I read through the 2019 Annual Report, have no experience in this business, just my thoughts, which may be and likely are completely wrong.
I was surprised to see how expensive the 365k of financing is. As I read it (and it reads like a riddle--If you haven't read about it, please do. Wow!) the minimum amount due is 600m in 5 years and the company says the company WILL NOT be profitable for 5 years from start of production in Bakersfield in early 2022, if everything goes well with ARB construction contract.
Again, I'm no expert but the XOM deal is for 2.5m barrels a year, approx 15k per day and the revenue from that will be, according to CEO, $600m per year. When you back that out, you see that XOM will take up the entire capacity of the Bakersfield plant for 5 years, so I don't understand how the CEO as someone has suggested here, may announce a deal for jet fuel. There is no capacity until 2027. I guess they could reproduce this whole deal at another refinery?? However, in the letter submitted (page 1) it notes that Bakersfield was able to refine 70,000 barrels a day of oil. Does this mean that Bakersfield will be able to increase its capacity of 70,000 or somewhere significantly more than 15,000? I have no idea, but obviously there is no plan to increase the capacity for at least five years (and no money). Nevertheless, if this is the case, it would change my thoughts significantly on the firm's future. Also, is the plan to sell excess Camelina to other producers? Not sure.
When you add the risk of the Camelina farmers not working out, the construction with ARB having problems (which is the norm in construction contracts, not the exception and how could it not with COVID raging in California, particularly the poorer areas like Bakersfield), the risk of XOM backing out [have you taken a look at the news surrounding XOM lately?], the vested stock options coming on to the market, the license with Haldor only gets them through 40% of the XOM contract, this seems like a bit of a long shot from a value investor POV.
The other note I have is regarding the insider compensation. I know it is good to have insiders aligned with investors, but the idea that just between Noah and Richard,
Richard 110 million shares at .0154
Noah 50 million at .02 and 10 million at .016.
At today's price of .17, that is 28m dollars, just half of the market cap. Between just the two of them they make approx 1m a year in cash. Must be nice to run a company that makes no money and won't for 5 years and hasn't for who knows how long. Did it it ever? Did Jatropha ever make money? I guess they are not being compensated on the success of the company's past ventures. Whatever happens, whether this company becomes profitable or not, it's execs are getting rich! It's just a matter of how rich. I won't be surprised to see this stock go over .50, but it won't be on fundamentals, at least not in the short term.
From a speculation POV: There is so much OTC garbage and there is no question that this is a real company with real prospects. It is not unreasonable to see a glorious future for this company, but it seems unlikely that is going to happen before Richard is retirement-aged.
Again, I know nothing. And if I knew more my opinion may change, specifically with regard to 1) selling Camelina to other producers a possibility of revenue stream 2) expanding Bakersfield capacity.
But I know AT THIS POINT I'll wait until this goes back to .05 to buy it but also be happy for its owners if it never goes down and just keeps going up. Good Luck.
