next20210930_10q.htm
0001612720 NextDecade Corp. false --12-31 Q3 2021 1,000 1,000 71,552 71,552 65,507 65,507 1,000 1,000 68,783 68,783 62,612 62,612 1,000 1,000 41,449 41,449 0 0 0.0001 0.0001 480.0 480.0 120.7 120.7 117.8 117.8 344,459 249,742 0.0001 0.0001 0.8 0.8 0 0 0 0 5,557 1,627 1,621 7,178 3,613 16 10,807 0.09 20 0.1 0.4 8.3 3.0 0 0 0 0 Does not include 8.3 million shares for each of the three and nine months ended September 30, 2021 and 3.0 million shares for each of the three and nine months ended September 30, 2020, of unvested stock because the performance conditions had not yet been satisfied as of September 30, 2021 and 2020, respectively. Permitting costs primarily represent costs incurred in connection with permit applications to the United States Army Corps of Engineers and the U.S. Fish and Wildlife Service for mitigation measures for potential impacts to wetlands and habitat that may be caused by the construction of the Terminal and the Pipeline. The IPO Warrants were issued in connection with our initial public offering in 2015. The IPO Warrants are exercisable at a price of $11.50 per share and expire on July 24, 2022. The Company may redeem the IPO Warrants at a price of $0.01 per IPO Warrant upon 30 days' notice only if the last sale price of our common stock is at least $17.50 per share for any 20 trading days within a 30 trading day period. 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Table of Contents



UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

 

      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

 

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                    to

 

Commission File No. 001-36842

 

NEXTDECADE CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

    

46-5723951

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

1000 Louisiana Street, Suite 3900, Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

 

(713) 574-1880

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Stock, $0.0001 par value

 

NEXT

 

The Nasdaq Stock Market LLC

 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

☒   

Smaller reporting company

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No ☒

 

As of November 8, 2021, the issuer had 123,829,640 shares of common stock outstanding.



 

 

 

NEXTDECADE CORPORATION

 

FORM 10-Q FOR THE QUARTER ENDED September 30, 2021

 

TABLE OF CONTENTS

 

 

Page

Organizational Structure

 
   

Part I. Financial Information

1

Item 1. Consolidated Financial Statements

1

Consolidated Balance Sheets

1

Consolidated Statements of Operations

2

Consolidated Statements of Stockholders’ Equity and Convertible Preferred Stock

3

Consolidated Statements of Cash Flows

5

Notes to Consolidated Financial Statements

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3. Quantitative and Qualitative Disclosures About Market Risk

16

Item 4. Controls and Procedures

16

Part II. Other Information

17

Item 1. Legal Proceedings

17

Item 1A. Risk Factors

17

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

18

Item 3. Defaults Upon Senior Securities

18

Item 4. Mine Safety Disclosures

18

Item 5. Other Information

18

Item 6. Exhibits

19

Signatures

20

 

 

 

 

Organizational Structure

 

The following diagram depicts our abbreviated organizational structure as of September 30, 2021 with references to the names of certain entities discussed in this Quarterly Report on Form 10-Q.

 

 

https://cdn.kscope.io/1e256d1a85639f309aeaa9f72939b2cb-abbreviatedorgchartforkandqm.jpg

 

Unless the context requires otherwise, references to “NextDecade,” the “Company,” “we,” “us” and “our” refer to NextDecade Corporation (NASDAQ: NEXT) and its consolidated subsidiaries.

 

 
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

NextDecade Corporation

Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

 

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Assets

        

Current assets

        

Cash and cash equivalents

 $36,743  $22,608 

Prepaid expenses and other current assets

  883   670 

Total current assets

  37,626   23,278 

Property, plant and equipment, net

  170,431   161,662 

Operating lease right-of-use assets, net

  727   429 

Other non-current assets, net

  19,903   16,299 

Total assets

 $228,687  $201,668 
         

Liabilities, Convertible Preferred Stock and Stockholders’ Equity

        

Current liabilities

        

Accounts payable

 $744  $207 

Share-based compensation liability

  182   182 

Accrued liabilities and other current liabilities

  5,306   1,032 

Current common stock warrant liabilities

  1,330   3,290 

Current operating lease liabilities

  579   432 

Total current liabilities

  8,141   5,143 

Non-current common stock warrant liabilities

  2,463   874 

Non-current operating lease liabilities

  169    

Other non-current liabilities

  23,000   22,916 

Total liabilities

  33,773   28,933 
         

Commitments and contingencies (Note 13)

          
         

Series A Convertible Preferred Stock, $1,000 per share liquidation preference Issued and outstanding: 71,552 shares and 65,507 shares at September 30, 2021 and December 31, 2020, respectively

  61,614   55,522 

Series B Convertible Preferred Stock, $1,000 per share liquidation preference Issued and outstanding: 68,373 shares and 62,612 shares at September 30, 2021 and December 31, 2020, respectively

  62,542   56,781 

Series C Convertible Preferred Stock, $1,000 per share liquidation preference Issued and outstanding: 41,449 shares and no shares at September 30, 2021 and December 31, 2020, respectively

  38,966    

Stockholders’ equity

        

Common stock, $0.0001 par value Authorized: 480.0 million shares at September 30, 2021 and December 31, 2020 Issued and outstanding: 120.7 million shares and 117.8 million shares at September 30, 2021 and December 31, 2020, respectively

  12   12 

Treasury stock: 344,459 shares and 249,742 shares at September 30, 2021 and December 31, 2020, respectively, at cost

  (1,310)  (1,031)

Preferred stock, $0.0001 par value Authorized: 0.8 million, after designation of the Convertible Preferred Stock Issued and outstanding: none at September 30, 2021 and December 31, 2020

      

Additional paid-in-capital

  195,136   209,481 

Accumulated deficit

  (162,046)  (148,030)

Total stockholders’ equity

  31,792   60,432 

Total liabilities, convertible preferred stock and stockholders’ equity

 $228,687  $201,668 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

 

NextDecade Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Revenues

 $  $  $  $ 

Operating expenses

                

General and administrative expense

  2,937   5,069   10,840   16,582 

Land option and lease expense

  240   423   678   1,281 

Depreciation expense

  43   65   136   146 

Total operating expenses

  3,220   5,557   11,654   18,009 

Total operating loss

  (3,220)  (5,557)  (11,654)  (18,009)

Other income (expense)

                

Gain (loss) on common stock warrant liabilities

  4,442   (1,627)  (2,363)  6,147 

Loss on redemption of investment securities

           (412)

Interest income, net

     7   2   241 

Other

     (1)  (1)  (17)

Total other income (expense)

  4,442   (1,621)  (2,362)  5,959 

Net income (loss) attributable to NextDecade Corporation

  1,222   (7,178)  (14,016)  (12,050)

Preferred stock dividends

  (5,264)  (3,613)  (13,015)  (10,565)

Deemed dividends on Series A Convertible Preferred Stock

  (16)  (16)  (47)  (113)

Net loss attributable to common stockholders

 $(4,058) $(10,807) $(27,078) $(22,728)
                 

Net loss per common share - basic and diluted

 $(0.03) $(0.09) $(0.23) $(0.19)
                 

Weighted average shares outstanding - basic and diluted

  119,374   117,564   118,677   117,450 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

 

NextDecade Corporation

Consolidated Statement of Stockholders Equity and Convertible Preferred Stock

(in thousands)

(unaudited)

 

  

For the Three Months Ended September 30, 2021

 
  

Common Stock

  

Treasury Stock

              

Series A

  

Series B

  

Series C

 
      

Par

          

Additional

      

Total

  

Convertible

  

Convertible

  

Convertible

 
      

Value

          

Paid-in

  

Accumulated

  

Stockholders’

  

Preferred

  

Preferred

  

Preferred

 
  

Shares

  

Amount

  

Shares

  

Amount

  

Capital

  

Deficit

  

Equity

  

Stock

  

Stock

  

Stock

 

Balance at June 30, 2021

  118,482  $12   300  $(1,171) $199,553  $(163,268) $35,126  $59,509  $60,549  $33,173 

Share-based compensation

              (3,653)     (3,653)         

Restricted stock vesting

  285                            

Shares repurchased related to share-based compensation

  (44)     44   (139)        (139)         

Issuance of common stock, net

  116            151      151          

Stock dividend

  399                            

Exercise of common stock warrants

  1,485            4,365      4,365          

Issuance of Series C Convertible Preferred Stock

                             4,634 

Preferred stock dividends

              (5,264)     (5,264)  2,089   1,993   1,159 

Deemed dividends - accretion of beneficial conversion feature

              (16)     (16)  16       

Net income

                 1,222   1,222          

Balance at September 30, 2021

  120,723  $12   344  $(1,310) $195,136  $(162,046) $31,792  $61,614  $62,542  $38,966 

 

 

   

For the Nine Months Ended September 30, 2021

 
   

Common Stock

   

Treasury Stock

                           

Series A

   

Series B

   

Series C

 
           

Par

                   

Additional

           

Total

   

Convertible

   

Convertible

   

Convertible

 
           

Value

                   

Paid-in

   

Accumulated

   

Stockholders’

   

Preferred

   

Preferred

   

Preferred

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

   

Stock

   

Stock

   

Stock

 

Balance at December 31, 2020

    117,829     $ 12       249     $ (1,031 )   $ 209,481     $ (148,030 )   $ 60,432     $ 55,522     $ 56,781     $  

Share-based compensation

                            (5,799 )           (5,799 )                  

Restricted stock vesting

    590                                                        

Shares repurchased related to share-based compensation

    (95 )           95       (279 )                 (279 )                  

Issuance of common stock, net

    116                         151             151                    

Stock dividend

    798                                                        

Exercise of common stock warrants

    1,485                         4,365             4,365                    

Issuance of Series C Convertible Preferred Stock

                                                          37,807  

Preferred stock dividends

                            (13,015 )           (13,015 )     6,045       5,761       1,159  

Deemed dividends - accretion of beneficial conversion feature

                            (47 )           (47 )     47              

Net loss

                                  (14,016 )     (14,016 )                  

Balance at September 30, 2021

    120,723     $ 12       344     $ (1,310 )   $ 195,136     $ (162,046 )   $ 31,792     $ 61,614     $ 62,542     $ 38,966  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

3

 

   

For the Three Months Ended September 30, 2020

 
   

Common Stock

   

Treasury Stock

                           

Series A

   

Series B

 
           

Par

                   

Additional

           

Total

   

Convertible

   

Convertible

 
           

Value

                   

Paid-in

   

Accumulated

   

Stockholders’

   

Preferred

   

Preferred

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

   

Stock

   

Stock

 

Balance at June 30, 2020

    117,492     $ 12       178     $ (796 )   $ 215,807     $ (138,573 )     76,450     $ 51,727     $ 53,192  

Share-based compensation

                            629             629              

Restricted stock vesting

    292                                                  

Shares repurchased related to share-based compensation

    (64 )           64       (211 )                 (211 )            

Preferred stock dividends

                            (3,613 )           (3,613 )     1,843       1,757  

Deemed dividends - accretion of beneficial conversion feature

                            (16 )           (16 )     16        

Net loss

                                  (7,178 )     (7,178 )            

Balance at September 30, 2020

    117,720     $ 12       242     $ (1,007 )   $ 212,807     $ (145,751 )   $ 66,061     $ 53,586     $ 54,949  

 

 

   

For the Nine Months Ended September 30, 2020

 
   

Common Stock

   

Treasury Stock

                           

Series A

   

Series B

 
           

Par

                   

Additional

           

Total

   

Convertible

   

Convertible

 
           

Value

                   

Paid-in

   

Accumulated

   

Stockholders’

   

Preferred

   

Preferred

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

   

Stock

   

Stock

 

Balance at December 31, 2019

    117,329     $ 12       137     $ (685 )   $ 224,091     $ (133,701 )     89,717     $ 48,084     $ 49,814  

Share-based compensation

                            (606 )           (606 )            

Restricted stock vesting

    496                                                  

Shares repurchased related to share-based compensation

    (105 )           105       (322 )                 (322 )            

Preferred stock dividends

                            (10,565 )           (10,565 )     5,389       5,135  

Deemed dividends - accretion of beneficial conversion feature

                            (113 )           (113 )     113        

Net loss

                                  (12,050 )     (12,050 )            

Balance at September 30, 2020

    117,720     $ 12       242     $ (1,007 )   $ 212,807     $ (145,751 )   $ 66,061     $ 53,586     $ 54,949  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

 

NextDecade Corporation.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

  

Nine Months Ended

 
  

September 30,

 
  

2021

  

2020

 

Operating activities:

        

Net loss attributable to NextDecade Corporation

 $(14,016) $(12,050)

Adjustment to reconcile net loss to net cash used in operating activities

        

Depreciation

  

136

   146 

Share-based compensation expense (forfeiture)

  (5,571)  (759)

Loss (gain) on common stock warrant liabilities

  2,363   (6,147)

Realized loss on investment securities

     423 

Amortization of right-of-use assets

  414   984 

Amortization of other non-current assets

  1,062   1,042 

Changes in operating assets and liabilities:

        

Prepaid expenses

  (234)  61 

Accounts payable

  76   (478)

Operating lease liabilities

  (396)  (710)

Accrued expenses and other liabilities

  3,914   (5,258)

Net cash used in operating activities

  (12,252)  (22,746)

Investing activities:

        

Acquisition of property, plant and equipment

  (8,390)  (30,088)

Acquisition of other non-current assets

  (4,666)  (9,390)

Proceeds from sale of investment securities

     61,972 

Purchase of investment securities

     (188)

Net cash (used in) provided by investing activities

  (13,056)  22,306 

Financing activities:

        

Proceeds from sale of Rio Bravo

     15,000 

Proceeds from sale of Series C Convertible Preferred Stock

  39,500    

Proceeds from sale of common stock

  389    

Equity issuance costs

  (117)   

Preferred stock dividends

  (50)  (41)

Shares repurchased related to share-based compensation

  (279)  (322)

Net cash provided by financing activities

  39,443   14,637 

Net increase in cash and cash equivalents

  14,135   14,197 

Cash and cash equivalents – beginning of period

  22,608   15,736 

Cash and cash equivalents – end of period

 $36,743  $29,933 
         

Non-cash investing activities:

        

Accounts payable for acquisition of property, plant and equipment

 $329  $479 

Accrued liabilities for acquisition of property, plant and equipment

  996   382 

Pipeline assets obtained in exchange for other non-current liabilities

  84   6,670 

Non-cash financing activities:

        

Paid-in-kind dividends on Convertible Preferred Stock

  12,965   10,524 

Accretion of deemed dividends on Series A Convertible Preferred Stock

  47   113 

Accounts payable for equity issuance costs

  148    

Accrued liabilities for equity issuance costs

  35    

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

NextDecade Corporation

Notes to Consolidated Financial Statements

(unaudited)

 

 

Note 1 — Background and Basis of Presentation

 

NextDecade Corporation engages in development activities related to the liquefaction and sale of liquefied natural gas (“LNG”) and the reduction of CO2 emissions. We have focused and continue to focus our development activities on the Rio Grande LNG terminal facility at the Port of Brownsville in southern Texas (the “Terminal”) and a carbon capture and storage project at the Terminal (the “CCS project”). 

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020. In our opinion, all adjustments, consisting only of normal recurring items, which are considered necessary for a fair presentation of the unaudited consolidated financial statements, have been included. The results of operations for the three months ended September 30, 2021 are not necessarily indicative of the operating results for the full year.

 

 

 

Note 2 — Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consisted of the following (in thousands):

 

   

September 30,

   

December 31,

 
   

2021

   

2020

 

Prepaid subscriptions

  $ 203     $ 29  

Prepaid insurance

    389       314  

Prepaid marketing and sponsorships

    60       60  

Other

    231       267  

Total prepaid expenses and other current assets

  $ 883     $ 670  

 

 

 

Note 3 — Sale of Equity Interests in Rio Bravo

 

On March 2, 2020, NextDecade LLC closed the transactions (the “Closing”) contemplated by that certain Omnibus Agreement, dated February 13, 2020, with Spectra Energy Transmission II, LLC, a wholly owned subsidiary of Enbridge Inc. (“Buyer”), pursuant to which NextDecade LLC sold one hundred percent of the equity interests (the “Equity Interests”) in Rio Bravo Pipeline Company, LLC (“Rio Bravo”) to Buyer for consideration of approximately $19.4 million. Buyer paid $15.0 million of the Purchase Price to NextDecade LLC at the Closing and the remainder will be paid within five business days after the date that Rio Grande has received, after a final positive investment decision, the initial funding of financing for the development, construction and operation of the Terminal. Rio Bravo is developing a proposed interstate natural gas pipeline (the “Pipeline”) to supply natural gas to the Terminal.  In connection with the Closing, Rio Grande LNG Gas Supply LLC, an indirect wholly-owned subsidiary of the Company (“Rio Grande Gas Supply”), entered into (i) a Precedent Agreement for Firm Natural Gas Transportation Service for the Rio Bravo Pipeline (the “RBPL Precedent Agreement”) with Rio Bravo and (ii) a Precedent Agreement for Natural Gas Transportation Service (the “VCP Precedent Agreement”) with Valley Crossing Pipeline, LLC (“VCP”). VCP and, as of the Closing, Rio Bravo are wholly owned subsidiaries of Enbridge Inc. The Valley Crossing Pipeline is owned and operated by VCP.

 

Pursuant to the RBPL Precedent Agreement, Rio Bravo agreed to provide Rio Grande Gas Supply with firm natural gas transportation services on the Pipeline in a quantity sufficient to match the full operational capacity of each proposed liquefaction train of the Terminal. Rio Bravo’s obligation to construct, install, own, operate and maintain the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the engineering, procurement and construction contractor (the “EPC Contractor”) for the construction of the Terminal. Under the RBPL Precedent Agreement, in consideration for the provision of such firm transportation services, Rio Bravo will be remunerated on a dollar-per-dekatherm, take-or-pay basis, subject to certain adjustments, over a term of at least twenty years, all in compliance with the federal and state authorizations associated with the Pipeline.

 

Pursuant to the VCP Precedent Agreement, VCP agreed to provide Rio Grande Gas Supply with natural gas transportation services on the Valley Crossing Pipeline in a quantity sufficient to match the commissioning requirements of each proposed liquefaction train of the Terminal. VCP’s obligation to construct, install, own, operate and maintain the necessary interconnection to the Terminal and the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the EPC Contractor for the construction of the Terminal. VCP will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the tap, riser and valve facilities (the “VCP Transporter Facilities”), which shall connect to Rio Grande Gas Supply’s custody transfer meter and such other facilities as necessary in order for the Terminal to receive gas from the VCP Transporter Facilities (the “Rio Grande Gas Supply Facilities”). Rio Grande Gas Supply will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the Rio Grande Gas Supply Facilities. Under the VCP Precedent Agreement, in consideration for the provision of the commissioning transportation services, VCP will be remunerated on the same dollar-per-dekatherm, take-or-pay basis as set forth in the RBPL Precedent Agreement for the duration of such commissioning services, all in compliance with the federal and state authorizations associated with the Valley Crossing Pipeline.

 

If Rio Grande or its affiliate fails to issue a full notice to proceed to the EPC Contractor on or prior to December 31, 2023, Buyer has the right to sell the Equity Interests back to NextDecade LLC and NextDecade LLC has the right to repurchase the Equity Interests from Buyer, in each case at a price not to exceed $23 million. Accordingly, the proceeds from the sale of the Equity Interests and additional costs incurred by Buyer are presented as a non-current liability and the assets of Rio Bravo have not been de-recognized in the consolidated balance sheet at September 30, 2021.

 

 

6

 
 

Note 4 — Property, Plant and Equipment

 

Property, plant and equipment consisted of the following (in thousands):

 

   

September 30,

   

December 31,

 
   

2021

   

2020

 

Fixed Assets

               

Computers

  $ 487     $ 487  

Furniture, fixtures, and equipment

    464       464  

Leasehold improvements

    101       101  

Total fixed assets

    1,052       1,052  

Less: accumulated depreciation

    (797 )     (660 )

Total fixed assets, net

    255       392  

Project Assets (not placed in service)

               

Terminal

    149,160       140,253  

Pipeline

    21,016       21,017  

Total Terminal and Pipeline assets

    170,176       161,270  

Total property, plant and equipment, net

  $ 170,431     $ 161,662  

 

Depreciation expense was $43 thousand and $65 thousand for the three months ended  September 30, 2021 and 2020, respectively, and $136 thousand and $146 thousand for the nine months ended September 30, 2021 and 2020, respectively.

 

 

 

Note 5 — Leases

 

Our leased assets primarily consist of office space and land sites. 

 

Operating lease right-of-use assets are as follows (in thousands):

 

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Office leases

 $727  $429 

Total operating lease right-of-use assets, net

 $727  $429 

 

 

Operating lease liabilities are as follows (in thousands):

 

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Office leases

 $579  $432 

Total current lease liabilities

 $579  $432 

Non-current office leases

  169    

Total lease liabilities

 $748  $432 

 

 

Operating lease expense is as follows (in thousands):

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Office leases

 $156  $238  $470  $691 

Land leases

     113      332 

Total operating lease expense

  156   351   470   1,023 

Short-term lease expense

  84   72   208   249 

Land option expense

           9 

Total land option and lease expense

 $240  $423  $678  $1,281 

 

Maturity of operating lease liabilities as of September 30, 2021 are as follows (in thousands, except lease term and discount rate):

 

2021 (remaining)

 $115 

2022

  690 

2023

   

2024

   

2025

   

Thereafter

   

Total undiscounted lease payments

  805 

Discount to present value

  (57)

Present value of lease liabilities

 $748 
     

Weighted average remaining lease term - years

  1.2 

Weighted average discount rate - percent

  12.0 

 

7

 

Other information related to our operating leases is as follows (in thousands):

 
  

Nine Months Ended September 30,

 
  

2021

  

2020

 

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

        

Cash flows from operating activities

 $509  $600 

Noncash right-of-use assets recorded for operating lease liabilities:

        

In exchange for new operating lease liabilities during the period

  712   605 

 

 

 

Note 6 — Other Non-Current Assets

 

Other non-current assets consisted of the following (in thousands)

 

   

September 30,

   

December 31,

 
   

2021

   

2020

 

Permitting costs(1)

  $ 7,409     $ 7,385  

Enterprise resource planning system, net

    743       1,805  

Rio Grande Site Lease initial direct costs

    11,751       7,109  

Total other non-current assets, net

  $ 19,903     $ 16,299  

 

(1)

Permitting costs primarily represent costs incurred in connection with permit applications to the United States Army Corps of Engineers and the U.S. Fish and Wildlife Service for mitigation measures for potential impacts to wetlands and habitat that may be caused by the construction of the Terminal and the Pipeline.

 

 

Note 7 — Accrued Liabilities and Other Current Liabilities

 

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Employee compensation expense

 $3,725  $14 

Terminal costs

  996   650 

Accrued legal services

  42   5 

Other accrued liabilities

  543   363 

Total accrued liabilities and other current liabilities

 $5,306  $1,032 

 

 

Note 8 – Preferred Stock and Common Stock Warrants

 

Preferred Stock

 

In August 2018, we sold an aggregate of 50,000 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock), at $1,000 per share for an aggregate purchase price of $50 million and we issued an additional 1,000 shares of Series A Preferred Stock in aggregate as origination fees to the purchasers of the Series A Preferred Stock. 

 

In September 2018, we sold an aggregate of 29,055 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), at $1,000 per share for an aggregate purchase price of $29.055 million and we issued an additional 581 shares of Series B Preferred Stock in aggregate as origination fees to the purchasers of the Series B Preferred Stock.

 

In May 2019, we sold an aggregate of 20,945 shares of Series B Preferred Stock at $1,000 per share for an aggregate purchase price of $20.945 million and we issued an additional 418 shares of Series B Preferred Stock in aggregate as origination fees to the purchasers of such shares of Series B Preferred Stock. 

 

In March 2021, we sold an aggregate of 24,500 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock” and, together with the Series A Preferred Stock and the Series B Preferred Stock, the “Convertible Preferred Stock”), at $1,000 per share for an aggregate purchase price of $24.5 million and we issued an additional 490 shares of Series C Preferred Stock in aggregate as origination fees to the purchasers of the Series C Preferred Stock.

 

In April 2021, we sold 10,000 shares of Series C Preferred Stock, at $1,000 per share for a purchase price of $10 million and we issued an additional 200 shares of Series C Preferred Stock as an origination fee to the purchaser of the Series C Preferred Stock.

 

In July 2021, we sold 5,000 shares of Series C Preferred Stock, at $1,000 per share for a purchase price of $5 million and we issued an additional 100 shares of Series C Preferred Stock as an origination fee to the purchaser of the Series C Preferred Stock.

 

Warrants, exercisable for Company common stock, were issued together with the shares of Convertible Preferred Stock (collectively, “Common Stock Warrants”).

 

The shares of Convertible Preferred Stock bear dividends at a rate of 12% per annum, which are cumulative and accrue daily from the respective dates of issuance on the $1,000 stated value. Such dividends are payable quarterly and may be paid in cash or in-kind. During the nine months ended September 30, 2021 and 2020, the Company paid-in-kind $13.0 million and $10.5 million of dividends, respectively, to the holders of the Convertible Preferred Stock.  On October 12, 2021, the Company declared dividends to the holders of the Convertible Preferred Stock as of the close of business on September 15, 2021.  On October 15, 2021, the Company paid-in-kind $5.3 million of dividends to the holders of the Convertible Preferred Stock.

 

As of September 30, 2021, shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock were convertible into shares of Company common stock at a weighted average conversion price of $6.54 per share, $6.57 per share and $3.29 per share, respectively.

 

Initial Fair Value Allocation

 

Net proceeds from the sales of Series C Preferred Stock were allocated on a fair value basis to the warrants issued together with the shares of the Series C Preferred Stock and on a relative fair value basis to the Series C Preferred Stock. The allocation of net cash proceeds from the sale of Series C Preferred Stock is as follows (in thousands):

 

      

Allocation of Proceeds

 
          

Series C

 
      

Series C

  Preferred 
      

Warrants

  Stock 

Gross proceeds

 $39,500         

Equity issuance costs

  (61)        

Net proceeds - Initial Fair Value Allocation

 $39,439  $1,631  $37,808 

Per balance sheet upon issuance

     $1,631  $37,808 

 

Common Stock Warrants

 

The Company revalues the Common Stock Warrants at each balance sheet date and recognized a gain of $4.4 million and a loss of $1.6 million during the three months ended September 30, 2021 and 2020, respectively, and a loss of $2.4 million and a gain of $6.1 million during the nine months ended September 30, 2021 and 2020, respectively.  The Common Stock Warrant liabilities are included in Level 3 of the fair value hierarchy.

 

The Company used a Monte Carlo simulation model to estimate the fair value of the Common Stock Warrants using the following assumptions:

 

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Stock price

 $2.78  $2.09 

Exercise price

 $0.01  $0.01 

Risk-free rate

  0.5%  0.1%

Volatility

  58.2%  58.6%

Term (years)

  1.9   0.8 

 

Beneficial Conversion Feature

 

ASC 470-20-20 – Debt – Debt with conversion and Other Options (“ASC 470-20”) defines a beneficial conversion feature (“BCF”) as a nondetachable conversion feature that is in the money at the issuance date. The Company was required by ASC 470-20 to allocate a portion of the proceeds from the Series A Preferred Stock equal to the intrinsic value of the BCF to additional paid-in capital. The Company is recording the accretion of the $2.5 million Series A Preferred Stock discount attributable to the BCF as a deemed dividend using the effective yield method over the period prior to the expected conversion date. 

 

Note 9 — Stockholders' Equity

 

Common Stock Purchase Agreement

 

On October 24, 2019, the Company entered into a Common Stock Purchase Agreement with Ninteenth Investment Company LLC, an affiliate of Mubadala Investment Company PJSC (the “Purchaser”).  During the three and nine months ended September 30, 2021, the Company issued an additional 399 thousand and 798 thousand shares of Company common stock, respectively, to the Purchaser pursuant to the terms of the Common Stock Purchase Agreement.

 

At-the-Market Program

 

In August 2021, the Company entered into an at-the-market sales agreement with Virtu Americas LLC (“Virtu”) pursuant to which the Company may sell shares of Company common stock from time to time through Virtu acting as sales agent, for aggregate proceeds of up to $50 million.  During the three and nine months ended September 30, 2021, the Company sold approximately 0.1 million shares for proceeds of approximately $0.4 million.

 

Common Stock Warrants

 

During the three months ended September 30, 2021, Common Stock Warrants were exercised by certain holders of Series A Preferred Stock and Series B Preferred Stock.  In connection with the exercises of Common Stock Warrants, the Company issued an aggregate of approximately 1.5 million shares of Company common stock.  

 

 

Note 10 — Net Loss Per Share

 

The following table (in thousands, except for loss per share) reconciles basic and diluted weighted average common shares outstanding for each of the three and nine months ended September 30, 2021 and 2020:

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Weighted average common shares outstanding:

                

Basic

  119,374   117,564   118,677   117,450 

Dilutive unvested stock, convertible preferred stock, Common Stock Warrants and IPO Warrants

            

Diluted

  119,374   117,564   118,677   117,450 
                 

Basic and diluted net loss per share attributable to common stockholders

 $(0.03) $(0.09) $(0.23) $(0.19)

 

8

 

Potentially dilutive securities not included in the diluted net loss per share computations because their effect would have been anti-dilutive were as follows (in thousands):

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Unvested stock (1)

  1,831   848   1,581   993 

Convertible preferred stock

  34,095   16,869   29,174   16,386 

Common Stock Warrants

  2,510   1,979   2,486   1,972 

IPO Warrants(2)

  12,082   12,082   12,082   12,082 

Total potentially dilutive common shares

  50,518   31,778   45,323   31,433 

 


(1)

Does not include 8.3 million shares for each of the three and nine months ended September 30, 2021 and 3.0 million shares for each of the three and nine months ended September 30, 2020, of unvested stock because the performance conditions had not yet been satisfied as of September 30, 2021 and 2020, respectively. 

 

(2)

The IPO Warrants were issued in connection with our initial public offering in 2015. The IPO Warrants are exercisable at a price of $11.50 per share and expire on July 24, 2022. The Company may redeem the IPO Warrants at a price of $0.01 per IPO Warrant upon 30 days’ notice only if the last sale price of our common stock is at least $17.50 per share for any 20 trading days within a 30 trading day period. If the Company redeems the IPO Warrants in this manner, the Company will have the option to do so on a cashless basis with the issuance of an economically equivalent number of shares of Company common stock. 

 

 

 

Note 11 — Share-based Compensation

 

We have granted shares of Company common stock, restricted Company common stock and restricted stock units to employees, consultants and non-employee directors under our 2017 Omnibus Incentive Plan, as amended (the “2017 Plan”).

 

Total share-based compensation consisted of the following (in thousands):

 

  

Three months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Share-based compensation:

                

Equity awards

 $(3,653) $629  $(5,799) $(606)

Liability awards

            

Total share-based compensation

  (3,653)  629   (5,799)  (606)

Capitalized share-based compensation

  944   211   228   (153)

Total share-based compensation expense

 $(2,709) $840  $(5,571) $(759)

 

 

 

 

Note 12 — Income Taxes

 

Due to our cumulative loss position, we have established a full valuation allowance against our deferred tax assets at September 30, 2021 and December 31, 2020. Due to our full valuation allowance, we have not recorded a provision for federal or state income taxes during either of the three and nine months ended September 30, 2021 or 2020.

 

In response to the global pandemic related to COVID-19, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020 and the Consolidated Appropriations Act, 2021 (the “CAA”) on December 27, 2020. The CARES Act and the CAA provide numerous relief provisions for corporate taxpayers, including modification of the utilization limitations on NOLs, favorable expansions of the deduction for business interest expense under Internal Revenue Code Section 163(j), and the ability to accelerate timing of refundable alternative minimum tax credits. For the three and nine months ended September 30, 2021, there were no material tax impacts to our consolidated financial statements from the CARES Act, the CAA or other COVID-19 measures.  The Company continues to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others.

 

 

Note 13 — Commitments and Contingencies

 

Rio Grande Site Lease

 

On March 6, 2019, Rio Grande entered into a lease agreement (the “Rio Grande Site Lease”) with the Brownsville Navigation District of Cameron County, Texas (“BND”) for the lease by Rio Grande of approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining (i) a liquefied natural gas facility and export terminal and (ii) gas treatment and gas pipeline facilities.

 

On April 30, 2020, Rio Grande and the BND amended the Rio Grande Site Lease (the “Rio Grande Site Lease Amendment”) to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2021 (the “Effective Date”). The Rio Grande Site Lease Amendment further provides that Rio Grande has the right, exercisable in its sole discretion, to extend the Effective Date to May 6, 2022 by providing the BND with written notice of its election no later than the close of business on the Effective Date.  On April 28, 2021, Rio Grande delivered a notice to the Port of Brownsville electing to extend the Effective Date of the Rio Grande Site Lease Amendment to May 6, 2022.

 

In connection with the Rio Grande Site Lease Amendment, Rio Grande is committed to pay approximately $1.5 million per quarter to the BND through the earlier of the Effective Date and lease commencement.

 

9

 

Obligation under LNG Sale and Purchase Agreement

 

In March 2019, we entered into a 20-year sale and purchase agreement (the “SPA”) with Shell NA LNG LLC (“Shell”) for the supply of approximately two million tonnes per annum of liquefied natural gas from the Terminal. Pursuant to the SPA, Shell will purchase LNG on a free-on-board (“FOB”) basis starting from the date the first liquefaction train of the Terminal that is commercially operable, with approximately three-quarters of the purchased LNG volume indexed to Brent and the remaining volume indexed to domestic United States gas indices, including Henry Hub.

 

In the first quarter of 2020, pursuant to the terms of the SPA, the SPA became effective upon the conditions precedent in the SPA being satisfied or waived.  The SPA obligates Rio Grande to deliver the contracted volumes of LNG to Shell at the FOB delivery point, subject to the first liquefaction train at the Terminal being commercially operable.

 

Legal Proceedings

 

From time to time the Company may be subject to various claims and legal actions that arise in the ordinary course of business. As of  September 30, 2021, management is not aware of any claims or legal actions that, separately or in the aggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the Company cannot guarantee that a material adverse effect will not occur.

 

 

Note 14 — Recent Accounting Pronouncements

 

The following table provides a brief description of recent accounting standards that have not been adopted by the Company as of September 30, 2021:

 

Standard

 

Description

 

Expected Date of Adoption

 

Effect on our Consolidated Financial Statements or Other Significant Matters

ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in Entity's Own Equity

 

This standard simplifies the accounting for convertible instruments primarily by eliminating the existing cash conversion and beneficial conversion models within Subtopic 470-20, which will result in fewer embedded conversion options being accounted for separately from the host.  This standard also amends and simplifies the calculation of earnings per share relating to convertible instruments.  

 

January 1, 2022

 

We plan to adopt this standard using the modified retrospective approach.  Preliminarily, we anticipate the adoption of ASU 2020-06 will not have an effect on our consolidated financial statements.

 

 

Note 15 — Subsequent Events

 

The Company has evaluated subsequent events through November 10, 2021, the date the financial statements were issued. Any material subsequent events that occurred during this time have been properly recognized and/or disclosed in these financial statements.

 

10

 
 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “would,” “could,” “should,” “can have,” “likely,” “continue,” “design” and other words and terms of similar expressions, are intended to identify forward-looking statements.

 

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs.

 

Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties, including those described in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:

 

 

our progress in the development of our liquefied natural gas (“LNG”) liquefaction and export projects and the timing of that progress;

 

 

our final investment decision (“FID”) in the construction and operation of a LNG terminal at the Port of Brownsville in southern Texas (the “Terminal”) and the timing of that decision;

 

 

the successful completion of the Terminal by third-party contractors and a pipeline to supply gas to the Terminal being developed by a third-party;

 

 

our ability to develop the carbon capture and storage project at the Terminal (the “CCS project”) to reduce carbon emissions from the Terminal;

 

 

our ability to secure additional debt and equity financing in the future to complete the Terminal;

 

 

our ability to secure additional debt and equity financing in the future to complete the CCS project, if implemented;

 

 

the accuracy of estimated costs for the Terminal;

 

 

the accuracy of estimated costs for the CCS project;

 

 

statements that the Terminal and the CCS project, when completed, will have certain characteristics, including amounts of liquefaction capacities and amount of CO2 reduction;

 

 

the development risks, operational hazards, regulatory approvals applicable to the Terminal’s, the CCS project's and the third-party pipeline's construction and operations activities;

 

 

technological innovation which may lessen our anticipated competitive advantage;

 

 

the global demand for and price of LNG;

 

 

the availability of LNG vessels worldwide;

 

 

changes in legislation and regulations relating to the LNG industry, including environmental laws and regulations that impose significant compliance costs and liabilities;

 

 

global pandemics, including the 2019 novel coronavirus (“COVID-19”) pandemic, and their impact on our business and operating results, including any disruptions in our operations or development of the Terminal and the health and safety of our employees, and on our customers, the global economy and the demand for LNG; 

 

 

risks related to doing business in and having counterparties in foreign countries;

 

 

our ability to maintain the listing of our securities on a securities exchange or quotation medium;

 

 

changes adversely affecting the business in which we are engaged;

 

 

management of growth;

 

 

general economic conditions;

 

 

our ability to generate cash;

 

 

compliance with environmental laws and regulations; and

 

 

the result of future financing efforts and applications for customary tax incentives.

 

 

Should one or more of the foregoing risks or uncertainties materialize in a way that negatively impacts us, or should the underlying assumptions prove incorrect, our actual results may vary materially from those anticipated in our forward-looking statements, and our business, financial condition, and results of operations could be materially and adversely affected.

 

The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.

 

Except as required by applicable law, we do not undertake any obligation to publicly correct or update any forward-looking statements. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in our most recent Annual Report on Form 10-K as well as other filings we have made and will make with the Securities and Exchange Commission (the “SEC”) and our public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.

 

Overview

 

NextDecade Corporation engages in development activities related to the liquefaction and sale of LNG and the reduction of CO2 emissions, in part, through the CCS project. We have focused and continue to focus our development activities on the Terminal and recently announced our planned development of the CCS project (described further under “Recent Developments”).  We have undertaken and continue to undertake various initiatives to evaluate, design and engineer the Terminal and the CCS project that we expect will result in demand for LNG supply at the Terminal, which would enable us to seek construction financing to develop the Terminal and the CCS project. We believe the Terminal possesses competitive advantages in several important areas, including, engineering, design, commercial, regulatory, emission reductions, and gas supply. We submitted a pre-filing request for the Terminal to the Federal Energy Regulatory Commission (the “FERC”) in March 2015 and filed a formal application with the FERC in May 2016. In November 2019, the FERC issued an order authorizing the siting, construction and operation of the Terminal.  We also believe we have robust commercial offtake and gas supply strategies.

 

Unless the context requires otherwise, references to “NextDecade,” “the Company,” “we,” “us,” and “our” refer to NextDecade Corporation and its consolidated subsidiaries.

 

Recent Developments

 

COVID-19 Pandemic and its Effect on our Business

 

The business environment in which we operate has been impacted by the recent downturn in the energy market as well as the outbreak of COVID-19 and its progression into a pandemic in March 2020.  We have modified and may continue to modify certain business and workforce practices to protect the safety and welfare of our employees.  Furthermore, we have implemented and may continue to implement certain mitigation efforts to ensure business continuity. We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities.  It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and prospects, or on our financial results for fiscal year 2021 or beyond.

 

NEXT Carbon Solutions

 

On March 18, 2021, we announced the formation of NEXT Carbon Solutions that is expected to (i) develop one of the largest CCS projects in North America at the Terminal, (ii) advance proprietary processes to lower the cost of utilizing CCS technology, (iii) help other energy companies to reduce their greenhouse gas (“GHG”) emissions associated with the production, transportation, and use of natural gas, and (iv) generate high-quality, verifiable carbon offsets to support companies in their efforts to achieve net-zero emissions. NEXT Carbon Solutions’ CCS project is expected to reduce permitted CO2 emissions at the Terminal by more than 90 percent without major design changes to the Terminal. 

 

Series C Convertible Preferred Stock Offering

 

In March, April and July 2021, we sold an aggregate of 39,500 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), at $1,000 per share for an aggregate purchase price of $39.5 million and issued an additional 790 shares of Series C Preferred Stock in aggregate as origination fees. Warrants were issued together with the issuances of the Series C Preferred Stock.

 

For further descriptions of the Series C Preferred Stock, see Note 8 - Preferred Stock and Common Stock Warrants, and for additional details on the issuances of the Series C Preferred Stock and the transactions in connection therewith, please refer to our Current Reports on Form 8-K filed with the SEC on March 18, 2021, March 29, 2021 and August 2, 2021.

 

CCS project

 

On March 25, 2021, we announced the execution of a term sheet with Oxy Low Carbon Ventures (“OLCV”), a subsidiary of Occidental Petroleum Corporation, for the offtake and storage of COcaptured from the Terminal. Under the terms of the agreement, OLCV will offtake and transport CO2 from the Terminal and permanently sequester it in an underground geologic formation in the Rio Grande Valley, where there is believed to be vast CO2 storage capacity, pursuant to a CO2 Offtake Agreement and a Sequestration and Monitoring Agreement to be negotiated by the parties.

 

We have partnered with Mitsubishi Heavy Industries, an experienced developer of post-combustion carbon capture technology, to assist with the planned CCS project at the Terminal.

 

Terminal

 

In April 2021, we announced a joint pilot project with Project Canary for the monitoring, reporting, and independent third-party measurement and certification of the GHG intensity of LNG to be sold from the Terminal.

 

 

Rio Grande Site Lease

 

On March 6, 2019, Rio Grande entered into a lease agreement (the “Rio Grande Site Lease”) with the Brownsville Navigation District of Cameron County, Texas (the "BND") for the lease by Rio Grande of approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining (i) a liquefied natural gas facility and export terminal and (ii) gas treatment and gas pipeline facilities.

 

On April 30, 2020, Rio Grande and the BND amended the Rio Grande Site Lease (the “Rio Grande Site Lease Amendment”) to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2021 (the “Effective Date”).  The Rio Grande Site Lease Amendment further provides that Rio Grande has the right, exercisable in its sole discretion, to extend the Effective Date to May 6, 2022 by providing the BND with written notice of its election no later than the close of business on the Effective Date.

 

On April 28, 2021, Rio Grande extended the Effective Date to May 6, 2022.

 

At-the-Market Program

 

In August 2021, the Company entered into an at-the-market sales agreement with Virtu Americas LLC (“Virtu”) pursuant to which the Company may sell shares of Company common stock from time to time through Virtu acting as sales agent, for aggregate proceeds of up to $50 million.

 

Liquidity and Capital Resources

 

Capital Resources

 

We have funded and continue to fund the development of the Terminal, CCS project, and general working capital needs through our cash on hand and proceeds from the issuance of equity and equity-based securities.  Our capital resources consisted of approximately $36.7 million of cash and cash equivalents as of September 30, 2021.

 

Sources and Uses of Cash

 

The following table summarizes the sources and uses of our cash for the periods presented (in thousands):

 

   

Nine Months Ended

 
   

September 30,

 
   

2021

   

2020

 

Operating cash flows

  $ (12,252 )   $ (22,746 )

Investing cash flows

    (13,056 )     23,306  

Financing cash flows

    39,443