AEMETIS, INC Commitments Disclosure

5. Commitments and Contingencies

Leases

The Company is a party to operating leases for the Company's corporate office in Cupertino, modular offices, and laboratory facilities.  We have also entered into several finance leases for mobile equipment and for the Riverbank Industrial Complex.  These finance leases have a purchase option at the end of the term that we are reasonably certain we will exercise, so the leases are classified as finance leases. All of our leases have remaining term of one year to 13 years. We made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses.

The Company evaluates leases in accordance with ASC 842 – Lease Accounting. When discount rates implicit in leases cannot be readily determined, we use the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and right of use (ROU) assets. The incremental borrowing rate used by the Company is based on weighted average baseline rates commensurate with the Company’s secured borrowing rate, over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter are used.

The components of lease expense and sublease income is as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Supplemental non-cash flow information related to the operating ROU asset and lease liabilities for the year ended December 31, 2023 and 2022:

Supplemental balance sheet information related to leases was as follows:

Maturities of operating lease liabilities were as follows:

The components of lease income for the years ended  December 31, 2023 and 2022 were as follows:

Future lease commitments to be received by the Company as of  December 31, 2023, are as follows:

Legal Proceedings

On  August 31, 2016, the Company filed a lawsuit in Santa Clara County Superior Court against defendant EdenIQ, Inc. (“EdenIQ”). The lawsuit was based on EdenIQ’s wrongful termination of a merger agreement that would have effectuated the merger of EdenIQ into a new entity that would be primarily owned by Aemetis. On  July 24, 2019, the court awarded EdenIQ a portion of the fees and costs it had sought in the amount of approximately $6.2 million and the Company recorded these fees based on the court order. On  May 6, 2022 the parties settled the dispute for $4.8 million by entering into a settlement agreement. The settlement was paid and a gain on litigation of $1.4 million was recognized on the income statement in the second quarter of 2022.

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. While the ultimate outcome of these matters is not presently determinable, it is in the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. Due to the uncertainties in the litigation and settlement process, it is at least reasonably possible that management's view of outcomes will change in the near term.