Good day, ladies and gentlemen. Welcome to Aemetis Third Quarter 2017 Earnings Review. All lines have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. [Operator instructions.] At this time, it is my pleasure to turn the floor over to your host, Executive Vice President and CFO, Todd Waltz. Sir, the floor is yours.

Thank you, Kat. Welcome to the Aemetis Third Quarter 2017 Earnings Review conference call. We suggest visiting our website at aemetis.com to review today’s earnings press release, updated corporate presentation, filings with the Security and Exchange Commission, 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 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 directly comparable GAAP measures is included in our earnings release for the quarter ended September 30, 2017, which is available on our website. Adjusted EBITDA is defined as net income or loss plus to the extent deducted in calculating such net income, interest expense, loss on extinguishment, income tax expense, and tangible and other amortization expense, depreciation expense, and share-based compensation expense. Now, I’d like to review the financial results for the third quarter of 2017. Revenues were $38.9 million for the third quarter of 2017 compared to $39.4 million for the third quarter of 2016. Revenue increased in…

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 distillers grain, and corn oil 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 on the East Coast of India near the port city of Kakinada. Today, we announced the retirement of our longtime board member, Harold Sorgenti, whom has served on the Aemetis Board of Directors for more than ten years. Hal was the president of ARCO Chemical for more than a decade and grew the company into an industry leader that was later sold for more than $5 billion. On the Aemetis Board of Directors, Hal has provided valuable industry experience and a steady hand on the weather of corporate strategy. I personally appreciate Hal’s friendly and supportive professional manner that has helped establish the Aemetis corporate culture. We are committed to continue to create the unique products and strategic opportunities that Hal has consistently encouraged Aemetis to acquire or develop. Before reviewing our quarter, I would like to reiterate what we communicated during last quarter’s conference call regarding our plans for the reduction of the currently outstanding higher interest rate loans that primarily were used to acquire the Keyes plant. These bridge loans were provided by Third Eye Capital of Toronto, Canada, a reliable and supportive financing source for Aemetis acquisitions and operations since 2008. Though $10 million of the Third Eye Capital…

Thank you, Mr. McAfee. The floor is now open for questions. [Operator instructions.] Our first question comes from Carter Driscoll. Go ahead, Carter.

Good morning, gentlemen. Thanks for taking my question. The first one I have is related to the ramp in India. Eric, could you comment what gives you confidence that the commission is looking to reverse the hike that was recently imposed and therefore making economics better and maybe just a little additional clarity? I mean do you have BP’s marketing weight behind it trying to get this reduced? It seems like a significant at least near-term hurdle that was fairly arbitrary. I have a couple follow ups. Thank you.

Actually, your last statement was correct. It was largely a basket of chemicals that they threw in biodiesels, an 18% number and didn’t really have the time to figure out what the actual number should be. Every month there’s a meeting at the GST Committee, and they announce literally dozens of revisions of the GST as different industries come in and point out the changes in tax rates compared to what the policy is of not using the tax rate. In this particular case, we have the active involvement of the Transport Minister, who we have a personal relationship with, and his work in the government to support the biodiesel industry has been very strong and very consistent. He also supports the ethanol industry very strongly. So we have direct contact with the highest levels of government, and this has now finally come to pass as an agenda item that they need to work on. They didn’t realize that a 13% rise in taxes would have such a dramatic effect on the entire biodiesel industry and now it’s clear that that impact has occurred and it’s time for them to fix it. They originally thought we would just adjust prices and then keep on going, but in the dynamic of the industry in India, we have to sell at a discount to diesel, which acts as a pricing method for us. So a 13% cost increase is not able to be passed on to customers. That’s now clear, and we expect to see progress. I can’t guarantee it would be this week. It’s supposed to be this week, but if it’s not, it’s a process, it’s ongoing. We do believe that there will be a decrease in the tax rate.

Okay. Can you talk a little bit about the import market in conjunction with the RFS, some of the noise around maybe trying to limit ethanol imports to the country? Do you think they would have a material effect of soaking up or I should say limiting supply, and therefore helping to boost price the second half of the year? I’d love to get your thoughts on where the export market stands, in particular China and the opportunity if they’re really serious about ramping up their use of ethanol, timing, potential magnitude and hurdles, if that’s the case. Thank you.

I just returned from ten days in China, Beijing, Shanghai, Shenzhen, and then back to Beijing again. China is very serious about their 10% ethanol mandate. They back that up with cash. They’re building an enormous corn ethanol processing facility that they expect to have online by 2020. The 10% mandate they have is about a 4 billion gallon per year requirement. It’s estimated that their domestic production from corn will be in the 1 to 1.5 billion gallon per year range, but they’re going to have a significant gap between their domestic production and the mandate that they have. As you know it’s an air pollution but it’s also for them an imported oil reduction strategy. So importing ethanol from us does not necessarily improve their imported fuel but it does improve their air quality and it improves the performance of their vehicles, etc. They set the 10% mandate, which was significantly higher than their domestic production, and I am expecting to see that our foreign trade representatives would be successful at opening up that market, although I do expect it to be gradual. Regarding the other countries, I think India, which is currently a closed market to US ethanol except for the [indiscernible] and industrial ethanol markets. So what’s happening is that we are shipping, I think about 135 million gallons over the last 4 months into India, but that is replacing the domestic production of ethanol that otherwise would go into these industrial and drinking ethanol markets. Then the domestic ethanol, there it’s going into fuels. So as the India Government is struggling to try to increase its ethanol consumption in order to clean up air pollution, where 13 of the 20 worst polluted cities in the world are in India, they are increasingly facing pressure to…

You don’t see any specific limitations on imports into the US being discussed?

I don’t think that has a serious opportunity as long-term policy. The reason why is the World Trade Organization. If we put up various imported fuels, then I think we’re going to lose in the litigation and the WTO. It might be a policy they have adopted, but it would be purely for short-term political reasons, because I think all observers would know it’s going to fail in the medium term.

Do you mind commenting on the dynamic the distillers grain market and your expectations of how that may or how long that may last in terms of softness and pricing, if there’s anything you can do specifically within Aemetis to mitigate that or is it really more of an industry-wide issue?

The price of distillers grain and the volume are somewhat related, but the price I said is more of a national number, the volume is more local. We supply over 150 local dairies in Central Valley and it’s been very successful at an aggressive customer relationship program we’ve been doing over the last year. We are very, very pleased with the physical deliveries in the contracts for [indiscernible] distillers grain. The price though is impacted by the inability for us as a nation to export distillers grain to countries that need it starting with China. About a year ago, China came up with a temporary blockage of US products, some concerned about GMOs or some other excuse. I think that’s very temporary and their need to feed animals with cheap feedstock, literally our product at times is one half the cost of domestic corn in China. It means that China is playing a very short-term game. I think they were trying to get rid of domestic corn supply. That really didn’t work and so they adopted the ethanol mandate to get rid of that corn supply, which is rapidly degrading in value. We’re seeing China’s policies in the short-term acting in their self-interest, but in the medium-term they just have a reality and that is they cannot produce enough biofuels to meet their own decarbonization and air pollution reduction goals and they can’t produce enough low-cost animal feed period. They don’t have 90 million acres of corn production capacity in the country of China and there’s an over capacity in the US. So I think the US has a sustainable competitive advantage in distillers grain as well as in ethanol. I expect that under the current Federal Administration we might see an increased focus on those export competitive advantages and that’s what we need. We need a US Government that’s going to stand up for what we can sustainably provide as export products that other countries need to import.

Thank you for that commentary. Just last one from me before I get back in the queue, you mention that you see favorable progress in the Edeniq litigation, though I do note that they filed a countersuit. Just some general comments to back up your favorable view of where litigation is heading and then any type of commentary you have on the validity of the countersuit. Thank you.

Sure. Thanks. In general, we have a lot of detail we can disclose, but we’ve decided we’re not going to talk much about Edeniq. I would say that I was very pleased with the countersuit. That’s an opportunity for them to come up with whatever claim that they consider to be valid and we consider the countersuit to be purely boiler plate. I was very pleased to see it frankly, because that was their shot at having some claim that we would have to worry about and apparently we don’t have any concerns about it. We are looking forward to seeing further progress in Edeniq’s business and watching closely to see that they’re successful. So we refer customers to them at any opportunity where a customer calls us and asks for a referral, we will absolutely give them the highest recommendation and encourage people to contact Edeniq and rapidly deploy corn fiber cellulosic ethanol. We think it’s an absolute first step that every corn ethanol plant in the US that’s a dry mill corn ethanol plant should adopt. We’re very supportive of the Edeniq technology and being the solution today.

The specific litigation, it doesn’t sound like there’s a definable timeframe as to when the next steps are?

There is a definable timeframe. We’re currently in discovery in I believe it was July, we had filed a motion that we won and there was a court order issue that required Edeniq to deliver discovery documents. They delivered documents basically about a half a year late and they’ve been delaying doing so. There’s good reason for it. They disclosed some things that were very helpful to our case. That discovery delay is as expected. That’s a strategy people would often use to test the mettle of the other litigants. In this case, we have a very long-term view and we’re very patient about it. We’ll just go through the process and see at what point in time we decide it’s time to conclude the transaction.

I appreciate you answering all of my questions. I’ll get back in the queue. Thank you.

Thank you, Carter.

[Operator instructions.]

I think we’re going to wrap up the call right now, operator. We have some other things going on we need to do as well. Thank you to the attendees on today’s call. I specifically appreciate the focus on the medium-term and long-term opportunities in decarbonizing the vehicles in the world that run on fuels. I think there’s a great opportunity in our industry and the position that Aemetis is in. I remind investors that on our website there’s a corporate presentation that can further provide information about both our LanzaTech cellulosic ethanol process as well as our enzymatic biodiesel process.

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 an audio version of this Aemetis earnings review and business update. Kat?

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