AEMETIS, INC

Previous wording

Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis referred to herein as “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas and renewable fuels company focused on the operation, acquisition, development, and commercialization of innovative technologies to produce low and negative carbon intensity renewable fuels that replace fossil-based products. We do this by building a local circular bioeconomy using agricultural products and waste to produce low carbon, advanced renewable fuels that reduce greenhouse gas ("GHG") emissions and improve air quality.

Current wording

Founded in 2006 and headquartered in Cupertino, California, we are an international renewable natural gas and biofuels company focused on the operation, acquisition, development and commercialization of innovative low and negative carbon intensity products and technologies. We operate in three reportable segments consisting of “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.” We have other operating segments determinednot to be separately reportable that are collectively represented by the “All Other” category. Our mission is to generate innovative renewable fuel solutions that benefit communities and improve the environment. We are executing our mission by building a circular bioeconomy using agricultural products and waste to produce low carbon renewable fuels that create jobs, reduce greenhouse gas (“GHG”) emissions and improve air quality. For revenue and other information regarding our operating segments, see Note 13 - Segment Information, of the Notes to Consolidated Financial Statements of this Form 10-Q.

Previous wording

Our California Ethanol segment consists of a 65 million gallon per year capacity ethanol production facility located in Keyes, California (the “Keyes Plant”) that we own and operate. In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to more than 80 local dairies and feedlots. We also capture the Carbon Dioxide (“CO 2”) emissions from our fermenters and sell it to Messer Gas for use to produce liquid CO₂ that it sells to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives focused on lowering the carbon intensity of our fuels, primarily by decreasing the use of fossil natural gas. These energy efficiency projects include high efficiency heat exchangers; a two-megawatt solar microgrid with battery storage that became operational in the second quarter; a Decision Control System (DCS) to manage and optimize energy use and other plant operations; and a Mechanical Vapor Recompression (MVR) system that is expected to replace about 80% of our natural gas consumption with low carbon electricity. These changes are expected to lower the carbon intensity (CI) of the ethanol we produce and allow us to sell it for a correspondingly higher price.

Current wording

Our California Ethanol segment consists of a 65 million gallon per year capacity ethanol production facility located in Keyes, California (the “Keyes Plant”) that we own and operate. In addition to low carbon renewable fuel ethanol, the Keyes Plant produces alcohol for other uses, Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”). WDG, DCO, and CDS are sold as animal feed to more than 80 local dairies and feedlots. We also capture the Carbon Dioxide (“CO 2”) generated by our fermenters and sell it to an industrial gas company to produce liquid CO₂ that it sells to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives focused on lowering the carbon intensity of our ethanol, primarily by decreasing the use of fossil natural gas. Recently completed energy efficiency projects include high efficiency heat exchangers and a solar micro grid. A significant energy efficiency project in progress is the Mechanical Vapor Recompression (MVR) system that will use low carbon electricity instead of natural gas. These changes will reduce our energy costs and will also lower the carbon intensity (CI) of the ethanol we produce and generate increased cash flows from LCFS and tax credits. We have already begun procuring MVR equipment and expect it to be installed later this year and begin operating in the first half of 2026.

Previous wording

Our California Dairy Renewable Natural Gas segment, Aemetis Biogas or “ABGL,” operates anaerobic digesters at local dairies near the Keyes Plant (many of whom also purchase WDG produced by the Keyes Plant as animal feed) to produce biogas from dairy waste; transports the biogas by pipeline to the Keyes Plant site; and converts the biogas to Renewable Natural Gas (“RNG”) that is delivered to customers through the PG&E regional natural gas pipeline. As of September 30, 2024, we had nine operating digesters that receive dairy waste from ten dairies, and we are actively growing with an additional five digesters currently under construction that are expected to receive dairy waste from eight dairies. We expect to initiate construction on several additional digesters in the fourth quarter when we close on currently planned debt financing. We have constructed 36 miles of collection pipeline and have received environmental approval to construct an additional 24 miles. We currently have agreements with a total of 44 dairies and are seeking to increase that number.

Current wording

Our California Dairy Renewable Natural Gas segment Aemetis Biogas LLC or “ABGL,” operates anaerobic digesters at local dairies near the Keyes Plant (many of whom also purchase WDG produced by the Keyes Plant as animal feed) to produce biogas from dairy waste, transports the biogas by pipeline to the Keyes Plant site, and converts the biogas to Renewable Natural Gas (“RNG”) that is delivered to customers through the utility natural gas pipeline. We currently have eleven operating digesters that receive waste from twelve dairies, and we are actively growing with additional digesters under construction. We have constructed 36 miles of biogas collection pipeline and have received environmental approval to construct an additional 24 miles of pipeline. We currently have agreements to build digesters and receive waste from a total of 50 dairies and are seeking to sign additional agreements with dairies.

Previous wording

Our India Biodiesel segment includes a biodiesel production plant in Kakinada, India (“Kakinada Plant”) with a nameplate production capacity of about 60 million gallons per year. It produces high quality distilled biodiesel and refined glycerin for customers in India. We believe the Kakinada Plant is one of the largest biodiesel production facilities in India on a nameplate capacity basis. The Kakinada Plant can process a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meets applicable product standards. Our Kakinada Plant can also distill the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive, and other industries.

Current wording

Our India Biodiesel segment includes a biodiesel production plant in Kakinada, India (“Kakinada Plant”) with a production capacity of about 80 million gallons per year. The plant produces high quality distilled biodiesel and refined glycerin for customers in India. We believe the Kakinada Plant is one of the highest capacity biodiesel production facilities in India. The Kakinada Plant is capable of processing a variety of vegetable and animal oil waste feedstocks into biodiesel that meets applicable product standards. Our Kakinada Plant also distills the crude glycerin coproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive, and other industries.

Previous wording

Our planned sustainable aviation fuel (SAF) and renewable diesel (RD) production plant is currently designed to produce 90 million gallons per year of combined SAF and RD from feedstocks consisting of renewable waste oils and fats. Our planned facility will be located at the Riverbank Industrial Complex in Riverbank, California. We signed a lease with an option to purchase for the Riverbank Industrial Complex in 2021 and took possession of the site in 2022. In 2023, we received a Use Permit and CEQA approval for the SAF/RD plant, and in March 2024, we received Authority to Construct air permits for the plant. We are continuing with development activities, including permitting, engineering, and financing. The site has access to low carbon hydroelectric power, and our plant is designed to use renewable hydrogen that will be produced from byproducts of the SAF/RD production process.

Current wording

Our SAF/RD production plant is currently designed to produce 90 million gallons per year of combined SAF/RD or 78 million gallons per year of SAF from feedstocks consisting of renewable waste vegetable and animal oils. Our project is located at the Riverbank Industrial Complex in Riverbank, California. We signed a lease with an option to purchase the Riverbank Industrial Complex in 2021 and took possession of the site in 2022. In 2023, we received a Use Permit and the California Environmental Quality Act ("CEQA") approval for the SAF/RD plant and in 2024 we received Authority to Construct air permits for the plant. We are continuing with development activities, including engineering, and financing. The site has access to low carbon hydroelectric power, and our plant is designed to use renewable hydrogen that will be produced from byproducts of the SAF/RD production process.

Previous wording

Our planned CCUS projects will compress and inject CO₂ into deep wells that are monitored to ensure the long-term sequestration of carbon underground. California’s Central Valley has been identified as one of the world’s most favorable regions for large-scale CO₂ injection projects due to the subsurface geologic formation that absorbs and retains CO₂ gas. The two initial Aemetis CCUS injection projects are being designed to capture and sequester more than two million metric tons per year of CO₂ at the Aemetis biofuels plant sites in Keyes and Riverbank, California. In July 2022, Aemetis purchased 24 acres at the Riverbank Industrial Complex in Riverbank, California to develop a CCUS injection well with more than 1 million metric ton per year of CO₂ sequestration capacity. In 2023, we obtained a permit to construct a geologic characterization well at the Riverbank site to obtain information to support an EPA Class VI CO₂ injection well permit application. Once operational, we expect that these projects will generate revenue by selling California LCFS credits and federal Internal Revenue Code Section 45Q tax credits.

Current wording

Our planned CCUS projects will compress and inject CO₂ into deep wells that are monitored to ensure the long-term sequestration of carbon underground. California’s Central Valley has been identified as one of the world’s most favorable regions for large-scale CO₂ injection projects due to the subsurface geologic formations that absorb and contain CO₂ gas. The two initial Aemetis CCUS injection projects are being designed to capture and sequester more than two million metric tons per year of CO₂ at the Aemetis biofuels plant sites in Keyes and Riverbank, California. In 2023, we obtained a permit to construct a geologic characterization well at the Riverbank site to obtain information to support an EPA Class VI CO₂ injection well permit application. Once operational, these projects will generate revenue by selling California LCFS credits and federal Internal Revenue Code Section 45Q tax credits.

Previous wording

Our Minneapolis, Minnesota research and development laboratory evaluates and develops technologies that would use low carbon intensity biomass and waste feedstocks to produce low or below zero carbon intensity biofuels and biochemicals. We are focused on processes that extract sugar from cellulosic feedstocks and then use the remaining biomass to produce low carbon ethanol, renewable hydrogen, sustainable aviation fuel, and renewable diesel.

Current wording

Our Minneapolis, Minnesota research and development laboratory evaluates and develops technologies that would use low carbon intensity and waste feedstocks to produce low or below zero carbon intensity biofuels and biochemicals. We are focused on processes that extract sugar from cellulosic feedstocks and produce low carbon ethanol, renewable hydrogen, SAF, and RD.

Previous wording

California Dairy Renewable Natural Gas. Cost of goods sold includes dairy manure payments, equipment maintenance, and depreciation. The increase from the third quarter of 2023 to the third quarter of 2024 was primarily due to the increase in the number of operating digesters.

Current wording

California Dairy Renewable Natural Gas. Cost of goods sold includes dairy manure payments, equipment maintenance, and depreciation. The increase from the first quarter of 2024 to the first quarter of 2025 was primarily due to the increase in the number of operating digesters.

Previous wording

*California Ethanol.*The increase in gross income during the period ended September 30, 2024, was attributable primarily to lower corn costs.

Current wording

*California Ethanol.*The decrease in gross loss during the period ended March 31, 2025, was attributable primarily to an increase in the average ethanol sales price.

Previous wording

California Dairy Renewable Natural Gas. The increase in gross income in the three months ended September 30, 2024, compared to the same period in 2023 is due to the substantial increase in sales of RNG, D3 RINs, and LCFS credits without a corresponding increase in costs.

Current wording

California Dairy Renewable Natural Gas. Thedecrease in gross profit for the three months ended March 31, 2025, compared to the same period in 2024 is due to the decrease in sales and increase in costs of goods sold, primarily depreciation, for the increased number of operating digesters.

Previous wording

Selling, general, and administrative (“SG&A”) expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California and biodiesel and other products in India, as well as professional fees, insurance, other corporate expenses, and related facilities expenses. Total SG&A also includes receipts of lease payments as an offset to expenses. Research and development expenses are also included in the SG&A expenses.

Current wording

SG&A expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, insurance, other corporate expenses, and related facility expenses. SG&A expenses as a percentage of revenue were 24%in the three months ended March 31, 2025, compared to 12% in the three months ended March 31, 2024. The increase in SG&A percentage was due to decreased revenues during the three months ended March 31, 2025. The increase in total SG&A expenses in the three months ended March 31, 2025, was primarily due to increases in taxes, insurance, rent, utilities, and professional fees and the insurance and professional fee increases were associated with tax credit sales.

Previous wording

Other expense (income) consists primarily of interest and amortization expense attributable to our debt facilities and accretion of Series A preferred units.

Current wording

Other expenses consist primarily of interest and amortization expense attributable to our debt and to accretion of biogas Series A Preferred Units. The cost of debt includes issuance of warrants as renewal fees. The fair value of stock and warrants are amortized as expenses, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense. Interest expense and debt related fees and amortization increased in the three months ended March 31, 2025, due to higher variable interest rates and higher debt balances.

Previous wording

Cash and cash equivalents, current assets, current liabilities, and debt at the end of each period were as follows:

Current wording

Cash and cash equivalents, current assets, current liabilities, and debt at the end of each period were as follows (in thousands):

Previous wording

Our principal sources of liquidity have been cash provided by operations, the sale of equity, and borrowings under various debt arrangements. Our principal uses of cash have been to fund operations, fund capital expenditures, and pay indebtedness. We anticipate these uses will continue to be our principal uses of cash in the future.

Current wording

Our principal sources of liquidity have been cash provided by the sale of equity, operations, and borrowings under various debt arrangements.

Previous wording

We operate in a volatile market in which we have limited control over the major components of input costs and product revenues and are making investments in future facilities and facility upgrades that improve overall margins while lessening the impact of these volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil, natural gas, LCFS credits, and D3 RINs as well as the timing of the sales of environmental attributes held in inventory. To the extent that we experience periods in which the spread between ethanol prices and corn and energy costs narrows or the spread between biodiesel prices and waste fats and oils or palm oil and energy costs narrow, we require additional working capital to fund operations.

Current wording

We operate in a volatile market in which we have limited control over major components of input costs and product revenues. We are making investments in future facilities and facility upgrades that improve overall margins while lessening the impact of volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil, natural gas, LCFS credits, and D3 RINs. To the extent that we experience periods in which the spread between ethanol prices and corn and energy costs narrow or the value of environmental attributes or tax credits is reduced, we require additional working capital to fund operations.

Previous wording

As a result of negative capital and negative operating results, and collateralization of substantially all the Company assets, we have been reliant on our senior secured lender to extend the maturity dates of our debt and loan facilities. In order to meet obligations during the next twelve months, we will need to either refinance our debt or receive the continued cooperation of its senior lender. We plan to pursue the following strategies to improve the course of the business.

Current wording

As a result of collateralization of substantially all of the Company assets with our senior secured lender, we have been reliant in the past on our senior secured lender to provide a portion of our funding and have been required to remit a significant portion of the cash received from investment tax credit sales to our senior lender. In order to meet obligations during the next twelve months, we will need to receive the continued cooperation of our senior lender to provide extensions of our debt maturities. We plan to pursue the following strategies to improve the course of the business.

Previous wording

For the Keyes Plant, we plan to operate the plant and continue to improve its financial performance by adopting new technologies or process changes that increase energy efficiency, reduce costs, and enhance revenue, as well as execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon intensity, and overall margin improvement.

Current wording

For the Keyes Plant, we plan to operate the plant and continue to improve its financial performance by adopting new technologies or process changes that increase energy efficiency, reduce costs, and enhance revenue, as well as execute on awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon intensity, and overall margin improvement. The planned improvements include the MVR system that is expected to begin operation in the first half of 2026. The MVR system is expected to reduce energy costs, reduce exposure to fluctuations in natural gas pricing, reduce the carbon intensity of ethanol produced by the plant, reduce the Keyes Plant's direct emissions of greenhouse gases, increase the value of LCFS and tax credits, and substantially improve the cash flows of the Keyes Plant.

Previous wording

For the Kakinada Plant, we plan to continue to enter cost-plus contracts with the OMCs as our primary customers. We also plan to continue to upgrade our plant to increase capacity and expand feedstock flexibility. We are also evaluating the production of additional products and developing channels for the export of allow. The Kakinada plant has had positive gross income during the last two years and we expect this to continue. We also will continue to rely on our working capital lines with Gemini and Secunderabad Oils to fund our commercial arrangements for the acquisitions of feedstock.

Current wording

For the Kakinada Plant, we plan to continue to enter contracts with the OMCs as our primary customers for biodiesel. We recently completed upgrades to increase our plant production capacity and specifically to increase the capacity to produce biodiesel from lower cost feedstocks and expand feedstock flexibility. The Kakinada Plant has had positive gross income during the last two years and we expect this to continue. We also rely on our working capital arrangements with feedstock suppliers to fund the acquisitions of feedstock and on a bank line of credit to provide lower cost financing secured by our accounts receivable.

Previous wording

In addition to the above, we plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, seeking project specific debt and equity, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, and by vendor financing arrangements.

Current wording

In addition to the above we plan to continue to locate funding for operations and for existing and new business opportunities through a combination of working with our senior lender, obtaining new debt, selling equity through our at-the-market sales, selling the current EB-5 Phase II offering, and by vendor financing arrangements.

Previous wording

At September 30, 2024, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes was $205.3 million. The maturity dates for the Third Eye Capital financing arrangements are March 1, 2025, for $39.3 million; March 1, 2026, for $140.6 million; and, April 1, 2026, for $25.4 million based on the Company's option to extend the maturity.

Current wording

As of December 31, 2024, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes equaled $217.4 million. The maturity dates for the Third Eye Capital financing arrangements are as follows:

Previous wording

Change in Working Capital and Cash Flows

Current wording

Change in Debt, Working Capital and Cash Flows

Previous wording

The following table describes the changes in current and long-term debt (in thousands) during the nine months ended September 30, 2024:

Current wording

The following table describes the changes in current and long-term debt (in thousands) during the three months ended March 31, 2025:

Previous wording

Net cash used in operating activities during thenine months ended September 30, 2024, was $20.4 million, which was calculated based on non-cash charges of $31.5 million, net cash provided by operating assets and liabilities of $19.5 million, and net loss of $71.3 million. The non-cash charges consisted of: (i) $4.9 million in amortization of debt issuance costs and other intangible assets, (ii) $6.1 million in depreciation expenses, (iii) $6.9 million in stock-based compensation expense, (iv) $10.1 million in accretion expense of Series A preferred units and (v) $3.6 million in loss on asset write-off. Net changes in operating assets and liabilities consisted primarily of (i) an increase in accrued interest of $20.9 million, (ii) an increase in accounts payable of $3.5 million, (iii) an increase in other liabilities of $1.5 million, (iv) an increase in inventories of $1.6 million and (v) a decrease in prepaid expenses of $1.6 million, (vi) an increase in other assets of $6.9 million, and (vii) an decrease in accounts receivable of $0.6 million.

Current wording

Cash provided by operating activities was $0.2 million, derived from a net loss of $24.5 million, non-cash changes of $9.6 million, and changes in operating assets and liabilities of $15.1 million. The non-cash changes primarily consisted of: (i) $2.3 million in stock-based compensation expense, (ii) $2.4 million in depreciation expenses, (iii) $2.7 million in amortization of debt issuance costs and other intangible assets, and (iv) $2.3 million in preferred unit accretion and other expenses of Series A Preferred Units. Cash increases related to changes in operating assets and liabilities consisted primarily of (i) a decrease in accounts receivable of $0.8 million, (ii) decrease in inventory of $2.5 primarily due to the India biodiesel segment selling feedstock inventory, (iii) $12.3 million receipt from tax credit sales, and (iv) $0.5 million reduction in other assets. This was offset by (i) a $0.7 million decrease in accounts payable, (ii) $0.2 million decrease in accrued interest expense and fees due to payments towards interest, and (iii) $0.1 million decrease in other liabilities.

Previous wording

Cash provided by financing activities was $27.8 million, consisting of $21.7 million from sales of common stock and proceeds from exercises of stock options and $12.5 million proceeds from borrowings, partially offset by repayments of borrowings of $4.8 million, payment of debt renewal and waiver fees of $1.4 million and payment on finance leases of $0.2 million.

Current wording

Cash provided by financing activities was $1.3 million, consisting primarily of (i) $3.8 million proceeds from borrowings, and (ii) $5.1 million from sales of common stock, offset by (i) $5.2 million in repayments of borrowings, (ii) $2.2 million in payments on Series A Preferred financing, and (iii) $0.3 million in debt renewal and waiver fee payments.

Previous wording

Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. We believe that of our most significant accounting policies and estimates, defined as those policies and estimates that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain are: revenue recognition; recoverability of long-lived assets, Series A Preferred unit liability, and debt modification and extinguishment accounting. These significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported net sales and expenses for each period. We believe that of our most significant accounting policies and estimates, defined as those policies and estimates that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain are: liquidity; debt covenant forecast; and recoverability of long-lived assets. These significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2024.