).

The Company has historically funded its operations through debt financing and issuances of equity securities. Based on the Company’s financial position as of the date the condensed consolidated financial statements were issued, the Company projects that it will be able to cover its liquidity needs for the next twelve months.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include fair value of equity awards granted to both employees and non-employees, revenue recognized over time, AM SAFE, Brookfield SAFE, AM SAFE warrants, the Forward Purchase Agreement and the Private Placement Warrants.

The Company uses the percentage of completion for both input and output methods to recognize revenue over time for certain contracts with customers. Under the output method, the Company exercises judgment and estimation when determining the percentage of completion against the total transaction price initially estimated. Under the input method, the Company exercises judgment and estimation when selecting the most indicative measure of such performance.

Most of our arrangements provide fixed consideration, however, when there are variable consideration elements, the Company estimates the transaction price and whether revenue should be constrained. Significant estimates and judgments are also used when a material right is provided to the customer. In these instances, the Company estimates the stand-alone selling price and apportions the total transaction price to this material right. Refer to the Revenue Recognition section in Note 2 hereunder.

Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

Segment Information

The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance.

While the Company offers a variety of services and operates in multiple countries, the Company’s business operates in one operating segment because most of the Company’s service offerings are delivered and supported on a global basis, most of the Company’s service offerings are deployed in a similar way, and the Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. There are no segment managers who are held accountable by the CODM, or anyone else, for operations, operating results, and planning for components below the consolidated level. Accordingly, the Company has determined that it has a single reportable and operating segment. See Note 5 - Revenues, for disaggregation of the Company’s revenues by customer location and contract type.

Foreign Currencies

The Company’s reporting currency is the U.S. Dollar. The Company has certain foreign subsidiaries where the functional currency is the local currency. All of the assets and liabilities of these subsidiaries are translated to U.S. dollars at the exchange rate in effect at the balance sheet date, income and expense accounts are translated at average rates for the period, and shareholders’ equity accounts are translated at historical rates. The effects of translating

financial statements of foreign operations into the Company’s reporting currency are recognized in accumulated other comprehensive income.

The Company also has foreign subsidiaries that have a functional currency of the U.S. dollar. Purchases and sales of assets and income and expense items denominated in foreign currencies are remeasured into U.S. dollar amounts on the respective dates of such transactions. Net realized and unrealized foreign currency gains or losses relating to the differences between these recorded amounts and the U.S. dollar equivalent actually received or paid are included within other expense, net in the condensed consolidated statements of operations and comprehensive loss.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. As of September 30, 2023 and December 31, 2022, the Company had $91,397 and $83,045 of cash and cash equivalents, respectively.

Restricted Cash

The Company is required to maintain a cash deposit with a bank which consists of collateral on certain travel and expense programs maintained by the bank. The following represents a reconciliation of cash and cash equivalents in the condensed consolidated balance sheets to total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows as of September 30, 2023 and December 31, 2022.


	As of
	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	91,397	$	83,045
Restricted cash (presented within Other current assets)	673		665
Cash, cash equivalents and restricted cash	$	92,070	$	83,710

Trade and Other Receivables

Receivables are reported net of allowances for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The Company estimates the allowance for doubtful accounts based on a variety of factors including the length of time receivables are past due, the financial health of customers, unusual macroeconomic conditions, and historical experience. As of September 30, 2023 and December 31, 2022, the Company recognized an allowance for doubtful accounts of $1,751 and $1,051, respectively.

Investment securities

The Company classifies investment securities according to their purpose and holding period. All investment securities are debt securities that have been classified as held-to-maturity (“HTM”) because the Company has both the ability and intent to hold the securities to maturity.

HTM debt securities are comprised of U.S. Treasury bills, U.S. Treasury notes, Yankee bonds, and corporate debt. HTM debt securities are carried at amortized cost, which is original cost net of periodic principal repayments and amortization of premiums and accretion of discounts. Accrued interest receivable is recorded within trade and other receivables, net of allowance on the condensed consolidated balance sheets. Amortization of premiums and accretion of discounts are computed using the contractual level-yield method (contractual interest method), adjusted for actual prepayments. The contractual interest method recognizes the income effects of premiums and discounts over the contractual life of the securities based on the actual behavior of the underlying assets, including adjustments for actual prepayment activities, and reflects the contractual terms of the securities without regard to changes in estimated prepayments based on assumptions about future borrower behavior.

Held-to-maturity securities are evaluated individually on a quarterly basis for expected credit losses. If applicable, an allowance for credit losses is recorded with a corresponding credit loss expense (or reversal of credit loss expense). The allowance for credit losses excludes uncollectible accrued interest receivable, which is measured separately.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded at fair value as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance and adjusted to the current fair value at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in other expense, net on the condensed consolidated statement of operations and comprehensive loss (see Note 7 - Warrants).

Forward Purchase Agreement

On February 3, 2023, the Company entered into a Forward Purchase Agreement (“FPA”) with ACM. On the same date, ACM partially assigned its rights under the FPA to Vellar. ACM and Vellar are together referred to as the “Purchasers”. Pursuant to the Forward Purchase Agreement, the Purchasers obtained 5,916,514 common shares (“Recycled Shares”) on the open market for $10.16 per share (“Redemption Price”), and such purchase price of $60,096 was funded by the use of AMCI trust account proceeds as a prepayment (“Prepayment Amount”) for the Forward Purchase Agreement redemption 3 years from the date of the Business Combination (“Maturity Date”). The Maturity Date may be accelerated, at the Purchasers discretion, if the Company share price trades below $3.00 per share for any 50 trading days during a 60 day consecutive trading-day period or the Company is delisted. On any date following the Business Combination, the Purchasers also have the option to early terminate the arrangement in whole or in part by providing optional early termination notice to the Company (the “Optional Early Termination”). For those shares early terminated (the “Terminated Shares”), the Purchasers will owe the Company an amount equal to the Terminated Shares times the Redemption Price, which may be reduced in the case of certain dilutive events (“Reset Price”).

At the Maturity Date, the Company is obligated to pay the Purchasers an amount equal to the product of (1) 7,500,000 less (b) the number of Terminated Shares multiplied by (2) $2.00 (the “Maturity Consideration”). In addition to the Maturity Consideration, on the Maturity Date, the Company shall pay to the Purchasers an amount equal to the product of (x) 500,000 and (y) the Redemption Price, totaling $5,079 (the “Share Consideration”). If the Purchasers were to utilize their Optional Early Termination to terminate the FPA early, neither the Maturity Consideration nor the Share Consideration would be due to the Purchasers.

The Purchasers’ Optional Early Termination economically results in the prepaid forward contract being akin to an in-substance written put option with the Purchaser’s right to sell all or a portion of the 5,916,514 common shares to the Company. The Company is entitled over the 36-month maturity period to either a return of the prepayment or the underlying shares, which the Purchasers will determine at their sole discretion.

The FPA consists of three freestanding financial instruments compromising the in-substance written put option (“FPA Put Option”), the minimum portion of the Maturity Consideration (the “Minimum Maturity Consideration”), and the Share Consideration. The FPA Put Option is a derivative instrument the Company has recorded as a liability and measured at fair value. The difference between the initial value of the derivative, including Maturity Consideration in excess of the Minimum Maturity Consideration (the “Variable Maturity Consideration”), and the Prepayment Amount was recorded in the condensed consolidated statement of operations and comprehensive loss.

Subsequent changes in fair value of the derivative liability are also recorded in other expense, net on the condensed consolidated statement of operations and comprehensive loss. The Prepayment Amount was accounted for as a reduction to equity to reflect the substance of the overall arrangement as a net repurchase of the Recycled Shares.

The Minimum Maturity Consideration, representing 7,500,000 less 5,916,513 multiplied by $2.00 or $3,167, and the Share Consideration are considered to be free-standing debt instruments. The Company has elected to measure these using the Fair Value Option (“FVO”) under ASC 825, Financial Instruments (“ASC 825”). As both the Minimum Maturity Consideration and the Share Consideration will be paid on the same terms and at the same time, these are accounted for together and referred to as the “Fixed Maturity Consideration”. The Variable Maturity Consideration is captured as part of the in-substance written put derivative liability (the FPA Put Option), as noted above. The Fixed Maturity Consideration is recorded as long-term liability on the condensed consolidated balance sheets. The initial value of the Fixed Maturity Consideration is recorded through the condensed consolidated statement of operations and comprehensive loss. Subsequent changes in fair value of the Fixed Maturity Consideration are also recorded in other expense, net on the condensed consolidated statement of operations and comprehensive loss.

Prior to filing these financial statements on Form 10-Q, we determined that our prior interpretation of the accounting guidance applicable to certain elements of the Forward Purchase Agreement (“FPA”) was incorrect. As a result, we have revised the accounting treatment of the FPA in our financial statements as of September 30, 2023 to reclassify the Prepayment Amount of $60.5 million, previously recorded as part of a net non-current derivative asset in the condensed consolidated balance sheet, to the equity section of the condensed consolidated balance sheet. The remaining liability balance of $38.1 million associated with the FPA, including the Minimum Maturity Consideration and the Share Consideration, are now reflected as non-current liabilities in our condensed consolidated balance sheet.

The change in accounting for the FPA did not have any impact on our liquidity, cash flows or results of operations for the third quarter. We intend to restate our financial statements for the quarters ended March 31, 2023 and June 30, 2023 to be consistent with this accounting treatment.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company primarily earns revenue from services related to biorefining (formerly known as carbon capture and transformation) which includes feasibility studies and basic engineering design of commercial plants, licensing of technologies and sales of biocatalysts. The other two revenue streams are: (1) joint development and contract research activities to develop and optimize novel biocatalysts, related processes and technologies, and (2) supply of chemical building blocks for sustainable products produced using the Company’s proprietary technologies (referred to as CarbonSmart).

Revenue is measured based on the consideration specified in a contract with a customer. The Company records taxes collected from customers and remitted to governmental authorities on a net basis. The Company’s payment terms are between 30-60 days and can vary by customer type and products offered. Management has evaluated the terms of the Company’s arrangements and determined that they do not contain significant financing components.

Biorefining

The Company provides feasibility studies and basic design and engineering services used for detailed design, procurement, and construction of commercial plants that utilize the Company’s technologies, along with the sale of microbes and media. The services provided are recognized as a performance obligation satisfied over time. Revenue is recognized using the output method based on milestone completion, the cost-to-cost input method for certain engineering services, or the percentage of completion method as performance obligations are satisfied. Revenue for the sale of microbes and media is at a point in time, depending on when control transfers to the customer.

The Company licenses intellectual property to generate recurring revenue, in the case of running royalties, or one-time revenue, in the case of fixed consideration royalties, when its customers deploy the Company’s technology in their biorefining plants. When licenses are considered to be distinct performance obligations, the recognition of

revenue is dependent on the terms of the contract, which may include fixed consideration or royalties based on sales or usage, in which case the revenue is recognized when the subsequent sale or usage occurs or when the performance obligation to which some or all of the sales or usage-based royalty is allocated has been satisfied, whichever is later.

Joint Development and Contract Research

The Company performs R&D services related to novel technologies and development of biocatalysts for commercial applications, mainly to produce fuels and chemicals. The Company engages in two main types of R&D services – joint development agreements, and contract research, including projects with the U.S. Department of Energy and other US and foreign government agencies. Such services are recognized as a performance obligation satisfied over time. Revenue is recognized based on milestone completion, when payments are contingent upon the achievement of such milestones, or based on percentage-completion method when enforceable rights to payment exist. When no milestones or phases are clearly defined, management has determined that the cost incurred, input method, is an appropriate measure of progress towards complete satisfaction of the performance obligations under ASC 606, and estimates its variable consideration under the expected value method.

Revenue is not recognized in advance of customer acceptance of a milestone when such acceptance is contractually required. Payments for R&D services with no contractual payments are not due from customers until a technical report is submitted; therefore, a contract asset is recognized at milestone completion but prior to the submission of a technical report. The contract asset represents the Company’s right to consideration for the services performed at milestone completion. Occasionally, customers provide payments in advance of the Company providing services which creates a contract liability for the Company. The contract liability represents the Company's obligation to provide services to a customer.

CarbonSmart

The Company purchases chemical building blocks from the customers who have deployed our proprietary technologies in their biorefining plants and sells them as CarbonSmart products. Revenue is recognized at a point in time when control transfers to our end customer, which varies depending on the shipping terms. The Company acts as the principal in such transactions and accordingly, recognizes revenue and cost of revenues on a gross basis. Amounts received for sales of CarbonSmart products are classified as Revenue from contract with customers - tangible products in the condensed consolidated statements of operations and comprehensive loss.

Collaboration Arrangements

The Company has certain partnership agreements that are within the scope of ASC 808, Collaborative Arrangements, which provides guidance on the presentation and disclosure of collaborative arrangements. Generally, the classification of the transaction under the collaborative arrangements is determined based on the nature of the contractual terms of the arrangement, along with the nature of the operations of the participants. The Company’s collaborative agreements generally include a provision of R&D services related to novel technologies and biocatalysts. Amounts received for these services are classified as Revenue from collaborative arrangements in the condensed consolidated statements of operations and comprehensive loss. The Company's R&D services are a major part of the Company's ongoing operations and therefore ASC 606 is applied to recognize revenue.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access;

Level 2 — Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities; and

Level 3 — Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, Fair Value Measurement, approximates the carrying amounts represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature, except for the warrant liability.

Concentration of Credit Risk and Other Risks and Uncertainties

Revenue generated from the Company’s customers outside of the United States for the three months ended September 30, 2023 and 2022 was approximately 75% and 54%, respectively. Revenue generated from the Company’s customers outside of the United States for the nine months ended September 30, 2023 and 2022 was approximately 75% and 61%, respectively.

As of September 30, 2023 and December 31, 2022, approximately 49% and 35%, respectively, of trade accounts receivable and unbilled accounts receivable were due from customers located outside the United States. As of September 30, 2023 and December 31, 2022, the value of property, plant, and equipment outside the United States was immaterial.

The Company’s revenue by geographic region based on the customer’s location is presented in Note 5, Revenues.

Customers

Customers representing 10% or greater of revenue were as follows for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Customer A	36	%	—	%	39	%	10	%
Customer B	7	%	27	%	8	%	24	%
Customer C	—	%	21	%	—	%	10	%

Stock-Based Compensation

In exchange for certain employee and director services, compensation is given in the form of equity-based awards. The Company accounts for equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation. Accordingly, equity-classified awards are recorded based on the grant date fair value and expensed over the requisite service period for the respective award. Liability-classified awards are remeasured at the end of each reporting period and expensed based on the percentage of requisite service that has been rendered.

The Company’s equity-based awards include stock option awards, restricted stock units, stock-appreciation rights (“SARs”) and restricted stock issued by the Company, which vest based on either time and/or the achievement of certain market or performance conditions. The Company records forfeitures as they occur. Compensation expense is recognized in the Company’s consolidated statements of operations and comprehensive loss, primarily within research and development expenses. For awards with only service conditions that have a graded vesting schedule, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award. For awards with market or performance conditions that have a graded vesting schedule, the Company recognizes compensation cost on a straight-line basis over the requisite service period for each tranche of the award.

Compensation expense resulting from performance awards is recognized over the requisite service period when it is probable that the performance condition will be met. The recognized compensation expense for performance awards is adjusted based on an estimate of awards ultimately expected to vest.

The Company estimates the fair value of service and performance-based options and SARs using a Black-Scholes option pricing model that uses assumptions including expected volatility, expected term, and the expected risk-free rate of return. The Company estimates the fair value of market-based RSUs using the Monte Carlo simulation model that uses assumptions including expected volatility, and the derived service period. The Company uses peer data to determine expected volatility and expected term. The Company estimates the fair value of RSUs based on the closing market price of its common stock on the date of measurement.

Recently Adopted and Issued Accounting Pronouncements

There are no recently adopted or issued accounting pronouncements that are expected to have a material impact on the Company.

Note 3 — Reverse Recapitalization

On February 8, 2023, Legacy LanzaTech and AMCI consummated the merger contemplated by the Merger Agreement (see Note 1 - Description of the Business).

Immediately following the Business Combination, there were 196,222,737 shares of common stock outstanding with a par value of $0.0001. Additionally, there were outstanding warrants to purchase 12,574,200 shares of common stock.

The Business Combination was accounted for as a reverse recapitalization in accordance with US GAAP. Under this method, while AMCI was the legal acquirer, it has been treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of pre-combination Legacy LanzaTech issuing stock for the net assets of AMCI, accompanied by a recapitalization. The net assets of AMCI were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of pre-combination Legacy LanzaTech. Reported shares and earnings per share available to holders of the Company’s common stock and preferred shares, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination (approximately one pre-combination Legacy LanzaTech share to 4.3747 of the Company’s shares).

Upon closing of the Business Combination, the shareholders of AMCI, including AMCI founders, were issued 10,398,374 shares of common stock of the Company. In connection with the closing, holders of 8,351,626 shares of common stock of AMCI were redeemed at a price per share of approximately $10.16. In connection with the Closing, 18,500,000 shares of common stock of the Company were issued to PIPE investors. 15,500,000 of those shares were issued at a price per share of $10.00. The remaining 3,000,000 shares were issued upon conversion of the AM SAFE liability. The Company incurred $7,223 in transaction costs relating to the Business Combination and recorded those costs against additional paid-in capital in the condensed consolidated balance sheet.

The number of shares of Class A common stock issued and outstanding immediately following the consummation of the Business Combination and PIPE financing were:


	Shares	Percentage
Legacy LanzaTech shares	167,324,363	85.3	%
Public stockholders	10,398,374	5.3	%
PIPE shares	18,500,000	9.4	%
Total	196,222,737	100	%

The following table reconciles the elements of the Business Combination and PIPE financing to the condensed consolidated statement of cash flows:


	Recapitalization
Cash - AMCI trust account1	$	64,090
Cash - PIPE financing	155,000
Less: Transaction costs allocated to equity	(5,709)
Effect of the Business Combination and PIPE financing	$	213,381

__________________

(1)The cash from the AMCI trust account is net of redemptions and the payment of pre-combination AMCI expenses.

The following table reconciles the elements of the Business Combination and PIPE financing to the change in additional paid-in capital on the condensed consolidated statement of changes in redeemable convertible preferred stock and shareholders’ equity / deficit:


	Recapitalization
Cash - AMCI trust account	$	64,090
Public Warrants and Private Placement Warrants recorded on the Closing Date	(4,624)
Cash - PIPE financing	155,000
Conversion of the AM SAFE	29,730
Transaction costs allocated to equity	(7,223)
	$	236,973
Less: par value of shares held by PIPE investors and public stockholders	(3)
Total additional paid-in capital from recapitalization	$	236,970

Note 4 — Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all common stock equivalents of the Company, including equity-classified share-based compensation, the Brookfield SAFE, warrants, and contingently redeemable preferred stock, to the extent dilutive. Earnings per share calculation for all periods prior to the Business Combination have been retrospectively restated to the equivalent number of shares reflecting the exchange ratio established in the Merger Agreement of 4.3747.

The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except shares and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net loss for basic and diluted earnings per common share	$	(25,326)	$	(22,267)	$	(115,424)	$	(54,974)
Unpaid cumulative dividends on preferred stock	—		(9,748)		(4,117)		(28,925)
Net loss allocated to common shareholders	$	(25,326)	$	(32,015)	$	(119,541)	(83,899)
Denominator:
Weighted-average shares used in calculating net loss per share, basic and diluted	195,869,537		9,229,781		169,797,443		9,223,884
Net loss per common share, basic and diluted(1)	$	(0.13)	$	(3.47)	$	(0.70)	$	(9.10)

__________________

(1)In periods in which the Company reports a net loss, all common stock equivalents are excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on loss per share.

As of September 30, 2023 and 2022, common stock equivalents not included in the computation of loss per share because their effect would be antidilutive include the following:


	September 30,
	2023	2022
Redeemable convertible preferred stock (if converted)	—	129,148,393
Options	17,021,827	16,584,305
RSUs	7,042,901	—
RSAs	—	2,535,825
Brookfield SAFE	5,000,000	—
Warrants	16,657,686	985,278
Total	45,722,414	149,253,801

The preferred shares automatically converted into common shares upon the Business Combination at a 1:1 ratio. On February 8, 2023, upon conversion of the preferred shares, the cumulative accrued, declared and unpaid dividends on the preferred shares became payable. The total amount of cumulative accrued, undeclared and unpaid dividends was approximately $241,529 on the Closing Date. As stipulated by the Merger Agreement, this amount was divided by 10 and resulted in the issuance of an additional 24,152,942 common shares. Prior to the Business Combination, the additional 129,148,393 of common stock equivalents resulting from any such conversion are not included in the computation of diluted net loss per share because doing so would be anti-dilutive.

In connection with the AM SAFE and Brookfield SAFE, see Note 9 - Fair Value, the Company could issue additional potential shares of common stock. Shares related to the AM SAFE were issued on the Closing Date.

Shares related to the Brookfield SAFE and AM SAFE warrant have not been issued as of September 30, 2023. The terms of the AM SAFE warrant became exercisable for a fixed number of shares as of the Closing Date, see Note 7 – Warrants. As a result, these common stock equivalents are included in the warrants line item in the potential share table above as of September 30, 2023. The per share issuance price for the Brookfield SAFE upon closing of the Business Combination is the liquidity price as defined in the Brookfield SAFE agreement. As a result of the Business Combination, the Brookfield SAFE became convertible into a maximum number of shares, which is included in the table above as of September 30, 2023. None of these common stock equivalents are included in the computation of diluted net loss per share until actually issued because doing so would be anti-dilutive.

Note 5 — Revenues

Disaggregated Revenue

The following table presents disaggregated revenue in the following categories (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Contract Types:
Licensing	$	1,515	$	540	$	2,902	$	1,620
Engineering and other services	10,912		2,955		25,572		12,630
Biorefining revenue	$	12,427	$	3,495	$	28,474	$	14,250

Joint development agreements	1,933		1,571		5,049		4,018
Contract research	2,987		1,315		5,380		4,100
Joint development and contract research revenue	$	4,920	$	2,886	$	10,429	$	8,118

CarbonSmart (tangible product)	2,258		1,691		3,265		3,413

Total Revenue	$	19,605	$	8,072	$	42,168	$	25,781

The following table presents revenue from partners in collaborative arrangements, which is included in the table above within Joint development agreements (in thousands).


	Three Months Ended September 30,			Nine Months Ended September 30,
	2023	2022		2023	2022
Revenue from partners in collaborative agreements	1,566	$	760	3,116	1,733

The following table presents disaggregation of the Company’s revenues by customer location for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
North America	$	4,847	$	4,412	$	11,309	$	12,361
Europe, Middle East, Africa (EMEA)	10,732		1,287		25,088		7,894
Asia	2,137		1,888		2,690		4,151
Australia	1,889		485		3,081		1,375
Total Revenue	$	19,605	$	8,072	$	42,168	$	25,781

Contract balances

The following table provides changes in contract assets and liabilities (in thousands):


	Current Contract Assets		Current Contract Liabilities		Non-current Contract Liabilities
Balance as of January 1, 2023	$	18,000	$	3,101	$	10,760
Additions to unbilled accounts receivable	43,901		—		—
Increases due to cash received	—		4,486		—
Unbilled accounts receivable recognized in trade receivables	(37,413)		—		—
Decrease on revaluation on currency	(175)		—		(73)
Reclassification from long-term to short-term	—		2,016		(2,016)
Reclassification to revenue as a result of performance obligations satisfied	—		(6,471)		—
Balance as of September 30, 2023	$	24,313	$	3,132	$	8,671

The increase in contract assets was mostly due to unbilled accounts receivable resulting from revenue recorded under contracts with customers where the Company performed engineering and other services, while the decrease in contract liabilities was primarily due to the recognition of revenue during the period related to advance payments previously received by the Company for engineering and other services contracts with customers. As of September 30, 2023 and December 31, 2022 the Company had $10,085 and $11,695, respectively, of billed accounts receivable, net of allowance.

The contract liability balance comprises unconditional payments received from the Company’s customers prior to the satisfaction of the related performance obligations. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. The Company expects to recognize the amounts classified as current contract liabilities in revenue within one year or less and those classified as non-current within two to three years.

Remaining performance obligations

Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue that will be recognized as revenue in future periods. Transaction price allocated to remaining performance obligations is influenced by several factors, including the length of the contract term compared to the research term and the existence of customer specific acceptance rights.

Remaining performance obligations consisted of the following (in thousands):


	As of
	September 30, 2023		December 31, 2022
Current	$	3,132	$	3,101
Non-current	8,671		10,760
Total	$	11,803	$	13,861

Note 6 — Investments

HTM Debt Securities

HTM debt securities are comprised of U.S. Treasury bills and notes, Yankee debt securities, and corporate debt securities. HTM debt securities are classified as short-term or long-term based upon the contractual maturity of the underlying investment.


	September 30, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Accrued Interest
Short-term
US Treasury bills and notes	$	20,178	$	—	$	(7)	$	20,171	$	45
Corporate debt securities	14,833		3		(26)		14,810		109
Total debt securities due within a year	$	35,011	$	3	$	(33)	$	34,981	$	154

After 1 year through 5 years
Corporate debt	6,780		3		(3)		6,780		24
Yankee debt securities	3,000		2		—		3,002		—
Total debt securities due after 1 year through 5 years	$	9,780	$	5	$	(3)	$	9,782	$	24

Total HTM Debt Securities	44,791		8		(36)		44,763		178

The Company regularly reviews held-to-maturity securities for declines in fair values that are determined to be credit related. As of September 30, 2023, the Company did not have an allowance for credit losses related to held-to-maturity securities.

Equity investments

The Company’s equity investments consisted of the following (in thousands):

As of

September 30, 2023

December 31, 2022

Equity Method Investment in LanzaJet