regi-20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the Quarterly Period Ended September 30, 2020


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

For the transition period from to

Commission File Number 001-35397

RENEWABLE ENERGY GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware			26-4785427
(State of other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

416 South Bell Avenue	Ames	Iowa	50010
(Address of principal executive offices)			(Zip code)

(515) 239-8000

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.0001 per share	REGI	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 x 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 x

As of October 31, 2020, the registrant had 39,332,719 shares of Common Stock outstanding.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION	1
ITEM 1.	Condensed Consolidated Financial Information	1
ITEM 2.	Management's Discussion and Analysis of Financial Information	25
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	41
ITEM 4.	Controls and Procedures	42

PART II	OTHER INFORMATION	42
ITEM 1.	Legal Proceedings	43
ITEM 1A.	Risk Factors	43
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
ITEM 3.	Defaults Upon Senior Securities	58
ITEM 4.	Mine Safety Disclosures	58
ITEM 5.	Other Information	58
ITEM 6.	Exhibits	58

FORWARD LOOKING STATEMENTS

This quarterly report on Form 10-Q contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations of future operations, are forward-looking statements. The words "believe," "may," "will," "would," "might," "could," "estimate," "continue," "anticipate," "design," "intend," "plan," "seek," "potential," "expect" and 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. Forward-looking statements include, but are not limited to, statements about:

•our business plans and strategies, including, but not limited to, our downstream objectives and undertakings and the capacity expansion of our Geismar, Louisiana biorefinery;

•our financial performance, including expectations regarding revenues, cost of revenues and operating expenses;

•changes in governmental programs, policymaking and requirements or encouraged use of biofuels, including RFS2 in the United States, renewable fuel policies in Canada and Europe, and state level programs such as California's Low Carbon Fuel Standard;

•our security repurchase programs and our marketable securities;

•the availability, future price and volatility of feedstocks and other inputs;

•the expansion of our distribution network and transportation costs;

•the future price and volatility of petroleum;

•our liquidity and working capital requirements;

•our leasing practices;

•anticipated trends and challenges in our business and competition in the markets in which we operate;

•our ability to successfully implement our acquisition strategy and integration strategy;

•our ability to protect proprietary technology and trade secrets;

•our risk management activities;

•the industry’s capacity, production and imports;

•product performance, in cold weather or otherwise;

•seasonal fluctuations in our business;

•our current products as well as products we are developing;

•our ability to retain and recruit key personnel;

•our indebtedness and our compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;

•critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements, guidance or changes in accounting principles and future recognition of impairments for the fair value of assets, including goodwill, financial instruments, intangible assets and other assets acquired;

•operating risks and the impact of disruptions to our business including, but not limited to, closures at our plant located in Geismar, Louisiana and the COVID-19 pandemic; and

•assumptions underlying or relating to any of the foregoing.

These statements reflect current views with respect to future events and are based on assumptions and subject to risks and uncertainties. We note that a variety of factors, including but not limited to those Risk Factors discussed in Item 1A of Part II of this report, could cause actual results and experience to differ materially from the anticipated results or expectations expressed in our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Forward-looking statements contained in this report present management’s views only as of the date of this report. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our 10-Q and 8-K reports filed with the Securities and Exchange Commission after the date hereof.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and per share amounts)


	September 30, 2020		December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	97,187	$	50,436
Marketable securities	184,916		—
Accounts receivable (net of allowance for doubtful accounts of $1,613 and $1,001, respectively)	187,860		858,922
Inventories	145,998		161,429

Prepaid expenses and other assets	59,811		35,473
Restricted cash	3,000		3,000

Total current assets	678,772		1,109,260
Long-term marketable securities	101,584		—
Property, plant and equipment, net	592,317		584,577

Right of use assets	29,057		36,899
Goodwill	16,080		16,080
Intangible assets, net	11,018		12,018


Other assets	31,580		26,515

TOTAL ASSETS	$	1,460,408	$	1,785,349
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Lines of credit	$	—	$	76,990
Current maturities of long-term debt	49,906		77,131

Current maturities of operating lease obligations	14,457		15,690
Accounts payable	135,039		369,213
Accrued expenses and other liabilities	23,107		40,776

Deferred revenue	9,654		8,620
Total current liabilities	232,163		588,420

Deferred income taxes	6,977		6,975


Long-term debt (net of debt issuance costs of $1,767 and $2,783, respectively)	15,881		26,130

Long-term operating lease obligations	15,701		30,413
Other liabilities	5,448		1,505
Total liabilities	276,170		653,443
COMMITMENTS AND CONTINGENCIES

EQUITY:
Common stock ($0.0001 par value; 300,000,000 shares authorized; 39,332,314 and 38,967,079 shares outstanding, respectively)	5		5
Common stock—additional paid-in-capital	390,383		438,591
Retained earnings	905,324		800,792
Accumulated other comprehensive income	(897)		(1,994)
Treasury stock (10,589,584 and 10,403,798 shares outstanding, respectively)	(110,577)		(105,488)
Total equity	1,184,238		1,131,906


TOTAL LIABILITIES AND EQUITY	$	1,460,408	$	1,785,349

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share amounts)


	Three months ended				Nine months ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
REVENUES:
Biomass-based diesel sales	$	492,769	$	583,676	$	1,350,496	$	1,620,960


Biomass-based diesel government incentives	83,178		512		245,471		1,510
	575,947		584,188		1,595,967		1,622,470
Other revenue	105		184		718		754
	576,052		584,372		1,596,685		1,623,224
COSTS OF GOODS SOLD:
Biomass-based diesel	498,362		560,288		1,386,996		1,638,701

Other costs of goods sold	40		8		151		11
	498,402		560,296		1,387,147		1,638,712
GROSS PROFIT (LOSS)	77,650		24,076		209,538		(15,488)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	31,059		24,762		86,971		77,157

GAIN ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT	—		—		(187)		—
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT	19,256		11,145		19,256		11,613
INCOME (LOSS) FROM OPERATIONS	27,335		(11,831)		103,498		(104,258)
OTHER INCOME (EXPENSE), NET:
Change in fair value of contingent consideration	—		136		—		(566)

Gain (loss) on debt extinguishment	18		—		1,809		(2)

Gain on lease termination	—		—		4,459		—
Other income	1,594		179		3,505		1,724
Interest expense	(1,070)		(2,866)		(4,732)		(10,822)
	542		(2,551)		5,041		(9,666)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	27,877		(14,382)		108,539		(113,924)
INCOME TAX BENEFIT (EXPENSE)	(1,046)		629		(4,007)		1,149


NET INCOME (LOSS) FROM CONTINUING OPERATIONS	26,831		(13,753)		104,532		(112,775)





NET LOSS ON DISCONTINUED OPERATIONS	—		(2,193)		—		(8,672)
NET INCOME (LOSS)	$	26,831	$	(15,946)	$	104,532	$	(121,447)

LESS—EFFECT OF PARTICIPATING SHARE-BASED AWARDS ON CONTINUING OPERATIONS	492		—		2,071		—
NET INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS	$	26,339	$	(13,753)	$	102,461	$	(112,775)

NET LOSS FROM DISCONTINUED OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS	$	—	$	(2,193)	$	—	$	(8,672)
Basic net income (loss) per share available to common stockholders:
Continuing operations	$	0.67	$	(0.35)	$	2.62	$	(2.96)
Discontinued operations	$	—	$	(0.06)	$	—	$	(0.23)
Net income (loss) per share	$	0.67	$	(0.41)	$	2.62	$	(3.19)
Diluted net income (loss) per share available to common stockholders:
Continuing operations	$	0.60	$	(0.35)	$	2.38	$	(2.96)
Discontinued operations	$	—	$	(0.06)	$	—	$	(0.23)
Net income (loss) per share	$	0.60	$	(0.41)	$	2.38	$	(3.19)
Weighted-average shares used to compute basic net income (loss) per share available to common stockholders:
Basic	39,306,263		38,959,606		39,154,788		38,060,782

Weighted-average shares used to compute diluted net income (loss) per share available to common stockholders:


Diluted	43,624,340		38,959,606		43,107,989		38,060,782

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands)


	Three months ended				Nine months ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Net income (loss)	$	26,831	$	(15,946)	$	104,532	$	(121,447)
Unrealized gains (losses) on marketable securities, net of taxes of (99), $—, $9 and $—, respectively	(176)		—		131		—

Foreign currency translation adjustments	982		(1,017)		966		(984)
Other comprehensive income	806		(1,017)		1,097		(984)


Comprehensive income (loss)	$	27,637	$	(16,963)	$	105,629	$	(122,431)

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

(in thousands, except share amounts)


	Company Stockholders’ Equity
	Common Stock Shares	Common Stock		Common Stock - Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
BALANCE, January 1, 2019	37,318,942	$	5	$	451,427	$	427,244	$	(1,656)	$	(111,767)	$	765,253
Conversion of restricted stock units to common stock (net of 138,012 shares of treasury stock purchased)	283,339	—		—		—		—		(2,760)		(2,760)
Settlement of stock appreciation rights in common stock (net of 9,888 shares of treasury stock purchased)	16,937	—		(12)		—		—		(159)		(171)
Partial termination of capped call options	(1,087)	—		30		—		—		(30)		—
Convertible debt extinguishment impact	—	—		(152)		—		—		—		(152)

Stock compensation expense	—	—		1,353		—		—		—		1,353
Other comprehensive loss	—	—		—		—		(362)		—		(362)
Adoption of ASC Topic 842, Leases	—	—		—		(6,516)		—		—		(6,516)
Net loss	—	—		—		(43,404)		—		—		(43,404)



BALANCE, March 31, 2019	37,618,131	$	5	$	452,646	$	377,324	$	(2,018)	$	(114,716)	$	713,241
Conversion of restricted stock units to common stock (net of 805 shares of treasury stock purchased)	58,759	—		—		—		—		(518)		(518)
Settlement of stock appreciation rights in common stock (net of 2,274 shares of treasury stock purchased)	4,631	—		(7)		—		—		(17)		(24)

Settlement of 2019 Convertible Senior Notes conversion premium	1,902,781	—		(18,779)		—		—		18,779		—
Termination of capped call options	(625,558)	—		8,952		—		—		(8,952)		—
Stock compensation expense	—	—		1,824		—		—		—		1,824
Other comprehensive income	—	—		—		—		395		—		395
Net loss	—	—		—		(62,097)		—		—		(62,097)
BALANCE, June 30, 2019	38,958,744	$	5	$	444,636	$	315,227	$	(1,623)	$	(105,424)	$	652,821
Conversion of restricted stock units to common stock (net of 1,775 shares of treasury stock purchased)	3,557	—		—		—		—		(39)		(39)
Settlement of stock appreciation rights in common stock (net of 1,042 shares of treasury stock purchased)	1,975	—		(5)		—		—		—		(5)

Stock compensation expense	—	—		1,804		—		—		—		1,804
Other comprehensive income	—	—		—		—		(1,017)		—		(1,017)
Net loss	—	—		—		(15,946)		—		—		(15,946)
BALANCE, September 30, 2019	38,964,276	$	5	$	446,435	$	299,281	$	(2,640)	$	(105,463)	$	637,618


	Company Stockholders’ Equity
	Common Stock Shares	Common Stock		Common Stock - Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
BALANCE, January 1, 2020	38,967,079	$	5	$	438,591	$	800,792	$	(1,994)	$	(105,488)	$	1,131,906
Conversion of restricted stock units to common stock (net of 25,134 shares of treasury stock purchased)	38,144	—		—		—		—		(578)		(578)
Settlement of stock appreciation rights in common stock (net of 14,438 shares of treasury stock purchased)	16,704	—		(5)		—		—		(240)		(245)

Convertible debt extinguishment impact (net of tax impact of $1,013)	—	—		(17,829)		—		—		—		(17,829)

Stock compensation expense	—	—		1,367		—		—		—		1,367


Other comprehensive loss	—	—		—		—		(551)		—		(551)

Net income	—	—		—		76,853		—		—		76,853
BALANCE, March 31, 2020	39,021,927	$	5	$	422,124	$	877,645	$	(2,545)	$	(106,306)	$	1,190,923
Conversion of restricted stock units to common stock (net of 86,701 shares of treasury stock purchased)	230,265	—		—		—		—		(2,063)		(2,063)
Settlement of stock appreciation rights in common stock (net of 21,794 shares of treasury stock purchased)	39,962	—		(276)		—		—		(776)		(1,052)

Convertible debt extinguishment impact (net of tax impact of $1,055)	—	—		(20,860)		—		—		—		(20,860)



Stock compensation expense	—	—		1,855		—		—		—		1,855


Other comprehensive income	—	—		—		—		842		—		842
Net income	—	—		—		848		—		—		848
BALANCE, June 30, 2020	39,292,154	$	5	$	402,843	$	878,493	$	(1,703)	$	(109,145)	$	1,170,493
Conversion of restricted stock units to common stock (net of 30,624 shares of treasury stock purchased)	23,800	—		—		—		—		(1,185)		(1,185)
Settlement of stock appreciation rights in common stock (net of 7,095 shares of treasury stock purchased)	16,360	—		(279)		—		—		(247)		(526)
Convertible debt extinguishment impact (net of tax impact of $318)	—	—		(13,992)		—		—		—		(13,992)
Stock compensation expense	—	—		1,811		—		—		—		1,811
Other comprehensive income	—	—		—		—		806		—		806

Net income	—	—		—		26,831		—		—		26,831
BALANCE, September 30, 2020	39,332,314	$	5	$	390,383	$	905,324	$	(897)	$	(110,577)	$	1,184,238

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine months ended
	September 30, 2020		September 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	104,532	$	(121,447)
Net income (loss) from discontinuing operations	—		(8,672)
Net income (loss) from continuing operations	104,532		(112,775)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation expense	27,425		27,349
Amortization expense of assets and liabilities, net	12,026		16,170


Accretion of convertible note discount	652		2,561
Amortization of marketable securities	366		(146)
Change in fair value of contingent consideration	—		566

Gain on sale of property, plant and equipment	(187)		—
(Gain) loss on debt extinguishment	(1,809)		2

Provision for doubtful accounts	716		17
Impairment of property, plant and equipment	19,256		11,613
Stock compensation expense	5,033		4,981
Deferred tax expense (benefit)	2,092		(1,159)

Gain on lease termination	(4,459)		—
Other operating activities	3		212
Changes in assets and liabilities:
Accounts receivable, net	670,395		(7,227)
Inventories	15,445		5,437
Prepaid expenses and other assets	(36,827)		2,947
Accounts payable	(236,213)		(6,694)
Accrued expenses and other liabilities	(13,607)		1,952
Operating lease obligations	(11,489)		(13,778)
Deferred revenue	1,034		655
Net cash flows provided by (used in) operating activities - continuing operations	554,384		(67,317)
Net cash flows used in operating activities - discontinuing operations	—		(9,832)
Cash provided by (used in) operating activities	554,384		(77,149)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for marketable securities	(305,726)		(3,478)
Cash received from maturities of marketable securities	19,000		54,584



Cash paid for purchase of property, plant and equipment	(46,945)		(31,088)


Cash paid for investments	—		(2,713)

Other investing activities	187		—
Net cash flows (used in) provided by investing activities - continuing operations	(333,484)		17,305
Net cash flows provided by investing activities - discontinuing operations	—		3,100
Cash (used in) provided by investing activities	(333,484)		20,405
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on revolving line of credit	(76,990)		77,758
Borrowings on other lines of credit	—		66,186
Repayments on other lines of credit	—		(60,918)

Cash paid on notes payable	(91,590)		(73,067)
Cash paid for debt issuance costs	—		(70)




Cash paid for contingent consideration settlement	—		(9,003)

Cash paid for conversion of restricted stock units and stock appreciation rights	(5,649)		(3,517)
Net cash flows used in financing activities - continuing operations	(174,229)		(2,631)
Net cash flows used in financing activities - discontinuing operations	—		—
Cash used in financing activities	(174,229)		(2,631)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	46,671		(59,375)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning of period	53,436		126,575
Effect of exchange rate changes on cash	80		(107)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, End of period	$	100,187	$	67,093

(continued)

RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine months ended
	September 30, 2020		September 30, 2019
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid for income taxes	$	15	$	1,515
Cash paid for interest	$	4,651	$	6,007
Leased assets obtained in exchange for new operating lease liabilities	$	3,807	$	11,347

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Amounts included in period-end accounts payable for:
Purchases of property, plant and equipment	$	5,497	$	7,824











Issuance of treasury stock to settle 2019 Convertible Senior Notes conversion premium	$	—	$	(18,779)
Receipt in treasury stock for settlement of capped call options	$	—	$	8,952

(concluded)

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2020 and 2019

(unaudited)

(in thousands, except share and per share amounts)

NOTE 1 — BASIS OF PRESENTATION AND NATURE OF THE BUSINESS

The condensed consolidated financial statements have been prepared by Renewable Energy Group, Inc. and its subsidiaries (the "Company" or "REG"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latest annual report on Form 10-K filed on March 6, 2020. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

The Company owns and operates a network of twelve biorefineries, with ten locations in North America and two locations in Europe, which includes twelve operating biomass-based diesel production facilities with aggregate nameplate production capacity of 505 million gallons per year ("mmgy"). Ten of these plants are “multi-feedstock capable”, which allows them to use a broad range of lower-cost feedstocks, such as distillers corn oil, used cooking oil and inedible animal fats in addition to vegetable oils, such as soybean oil and canola oil. In August 2019, the Company closed the New Boston, Texas biorefinery, which had a nameplate capacity of 15 mmgy.

The biomass-based diesel industry and the Company’s business have benefited from certain federal and state government programs. The federal biodiesel mixture excise tax credit (the "BTC") was retroactively reinstated on December 20, 2019 for the years 2018 and 2019. The BTC has also been extended through December 31, 2022. The modification of federal and state government programs could adversely affect the financial results of the Company.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies should be read in conjunction with a summary of the significant accounting policies the Company has disclosed in its Annual Report on Form 10-K for the year ended December 31, 2019.

Restricted Cash

The Company segregates certain cash balances as restricted cash that represent those funds required to be set aside by a contractual agreement. The Company classifies restricted cash between current and non-current assets based on the length of time of the restricted use.

As of September 30, 2020 and 2019, current restricted cash was $3,000, representing pledges for outstanding letters of credit issued to support our operations. See the table below for reconciliation of "Cash, Cash Equivalents and Restricted Cash" in the Condensed Consolidated Statements of Cash Flows:


	September 30, 2020		September 30, 2019
Cash and cash equivalents	$	97,187	$	64,093
Restricted cash	3,000		3,000
Total cash, cash equivalents and restricted cash in the Condensed Statements of Cash Flows	$	100,187	$	67,093

Accounts Receivable

Accounts receivable are carried at invoiced amount less allowance for doubtful accounts. Management estimates the allowance for doubtful accounts based on existing economic conditions, the financial conditions of customers and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for doubtful accounts only after reasonable collection attempts have been exhausted.


	September 30, 2020		December 31, 2019
Trade accounts receivable from customers (net of allowance for doubtful accounts of $1,613 and $1,001, respectively)	$	135,374	$	185,156
BTC receivables from the government	52,482