Hello, and welcome to the Aemetis Fourth Quarter and Year 2018 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, Kevin. Welcome to the Aemetis fourth quarter and year 2018 earnings review conference call. We suggest visiting our website at aemetis.com to review today’s earnings press release, updated corporate presentations, filing with the Security and Exchange Commission, recent press releases and previous earning conference calls. This presentation is available for review or download on the aemetis.com homepage. Before we begin our presentation today, I’d like to read the following disclaimer statement. During today’s call, we’ll be making forward-looking statements, including without limitations statements with respect to our future stock performance, plans, opportunities and expectations with respect to financing activities and the execution of our business plan. These statements must be considered in conjunction with the disclosure and cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements made on this call involve risk 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 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 recent directly comparable GAAP measures is included in our earnings release for the quarter ended on December 30, 2018, which is available on our website. Adjusted EBITDA is defined as net income or loss plus to the extent deduced in calculating such net income. Interest expense, loss on extinguishment, income tax expense in tangible and other amortization expense, depreciation expense and share-based compensation expense. Now, I’d like to review the financial results for the fourth quarter of 2018. Revenues were $38.8 for the fourth quarter of 2018, compared to $38.9…

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 production 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, 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 the Kakinada. Last year, we funded and launched a $30 million dairy digester pipeline and gas conditioning project in central California, and we are in the late stages of developing a $175 million advanced ethanol production facility to convert waste orchard wood and other waste biomass into cellulosic ethanol. Aemetis made excellent progress on each of our four core businesses during 2018 and early 2019. Let's first review our biodiesel business in India. During the past few years, the tax and regulatory structure for biofuels in India has been developed and we believe it is now being implemented to support the biodiesel industry. In 2017, India adopted a Goods and Services Tax for biodiesel at 18%, which has subsequently been reduced to 12% in early 2018. In mid-2018, the India government updated the national biofuels policy to set a target of a 5% blend of biodiesel with diesel and instituted a high tariff to block the importation of biodiesel into India in order to support the expansion of domestic biodiesel production. The national biofuels lending target requires more than 1 billion gallons of new biodiesel production in India. As one…

Thank you, Mr. McAfee. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Ed Woo from Ascendiant Capital. Your line is now live.

Yes. Thank you for taking my question and congratulations on all your projects. My question is specifically on India. What is holding you guys back from ramping up to capacity [ph] new production, is it the sales process or are you guys just still working your way upto the capacity?

Hey, Ed, that’s a very good question. We are very-pleased that unlike previous earnings calls each quarter, we now do not have production capacity as our constraint. We are now ramping up as we come out of winter in India. The winter season requires blending by our customers. So, if they don’t have blending capacity, they tend to decrease their purchasing in the winter time. And India warms up rapidly during the March time period. And so, we are rapidly increasing our shipments. But, the plant is now in full production and we have feedstock on hand and we are now just ramping up the customer list. And as I mentioned in the commentary, we have been expanding our breadth of customers. Historically, our customers are the fleet, primarily truck fleet but also bus fleet customer base. But we've recently expanded into three additional marketplaces. First was the retail stations. As you can imagine with 25 billion gallons a year of consumption of diesel in India, there is a very-large market of retail sales of diesel. And so, in the just the past few weeks, we have announced that we opened up the retail gas stations, or I should say, diesel stations to sell our product under our Universal Biofuels brand name. We actually have our product branded as Premium Biodiesel. So, you have a little logo et cetera for Premium Biodiesel. So, our India market also is expanding into mining. We have very, very significant cost reduction for mining companies that can use our distilled biodiesel instead of petroleum diesel. And as I think we all know, price of crude oil is moving up internationally, that means the price of diesel in India is moving up. And so, these large consumers of diesel that consume more than 1 gallon per mile in running their large mining trucks can -- see the significant financial benefit from buying biodiesel from us. And then, lastly is the government. So, we are in the middle of a government’s purchase process where the government’s came out, sought to buy 260 million gallons of biodiesel, the entire production in the entire country or for biodiesel is about 260 million gallon. And so, we are working to complete our government tender process, which would allow us to continue production in the other markets, we wouldn’t be excluding those markets but to add the government as a customer, and of course they are seeking to have more fuel than we can produce, but we did not allocate our entire production to them. So, you should expect that as we complete the paperwork and get that announced, the volumes will be disclosed at that time.

Great. And then, moving onto the Riverbank project, congratulations on getting the USDA loan approval. You expect closing to occur this summer with I guess construction start shortly thereafter that the plant to open by late 2020?

That is correct. We are currently in the first phase of the plant development, which is the engineering and permitting phase, and we are basically expecting to wrap that up as we get into the third quarter. And that will result in a financial close, which I do expect would be a third quarter event. And then, construction, physical movement on on-site et cetera would then start with completion in the end of 2020.

Is there any risk to the construction phase, or do you feel that the biggest delay was getting that financing?

I don't think construction is going to be our area of concern in this particular project. We are building rather standard piece of equipment. But, the permitting and then the financing has been our primary focus. Frankly, you can finance these things easier by just giving away all the ownership to someone else and take that developer fee and essentially not have very much value for shareholders. In this case, we have a financing that has 100% ownership of all of the common equity by Aemetis. And so, in that structure, we had to get more strategic type investors and investors that are somewhat more sophisticated than usual investors in these kind of projects. And in doing so, we've come up with something that's extremely attractive to Aemetis shareholders with projected positive cash flow in excess of $50 million per year. By Aemetis owning a 100% of the common stock, we end up with very significant annual positive cash flow from the project. And we have invested more than $10 million to get to the state. It’s taken us sort over three years to get USDA loan guarantee, et cetera including building a demonstration plant. But, I think that the ability of Aemetis shareholders to be both the owner and operator of the plant in the medium term is going to prove to be a much wiser approach than traditional structure, which you sell off 80% to 100% of the ownership in order to get it financed.

And lastly, on your outlook for oil, you mentioned I think $50 to $55 price outlook. Oil is a little bit higher now and a couple of months ago it was significantly lower. How do you think the volatility is impacting your outlook and how would it affect that ethanol business?

Yes. We project $65 [ph] to $70 as the range. It should -- the higher it moves, it does have a small effect on the ethanol business. A greater effect is whether the EPA is enforcing the federal law or not. But, we think the pricing pressures on crude oil which are global and largely political, such as the collapse of Venezuela in ethnic conflicts in Nigeria, et cetera, we don’t think those are being resolved in anytime soon in a way that’s going to need dramatically increased supply. But we do know that the demand is increasing at a rate of 1.5 million barrels per day every year. So, last year we used 1.5 million barrels per day less than we are using this year. This year, we should hit the first 100 million barrel per day global crude oil consumption number. And that’s driven by 2.5 billion people in India and China who are migrating into the middle class. And I think, that's inexorable trend that is going to consume more crude oil and related natural gas. So, despite the tremendous success of increases in production and fracking in the U.S., we’ll be at our 12 million barrel per day number here very soon. The rise in demand and then the fall off on other producers has had a very meaningful impact on the amount of crude oil in the market. Last thing I would point out is that the Saudi Arabians are completely in control of the price of crude oil with more than 10 million barrels per day of production by the very low cost. If they were to take 1 million barrels day out of the market today, just the announcement by Tweet, the market for crude oil could easily be at $80 a barrel.…

Our next question is coming from Tom Welch, [ph] a private investor. Your line is now live.

Hi, Eric. Could you shed some more color on the CO2 project? There has not been much in the quarterly reports as far as what do you think the target date is for getting that up and running and how you think that will impact cash flow.

We have received the key permits. We are moving dirt, as we speak. And we have our financing completed. And the counterparty is -- well it used to be a $60 billion company but they are fully funded. So, we expect construction to be completed and have operations done fourth quarter this year. And there is two major revenue sources for us. One is the sale of our CO2, which we ramp up to about a $1.5 million a year of cash as the plant comes on line and expands its delivery of CO2. And then, separately from that, the new tax regime provides a value per ton for either sequestration or for reuse. And so, when we do the math around the reuse of our product, which is what we're doing and the fact that our project is coming on line in 2018 or later, which is what's required in the tax law, we are ideally positioned to earn more than several, many millions of dollars of value from the roughly 175,000 tons per year of CO2 that we’ll be producing and reusing a large portion of that. So, we will be doing the calculation and hopefully in the next quarterly conference call we will have received our tax accountants’ confirmation of the value to our Company. But, I think it's going to significantly exceed the $1.5 million that we actually directly get from sale of CO2.

One last question. Is it true that India is now prohibiting the export of biodiesel?

Yes, it is actually, which is very, very interesting, because the India government's rationale for that was that they have a need for 5% of 25 billion gallons, so 1.25 billion gallon of biodiesel would need to be consumed in India. So, in order for them to achieve their consumption goals, they didn't want to have any India produced biodiesel exported from the country. And that put pressure on them of course then create a domestic market which they did. About six months after that policy was passed in May of 2018, they came out with a 260 million gallon government purchase order, which is essentially what this is. So, as I described in my comments, they have been thinking about these policies, they then adopted these policies, they then passed the tax regime, reducing our taxes by a third et cetera, and then they came out with a purchase order for all the biofuels in the whole country from biodiesel plants. So, they have been delivering on their policy goals. And I would give them some commendation for this. There have been many, many governments before them who have talked a lot and not executed, and this government has been executing to encourage the domestic production of biodiesel.

One last question on the ZEBREX. Are you planning on adding any additional ZEBREX units to the production facility or just this one?

We are sizing this unit to handle all of our production capacity because we're taking a molecular sieve system that requires a tremendous amount of energy to operate, and replacing it with a dehydration ceramic system from Mitsubishi, which has dramatic increases -- decreases in the use of natural gas and energy to operate it. But, it will have actually effect of increasing our production capability. So, the unit actually has a floor production capability of over 70 million gallons a year. So, in essence, we’re debottlenecking our Keyes plant, so we can actually increase production beyond the 65 million gallons we achieved last year, as well as reducing natural gas use. And the unit is also scalable. So, we decided we didn’t want to do increase production beyond the 70 million plus gallons. We can literally just install another unit and the ceramic components in it are very scalable. So, we are the global launch customer of Mitsubishi in the corn ethanol business, but they have about 70 of these units already operating at portable ethanol, drinkable ethanol facilities worldwide. And it's a known technology. It just has not been used in the corn ethanol business primarily because in corn ethanol and prior to the Low Carbon Fuel Standard credits being worth a tremendous amount of money, you weren't financially incentivized to decrease your natural gas use as much as you are now where that reduces the carbon intensity of our fuel and our fuel is worth a lot more money, while also saving on -- we have more of $5 million or $6 million per year natural gas budget. If you can save significantly on a natural gas budget as well as sell 65 million gallons of ethanol at a higher price, it is really an attractive environment for this. So, Mitsubishi selected us and we selected them, but they're providing a 100% financing for installation of the unit. And we are very pleased to be their strategic partner on this initiative.

I would think that in addition to saving $5 million or $6 million in natural gas costs, it would be a huge impact as far as the increased value of the LCFS?

That’s correct. And we spend at roughly $5 million or $6 million on buying natural gas. This would not displace all of our natural gas but it would be a very meaningful component of that. But you are correct, the real economics is that in California we have an excellent system that is agnostic about how you create carbon reduction. Oil refineries can reduce their carbon emissions, it just happens to be that they start with crude oil. So, it's difficult to do so. In our case, we’re able to remove the use of petroleum natural gas as a component of making ethanol. We then have a lower carbon molecule we’re shipping as biofuel. And that economic value is very, very high. So, I agree with you. And as we get this implemented, we will put out more numbers. But we’ve I think already publicly disclosed, we expect more than 3 points to CI score reduction here. So, it's a multimillion dollar increase in profitability.

Thank you. Our next question is coming from Brain Lukensmeyer [ph] from private investor. Your line is now live.

Eric, Brain here. Two questions for you. One is, the lawsuit on Edeniq. And the second question is, does the plant in India have a capability of doubling in size for production?

Sure. Let me answer the second question because it’s easy. We actually built the plant with a footprint to 100 million gallons of capacity. In today's market, that’s over $300 million of revenue. And so, we just installed process equipment for a 50 million gallon capacity plant. So, within one year, and we’ve announced a budget of $15 million, we could actually end up with a $300 million revenue business in India. And we did this anticipating that the India government would see the value of the biofuels industry and then eventually have tax and regulatory structures that would support it. And that's what's come to pass. So, I'm looking forward to solidifying our first 50 million gallons of production and then I would expect within the next year to then make decision about expansion. But, we are looking at very significant revenue increases from $20 million or $21 million last year to an expected capacity expansion that would get us in excess of $300 million of revenues coming out of India. And I am looking for that to be a phase we go through over the next 24 to 36 months. Regarding Edeniq, we have a case in which it’s still pending, but there were originally four parties involved us, Edeniq, our financing and their financing. And of the four parties, Edeniq has dismissed all their claims against Aemetis, they are no longer a cleaning party. Our financing and Edeniq's financing have both signed a settlement agreement that Edeniq and us have agreed to, so they are no longer parties. So, out of the four parties to the case, three of them of have either voluntarily dismissed all their claims or settled. So, we are the only standing party in the case and we expect sometime this summer to then be moving forward with the appellate process. So, we have six outstanding claims that have not yet been litigated, and we are moving forward with what I originally described many years ago, as unnecessarily but realistically slow process of litigation. And so, we have not actually litigated any of the claims we filed several years ago. I am hopeful that the Edeniq company will continue to progress in their EPA approvals and their number of customers in their implementation of the technology, and I'm hopeful they will continue to be as successful as possible. We’ve been a supporter of their company since the beginning. And frankly, our acquisition was signed with the intention of trying to more rapidly expand our technology. So., we wish them the best and hopefully we will end up with some litigation or I should just say adjudication of this process sometime in the next several years.

Ladies and gentlemen, we’ve reached the end of our question-and-answer session. I want to turn the floor back over now to management for any further or closing comments.

Thank you everyone for joining us today. We look forward to meeting with you and continuing our dialogue about the same growth opportunities at Aemetis.

Thank you for attending today's Aemetis earnings conference call. Please visit the Investors section of the Aemetis website where we’ll post a written version and an audio version of this Aemetis earnings review and business update. Kevin?

That concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.