Business Context and Reporting Period
Company: Green Plains Renewable Energy, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: May 31, 2005
Status: Development stage company incorporated in June 2004. The company is organized to construct and operate a 50 million gallon dry mill fuel-grade ethanol plant in Shenandoah, Iowa. It has no current operating revenues and is in the pre-construction financing phase.
Key Financial Metrics
| Metric | Three Months Ended May 31, 2005 | Six Months Ended May 31, 2005 | Inception to May 31, 2005 |
|---|---|---|---|
| Revenues | $0 | $0 | $0 |
| Net Loss | $(231,524) | $(341,014) | $(391,009) |
| Operating Expenses | $231,766 | $342,480 | $392,785 |
| Cash and Equivalents | $289,262 (as of May 31, 2005) | ||
| Total Assets | $300,585 | ||
| Total Liabilities | $18,306 | ||
| Stockholders' Equity | $282,279 | ||
| Shares Outstanding | 765,000 |
Liquidity: The company holds $289,262 in cash. It has a credit card line of credit with a limit of $10,700, with an outstanding balance of $8,106 as of May 31, 2005.
Material Changes and Operational Status
- No Revenue Generation: The company continues to report zero revenue as it has not commenced plant operations.
- Accumulated Deficit: The accumulated deficit stands at $(391,009) from inception, driven entirely by consulting, professional, and general administrative expenses.
- Capital Structure: The company has raised approximately $637,500 in seed capital. It has filed a Registration Statement for an IPO to raise between $29.7 million and $35.3 million.
- Project Cost: The estimated total cost to construct the plant is approximately $75.9 million.
Guidance, Outlook, and Risks
Outlook and Financing Needs: The company expects to spend the next 24 months on financing, design, and construction. It anticipates needing approximately $36 million to $41.7 million in debt financing to complete the project, depending on the equity raised in the IPO. Management has had limited discussions with lenders but holds no binding agreements for debt financing. If the minimum equity offering is not raised and debt financing is not secured by November 29, 2005, the offering will fail, and funds will be returned to investors.
Key Risks and Contingencies:
- Financing Risk: There is no assurance the company will secure the necessary equity or debt financing. Failure to do so will result in the abandonment of the business plan.
- Operational Risk: The company has no experienced general manager and relies on the president and board for record-keeping. There is no assurance of retaining qualified staff.
- Market Risk: Future operations will be sensitive to corn and natural gas price fluctuations. The company plans to use hedging strategies but currently has no exposure.
- Product Sales: The company has no agreements with third parties to sell ethanol or distillers grains (DDGS) upon completion.
- Carbon Dioxide: The plant will produce significant CO2, but there is no agreement to capture or market it; it may be vented.
Investor Verification Checklist
- Financing Commitments: Verify if the company has secured the required debt financing commitments (approx. $36M+) necessary to close the IPO escrow.
- Offering Status: Confirm the status of the IPO and whether the minimum subscription threshold of $29,667,000 has been met.
- Site and Permits: Verify the status of the property tax abatement from the City of Shenandoah and the acquisition of necessary regulatory permits.
- Management Team: Assess the timeline for hiring an experienced general manager, as the company currently lacks one.
- Off-Balance Sheet Liabilities: Confirm there are no undisclosed liabilities, though the filing states none exist.