Alto Ingredients, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

8. FAIR VALUE MEASUREMENTS (Tables)

8. FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Assumptions used and related fair value for conversion feature

Significant assumptions used and related fair values for the Company’s warrants as of June 30, 2014 were as follows:

Original Issuance	Exercise Price	Volatility	Risk-Free Interest Rate	Term (years)	Discount for marketability restrictions		Warrants Outstanding		Fair Value
06/21/2013	$7.59	52.6%	0.11%	0.99		20.6%		1,051,200	$	6,636,500
03/28/2013	$7.59	55.1%	0.09%	0.70		18.7%		295,700		1,891,800
09/26/2012	$8.85	52.0%	0.11%	1.24		38.7%		1,637,500		7,078,200
07/3/2012	$6.09	56.3%	0.88%	3.01		35.7%		831,200		5,515,000
12/13/2011	$8.43	54.3%	0.68%	2.46		31.8%		281,500		1,641,900
								4,097,100	$	22,763,400

Significant assumptions used and related fair values for the Company’s warrants as of December 31, 2013 were as follows:

Original Issuance	Exercise Price	Volatility	Risk-Free Interest Rate	Term (years)	Discount for marketability restrictions		Warrants Outstanding		Fair Value
03/28/2013	$7.59	52.4%	0.13%	1.20		22.7%		788,000	$	495,000
06/21/2013	$7.59	52.4%	0.13%	1.24		22.7%		1,051,000		660,000
01/11/2013	$6.32	63.3%	1.27%	4.03		43.8%		1,709,000		2,892,000
09/26/2012	$8.85	58.5%	0.38%	1.74		42.3%		1,771,000		702,000
07/3/2012	$6.09	61.2%	1.27%	3.51		40.2%		1,812,000		3,008,000
07/3/2012	$5.47	52.8%	0.01%	0.01		42.3%		804,000		3,000
12/13/2011	$8.43	60.4%	0.78%	2.95		37.9%		306,000		455,000
								8,241,000	$	8,215,000

Summary of fair value measurements by level

The following table summarizes fair value measurements by level at June 30, 2014 (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Commodity contracts⁽¹⁾	$	405	$	–	$	–	$	405
Total Assets	$	405	$	–	$	–	$	405

Liabilities:
Warrants⁽²⁾	$	–	$	–	$	22,763	$	22,763
Commodity contracts⁽³⁾		336		–		–		336
Total Liabilities	$	336	$	–	$	22,763	$	23,099

__________

(1) Included in other current assets in the consolidated balance sheets.

(2) Included in warrant liabilities at fair value in the consolidated balance sheets.

(3) Included in other current liabilities in the consolidated balance sheets.

The following table summarizes fair value measurements by level at December 31, 2013 (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Commodity contracts⁽¹⁾	$	961	$	–	$	–	$	961
Total Assets	$	961	$	–	$	–	$	961

Liabilities:
Warrants⁽²⁾	$	–	$	–	$	8,215	$	8,215
Commodity contracts⁽³⁾		859		–		–		859
Total Liabilities	$	859	$	–	$	8,215	$	9,074

__________

(1) Included in other current assets in the consolidated balance sheets.

(2) Included in warrant liabilities at fair value in the consolidated balance sheets.

(3) Included in accrued liabilities in the consolidated balance sheets.

Changes in fair value of Level 3 inputs

Fair value of warrants, December 31, 2013	$	8,215
Adjustments to fair value for the period		34,559
Exercises of warrants		(20,008	)
Expiration of warrants		(3	)
Fair value of warrants, June 30, 2014	$	22,763

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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