Good day, ladies and gentlemen, and welcome to the Aemetis Fourth Quarter and Year End 2016 Earnings Review Conference Call. All lines have been placed on a listen-only mode. [Operator Instructions] At this time, it is now my pleasure to turn the floor over to your host, Executive Vice President and Chief Financial Officer of Aemetis, Todd Waltz. Sir, the floor is yours.

Thank you, Angelica. Welcome to the Aemetis fourth quarter and year end 2016 earnings review conference call. We suggest visiting our Web site at aemetis.com to review today's earnings press release, updated corporate presentation, filings with the SEC, recent press releases, and previous earnings conference calls. This presentation is available for review or download on the aemetis.com homepage. 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 price, plans, opportunities, and expectations with respect to financing 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 uncertainty, 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 Web site 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 directly comparable GAAP measures is included in our earnings release for the quarter ended on December 21, 2016, which is available on our Web site. Adjusted EBITDA is defined as net income or loss, to the extent deductible and calculating net income, interest expense, loss on extinguishment, income tax expense, intangible and other amortization expense, depreciation expense, and share-based compensation expense. Now I'd like to review the financial results for 2016. Revenues were $143.2 million for the year ended December 31, 2016, compared to $146.6 million for the same period in 2015. Decrease in biodiesel volumes and…

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 U.S. 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 bio refinery on the east coast of India, near the port city of Kakinada. Aemetis owns and operates first-generation biofuels plants in order to develop, license, or acquire advanced biofuels technologies, whether adopted or owned facilities, then have the opportunity to deploy these advanced biofuels technologies among the approximately 200 ethanol plants and hundreds of biodiesel plants in the U.S. and worldwide. Unlike technology-only companies that lack first-generation biofuels production facilities, our platform Biofuels Businesses provide non-dilutive operating income and access to debt financing to fund growth without requiring shareholder dilution. We will first briefly discuss our platform businesses in ethanol and biodiesel, and then review our low-cost financing initiatives and exciting projects in advanced biofuels. To begin, let us review our ethanol business. In November, 2016, the EPA set the 2017 blending volumes for first-generation ethanol at 15 billion gallons per year, which for the first time enforced the statutory limit the congress had set for 2015. This blending mandate is up from 14.5 billion gallons in 2016. Enforcement of the renewable fuel standard by the EPA bodes well for the biofuels industry as it creates a favorable supply-demand balance to support expanded divestment in the biofuels projects -- in future biofuels projects. Expanding exports have also…

Thank you. The floor is now open for questions. [Operator Instructions] And our first question comes from Carter Driscoll. You may now state your question, sir.

Good morning Eric, Todd.

Good morning.

First question is I see that Pacific Ethanol is looking to expand the use of Edeniq's technology beyond stock into its Madeira facilities. So it looks like the implementation seems to be going well after the first introduction. Can you talk about your ability to evaluate that? Obviously, as a company you're intimately familiar with Eric, and just give me an update on your confidence level in holding Edeniq at some point, and maybe your expectation of the timing of the potential resolution. And then I have a couple of follow-ups, if I may.

Thank you, Carter. First of all, we are very supportive of Edeniq's deployment of the technology. There are now three EPA approved implementations including Flint Hills as you may know, the Koch Industries subsidiary, and Pacific Ethanol's announcement that that they were doing a second deployment does endorse the economics of the operational efficacy of the Edeniq technology. We have another 15 ethanol plants that they've announced are in the various states of testing or negotiation. So it's being deployed at the rate, and with the level of interest that we fully expected. And we are very pleased to see the continued progress that Edeniq is making, and frankly would say we've been supportive of helping them move along and it's free [ph] for new customers into them as well. We see their operational successes as our operational success. And are currently binding merger agreement is something that is in the process of being enforced. So, we do look forward to completing the acquisition, and hopefully their business will continue along this very positive path that it's been going on so far.

So correct me if I'm wrong, did you just not say that you've referred customers to them despite them attempting to break the merger agreement. So you seem to have a relatively friendly operational relationship currently. I guess I'm struggling to figure out why they would want to come back to the fold and continue to work with you as a subsidiary under the Aemetis brand.

We do have a positive working relationship with them. And we think it is in all of our best interests and frankly in the industry's best interest to produce the valuable D3 cellulosic ethanol RINs at corn ethanol plant. And this is really the only profitable way to do it for a few million dollar investment. And so we have maintained an excellent working relationship with the operational management team of the company. We perceive that their success is our success because we have an agreement that's signed. Some of their shareholders got very excited about the EPA approval, which we played the lead role in obtaining last year. And so after we signed our definite agreement, we then led the process of getting their EPA approval, which I believe actually happened a lot quicker than anybody expected. So our issues with the Edeniq shareholders primarily revolve around their desire to change the economics of the deal, and lack of interest in doing so.

Maybe shifting gears, could you give me your expectation of the current administration, which in the past has been -- at lest President Trump is a supporter of the ethanol industry, and yet some of the cabinet members he's chosen maybe be little bit less favorable, and then you have some very public exclamations by senior counsels, such as Mr. Icahn talking about moving the point of obligation. Could you talk about how that would or would not impact the ethanol business in your view, and kind of your current view of the regulatory hurdles and or potential opportunities under a new administration?

I gave a speech at the Advanced Biofuels Leadership Conference last week, in Washington D.C., and I'll basically draw from that. Point number one is that the renewal fuel standard is part of the Clean Air Act, which is federal law that has many, many complexities. And it is critical to the biofuels industry in order to maintain investor and commercial lending support that we don't constantly go and change federal law, because changing rules the rules of the game or we're trying to make long-term investments obviously it returns to those sorts of debt and equity instruments. And so the core message is, let's not open up clean air act and renegotiate whether we want healthy air for our kids. The second point is we do have President that in essence was hired in his current position by corn farmers. If you really want to simplify his election he wouldn't have won Iowa and Ohio and a couple of other corn states, he just would not be President. And so today's news that was put on the wire with a interview with Iowa or former Iowa Governor, Terry Branstad, I think was a very good insight into what's really going on in the Trump administration, what's really going on is I think Trump's close advisors understand the value of the 94 million acres of corn being grown in the United States and not only the political, but their financial impact of bankrupting corn farmers and all the communities are good -- they pretend upon them. And outside of that inner core, there is a group including Carl Icahn and others who have the interest in the oil industry in mind. And the press release today I think clearly stated that Terry Branstad had done his work inside the administration…

Good a bit of detail. Thank you, Eric. Switching gears a little bit, any you can add in terms of the inline you're looking to apply to Indian operations, talk about maybe the feed-stocks and I'm assuming its feedstocks domestically, India will now be - you try to convert and get around the import issues, the things of your roadblock, talk about timing any type of incremental investment necessary. Could you get a financial relationship with the large partner you talked about being in negotiations with potential timing any sort of those issues in terms of turning around your lean operations.

Good, thank you very much for that question. Our India operation is now free of any senior secured debt, we pay the debt off in its entirety and so we are in a position of excellent flexibility about our relationships and this will cost feedstock is both available domestically in India, as well as imported feedstock and the challenges been that as the valuable asset and other components of the feedstock is combined with less valuable components. The technology is not readily available to separate out if you quickly and cheaply. And what we were able to successfully develop over the last couple of years in partnership with the world's largest enzyme producer was a process that allowed their enzymes to survive and thrive on and to be in a very short residence time literally five or six hours accomplishing -- accomplish something that otherwise have indicating 50 to 60 hours which means the economics are dramatically better. And so will cause feedstocks quick cycle times using a process that we're playing to file patent on this month is really the core of our opportunity. Now our particular relationship for this particular customer that has -- we have signed some initial documents already, its exclusive relationship because they would like to deliver the feedstock and then buy all of our output and bring it -- in the current case spring it all the gear up, potentially could also bring it to the United States but currently be of extensive distribution and blending capability in Europe and so they would like to see that with our product. And this particular product gets what's known as double counting which makes it the most valuable biodiesel product you can bring into Europe. By the way, you asked about capital expenditures, it's a very small amount we're putting it out operating cash flow. So it really has no impact on our business at this point.

The plan initially is really to use this to export rather than to consume in India, is that correct?

We actually going to do both but this particular customer is solely focused on export. We are planning to reserve some of our capacity for domestic customers but there is a need for us to expand capacity from the current 50 million gallons to 100 million gallons capacity and that is part of discussion because we're facing just a lack of production capacity and we're going to meet their European government as well as the growing Indian market.

Thanks. My last question is, I think you talked about acceleration in the removal from escrow of EB-5 program in terms of what your experience Phase 1. You talked about your expectations and what you've been able to gather so far versus your $50 million target and timing obviously is very important in terms of being on your largest expenditures right now and vendor expect -- any update there would be helpful.

Our first EB-5 program will be an unproven developer required that we escrow the funds until about 18 month process of approving the investor immigration status and then completed because we are now a proven developer that has been reduced to less than a month. So I'm taking the night for Asia and will be there for the next week and half and we have done four trips to Asia in the last six months. Our plan is to execute this year on completing that $50 million of funding and unlike previous years where we wouldn't really see the funds until 2019, we should see those funds this calendar year if they are deposited with the campus calendar year because of the rarely short 2 to 4 weeks escrow that's recorded. We have one component which is called an exemplar that we expect to get an approval in the third quarter this year's so our funds would be escrowed until the exemplar is approved all that is just a form document with the government but the government has been a bit slow in responding to those exemplar filings. So, our current expectations are that the third and fourth quarter release of funds from escrow will come.

You feel comfortable that you could hit your goal this year assuming the government approval isn't there hanging?

We have very, very good response from our brokers and in China, Vietnam and interested enough Russia and the Middle East we have excellent representation. And the years we spent investing in those broker relationships is now paying off.

Okay. I'll get back in the queue. Thanks for answering all my questions.

Thank you, Carter.

Thank you. And our next question comes from Tom Welch. You may now state your question, sir.

Thank you, Eric, exciting news about potentially hitting capacity over in India by this production. What is the timeframe for getting the enzyme tech in place, finishing the contracts, bringing in enough of base integrals to - what is the timeframe for finally getting that biodiesel up and fully functioning and running at 50 gallons a year capacity.

We're currently in the process doing the first commercial shipment. That's in the feedstock at this point in time but we'll be producing shipping within the next four to six weeks from today. Then as a ramp up from that perspective and I will be in Singapore later this week, so we are working right now on the transactional activity. The logistics of checking ports, regulatory and all that activities behind us, now what we are doing is just the trading activity bringing the feedstock and then putting on a boat and I'm anticipating that's going to require one quarter for us to ramp up to our full relationship with this particular oil company and that will be primarily just the physical logistics of scaling out two shipments of 5,000 tons each per month. And so, I think we're talking about one quarter, they will get to that but it's a ramp up process where I expect would be initially doing one 5000 ton shipment per month and then speaking that up is Edeniq logistics and plus.

Got it. Put more of a fine point on it. We actually have the enzyme process in place right now, correct?

The enzyme process -- yes, we have in place right now to run at more limited volumes but within the next 30 days will be to run our entire plant on enzymes. We will be far ahead of the pace of the feedstock actually being delivered to the plant in terms of our constraints on growth the enzyme production, the upgrade is not a part of it.

So the bottleneck here is bringing in the feedstock and…

The term bottleneck is more of a logistics term. This particular operation is a very, very large organization. So it's mostly just the physical process of them purchasing things, bringing out the boats and bring them in and they very well might exceed our expectations, our current expectations that it's going to take us in the second quarter before you really be at full production capacity. But again they like surprises and start loading beginning of April with full months of activity.

Thanks for clarity. Furthering that question we had on shelf offering, sitting waiting to potentially take the biodiesel operation public in India, is that still on the table or is that now off the table?

Technically it's not really the shelf offering but we did retain investment banking advisory work in India and that is still on the table, it's always subject to market conditions but we are very excited about the prospects in India, we think there is desperate need for biodiesel production growth and we are very open to using the public markets in India on attractive economics to us as a tool to grow that business.

And now with this arrangement with a very large international oil company, they are providing not only the feedstock but they are also providing the turnaround financing for the whole operation, and I'm guessing that the terms are dramatically better than what they were as far as financing goes before we take off the Bank of India.

Then it's correct, and we're using a working capital relationship in which our cost of working capital essentially is zero because they provide us the feedstock and then we pay for the feedstock after we delivered the finished goods. So we are using their deep financial capability and frankly very low cost of capital as a mechanism to not have to put working capital to work and to ramp up the business it's an excess of $10 million a month without having to very high interest rates.

And that's huge because I before we are paying 15% interest rate premium on our working capital in India.

That is correct and in India the interest rates are relatively high because the Rupee depreciates against Dollar. We announced our interest cost of course the dollar denominated terms and this relationship in India is similar to the relationship we have in California that's enabled us to run our California operations without having working capital deployed, we've a couple billion dollar company that does with us in California as a primary supplier of our feedstock. And so it's a relationship that we're comfortable with. We have run it over five years in California on the same kind of mechanism and it's very beneficial to our customer because they get to not be dependent on other feedstock suppliers they actually have much more control over the rapid scale of their business because they are able to deliver the feedstock to.

On summary, we could be shipping our -- sending our first shipment biodiesel to Europe within potentially 30 days and if possible that we could have full ramp up of production in the 50 million gallons capacity, to be running at current capacity within 90 days.

I would add a month everything you said and I'd say within 30 to 60 days shipments board the Europe and within 60 to 120 days ramping up and my suggestion is that it's really going to be our customer and right now the margins are excellent, the price of soybean-based biodiesel is rise -- has risen so we'll see how their traders react to market and if they react in a aggressive manner than we'll course have to respond accordingly.

Very good. That closes my questions. Thank you.

Thank you.

Thank you. And our next question comes from Keith Goodman. You may now state your question, sir.

Hi, guys. My questions were actually very similar to last line of questions I came in, so I'll just try to add to the last part that you mentioned. Is the one thing that would derail the success in the biodiesel business over the next 30 to 60 days and then 60 to 100 days is the price of the commodity of input.

With this particular customer that is not such a factor because it's a waste product of raising feedstock and in our regular India business we use a derivative of the palm oil business so as palm oil, the edible oils go up and down, then the waste products palm goes up and down. So in this particular major customer the feedstock variability is not as much of a functional relationship.

So what would derail your timeline for the next 30 to 60 days where I guess the input would come in and then 60 to 120 days for the ramp up to actually happen?

We have two potential derailments. Number one is we're dealing with a very, very large organization and so a delay of 30 days would be just purely administrative in nature and would not be any indication of their intentions changing. So we would anticipate that would be the first time impact on timing. The second is just the import export process in India and the paperwork related to that. We think we have that - manage we of course done that many times in the past but there is always a potential for a 2 to 4 week delay just on the administrative process. I think the alignment of our interests with this major oil company has been well established, we've been working with them since last August and I think that is really the most important part of this whole discussion is that -- here is a company that can take 100 million gallons per year of biodiesel very easily and has a very large market they want to deliver to in Europe, as well as opportunities in the United States and they see our unique position in the marketplace and unique technology as a strategic relationship that requires an exclusive relationship so that we are not shipping to their competitors and that is -- that relationship that we intend to fully exercise.

Okay. And what type of margins are you getting from that relationship or do you foresee from getting to that relationship?

We anticipate the margins will be reasonable and that both parties will consider the transaction to be a profitable and attractive one.

Okay, all right. Thank you very much.

Thank you, Keith.

Thank you. And our next question comes from Scott Ozer. You may now state your question, sir.

Hi, Eric, how are you? I missed part of it. Did you say we had a customer in India, and that's why we were going to be moving to full production?

We are negotiating with a major oil company customer and anticipating that initial production is in process this month and next month, and that we're going to be ramping up from that point to nearly full capacity. We anticipate to maintain a minority of our production for domestic India customers, and so we're not shutting off India. But there was a [indiscernible] Pacific was cancelled going from India to Europe that makes our product very attractive for European customers, and this particular major oil company is desirous of us not selling to their competitors, so they're seeking an exclusive relationship to be able to supply our product in Europe.

And more so than if we were to ship it to California with the credits that we would receive?

Yes, actually it is. Because of the nature of the feedstock, the European market is the high margin opportunity right now.

Okay. And when did -- was it correct in my understanding that sometime in the third quarter we'll actually see meaningful pay down from the EB-5 funds to Third Eye.

We have paid down about $35 million in our Phase I, and we're $50 million at Phase II, and our current timing is a third quarter and fourth quarter 2017 collection of those funds. That's the current pace we're on, and subject to market conditions changing, if there were some worldwide event of something we would have to amend that. But currently our visibility would be a third quarter and fourth quarter pay down, that's correct.

So would it be takedown or paid off?

It would effectively be a potential payoff if we just replace the remaining balance, which is a relatively small amount, with debt financing and some other financing it could definitely be a payoff. We have an excellent working relationship with Third Eye Capital, and anticipate that relationship will be a bridge financing tool available to the company for acquisitions or other things we might do. So I would definitely saw though that the impact on the interest costs will be significant with a $50 million reduction in high interest debt replaced with 3% low interest debt the financial impact to our shareholders would be material upon collecting $50 million.

No, I would imagine that would be difference between night and day for the company and its bottom line, so. Okay, well that concludes my questions. So if you have anybody else in queue.

Thank you, Scott, I appreciate it.

Thank you. And our next question comes from Anthony Marchesa [ph]. You may now state your question.

Hi, Eric. First, good afternoon. First of all, I think you did a great job in answering these questions. You're very patient and you take all the time in the world. So I do appreciate that as a shareholder. My question is relating to Edeniq, how much money is the company spending on legal fees on a quarterly basis or a monthly -- however you want to describe it.

Sure. We have used a law firm in Silicon Valley who we have other non-legal matter, more dis-contractual work we do with them as well. And we've been very successful at keeping our legal fees very low. I don't know the numbers off the top of my head, but I'd say less than $20,000 a month probably. So it's a small amount of our administrative cost.

Okay. And I guess is it possible that we could see some type of resolution this calendar year or would your hope be that we would see some resolution in this calendar year?

An excellent question, in any litigation we of course don't really control the timing. The Edeniq Board of Directors to a large extent controls that timing. But we do believe there are certain disclosures that have happened during the process of the [indiscernible] and the upcoming depositions that will help clarify for Edeniq Board and shareholders that we have a fully executed binding agreement. And we have every intention to just go ahead and close the transaction. So we think that that message is going to become more and more clear. There was certainly a time of excitement for Edeniq Board members and shareholders when they found out the EPA would approve them, late last summer. And I think they responded to that excitement requesting a change in the economics with us. And we made the decision that setting aside our existing agreement and starting the negotiation over again was not something we were interested in doing. So I think that it'll become more and more apparent to them that there is a binding agreement. And there's lots of reasons of them not to have it a protracted legal situation.

Right. Okay, great. Thank you very much. I really appreciate the job you're doing.

Sure, thank you Tony.

Thank you. And there appear to be no further questions. At this time, I will turn the floor back over to you, Eric.

All right. Thank you very much, appreciate it. Thanks to the Aemetis shareholders, analysts, and others for joining us today. We look forward to meeting with you further, and in continuing our dialogue about pursuing growth opportunities at Aemetis. Thank you for attending today's Aemetis earnings conference call. Please visit the Investors Section of the Aemetis Web site, where we'll post a written version and an audio version of this Aemetis earnings review and business update. Angelica?

Thank you. This does conclude today's conference. We thank you for your participation. You may now disconnect your lines at this time, and have a great day.