Welcome to the Aemetis First Quarter 2016 Earnings Review Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Todd Waltz, Executive Vice President and Chief Financial Officer of Aemetis Inc. Mr. Waltz, you may begin.

Thank you, Tim. We welcome our shareholders and financial market professionals to today's Aemetis first quarter 2016 earnings review conference call. We suggest visiting the website at aemetis.com to review today's earnings press release, the uploaded corporate presentation, filings with the SEC, recent press releases, and previous earnings conference calls. During today’s call we will be reviewing the presentation regarding the pending Edeniq acquisition. This presentation is available for review or download on the aemetis.com home page. Before we begin our discussion today, I'd like to read the following disclaimer statement. During today's call we'll be making forward-looking statements, including, without limitation statements with respect to our future stock performance, plans, opportunities, and expectations with respect to financial activities. These statements must be considered in conjunction with the disclosures and cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements made on this call involve risks and uncertainties, and that future events may differ materially from the statements made. For additional information, please refer to the company's Security and Exchange Commission filings which are posted on our website and are available from the company without charge. Our discussion on this call will include a review of non-GAAP measures as a supplement to financial results based on GAAP. A reconciliation of the non-GAAP measures to the most recently comparable GAAP measures is included in our earnings release for the quarter ended on March 31, 2016, which is available on our website. Adjusted EBITDA is defined as net income or loss plus, to the extent deducted and calculating such net income, interest expense, loss on extinguishment, income tax expense, intangible and other amortization expense, depreciation expense, and share-based expense. Now, I'd like to review financial results for the first quarter of 2016. Revenues were $33.3 million for…

Thank you, Todd. For those of you who may be new to our company, let me take a moment to provide some brief background information. Aemetis was founded in 2006 and we own and operate facilities with more than 110 million gallons per year of renewable fuel capacity in the US and India. Included in our production portfolio is a 60 million gallon per year capacity ethanol plant located in Keyes, California near Modesto. We also built, own and operate a 50 million gallon per year capacity distilled biodiesel and refined glycerin biorefinery production plant on the East Coast of India near the port city of Kakinada, our India biodiesel business. During the first quarter we achieved several important milestones related to India biodiesel and refined glycerin business. In January, we received approval from the California Air Resources Board for the importation of used cooking oil and tallow biodiesel into California under the low carbon fuel standard. [indiscernible] tallow biodiesel is 57 above 40% below the carbon intensity of diesel and the carbon intensity of our used cooking oil biodiesel is 24, about 75% below the carbon intensity of diesel. Our India plant is the only production facility in India approved to sell biodiesel into California and earn low carbon fuel standard credits. We've been working with major oil companies from our customers in our existing ethanol business to arrange logistics for the delivery and sale of biodiesel into California. Tallow biodiesel has a high cloud point and UCO biodiesel is not approved for importation as feedstock into India, so we're working on these two issues in order to begin shipments from India to California as soon as possible. After more than a year of testing and review. we achieved an important milestone in India last month with the approval…

Thank you, Mr. McAfee. [Operator Instructions] Our first question comes from the line Brent Rystrom, of Feltl. Please proceed with your question, Brent.

Good morning. Hi, Eric, how are you?

Very well, thanks.

Couple of quick questions. Can you give a little granularity on how that $20 million of revenue, what pockets those came in from last year?

The $20 million last year was from equipment sales and licensing royalties on the roughly 29 cellunators installed primarily at [indiscernible]

Okay. And I would assume vast majority of the EBITDA comes on the licensing side, is that a reasonable assumption?

We have a component of that absolutely.

What is the life of their IP?

What is that, license?

What is the life, what’s the remaining life on the IP?

The remaining life is rather long, we have still got about 15 years on most of the IP. I should mention that the sight of adoption in this industry is probably going to be three to four year cycle. We have put out pretty conservative numbers, but with only four to six month physical implementation, three years from now, you could see that we are going to have plenty of time to talk to every ethanol plant in the country and to whatever stand where you sign them up we will sign them. So I don’t think we are going to target 15-year adoption cycle in this technology.

All right. And then out of curiosity, on the core part of your company looking outside of the acquisition, just as a contrary thought, not contrary prediction, but it’s a thought, if we do get El Nino in the Midwest this summer and we were to have yields get hit by hotter, drier weather, what ability do you have to shift feedstocks as far as your plant in California?

We are uniquely positioned to use milo and as you know, milo does well in drier weather because it require significantly less water than corn. And we have been running almost every other week milo shipment from the Midwest, so we are already using that value chain. We’ve run about 7 trains so far in calendar 2016. So historically, milo has been about 10% discounted price from corn and if you do see a corn price spike, which is not expected of course, but if we do see one, we would expect that milo opportunity would be available to us.

And then this is kind of off track, but it’s something I thought you might have some knowledge of. There was an announcement last Friday out of India on a second generation plant that’s going to be developed there for second generation biofuels using basically almost any feedstocks. So could you switch grass, but yes it could use corn slover, whatever, I am curious, are you familiar with the project and do you have any cut-offs on the technology?

I do, we are familiar with it. Our plant in India was originally constructed by Praj Industries, which is the leading sugar ethanol engineering firm in the world actually and they are based out of India. They have an advanced biofuels testing and development unit that they have been operating for over a decade and we are very familiar with their company and what they are doing. The yields in the process are still in question, and as you know, the economics all driven by the yield. So they are definitely doing a conversion, there is no question about that, but the economics of the process are still highly in question, because the yields have not proven yet to be economic.

Thank you.

Certainly, thank you.

Our next question comes from the line of Tom Welch of Ameriprise Financial. Please proceed with your question, Mr. Welch.

Thank you. In regards to the Goodland, Kansas acquisition, what are the actual assets that are on the ground there? Do they actually have a finished ethanol plant, do they not have an ethanol plant, it’s not clear what the assets are in that acquisition, can you elaborate for us?

Certainly, the Goodland asset is a portfolio company of our Canadian lender and has about $63 million invested in development of traditional corn ethanol plant. What we have planned to do is not build or complete a traditional corn ethanol plant, because the local feedstock supply includes a significant amount of cellulose from corn stover and even wheat straw as well as a hazardous material supply chain that can be brought in from, not only Denver, but frankly the upper Midwest. So it’s uniquely positioned to become an advanced biofuel project, it is not going to be the next one we do. The next one we do is in California, and then that same technology we are deploying in California with the financial support by the way of our Canadian financing partner will be replicated in Kansas. So what they were able to bring us $15 million off balance sheet financing, I say off balance sheet because we don’t have any corporate financial exposure to the repayment of that $15 million. What we are able to do with was to set up a separate project number two in the Midwest, with financing in place and no financial exposure to the parent company for the acquisition and $15 million, of course that’s significantly less than the $63 million that’s been invested. It’s about a 91-acre site and it’s in an advanced industrial area in Goodland, Kansas, which is in Western Kansas, about three-hour drive from Denver.

Very good. Thank you.

Certainly, thank you. By the way, I should wrap that up by saying this demonstrates the - I would say a long-term partnership we have with our Canadian financing supplier and our ability to be more flexible, I suggest than some of the other companies in our business that are deploying new technology. I think our Canadian financing partner, as a bridge loan financer, has proven that they have launched in the industry and have a trusting relationship with our company. So we are looking to continue to use them as a bridge loan financing source and repay us EB-5 funding, which would be a part of our plan in Kansas as well. So this structure of taking bridge loan and the rapidly repaying it with EB-5 is definitely a core strategy for our company. Operator?

[Operator Instructions] Our next question comes from the line of Jim Stone of PSK Advisors. Please proceed with your question.

Good morning, guys. It looks very interesting to say the least. Could you tell us of the 29 - you said, 29 of the cellunators were shipped in the last year, is that what I heard?

We have a total of 29 installations, some of those operating communities, it’s five year actually. So 29 cellunators installed at six ethanol plants.

Okay. My questions is, I assume some of those 29 then we’re very small capacity for testing and trying, how many of the full size do up in the million gallons per year have been sold?

Yes, each cellunator does about 20 million gallons equivalent, so all 29 are actually operating at 20 million gallons equivalent business somewhat different than what you usually expect where people build pilot plants and demonstration plants and the finally, small commercial plants and then large commercial plants, all these Cellunators are at full commercial capacity implementations, these are not pilot and demonstration kind of facilities.

And you said that capacity is what, 29 or --?

The capacity per Cellunator is equivalent to about 20 million gallons per year of ethanol that is treated. So again, 60 million gallon ethanol plant, which you end up deploying us three Cellunators, so each Cellunator handles 20 million gallons per capacity.

Can you comment on what is the status of the IPO, does that still look like it’s squeezable sometime this year?

The IPO in India has been - continued to move in the positive direction. The price of crude oil was as low as $25 a barrel in January. That definitely had a dampening effect on the appetite in India. We are now about $45 a barrel and if that trend continues, we expect of course the appetite to increase as well.

So you think the primary selling position will be related to gas - to price, not year performance?

We sell diesel - I am sorry, we sell at a price that’s directly linked to diesel in India, so as the price of crude oil goes up, India’s price of diesel goes up at basically exactly parallel to the price of crude oil, and so our price goes up and - which means frankly our margins go up. And so we are a highly leveraged, positive leveraged business against the rising price in crude oil, specifically at our biodiesel subsidiary. We don’t have to physically do anything, we buy the same product and the same vendor and sell exactly same product and same customer and we make a whole lot more money as the price of crude oil rises.

Okay. And I - you were talking in the same general ballpark of the relation of what they would pay versus what if you tried to do a deal in this country?

Correct. California has some unusual benefits, so California is a target market for us to ship India product.

No, I am talking about on the IPO. If you wanted to do an all offering here in and everything else being equal and obviously, you’re not going get the same multiple that you’re getting in India, but you were talking a relatively high price in India, and I am wondering if things have changed in India, that might lower substantially lower than type you’re still looking in that same ballpark?

Yes, we are attracted frankly to the rapidly rising demand in India as well as frankly our January 2016 approval to bring our India product into California, and we think both were great opportunities. And so we are aggressively pursuing both of them. We actually brought in some new staff just solely focused on the California marketing of our product and we are working with some major oil companies to expand distribution in the state.

Excuse me, Mr. Stone, due to time management, we have to manage our questions. So I will have to take the next question at this time. Our next question comes from the line of Carter Driscoll of FBR. Please proceed with your question Mr. Driscoll

Good morning. How are you?

Good morning, Carter, good to talk to you.

Nice to speak to you again. You were talking about some of the competing technologies out there in the place with Edeniq’s IP and then Cellunator equipment?

Certainly, I would remark probably that the pre-treatment processes offered by ICM and a company called Fluid Quip would be probably the two primary competing processes. These companies use the milling technology that already exists in a corn ethanol plant and a hammer mill essentially does exactly what it sounds like it's a hammer hitting the corn kernel. The Cellunator device uses sheering technology, it looks a jet aircraft turbine and it's spins rapidly and it sheers the material I've heard it described as what a beaver does when a beaver chops a tree as it hits the tree with its teeth at a specific angle it doesn't hit the tree with a hammer and so the cellulosic fibers are uniquely non-responsive to being hit by a hammer but they are very responsive to sheering. These competitive technologies have very expensive capital investments required $30 million to $40 million long lead times for permitting, construction and commissioning typically a year or more. And high operating costs because you are running essentially another hammer mill and you're hammer mill is one your highest operating cost units in the corn ethanol plant between the power required as well the maintenance and up times required. These approaches are basically just doing more hammer milling are interest, they work but when you compare that to our business proposition which is don't write any checks within four to six months will have you operating and every month they are after you, you're going to get a check in the mail from us for your revenue share of millions of dollars a year is just a dramatic departure from the current mentality of selling capital equipment and selling engineering services to ethanol plants.

So if understand correctly, the value proposition really is lower cost, no upfront capital, is there a noticeable yield difference from the pre-treatment side and then I want to talk about what are the potential limitations, I'm assuming there is one OEM in Germany that does this, the type of commitment you have from them whether it relates to some of these agreements in terms of their ability to manufacture and just a couple of quick follow ups after that if I may.

Absolutely, let's start backwards. The acquisition, the equipment from the German manufacturer actually is a US subsidiary that manufacture that provides it out of the East Coast. So we have relatively short lead times compared to any other capital equipment business, we're talking 90 day to 180 day lead times on all of the devices and they're coming largely from the US. There is no limitation on our exclusive its global it's covered by our patent and there really is not that much of a limitation on scale up so anything within a reasonable, and if we're going to order 50 plants to be online in the next six months that is not going to be achieved but within the perimeters of our plan we really don't have a constraint on the manufacturability of the device. Same goes with the end times, the end time scale up is of really no consequence at this point in time. The two, it's physical inputs which is a cellular device in the enzymes, can feel as fast as our sales and marketing and analytics team can bring on new customers. In terms of the economics, this is very, very important point, the EPA regulates whether a corn kernel fiber cellulosic sugar has been converted into cellulosic ethanol. In other words you could be doing it all day long in your bathtub but if the EPA has not approved then what's coming out your bathtub is cellulosic ethanol you're not producing cellulosic ethanol you're just producing ethanol and you have to go and get essentially a D6 RIN corn-ethanol kind of pathway. The only current pending approval for cellulosic ethanol from corn fiber is the identical pathway it's actually now as the identical pathway at the EPA. So these other technologies over time will find some weighted show that they have produce some cellulosic ethanol, they'll develop their own software, their own analytics and as long as they don't step on and violate the patents filed by Edeniq they would be allowed to file with the EPA get their own pathway, it was a multi-year process to get Edeniq approved and they will eventually be producing cellulosic ethanol. We think what would be more rational would be that the plant operators who are actually making the decisions would say why don't we just put in the Aemetis system, doesn't cost us any money and it makes us millions of dollars every year even though we're already running these other separation technologies upfront, the financial benefit of us being able to quantify the amount of cellulosic ethanol and starch ethanol and get them under our umbrella of approval with the EPA, I think is very, very compelling. So we believe we're actually synergistic with even the plants that have made these multi tens of millions dollars of investment already.

It sounds like really the value proposition is getting that EPA and kind of approval for the conversion process, do you have a specific time frame around that or visibility I'm sure you have into it but is it pending within say 90 days or the close date of the acquisition or shortly thereafter?

The pathway has been approved but it's not been approved it's what's called the company registrations, so physical ethanol plant needs to get approved under the pathway in order to garner the benefits. That's supposed to be a 90 day process; the applications were filed about 120 days ago. And so the EPA is now in the timeframe of wrapping this up from just their own schedules. Now it is EPA, I grant them that they are doing this for the first time and so things will take a little bit longer but as you can see from their own targets it is time for them to get this approval done.

You have specific plans I'm assuming in share order that you applied for the EPA approval, correct?

Specific ethanol which is the stocked in plant about 40 miles from our plant in Central California is the pending company registration, Pacific does have a total of eight plants in the US some of which are dry mill plants and so Pacific's pending application with them already running the equipment means that they're almost immediately would be able to garner financial benefits from this approval and then rapidly from that point would be able to deploy at other sites and have their entire portfolio of ethanol plants both in Midwest as well as in California receive a financial benefits of the relationship with Aemetis.

But obviously with your relation, you're past relationship as the founder of Pacific Ethanol; I'm assuming that the initial path would be to outfit Pacific Ethanol first and then move to other customers is that a fair assumption?

We have a very strong relationship with Pacific Ethanol, I think you may know they market over $100 million a year of our ethanol product and we're also proud with the industry association with them. We think this is a very compelling opportunity for them and I think they're filing for the pathway, I think the first do it shows their interest in the technology as well.

Our next question comes from the line of Scott Ozer of Sandlapper Securities. Please proceed with your question.

Just if you could highlight what's going on with the IPO in India and about getting the customer for the diesel that you're producing there?

The IPO in India has slowed down by the crude oil decline which is now the crude oil rise, and as we see further crude oil rise, I think the IPO in India will move along more quickly. We have retained investment banking and accounting professionals, so we're already in the process, we're now just waiting for market adoption. In terms of our biodiesel sales, India is a very large biodiesel market and the Prime Minister of India announced he'd like to convert about 10 billion gallons of that to renewable fuels quite frankly as rapidly as possible. So we're working within the Indian bureaucracy and the approval of B100 that happened a month ago was almost a multi-year process and has now been achieved. That opens up the potential for the entire retail diesel market and so bulk which is what we're selling into now as well as retail would allow us to grow rapidly in India. So those are the two key metrics rising diesel prices because of rising crude prices and then expanding approvals such as for the first time 100% biodiesel being approved as a motor fuel are expected to expand the market. And I think as we get into the third and fourth quarters of this year, if we see $55, $60 crude oil prices I think you're going to see a certain about excitement around companies such as ours, there is only five producers in the whole country who are uniquely positioned to benefit from those rising crude oil prices.

And what's your expected timeline for raising the additional 50 million in EB-5 funds?

Well, I hate to tell you this, I can't rely upon history, what we do have is we have an amount of credibility because of the success of our first $36-million and so we are out marketing in China this month and we will be able to update you hopefully within the next two to three months about the success of those efforts. And so last time once we are marketing in China things went very, very quickly and so I hope by the end of the summer we'll be able to report that the pace is likewise also quick here.

Our next question comes from line of Keith Goodman of Maxim Group. Please proceed with your question Mr. Goodman.

Just a quick question, actually two part question, bringing used cooking oil into India and getting the approvals to bring biodiesel into the California which you said you're working on both of those, when do you expect what the ETA, when do we think we could start generating more significant revenues out of biodiesel in India and in the States?

Let's start it again at the end, rising revenues in India can come from Indian domestic customers as we see the price of diesel has hiked in India quite dramatically quite frankly and as the prices of our feedstock moderate we'll see rising revenues in India just based on a steering product. What we have is an upside in that we just January of this year received approval to bring our India produced product into California if we used Tallow from animals or used cooking oil. India is not a good supply of used cooking oil so we have to import in India. But we are fully approved to take Tallow biodiesel from India bring it into California, we're fully approved to bring UCO biodiesel from India into the California that's all done. All we're doing right now is just expanding our feedstock supply chain by getting approval for the import of used cooking oil from the Middle East, from China, from elsewhere in Southeast Asia into India, so we can the high volumes that we are used to, we typically ship as much as 5,000 tons which is a million half gallons per shipment into Europe historically and now into California. So we're looking for broader supply chains of UCO et cetera. The timing which is what the core of your question was is we are very active, I am talking to Indian ministers almost weekly and our team is in New Delhi meeting with the same Ministers almost weekly. So we expect good progress, there was an article written about the ministers' support of this process. So we are - we've been - demonstrated that we can make things happen at the ministerial level in India and it's literally could be a matter of days, weeks or perhaps months but it's the bureaucracy we're dealing with, so my expectation is sometime this summer we will get that approval and because all the other approvals are in place we can then immediately begin production.

And do you have an end customer or way to bring biodiesel into California, I mean are you putting sort of the cart in front of horse and addressing that for when you do get the approval?

We have hired a person who is focused solely on the California market deployment, he is based out of Cupertino and we have our existing European customer which is a $100 billion oil trading company, the world's largest frankly who wants to sell in California. So either using our existing European trading partner or just our own major oil company relationships, we are setting up the California supply chain far ahead whenever we get UCO approval. So once that approval happens, all we start doing is buying inventory and start the process.

At this time I'd like to turn the conference back over to management for closing remarks.

Thank you very much operator, I appreciate it. I'd like to thank our shareholders and the several stock analysts and others for joining us today. We look forward to meeting with you and continuing our dialog about pursuing growth opportunities at Aemetis.

Thank you for attending today's Aemetis earnings conference call, please visit the Investor Section of the Aemetis website where we will post a written version and audio version of the Aemetis earnings review and business update. Tim?

This concludes today's teleconference; you may disconnect your lines at this time. Thank you for your participation.