Welcome to the Aemetis Third Quarter 2021 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, Paul. Welcome to the Aemetis third quarter 2021 earnings review conference call. Joining us today for the call is Eric McAfee, Founder, Chairman and CEO of Aemetis, and Andy Foster, President of Aemetis Advanced Fuels and Aemetis Biogas. We suggest visiting our website at aemetis.com to review today's earnings press release. The Aemetis Corporate and Investor Presentations, filing with the Securities and Exchange Commission, recent press releases, and previous earnings conference calls. The presentation for today's call is available for review or download on the Investors section of the aemetis.com website. 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 financing activities and the execution of our business plan. 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's filings which are posted on our website and are available from the Company without charge. Our discussion on the call today 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 September 30, 2021, 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, gain on extinguishment, income tax expense, intangible, and other amortization…

Thank you, Todd. Aemetis is focused on producing below zero carbon intensity products, including the production of negative carbon intensity renewable natural gas and renewable fuels. Our projects maximize the value of carbon credits under the California low carbon fuel standard, the federal renewable fuel standard, IRS 45Q carbon sequestration tax credits, and blenders tax credits, while reducing operating costs by using waste materials as feed-stock. In early 2021, we announced a 5-year plan to grow to more than $1 billion of revenue and $325 million of annual cash flow. We are on track with the five-year plan. This year, we have paid $63 million on the higher interest rate bridge loans from Third Eye - capital. We're also on track with financing growth using long term 20-year, low interest rate project financing. From the USDA Department of Energy and municipal bond markets. Importantly, our third-quarter earnings are on track with the 5 years. After adjusting for the establishment of a one-time $5.3 million reserve for California emission credits, related to the Keyes ethanol plant, our net loss would have been $12.2 million for the third quarter, which is a negative $0.39 per share, which is in line with our growth plan. The positive regulatory trends for renewable fuels have continued to improve by the passage of the Federal Infrastructure, Investment and Jobs Act last week. This legislation supports all of Aemetis' low carbon renewable fuels businesses in both the U.S. and in India in various ways. First, the USDA and Department of Energy loan programs have received a billion of dollars of expanded funding to provide 20 year, 6% to 8% low interest rate, government guaranteed or direct loans. Aemetis is working closely with these organizations to provide funding for the 52-dairy bio-gas digester and pipeline project, the sustainable…

Thanks, Eric. Excuse me, as Eric mentioned, we are focused on producing below 0 carbon intensity products, including the production of negative carbon intensity, renewable natural gas, and renewable fuels. Excuse me, a prime example is our dairy-based renewable natural gas business, which recently marked the one-year anniversary of commercial production in September. RNG is a negative carbon renewable fuel that perfectly exemplifies the circular bio economy that Eric often refers to when describing our approach to reducing greenhouse gas emissions while producing sustainable below zero-carbon transportation fuels. Let me take a moment to update you on some key milestones achieved as we build out our network of dairy digesters and the supporting infrastructure that will deliver RNG to the California market. In September 2020, we completed Phase 1 of the Aemetis Biogas central dairy digester project and commenced operation of the first 2 covered lagoon digesters, including on-site dairy biogas cleanup and pressurization of 4-mile pipeline owned by Aemetis and a boiler unit used to utilize the biogas as processed energy at the Keyes plant, which allows us to monetize the LCFS credits through a lower CI score for the ethanol produced. During Q1-2021, the California Air Resources Board issued an updated carbon intensity fuel pathway for the Keyes ethanol plant, utilizing a negative 426 CI score for our biogas, compared to approximately a positive 100 carbon intensity for petroleum and natural gas. In addition to the 2 dairy digesters and 4 miles of gas pipeline currently in operation, we are now building Phase 2 of the biogas project, including the main biogas cleanup facility, the utility pipeline, interconnection unit, and RNG fueling station at the Keyes plant, and an additional 15 dairy digesters, and 32 miles of bio-gas pipeline. Each of these project’s components are on schedule for…

Thank you, Andy. Thank you all for all the excellent work that your team is doing. Let's discuss our carbon zero renewable jet and diesel fuel project using negative carbon intensity hydrogen from waste orchard wood in Riverbank, California. We're pleased that the Aemetis carbon zero biorefinery under-development Riverbank near Modesto continues to achieve major milestones. Recently, we announced a $1 billion sales agreement with Delta Airlines to supply 250 million gallons of blended, sustainable aviation fuel over 10 years at the rate of 25 million gallons per year, known as blended SAF, the contract provides for 10 million gallons of neat, unblended SAF combined with 15 million gallons of petroleum jet-fuel each year. Under the Delta Airlines agreement, the neat SAF will be trucked from the Riverbank production plant to a tank farm in the Bay Area for blending with jet-fuel. The blended SAF will be delivered via pipeline to San Francisco Airport for use by Delta Airlines. We are in final contract review for additional aviation fuel agreements with other major airlines, including foreign airlines, that service the San Francisco and Los Angeles airports. We expect to announce about $3.5 billion of additional aviation fuel sales agreements starting later this month and continuing through the second quarter of 2022. In addition to major U.S. and international airlines, we have received a high level of interest from leading private jet FBOs due to corporate jet owner interest in Sustainable Aviation Fuel. For example, FBO chains with California locations have requested us to truck blended Sustainable Aviation Fuel to Aspen and Vail airports for use by corporate and private jets in addition to California locations. In addition to the $4.5 billion of blended Sustainable Aviation Fuel sales agreements that we have signed or expect to sign in the next few…

Thank you, Mr. McAfee. We will now be conducting a question-and-answer session. . And we did have some questions in queue. The first question is coming from Manav Gupta from Credit Suisse. Please proceed with your question.

Hey, Eric and team. Congrats on the Delta deal and all the other positive developments that are happening, $3.5 billion in the contract negotiations. My first and quick clarification here, Eric and thought is, your 2023 5 guidance doesn't have BTC. And when we look at what was being proposed and build back better, and you mentioned it, it's about $1 BTC for RD, and $1.75 for SAF, and most likely you will completely qualify for it till 2031. Very simply adding those numbers in your guidance means your EBITDA jumps by about 123, that's a 38% increase, and because BTC is not taxable at all, your net income jumps by 55. Now, are those numbers making sense as the math adds up? Basically, I'm just taking and adding BTC to your existing guidance. I guess, if you could walk us through that math a little bit.

Thank you, Manav. And thank you for pulling out the calculator and doing the math. But you're exactly correct. It's 45 million gallons times $1, that's our renewable diesel business and then 45 million gallons times a $1.75 and those effectively are $123 million of additional tax credits that we received. And largely it comes to us as basically just additional profit because as you know, our costs don't change at all. The reason why we did not include that in our first quarter five-year plan was because we thought it was very unstable policy, with every year Congress running to the end of the year, and sometimes past the end of the year, before they would pass the tax credits. And we thought it would not be supportive of. The execution. Our five-year plan to increase that cash increase our cash flow by including it. What has come to pass is frankly what we expected, which is at aviation fuel requires a larger tax credit in order to overcome some of the lower yields and higher capital costs that occur in the production of sustainable aviation fuel. We selected a technology from in France that is a native aviation fuel, so we actually designed their plant with the intention of producing 50% aviation fuel. Most of the other produces renewable diesel do not have renewable aviation fuel capacity. If they wanted to upgrade their plant, they have to build essentially a separate facility and take a bit of a yield at doing that. Our focus on what we believe to be the necessary role of low carbon, at our case, it's carbon negative, renewable fuels and aviation was a good strategy and has paid out, I think better than we expected and we intend in the first quarter to include that in our updated 5-year plan.

Okay. And second and very quick follow-up here is, you do speak to a lot of people at CARB, and as we understand you speak to the higher-level people. There is this peer case being floated that as these projects come on SAF's price will come under a lot of pressure and CARB will just sit on the sidelines and let the SAF's price crash. Is that the feeling you get when you talk to these people or there is more developed feeling over there that they actually want to lower the carbon intensity of fuel and they would try and help companies like yours who are actually making a difference here. And in the process, whatever they have to do, they have to do, but they'll try and be supportive of a minimum carbon price and not let it dip to something like 80 or 70 where project economics comes under pressure. If you could just talk about that.

Absolutely. For those who have been in California, operating active production units. February of 2019 was an interesting month because the California Air Resources Board met and decided to change the number of carbon credits required for the next 12 years all the way until 2030. They just, in one meeting decided that the price of the LCFS credits was not high enough to support projects, and so they changed the rules and made it 1.25% every single year. And that of course, caused the price of credits to rise from about $120 to $200. And as you may know, in the original negotiations roughly 10 years ago, $200 plus the cost-of-living index increase every year was set up as an informal price limit. We hit almost $220 within about a year or so after they had taken this action, and what occurred then was they held public hearing saying that they wanted to talk about putting more credits in the marketplace, given them the electric utilities, for example, to make charging stations, as a pure tool to tell the markets that they're not going to let the price go to 300 or $500 and caused the program to fail. We're now at the final phase of this where we think that the California Resources Board is absolutely committed to taking whatever necessary steps are needed to try to target a $200 price and $200 plus cost-of-living index would not be too far to ask them to go. They are very concerned that their actions would not support what Aemetis is doing and are working closely with us to take necessary steps over the next year to give us the LCFS credit value necessary to fund our project.

Thank you so much for taking my questions, and congrats on all the positive developments.

Thanks, Manav.

Thank you. The next question is coming from Nate Pendleton from Stifel. Please proceed with your question.

Good morning, everyone. Thanks for taking my questions. For my first question. Regarding dairy, RNG, could you provide an update on where your operations stand relative to your initial plan from both a build-out and as sign-up perspective?

Andy?

We've been fully operating our first two dairies for a year now, and they are meeting our exceeding expectations from a production perspective. As far as additional dairies, we have 22 dairies that we are -- have under contract right now. We have 5 additional dairies that we expect to close by the end of this year. And then there's about 12 or so that we are in active discussions with. I think we're feeling like we're right on track with our goals in terms of the overall scope of the project.

Great. Thank you. And for my follow-up. Regarding CCS, could you speak to how Aemetis is differentiated from a geologic perspective compared to others in the Central Valley? And how you're able to qualify for IRS 45Q credits given the CO2 capture thresholds are quite high and serve as a barrier for other smaller potential operations?

One of the big advantages we have is we have our own CO2. And so, the minimum thresholds we exceed with what we're already producing from our own facilities, which is a helpful component for us. The Central Valley, California has very extensive natural gas and oil production, especially as you get down near Bakersfield but frankly, if you go North of us much, you get a lot of natural gas fields. And carbon sequestration requires sequestration. which means that if you have natural gas field with a lot of holes in your caprock, when you put an injection of liquid CO2 at very high pressure more than 2,000 PSI below that shale layer, you actually have holes that allow that liquid CO2 to turn into a gas and come back up. It's not really effective if you go to a place that has a lot of natural gas or oil production and you're using those formations for sequestration because you have to buy every single well within probably 5 miles of your facility and go in and spend up to a $1/2 million per well capping the well. It's a very difficult business proposition to have to go and buy every single well in an area. And that restricts the number of areas that really are appropriate. You have to have the correct underground formation. You don't really want a population of people on the surface. You need to be in really a rural or agricultural area, you cannot be up against the mountains because your slope is too much to your COTs doesn't say sequester is actually just those up with slope. So, you start looking at where the footprint is of putting these wells and you end up with the kind of some spots at work and a lot of spots don't work in Central Valley, and your so we spend a lot of time with Baker Hughes and our other partners that makes this and I think we've identified certainly the 2 locations we have. Stanford was correct, these were excellent locations, but in that area around us, we potentially could additional wells and have, certainly, a 1st-mover advantage.

Great. Thanks for your time.

Thank you, Nate.

Thank you. And the next question is coming from Jordan Levy from Truist Securities. Please proceed with your question.

Afternoon, all. I wanted to start with a question on Riverbank and specifically, Eric, if you could talk us through how you view the unit economics there and maybe more so, why you view this as the right combination of technologies to deploy? And the reason I asked this is given some of the recent buzz around things like alcohol-to-jet or ethanol-to-jet. And maybe you could talk through how you view the economic comparison between the gasification for hydrogen and hydro treatment, veg oils and other oils for renewable diesel versus -- or SAF versus some of the other technologies out there?

Okay. I'll give you a really short answer. There are basically 2 jet production technologies are being popularized today. One is alcohol-to-jet and the other one is what I would call oils-to-jet. And the current production of renewable diesel worldwide, it's virtually all oils-to-jet and it's a highly profitable business. You just look at NESTI, you look at Valero and REGI in the U.S. and it's very publicly known that the margins are $2.50 to $3.28 per gallon because that's what they reported last quarter. And that's taking a renewable oil grown by a plant usually in the field and increasing its energy by adding hydrogen to it. Typically, the hydrogen is petroleum natural gas. It comes out of the ground and it's about a carbon-intensive at a positive 150 under the pathways of proven California. And then use electricity. And most electricity usually is coal because that's the cheapest energy source in Asia and most of the Midwest. So, what we did is we looked at it, said, well, that's interesting. We're the largest distillers corn oil producer in California so we got a part of our feed stock. We happen to have a 100%, zero carbon intensity, hydroelectric power, comes off of a dam. So, we have zero CI electricity instead of petroleum natural gas electricity or coal electricity. And we also happen to have what I call the Saudi Arabia of carbon negative would waste the almonds in the Central Valley, California our renewable source of wood waste that is currently being burned or sits in the field in terms of nothing. So, it has a negative 100 carbon intensity. And by turning that would waste into hydrogen, we end up with approximately negative 80 hydrogen input. So, we looked at the existing formula of the most…

That's great. Thanks for that, Eric. And maybe just a follow-up more specific to your biodiesel business. I wanted to see if you could just talk to if there's been any change at all and how you're thinking about the India biodiesel facility and how it fits into your 5-year plan. And also, any potential means you see to bring forward revenues out of that plant near-term as you wait to see what happens with government purchases and that sort of thing.

Yeah. Our India biodiesel plant as operating instead of an on-off switch. The differential between feed stock and government purchase prices. If you just get slightly positive, suddenly you've literally had $150 million revenue business in India. The India government, largely due to COVID, it's been very, very slow at moving their prices up. While oil doubled from 40 to 80, they haven't doubled the prices for biodiesel. They've been just going through this recurring process every 3 months of setting out a new price and everybody saying, gosh, that's not keeping up with the price of oil. We do think the India government will catch up. And if you listen to Prime Minister Modi 's presentation at COP26 in Glasgow, they're certainly committed to playing a role in de - carbonization. We think India will catch up and play the role they would like to play. What we've been trying to achieve though, is to have a global market for our India product. And India has a view that they have such a strong demand, 5% of 25 billion gallons a year is 1.25 billion gallons of biodiesel. It stated in their national bio-fuels policy. But they've not been able to execute against that. And so, we went to the government and said, we have a substantial investment, we have a lot of employees, we have 100% of our employees that working for us, and we are well-positioned to create additional investment and frankly revenue for India by exporting out of India, which is tremendous for their balance of trade. And so, we are within hopefully weeks and maybe even days of getting an approval that took us many years to get. And the natural market is California were of course. we are very well-positioned, because when it's shipped across the ocean, the biodiesel turns into a solid. It's kind of cold on the ocean, and so when it arrives, you just can't pour it into a tank or into a truck. You actually have logistics of steam heating the tanks and turning it back into liquid and then transloading into trucks. And we have the Riverbank facility that's ideally situated to handle this kind of logistics. We have a 120 - railcar rail line already in place, and so we are able to, with very low cost and pretty much just with our existing team, able to become a supplier of biodiesel into California at what we believe to be very high margins.

Thanks so much.

Thank you. And the next question is coming from Amit Dayal, from H.C. Wainwright. Please proceed with your questions.

Hi, guys. Thank you for taking my questions. This coming through some of the near-term execution priorities. Are there any changes to the deployment schedule for those 17 digesters doing supply chain challenges, etc, that are going in the market right now?

Not since last quarter. I think we proactively bought a bunch of materials required for the whole thing. Andy, do you have any

Yeah. During COVID, we were able to take advantage of -- it's interesting to think about the price of oil today versus where it was in April or May of 2020 when it would actually go below zero. We were able to go out and pre -purchase materials for 10 digesters. The liner material at about 50% of the cost of the original 2. We were able to go out and purchase the HDP pipeline that we used for the transmission of the gas at similar margin savings, I think probably 40% margin. So, we've already sort of jumped ahead of the supply chain fortuitously taking advantage of that during COVID to take advantage of the lower pricing. So, from a liner perspective, as far as that goes in pipeline, we're in very good shape of being ahead of the curve. When the economy really started to pick up, we also went ahead and pre -ordered 5 of our dairy-based biogas cleanup skids. We do a little pre -treatment at the dairy before we send it to the main hub. And those are now modularized. They were built during the summer time and into the early fall. They'll be delivered to us next week, so the next 5 digesters will have everything that they need, and we're currently in the RFP process for the next 5 after that for those digester skid units. It's not out of question to say that we do see delays in materials, but we don't think there's any one piece that we've overlooked that will create a substantial delay for us. We're trying to stay ahead of it as much as possible by pre -ordering equipment for the next phase of digesters to be built so that we're staying -- trying to stay ahead of the global supply chain challenges,

Thank you for that. And the cash flows from the P digesters deployed, are you starting to receive that yet or is there still a little bit lagged? You highlighted there were some quality checks that needed to happen before you started receiving those cashflows?

So, the way we are monetizing that currently is through the LCFS for the ethanol produced at the plant. So, we received a pathway approval in March of this year which lowered the CI score for the ethanol plant in Keyes from call it 67 to 65. We got about a 2-point reduction and close to a 2-point reduction. And so, we're able to monetize the LCFS by taking the dairy biogas from the 2 existing digesters and utilizing it in a boiler at the plant to replace carbon-based natural gas as a source for energy at the plant. We've been able to already monetize the gas coming off those first two dairies through the production of ethanol. That gives us a little bit of an advantage over some of the other developers who have to sit around and wait for CI score to be issued for the pipeline. As soon as we're able to complete our pipeline interconnect, which will happen in the next 45 to 50 days, something like 60 days, we'll have access to the PG&E pipeline. We'll then apply for the pipeline pathway for those two dairies, and then all the dairies that come after that. When it's all said and done, we'll have 3 different pathways for each dairy. One for using the biogas as processed energy at the ethanol plant, one for transmission to the utility pipeline, and one for our on-site CNG fueling station. We'll have maximum flexibility in terms of where we can send those -- send the gas to and we'll be able to monetize. But as far as to your question about when can we monetize in the pipeline, we'll do that as soon as our interconnection begins. And as you know, there's about a 30-day or 60-day -- sorry, 90-day data collection period and then CARB takes about another 90 days to give you the approval on the pathway. So, we can either take the provisional pathway that's granted or we can store those molecules and then monetize the full amount once the pathway has been granted, which usually takes -- from start to finish, it's about a 120 - day or a 180-day process.

Okay. Understood. Thank you for that. And then agreements with Delta and some other that you are working on, should we view them as definitive agreement for the full use.

Yeah. These are not memorandums of understanding or non-binding term sheets or napkins at the local restaurants. These are fully bedded. lawyered, reviewed, signed. There's nothing to do except to start to ship product, and Delta Airlines was a tremendous organization to work with. We worked with their global group and just a wonderful group of people. And we are currently working with several other airlines of that size as well. And we've just found a sincere commitment to sustainable aviation fuel. And they do not really see other ways forward that are going to be quick or fitting with their existing equipment. And certainly, electricity is tough to see in cargo or passenger jets anytime soon, and hydrogen probably is in similar situation. They have a sincere appetite to de -carbonize, and they also understand the incentives are coming along, but the airline incentives are a meaningful number for them. We've found it's a very proactive community, and we happen to, interestingly, know a lot of people in that community because of our backgrounds. And it's gone very quickly, but certainly more quickly than I would have expected if you would asked me six months ago. I'm very, very pleased with the progress we're making there.

Okay. And just one last one. If you get the approval for exports in India, how quickly can the plant being utilized, etc. to begin that process?

We would be in production with a matter of few days, plants fully capable of operations and does operate. This will just be a higher volume. And then the export process takes with some scheduling, but our initial shipments will not be bulk shipments so we're not going to have to schedule entire ship. We'll be using what it knows ISO tanks, about 8,000 gallons per and that's got a lot of flexibility around that. We're doing that on purpose just to be able to not have to wait for bulk shipments to be arranged. And so, we could easily be shipping in the first quarter.

Okay. Understood. That's all I have, guys. Thank you so much.

Thank you, Amit. Paul, we're running out of time. Let's take 1, maybe 2 more calls.

Okay. There are two left in queue. The first one is coming from Ed Woo from Ascendiant Capital. Please proceed with your question, Ed.

Congratulations on all the milestones. My question is on Riverbank. When do you anticipate groundbreaking and when do you think that the plant will be operational?

We're expecting groundbreaking is going to be third quarter of next year. I think that operational would be roughly 24 months after that. I say roughly because the particular contractor we're working with is completing a 225-million-gallon plant, and already has the vendors and supervising staff and they are just really ahead of the game, so I think we're going to need to amend those times as they get on the ground. These plants are usually run by the long lead time equipment, and we're finding ourselves in a position of which because of the contract we're using, we have some distinctive advantage that's going to save us a lot of time here. So, we'll be updating those numbers as we get closer to the third quarter next year.

Great. Thanks for the update and good luck.

Thank you, Ed. Paul, are there any additional callers or questions?

We did have a question coming from Marco Rodriguez. Marco, your line is live. Marco is calling from Stonegate Capital.

Good afternoon, guys. Thanks for taking my questions. Most have been asked and answered. Just wanted to go through just a real quick housekeeping item. On the gross loss in the quarter, I believe you made some comments in prepared remarks, just unfortunately unable to get all down. But even if I took a look at excluding the reserves it still looked like it was down year-over-year. Can you talk a little bit about the drivers behind that?

What was down? I didn't get the metric.

The gross profit.

We have a 1-point -- I'm sorry, $5.3 million reserve for the California emissions credits that caused our cost of goods sold during the quarter to be increased by $5.3 million. If that's what you're comparing,

And it would put us -- this is Todd. It would put us really level with the same quarter last year. Last year we recorded 12.2, this year we're reporting 17.5 adjusting for the 5.3. Really sets from that loss at exactly what it was last quarter -- quarter a year ago.

All right. Thanks. Appreciate it.

Thank you, Marco.

Thank you. There are no further questions at this time. I would like to turn the call back over to the management.

Thank you, Paul. Thanks to the Aemetis shareholders analysts, and others for joining us today. Please review the Aemetis corporate presentation and the Aemetis investor presentation that was on the Aemetis website. We look forward to talking with you about participating in the growth opportunities at Aemetis. Todd?

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

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