Benson Hill (BHIL) 10-Q2024 Q1 Quarterly report

Moving to an asset-light business model enables Benson Hill to focus on our research and development competitive advantage. We participate across the value chain with partnerships that are more efficient to scale acreage, require less operating expense and are more capital efficient. This model will continue to enable us to solve end user challenges with seed innovation. As we analyze the asset-light business model across the value chain, there are three opportunities to monetize Benson Hill’s technology. First, licensing our germplasm to seed companies. Second, direct seed sales to farmers. And third, through technology access fees and value-based royalties from seed companies, processors and end users.

Our commitment to environmental and social issues impacting our planet and our purpose-driven culture are fundamental to our ability to achieve our mission. Environmental, Social and Governance (“ESG”) principles help guide our thinking and approach throughout the development and commercialization of our products, and our innovative culture is rooted in our Core Values of Be Bold, Be Inspired, and Be Real. We believe our technology platform, asset-light model, and purpose-driven culture will help bridge the divide between evolving preferences and quality traits already present within the genetic diversity of plants. We see nature as our partner; technology as our enabler; and innovators like our Company, like-minded stakeholders, stockholders and partners as the catalysts to activate the change needed.

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for financial reporting and Securities and Exchange Commission (“SEC”) regulations.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and SEC regulations. The unaudited condensed consolidated financial statements include the accounts of our Company and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ended December 31, 2024. A description of our significant accounting policies is included in the notes to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2023 audited consolidated financial statements and the notes thereto.

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We expect to remain an emerging growth company at least through December 31, 2024 and expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. We expect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and non-public companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2026, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the SEC rules with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant management estimates include those with respect to allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of our warrant liabilities and conversion option liabilities.

We consider all short-term, highly liquid investments with maturities of 90 days or less at the acquisition date to be cash equivalents. Restricted cash primarily represents cash proceeds from the sale of certain assets pursuant to the covenants with a lender. Restricted cash is classified as non-current if we expect that the cash will remain restricted for a period greater than one year.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets, inclusive of $29 and $2,796 of cash and cash equivalents reported within current assets of discontinued operations as of March 31, 2024 and March 31, 2023 to the amounts shown in the condensed consolidated statements of cash flows.

Intangible assets consist primarily of customer relationships, trade names, employment agreements, technology licenses, and developed or acquired technology. Intangible assets are valued based on the income approach, which utilizes discounted cash flows, or cost buildup. These estimates generally constitute Level 3 inputs under the fair value hierarchy.

Definite lived intangible assets are reviewed for impairment, at the asset group level, whenever, in management’s judgment, impairment indicators are present. At a minimum, we assess all definite lived intangible assets annually for indicators of impairment. When indicators of impairment are present, such an assessment involves estimating undiscounted cash flows over the remaining useful life of the intangible. If the review indicates that undiscounted cash flows are less than the carrying value of the intangible asset, the asset group is written down to fair value, and any impairment is assigned to the assets in the asset group in accordance with the applicable guidance, and a corresponding impairment is recognized in our consolidated statements of operations and comprehensive loss.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The standard requires all entities to disclose specific categories in the rate reconciliation, income taxes paid, and other income tax information. For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires public entities, including those entities with a single reportable segment, to provide disclosures of significant segment expenses and other segment items. The public entities are permitted to disclose multiple measures of a segment’s profit or loss used by the chief operating decision-maker to allocate resources and assess performance, as long as at least one measure that is most consistent with our consolidated financial statements is included. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The guidance is applied retrospectively to all periods presented in financial statements, unless it is impracticable. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

On October 31, 2023, the Company sold our soybean processing facility located in Seymour, Indiana, together with certain related assets, for approximately $35,397 of total gross proceeds, subject to certain adjustments, including an adjustment for inventory and other working capital (the “Seymour Sale”). Upon closing the Seymour Sale, we recorded a gain on the sale of $18,970 for the year ended December 31, 2023.

Upon closing the Creston Sale, $3,413 of the Purchase Price (the “Holdback”) and $4,950 of the Purchase Price (the “Carryback”) was held back by the Purchaser. The Holdback may be used by the Purchaser to satisfy certain Adverse Consequences (as defined in the MIPA) subject to the indemnification provisions, and for the Purchaser’s recovery with respect to certain Facility KPIs (as defined in the MIPA). The Holdback, less any amounts due to the Purchaser under the MIPA terms, shall be paid to the Seller within five days following the twelve-month anniversary of the closing. The Carryback will be paid by the Purchaser to the Seller pursuant to the terms of a promissory note executed by the Purchaser, and guaranteed by BHI, on February 13, 2024 (the “Promissory Note”). Under the Promissory Note, and subject to its terms and conditions, the Carryback will be paid in four equal installments on November 24, 2024, February 25, 2025, May 25, 2025, and August 25, 2025, together with all unpaid accrued interest on the outstanding principal amount on each such date. Subject to the terms and conditions of the Promissory Note, interest will accrue on the outstanding and unpaid principal amount thereunder at a fixed rate equal to 8.00% per annum. The Promissory Note may be partially or fully prepaid at any time without penalty.

The Creston Sale and the Seymour Sale (collectively, the “Transactions”) were separately marketed, negotiated, executed, and closed, and neither of the Transactions was conditioned upon the other. The Transactions were executed to leverage the Company’s core competencies as a technology-enabled seed innovation company as the Company transitions from a vertically integrated business model to an asset-light business model with an expanded focus on animal feed markets. Exiting the soybean processing business is intended to strengthen the Company’s balance sheet as the Company seeks to continue to commercialize our core business and intellectual property assets through partnerships and licensing arrangements to scale the Company’s

Assets and liabilities recorded at fair value on a recurring basis on the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

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

Our financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, commodity derivatives, commodity contracts, accounts payable, accrued liabilities, warrant liabilities, conversion option liabilities, and notes payable. As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $6,646 and $8,934, respectively, which include money market funds with maturities of less than three months. At March 31, 2024 and

December 31, 2023, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximated fair value due to their short maturities.

The following tables provide the financial instruments measured at fair value on a recurring basis based on the fair value hierarchy:

Public Warrant liabilities of $30 were transferred from Level 1 to Level 2 in 2023. Our Public Warrants were traded on the NYSE under the symbol “BHIL WS.” and considered Level 1 liabilities through December 18, 2023. On December 18, 2023, we received notice from the NYSE that it had determined to commence proceedings to delist our Company’s Public Warrants. On December 19, 2023, the NYSE suspended trading in the warrants. As of December 31, 2023, Public Warrants are available for trading over-the-counter under the symbol “BHILW” and are considered Level 2 liabilities. There were no other transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for 2024 or 2023.

The significant inputs to the valuation of Level 3 warrant and conversion option liabilities as of March 31, 2024 were as follows:

The significant inputs to the valuation of Level 3 warrant and conversion option liabilities as of December 31, 2023 were as follows:

The following table summarizes the change in the warrant and conversion option liabilities categorized as Level 3 for the three months ended March 31, 2024 and 2023:

We have invested in marketable debt securities, primarily investment-grade corporate bonds, preferred stock, and highly liquid U.S Treasury securities, which are held in the custody of a major financial institution. These securities are classified as

available-for-sale and, accordingly, the unrealized gains and losses are recorded through other comprehensive income and loss. Marketable securities classified as available-for-sale securities are summarized below:

The aggregate fair value of investments with unrealized losses that had been owned for less than a year was $14,671 and $6,887 as of March 31, 2024 and December 31, 2023, respectively. The aggregate fair value of investments with unrealized losses that had been owned for more than one year was $6,036 and $21,543 as of March 31, 2024 and December 31, 2023, respectively.

Available-for-sale investments outstanding as of March 31, 2024, classified as marketable securities in our condensed consolidated balance sheets, have maturity dates ranging from the second quarter of 2024 through the fourth quarter of 2026. The fair value of marketable securities as of March 31, 2024 with maturities within one year and one to five years is $14,524 and $9,328, respectively. We classify available-for-sale investments as current based on the nature of the investments and their availability to provide cash for use in current operations, if needed.

We use exchange-traded futures to manage price risk of fluctuating Chicago Board of Trade prices related to forecasted purchases and sales of soybeans and soybean related products in the normal course of business. These risk management activities are actively monitored for compliance with our risk management policies.

As of March 31, 2024, our Company held financial futures related to a portion of our forecasted purchases of soybeans for an aggregate notional volume of 2,160 bushels of soybeans; all of which will settle in 2024. As of March 31, 2024, our Company held financial futures related to a portion of our forecasted sales of soybean oil for an aggregate notional volume of 47 pounds of soybean oil; all of which will settle in 2024.

We had a current asset representing excess cash collateral posted to a margin account of $1,138 and $992 as of March 31, 2024 and December 31, 2023, respectively. These amounts are not included with the derivatives presented in the table above, but are included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

Currently, we do not seek cash flow hedge accounting treatment for derivative financial instruments and thus changes in fair value are reflected in current earnings.

The tables below show the amounts of pre-tax gains and losses recognized in our condensed consolidated statements of operations related to the derivatives:

Table disclosures above include the results from both continuing operations and discontinued operations. Our soybean positions are designed to hedge risk related to inventory purchases, therefore the gains and losses on soybean instruments from our operations are recorded in cost of sales in our condensed consolidated statements of operations. Our soybean oil and soybean meal positions are designed to hedge risk related to sales transactions therefore the gains and losses on soybean oil and soybean meal instruments from our operations are recorded in revenues in our condensed consolidated statements of operations.

We classify the cash effects of our derivatives within the “Cash Flows from Operating Activities” section of our condensed consolidated statements of cash flows.

Inventories, net consist of the following:

Work-in-process inventory consists of seed provided to contracted seed producers and growers with which we hold a purchase option for, or are required to purchase the future harvested seeds or grains. It also includes crops under production which represent the direct costs of land preparation, seed, planting, growing, and maintenance.

In April 2019, our wholly-owned subsidiary, Dakota Dry Bean, Inc. (“DDB”) entered into a Credit Agreement comprised of a $14,000 aggregate principal amount of floating rate, five-year term loan (“DDB Term Loan”), a $3,500 floating rate, five-year loan to be used for facility expansion (“DDB Equipment Loan”), and a $6,000 floating rate revolving credit facility (“DDB Revolver”), which is renewed annually (together, the “Credit Agreement”). In March 2024, the DDB Term Loan maturity date was extended to April 2026. In the fourth quarter of 2023, the DDB Revolver maturity date was extended to December 2024. As of March 31, 2024, the interest rate is U.S. prime rate plus 0.75% on the DDB Term Loan and DDB Equipment Loan, and U.S. prime rate plus 0.25% on the DDB Revolver.

The Credit Agreement is secured by substantially all of DDB’s real and personal property and is guaranteed, in part, by Benson Hill, Inc., DDB’s parent company, to a maximum of $7,000. The DDB Term Loan is payable in equal quarterly installments of $284 plus interest with the remaining balance of $5,972 due in April 2025. The Equipment Loan is payable in equal quarterly installments of $175 plus interest through July 2024.

Under the Credit Agreement, DDB and our Company must comply with certain financial covenants based on DDB’s operations, including a minimum working capital covenant, a minimum net worth covenant, a funded debt to EBITDA ratio covenant, and a fixed charge coverage ratio covenant.

In December 2021, we entered into a financing agreement with an investment firm (the “Convertible Loan and Security Agreement”), which included a commitment by the lender to make term loans available to us in an amount of up to $100,000 with $80,000 available immediately.

We executed term notes with the lender in December 2021 in the aggregate amount of $80,000 with an initial term of 36 months payable in interest only, at the greater of (a) the prime rate of interest as published in the Wall Street Journal or (b) 3.25% per annum, plus 5.75% per annum for the first 12 months and principal and interest payments for the remaining 24 months. The term notes were secured by substantially all of our assets.

In June 2022, we amended the Convertible Loan and Security Agreement (“First Amendment”), which changed the definition of gross margin, and modified the Conversion Price and the Exercise Price. The change to the definition of gross margin removed the impact of derivative hedging gains or losses related to future periods and resulted in our achievement of the milestones required to draw on the second tranche. We drew on the full $20,000 available under the second tranche upon entering into this amendment.

In November 2022, we entered into a second amendment to the Convertible Loan and Security Agreement (“Second Amendment”), which, among other things, changed the definition of Outstanding Shares based on the updated definition of Market Cap Threshold I. Additionally, the required minimum liquidity covenant requirement was reduced from six months to four months. The amendment also increased the designated interest rate by 25 basis points.

In March 2023, we entered into a third amendment to the Convertible Loan and Security Agreement (“Third Amendment”), which, among other things, allowed the restricted cash to be counted towards the required minimum liquidity covenant calculation. In addition, the Third Amendment increased the final balloon payment by 200 basis points and reset the prime rate to be the greater of (a) the prime rate of interest as published in the Wall Street Journal or (b) 7.75% per annum.

In November 2023, using the proceeds obtained from the sale of our soy processing facility in Seymour, Indiana, and other asset sales, we repaid approximately half of the outstanding obligations under the Convertible Notes Payable for an aggregate amount of $58,391.

On February 13, 2024, we repaid in full all outstanding obligations under the Convertible Loan and Security Agreement with Avenue Capital Management II, L.P. (the “Agent”), as administrative agent and collateral agent for several funds managed by the Agent (the “Lenders”) (as amended, restated, or supplemented from time to time, the “Loan Agreement”) (the “Avenue Capital Payoff”). In connection with the Avenue Capital Payoff, we paid an aggregate amount of approximately $59,000 in full payment of our outstanding obligations under the Loan Agreement and the promissory notes evidencing the obligations

Upon the Avenue Capital Payoff, the Lenders’ commitments to extend further credit to the Borrowers terminated, the Agent released and terminated all liens or security interests granted to secure the obligations under the Loan Agreement, and the parties to the Loan Agreement were released from their respective guaranties and obligations under the Loan Agreement (except for inchoate indemnity obligations). Upon the Avenue Capital Payoff, the Conversion Option (as such term is defined in the Loan Agreement) to the Convertible Notes Payable has expired. The Convertible Notes Payable Warrants remain outstanding.

In March 2022, our Company entered into a sale-leaseback transaction relating to certain of our Company equipment. Our Company evaluated whether the transaction qualified as a sale under ASC 606 and ultimately determined that since the leases are classified as financing leases under ASC 842, the transaction did not qualify as a sale and therefore control of the equipment was not transferred. Therefore, the sale proceeds of $1,160 were recorded as a financing liability. We will make monthly payments of $33 under the financing arrangement for a term of 36 months.

Our effective tax rate was 0% for the three months ended March 31, 2024 and 2023. The 2024 and 2023 effective tax rates differed from the statutory rate of 21% primarily due to the fact that we recorded no income tax benefit on our pretax losses as we recorded a full valuation allowance globally.

Our other comprehensive income (loss) (“OCI”) consists of unrealized gains and losses on marketable debt securities classified as available for sale and foreign currency translation adjustments from our subsidiaries in Brazil and Canada.

The following table shows changes in accumulated other comprehensive income (“AOCI”) by component for the three months ended March 31, 2024 and 2023:

Amounts reclassified from AOCI were reported within “Other (income) expense, net” on our condensed consolidated statements of operations. Our Company’s accounting policy is to release the income tax effects (if applicable) from AOCI when the individual units of account are sold.

We accrue for cost related to contingencies when a loss is probable, and the amount is reasonably determinable. Disclosure of contingencies is included in the condensed consolidated financial statements when it is at least reasonably possible that a material loss or an additional material loss in excess of amounts already accrued may be incurred. For all litigation matters, the accruals were immaterial as of March 31, 2024 and December 31, 2023.

As of March 31, 2024, we have committed to purchase from seed producers and growers at dates throughout 2024 and 2025 at fixed prices aggregating to $26,070 based on commodity futures or market prices, other payments to growers, and estimated yields per acre, of which $22,973 are due within one year. In addition to the obligations for which the price is fixed or determinable, we have committed to purchase from seed producers and growers 988 bushels throughout 2024 for which the pricing is currently variable. These amounts are not recorded in the condensed consolidated financial statements because we have not taken delivery of the grain or seed as of March 31, 2024 and due to the fact that the grain or seed is subject to specified quality standards prior to delivery.

The CODM uses Adjusted EBITDA to review and assess our operating performance. We define Adjusted EBITDA as net loss from continuing operations excluding income taxes, interest, depreciation, amortization, stock-based compensation, changes in fair value of warrants and conversion options, realized (gains) losses on marketable securities, goodwill and long-lived asset impairment, restructuring-related costs (including severance costs) and the impact of significant non-recurring items. Adjustments to reconcile net loss from continuing operations to Adjusted EBITDA for the three months ended March 31, 2024 and 2023 were as follows:

Some of the statements contained in this report and documents incorporated by reference herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believe,” “estimate,” “expect,” “intend,” “project,” “forecast,” “may,” “will,” “should,” “could,” “would,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions, as well as the negative of such statements. Forward-looking statements contained in this report include, but are not limited to, statements about our ability to:

well as elsewhere in this report. Other sections of this report describe additional factors that could adversely affect our business, financial condition or results of operations. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk 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. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this report to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. We qualify all of our forward-looking statements by these cautionary statements.

We believe that moving to an asset-light business model will enable us to focus on our research and development competitive advantage while participating across the value chain through partnerships that are more efficient to scale acreage, require less operating expense and are more capital efficient. This model maintains our ability to solve end user challenges with seed innovation. As we analyze the asset-light business model across the value chain, we have identified three opportunities to monetize Benson Hill’s technology. First, by licensing our germplasm to seed companies. Second, by direct seed and grain sales to farmers. And third, through technology access fees and value-based royalties from seed companies, processors and end users. In the future, we plan to enter the animal feed market and secure partnerships and licensing agreements to scale our product offerings.

The emergence of significant market headwinds in the food, aquaculture, and specialty oil markets, which are the markets where our collaboration efforts had been primarily focused, is a factor in our decision to reshape our business to best position our proprietary product portfolio and future product pipeline for significant growth. Recent advances in our soybean breeding program will drive the significant expansion of our seed portfolio offer by 2025. The latest field evaluations on our third generation of Ultra High Protein Low Oligosaccharides (“UHP-LO”), non-GMO soybean varieties showed protein gains of two percent over the previous generation and achieved a yield gap of only three to five bushels per acre, compared with commodity GMO soybeans. Our herbicide-tolerant Ultra High Protein (“UHP”) soybean varieties are on track for commercial release in 2025, with acreage and further portfolio expansion expected in 2026. This is a major step in providing farmers with options for weed control and enabling lower-cost, broadacre production of already advantaged UHP soybeans for the animal feed industry.

In November 2023, using the proceeds obtained from the sale of our soy crushing facility in Seymour, Indiana and other asset sales, we repaid approximately half of the outstanding obligations under the Convertible Loan and Security Agreement for an aggregate amount of $58.4 million.

On March 27, 2023, our Board committed to a Liquidity Improvement Plan (the “Liquidity Improvement Plan”) intended to improve liquidity by an estimated $65 million to $85 million by the end of 2024. We are executing the Liquidity Improvement

Plan to create a more cost-efficient organization and enhance our capital structure to execute on our strategic priorities. On October 31, 2023, we announced an expansion of the Liquidity Improvement Plan to include the divestiture of certain of our soy processing assets in connection with our transition to an asset-light business model. On October 31, 2023, we sold our soy processing facility located in Seymour, Indiana for $35.4 million of total gross proceeds, subject to certain deferred payments, holdbacks and other adjustments, and in November 2023, we repaid approximately half of the outstanding Convertible Notes Payable. On February 13, 2024, we sold our soy processing facility located in Creston, Iowa for $72.2 million of total gross proceeds, subject to certain deferred payments, holdbacks and other adjustments, and successfully retired our Convertible Notes Payable in full earlier than its maturity date. Through the combination of cash on hand, savings driven by our expanded Liquidity Improvement Plan, net proceeds from our completed and any future anticipated asset dispositions, and securing additional financing, we expect to improve our liquidity position. We plan to use this anticipated liquidity runway while we seek to secure partnerships and licensing agreements to help us execute our long-term strategy.

On December 18, 2023, we received notice from the NYSE that it had determined to commence proceedings to delist our Public Warrants, issued in connection with the Merger that closed on September 29, 2021, with each warrant exercisable for one share of our common stock at an exercise price of $11.50 per share, due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. On December 19, 2023, the NYSE suspended trading in the warrants. On January 5, 2024, the NYSE filed a Form 25 with the SEC to report the removal of the warrants from listing. On January 15, 2024, the delisting of the warrants became effective. Since being delisted, our Public Warrants have traded over-the-counter on the OTC Pink Sheets under the symbol “BHILW”.

On September 13, 2023, we received notice (the “Notice”) from the New York Stock Exchange (the “NYSE”) that as of September 12, 2023, we were not in compliance with the continued listing standard set forth in Section 802.01C of the NYSE’s Listed Company Manual (“Section 802.01C”) because the average closing price of our common stock was less than $1.00 over a consecutive 30 trading-day period (the “minimum price condition”). The Notice had no immediate impact on the listing of our common stock on the NYSE, subject to our compliance with the NYSE’s other continued listing requirements, nor did the Notice affect our business, operations or reporting obligations with the SEC.

Section 802.01C requires us to notify the NYSE, within 10 business days of receipt of the Notice, of our intent to cure this deficiency. On September 26, 2023, we notified the NYSE of our intent to regain compliance with the requirements of Section 802.01C.

Under applicable NYSE rules, if we determine that in order to cure the minimum price condition it is necessary to take an action that requires stockholder approval, we may obtain stockholder approval by no later than our next annual meeting and implement the action promptly thereafter. The minimum price condition will be deemed cured if the price promptly exceeds $1.00 per share, and the price remains above the level for at least the following 30 trading days.

Our Board of Directors has approved the inclusion of a reverse stock split proposal in the proxy statement for our 2024 annual meeting of stockholders (the “Annual Meeting”), in order to cure our noncompliance with the minimum price condition. The Annual Meeting is currently planned for August 13, 2024. Our common stock will continue to be listed and trade on the NYSE during this period, subject to our compliance with the NYSE’s other continued listing requirements.

The following table shows the amounts from our condensed consolidated statements of operations, with the corresponding percentage change from the comparative prior year period:

Selling, general and administrative expenses for the three months ended March 31, 2024 were $14.8 million, an increase of $1.6 million, compared to the same period in 2023. The increase was primarily driven by approximately $3.0 million of non-recurring expenses in the quarter related to the evolution of our company to an asset-light business model partially offset by a decrease in non-cash stock-based compensation expense of approximately $1.6 million driven by the overall decline in the current share price of our common stock and reduced personnel-related costs in connection with implementing the expanded Liquidity Improvement Plan during the three months ended March 31, 2024 compared to the same period in 2023.

Total other (income) expense, net for the three months ended March 31, 2024 was $9.8 million, a decrease of $24.2 million, compared to the same period in 2023. The decrease was largely due to a $21.9 million reduction in the valuation of warrant and conversion option liabilities driven by the fluctuation in the share price of our common stock and equity volatility for the three months ended March 31, 2024 compared to the same period in 2023. The decrease was partially offset by higher interest expense of approximately $2.2 million resulting from debt modifications of the Convertible Notes Payable.

No net income tax benefit for net operating losses incurred in the U.S. has been recorded due to uncertainty in realizing a benefit from these items. The tax expense recorded for the three month period ended March 31, 2023 relates to minor state and foreign taxes.

Adjusted EBITDA is a financial measure of performance not presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Among other financial metrics, our management reviews results of operations based upon Adjusted EBITDA. We calculate Adjusted EBITDA as consolidated net loss from continuing operations before net interest expense, income tax provision and depreciation and amortization, further adjusted to exclude stock-based compensation, changes in fair value of warrants and conversion option, realized (gains) losses on marketable securities, goodwill and long-lived asset impairment, restructuring-related costs (including severance costs) and the impact of significant non-recurring items.

We believe that Adjusted EBITDA is useful in comparing our financial performance with the performance of other companies for the following reasons:

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are as follows:

Because of these limitations, Adjusted EBITDA should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP. Adjusted EBITDA for the three months ended March 31, 2024 and 2023 are presented below. A reconciliation of our consolidated net loss from continuing operations to Adjusted EBITDA is also presented below.