What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 355 added, 240 removed, 355 unchanged (63% of the section changed)

6 unchanged sentences

Restricted cash

Accounts receivable (net of allowance for doubtful accounts of $ 409 and $ 378 , respectively)

Accounts receivable, net (net of allowance for doubtful accounts of $ 444 and $ 378 , respectively)

Derivative instruments

8 unchanged sentences

Total other assets

derived from the audited financial statements for the year ended December 31, 2021.

derived from the audited consolidated financial statements for the year ended December 31,

See accompanying notes to consolidated financial

2 unchanged sentences

(in thousands, except par value)

LIABILITIES AND STOCKHOLDERS’ EQUITY

AND STOCKHOLDERS’ EQUITY

Current Liabilities:

5 unchanged sentences

Total current liabilities

Long-term debt

Long-term debt, net of current portion

Operating leases, net of current portion

8 unchanged sentences

1,684 shares authorized;

no shares issued and outstanding as of March 31, 2022 and December 31, 2021;

no shares issued and outstanding as of June 30, 2022 and December 31, 2021;

1,581 shares authorized;

927 shares issued and outstanding as of March 31, 2022 and December 31, 2021;

liquidation preference of $ 18,075 as of March 31, 2022

927 shares issued and outstanding as of June 30, 2022 and December 31, 2021;

liquidation preference of $ 18,075 as of June 30, 2022

Common stock, $ 0.001 par value;

300,000 shares authorized;

74,411 and 72,778 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

74,188 and 72,778 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Non-voting common stock, $ 0.001 par value;

3,553 shares authorized;

1 share issued and outstanding as of March 31, 2022 and December 31, 2021

1 share issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

2 unchanged sentences

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

* Amounts derived from the audited financial statements for the year ended December 31, 2021.

See accompanying notes to consolidated financial

Total Liabilities

and Stockholders’ Equity

* Amounts derived from the audited consolidated financial statements for the year ended December 31, 2021.

accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.

2 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

Selling, general and administrative expenses

Asset impairment

Asset impairments

Income (loss) from operations

Interest expense, net

Other income, net

Income (loss) before provision for income taxes

Income from cash grant

Income from loan forgiveness

Other income (expense), net

Income before provision for income taxes

Provision for income taxes

Net income (loss)

Preferred stock dividends

Net income (loss) available to common stockholders

Net income (loss) per share, basic and

Income allocated to participating securities

Net income available to common stockholders

Net income per share, basic

Net income per share, diluted

Weighted-average shares outstanding, basic

4 unchanged sentences

(unaudited, in thousands)

Three Months Ended

Six Months Ended

Operating Activities:

Consolidated net income (loss)

Adjustments to reconcile consolidated net income (loss) to

net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization of intangibles

Asset impairment

Gains on derivative instruments

Inventory valuation

Asset impairments

Income from loan forgiveness

Non-cash compensation

6 unchanged sentences

Liabilities held-for-sale

Accounts payable and accrued liabilities

Net cash provided by (used in) operating

Accounts payable and accrued expenses

Net cash provided by operating activities

Investing Activities:

Proceeds from Madera Sale

Additions to property and equipment

of Eagle Alcohol, net of cash acquired

Net cash used in investing activities

Purchase of Eagle Alcohol, net of

cash acquired

Net cash (used in) provided by investing

Financing Activities:

2 unchanged sentences

Proceeds from stock option exercises

Preferred stock dividends paid

Principal payments on borrowings

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning

Cash, cash equivalents and restricted cash at end of period

Reconciliation of total cash, cash equivalents and restricted

Preferred stock dividends paid

Net cash provided by (used in) financing

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted

cash at beginning of period

Cash, cash equivalents and restricted

cash at end of period

Reconciliation of total cash, cash

equivalents and restricted cash:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

Total cash, cash equivalents and

restricted cash

Supplemental Information:

Interest paid

Income tax refunds

Accrued preferred stock dividends

See accompanying notes to consolidated financial

accompanying notes to consolidated financial statements.

ALTO INGREDIENTS, INC.

1 unchanged sentence

(unaudited, in thousands)

Preferred Stock

Comprehensive

January 1, 2022

Balances, January

$ ( 691,781 )

stock issued to employees and directors, net of cancellations and tax

issued for Eagle Alcohol acquisition

stock dividends

March 31, 2022

Restricted stock issued to employees and directors, net

of cancellations and tax

Stock-based compensation

Shares issued for Eagle Alcohol acquisition

Preferred stock dividends

Balances, March 31, 2022

$ ( 694,695 )

Restricted stock issued to employees and directors, net

of cancellations and tax

Stock-based compensation

Preferred stock dividends

Balances, June 30, 2022

$ ( 672,895 )

January 1, 2021

$ ( 736,598 )

stock issued to employees and directors, net of cancellations and tax

option exercises

stock dividends

March 31, 2021

Restricted stock issued to employees and directors, net

of cancellations and tax

Stock-based compensation

Issuances of common stock

Preferred stock dividends

Balances, March 31, 2021

$ ( 732,232 )

accompanying notes to consolidated financial statements.

Restricted stock issued to employees and directors, net

of cancellations and tax

Stock-based compensation

Preferred stock dividends

Balances, June 30, 2021

$ ( 724,157 )

See accompanying notes to consolidated financial

ALTO INGREDIENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND BASIS OF PRESENTATION.

ORGANIZATION AND BASIS OF

PRESENTATION.

Organization and Business

7 unchanged sentences

4, 2021, the Company completed the sale of its production facilities located in Madera and Stockton, California, respectively.

results of these facilities are included in the Company’s results reported for the three months ended March 31, 2021.

discussed in Note 2, on January 14, 2022, the Company acquired 100 % ownership of Eagle Alcohol Company LLC, a Missouri limited

liability company (“Eagle Alcohol”), which is now a wholly-owned subsidiary of Alto Ingredients, Inc.

The results of

Eagle Alcohol since the date of the acquisition are included in the Company’s results reported for the three months ended

March 31, 2022.

of these facilities are included in the Company’s results reported for the three and six months ended June 30, 2021.

in Note 2, on January 14, 2022, the Company acquired 100 % ownership of Eagle Alcohol Company LLC, a Missouri limited liability company

(“Eagle Alcohol”), which is now a wholly-owned subsidiary of Alto Ingredients, Inc.

The results of Eagle Alcohol since the

date of the acquisition are included in the Company’s results reported for the three and six months ended June 30, 2022.

The Company is a leading

producer and distributor of specialty alcohols and essential ingredients.

The Company also produces, markets and distributes

renewable fuel.

The Company’s production facilities in Pekin, Illinois are located in the heart of the Corn Belt, benefit from

low-cost and abundant feedstock and allow for access to many additional domestic markets.

In addition, the Company’s ability

to load unit trains and barges from these facilities allows for greater access to international markets.

The Company’s two

production facilities in Oregon and Idaho are located in close proximity to both feed and renewable fuel ethanol customers and

thus enjoy unique advantages in efficiency, logistics and product pricing.

The Company also produces, markets and distributes renewable

The Company’s production facilities in Pekin, Illinois are located in the heart of the Corn Belt, benefit from low-cost and

abundant feedstock and allow for access to many additional domestic markets.

In addition, the Company’s ability to load barges,

rail and trucks from these facilities allows for greater access to international markets.

The Company’s two production facilities

in Oregon and Idaho are located in close proximity to both feed and renewable fuel customers and thus enjoy unique advantages in efficiency,

logistics and product pricing.

The Company has a combined

alcohol production capacity of 350 million gallons per year and produces, on an annualized basis, nearly 1.2 million tons of

essential ingredients on a dry matter basis, such as dried yeast, corn gluten meal, corn gluten feed, and distillers grains and

liquid feed used in commercial animal feed and pet foods.

In addition, the Company sells alcohols acquired from other producers, and

markets and distributes fuel-grade ethanol produced by third parties.

alcohol production capacity of 350 million gallons per year and produces, on an annualized basis, nearly 1.2 million tons of essential

ingredients, such as dried yeast, corn gluten meal, corn gluten feed, corn germ, and distillers grains and liquid

feed used in commercial animal feed and pet foods.

In addition, the Company sells alcohols acquired from other producers, and markets

and distributes fuel-grade ethanol produced by third parties.

The Company focuses on four

7 unchanged sentences

vinegar as well as corn germ used for corn oils.

Products for Essential Ingredients markets include yeast, corn gluten and distillers

grains used in commercial animal feed and pet foods.

Renewable Fuels includes fuel-grade ethanol and distillers corn oil used as a feedstock

for renewable diesel fuel.

As of March 31, 2022, all of

Products for Essential Ingredients markets include dried yeast, corn gluten meal, corn

gluten feed, corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods.

Renewable Fuels includes

fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and biodiesel fuels.

As of June 30, 2022, all of

the Company’s production facilities were operating.

As market conditions change, the Company may increase, decrease or idle production

at one or more operating facilities or resume operations at any idled facility.

at one or more operating facilities or resume operations at any then-idled facility.

Basis of Presentation – Interim

30 unchanged sentences

Of the accounts receivable balance, approximately

$ 52,008,000 and $ 63,929,000 at March 31, 2022 and December 31, 2021, respectively, were used as collateral under Kinergy’s operating

$ 60,256,000 and $ 63,929,000 at June 30, 2022 and December 31, 2021, respectively, were used as collateral under Kinergy’s operating

line of credit.

The allowance for doubtful accounts was $ 409,000 and $ 378,000 as of March 31, 2022 and December 31, 2021, respectively.

The Company recorded a bad debt expense of $ 31,000 and $ 91,000 for the three months ended March 31, 2022 and 2021, respectively.

Company does not have any off-balance sheet credit exposure related to its customers.

The allowance for doubtful accounts was $ 444,000 and $ 378,000 as of June 30, 2022 and December 31, 2021, respectively.

The Company recorded a bad debt expense of $ 35,000 and $ 52,000 for the three months ended June 30, 2022 and 2021, respectively.

recorded a bad debt expense of $ 66,000 and $ 143,000 for the six months ended June 30, 2022 and 2021, respectively.

The Company does not

have any off-balance sheet credit exposure related to its customers.

Financial Instruments – The

3 unchanged sentences

the interest rates on these instruments are variable.

Business Combinations – Business

acquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

(“ASC”) 805 “Business Combinations”.

FASB ASC 805 requires the reporting entity to identify the acquirer, determine

the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and recognize

and measure goodwill or a gain from the purchase.

Assets acquired and liabilities assumed are recorded at their fair values and the excess

of the purchase price over the amounts assigned is recorded as goodwill.

Adjustments to fair value assessments are recorded to goodwill

over the measurement period (not longer than twelve months).

Business Combinations –

Business acquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC”) 805 “Business Combinations”.

FASB ASC 805 requires the reporting entity to identify the

acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired and liabilities

assumed and recognize and measure goodwill or a gain from the purchase.

Assets acquired and liabilities assumed are recorded at their

fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill.

Adjustments to fair value assessments

are recorded to goodwill over the measurement period (not longer than twelve months).

Income from Cash Grant –

The Company applied for and received $ 22,652,000 in cash from the USDA’s Biofuel Producer Program.

The program was created as part

of the CARES Act in 2020, which allocated $ 700,000,000 to support biofuel producers who experienced market losses due to the pandemic.

The cash grant is not required to be repaid.

Since these funds are provided to subsidize historical losses of the Company, and are not

required to be repaid, the Company accounted for the proceeds by analogy to International Accounting Standards 20 Accounting for Government

Grants and Disclosure of Government Assistance , and reported as income from cash grant in the accompanying consolidated

statements of operations.

Estimates and Assumptions –

18 unchanged sentences

With respect to these payments, the Company has recognized an estimated $ 0.9 million

for the three months ended March 31, 2022, in selling, general and administrative expenses in the accompanying consolidated statements

of operations.

and $ 1.8 million for the three and six months ended June 30, 2022, respectively, in selling, general and administrative expenses in the

accompanying consolidated statements of operations.

Eagle Alcohol specializes in break bulk distribution

1 unchanged sentence

Eagle Alcohol purchases bulk alcohol from suppliers.

Eagle Alcohol then stores, denatures, packages, and resells alcohol

products in smaller sizes, including tank trucks, totes, and drums, that garner a premium to bulk alcohols.

Eagle Alcohol delivers products

to customers in the beverage, food, pharma, and related-process industries via its own dedicated trucking fleet and common carrier.

acquisition will provide the Company further vertical integration and access to new markets in the specialty alcohol industry.

Eagle Alcohol then stores, denatures, packages, and resells

alcohol products in smaller sizes, including tank trucks, totes, and drums, that garner a premium to bulk alcohols.

Eagle Alcohol delivers

products to customers in the beverage, food, and related-process industries via its own dedicated trucking fleet and common carrier.

The acquisition will provide the Company further vertical integration and access to new markets in the specialty alcohol industry.

Eagle Alcohol’s unaudited results for the

three months ended March 31, 2022 and 2021 generated $ 3.8 million and $ 6.8 million in net sales and $ 0.2 million and $ 0.9 million in

net income, respectively.

The following table presents unaudited pro forma combined financial information assuming the acquisition

occurred on January 1, 2021 (dollars in thousands except per share amounts):

three months ended June 30, 2022 and 2021 generated $ 4.1 million and $ 8.9 million in net sales and $ 0.0 million and $ 1.1 million in net

income, respectively.

Eagle Alcohol’s unaudited results for the six months ended June 30, 2022 and 2021 generated $ 7.9 million

and $ 17.5 million in net sales and $ 0.2 million and $ 2.0 million in net income, respectively.

The following table presents unaudited

pro forma combined financial information assuming the acquisition occurred on January 1, 2021 (dollars in thousands except per share

Three Months Ended

Revenues – pro forma

Net income (loss) available to common stockholders – pro forma

Diluted net income (loss) per share – pro forma

Net income available to common stockholders – pro forma

Diluted net income per share – pro forma

Diluted shares

Six Months Ended

Revenues – pro forma

Net income available to common stockholders – pro forma

Diluted net income per share – pro forma

Diluted shares

The following preliminary allocation of the estimated

3 unchanged sentences

estimate of working capital is under review by management and is subject to change.

Based upon these

assumptions, the preliminary purchase price allocation is as follows (in thousands):

Cash and equivalents

Accounts receivables

Based upon these assumptions, the preliminary purchase

price allocation is as follows (in thousands):

Cash and cash equivalents

Accounts receivable

Total current assets

3 unchanged sentences

Current liabilities

Right of use liabiltiy

Right of use liabilities

Total liabiltiies

8 unchanged sentences

customer relationships and 10 years for tradename.

For the three months ended March 31, 2022, the Company recorded amortization of

these intangibles of $ 108,000 and $ 9,000 , respectively.

Any changes to the initial estimates of the fair value of the acquired

assets and assumed liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be

allocated to goodwill if net assets acquired are less than the purchase price.

The Company did not incur any material acquisition

For the three months ended June 30, 2022, the Company recorded amortization

expense of $ 137,000 and $ 10,000 for customer relationships and tradename, respectively.

For the six months ended June 30, 2022, the

Company recorded amortization expense of $ 245,000 and $ 19,000 for customer relationships and tradename, respectively.

to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those

assets and liabilities and residual amounts will be allocated to goodwill if net assets acquired are less than the purchase price.

The Company did not incur any material acquisition costs.

The Company reports its financial and operating

performance in three segments:

(1) marketing and distribution, which includes marketing and merchant trading for Company-produced

alcohols and essential ingredients on an aggregated basis and third-party fuel-grade ethanol sales (2) Pekin production, which

includes the production and sale of alcohols and essential ingredients produced at the Company’s Pekin, Illinois campus

(“Pekin Campus”), and (3) Other production, which includes the production and sale of renewable fuel and

essential ingredients produced at all of the Company’s other production facilities on an aggregated basis (“Other

production”), none of which are individually so significant as to be considered a reportable segment.

(1) marketing and distribution, which includes marketing and merchant trading for Company-produced alcohols

and essential ingredients on an aggregated basis and third-party fuel-grade ethanol sales (2) Pekin production, which includes the production

and sale of alcohols and essential ingredients produced at the Company’s Pekin, Illinois campus (“Pekin Campus”), and

(3) Other production, which includes the production and sale of renewable fuel and essential ingredients produced at all of the Company’s

other production facilities on an aggregated basis (“Other production”), none of which are individually so significant as

to be considered a reportable segment.

The following tables set forth certain financial

1 unchanged sentence

Three Months Ended

Pekin Campus production, recorded as gross:

Six Months Ended

Pekin Campus, recorded as gross:

Alcohol sales

15 unchanged sentences

Net sales as reported

Cost of goods sold:

of goods sold:

Marketing and distribution

3 unchanged sentences

Cost of goods sold as reported

Gross profit (loss):

Pekin Campus production

Marketing and distribution

2 unchanged sentences

Intersegment eliminations

Gross profit (loss) as reported

Income (loss) before provision

for income taxes:

Pekin Campus production

Gross profit as reported

before provision for income taxes:

Marketing and distribution

Other production

and amortization:

Pekin Campus production

Corporate and other

and amortization of intangibles:

Other production

Interest expense:

Pekin Campus production

Corporate and other

expense, net of capitalized interest:

Marketing and distribution

Other production

Corporate and other

The following table sets forth the Company’s

1 unchanged sentence

Total assets:

Pekin Campus production

Marketing and distribution

4 unchanged sentences

cost determined on a first-in, first-out basis.

Inventory is net of a valuation adjustment of $ 249,000 and $ 0 as of

March 31, 2022 and December 31, 2021, respectively.

Inventory is net of a valuation adjustment of $ 3,010,000 and $ 0 as of June 30, 2022 and

December 31, 2021, respectively.

Inventory balances consisted of the following (in thousands):

20 unchanged sentences

recognized immediately in cost of goods sold.

For the three months ended March 31, 2022 and 2021, the Company did not designate any of

its derivatives as cash flow hedges.

For the three and six months ended June 30, 2022 and 2021, the Company did not designate

any of its derivatives as cash flow hedges.

Commodity Risk – Non-Designated Hedges

– The Company uses derivative instruments to lock in prices for certain amounts of corn and ethanol by entering into exchange-traded

– The Company uses derivative instruments to lock in prices for certain amounts of corn and alcohols by entering into exchange-traded

forward contracts or options for those commodities.

2 unchanged sentences

The Company recognized

net gains of $ 5,316,000 and $ 10,543,000 as the change in the fair value of these contracts for the three months ended March 31, 2022

and 2021, respectively.

net gains of $ 16,619,000 and $ 8,868,000 as the change in the fair value of these contracts for the three months ended June 30, 2022 and

2021, respectively.

The Company recognized net gains of $ 21,936,000 and $ 19,411,000 as the change in the fair value of these contracts

for the six months ended June 30, 2022 and 2021, respectively.

Non Designated Derivative Instruments

1 unchanged sentence

balances, are as follows (in thousands):

As of March 31, 2022

As of June 30, 2022

Type of Instrument

15 unchanged sentences

Derivative liabilities

The above amounts represent the gross balances

of the contracts;

however, the Company does have a right of offset with each of its derivative brokers, but its intent is to close out

positions individually, therefore, they are reported at gross.

The above amounts represent the gross balances of

the contracts;

however, the Company does have a right of offset with each of its derivative brokers, but its intent is to close out positions

individually, therefore, they are reported at gross.

The classification and amounts of the Company’s

1 unchanged sentence

Realized Gains

For the three months Ended March 31,

For the Three Months Ended

Type of Instrument

2 unchanged sentences

Cost of goods sold

Realized Gains

For the Six Months Ended

Type of Instrument

Statements of Operations Location

Commodity contracts

Cost of goods sold

Unrealized Gains (Losses)

For the three months Ended March 31,

For the Three Months

Ended June 30,

Type of Instrument

2 unchanged sentences

Cost of goods sold

Long-term borrowings are summarized as follows

(in thousands):

Unrealized (Losses)

For the Six Months Ended

Type of Instrument

Statements of Operations Location

Commodity contracts

Cost of goods sold

Long-term borrowings are summarized as follows (in

Kinergy line of credit

2 unchanged sentences

Long-term debt

Excess Availability – As

of March 31, 2022, Kinergy had $ 15.2 million in unused borrowing availability under its line of credit.

COMMITMENTS AND CONTINGENCIES.

Sales Commitments – At March

As of June 30, 2022, Kinergy had $ 28.6 million in

unused borrowing availability under its line of credit.

In addition, the Company believes it is currently in compliance with its covenants

under the line of credit.

AND CONTINGENCIES.

Sales Commitments – At June

30, 2022, the Company had entered into sales contracts with its major customers to sell certain quantities of alcohol and essential ingredients.

The Company had open alcohol indexed-price contracts for 125,438,000 gallons as of March 31, 2022 and open fixed-price alcohol sales

contracts totaling $ 124,713,000 as of March 31, 2022.

The Company had open alcohol indexed-price contracts for 103,094,000 gallons as of June 30, 2022 and open fixed-price alcohol sales contracts

totaling $ 102,157,000 as of June 30, 2022.

The Company had open fixed-price sales contracts for essential ingredients totaling $ 18,847,000

$ 23,023,000 and open indexed-price sales contracts of essential ingredients for 5,242,000 tons as of March 31, 2022.

These sales contracts

are scheduled to be completed throughout 2022.

Purchase Commitments – At

March 31, 2022, the Company had indexed-price purchase contracts to purchase 17,439,000 gallons of alcohol and fixed-price purchase contracts

as of June 30, 2022.

These sales contracts are scheduled to be completed throughout 2022.

Purchase Commitments – At June

30, 2022, the Company had indexed-price purchase contracts to purchase 12,746,000 gallons of alcohol and fixed-price purchase contracts

to purchase $ 68,886,000 of alcohol from its suppliers.

The Company had fixed-price purchase contracts to purchase $ 104,062,000 of corn

from its suppliers as of March 31, 2022.

from its suppliers as of June 30, 2022.

The Company had fixed-price purchase contracts for natural gas totaling $ 7,724,000 and indexed-price

15 unchanged sentences

have a material impact on the Company’s financial condition or results of operations.

PENSION PLANS.

RETIREMENT BENEFIT PLANS.

The Company sponsors a defined

benefit pension plan (the “Retirement Plan”) and a healthcare and life insurance plan (the “Postretirement Plan”).

Retirement Plan is noncontributory, and covers only “grandfathered” unionized employees at the Company’s Pekin, Illinois

facility who fulfill minimum age and service requirements.

Benefits are based on a prescribed formula based upon the employee’s

years of service.

The Retirement Plan, which is part of a collective bargaining agreement, covers only union employees hired prior to

November 1, 2010.

Company uses a December 31 measurement date for its Retirement Plan.

The Company’s funding policy is to make the minimum annual

contribution required by applicable regulations.

As of December 31, 2021, the Retirement Plan’s accumulated projected benefit obligation

was $ 23.8 million, with a fair value of plan assets of $ 20.0 million.

The underfunded amount of $ 3.8 million is recorded on the Company’s

consolidated balance sheet in other liabilities.

For the three months ended March 31, 2022, the Retirement Plan’s net periodic

expense (income) was ($ 8,000 ), comprised of $ 164,000 in interest cost and $ 101,000 in service cost, more than offset by $ 273,000 of expected

return on plan assets.

For the three months ended March 31, 2021, the Retirement Plan’s net periodic expense was $ 22,000 , comprised

of $ 151,000 in interest cost and $ 109,000 in service cost, partially offset by $ 238,000 of expected return on plan assets.

Postretirement Plan provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees.

Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan.

The Postretirement Plan is contributory,

with contributions required at the same rate as active employees.

Benefit eligibility under the plan reduces at age 65 from a defined

benefit to a defined dollar cap based upon years of service.

As of December 31, 2021, the Postretirement Plan’s accumulated projected

benefit obligation was $ 4.3 million and is recorded on the Company’s consolidated balance sheet in other liabilities.

The Company’s

funding policy is to make the minimum annual contribution required by applicable regulations.

For the three months ended March 31, 2022,

the Postretirement Plan’s net periodic expense was $ 32,000 , comprised of $ 26,000 of interest cost and $ 6,000 of service cost.

the three months ended March 31, 2021, the Postretirement Plan’s net periodic expense was $ 42,000 , comprised of $ 10,000 of interest

cost, $ 26,000 of service cost and $ 6,000 of amortization expense.

The Retirement Plan is noncontributory,

and covers only “grandfathered” unionized employees at the Company’s Pekin, Illinois facility who fulfill minimum age

and service requirements.

Benefits are based on a prescribed formula based upon the employee’s years of service.

The Retirement

Plan, which is part of a collective bargaining agreement, covers only union employees hired prior to November 1, 2010.

The Company uses a December 31

measurement date for its Retirement Plan.

The Company’s funding policy is to make the minimum annual contribution required by applicable

As of December 31, 2021, the Retirement Plan’s accumulated projected benefit obligation was $ 23.8 million, with a

fair value of plan assets of $ 20.0 million.

The underfunded amount of $ 3.8 million is recorded on the Company’s consolidated balance

sheet in other liabilities.

For the three months ended June

30, 2022, the Retirement Plan’s net periodic benefit was $ 8,000 , comprised of $ 273,000 of expected return on plan assets, partially

offset by $ 164,000 in interest cost and $ 101,000 in service cost.

For the three months ended June 30, 2021, the Retirement Plan’s

net periodic expense was $ 22,000 , comprised of $ 151,000 in interest cost and $ 109,000 in service cost, partially offset by $ 238,000 of

expected return on plan assets.

For the six months ended June 30, 2022, the Retirement Plan’s net periodic benefit was $ 16,000 ,

comprised of $ 546,000 of expected return on plan assets, partially offset by $ 328,000 in interest cost and $ 202,000 in service cost.

For the six months ended June 30, 2021, the Retirement Plan’s net periodic expense was $ 44,000 , comprised of $ 302,000 in interest

cost and $ 218,000 in service cost, partially offset by $ 476,000 of expected return on plan assets.

The Postretirement Plan provides

postretirement medical benefits and life insurance to certain “grandfathered” unionized employees.

Employees hired after

December 31, 2000 are not eligible to participate in the Postretirement Plan.

The Postretirement Plan is contributory, with contributions

required at the same rate as active employees.

Benefit eligibility under the plan declines at age 65 from a defined benefit to a defined

dollar cap based upon years of service.

As of December 31, 2021, the Postretirement Plan’s accumulated projected benefit obligation

was $ 4.3 million and is recorded on the Company’s consolidated balance sheet in other liabilities.

The Company’s funding

policy is to make the minimum annual contribution required by applicable regulations.

For the three months ended June

30, 2022, the Postretirement Plan’s net periodic expense was $ 32,000 , comprised of $ 6,000 of interest cost and $ 26,000 of service

For the three months ended June 30, 2021, the Postretirement Plan’s net periodic expense was $ 42,000 , comprised of $ 10,000

of interest cost, $ 26,000 of service cost and $ 6,000 of amortization expense.

For the six months ended June

30, 2022, the Postretirement Plan’s net periodic expense was $ 64,000 , comprised of $ 12,000 of interest cost and $ 52,000 of service

For the six months ended June 30, 2021, the Postretirement Plan’s net periodic expense was $ 84,000 , comprised of $ 20,000

of interest cost, $ 52,000 of service cost and $ 12,000 of amortization expense.

FAIR VALUE MEASUREMENTS.

fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows:

The fair value hierarchy prioritizes the inputs

used in valuation techniques into three levels, as follows:

1 – Observable inputs – unadjusted quoted prices in active markets for identical

7 unchanged sentences

inputs is required along with a reconciliation of Level 3 values from the prior reporting

separate accounts – Pooled separate accounts invest primarily in domestic and international stocks, commercial paper or

single mutual funds.

The net asset value is used as a practical expedient to determine fair value for these accounts.

Each pooled separate

account provides for redemptions by the Retirement Plan at reported net asset values per share, with little to no advance notice requirement,

therefore these funds are classified within Level 2 of the valuation hierarchy.

Assets Held-for-Sale – The Company recorded its long-lived assets associated with its property and equipment held-for-sale

at fair value at March 31, 2022 and December 31, 2021 of $ 1,000,000 .

The fair values of these assets are based on observable values for

the assets through corroboration with market data and are designated as Level 3 inputs.

Derivative Instruments – The Company’s other derivative instruments consist of commodity positions.

The fair values

of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 inputs.

following table summarizes recurring and nonrecurring fair value measurements by level at March 31, 2022 (in thousands):

financial instruments

assets held-for-sale

Pooled separate accounts – Pooled

separate accounts invest primarily in domestic and international stocks, commercial paper or single mutual funds.

The net asset value

is used as a practical expedient to determine fair value for these accounts.

Each pooled separate account provides for redemptions by

the Retirement Plan at reported net asset values per share, with little to no advance notice requirement, therefore these funds are classified

within Level 2 of the valuation hierarchy.

Long-Lived Assets Held-for-Sale –

The Company recorded its long-lived assets associated with its property and equipment held-for-sale at fair value at June 30, 2022 and

December 31, 2021 of $ 1,000,000 .

The fair values of these assets are based on observable values for the assets through corroboration

with market data and are designated as Level 3 inputs.

Other Derivative Instruments –

The Company’s other derivative instruments consist of commodity positions.

The fair values of the commodity positions are based

on quoted prices on the commodity exchanges and are designated as Level 1 inputs.

The following table summarizes recurring and nonrecurring

fair value measurements by level at June 30, 2022 (in thousands):

Derivative financial instruments

following table summarizes recurring and nonrecurring fair value measurements by level at December 31, 2021 (in thousands):

financial instruments

Long-lived assets held-for-sale

Defined benefit plan

Derivative financial instruments

The following table summarizes recurring and nonrecurring

fair value measurements by level at December 31, 2021 (in thousands):

Derivative financial instruments

Long-lived assets held-for-sale

Defined benefit plan assets(1)

(pooled separate accounts):

3 unchanged sentences

Derivative financial instruments

(1) Included in other assets in the consolidated balance sheets.

(2) This category includes investments in funds comprised of equity securities of large U.S.

The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(3) This category includes investments in funds comprised of equity securities of small- and medium-sized U.S.

The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(4) This category includes investments in funds comprised of equity securities of foreign companies including emerging markets.

The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(5) This category includes investments in funds comprised of U.S.

and foreign investment-grade fixed income securities, high-yield fixed income securities that are rated below investment-grade, U.S.

in other assets in the consolidated balance sheets.

category includes investments in funds comprised of equity securities of large U.S.

The funds are valued using the net asset value method in which an average of the market prices

for the underlying investments is used to value the fund.

category includes investments in funds comprised of equity securities of small- and medium-sized

The funds are valued using the net asset value method in which an average

of the market prices for the underlying investments is used to value the fund.

category includes investments in funds comprised of equity securities of foreign companies

including emerging markets.

The funds are valued using the net asset value method in which

an average of the market prices for the underlying investments is used to value the fund.

category includes investments in funds comprised of U.S.

and foreign investment-grade fixed

income securities, high-yield fixed income securities that are rated below investment-grade,

treasury securities, mortgage-backed securities, and other asset-backed securities.

The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

following tables compute basic and diluted earnings per share (in thousands, except per share data):

Months Ended March 31, 2022

Preferred stock

Basic and diluted loss per

Net loss available to

common stockholders

Months Ended March 31, 2021

Preferred stock

The funds are valued using the net asset value method in which an average of the market prices

for the underlying investments is used to value the fund.

The following tables compute basic and diluted earnings

per share (in thousands, except per share data):

Three Months Ended June 30, 2022

Net income attributed to Alto Ingredients, Inc.

Preferred stock dividends

Income allocated to participating securities

Basic income per share:

Income available to common

Dilutive securities

Income available to common stockholders

Dilutive instruments

Diluted income per share:

Income available to common

were an additional aggregate potentially dilutive weighted-average shares of 1,339,000 and 3,265,000 from convertible securities outstanding

for the three months ended March 31, 2022 and 2021.

These securities were not considered in calculating diluted net income (loss) per

share for the three months ended March 31, 2022 and 2021, as their effect would have been anti-dilutive.

At March 31, 2022, the Company

had outstanding unexercised warrants to purchase 8.9 million shares of its common stock at an exercise price of $ 9.76 per share.

warrants expired unexercised on April 28, 2022.

Income available to common stockholders

Three Months Ended June 30, 2021

Income Numerator

Shares Denominator

Per-Share Amount

Net income attributed to Alto Ingredients, Inc.

Preferred stock dividends

Income allocated to participating securities

Basic income per share:

Income available to common stockholders

Dilutive instruments

Diluted income per share:

Income available to common stockholders

Six Months Ended June 30, 2022

Income Numerator

Shares Denominator

Per-Share Amount

Net income attributed to Alto Ingredients, Inc.

Preferred stock dividends

Income allocated to participating securities

Basic income per share:

Income available to common stockholders

Dilutive instruments

Diluted income per share:

Income available to common stockholders

Six Months Ended June 30, 2021

Income Numerator

Shares Denominator

Per-Share Amount

Net income attributed to Alto Ingredients, Inc.

Preferred stock dividends

Income allocated to participating securities

Basic income per share:

Income available to common stockholders

Dilutive instruments

Diluted income per share:

Income available to common stockholders

There were an additional aggregate potentially

dilutive weighted-average shares of 964,000 from convertible securities outstanding for the three and six months ended June 30, 2022

These securities were not considered in calculating diluted net income (loss) per share for the three and six months ended

June 30, 2022 and 2021, as their effect would have been anti-dilutive.

At December 31, 2021, the Company had outstanding unexercised

warrants to purchase 8.9 million shares of its common stock at an exercise price of $ 9.76 per share.

These warrants expired unexercised

on April 28, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements