Genie Energy (GNE) 10-Q 2021 Q3 Quarterly report

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, 2021

or

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

Commission File Number: 1-35327

GENIE ENERGY LTD.

(Exact Name of Registrant as Specified in its Charter)

Delaware	45-2069276
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
520 Broad Street, Newark, New Jersey	07102
(Address of principal executive offices)	(Zip Code)

(973) 438-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b)-2 of the Exchange Act:

Title of each Class	Trading Symbol	Name of exchange of which registered
Class B common stock, par value $0.01 per share	GNE	New York Stock Exchange
Series 2012-A Preferred stock, par value $0.01 per share	GNE-PRA	New York Stock Exchange

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 registrant had the following shares outstanding:

Class A common stock, $0.01 par value:	1,574,326 shares
Class B common stock, $0.01 par value:	24,636,113 shares (excluding 1,982,331 treasury shares)

GENIE ENERGY LTD. 

TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION			1
	Item 1.	Financial Statements (Unaudited)	1
		CONSOLIDATED BALANCE SHEETS	1
		CONSOLIDATED STATEMENTS OF OPERATIONS	2
		CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME	3
		CONSOLIDATED STATEMENTS OF EQUITY	4
		CONSOLIDATED STATEMENTS OF CASH FLOWS	7
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
	Item 3	Quantitative and Qualitative Disclosures About Market Risks	43
	Item 4	Controls and Procedures	43
PART II. OTHER INFORMATION			44
	Item 1.	Legal Proceedings	44
	Item 1A.	Risk Factors	44
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
	Item 3.	Defaults upon Senior Securities	44
	Item 4.	Mine Safety Disclosures	44
	Item 5.	Other Information	44
	Item 6.	Exhibits	45
SIGNATURES			46

i

PART I. FINANCIAL INFORMATION

Item 1.        Financial Statements (Unaudited)

 GENIE ENERGY LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	September 30, 2021			December 31, 2020
	(Unaudited)			(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	33,983		$	36,913
Restricted cash—short-term		6,528			6,271
Marketable equity securities		8,048			5,089
Trade accounts receivable, net of allowance for doubtful accounts of $16,465 and $8,793 at September 30, 2021 and December 31, 2020, respectively		58,593			60,778
Inventories		23,648			16,930
Prepaid expenses		5,767			4,633
Other current assets		15,924			3,206
Total current assets		152,491			133,820
Property and equipment, net		281			259
Goodwill		25,627			25,929
Other intangibles, net		3,768			11,645
Deferred income tax assets, net		2,005			4,882
Other assets		9,448			10,804
Total assets	$	193,620		$	187,339
Liabilities and equity
Current liabilities:
Loan payable	$	0—		$	1,453
Trade accounts payable		39,760			43,005
Accrued expenses		51,339			42,762
Contract liability		8,317			5,609
Income taxes payable		6,435			1,893
Due to IDT Corporation, net		109			257
Other current liabilities		2,132			2,494
Total current liabilities		108,092			97,473
Other liabilities		2,965			3,787
Total liabilities		111,057			101,260
Commitments and contingencies		0—			0—
Equity:
Genie Energy Ltd. stockholders’ equity:
Preferred stock, $0.01 par value; authorized shares—10,000:
Series 2012-A, designated shares—8,750; at liquidation preference, consisting of 2,322 shares issued and outstanding at September 30, 2021 and December 31, 2020		19,743			19,743
Class A common stock, $0.01 par value; authorized shares—3,500; 1,574 shares issued and outstanding at September 30, 2021 and December 31, 2020		16			16
Class B common stock, $0.01 par value; authorized shares—200,000; 26,582 and 25,966 shares issued and 24,600 and 24,646 shares outstanding at September 30, 2021 and December 31, 2020, respectively		266			260
Additional paid-in capital		141,787			140,746
Treasury stock, at cost, consisting of 1,982 and 1,320 shares of Class B common stock at September 30, 2021 and December 31, 2020, respectively		(13,922	)		(9,839	)
Accumulated other comprehensive income		2,994			3,827
Accumulated deficit		(56,673	)		(56,658	)
Total Genie Energy Ltd. stockholders’ equity		94,211			98,095
Noncontrolling interests		(11,648	)		(12,016	)
Total equity		82,563			86,079
Total liabilities and equity	$	193,620		$	187,339

 See accompanying notes to consolidated financial statements. 

1

GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands, except per share data)
Revenues:
Electricity	$	103,799		$	91,793		$	290,783		$	227,671
Natural gas		7,609			2,724			48,458			24,190
Other		1,756			1,809			6,970			24,591
Total revenues		113,164			96,326			346,211			276,452
Cost of revenues		70,788			69,010			262,540			200,744
Gross profit		42,376			27,316			83,671			75,708
Operating expenses and losses:
Selling, general and administrative (i)		28,853			18,831			75,366			54,287
Impairment of assets		6,650			0—			6,650			993
Income from operations		6,873			8,485			1,655			20,428
Interest income		8			21			28			164
Interest expense		(99	)		(48	)		(311	)		(223	)
Equity in the net income (loss) in equity method investees, net		52			(146	)		215			(1,698	)
Unrealized (loss) gain on marketable equity securities and investments		(5,312	)		0—			1,710			0—
Gain on sale of subsidiary		0—			0—			4,226			0—
Other (loss) income, net		(17	)		291			267			390
Income before income taxes		1,505			8,603			7,790			19,061
Provision for income taxes		(3,822	)		(2,406	)		(7,515	)		(5,563	)
Net (loss) income		(2,317	)		6,197			275			13,498
Net loss attributable to noncontrolling interests		(31	)		(531	)		(821	)		(1,026	)
Net (loss) income attributable to Genie Energy Ltd.		(2,286	)		6,728			1,096			14,524
Dividends on preferred stock		(370	)		(370	)		(1,111	)		(1,111	)
Net (loss) income attributable to Genie Energy Ltd. common stockholders	$	(2,656	)	$	6,358		$	(15	)	$	13,413
(Loss) earnings per share attributable to Genie Energy Ltd. common stockholders:
Basic	$	(0.10	)	$	0.25		$	(0.00	)	$	0.51
Diluted	$	(0.10	)	$	0.24		$	(0.00	)	$	0.50
Weighted-average number of shares used in calculation of (loss) earnings per share:
Basic		25,514			25,928			25,867			26,107
Diluted		25,514			26,769			25,867			26,839
Dividends declared per common share	$	0—		$	0.085		$	0—		$	0.245
(i) Stock-based compensation included in selling, general and administrative expenses	$	531		$	447		$	1,680		$	1,331

See accompanying notes to consolidated financial statements.

2

GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

		Three Months Ended September 30,					Nine Months Ended September 30,
		2021			2020	2021			2020
		(in thousands)				(in thousands)
Net (loss) income	$	(2,317	)	$	6,197	$	275		$	13,498
Other comprehensive loss (income):
Foreign currency translation adjustments		(133	)		173		(370	)		214
Comprehensive (loss) income		(2,450	)		6,370		(95	)		13,712
Comprehensive (loss) gain attributable to noncontrolling interests		(20	)		605		540			1,098
Comprehensive (loss) income attributable to Genie Energy Ltd.	$	(2,470	)	$	6,975	$	445		$	14,810

  

See accompanying notes to consolidated financial statements.

3

GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except dividend per share)

Genie Energy Ltd. Stockholders

	Preferred			Class A			Class B				Additional					Accumulated Other
	Stock			Common Stock			Common Stock				Paid-In		Treasury			Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Stock			Income			Deficit			Interests			Equity
BALANCE AT JANUARY 1, 2021	2,322	$	19,743	1,574	$	16	25,811	$	260	$	140,746	$	(9,839	)	$	3,827		$	(56,658	)	$	(12,016	)	$	86,079
Dividends on preferred stock ($ 0.1594 per share)	—		0—	—		0—	—		0—		0—		0—			0—			(370	)		0—			(370	)
Stock-based compensation	0—		0—	0—		0—	121		1		588		0—			0—			0—			0—			589
Issuance of Class B common stock to Howard Jonas	0—		0—	0—		0—	20		0—		162		0—			0—			0—			0—			162
Other comprehensive (loss) income	—		0—	—		0—	—		0—		0—		0—			(572	)		0—			230			(342	)
Net loss for three months ended March 31, 2021	—		0—	—		0—	—		0—		0—		0—			0—			(1,986	)		(708	)		(2,694	)
BALANCE AT  MARCH 31, 2021	2,322		19,743	1,574		16	25,952		261		141,496		(9,839	)		3,255			(59,014	)		(12,494	)		83,424

	Preferred			Class A			Class B				Additional					Accumulated Other
	Stock			Common Stock			Common Stock				Paid-In		Treasury			Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Stock			Income			Deficit			Interests			Equity
BALANCE AT MARCH 31, 2021	2,322	$	19,743	1,574	$	16	25,952	$	261	$	141,496	$	(9,839	)	$	3,255		$	(59,014	)	$	(12,494	)	$	83,424
Dividends on preferred stock ($ 0.1594 per share)	—		0—	—		0—	—		0—		0—		0—			0—			(370	)		0—			(370	)
Stock-based compensation	0—		0—	0—		0—	0—		0—		560		0—			0—			0—			0—			560
Repurchase of Class B common stock from stock purchase program	0—		0—	0—		0—	0—		0—		0—		(2,435	)		0—			0—			0—			(2,435	)
Sale of subsidiary	—		0—	—		0—	—		0—		0—		0—			(182	)		0—			113			(69	)
Other comprehensive (loss) income	—		0—	—		0—	—		0—		0—		0—			105			0—			0—			105
Net income (loss) for three months ended June 30, 2021	—		0—	—		0—	—		0—		0—		0—			0—			5,367			(82	)		5,285
BALANCE AT  JUNE 30, 2021	2,322		19,743	1,574		16	25,952		261		142,056		(12,274	)		3,178			(54,017	)		(12,463	)		86,500

4

GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF EQUITY
(in thousands) — (Continued)

Genie Energy Ltd. Stockholders 

	Preferred			Class A			Class B				Additional						Accumulated Other
	Stock			Common Stock			Common Stock				Paid-In			Treasury			Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount	Shares		Amount	Shares		Amount		Capital			Stock			Income			Deficit			Interests			Equity
BALANCE AT  JUNE 30, 2021	2,322	$	19,743	1,574	$	16	25,952	$	261	$	142,056		$	(12,274	)	$	3,178		$	(54,017	)	$	(12,463	)	$	86,500
Dividends on preferred stock ($ 0.1594 per share)	—		0—	—		0—	—		0—		0—			0—			0—			(370	)		0—			(370	)
Stock-based compensation	—		0—	—		0—	248		3		528			0—			0—			0—			0—			531
Repurchase of Class B common stock from stock purchase program	—		0—	—		0—	—		0—		0—			(1,412	)		0—			0—			0—			(1,412	)
Restricted Class B common stock repurchased from employees	—		—	—		—	—		—		—			(236	)		—			—			—			(236	)
Acquisition of noncontrolling interest of subsidiary	—		0—	—		0—	228		2		(797	)		0—			0—			0—			795			0—
Other comprehensive (loss) income	—		0—	—		0—	—		0—		0—			0—			(184	)		0—			51			(133	)
Net loss for three months ended September 30, 2021	—		0—	—		0—	—		0—		0—			0—			0—			(2,286	)		(31)			(2,317	)
BALANCE AT SEPTEMBER 30, 2021	2,322		19,743	1,574		16	26,428		266		141,787			(13,922	)		2,994			(56,673	)		(11,648	)		82,563

	Preferred			Class A			Class B				Additional						Accumulated Other
	Stock			Common Stock			Common Stock				Paid-In			Treasury			Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount	Shares		Amount	Shares		Amount		Capital			Stock			Income			Deficit			Interests			Equity
BALANCE AT JANUARY 1, 2020	2,322	$	19,743	1,574	$	16	25,785	$	258	$	139,615		$	(7,675	)	$	2,519		$	(59,671	)	$	(13,875	)	$	80,930
Dividends on preferred stock ($0.01594 per share)	—		0—	—		0—	—		0—		0—			0—			0—			(370	)		0—			(370	)
Dividends on common stock ($ 0.075 per share)	—		0—	—		0—	—		0—		0—			0—			0—			(1,975	)		0—			(1,975	)
Stock-based compensation	0—		0—	0—		0—	20		0—		483			0—			0—			0—			0—			483
Repurchase of Class B common stock from stock repurchase program	—		0—	—		0—	0—		0—		0—			(88	)		0—			0—			0—			(88
Noncontrolling interest from acquisition of Lumo	—		0—	—		0—	—		0—		(29	)		0—			0—			0—			29			0—
Deconsolidation of subsidiaries	—		0—	—		0—	—		0—		0—			0—			(6	)		0—			(92	)		(98	)
Other comprehensive income (loss)	—		0—	—		0—	—		0—		0—			0—			(283	)		0—			189			(94	)
Net income for three months ended March 31, 2020	—		0—	—		0—	—		0—		0—			0—			0—			5,832			589			6,421
BALANCE AT  MARCH 31, 2020	2,322		19,743	1,574		16	25,805		258		140,069			(7,763	)		2,230			(56,184	)		(13,160	)		85,209

5

GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF EQUITY
(in thousands) — (Continued)

Genie Energy Ltd. Stockholders 

	Preferred			Class A			Class B				Additional					Accumulated Other
	Stock			Common Stock			Common Stock				Paid-In		Treasury			Comprehensive		Accumulated			Noncontrolling			Total
	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Stock			Income		Deficit			Interests			Equity
BALANCE AT MARCH 31, 2020	2,322	$	19,743	1,574	$	16	25,805	$	258	$	140,069	$	(7,763	)	$	2,230	$	(56,184	)	$	(13,160	)	$	85,209
Dividends on preferred stock ($0.01594 per share)	—		0—	—		0—	—		0—		0—		0—			0—		(370	)		0—			(370	)
Dividends on common stock ($ 0.085 per share)	—		0—	—		0—	—		0—		0—		0—			0—		(2,240	)		0—			(2,240	)
Stock-based compensation	0—		0—	0—		0—	0—		0—		401		0—			0—		0—			0—			401
Repurchase of Class B common stock from stock repurchase program	0—		0—	0—		0—	0—		0—		0—		(1,458	)		0—		0—			0—			(1,458	)
Purchase of subsidiary	—		0—	—		0—	—		0—		0—		0—			0—		0—			45			45
Other comprehensive income (loss)	—		0—	—		0—	—		0—		0—		0—			323		0—			(188	)		135
Net income for three months ended March 31, 2020	—		0—	—		0—	—		0—		0—		0—			0—		1,963			(1,083	)		880
BALANCE AT  JUNE 30, 2020	2,322		19,743	1,574		16	25,805		258		140,470		(9,221	)		2,553		(56,831	)		(14,386	)		82,602

	Preferred			Class A			Class B				Additional					Accumulated Other
	Stock			Common Stock			Common Stock				Paid-In		Treasury			Comprehensive		Accumulated			Noncontrolling			Total
	Shares		Amount	Shares		Amount	Shares		Amount		Capital		Stock			Income		Deficit			Interests			Equity
BALANCE AT  JUNE 30, 2020	2,322	$	19,743	1,574	$	16	25,805	$	258	$	140,470	$	(9,221	)	$	2,553	$	(56,831	)	$	(14,386	)	$	82,602
Dividends on preferred stock ($0.01594 per share)	—		0—	—		0—	—		0—		0—		0—			0—		(370	)		0—			(370	)
Dividends on common stock ($ 0.085 per share)	—		0—	—		0—	—		0—		0—		0—			0—		(2,218	)		0—			(2,218	)
Repurchase of Class B common stock from stock repurchase program	0—		0—	0—		0—	0—		0—		0—		(88	)		0—		0—			0—			(88	)
Restricted Class B common stock units purchased from employees	—		0—	—		0—	—		0—		0—		(263	)		0—		0—			0—			(263	)
Stock-based compensation	0—		0—	0—		0—	0—		0—		447		0—			0—		0—			0—			447
Exercise of stock options	0—		0—	0—		0—	3		0—		18		0—			0—		0—			0—			18
Other comprehensive income (loss)	—		0—	—		0—	—		0—		0—		0—			247		0—			(74	)		173
Net income (loss) for three months ended September 30, 2020	—		0—	—		0—	—		0—		0—		0—			0—		6,728			(531	)		6,197
BALANCE AT SEPTEMBER 30, 2020	2,322		19,743	1,574		16	25,808		258		140,935		(9,572	)		2,800		(52,691			(14,991	)		86,498

6

GENIE ENERGY LTD. 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 

	Nine Months Ended September 30,
	2021			2020
	(in thousands)
Operating activities
Net income	$	275		$	13,498
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,326			2,219
Impairment of assets		6,650			993
Deferred income taxes		2,877			4,838
Provision for doubtful accounts receivable		8,018			2,209
Unrealized gain on marketable equity securities and investment		(1,710	)		0—
Stock-based compensation		1,680			1,331
Equity in the net (income) loss in equity method investees		(215	)		1,698
Gain on sale of subsidiary		(4,226	)		0—
Loss on sale of assets held for sale		0—			456
Gain on deconsolidation of subsidiaries		0—			(98	)
Changes in assets and liabilities:
Trade accounts receivable		(7,570	)		2,827
Inventory		(6,718	)		3,218
Prepaid expenses		(1,524	)		2,166
Other current assets and other assets		(13,381	)		(633	)
Trade accounts payable, accrued expenses and other current liabilities		5,414			2,018
Contract liability		2,796			(12,393	)
Due to IDT Corporation		(148	)		(266	)
Income taxes payable		4,542			(43	)
Net cash provided by operating activities		86			24,038
Investing activities
Capital expenditures		(158	)		(125	)
Proceeds from disposal of assets held for sale		0—			48
Proceeds from the sale of a subsidiary, net of cash disposed		4,550			0—
Purchase of marketable equity securities		(1,000	)		0—
Investments in equity method investee		0—			(1,502	)
Purchase of short-term equity investments		(750	)		0—
Payment for acquisition of intangible		0—			(298	)
Repayment of notes receivable		14			14
Net cash provided by (used in) investing activities		2,656			(1,863	)
Financing activities
Dividends paid		(1,111	)		(7,543	)
Proceeds from revolving line of credit		0—			1,000
Repayment of revolving line of credit		0—			(3,514	)
Proceeds from loan		0—			1,395
Purchases of Class B common stock		(3,847	)		(1,634	)
Repayment of notes payable		0—			(25	)
Proceeds from exercise of stock options		0—			18
Purchase of Class B common stock from employees upon vesting of restricted shares		(236	)		(263	)
Repayment of loan payable		0—			(930	)
Net cash used in financing activities		(5,194	)		(11,496	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(221	)		(3	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(2,673	)		10,676
Cash, cash equivalents, and restricted cash at beginning of period		43,184			38,554
Cash, cash equivalents, and restricted cash at end of period	$	40,511		$	49,230

See accompanying notes to consolidated financial statements.

7

GENIE ENERGY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1—Basis of Presentation

The accompanying unaudited consolidated financial statements of Genie Energy Ltd. and its subsidiaries (the “Company” or “Genie”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The balance sheet at December 31, 2020 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the U.S. Securities and Exchange Commission (the “SEC”). 

The Company owns 99.5% of its subsidiary, Genie Energy International Corporation (“GEIC”), which owns 100% of Genie Retail Energy (“GRE”), 100% of Genie Retail Energy International LLC ("GRE International" or "GREI") and 95.5% of Genie Renewables. In March 2021, the Company modified its management reporting to rename the Genie Energy Services ("GES") segment to the Genie Renewables segment. 

GRE owns and operates retail energy providers (“REPs”), including IDT Energy, Inc. (“IDT Energy”), Residents Energy, Inc. (“Residents Energy”), Town Square Energy, LLC and Town Square Energy East, LLC (collectively, "TSE"), Southern Federal Power LLC ("Southern Federal") and Mirabito Natural Gas (“Mirabito”). GRE's REP businesses resell electricity and natural gas to residential and small business customers primarily in the Eastern and Midwestern United States and Texas. 

GRE International holds the Company's 100% interest in Shoreditch Energy Limited, a REP that serves retail customers in the United Kingdom under the name Orbit Energy, the Company's 91.7% interest in Lumo Energia Oyj ("Lumo Finland"), a REP serving residential customers in Finland, and its 98.8% interest in Lumo Energi AB ("Lumo Sweden"), which was formed in 2019 to serve retail energy customers in Sweden. GRE International also held the Company's 98.8% interest in venture in Japan, which the Company sold on May 11, 2021.

        Genie Renewables holds Genie Solar Energy, a rooftop solar system sales and general contracting company and a 93.5% interest in CityCom Solar, a marketer of community solar energy solution, oversees Diversegy LLC ("Diversegy"), a retail energy advisory and brokerage company that serves commercial and industrial customers throughout the United States and manages GRE's 60.0% interest in Prism Solar Technology, Inc. ("Prism"), a solar solutions company that is engaged in U.S.-based manufacturing of solar panels, solar installation design and solar energy project management, 

Energy Price Volatility in Japan and Texas

In January 2021, weather volatility and the lack of adequate gas reserves significantly increased the price of energy at Japan Electric Power Exchange ("JEPX") for an extended period of time. The spike in demand associated with this situation, exposed Genie Japan to unexpected cost increases. Genie Japan incurred approximately $2.5 million in additional costs related to the price increases, which were included in the cost of revenue in the three months ended March 31, 2021.

In February of 2021, the State of Texas experienced unprecedented cold weather and snow, which was named Winter Storm Uri. With the grid overtaxed due to demand and weather-related reduced supply and rolling blackouts being enforced, by order of the Electricity Reliability Council of Texas ("ERCOT"), real-time commodity prices during the crisis escalated significantly. Although GRE's commitment for their customers in Texas was hedged for foreseen winter weather conditions, the market conditions exposed the Company to significant unexpected cost increases. In the three and nine months ended September 30, 2021, GRE recognized approximately $1.0 million and $13.0 million, respectively, in additional costs related to the situation, which were included in the cost of revenue in the consolidated statements of operation. 

In June 2021, the state legislature of the State of Texas passed House Bill 4492 (“HB 4492”) which includes certain provisions for financing certain costs associated with electric markets caused by Winter Storm Uri. Pursuant to HB 4492, two categories of charges associated with Winter Storm Uri are to be securitized and the proceeds of the securitization will be provided to the load serving entities who originally incurred the charges. Under HB 4492, the Company is entitled to recover a portion of the costs incurred from the effect of Winter Storm Uri with a calculated range of $1.5 million to $2.6 million. In the second quarter of 2021, the Company recorded a reduction in cost of revenues of $1.5 million. 

In September 2021, the Public Utility Commission of Texas ("PUC") approved the Debt Obligation Order to grant ERCOT's application for a debt financing mechanism to pay for certain costs associated with Winter Storm Uri. Under the Debt Obligation Order, the amount that the Company is entitled to recover increased to approximately $3.4 million. For the three months ended September 30, 2021, the Company recorded an additional reduction in the cost of revenues of $1.9 million for an aggregate amount of $3.4 million for the nine months ended September 30, 2021.

Natural Gas Price Volatility in United Kingdom

In September 2021, the Company initiated the process of spinning off the operations of GRE International into a separate publicly-traded company. After initiation of the spin-off process, the natural gas and energy market in the United Kingdom deteriorated which prompted the Company to suspend the spin-off and start the process of orderly withdrawal from the United Kingdom market. For the three and nine months ended September 30, 2021, the Company recognized $6.7 million impairment of assets in the consolidated statements of operations related to the planned exit from United Kingdom.

8

Seasonality and Weather

The weather and the seasons, among other things, affect GRE’s revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters or summers have the opposite effect. Unseasonable temperatures in other periods may also impact demand levels. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 47.7% and 46.9% of GRE’s natural gas revenues for the relevant years were generated in the first quarters of 2020 and 2019, respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 31.8% of GRE’s electricity revenues for the relevant years were generated in the third quarters of 2020 and 2019. GRE’s REPs’ revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year.  

Coronavirus Disease (COVID-19)

Starting in the first quarter of 2020, the world and the United States experienced the unprecedented impacts of the coronavirus disease 2019 (COVID-19) pandemic. 

For the three and nine months ended September 30, 2021, the impacts of COVID-19 are evident in several key aspects of the Company's business operations and the corresponding financial impact has been mixed. The Company's customer base is predominantly residential, so the Company has benefited from the increased demand for residential electricity as many customers are working from and spending more time in their homes. On the other hand, like other retail providers, the Company suspended its face-to-face customer acquisition programs in March 2020 as public health measures were implemented to combat COVID-19, resulting in a decrease in gross meter acquisitions. The reduction in gross meter acquisitions during the second quarter of 2021 resulted in a slight decline in domestic meters served during the third quarter of 2021. Churn for the third quarter of 2021 slightly increased compared to the same period in 2020, however, below the churn levels that the Company typically experienced before March 2020. In the fourth quarter of 2020, authorities began relaxing certain COVID-19 public health restrictions in some of GRE's domestic markets facilitating a partial reactivation of the previously curtailed customer acquisition channels.

There are many uncertainties regarding the impacts of the COVID-19 pandemic, and the Company is closely monitoring those impacts on all aspects of its business, including how it will impact the customers, employees, suppliers, vendors, and business partners.

Note 2—Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that equals the total of the same amounts reported in the consolidated statements of cash flows:

	September 30, 2021		December 31, 2020
	(in thousands)
Cash and cash equivalents	$	33,983	$	36,913
Restricted cash—short-term		6,528		6,271
Total cash, cash equivalents, and restricted cash	$	40,511	$	43,184

Restricted cash—short-term includes amounts set aside in accordance with the Amended and Restated Preferred Supplier Agreement with BP Energy Company (“BP”) (see Note 17), Credit Agreement with JPMorgan Chase (see Note 18) and Afek Oil and Gas, Ltd.’s security deposits for its exploration license from the Government of Israel, and its customs and other import duties for the import of exploration equipment.

Note 3—Inventories

Inventories consisted of the following:

	September 30, 2021		December 31, 2020
	(in thousands)
Natural gas	$	1,965	$	1,021
Renewable credits		21,395		15,574
Solar Panels:
Finished goods		288		335
Totals	$	23,648	$	16,930

9

Note 4—Revenue Recognition

Revenue from the single performance obligation to deliver a unit of electricity and/or natural gas is recognized as the customer simultaneously receives and consumes the benefit. Variable quantities in requirements contracts are considered to be options for additional goods and services because the customer has a current contractual right to choose the amount of additional distinct goods to purchase. GRE and Genie Japan record unbilled revenues for the estimated amount customers will be billed for services rendered from the time meters were last read to the end of the respective accounting period. The unbilled revenue is estimated each month based on available per day usage data, the number of unbilled days in the period and historical trends. Several utility companies offer purchase of receivable, or POR, programs in most of the service territories in which GRE operates, and GRE’s REPs participate in POR programs for a majority of their receivables. The Company estimates variable consideration related to its rebate programs using the expected value method and a portfolio approach. The Company’s estimates related to rebate programs are based on the terms of the rebate program, the customer’s historical electricity and natural gas consumption, the customer’s rate plan, and a churn factor. Taxes that are imposed on the Company’s sales and collected from customers are excluded from the transaction price.

Revenues from Orbit Energy are accrued based on an estimate of the quantity in units of electricity or natural gas supplied to customers by profile class. The estimate is made using historical consumption patterns, industry estimated consumption rates, and takes into consideration industry reconciliation processes.

Revenue from sales of solar panels are recognized at a point in time following the transfer of control of the solar panels to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. For sales contracts that contain multiple performance obligations, such as the shipment or delivery of solar modules, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product is transferred to the customer, in satisfaction of the corresponding performance obligations. Revenues from sale of solar panels are included in other revenues in the consolidated statements of operations.

The Company recognizes the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales commissions to acquire customers meet the requirements to be capitalized. For GRE, the Company applies a practical expedient to expense costs as incurred for sales commissions to acquire customers as the period would have been one year or less. Incremental customer acquisition cost of certain GRE International entities are capitalized and amortized over the range of between eighteen and twenty-four months. These costs and the related amortization are recorded within sales and marketing expenses. Total capitalized customer acquisition costs to obtain customer contracts were $0.2 million and $0.8 million for the three and nine months ended September 30, 2021, respectively. Total capitalized customer acquisition costs to obtain customer contracts were $0.2 million and $0.6 million for three and nine months ended September 30, 2020, respectively. At September 30, 2021, customer acquisition costs of $0.5 million and $0.2 million included in other current assets and other assets, respectively, on the consolidated balance sheet. The Company recognized $0.2 million of amortization of capitalized customer acquisition cost, in each of the three months ended September 30, 2021 and 2020. The Company recognized $0.6 million of amortization of capitalized customer acquisition cost, in each of the nine months ended September 30, 2021 and 2020.

10

Disaggregated Revenues  

The following table shows the Company’s revenues disaggregated by pricing plans offered to customers: 

	Electricity		Natural Gas		Other		Total
	(in thousands)
Three Months Ended September 30, 2021
Fixed rate	$	57,429	$	5,027	$	0—	$	62,456
Variable rate		46,370		2,582		0—		48,952
Other		0—		0—		1,756		1,756
Total	$	103,799	$	7,609	$	1,756	$	113,164
Three Months Ended September 30, 2020
Fixed rate	$	41,707	$	631	$	0—	$	42,338
Variable rate		50,086		2,093		0—		52,179
Other		0—		0—		1,809		1,809
Total	$	91,793	$	2,724	$	1,809	$	96,326
Nine Months Ended September 30, 2021
Fixed rate	$	161,279	$	26,063	$	0—	$	187,342
Variable rate		129,504		22,395		0—		151,899
Other		0—		0—		6,970		6,970
Total	$	290,783	$	48,458	$	6,970	$	346,211
Nine Months Ended September 30, 2020
Fixed rate	$	99,278	$	3,200	$	0—	$	102,478
Variable rate		128,393		20,990		0—		149,383
Other		0—		0—		24,591		24,591
Total	$	227,671	$	24,190	$	24,591	$	276,452

The following table shows the Company’s revenues disaggregated by non-commercial and commercial channels:

	Electricity		Natural Gas		Other		Total
	(in thousands)
Three Months Ended September 30, 2021
Non-Commercial Channel	$	79,476	$	5,948	$	0—	$	85,424
Commercial Channel		24,323		1,661		0—		25,984
Other		0—		0—		1,756		1,756
Total	$	103,799	$	7,609	$	1,756	$	113,164
Three Months Ended September 30, 2020
Non-Commercial Channel	$	75,214	$	1,747	$	0—	$	76,961
Commercial Channel		16,579		977		0—		17,556
Other		0—		0—		1,809		1,809
Total	$	91,793	$	2,724	$	1,809	$	96,326
Nine Months Ended September 30, 2021
Non-Commercial Channel	$	234,534	$	43,410	$	0—	$	277,944
Commercial Channel		56,249		5,048		0—		61,297
Other		0—		0—		6,970		6,970
Total	$	290,783	$	48,458	$	6,970	$	346,211
Nine Months Ended September 30, 2020
Non-Commercial Channel	$	190,970	$	20,750	$	0—	$	211,720
Commercial Channel		36,701		3,440		0—		40,141
Other		0—		0—		24,591		24,591
Total	$	227,671	$	24,190	$	24,591	$	276,452

11

Contract Liabilities

Certain revenue contracts at Genie Renewables include provisions that require advance payment from customers. These advance payments received under revenue contracts are recognized as revenue as the Company satisfies the performance obligations to the other party. A portion of the transaction price allocated to the performance obligations to be satisfied in the future periods is recognized as contract liability. 

Customers of Orbit Energy can elect to be on a budget plan. Under this type of plan, a monthly installment amount is calculated based on estimated annual usage. Contract liabilities are adjusted monthly based on actual and estimated usage of the customers. Annually, the budget plan is reconciled to actual annual usage.

The following table summarized the changes in the liabilities.

	Nine Months Ended September 30,
	2021			2020
		(in thousands)
Contract liability, beginning	$	5,609		$	13,426
Recognition of revenue included in the beginning of year contract liability		(4,468	)		(13,004	)
Additions during the period, net of revenue recognized during the period		7,158			611
Cumulative translation adjustments		18			0—
Contract liability, end	$	8,317		$	1,033

Note 5—Acquisition and Divestiture

Acquisition of Controlling Interest of Shoreditch Energy Limited

On July 17, 2017, the Company’s subsidiary, Genie Energy UK Ltd. (“GEUK”), entered into a definitive agreement with Energy Global Investments Pty Ltd (“EGC”) to launch Shoreditch Energy Limited (“Shoreditch”), a joint venture to offer electricity and natural gas service to residential and small business customers in the U.K., under the trade name Orbit Energy. In second quarter of 2020, the Company contributed $1.5 million to Shoreditch, which increased GEUK's total contribution to $9.5 million as of October 8, 2020. Prior to October 8, 2020, the Company owned 77.0% of the outstanding equity of Shoreditch.

Prior to the Company acquiring the remaining 23.0% of Shoreditch, EGC had significant participation rights in the management of Shoreditch that limited GEUK’s ability to direct the activities that most significantly impact Shoreditch’s economic performance. GEUK, therefore, accounted for its ownership interest in Shoreditch using the equity method since GEUK had the ability to exercise significant influence over its operating and financial matters, although it did not control Shoreditch.

On October 8, 2020, the Company entered into an agreement (the “Purchase Agreement”) with EGC under which GEUK purchased EGC’s remaining interest in Shoreditch, in exchange for a cash payment of £1.3 million (equivalent to $1.7 million on the date of closing) offset by £0.2 million (equivalent to $0.2 million on the date of closing) in amounts owing from EGC to the Company under a loan provided to EGC in 2018 related to EGC’s capital contributions to Shoreditch. Prior to October 8, 2020, the estimated fair value and net book value of the Company's investment in Shoreditch was $5.5 million and nil, respectively. Following the transaction, Shoreditch is a wholly-owned subsidiary of GEUK.

Following the transaction, EGC has no rights in the management of Shoreditch and GEUK has complete control over the activities of Shoreditch.

12

 The Company conducted an assessment of assets and liabilities related to the acquisition of Shoreditch. The impact of the acquisition’s purchase price allocations on the Company’s consolidated balance sheet and the acquisition date fair value of the total consideration transferred were as follows:

(in thousands)
Cash	$	2,681
Trade accounts receivable		8,008
Other current assets		843
Intangible assets:
Trademark (10-year useful life)		1,594
Non-compete agreements (2-year useful life)		1,956
Customer relationships (2-year useful life)		3,620
Goodwill		13,426
Other assets		657
Accounts payable and other current liabilities		(20,490	)
Contract liabilities		(5,152	)
Net assets	$	7,143

Goodwill was allocated to the GRE International segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes. 

The Company recognized a gain of $5.5 million upon consolidation of Orbit Energy in the consolidated statement of operations for the year ended December 31, 2020, pertaining to the estimated fair value of the Company's noncontrolling interest prior to the acquisition, which is based on the amount paid by the Company for the remaining 23.0% of Shoreditch. The net book value of the Company's investments in Shoreditch was nil immediately prior to the acquisition. 

Divestiture of Genie Japan

In March 2021, the Company initiated a plan to sell certain assets and liabilities of Genie Japan. In the first quarter of 2021, certain assets and liabilities of Genie Japan were reclassified as assets and liabilities held for sale and reported at lower of fair value less cost to sell and net book value.

On April 26, 2021, the Company entered into an Equity Purchase Agreement ("Purchase Agreement") with Hanhwa Q Cells Japan Co., Ltd. ("Hanhwa"), pursuant to which, the Company agreed to sell its interest in Genie Japan for ¥570.0 million (equivalent to approximately $5.3 million at April 26, 2021) subject to certain terms and conditions set forth in the Purchase Agreement. On May 11, 2021, upon the terms and subject to the conditions of Purchase Agreement, the Company completed the divestiture of Genie Japan for an aggregate cash consideration of ¥570.0 million (equivalent to approximately $5.2 million at May 11, 2021). Hanhwa also assumed the outstanding balance of the loan payable of Genie Japan. The Company paid $0.6 million of commission to certain former employees of Genie Japan and recognized a pre-tax gain of $4.2 million from the divestiture.

The assets and liabilities divested which was previously classified as held for sale as of March 31, 2021 included the following:

(in thousands)
Cash	$	83
Trade accounts receivable		`1,737
Prepaid and other current assets		391
Intangible (license)		540
Other noncurrent assets		296
Accounts payable		(611	)
Accrued expenses and other current liabilities		(588	)
Loans payable		(1,372	)
Cumulative translation adjustment		(181	)
Noncontrolling interest		114
Liabilities held for sale included in other current liabilities	$	409

The assets and liabilities were included in GRE International segment.

13

Note 6—Fair Value Measurements

The following table presents the balance of assets and liabilities measured at fair value on a recurring basis:

	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
	(in thousands)
September 30, 2021
Assets:
Marketable equity securities	$	8,048	$	0—	$	0—	$	8,048
Derivative contracts	$	11,398	$	2,431	$	0—	$	13,829
Liabilities:
Derivative contracts	$	457	$	0—	$	0—	$	457
December 31, 2020
Assets:
Marketable equity securities	$	5,089	$	0—	$	0—	$	5,089
Other current assets (Investments in warrants)	$	0—	$	0—	$	259	$	259
Derivative contracts	$	1,237	$	118	$	0—	$	1,355
Liabilities:
Derivative contracts	$	286	$	0—	$	0—	$	286

(1) – quoted prices in active markets for identical assets or liabilities

(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities

(3) – no observable pricing inputs in the market

The Company’s derivative contracts consist of natural gas and electricity put and call options and swaps. The underlying asset in the Company’s put and call options is a forward contract. The Company’s swaps are agreements whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period.

The Company did not have any transfers of assets or liabilities between Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the period ended September 30, 2021 and 2020.

14

 Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting this data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Restricted cash—short-term and long-term, trade receivables, due to IDT Corporation, other current assets and other current liabilities. At September 30, 2021 and December 31, 2020, the carrying amounts of these assets and liabilities approximated fair value. The fair value estimate for restricted cash—short-term and long-term was classified as Level 1. The carrying value of other current assets, due to IDT Corporation, and other current liabilities approximated fair value.  

Other assets, revolving line of credit and notes payable. At September 30, 2021 and December 31, 2020, other assets included notes receivable. At September 30, 2021, the outstanding balance of the sellers of Lumo Finlands' one-time put option was not significant and was included in other liabilities account in the consolidated balance sheet. The carrying amount of the note receivable and loans payable approximated fair value. The fair values were estimated based on the Company’s assumptions, and were classified as Level 3 of the fair value hierarchy.

The primary non-recurring fair value estimates typically are in the context of business acquisitions (Note 5) which involve a combination of Level 2 and Level 3 inputs, goodwill impairment testing, which involves Level 3 inputs, and asset impairments (Notes 8 and 10) which utilize Level 3 inputs.

Concentration of Credit Risks

The Company holds cash, cash equivalents, and restricted cash at several major financial institutions, which may exceed Federal Deposit Insurance Corporation insured limits. Historically, the Company has not experienced any losses due to such concentration of credit risk. The Company’s temporary cash investments policy is to limit the dollar amount of investments with any one financial institution and monitor the credit ratings of those institutions. While the Company may be exposed to credit losses due to the nonperformance of the holders of its deposits, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition.

The following table summarizes the percentage of consolidated revenues from customers that equal or exceed 10.0% of the Company’s consolidated revenues in the period (no other single customer accounted for more than 10.0% of consolidated revenues in these periods): 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Customer A		12	%		13	%		na	%		11	%

na-less than 10.0% of consolidated revenue in the period

The following table summarizes the percentage of consolidated trade receivable by customers that equal or exceed 10.0% of consolidated net trade receivables at September 30, 2021 and December 31, 2020 (no other single customer accounted for 10.0% or greater of our consolidated net trade receivable as of September 30, 2021 or December 31, 2020):

	September 30, 2021			December 31, 2020
Customer A		11	%		na
Customer B		11	%		na

na-less than 10.0% of consolidated revenue in the period

15

Note 7—Derivative Instruments

The primary risk managed by the Company using derivative instruments is commodity price risk, which is accounted for in accordance with Accounting Standards Codification 815 — Derivatives and Hedging. Natural gas and electricity put and call options and swaps are entered into as hedges against unfavorable fluctuations in market prices of natural gas and electricity. The Company does not apply hedge accounting to these options or swaps, therefore the changes in fair value are recorded in earnings. By using derivative instruments to mitigate exposures to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company minimizes the credit or repayment risk in derivative instruments by entering into transactions with high-quality counterparties. At September 30, 2021, GRE’s swaps and options were traded on the Intercontinental Exchange. GRE International's swaps and options were traded through counterparties.

The summarized volume of GRE and GRE International's outstanding contracts and options at September 30, 2021 was as follows (MWh – Megawatt hour and Dth – Decatherm):

Settlement Dates	Volume
	Electricity (in MWh)		Gas (in Dth)
Fourth quarter 2021		215,479		526,400
First quarter 2022		173,802		851,800
Second quarter 2022		49,681		112,800
Third quarter 2022		61,992		63,940
Fourth quarter 2022		34,312		70,850
First quarter 2023		19,456		82,500
Second quarter 2023		19,456		50,600
Third quarter 2023		19,152		32,350
Fourth quarter 2023		19,152		32,500
First quarter 2024		0—		29,950
Second quarter 2024		0—		18,900
Third quarter 2024		0—		6,250

The fair value of outstanding derivative instruments recorded in the accompanying consolidated balance sheets were as follows: 

Asset Derivatives	Balance Sheet Location	September 30, 2021		December 31, 2020
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Energy contracts and options1	Other current assets	$	12,671	$	1,338
Energy contracts and options	Other assets		1,158		17
Total derivatives not designated or not qualifying as hedging instruments — Assets		$	13,829	$	1,355

Liability Derivatives	Balance Sheet Location	September 30, 2021		December 31, 2020
Derivatives not designated or not qualifying as hedging instruments:
Energy contracts and options1	Other current liabilities	$	346		245
Energy contracts and options	Other liabilities		111		41
Total derivatives not designated or not qualifying as hedging instruments — Liabilities		$	457	$	286

(1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.

16

The effects of derivative instruments on the consolidated statements of operations was as follows:

		Amount of Gain Recognized on Derivatives
Derivatives not designated or not qualifying as	Location of Gain (Loss) Recognized	Three Months Ended September 30,				Nine Months Ended September 30,
hedging instruments	on Derivatives		2021		2020		2021		2020
		(in thousands)				(in thousands)
Energy contracts and options	Cost of revenues	$	24,305	$	4,764	$	29,100	$	23,352

Note 8—Goodwill and Other Intangible Assets

The table below reconciles the change in the carrying amount of goodwill for the period from January 1, 2021 to September 30, 2021:

	GRE		GRE International			Genie Renewables		Total
	(in thousands)
Balance at January 1, 2021	$	9,998	$	15,931		$	0—	$	25,929
Cumulative translation adjustment		0—		(302	)		0—		(302	)
Balance at September 30, 2021	$	9,998	$	15,629		$	0—	$	25,627

In the fourth quarter of 2020, the Company performed a quantitative impairment analysis for its Prism reporting unit (part of the Genie Renewables segment) as a result of lower than expected results of operations in 2020. As a result of this test, the Company concluded that the carrying value of the Prism reporting unit exceeded its fair value of including the allocated goodwill. Therefore, the Company recognized a goodwill impairment charge of $0.4 million.

The table below presents information on the Company’s other intangible assets:  

	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization and Impairment		Net Balance
	(in thousands)
September 30, 2021
Patents and trademarks		17.0 years	$	5,557	$	2,781	$	2,776
Non-compete agreements		3.0 years		2,120		2,117		3
Customer relationships		9.0 years		4,958		4,357		601
Licenses		10.0 years		479		91		388
Total			$	13,114	$	9,346	$	3,768
December 31, 2020
Trademark		14.9 years	$	5,534	$	878	$	4,656
Non-compete agreement		2.0 years		2,096		75		2,021
Customer relationships		3.1 years		6,907		2,922		3,985
Licenses		10.0 years		1,224		241		983
Total			$	15,761	$	4,116	$	11,645

In the third quarter of 2021, as a result of the deterioration of the energy and natural gas market in the United Kingdom, the Company initiated the process of exiting that market which resulted in the impairment of trademark, non-compete agreements and customer relationships of Orbit of $4.7 million, included in the statements of operations.

In the second quarter of 2020, Prism renegotiated a contract with its main customer which resulted in impairment of customer relationship of $0.8 million included in the consolidated statements of operations. 

Amortization expense of intangible assets (including minimal amounts reported in cost of revenues) was $0.9 million and $3.2 million in the three and nine months ended September 30, 2021, respectively. Amortization expense of intangible assets (including minimal amounts reported in cost of revenues) was $0.3 million and $1.3 million in the three and nine months ended September 30, 2020, respectively. The Company estimates that amortization expense of intangible assets will be $0 million, $0.4 million, $0.4 million, $0.4 million, $0.4 million and $2.0 million for the remainder of 2021, and for 2022, 2023, 2024, 2025 and thereafter, respectively.

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Note 9—Accrued Expenses

Accrued expenses consisted of the following:

	September 30, 2021		December 31, 2020
	(in thousands)
Renewable energy	$	35,673	$	26,474
Liability to customers related to promotions and retention incentives		9,003		9,558
Payroll and employee benefit		3,074		3,534
Other accrued expenses		3,589		3,196
Total accrued expenses	$	51,339	$	42,762

Note 10—Leases

The Company entered into operating lease agreements primarily for offices in domestic and foreign locations where it has operations with lease periods expiring between 2021 and 2030. The Company has no finance leases.

The Company determines if a contract is a lease at inception. Right-of-Use ("ROU") assets are included under other assets in the consolidated balance sheet. The current portion of the operating lease liabilities are included in other current liabilities and the noncurrent portion is included in other liabilities in the consolidated balance sheet.

ROU assets and operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the incremental borrowing rate, because the interest rate implicit in most of our leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized borrowing rate based on information available at the lease commencement date. ROU assets also include any prepaid lease payments and lease incentives. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The Company use the base, non-cancelable, lease term when determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term.

	September 30, 2021		December 31, 2020
	(in thousands)
ROU Assets	$	1,488	$	4,409
Current portion of operating lease liabilities		1,004		1,327
Noncurrent portion of operating lease liabilities		2,521		3,233
Total	$	3,525	$	4,560

18

At September 30, 2021, the weighted average remaining lease term is 8.3 years and the weighted average discount rate is 6.0%.

Supplemental cash flow information for ROU assets and operating lease liabilities are as follows:

	Nine Months Ended September 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:	(in thousands)
Operating cash flows from operating activities	$	1,377	$	637
ROU assets obtained in the exchange for lease liabilities
Operating leases	$	0—	$	0—

In the third quarter of 2021, as a result of the deterioration of the energy and natural gas market in the United Kingdom, the Company initiated the process of exiting the market which resulted in the impairment of ROU of $1.9 million, included in the statements of operations.

Future lease payments under operating leases as of September 30, 2021 were as follows:

(in thousands)
Remainder of 2021	$	308
2022		1,193
2023		1,162
2024		225
2025		233
Thereafter		1,072
Total future lease payments		4,193
Less imputed interest		(668	)
Total operating lease liabilities	$	3,525

Rental expenses under operating leases were $0.4 million and $1.4 million in the three and nine months ended September 30, 2021, respectively. Rental expenses under operating leases were $0.2 million and $0.6 million in the three and nine months ended September 30, 2020, respectively.

.     

19

Note 11—Equity

Dividend Payments

The following table summarizes the quarterly dividends paid by the Company to holders of its Series 2021-A Preferred Stock during the nine months ended September 30, 2021 (in thousands, except per share amounts):

Declaration Date	Dividend Per Share		Aggregate Dividend Amount		Record Date	Payment Date
Series 2012-A Preferred Stock (“Preferred Stock”)
January 13, 2021	$	0.1594	$	370	February 8, 2021	February 16, 2021
April 14, 2021		0.1594		370	April 27, 2021	May 17, 2021
July 8, 2021		0.1594		370	August 9, 2021	August 16, 2021

In March 2021, in light of the losses incurred from the effects of events in Texas and Japan discussed above, the Company suspended the payment of quarterly dividends on its common stock.

On October 13, 2021, the Company’s Board of Directors declared a quarterly Base Dividend of $0.1594 per share on the Preferred Stock for the third quarter of 2021. The dividend will be paid on or about November 15, 2021 to stockholders of record as of the close of business November 8, 2021.

The Delaware General Corporation Law allows companies to declare dividends out of “Surplus,” which is calculated by deducting the par value of the company’s stock from the difference between total assets and total liabilities. The Company has elected to record dividends declared against accumulated deficit.

Stock Repurchase Program

On March 11, 2013, the Board of Directors of the Company approved a program for the repurchase of up to an aggregate of 7.0 million shares of the Company’s Class B common stock. In the three months ended September 30, 2021, the Company acquired 230,000 shares of Class B common stock under the stock purchase program for an aggregate amount of $1.4 million. In the nine months ended September 30, 2021, the Company acquired 623,000 shares of Class B common stock under the stock purchase program for an aggregate amount of $3.8 million. In the three months ended September 30, 2020, the Company acquired 11,738 shares of Class B common stock under the stock purchase program for an aggregate amount of $0.1 million. In the nine months ended September 30, 2020, the Company acquired 224,944 shares of Class B common stock under the stock repurchase program for an aggregate amount of $1.6 million. At September 30, 2021, 5.3 million shares remained available for repurchase under the stock repurchase program.  

Treasury Stock

As of September 30, 2021 and December 31, 2020, there were 2.0 million and 1.3 million outstanding shares of Class B common stock held in the Company's treasury, respectively, with a cost of $13.9 million and $9.8 million, respectively, at a weighted average cost per share of $7.03 and $7.46, respectively.

Warrants to Purchase Class B Common Stock

On June 8, 2018, the Company sold to Howard S. Jonas, the Chairman of the Company’s Board of Directors and then the holder of the controlling portion of the Company's common stock, 1,152,074 shares of the Company’s Class B common stock and warrants to purchase an additional 1,048,218 shares of the Company’s Class B common stock at an exercise price of $4.77 per share for an aggregate exercise price of $5.0 million. The warrants will expire in June 2023. In addition, on June 12, 2018, the Company sold to a third-party investor 230,415 shares of the Company’s Class B common stock held in the treasury of the Company for an aggregate sales price of $1.0 million and warrants to purchase an additional 209,644 shares of the Company’s Class B common stock at an exercise price of $4.77 per share, for an aggregate exercise price of $1.0 million. As of September 30, 2021, there were outstanding 1,257,862 warrants to purchase the Company’s Class B common stock at $4.77 per share, all of which will expire in June 2023.

Purchase of Equity of Subsidiaries

In September 2021, the Company purchased from employees and Howard S. Jonas the 4.3% fully vested interest in GRE International by issuing 218,862 of the Company's Class B common stock. 

Stock-Based Compensation

The Company’s 2011 Stock Option and Incentive Plan (as amended, the "2011 Plan") is intended to provide incentives to executives, employees, directors and consultants of the Company. Incentives available under the Plan include stock options, stock appreciation rights, limited rights, deferred stock units, and restricted stock. The 2011 Plan, is scheduled to expire on October 24, 2021. The 2011 Plan expired and no new grants are issued, however, outstanding grants are no impacted by the expiration of the plan. 

On March 8, 2021, the Board of Directors adopted the Company 2021 Stock Option and Incentive Plan (the "2021 Plan"). The 2021 Plan, was approved by the Company's stockholders in May 2021, became effective and replaced the 2011 Plan on May 12, 2021. Similar to the 2011 Plan, the 2021 Plan is intended to provide incentives to executives, employees, directors and consultants of the Company. Incentives available under the 2021 Plan include stock options, stock appreciation rights, limited stock appreciation rights, deferred stock units, and restricted stock. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. The maximum number of shares reserved for the grant of awards under the 2021 Plan is 1.0 million shares of Class B Common Stock.

20

In February 2020, the Company granted certain employees and members of its Board of Directors an aggregate of 305,000 deferred stock units, which were subject to vesting in two tranches upon the achievement of a specified thirty-day average closing price of the Company's Class B common stock within specified periods of time (the "2020 market conditions") and the satisfaction of service-based vesting conditions. Each deferred stock unit entitled the grantee to receive, upon vesting, up to two shares of Class B common stock of the Company upon achievement of market conditions. The 2020 market conditions were not achieved and the awards expired in February 2021. There was 0 expense recognized for these awards.

In February 2021, the Company granted certain employees and members of its Board of Directors an aggregate of 305,000 deferred stock units which will vest in two tranches contingent upon the achievement of a specified thirty-day average closing price of the Company's Class B common stock within a specified period of time (the "2021 market conditions") and the satisfaction of service-based vesting conditions. Each deferred stock unit entitles the recipient to receive, upon vesting, up to two shares of Class B common stock of the Company depending on market conditions. The Company used a Monte Carlo simulation model to estimate the grant-date fair value of the awards. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility based on a combination of the Company’s historical stock volatility. The 2021 market conditions for vesting of deferred stock units were not met as of September 30, 2021.

As of September 30, 2021, there was approximately $5.4 million of total unrecognized stock-based compensation costs related to outstanding and unvested equity-based grants. These costs are expected to be recognized over a weighted-average period of approximately 2.6 years.

Note 12—Variable Interest Entity

Citizens Choice Energy, LLC (“CCE”), is a REP that resells electricity and natural gas to residential and small business customers in the State of New York. The Company does not own any interest in CCE. Since 2011, the Company has provided CCE with substantially all of the cash required to fund its operations. The Company determined that it has the power to direct the activities of CCE that most significantly impact its economic performance and it has the obligation to absorb losses of CCE that could potentially be significant to CCE on a stand-alone basis. The Company therefore determined that it is the primary beneficiary of CCE, and as a result, the Company consolidates CCE within its GRE segment. The net income or loss incurred by CCE was attributed to noncontrolling interests in the accompanying consolidated statements of operations.

The Company has an option to purchase 100% of the issued and outstanding limited liability company interests of CCE for one dollar plus the forgiveness of $0.5 million that the Company loaned to CCE in October 2015. The option expires on October 22, 2023.

Net loss related to CCE and aggregate net funding provided by the Company were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)						(in thousands)
Net loss	$	(445	)	$	(399	)	$	(818	)	$	(1,147	)
Aggregate funding provided by the Company, net	$	(393	)	$	(932	)	$	(921	)	$	(1,454	)

Summarized combined balance sheet amounts related to CCE was as follows:

	September 30, 2021			December 31, 2020
	(in thousands)
Assets
Cash, cash equivalents and restricted cash	$	659		$	491
Trade accounts receivable		399			433
Prepaid expenses and other current assets		432			416
Other assets		359			359
Total assets	$	1,849		$	1,699
Liabilities and noncontrolling interests
Current liabilities	$	565		$	518
Due to IDT Energy		5,043			4,122
Noncontrolling interests		(3,759	)		(2,941	)
Total liabilities and noncontrolling interests	$	1,849		$	1,699

The assets of CCE may only be used to settle obligations of CCE, and may not be used for other consolidated entities. The liabilities of CCE are non-recourse to the general credit of the Company’s other consolidated entities.

21

Note 13—Income Taxes

The following table provides a summary of Company's effective tax rate: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Reported tax rate	254.0	%	28.0	%	96.5	%	29.2	%

The Company's reported tax rate for the three and nine months ended September 30, 2021 increased as compared to the same periods in 2020. The increases in the reported tax rate for the three and nine months ended September 30, 2021 compared to the same periods in 2020 are a result of changes in the mix of jurisdictions in which the taxable income was earned which was not offset by income tax benefit in some jurisdictions that had losses due to valuation allowances in those jurisdictions. The GRE International segment incurred significant losses as discussed in Notes 8 and 10, which resulted in lower consolidated income before income taxes.

Note 14— (Loss) Earnings Per Share

Basic earnings per share is computed by dividing net loss or income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options and warrants using the treasury stock method, unless the effect of such increase is anti-dilutive.

The weighted-average number of shares used in the calculation of basic and diluted earnings per share attributable to the Company’s common stockholders consists of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)				(in thousands)
Basic weighted-average number of shares		25,514		25,928		25,867		26,107
Effect of dilutive securities:
Stock options and warrants		0—		711		0—		628
Non-vested restricted Class B common stock		0—		130		0—		104
Diluted weighted-average number of shares		25,514		26,769		25,867		26,839

The following shares were excluded from the diluted earnings per share computations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)				(in thousands)
Shares underlying options and warrants		665		0—		731		126
Non-vested restricted Class B common stock		27		0—		33		0—
Non-vested deferred stock units		610		610		610		610

In the three and nine months ended September 30, 2021, the diluted loss per share computation equals basic loss per share because the Company has a net loss and the impact of the assumed exercise of the stock options and warrants and the vesting of the restricted stock would have been anti-dilutive.

Stock options and warrants were excluded from the diluted earnings per share computation for the three and nine months ended September 30, 2021 because the exercise prices of the stock options were greater than the average market prices of the Company's stock during the periods.

 Non-vested deferred stock units were excluded from the basic and diluted weighted average shares outstanding calculation because the market condition for vesting of those deferred stock units were not met as of September 30, 2021 and 2020.

Note 15—Related Party Transactions 

In December 2020, the Company invested $5.0 million to purchase 218,245 shares of Class B common stock of Rafael Holdings, Inc. ("Rafael"). Rafael, a publicly-traded company, is also a related party. In connection with the purchase, Rafael issued to the Company warrants to purchase an additional 43,649 shares of Rafael's Class B common stock with an exercise price of $22.91 per share. The warrants had a term expiring on June 6, 2022. The Company exercised the warrants in full on March 31, 2021 for a total exercise price of $1.0 million. The Company does not exercise significant influence over the operating or financial policies of Rafael. For the three months ended September 30, 2021, the Company recognized unrealized loss on investment of $5.3 million, in connection with the investment. For the nine months ended September 30, 2021, the Company recognized unrealized gain on investment of $1.1 million, in connection with the investment.  At September 30, 2021, the carrying values of investments in the common stock was $8.0 million. 

22

 

The Company was formerly a subsidiary of IDT Corporation (“IDT”). On October 28, 2011, the Company was spun-off by IDT. The Company entered into various agreements with IDT prior to the spin-off including an agreement for certain services to be performed by the Company and IDT. The Company also provides specified administrative services to certain of IDT’s foreign subsidiaries. Howard S. Jonas is the Chairman of the Board of IDT.

The Company leases office space and parking in New Jersey from Rafael a former subsidiary of IDT that was spun off from IDT in March 2018. Howard S. Jonas is the Chairman of the Board of Directors of Rafael. The lease expires in April 2025.

The charges for services provided by IDT to the Company, and rent charged by Rafael, net of the charges for the services provided by the Company to IDT, are included in “Selling, general and administrative” expense in the consolidated statements of operations.

	Three Months Ended  September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
	(in thousands)				(in thousands)
Amount IDT charged the Company	$	247	$	286		$	766	$	806
Amount the Company charged IDT	$	33	$	35		$	105	$	114
Amount Rafael charged the Company	$	57	$	56		$	170	$	168

The following table presents the balance of receivables and payables to IDT and Rafael:

	September 30, 2021		December 31, 2020
	(in thousands)
Due to IDT	$	152	$	299
Due from IDT	$	43	$	40
Due to Rafael	$	0—	$	0—

On August 31, 2018, the Company extended a loan to a former employee for $0.1 million. The loan agreement required scheduled payments from December 31, 2020 to December 2052. The loan bears the same interest equivalent to a minimum rate, in effect from time to time required by local regulations and is compounded annually. The Company recorded minimal amounts of interest income for the three and nine months ended September 30, 2021 and 2020 related to this debt. The outstanding balance, including accrued interest was $0.1 million as of September 30, 2021.

The Company obtains insurance policies through several insurance brokers, one of which is IGM Brokerage Corp. (“IGM”). IGM is owned by the mother of Howard S. Jonas and Joyce Mason, the Company’s Corporate Secretary. Jonathan Mason, husband of Joyce Mason and brother-in-law of Howard S. Jonas, provides insurance brokerage services via IGM. Based on information the Company received from IGM, the Company believes that IGM received commissions and fees from payments made by the Company (including payments from third party brokers). The Company paid IGM a total of $0.3 million in 2020 related to premium of various insurance policies that were brokered by IGM. There was 0 outstanding payable to IGM as of September 30, 2021. Neither Howard S. Jonas nor Joyce Mason has any ownership or other interest in IGM other than via the familial relationships with their mother and Jonathan Mason. 

Investments in Atid 613

In September 2018, the Company divested a majority interest in Atid Drilling Ltd. in exchange for a 37.5% interest in a contracting drilling company in Israel ("Atid 613") which the Company accounts for using equity method of accounting. The Company did not recognize any equity in net loss from Atid 613 for the three and nine months ended September 30, 2021. The Company recognized a $0.2 million equity in net loss from Atid 613 for the three months ended September 30, 2020  and a minimal amount of equity in net gain from Atid 613 for the nine months ended September 30, 2020. The carrying value of investments in Atid 613 was $0.1 million at September 30, 2021 and December 31, 2020 included in other noncurrent assets in the consolidated balance sheets.

The Company also entered into a Shareholder Agreement with Atid 613's other shareholders to govern certain issues regarding management of the new company. Under the Shareholder Agreement, among other things, Genie Israel agreed to make available to Atid 613 working capital financing up to $0.4 million ("Credit Facility"). Any outstanding borrowing under the Credit Facility would bear interest at a variable rate as described in the Shareholder Agreement. As of September 30, 2021, the outstanding balance of Credit Facility was nil.

23

On August 12, 2019, the Company, together with the other shareholders of Atid 613 signed a Funding Agreement to provide aggregate loans to Atid 613 in an amount of up to New Israeli Shekel or NIS 5.1 million (equivalent to $1.5 million at September 30, 2021), including the Company's commitment to extend up to NIS1.9 million (equivalent to $0.5 million at September 30, 2021) of such amount. In August 2019, the Company extended NIS0.8 million (equivalent to $0.2 million) in loans. The loans which are secured by Atid 613’s assets bore 0 interest until March 1, 2020 and bore interest at 5.5% for all subsequent periods. In May 2021 Atid 613 paid the outstanding balance of the loan of $ 0.2 million. At September 30, 2021, the balance of loan receivables from Atid 613 was nil.

Note 16—Business Segment Information

The Company has 3 reportable business segments: GRE, GRE International and Genie Renewables (formerly Genie Energy Services, or GES). In the first quarter of 2021, the Company modified its management reporting to rename its GES segment as "Genie Renewables." GRE owns and operates REPs, including IDT Energy, Residents Energy, TSE, Southern Federal and Mirabito. Its REP businesses resell electricity and natural gas to residential and small business customers in the Eastern and Midwestern United States and Texas. GRE International, operates REPs in the United Kingdom (which it is currently exiting), Finland and Sweden. Genie Renewables designs, manufactures and distributes solar panels, offers energy brokerage and advisory services and also sells third-party products to customers. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expenses and other corporate-related general and administrative expenses. Corporate does not generate any revenues, nor does it incur any cost of revenues.

The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision-maker.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations. There are no significant asymmetrical allocations to segments.

 

Operating results for the business segments of the Company were as follows:

(in thousands)	GRE		GRE International			Genie Renewables			Corporate			Total
Three Months Ended September 30, 2021
Revenues	$	86,317	$	25,509		$	1,338		$	0—		$	113,164
Income (loss) from operations		19,714		(10,935	)		(203	)		(1,703	)		6,873
Depreciation and amortization		90		779			12			0—			881
Impairment of assets		0—		6,650			0—			0—			6,650
Equity in net income of equity method investees		0—		0—			0—			52			52
Three Months Ended September 30, 2020
Revenues	$	88,924	$	5,829		$	1,573		$	0—		$	96,326
Income (loss) from operations		12,229		(1,575	)		(614	)		(1,555	)		8,485
Impairment of assets		0—		0—			0—			0—			0—
Depreciation and amortization		118		527			11			14			670
Equity in net loss of equity method investees		0—		0—			0—			(146	)		(146	)
Nine Months Ended September 30, 2021
Revenues	$	243,960	$	96,081		$	6,170		$	0—		$	346,211
Income (loss) from operations		26,427		(20,630	)		690			(4,832	)		1,655
Depreciation and amortization		295		2,996			34			1			3,326
Impairment of assets		0—		6,650			0—			0—			6,650
Equity in net income of equity method investees		0—		0—			0—			215			215
Nine Months Ended September 30, 2020
Revenues	$	234,540	$	17,820		$	24,092		$	0—		$	276,452
Income (loss) from operations		31,203		(4,701	)		(1,385	)		(4,689	)		20,428
Depreciation and amortization		347		1,512			314			0—			2,219
Impairment of assets		0—		0—			993			0—			993
Equity in net loss of equity method investees		0—		(1,502	)		0—			(17	)		(1,698	)

24

Total assets for the business segments of the Company were as follows:

(in thousands)	GRE		GRE International		Genie Renewables		Corporate		Total
Total assets:
September 30, 2021	$	128,293	$	41,926	$	3,616	$	19,785	$	193,620
December 31, 2020		101,904		55,273		3,171		26,991		187,339

Note 17—Commitments and Contingencies

Legal Proceedings 

On February 18, 2020, named Plaintiff Danelle Davis filed a putative class action complaint against Residents Energy and GRE in United States District of New Jersey alleging violations of the Telephone Consumer Protection Act, 47 U.S.C § 227 et seq. Resident Energy denies allegations in the complaint and plans to vigorously defend this action. Although Residents Energy and GRE deny any wrongdoing in connection with the complaints, the parties settled the matter for a minimal amount which was included in selling general and administrative expenses for three months ended March 31, 2021. 

In addition to the matters disclosed above, the Company may from time to time be subject to legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Agency and Regulatory Proceedings 

From time to time, the Company receives inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes, and the Company responds those inquiries or requests. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made. 

New York Public Service Commission Orders

In December 2017, the New York Public Service Commission (“PSC”) held an evidentiary hearing to assess the retail energy market in New York. On December 12, 2019, following the completion of post-hearing briefings in the proceedings, the PSC issued orders adopting the changes to the New York retail energy market, effective April 16, 2021 ("2021 Orders"). The 2021 Orders limits the types of services energy retailer marketers may offer new customers or renewals, in terms of pricing for non-renewable commodities and renewable product offerings. Although the Company is working to ensure that its products and services are fully compatible with the 2021 Orders, such compliance may adversely impact customer acquisition and renewal revenue and profitability. The Company is evaluating its options, both by itself and in tandem with other industry participants, to challenge or petition for additional clarity and changes to the 2021 Orders. There is insufficient basis to deem any loss probable or to assess the amount of any possible loss based on the changes instituted by the 2021 Orders. For the three and nine months ended September 30, 2021 gross revenue from New York was $12.8 million and $40.1 million, respectively.

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State of Connecticut Public Utilities Regulatory Authority

Town Square

On September 19, 2018, the State of Connecticut Public Utilities Regulatory Authority (“PURA”) commenced an investigation into Town Square following customer complaints of allegedly misleading and deceptive sales practices on the part of Town Square. The Connecticut Office of Consumer Counsel subsequently joined in the investigation. Although Town Square denies any basis for those complaints and any wrongdoing on its part, it has cooperated with the investigation and has responded to subpoenas for discovery. On June 17, 2020, PURA notified Town Square that it was advancing its investigation by assigning Prosecutorial staff for the purpose of investigating Town Square’s compliance with licensed electric supplier billing, marketing, and licensing requirements, and, if appropriate, facilitating settlement discussions among the parties that contains, but is not limited to, an appropriate civil penalty, extensive retraining of the supplier’s third-party agents, and retention of all sales calls with continued auditing. In the first quarter of 2021, Town Square engaged in settlement discussions with PURA and accrued $0.4 million in the first quarter of 2021. 

In July 2021, the parties settled the dispute. Pursuant to the terms of the settlement agreement, Town Square paid $ 0.4 million. Town Square has also agreed to voluntarily refrain from in-person marketing activities in Connecticut for a period of 15 months. For the three and nine months ended September 30, 2021, Town Square’s gross revenues from sales in Connecticut was $9.0 million and $24.9 million, respectively. 

Residents Energy

In August 2020, Residents Energy began marketing retail energy services to Connecticut. For the three and nine months ended September 30, 2021, Residents Energy's gross revenues from sales in Connecticut were $0.1 million and $0.2 million, respectively. During the fourth quarter of 2020, the enforcement division of PURA contacted Residents Energy concerning customer complaints received in connection with alleged door-to-door marketing activities in violation of various rules and regulations, including a ban on door-to-door activities during the pertinent time period as a result of the COVID-19 pandemic. In January and February of 2021, Residents Energy responded to the limited information requests and discovery made by the enforcement division. On March 12, 2021, the enforcement division filed a motion against Resident Energy with the adjudicating body of PURA, seeking the assessment of $1.5 million in penalties, along with a suspension of license for eighteen months, auditing of marketing practices upon reinstatement and an invitation for settlement discussions. Residents Energy believes that the initial demand is disproportionate to its scope of activity. In the first quarter of 2021, Residents Energy engaged in settlement discussion with PURA and accrued $0.3 million in the first quarter of 2021.

In June 2021, the parties settled the dispute. Pursuant to the terms of the settlement agreement, Residents Energy paid $0.3 million and volunteered to withdraw from the market in Connecticut for a period of 36 months.

Other Reviews or Investigations

From time to time regulators may initiate reviews, compliance checks or issue subpoenas for information as means to evaluate the Company and its subsidiaries’ compliance with applicable laws, rules, regulations and practices.

On October 25, 2019, the Office of the Attorney General of the State of Illinois ("IL AG") notified Residents Energy (by way of subpoena) that it is conducting an investigation to assess compliance with the Illinois Consumer Fraud and Deceptive Business Practices Act. The notice was issued in the form of a subpoena in the course of the foregoing. The Company, which has responded in part, has challenged the merits of the subpoena and investigation. The IL AG is seeking to compel Residents Energy's response to its subpoena. Residents Energy denies any wrongdoing on its part. As of September 30, 2021, 0 claims or demands have been made against Residents Energy by the IL AG, and there is insufficient basis to deem any loss probable or to assess the amount of any possible loss. For the three and nine months ended September 30, 2021, Resident Energy’s gross revenues from sales in Illinois was $7.2 million and $20.2 million, respectively. 

In response to certain customers complaints, the State of Maine Public Utility Commission ("MPUC") has opened a review of the door-to-door marketing practices of Town Square. In connection with the review, the MPUC has requested information from Town Square demonstrating compliance in the form of an order to show cause as to why its marketing practices are in compliance and it should be permitted to continue licensed operations in Maine. In August 2021, the parties settled the dispute without any obligation for payment by Town Square. In connection with the settlement, Town Square has agreed to voluntarily refrain from door-to-door marketing activities in Maine through June 30, 2023, and to voluntarily refrain from outbound telemarketing to obtain new residential customers for a period of six months, along with certain compliance procedures. For the three and nine months ended September 30, 2021, Town Square’s gross revenues from sales in Maine was $0.3 million and $1.1 million, respectively. 

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Other Commitments

Purchase Commitments

The Company had future purchase commitments of $219.9 million at September 30, 2021, of which $170.7 million was for future purchases of electricity. The purchase commitments outstanding as of September 30, 2021 are expected to be paid as follows (in thousands): 

Remainder of 2021	$	34,397
2022		111,526
2023		61,927
2024		11,013
2025		1,006
Thereafter		0—
Total payments	$	219,869

In three months ended September 30, 2021, the Company purchased $10.7 million and $8.5 million of electricity and renewable energy credits, respectively, under these purchase commitments. In the nine months ended September 30, 2021, the Company purchased $10.4 million and $16.4 million of electricity and renewable energy credits, respectively, under these purchase commitments. In three months ended September 30, 2020, the Company purchased $23.2 million and $5.9 million of electricity and renewable energy credits, respectively, under these purchase commitments. In the nine months ended September 30, 2020, the Company purchased $43.1 million and $12.5 million of electricity and renewable energy credits, respectively, under these purchase commitments. 

Renewable Energy Credits 

GRE must obtain a certain percentage or amount of its power supply from renewable energy sources in order to meet the requirements of renewable portfolio standards in the states in which it operates. This requirement may be met by obtaining renewable energy credits that provide evidence that electricity has been generated by a qualifying renewable facility or resource. At September 30, 2021, GRE had commitments to purchase renewable energy credits of $49.2 million.

Performance Bonds

GRE has performance bonds issued through a third party for certain utility companies and for the benefit of various states in order to comply with the states’ financial requirements for REPs. At September 30, 2021, GRE had aggregate performance bonds of $13.4 million outstanding. 

BP Energy Company Preferred Supplier Agreement

Certain of GRE’s REPs are party to an Amended and Restated Preferred Supplier Agreement with BP, which is to be in effect through November 30, 2023. Under the agreement, the REPs purchase electricity and natural gas at market rate plus a fee. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REPs’ customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At September 30, 2021, the Company was in compliance with such covenants. At September 30, 2021, restricted cash—short-term of $0.9 million and trade accounts receivable of $51.7 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $15.5 million at September 30, 2021.

Shell Exclusive Supply Contract with Orbit Energy

Orbit Energy had an exclusive contract with Shell U.K. Limited ("Shell") to provide electricity and natural gas to Orbit Energy until June 2024, with an option (not an obligation) to extend through June 2027. Shell provides access to the forward market such that Orbit Energy can enter into forward hedge position for its customers which protects the Company from mark-to-market fluctuations. Shell also provides extended payment facilities of an additional 30 days compared to the United Kingdom payment terms up to a limit of £5.0 million at an interest of LIBOR plus 5.0%. Shell charges an additional £0.9 per therm of natural gas and Mwh of electricity for all delivered volume on top of the wholesale costs. The contract with Shell is secured by a pledge of the outstanding equity interest of Orbit Energy. The contract is also subject to satisfaction of certain conditions including the maintenance of certain covenants which includes minimum levels of cash, gross margin, net worth, as defined in the contract, earnings before tax, as defined in the contract and provision for bad debts on accounts receivable. At September 30, 2021, Orbit Energy was in compliance with such covenants. At September 30, 2021, Orbit Energy's total liability to Shell was $9.1 million included in trade accounts payable and accrued expenses accounts in the consolidated balance sheet. In October 2021, the exclusive contract with Shell was terminated and settled all liabilities related to the contract.

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Note 18—Debt

Loan with Tokyo Star Bank

On November 28, 2019, Genie Japan entered into a Loan Agreement with Tokyo Star Bank for a ¥100.0 million (equivalent to $0.9 million) short-term credit facility. Genie Japan provided a letter of credit issued by JPMorgan Chase amounting to ¥100.0 million (equivalent to $0.9 million) as collateral. The outstanding principal amount incurred interest at Tokyo Star Bank's short-term prime rate plus 0.25% per annum. Interest was payable monthly and all outstanding principal and any accrued and unpaid interest matured on May 13, 2020. Genie Japan settled the Loan agreement and paid the outstanding balance of ¥100.0 million (equivalent to $0.9 million) on May 13, 2020.

On May 13, 2020, Genie Japan entered into a new Loan Agreement with Tokyo Star Bank for a ¥150.0 million (equivalent to $1.4 million) short-term credit facility ("May 2020 Loan") with maturity date of November 13, 2020. On November 13, 2020, Genie Japan and Tokyo Star Bank amended the May 2020 Loan to extend the maturity date to May 13, 2021. Genie Japan provided a letter of credit issued by JPMorgan Chase in the amount of ¥150.0 million (equivalent to $1.4 million) as collateral. The outstanding principal amount incurred interest at 3.0% per annum and was payable monthly. In May 2021, the Company completed the divestiture of Genie Japan including balance of the May 2020 Loan (see Note 5). At December 31, 2020, the effective interest rate was 3.0%.

Revolving Line of Credit with Vantage Commodities

On April 4, 2017, GRE, IDT Energy, and other GRE subsidiaries entered into a Credit Agreement with Vantage Commodities Financial Services II, LLC ("Vantage") for a $20.0 million revolving loan facility. The borrowers consist of the Company’s subsidiaries that operate REP businesses, and those subsidiaries’ obligations are guaranteed by GRE. The borrowers have provided as collateral a security interest in their receivables, bank accounts, customer agreements, certain other material agreements and related commercial and intangible rights. The outstanding principal amount incurred interest at LIBOR plus 4.5% per annum. Interest was payable monthly, and all outstanding principal and any accrued and unpaid interest was due on the maturity date of April 3, 2020. In April 2020, the revolving line of credit expired and the Company paid the outstanding balance of $3.5 million in exchange for the release and termination of any further obligations and security interest.

Credit Agreement with JP Morgan Chase Bank

On December 5, 2019, the Company entered into the first amendment of Credit Agreement with JPMorgan Chase Bank (“Credit Agreement”) to extend the maturity date of December 31, 2020. On December 8, 2020, the Company entered into the second amendment of its existing Credit Agreement to extend the maturity date to December 31, 2021. The Company continues to have the aggregate principal amount of $5.0 million credit line facility (“Credit Line”). The Company pays a commitment fee of 0.1% per annum on unused portion of the Credit Line as specified in the Credit Agreement. The borrowed amounts will be in the form of letters of credit which will bear interest of 1.0% per annum. The Company will also pay a fee for each letter of credit that is issued equal to the greater of $500 or 1.0% of the original maximum available amount of the letter of credit. The Company agreed to deposit cash in a money market account at JPMorgan Chase Bank as collateral for the line of credit equal to $5.1 million. As of September 30, 2021, there are no letters of credit issued by JP Morgan Chase Bank. At September 30, 2021, the cash collateral of $5.7 million was included in restricted cash—short-term in the consolidated balance sheet.

Prism Notes Payable

On December 11, 2019, the Company refinanced Prism's outstanding 5.95% notes payable to Catskill Hudson Bank that were due in November 2019. The outstanding balance of notes payable of $0.9 million at December 11, 2019 was payable in monthly equal annual installments for period of ten years. The outstanding principal amount incurred fixed interest at 4.75% per annum. On October 16, 2020, Prism settled the notes payable to Catskill Bank with full payment of the remaining principal amount of $0.9 million.

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Note 19—Recently Issued Accounting Standards

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on January 1, 2023. The Company is currently evaluating the requirements of this guidance and has not yet determined the impact of its adoption on the Company's consolidated financial statements.

Note 20— Subsequent Events

United Kingdom Market

In October 2021, as part of the orderly exit process from the United Kingdom market (see Note 1), Orbit and Shell agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell. These proceeds, together with the existing cash and accounts receivables as of September 30, 2021, are expected to cover the cost to supply Orbit's current customers with electricity and natural gas until an orderly transfer of those customers is completed, and to exceed Orbit’s liabilities and carrying value of goodwill at September 30, 2021 of $30.7 million and $13.9 million, respectively. Due to a wide range of outcomes related to the on-going exit from the United Kingdom market, the Company is unable to provide the expected net proceeds from the exit from the United Kingdom market at this time.

Fair Value of Investments in Rafael

In October 2021, Rafael reported disappointing news related to the result of its clinical trials which resulted in a significant decline in the value of its Class B common stock. At September 30, 2021, the carrying value of the investment in Rafael was $8.0 million (see Note 15).

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

The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the U.S. Securities and Exchange Commission (or SEC).

As used below, unless the context otherwise requires, the terms “the Company,” “Genie,” “we,” “us,” and “our” refer to Genie Energy Ltd., a Delaware corporation, and its subsidiaries, collectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed below under Part II, Item IA and under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the year ended December 31, 2020.

Coronavirus Disease (COVID 19)

Starting in the first quarter 2020, the world and the United States experienced the unprecedented impacts of the coronavirus disease 2019 (COVID-19) pandemic.

For the three and nine months ended September 30, 2021, the impacts of COVID-19 are evident in several key aspects of our business operations and the corresponding financial impact has been mixed. 

Our customer base is predominantly residential, so we benefited from the increased demand for residential electricity when customers are working from their homes. On the other hand, like other retail providers, we suspended our face-to-face customer acquisition programs in March 2020 as public health measures were implemented to combat COVID-19, resulting in a decrease in gross meter acquisitions and a reduction in the U.S. domestic meters served. Churn for the third quarter of 2021 slightly increased compared to the same period in 2020, however, below the churn levels that the Company typically experienced before March 2020. In the fourth quarter of 2020, authorities began relaxing certain COVID-19 public health restrictions in some of GRE's domestic markets facilitating a partial reactivation of the previously curtailed customer acquisition channels.

We did not experience any significant changes in our workforce composition and were able to implement our business continuity plans with no significant impact to our ability to maintain our operations. We continue to maintain strong physical and cybersecurity measures in order to both serve our operational needs with a remote workforce and to ensure that we continue to provide services to our customers. We face challenges due to the need to operate with a remote workforce and are continuing to address those challenges so as to minimize the impact on our ability to operate.   

In the fourth quarter of 2020, authorities began relaxing certain COVID-19 public health restrictions in some of our markets which allows us to resume face-to-face sales and marketing. Looking ahead, we expect to see a modest rebound in meter acquisition, however, any reversal of the easing of restrictions would impact that expected rebound.

There are many uncertainties regarding the impacts of the COVID-19 pandemic, and we are closely monitoring those impacts of on all aspects of its business, including how it will impact our customers, employees, suppliers, vendors, and business partners. We are currently unable to predict the impact that COVID-19 will have on our financial position and operating results due to the complexities of the impacts and numerous uncertainties that are beyond the Company's control. We expect to continue to assess the evolving impact of COVID-19 on our business and assets and intend to make adjustments accordingly.

Overview

We are comprised of Genie Retail Energy ("GRE"), Genie Retail Energy International ("GRE International") and Genie Renewables. In March 2021, the Company modified its management reporting to rename the Genie Energy Services ("GES") segment as "Genie Renewables."

GRE owns and operates retail energy providers ("REPs"), including IDT Energy, Residents Energy, Town Square Energy ("TSE"), Southern Federal and Mirabito Natural Gas. GRE's REP businesses resell electricity and natural gas primarily to residential and small business customers, with the majority of the customers in the Eastern and Midwestern United States and Texas.

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GRE International holds the Company's REPs that serve retail customers in United Kingdom under the name Orbit Energy, its 98.8% interest in venture in Japan ("Genie Japan"), its 91.7% interest in Lumo Energia Oyj ("Lumo Finland"), a REP serving residential customers in Finland and its 98.8% interest in Lumo Energi AB ("Lumo Sweden"), which was formed in 2019 to serve retail energy customers in Sweden. In May 2021, we completed the sale of Genie Japan.

Genie Renewables holds Genie Solar Energy, a rooftop solar system sales and general contracting company, a 93.5% interest in CityCom Solar, a marketer of community solar energy solutions, oversees Diversegy, a retail energy advisory and brokerage company that serves commercial and industrial customers throughout the United States and manages our 60.0% controlling interest in Prism, a solar solutions company that is engaged in U.S. based manufacturing of solar panels, solar installation design and solar energy project management. 

As part of our ongoing business development efforts, we seek out new opportunities, which may include complementary operations or businesses that reflect horizontal or vertical expansion from our current operations. Some of these potential opportunities are considered briefly and others are examined in further depth. In particular, we seek out acquisitions to expand the geographic scope and size of our REP businesses.

Strategic Update

We suspended the planned spin-off of our international operations in the United Kingdom and Scandinavia following the deterioration of the United Kingdom energy market, where a planned, orderly withdrawal from the market is underway. We do not expect to incur additional material, cash charges as a result.

Genie Retail Energy

GRE operates REPs that resell electricity and/or natural gas to residential and small business customers in Connecticut, Delaware, Georgia, Florida, Georgia, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Texas, Rhode Island, and Washington, D.C. GRE’s revenues represented approximately 70.5 and 85.0%  of our consolidated revenues in the nine months ended September 30, 2021 and 2020, respectively.

Seasonality and Weather

The weather and the seasons, among other things, affect GRE’s REPs' revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters and/or summers have the opposite effects. Unseasonable temperatures in other periods may also impact demand levels. Potential changes in global climate may produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in unusual weather conditions, more intense, frequent and extreme weather events and other natural disasters. Some climatologists believe that these extreme weather events will become more common and more extreme which will have a greater impact on our operations. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 47.7% and 49.6% of GRE’s natural gas revenues for the relevant years were generated in the first quarter of 2020 and 2019, respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 31.8% of GRE’s electricity revenues for 2020 and 2019, were generated in the third quarters of those years. GRE's REP's revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year.

Winter Storm in Texas

In mid-February of 2021, the State of Texas experienced unprecedented cold weather and snow, which was named Winter Storm Uri. With the grid overtaxed due to demand and weather-related reduced supply and rolling blackouts being enforced, by order of the ERCOT, real-time commodity prices during the crisis escalated significantly. Although our supply commitment for our customers in Texas was reasonably hedged for reasonably foreseen winter weather conditions, the market conditions exposed us to further unexpected cost increases. Despite our cost increases related to the unprecedented price volatility in real-time electricity prices, we maintained customer rates under current agreements with customers. The impact on our consolidated profitability for the nine months ended September 30, 2021 was approximately$13.0 million. 

In June 2021, the state legislature of the State of Texas passed House Bill 4492 (“HB 4492”) which includes certain provisions for financing certain costs associated with electric markets caused by Winter Storm Uri. Pursuant to HB 4492, two categories of charges associated with Winter Storm Uri are to be securitized and the proceeds of the securitization will be provided going to the load serving entities who originally incurred the charges. Under HB 4492, we are entitled to recover a portion of the costs incurred from the effect of Winter Storm Uri with a calculated range of $1.5 million to $2.6 million. In the second quarter of 2021, the Company recorded a reduction in cost of revenues of $1.5 million. 

In September 2021, the Public Utility Commission of Texas ("PUC") approved the Debt Obligation Order to grant ERCOT's application for a debt financing mechanism to pay for certain costs associated with Winter Storm Uri. Under the Debt Obligation Order, the amount that the Company is entitled to recover increased to approximately $3.4 million. For the three months ended September 30, 2021, the Company recorded an additional reduction in the cost of revenues of $1.9 million for an aggregate amount of $3.4 million for the nine months ended September 30, 2021.

United Kingdom Operations Update

In the third quarter of 2021, as a result of the deterioration of the energy and natural gas market in the United Kingdom, the Company initiated the process of exiting the market which resulted in the impairment assets of $6.7 million, included in the statements of operations.

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Purchase of Receivables

Utility companies offer purchase of receivable, or POR, programs in most of the service territories in which GRE operates. GRE’s REPs reduce their customer credit risk by participating in POR programs for a majority of their receivables. In addition to providing billing and collection services, utility companies purchase those REPs’ receivables and assume all credit risk without recourse to those REPs. GRE’s REPs’ primary credit risk is therefore nonpayment by the utility companies. In each of the three and nine months ended September 30, 2021 the associated cost was approximately 1.0% of GRE's revenue. In the three and nine months ended September 30, 2020 the associated cost was approximately 1.2%, of GRE's revenue. At September 30, 2021, 86.6% of GRE’s net accounts receivables were under a POR program.

Class Action Lawsuits

Although GRE endeavors to maintain best sales and marketing practices, such practices have been the subject of certain class action lawsuits.

On February 18, 2020, named Plaintiff Danelle Davis filed a putative class action complaint against Residents Energy and GRE in United States District of New Jersey alleging violations of the Telephone Consumer Protection Act, 47 U.S.C § 227 et seq. Residents Energy denies allegations in the complaint and plans to vigorously defend this action. On or around October 9, 2020, Residents Energy filed a preliminary motion to dismiss one of the counts in the complaint, and to dismiss GRE as a named defendant.  Although Residents Energy and GRE denies any wrongdoing in connection with the complaints, the parties settled the matter for a minimal amount which was included in selling general and administrative expenses for three months ended March 31, 2021.

See Note 17, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference.

Agency and Regulatory Proceedings

From time to time, the Company responds to inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made. See Notes 17, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference, for further detail on agency and regulatory proceedings.

New York Public Service Commission Proceedings

In December 2017, the New York Public Service Commission (“PSC”) held an evidentiary hearing to assess the retail energy market in New York. On December 12, 2019, following the completion of post-hearing briefings in the proceedings, the PSC issued orders adopting changes to the New York retail energy market, effective April 14, 2021 (“2021 Orders”). The 2021 Orders limits the types of services energy retailer marketers may offer new customers or renewals, in terms of pricing for non-renewable commodities, and renewable product offerings.  Although the Company is working to ensure that its products and services are fully compatible with the 2021 Orders, such compliance may adversely impact customer acquisition and renewal revenue and profitability. The Company is evaluating its options, both by itself and in tandem with other industry participants, to challenge or petition for additional clarity and changes to the 2021 Orders. There is insufficient basis to deem any loss probable or to assess the amount of any possible loss based on the changes instituted by the 2021 Orders. As of September 30, 2021, New York represented 18.0% of GRE’s total meters served and 14.2% of the total residential customer equivalents (“RCEs”) of GRE’s customer base. For the three and nine months ended September 30, 2021, New York gross revenues were $12.8 million and $40.1 million, respectively.

An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.

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State of Connecticut Public Utilities Regulatory Authority

Town Square

On September 19, 2018, the State of Connecticut Public Utilities Regulatory Authority (“PURA”) commenced an investigation into Town Square following customer complaints of allegedly misleading and deceptive sales practices on the part of Town Square. The Connecticut Office of Consumer Counsel has joined in the investigation Although Town Square denies any basis for those complaints and any wrongdoing on its part, has cooperated with the investigation and responded to subpoenas for discovery. On June 17, 2020, the PURA notified Town Square that it was advancing it’s investigation by assigning Prosecutorial staff for the purpose of investigating Town Square’s compliance with licensed electric supplier billing, marketing, and licensing requirements, and, if appropriate, facilitating settlement discussions among the parties that contains, but is not limited to, an appropriate civil penalty, extensive retraining of the supplier’s third-party agents, and retention of all sales calls with continued auditing. In the first quarter of 2021, Town Square engaged in settlement discussions with PURA and accrued $0 million in the first quarter of 2021. 

In July 2021, the parties settled the dispute. Pursuant to the terms of the settlement agreement, Town Square paid $0.4 million. Town Square has also, and has agreed to voluntarily refrain, from in-person marketing activities in Connecticut for the period of 15 months. As of September 30, 2021, Town Square’s Connecticut customer base represented 9.0% of GRE’s total meters served and 9.9% of the total RCEs of GRE’s customer base. For three and nine months ended September 30, 2021, Town Square’s gross revenues from sales in Connecticut were $9.0 million and $24.9 million, respectively.

Residents Energy

In August of 2020, Residents Energy began marketing retail energy services in Connecticut. For the three and nine months ended September 30, 2021, Residents Energy's gross revenues from sales in Connecticut were nil and $0.2 million, respectively. During the fourth quarter of 2020, the enforcement division of PURA contacted Residents Energy concerning customer complaints received in connection with alleged door-to-door marketing activities in violation of various rules and regulations, including a ban on door-to-door activities during the pertinent time period as a result of the COVID-19 pandemic. In January and February of 2021, Residents Energy responded to the limited information requests and discovery made by the enforcement division. On March 12, 2021, the enforcement division filed a motion against Resident Energy with the adjudicating body of PURA, seeking the assessment of $1.5 million in penalties, along with a suspension of license for eighteen months, auditing of marketing practices upon reinstatement and an invitation for settlement discussions. Residents Energy believes that the initial demand is disproportionate to its scope of activity. In the first quarter of 2021, Residents Energy engaged in settlement discussions with PURA and accrued $0.3 million in the first quarter of 2021.

In September 2021, the parties settled the dispute. Pursuant to the terms of the settlement agreement, Residents Energy paid $0.3 million and volunteered to withdraw from the market in Connecticut for a period of 36 months.

Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to revenue recognition, allowance for doubtful accounts, acquisitions, goodwill, and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020.

Recently Issued Accounting Standards

Information regarding new accounting pronouncements is included in Note 20—Recently Issued Accounting Standards, to the current period’s consolidated financial statements.

Results of Operations

We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.

33

Three and Nine Months Ended September 30, 2021 and Compared to Three and Nine Months Ended September 30, 2020

Genie Retail Energy Segment

	Three months ended September 30,				Change							Nine months ended September 30,				Change
(amounts in thousands)	2021		2020		$			%				2021		2020		$			%
Revenues:
Electricity	$	82,801	$	86,200	$	(3,399	)		(3.9	)	%	$	218,082	$	210,350	$	7,732			3.7		%
Natural gas		3,516		2,724		792			29.1				25,878		24,190		1,688			7.0
Total revenues		86,317		88,924		(2,607	)		(2.9	)			243,960		234,540		9,420			4.0
Cost of revenues		52,166		63,122		(10,956	)		(17.4	)			176,523		164,084		12,439			7.6
Gross profit		34,151		25,802		8,349			32.4				67,437		70,456		(3,019	)		(4.3	)
Selling, general and administrative expenses		14,437		13,573		864			6.4				41,010		39,253		1,757			4.5
Income from operations	$	19,714	$	12,229	$	7,485			61.2		%	$	26,427	$	31,203	$	(4,776	)		(15.3	)	%

Revenues. Electricity revenues decreased by 3.9% in three months ended September 30, 2021 compared to the same period in 2020. The decrease is due to a decrease in electricity consumption partially offset by an increase in the average rate per kilowatt hour sold in the three months ended September 30, 2021 compared to the same period in 2020. Electricity consumption by GRE’s REPs' customers decreased by 9.2% in the three months ended September 30, 2021, compared to the same period in 2020. The decrease in electricity consumption reflected a 5.9% decrease in average number of meters served and a 3.5% decrease in average consumption per meter. The average rate per kilowatt hour sold increased by 5.2% in the three months ended September 30, 2021 compared to the same period in 2020. The decrease in per meter consumption reflects a decrease in residential electricity as many COVID-19 "stay-at-home" orders have been lifted or relaxed in some territories.

Electricity revenues increased by 3.7% in nine months ended September 30, 2021 compared to the same period in 2020. The increase is due to increases in electricity consumption and in the average rate per kilowatt hour sold in the nine months ended September 30, 2021 compared to the same period in 2020. Electricity consumption by GRE’s REPs' customers increased 1.8% in the nine months ended September 30, 2021, compared to the same period in 2020. The increase in electricity consumption reflected a 5.5% increase in the average consumption per meter partially offset by a 3.5% decrease in the average number of meters served. The average rate per kilowatt hour sold increased by 1.8% in the nine months ended September 30, 2021 compared to the same period in 2020. 

GRE’s natural gas revenues increased by 29.1% in the three months ended September 30, 2021 compared to the same period in 2020. The increase in natural gas revenues in the three months ended September 30, 2021 compared to the same period in 2020 was a result of increases in natural gas consumption and the average rate per therm sold. Natural gas consumption by GRE’s REPs’ customers increased by 9.3% in the three months ended September 30, 2021 compared to the same period in 2020, reflecting a 0.6% increase in average consumption per meter and an 8.7% increase in average meters served in the three months ended September 30, 2021 compared to the same period in 2020. The average revenue per therm increased by 18.1% in the three months ended September 30, 2021, compared to the same period in 2020.

GRE’s natural gas revenues increased by 7.0% in the nine months ended September 30, 2021 compared to the same period in 2020.  The increase is due to increases in natural gas consumption by GRE's REPs' customers and in the average rate per therm sold in the nine months ended September 30, 2021, compared to the same period in 2020. Natural gas consumption by GRE’s REPs’ customers increased by 6.1% in the nine months ended September 30, 2021 compared to the same period in 2020 reflecting a 5.2% increase in average consumption per meter in the nine months ended September 30, 2021 compared to the same period in 2020 and an increase of 0.8% in average meters served in the nine months ended September 30, 2021 compared to the same period in 2020. Average rate per therm sold slightly increased by 0.9% in the nine months ended September 30, 2021, compared to the same period in 2020.

34

The customer base for GRE’s REPs as measured by meters served consisted of the following:

(in thousands)	September 30, 2021	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
Meters at end of quarter:
Electricity customers	289		292		308		305		309
Natural gas customers	72		69		65		65		67
Total meters	361		361		373		370		376

Gross meter acquisitions in three months ended September 30, 2021, were 46,000 compared to 44,000 for the same period in 2020. Gross meter acquisitions in nine months ended September 30, 2021, were 144,000 compared to 154,000 for the same period in 2020. 

Meters served were flat at 361,000 meters at June 30, 2021 and September 30, 2021. Meters served decreased by 9,000 meters or 2.4% from December 31, 2020 to September 30, 2021. In the three months ended September 30, 2021, average monthly churn slightly increased to 4.0% compared to 3.7% for same period in 2020. In the nine months ended September 30, 2021, average monthly churn slightly increase to 4.2% compared to 4.1% compared to same period in 2020. 

The average rates of annualized energy consumption, as measured by RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.

(in thousands)	September 30, 2021	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
RCEs at end of quarter:
Electricity customers	276		272		291		284		294
Natural gas customers	60		58		56		53		56
Total RCEs	336		330		347		337		350

35

RCEs increased by 1.8% at September 30, 2021 compared to June 30, 2021. RCEs were relatively flat at December 31, 2020 and September 30, 2021. The fluctuations reflect the focus on adding higher consumption meters.

Cost of Revenues and Gross Margin Percentage. GRE’s cost of revenues and gross margin percentage were as follows: 

	Three Months Ended September 30,				Change						Nine months ended September 30,				Change
(amounts in thousands)	2021		2020		$			%			2021		2020		$			%
Cost of revenues:
Electricity	$	52,096	$	61,467	$	(9,371	)	(15.2	)	%	$	164,440	$	150,720	$	13,720			9.1		%
Natural gas		70		1,655		(1,585	)	(95.8	)			12,083		13,364		(1,281	)		(9.6	)
Total cost of revenues	$	52,166	$	63,122	$	(10,956	)	(17.4	)	%	$	176,523	$	164,084	$	12,439			7.6		%

	Three months ended September 30						Nine months ended September 30,
(amounts in thousands)	2021		2020		Change		2021		2020		Change
Gross margin percentage:
Electricity	37.1	%	28.7	%	8.4	%	24.6	%	28.3	%	(3.8	)	%
Natural gas	98.0		39.2		58.8		53.3		44.8		8.6
Total gross margin percentage	39.6	%	29.0	%	10.5	%	27.6	%	30.0	%	(2.4	)	%

nm—not meaningful

Cost of revenues for electricity decreased in the three months ended September 30, 2021 compared to the same period in 2020 primarily because of decreases in electricity consumption by GRE’s REPs’ customers and the average unit cost of electricity. The average unit cost of electricity decreased 6.7% in the three months ended September 30, 2021 compared to the same period in 2020. Gross margin on electricity sales increased in the three months ended September 30, 2021 compared to the same period in 2020 because the average rate charged to customers increased while the average unit cost of electricity decreased. 

Cost of revenues for electricity increased in the nine months ended September 30, 2021 compared to the same period in 2020 primarily because of increases in electricity consumption by GRE’s REPs’ customers and the average unit cost of electricity. The average unit cost of electricity increased 7.3% in the nine months ended September 30, 2021 compared to the same period in 2020. A significant portion of the increase resulted from incremental cost incurred as an effect of the major winter storm in Texas discussed above. Gross margin on electricity sales decreased in the nine months ended September 30, 2021 compared to the same period in 2020 because the average rate charged to customers increased less than the increase in the average unit cost of electricity.  

Cost of revenues for natural gas decreased in the three months ended September 30, 2021 compared to the same period in 2020 primarily because of  a decrease in the average unit cost of natural gas partially offset by an increase in natural gas consumption by GRE's REPs' customers. The average unit cost of natural gas decreased 96.2% in the three months ended September 30, 2021 compared to the same period in 2020. A significant portion of the decrease resulted from the favorable fluctuation of the fair value of the Company's natural gas hedges. Gross margin on natural gas sales increased in the three months ended September 30, 2021 compared to the same period in 2020 because the average rate charged to customers increased while the average unit cost of natural gas decreased.

Cost of revenues for natural gas decreased in the nine months ended September 30, 2021 compared to the same period in 2020 primarily because of a decrease in the average unit cost of natural gas partially offset by an increase in natural gas consumption by GRE's REPs' customers. The average unit cost of natural gas decreased 15.6% in the nine months ended September 30, 2021 compared to the same period in 2020. Gross margin on natural gas sales increased in the nine months ended September 30, 2021 compared to the same period in 2020 because the average rate charged to customers slightly increased while the average unit cost of natural gas decreased.

36

Selling, General and Administrative. The increase in selling, general and administrative expenses in the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to an increase in marketing and employee-related expenses. Employee-related expenses increased by $0.6 million in the three months ended September 30, 2021, compared to the same period in 2020 due to an increase in the number of employees. Marketing expenses increased by $0.2 in the three months ended September 30, 2021, compared to the same period in 2020 due to expenses incurred on different marketing channels to offset the effect of COVID-19 related public health restrictions on door-to-door marketing. As a percentage of GRE’s total revenues, selling, general and administrative expense increased from 15.3% in the three months ended September 30, 2020 to 16.7% in the three months ended September 30, 2021. 

The increase in selling, general and administrative expenses in the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to increases in marketing expenses. Marketing expenses increased by $1.5 million in the nine months ended September 30, 2021, compared to the same period in 2020 due to expenses incurred on different marketing channels to offset the effect of COVID-19 related public health restrictions on door-to-door marketing. As a percentage of GRE’s total revenues, selling, general and administrative expenses increased from 15.3% in the nine months ended September 30, 2020 to 16.7%% in the nine months ended September 30, 2021. 

GRE International Segment

	Three Months Ended September 30,					Change						Nine Months Ended September 30,						Change
(amounts in thousands)		2021		2020			$		%			2021			2020			$			%
Revenues
Electricity	$	20,998	$	5,593		$	15,405		275.4		%	$	72,701		$	17,321		$	55,380			319.7		%
Natural gas		4,093		—			4,093		nm				22,580			—			22,580			nm
Others		418		236			182		77.1				800			499			301			60.3
Total revenues	$	25,509	$	5,829		$	19,680		337.6			$	96,081		$	17,820		$	78,261			439.2
Cost of revenue		17,739		4,741			12,998		274.2				82,342			15,105			67,237			445.1
Gross profit		7,770		1,088			6,682		614.2				13,739			2,715			11,024			406.0
Selling, general and administrative expenses		12,055		2,663			9,392		352.7				27,719			7,416			20,303			273.8
Impairment of assets		6,650		—			6,650		nm				6,650			—			6,650			nm
Loss from operations	$	(10,935)	$	(1,575	)	$	9,360		594.3		%	$	(20,630	)	$	(4,701	)	$	15,929			338.8		%
Equity in net loss of Shoreditch		—		1,502			(1,502	)	(100.0	)			—			1,502			(1,502	)		(100.0	)

nm—not meaningful

GRE International holds our stakes in REPs outside of North America. These businesses include Shoreditch, which operates as Orbit Energy in the U.K., Genie Japan (prior to its sale in May 2021), our controlling stakes in Lumo Finland and Lumo Sweden. Lumo Sweden began operations in the second quarter of 2020.

Prior to our acquisition of the remaining 23.0% of Shoreditch in October 2020, we accounted for our 77.0% interest in Shoreditch under the equity method of accounting. Under this method, we recorded our share in the net income or loss of Shoreditch. Therefore, revenue generated, and expenses incurred were not reflected in our consolidated revenue and expenses.

In January 2021, weather volatility and the lack of adequate gas reserves drove the prices on the Japan Electric Power Exchange to $2,390 per megawatt hour for an extended period of time. Although our supply commitment for our customers in Japan was hedged reasonably for expected winter weather conditions, the extreme price spike exposed us to further unexpected cost increases. The impact on our first quarter 2021 consolidated result of operations was approximately $2.5 million.

On April 26, 2021, we entered into an Equity Purchase Agreement ("Purchase Agreement") with Hanhwa Q Cells Japan Co., Ltd. ("Hanhwa"), pursuant to which, we agreed to sell our interest in Genie Japan for ¥570.0 million (equivalent to approximately $5.3 million at April 26, 2021) subject to certain terms and conditions set forth in the Purchase Agreement. On May 11, 2021, upon the terms and subject to the conditions of Purchase Agreement, we completed the divestiture of Genie Japan for an aggregate cash consideration of ¥570.0 million (equivalent to approximately $5.2 million at May 11, 2021). Hanhwa also assumed the outstanding loans payable of Genie Japan. We paid $0.6 million of commission to certain former employees of Genie Japan and recognized a pre-tax gain of $4.2 million from the divestiture. For the period from January 1, 2021 to May 11, 2021, Genie Japan had revenues and cost of revenues of $3.9 million and $5.9 million, respectively.

Meters served by GRE International's REPs (including those served by Orbit Energy for all periods) was flat at  193,000 at September 30, 2021 compared to June 30, 2021 and slightly decreased by 2,000 compared to December 31, 2020. The decreases are primarily due to the sale of Genie Japan partially offset by the growth in Orbit Energy's customer bases.

RCEs served by GRE International's REPs (including those served by Orbit Energy for all periods) decreased to 98,000 at September 30, 2021 from 106,000, at June 30, 2021 and 103,000 at December 31, 2020. The decrease are primarily due to the sale of Genie Japan. 

In the third quarter of 2021, as a result of the deterioration of the energy and natural gas market in the United Kingdom, the Company initiated the process of exiting the market and is in discussion with the regulators for an oderly transfer of existing customers.

Revenue. GRE International's revenues increased in three and nine months ended September 30, 2021 compared to the same periods in 2020 primarily due to the consolidation of Orbit Energy in October 2020, partially offset by the decrease from the sale of Genie Japan in May 2021. Orbit Energy increased GREI's revenue in the three and nine months ended September 30, 2021 by $18.0 million and $67.2 million, respectively.

37

Cost of Revenues. Cost of revenue increased in the three and nine months ended September 30, 2021 compared to the same periods in 2020. The increases in cost of revenues were consistent with the increases in revenues for the periods. Orbit Energy increased GREI's cost of revenue in the three and nine months ended September 30, 2021 by $17.1 million and $58.8 million, respectively. Cost of revenues for nine months ended September 30, 2021 includes $2.5 million incremental cost recorded in Genie Japan as a result of weather volatility and the lack of adequate gas reserves in Japan in the first quarter of 2021.

Selling, General and Administrative Expenses. The increase in selling, general and administrative expenses in the three and nine months ended September 30, 2021 compared to the same periods in 2020 was primarily due to the consolidation of Orbit Energy in October 2020, the continued growth of operations at Lumo Finland and the start of commercial operation of Lumo Sweden in the second quarter of 2020, partially offset by the sale of Genie Japan in May 2021. Orbit Energy increased GREI's selling, general and administrative expenses for the three and nine months ended September 30, 2021 by $10.7 million and $22.4 million, respectively.

Impairment of assets. In the third quarter of 2021, as a result of the deterioration of the energy and natural gas market in the United Kingdom, the Company initiated the process of exiting the market which resulted in the impairment of trademark, customer relationship, non-compete agreements, property and equipment and right of use assets for an aggregate amount of $6.7 million.

Genie Renewables Segment

The Genie Renewables (formerly GES) segment is composed of Genie Solar, CityCom Solar, Diversegy and Prism, in which we hold a 60% controlling interest.

	Three Months Ended September 30,					Change						Nine Months Ended September 30,					Change
(amounts in thousands)		2021	2020				$		%			2021		2020			$			%
Revenues	$	1,338	$	1,573		$	(235	)	(14.9	)	%	$	6,170	$	24,092		$	(17,922	)		(74.4	)	%
Cost of revenues		883		1,147			(264	)	(23.0	)			3,675		21,555			(17,880	)		(83.0	)
Gross profit		455		426			29		6.8				2,495		2,537			(42	)		(1.7	)
Selling, general and administrative expenses		658		1,040			(382	)	(36.7	)			1,805		2,929			(1,124	)		(38.4	)
Impairment of assets		—		—			—		nm				—		993			(993	)		nm
(Loss) income from operations	$	(203)	$	(614	)	$	(411	)	(66.9	)	%	$	690	$	(1,385	)	$	(2,075	)		(149.8	)	%

nm—not meaningful

Revenue. Genie Renewables' revenues decreased in the three and nine months ended September 30, 2021 compared to the same periods in 2020. The decreases in revenues were the result of the discontinuance of a relationship with a customer of Prism in the second quarter of 2020. Revenues from Diversegy include commissions, entry fees and other fees from our energy brokerage and marketing services businesses.  Revenues from CityCom Solar include commissions from selling third-party products to customers.

Cost of Revenues. Cost of revenue decreased in the three and nine months ended September 30, 2021 compared to the same periods in 2020. The decreases in cost of revenues were consistent with the decreases in revenues for the periods. Cost of revenues also includes commissions incurred by our energy brokerage and marketing services businesses.  

Selling, General and Administrative. Selling, general and administrative expenses decreased in the three and nine months ended September 30, 2021 compared to the same periods in 2020 primarily because of the streamlining of operations of Prism and the sale of the Prism facility in October 2020.

Impairment of assets. Impairment of assets in three and nine months ended September 30, 2020 pertains to the impairments of property, plant and equipment and customer relationship of Prism as a result of the disposal of  Prism's property in New York and renegotiation of the contract with the customer. 

38

Corporate

Corporate does not generate any revenues, nor does it incur any cost of revenues. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expense and other corporate-related general and administrative expense. 

(amounts in thousands)	Three months ended September 30,				Change					Nine months ended September 30,				Change
	2021		2020		$		%				2021		2020		$	%
General and administrative expenses and loss from operations	$	1,703	$	1,555	$	148		9.5	%	$	4,832	$	4,689	$	143	3.0	%

Corporate general and administrative expenses in the three and nine months ended September 30, 2021 increased compared to the same periods in 2020, primarily due to an increase in stock-based compensation. As a percentage of our consolidated revenues, Corporate general and administrative expenses decreased to 1.5% in the three months ended September 30, 2021 from 1.6% in the three months ended September 30, 2020 and decreased to 1.4% in the nine months ended September 30, 2021 from 1.7% in the nine months ended September 30, 2020.

Consolidated

Selling, general and administrative expenses. Stock-based compensation expenses included in consolidated selling, general and administrative expenses was $0.5 million and $0.4 million in the three months ended September 30, 2021 and 2020, respectively and $1.7 million and $1.3 million in the nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021, aggregate unrecognized compensation cost related to non-vested stock-based compensation was $5.4 million. The unrecognized compensation cost is recognized over the expected service period.

The following is a discussion of our consolidated income and expense line items below income from operations: 

	Three months ended September 30,						Change							Nine months ended September 30,						Change
(amounts in thousands)	2021			2020			$			%				2021			2020			$		%
Income from operations	$	6,873		$	8,485		$	(1,612	)		(19.0)	%	$	1,655		$	20,428		$	(18,773	)	(91.9	)	%
Interest income		8			21			(13	)		(61.9	)		28			164			(136	)	(82.9	)
Interest expense		(99	)		(48	)		(51	)		106.3			(311	)		(223	)		(88	)	39.5
Equity in net income (loss) in equity method investees		52			(146	)		198			(135.6	)		215			(1,698	)		1,913		(112.7	)
Other (loss) income, net		(17	)		291			(308	)		(105.8	)		267			390			(123	)	(31.5	)
Unrealized (loss) gain on marketable equity securities and investments		(5,312	)		—			(5,312	)		nm			1,710			—			1,710		nm
Gain on sale of subsidiary		—			—			—			nm			4,226			—			4,226		nm
Provision for income taxes		(3,822	)		(2,406	)		(1,416	)		58.9			(7,515	)		(5,563	)		(1,952	)	35.1
Net (loss)  income		(2,317	)		6,197			(8,514	)		137.4			275			13,498			(13,223	)	(98.0	)
Net loss attributable to noncontrolling interests		(31	)		(531	)		500			(94.2	)		(821	)		(1,026	)		205		(20.0	)
Net (loss) income attributable to Genie	$	(2,286	)	$	6,728		$	(9,014	)		(134.0)	%	$	1,096		$	14,524		$	(13,428	)	(92.5	)	%

nm—not meaningful

39

Other (loss) income, net.  Other (loss) income, net in the three and nine months ended September 30, 2021 and 2020 consisted primarily foreign currency transactions.

Provision for Income Taxes. Our reported tax rate for the three months ended September 30, 2021 was 254.0%, an increase as compared to 28.0% for the same period in 2020. Our reported tax rate for the three months ended September 30, 2021 was 96.5%, an increase as compared to 29.2% for the same period in 2020. The increases in the reported tax rate for the three and nine months ended September 30, 2021 compared to the same periods in 2020 are a result of changes in the mix of jurisdictions in which the taxable income was earned which was not offset by income tax benefit in other jurisdictions that had losses due to valuation allowances in those jurisdictions. The GRE International segment incurred significant losses as discussed above which resulted in lower consolidated income before income taxes.

Net Loss Attributable to Noncontrolling Interests. The decrease in the net loss attributable to noncontrolling interests in the three months ended September 30, 2021 compared to the same periods in 2020 was primarily due to a decrease in net losses of CCE, improvement of results of operations of Lumo Finland as discussed above and the acquisition of a noncontrolling interest of GRE International in the third quarter of 2021.

The decrease in the net loss attributable to noncontrolling interests in the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to a decrease in net losses of CCE, improvement of results of operations of Lumo Finland as discussed above and the streamline of operations at Prism.

Unrealized (loss) gain on marketable equity securities and investments. The unrealized (loss) gain on marketable equity securities and investment for the three and nine months ended September 30, 2021 pertains primarily to the fluctuation of the market price of the Company's investments in common stock and warrants to purchase common stock of Rafael Holdings, Inc. ("Rafael") which the Company acquired in December 2020. 

Equity in net income (loss) in equity method investees. The equity in net income (loss) in equity method investees for the  three months ended September 30, 2021  and 2020 pertains to our share in the result of operations of certain investee that are accounted for using the equity method of accounting.

The equity in net income from equity method investees for the nine months ended September 30, 2021 relates to our shares in the result of operation of certain investee. The equity in net loss from equity method investees for the nine months ended September 30, 2020, pertains to our share in the results of operations of Orbit. Prior to the acquisition of the controlling interest of Orbit in October 2020 as discussed above, we accounted for our ownership interest in Orbit using the equity method since we had the ability to exercise significant influence over Orbit's operating and financial matters, although we did not control Shoreditch.

Gain on sale of subsidiary. The gain on the sale of the subsidiary for the nine months ended September 30, 2021 pertains to the gain recognized related to the sale of Genie Japan in May 2021.

Liquidity and Capital Resources 

General

We currently expect that our cash flow from operations and the $34.0 million balance of unrestricted cash and cash equivalents that we held at September 30, 2021 will be sufficient to meet our currently anticipated cash requirements for at least the period from October 1, 2021 to November 8, 2022.

At September 30, 2021, we had working capital (current assets less current liabilities) of $44.4 million.

	Nine Months Ended September 30,
	2021			2020
	(in thousands)
Cash flows provided by (used in):
Operating activities	$	86		$	24,038
Investing activities		2,656			(1,863	)
Financing activities		(5,194	)		(11,496	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(221	)		(3	)
(Decrease) increase in cash, cash equivalents, and restricted cash	$	(2,673	)	$	10,676

Operating Activities

Cash, cash equivalents and restricted cash provided by operating activities decreased by $24.0 million in the nine months ended September 30, 2021 compared the same period in 2020. Net income after non-cash adjustments decreased cash flows by $10.5 million for the nine months ended September 30, 2021, compared to the same period in 2020. The decrease in operating cash flows is primarily the result of unfavorable results of operations and the consolidation of operations of Orbit Energy in the nine months ended September 30, 2021.

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Changes in working capital decreased cash flows by $12.7 million for the nine months ended September 30, 2021, compared to the same period in 2020. Changes in other assets decreased cash flows by $0.4 million in the nine months ended September 30, 2021, compared to the same period in 2020. 

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GRE’s REPs are party to an Amended and Restated Preferred Supplier Agreement with BP Energy Company, or BP, which is to be in effect through November 30, 2020. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REPs’ customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. In addition, the REPs must pay an advance payment of $2.5 million to BP each month that BP will apply to the next invoiced amount due to BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At September 30, 2021, we were in compliance with such covenants. At September 30, 2021, restricted cash—short-term of $0.9 million and trade accounts receivable of $51.7 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $15.5 million at September 30, 2021.

We had purchase commitments of $219.9 million at September 30, 2021, of which $170.7 million was for purchases of electricity.

Orbit Energy had an exclusive contract with Shell U.K. Limited ("Shell") to provide electricity and natural gas to Orbit Energy until June 2024, with an option (not an obligation) to extend through June 2027. Shell provides access to the forward market such that Orbit Energy can enter into forward hedge position for its customers which protects the Company from mark-to-market fluctuations. Shell also provides extended payment facilities of an additional 30 days compared to the United Kingdom payment terms up to a limit of £5.0 million at an interest of LIBOR plus 5.0%. Shell charges an additional £0.9 per therm of natural gas and Mwh of electricity for all delivered volume on top of the wholesale costs. The contract with Shell is secured by a pledge of the outstanding equity interest of Orbit Energy. The contract is also subject to satisfaction of certain conditions including the maintenance of certain covenants which includes minimum levels of cash, gross margin, net worth, as defined in the contract, earnings before tax, as defined in the contract and provision for bad debts on accounts receivable. At September 30, 2021, Orbit Energy was in compliance with such covenants. At September 30, 2021, Orbit Energy's total liability to Shell was $9.1 million included in trade accounts payable and accrued expenses accounts in the consolidated balance sheet.

In October 2021, as part of the orderly exit process from the United Kingdom market discussed above, Orbit and Shell agreed to terminate the exclusive supply contract. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell. These proceeds, together with the existing cash and accounts receivables as of September 30, 2021, are expected to cover the cost to supply its current customers with electricity and natural gas until the orderly transfer is completed, and to exceed Orbit’s liabilities and carrying value of goodwill at September 30, 2021 of $30.7 million and $13.9 million, respectively. Due to a wide range of outcomes related to the on-going exit from the United Kingdom market, the Company is unable to provide the expected net proceeds from the exit from the United Kingdom market at this time.

From time to time, we receive inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes, and we respond to those inquiries or requests. We cannot predict whether any of those matters will lead to claims or enforcement actions.

Investing Activities

Our capital expenditures were $0.2 million and $0.1 million for the nine months ended September 30, 2021 and 2020, respectively. We currently anticipate that our total capital expenditures in the twelve months ending December 31, 2021 will be between $0.3 to $0.6 million.

In December 2020, we invested $5.0 million in Class B common stock of Rafael. Rafael, a publicly-traded company, is also a related party. In connection with the purchase, Rafael issued to us warrants to purchase an additional 43,649 shares of Rafael's Class B common stock with an exercise price of $22.91 per share. The warrants had a term expiring on June 6, 2022. We exercised the warrants in full on March 31, 2021 for a total exercise price of $1.0 million. We do not exercise significant influence over the operating or financial policies of Rafael.

On May 11, 2021, upon the terms and subject to the conditions of the Purchase Agreement, we completed the divestiture of Genie Japan for an aggregate consideration of ¥570.0 million (equivalent to approximately $5.2 million at May 11, 2021). We paid $0.6 million of commission to certain former employees of Genie Japan and included $0.1 million of cash in the assets transferred to the buyer for a net proceed of $4.5 million.

 Financing Activities

In each of the nine months ended September 30, 2021 and 2020, we paid aggregate quarterly Base Dividends of $0.4782 per share, $1.1 million in the aggregate, on our Series 2012-A Preferred Stock, or Preferred Stock. On October 13, 2021, our Board of Directors declared a quarterly Base Dividend of $0.1594 per share of our Preferred Stock. The dividend will be paid on or about November 15, 2021 to stockholders of record as of the close of business on November 8, 2021.

In March 2021, in light of the losses incurred from the effects of the events in Texas and Japan discussed above, the Company suspended the payment of quarterly dividends on its common stock to rebuild cash position.

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In the nine months ended September 30, 2020, we paid aggregate quarterly dividends of $0.245 per share to stockholders of our Class A common stock and Class B common stock. The Company paid $6.4 million in aggregate dividends on our common stock in the nine months ended September 30, 2020.

On March 11, 2013, our Board of Directors approved a program for the repurchase of up to an aggregate of 7.0 million shares of our Class B common stock. In the three months ended September 30, 2021, we acquired 230,000 Class B common stock under the stock purchase program for an aggregate amount of $1.4 million. In the nine months ended September 30, 2021, we acquired 622,932 Class B common stock under the stock purchase program for an aggregate amount of $3.8 million. In the three months ended September 30, 2020, we acquired 11,738   Class B common stock under the stock purchase program for an aggregate amount of $0.1 million. In the nine months ended September 30, 2020, we acquired 224,944 Class B common stock under the stock repurchase program for an aggregate amount of $1.6 million. At September 30, 2021, 5.3 million shares of Class B common stock remained available for repurchase under the stock repurchase program.

In the nine months ended September 30, 2021, we paid $0.2 million to purchase 39,523 shares of our Class B common stock, and, in the nine months ended September 30, 2020, we paid $0.3 million to repurchase 32,907 shares of our Class B common stock tendered by our employees to satisfy tax withholding obligations in connection with the
lapsing of restrictions on awards of restricted stock. Such shares were purchased by us based on their fair market value on the trading day immediately prior to the vesting date.

On November 28, 2019, Genie Japan entered into a Loan Agreement with Tokyo Star Bank for a ¥100.0 million (equivalent to $0.9 million) short-term credit facility. Genie Japan provided a letter of credit issued by JPMorgan Chase amounting to ¥100.0 million (equivalent to $0.9 million) as collateral. The outstanding principal amount incurred interest at Tokyo Star Bank's short-term prime rate plus 0.25% per annum. Interest was payable monthly and all outstanding principal and any accrued and unpaid interest matured on of May 13, 2020. Genie Japan settled the Loan agreement and paid the outstanding balance of ¥100.0 million (equivalent to $0.9 million) on May 13, 2020. 

On May 13, 2020, Genie Japan entered into a new Loan Agreement with Tokyo Star Bank for a  ¥150.0 million (equivalent to $1.4 million) short-term credit facility ("May 2020 Loan"). Genie Japan provided a letter of credit issued by JPMorgan Chase in the amount of ¥150.0 million (equivalent to $1.4 million) as collateral. The outstanding principal amount incurs interest at 3.0% per annum. Interest is payable monthly and all outstanding principal and any accrued and unpaid interest matured on November 13, 2020. On November 13, 2020, Genie Japan and Tokyo Star Bank amended the May 2020 Loan to extend the maturity date to March 13, 2021. At March 31, 2021, $1.4 million was outstanding under the May 2020 Loan. At March 31, 2021, the effective interest rate was 3.0%.

In May 2021, completed the sale of Genie Japan including the outstanding balance of the May 2020 Loan of $1.4 million at the date of the sale.

On April 4, 2017, GRE, IDT Energy, and other GRE subsidiaries entered into a Credit Agreement with Vantage Commodities Financial Services II, LLC ("Vantage"), for a $20 million revolving loan facility. The borrowers consist of our subsidiaries that operate REP businesses, and those subsidiaries’ obligations are guaranteed by GRE. The borrowers have provided as collateral a security interest in their receivables, bank accounts, customer agreements, certain other material agreements and related commercial and intangible rights. The outstanding principal amount incurred interest at LIBOR plus 4.5% per annum. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest matured on April 3, 2020. In April 2020, the revolving line of credit expired and we paid outstanding balance of $3.5 million.

On December 5, 2019, we entered into the first amendment of Credit Agreement with JPMorgan Chase Bank (“Credit Agreement”) to extend the maturity date to December 31, 2020. On December 8, 2020, we entered into the second amendment of the existing Credit Agreement to extend the maturity date to December 31, 2021. The Company continues to have the aggregate principal amount of $5.0 million credit line facility (“Credit Line”). The Company pays a commitment fee of 0.1% per annum on unused portion of the Credit Line as specified in the Credit Agreement. The borrowed amounts will be in the form of letters of credit which will bear interest of 1.0% per annum. The Company will also pay a fee for each letter of credit that is issued equal to the greater of $500 or 1.0% of the original maximum available amount of the letter of credit. We agreed to deposit cash in a money market account at JPMorgan Chase Bank as collateral for the line of credit equal to $5.1 million. As of September 30, 2021, there was no letters of credit issued from JP Morgan Chase Bank. At September 30, 2021, the cash collateral of $5.2 million was included in restricted cash—short-term in the consolidated balance sheet.

In December 11, 2019, we refinanced Prism's outstanding 5.95% notes payable from Catskill Hudson Bank that was due in November 2019. The outstanding balance of notes payable of $0.9 million at December 11, 2019 was payable in monthly equal installments for period of ten years. The outstanding principal amount incurred fixed interest at 4.75% per annum. The notes payable were secured by Prism's commercial property in Highland, New York. In March 2020, the outstanding balance of the notes payable was transferred to liabilities held for sale. On October 16, 2020, Prism settled the notes payable to Catskill Bank previously classified as liabilities held for sale with full payment of the principal amount of $0.8 million.

Off-Balance Sheet Arrangements 

We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources, other than the following. GRE has performance bonds issued through a third party for the benefit of certain utility companies and for various states in order to comply with the states’ financial requirements for retail energy providers. At September 30, 2021, the Company had outstanding aggregate performance bonds of $13.4 million.

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Item 3.       Quantitative and Qualitative Disclosures About Market Risks.

Our primary market risk exposure is the price applicable to our natural gas and electricity purchases and sales. The sales price of our natural gas and electricity is primarily driven by the prevailing market price. Hypothetically, for our GRE segment, if our gross profit per unit in the three months ended September 30, 2021 had remained the same as in the three months ended September 30, 2020, our gross profit from electricity sales would have decreased by $8.2 million and our gross profit from natural gas sales would have decreased by $2.3 million in the three months ended September 30, 2021. Hypothetically, for our GRE segment, if our gross profit per unit in the nine months ended September 30, 2021 had remained the same as in the nine months ended September 30, 2020, our gross profit from electricity sales would have increased by $7.2 million and our gross profit from natural gas sales would have decreased by $2.4 million in the nine months ended September 30, 2021. 

Hypothetically, for our GRE International segment, if our gross profit per unit in the three months ended September 30, 2021 had remained the same as in the three months ended September 30, 2020, our gross profit from electricity sales would have decreased by $6.3 million and our gross profit from natural gas would have increased by $0.3 million in the three months ended September 30, 2021. Hypothetically, for our GRE International segment, if our gross profit per unit in the nine months ended September 30, 2021 had remained the same as in the nine months ended September 30, 2020, our gross profit from electricity sales would have decreased by $5.4 million and our gross profit from natural gas would have decreased by $0.9 million in the three months ended September 30, 2021.

The energy markets have historically been very volatile, and we can reasonably expect that electricity and natural gas prices will be subject to fluctuations in the future. In an effort to reduce the effects of the volatility of the price of electricity and natural gas on our operations, we have adopted a policy of hedging electricity and natural gas prices from time to time, at relatively lower volumes, primarily through the use of put and call options and swaps. While the use of these hedging arrangements limits the downside risk of adverse price movements, it also limits future gains from favorable movements. We do not apply hedge accounting to these options or swaps, therefore the mark-to-market change in fair value is recognized in cost of revenue in our consolidated statements of operations. Refer to Note 7 – Derivative Instruments, for details of the hedging activities.

Item 4.             Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2021, due to the material weakness in internal control over financial reporting that was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Remediation. As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2020, we began implementing a remediation plan to address the material weakness mentioned above. The weakness will not be considered remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed in 2021.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

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PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

Legal proceedings in which we are involved are more fully described in Note 17 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

Item 1A.       Risk Factors

There are no material changes from the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

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

The following table provides information with respect to purchases by us of shares of our Class B common stock during the first quarter of 2021:

	Total Number of  Shares Purchased			Average Price per Share		Total Number  of Shares Purchased as  part of Publicly  Announced Plans or  Programs		Maximum  Number of  Shares that  May Yet Be Purchased Under the  Plans or Programs (1)
July 1–31, 2021		125,000		$	6.20		125,000		5,413,366
August 1–31, 2021		136,431	(2)		6.02		105,000		5,308,366
September 1–30, 2021		8,092	(3)		6.53		—		5,308,366
Total		269,523		$	6.20		230,000

(1)	Under our existing stock repurchase program, approved by our Board of Directors on March 11, 2013, we were authorized to repurchase up to an aggregate of 7.0 million shares of our Class B common stock.
(2)	Includes 31,431 Class B Common stock that were tendered by the employees of ours to satisfy the tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.
(3)	Consists of Class B Common stock that were tendered by the employees of ours to satisfy the tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.

Item 3.         Defaults upon Senior Securities

None

Item 4.          Mine Safety Disclosures

Not applicable

Item 5.           Other Information

None 

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Item 6.       Exhibits

Exhibit Number	Description
31.1*	Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed or furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Genie Energy Ltd.
November 9, 2021	By:	/s/ Michael M. Stein
		Michael M. Stein Chief Executive Officer
November 9, 2021	By:	/s/ Avi Goldin
		Avi Goldin Chief Financial Officer

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