Aemetis, Inc: Form 10-Q for the period ended Jun 30, 2025

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated condensed financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

• Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A.
• Results of Operations. An analysis of our financial results comparing the three and six months ended June 30, 2025 and 2024.
• Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition.
• Critical Accounting Policies and Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

The following discussion should be read in conjunction with our consolidated condensed financial statements and accompanying notes included in Item 1 of Part 1 of this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report and in other reports we file with the SEC. All references to years relate to the calendar year ended December 31 of the particular year.

Overview

Founded in 2006 and headquartered in Cupertino, California, we are an international renewable natural gas and biofuels company focused on the operation, acquisition, development and commercialization of innovative low and negative carbon intensity products and technologies. We operate in three reportable segments consisting of “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.” We have other operating segments determined not to be separately reportable that are collectively represented by the “All Other” category. Our mission is to generate innovative renewable fuel solutions that benefit communities and improve the environment. We are executing our mission by building a circular bioeconomy using agricultural products and waste to produce low carbon renewable fuels that create jobs, reduce greenhouse gas (“GHG”) emissions, and improve air quality. For revenue and other information regarding our operating segments, see Note 13 - Segment Information, of the Notes to Consolidated Financial Statements of this Form 10-Q.

Our California Ethanol segment consists of a 65 million gallon per year capacity ethanol production facility located in Keyes, California (the “Keyes Plant”) that we own and operate. In addition to low carbon renewable fuel ethanol, the Keyes Plant produces alcohol for other uses, Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”). WDG, DCO, and CDS are sold as animal feed to more than 80 local dairies and feedlots. We also capture the Carbon Dioxide (“CO2”) generated by our fermenters and sell it to an industrial gas company to produce liquid CO₂ that it sells to food, beverage, and industrial customers. We are implementing several energy efficiency initiatives focused on lowering the carbon intensity of our ethanol, primarily by decreasing the use of fossil natural gas. Recently completed energy efficiency projects include high efficiency heat exchangers and a solar micro grid. A significant energy efficiency project in progress is the Mechanical Vapor Recompression (MVR) system that will use low carbon electricity instead of natural gas. These changes will reduce our energy costs and will also lower the carbon intensity (CI) of the ethanol we produce and generate increased cash flows from LCFS and tax credits. We have already begun procuring MVR equipment and expect it to be installed later this year and begin operating in the first half of 2026.

Our California Dairy Renewable Natural Gas segment operates anaerobic digesters at local dairies near the Keyes Plant (many of whom also purchase WDG produced by the Keyes Plant as animal feed) to produce biogas from dairy waste, transports the biogas by pipeline to the Keyes Plant site, and converts the biogas to Renewable Natural Gas (“RNG”) that is delivered to customers through the utility natural gas pipeline. We currently have eleven operating digesters that receive waste from twelve dairies, and we are actively growing with additional digesters under construction. We have constructed 36 miles of biogas collection pipeline and have received environmental approval to construct an additional 24 miles of pipeline. We currently have agreements to build digesters and receive waste from a total of 50 dairies and are seeking to sign agreements with additional dairies.

Our India Biodiesel segment includes a biodiesel production plant in Kakinada, India (“Kakinada Plant”) with a production capacity of about 80 million gallons per year. The plant produces high quality distilled biodiesel and refined glycerin for customers in India. We believe the Kakinada Plant is one of the highest capacity biodiesel production facilities in India. The Kakinada Plant is capable of processing a variety of vegetable and animal oil waste feedstocks into biodiesel that meets applicable product standards. Our Kakinada Plant also distills the crude glycerin coproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive, and other industries.

Our "All Other" segment consists of our projects that are under development, including our planned Carbon Capture and Underground Sequestration ("CCUS") operations and the planned sustainable aviation fuel ("SAF") and renewable diesel ("RD") plant in Riverbank, California. The All Other segment also includes our research and development facility in Minneapolis, Minnesota, operation of the Riverbank Industrial Complex, and our corporate offices in Cupertino, California.

Our SAF/RD production plant is currently designed to produce 90 million gallons per year of combined SAF/RD or 78 million gallons per year of SAF from feedstocks consisting of renewable waste vegetable and animal oils. Our project is located at the Riverbank Industrial Complex in Riverbank, California. We signed a lease with an option to purchase the Riverbank Industrial Complex in 2021 and took possession of the site in 2022. In 2023, we received a Use Permit and the California Environmental Quality Act ("CEQA") approval for the SAF/RD plant and in 2024 we received Authority to Construct air permits for the plant. We are continuing with development activities, including engineering, and financing. The Riverbank site has access to low carbon hydroelectric power, and our plant is designed to use renewable hydrogen that will be produced from byproducts of the SAF/RD production process.

Our planned CCUS projects will compress and inject CO₂ into deep wells that are monitored to ensure the long-term sequestration of carbon underground. California’s Central Valley has been identified as one of the world’s most favorable regions for large-scale CO₂ injection projects due to the subsurface geologic formations that absorb and contain CO₂ gas. The two initial Aemetis CCUS injection projects are being designed to capture and sequester more than two million metric tons per year of CO₂ at the Aemetis biofuels plant sites in Keyes and Riverbank, California. Once operational, these projects will generate revenue by selling California LCFS credits and federal Internal Revenue Code Section 45Q tax credits.

Our Minneapolis, Minnesota research and development laboratory evaluates and develops technologies that would use low carbon intensity and waste feedstocks to produce low or below zero carbon intensity biofuels and biochemicals. We are focused on processes that extract sugar from cellulosic feedstocks and produce low carbon ethanol, renewable hydrogen, SAF, and RD.

Results of Operations

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

Revenues

Our revenues are derived primarily from sales of ethanol and WDG for our California Ethanol segment, renewable natural gas ("RNG") environmental attributes for our California Dairy Renewable Natural Gas segment, and biodiesel for our India Biodiesel segment.

California Ethanol. For the three months ended June 30, 2025, this segment generated 74.4% of its revenue from sales of ethanol, and the rest from sales of WDG, Corn Oil, CDS, and CO₂. For the three months ended June 30, 2025, the Keyes Plant sold 13.8 million gallons of ethanol at an average price of $2.01 per gallon and 91 thousand tons of WDG at an average price of $86 per ton, compared to sales during the three months ended June 30, 2024, when the Keyes Plant sold 14.8 million gallons of ethanol at an average price of $1.99 per gallon and 105 thousand tons of WDG at an average price of $89 per ton. Overall revenue decreased by 7.1% primarily due to our scaling back of the Keyes Plant production rate to optimize yields, resulting in a decrease in sales volume of ethanol by 7% and WDG by 13%.

California Dairy Renewable Natural Gas. During the three months ended June 30, 2025, we sold 106.4 thousand MMBtu ("million British thermal units") of RNG at an average price of $2.75 per MMBtu, compared to the three months ended June 30, 2024, when we sold 88 thousand MMBtu of RNG at an average price of $2.19 per MMBtu. During the three months ended June 30, 2025, we sold 763.6 thousand D3 RINs at an average price of $2.60 per D3 RIN, compared to the three months ended June 30, 2024, when we sold 341 thousand D3 RINs at an average price of $3.17 per RIN. We have been generating LCFS credits associated with the RNG sales based on the default carbon intensity ("CI") of negative 150 while our individual dairy CI pathways were waiting for approval from the California Air Resources Board ("CARB"). During the period ended June 30, 2025, we sold 14 thousand LCFS credits at an average price of $55.25 each, compared to 5 thousand LCFS credits at an average price of $64.75 each during the period ended June 30, 2024.

India Biodiesel. In 2024 and 2025, all of our India sales of biodiesel were to government owned Oil Marketing Companies ("OMCs") pursuant to the OMC tender and allocation process. For the three months ended June 30, 2025, we generated 80% of our India segment revenues from the sale of biodiesel, and 20% from other sales, compared to 96% of revenue from biodiesel, and 4% from other sales for the three months ended June 30, 2024. The decrease in revenues was primarily due to delays in receiving the tender contracts from Oil Marketing Companies and a change in the purchase price offered in the tender from cost-plus to a fixed price specified in the tender. We sold 9.4 thousand metric tons of biodiesel during the three months ended June 30, 2025, compared to 20.4 thousand metric tons of biodiesel sold during the three months ended June 30, 2024.

Cost of Goods Sold

Cost of goods sold consists primarily of feedstock, energy, chemicals, direct costs (principally labor and labor related costs), and overhead. Depending on the costs of these inputs in comparison to the sales price of our end products, our gross margins at any given time can vary from positive to negative. Overhead includes direct and indirect costs associated with plant operations, including the cost of repairs and maintenance, consumables, maintenance, on-site security, insurance, and depreciation.

We purchase our feedstock for California Ethanol from J.D. Heiskell based on daily market prices for corn plus costs of rail transportation, local basis, and a handling fee paid to J.D. Heiskell. The credit term for the corn purchased from J.D. Heiskell is one day, netted from our product sales. Cost of goods sold also includes the cost of electricity and natural gas, chemicals, maintenance, direct labor, depreciation, and freight.

We obtain the feedstock for producing RNG from dairy operators who lease us their land for construction of our digesters and supply our digesters with manure in liquid form. Our cost of feedstock is established by manure supply agreements based on the value of the environmental attributes and the number of cows at each dairy.

We procure several different feedstocks for the Kakinada Plant, including stearin, a non-edible feedstock, from neighboring natural oil processing plants. Raw material is received by truck and loaded at our vendor's nearby facilities. Credit terms vary by vendor. However, we generally receive 15 days of credit for the purchases. We purchase crude glycerin in the international market on letters of credit or advance payment terms as market prices become viable.

California Ethanol. We ground 4.7 million bushels of corn at an average cost of $6.42 per bushel during the three months ended June 30, 2025, compared to 5.2 million bushels of corn at an average cost of $6.36 per bushel during the three months ended June 30, 2024. The 6.7% decrease in cost of goods sold for the three months ended June 30, 2025, is mainly due to the planned reduction in the quantity of corn ground.

California Dairy Renewable Natural Gas. Cost of goods sold includes dairy manure payments, equipment maintenance, and depreciation. The increase from the first quarter of 2024 to the first quarter of 2025 was primarily due to the increase in the number of operating digesters.

India Biodiesel. The decrease in cost of goods sold during the three months ended June 30, 2025, compared to June 30, 2024, was attributable to reduced biodiesel sales. The average cost of feedstock used to produce biodiesel was $1,165 per metric ton during the three months ended June 30, 2025, compared to $924 per metric ton during the three months ended June 30, 2024.

Gross profit (loss)

California Ethanol. The decrease in gross loss during the three months ended June 30, 2025, compared to the same period in 2024, was attributable primarily to decreased corn costs.

California Dairy Renewable Natural Gas. The increase in gross profit for the three months ended June 30, 2025, compared to the same period in 2024, is due to the increase in sales as a result of the increased number of operating digesters.

India Biodiesel. The decrease in gross profit for the three months ended June 30, 2025, compared to the same period in 2024, reflects the decrease in the quantity of biodiesel sold, as well as a decrease in glycerin sold, coupled with a 28% increase in feedstock costs.

Operating (income)/expense and non-operating (income)/expense

SG&A expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, insurance, other corporate expenses, and related facility expenses. SG&A expenses as a percentage of revenue were 14% in the three months ended June 30, 2025, compared to 18% in the three months ended June 30, 2024. The decrease in SG&A expense was primarily due to a one-time $3.6 million loss on an asset write-off in the three months ended June 30, 2024, a $0.2 million increase in rental income from subleases in the three months ended June 30, 2025, and a reduction in legal, professional, and membership fees.

Other expenses consist primarily of interest and amortization expense on debt and accretion of the liability to repurchase biogas Series A Preferred Units. The cost of debt includes issuance of warrants as renewal fees. The fair value of stock and warrants are amortized as expenses, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense. Interest expense and debt related fees and amortization increased in the three months ended June 30, 2025, due to higher variable interest rates and higher debt balances.

Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024

Revenues

California Ethanol. For the six months ended June 30, 2025, this segment generated 74% of its revenue from sales of ethanol, and the rest from sales of WDG, corn oil, CDS, and CO₂. During the six months ended June 30, 2025, the Keyes plant sold 27.9 million gallons of ethanol at an average price of $2.00 per gallon and 184 thousand tons of WDG at an average price of $86.00 per ton, compared to sales during the six months ended June 30, 2024, when the Keyes plant sold 28.9 million gallons of ethanol at an average price of $1.89 per gallon and 199 thousand tons of WDG at an average price of $93 per ton. This segment's revenue decreased slightly primarily due to decrease in the quantities sold for ethanol and WDG along with a decrease in the WDG price.

California Dairy Renewable Natural Gas. During the six months ended June 30, 2025, we sold 177.3 thousand MMBtu ("million British thermal units") of RNG at an average price of $3.11 per MMBtu, compared to the six months ended June 30, 2024, when we sold 148.8 thousand MMBtu of RNG at an average price of $2.94 per MMBtu. During the six months ended June 30, 2025, we sold 1.2 million D3 RINs at an average price of $2.61 per D3 RIN, compared to the six months ended June 30, 2024, when we sold 1.1 million D3 RINs at an average price of $3.11 per RIN. We have been generating LCFS credits associated with the RNG sales based on the default carbon intensity ("CI") of negative 150 while our individual dairy CI pathways were waiting for approval from the California Air Resources Board ("CARB"). During the six months ended June 30, 2025, we sold 30 thousand LCFS credits at an average price of $64.45 each, compared to 23 thousand metric tons of LCFS credits at an average price of $65.73 each during the six months ended June 30, 2024.

India Biodiesel. For the six months ended June 30, 2025, the Kakinada Plant generated $9.5 million in revenue from sales of biodiesel, and $5.1 million from other sales. The India biodiesel plant generated $54.7 million in revenue from biodiesel and $2.9 million in revenue from other sales during the same period in 2024. The segment's revenue decreased due to delays in OMC's issuing tenders and associated purchase contracts.

Cost of Goods Sold

California Ethanol. We ground 9.4 million bushels of corn at an average cost of $6.53 per bushel during the six months ended June 30, 2025, compared to 10.1 million bushels of corn at an average price of $6.35 per bushel during the six months ended June 30, 2024. The slight decrease in cost of goods sold for the six months ended June 30, 2025, is mainly due to the decrease in the quantity of the corn ground.

California Dairy Renewable Natural Gas. Cost of goods sold includes dairy manure payments, equipment maintenance, and depreciation. The increase from the second quarter of 2024 to the second quarter of 2025 was primarily due to the increase in the number of operating digesters.

India Biodiesel. The decrease in cost of goods sold during the six months ended June 30, 2025, compared to June 30, 2024, was attributable to a reduced use of feedstock due to reduced sales of biodiesel during the six months ended June 30, 2025, of 9.4 metric tons compared to 47.5 thousand metric tons of biodiesel sold during the six months ended June 30, 2024.

Gross profit (loss)

California Ethanol. The decrease in gross loss between the six months ended June 30, 2025, and the same period in 2024 was attributable primarily to the decrease in the costs of goods sold.

California Dairy Renewable Natural Gas. The decrease in gross profit for the six months ended June 30, 2025, compared to the same period in 2024 is due to the decrease in sales and increase in costs of goods sold, primarily depreciation, for the increased number of operating digesters.

India Biodiesel. The decrease in gross profit during the six months ended June 30, 2025, compared to the six months ended June 30, 2024 reflects the reduced sales in 2025 the increase in feedstock costs.

Operating (income)/expense and non-operating (income)/expense

SG&A expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, insurance, other corporate expenses, and related facility expenses. SG&A expenses as a percentage of revenue increased to 19% in the six months ended June 30, 2025, compared to 15% in the six months ended June 30, 2024. The overall decrease in SG&A expense was primarily due to a $3.6 million loss on an asset write-off in the six months ended June 30, 2024, offset by a $2.2 million increase in expenses such as taxes, insurance, rent, utilities, supplies, and services, and $0.4 million increase in rental income from subleases in the six months ended June 30, 2025.

Other expenses consist primarily of interest and amortization expense attributable to our debt and to accretion of biogas Series A Preferred Units. The cost of debt includes issuance of warrants as renewal fees. The fair value of stock and warrants are amortized as expenses, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense. Interest expense and debt related fees and amortization increased in the six months ended June 30, 2025, due to higher variable interest rates and higher debt balances.

Liquidity and Capital Resources

Cash and Cash Equivalents

Cash and cash equivalents were $1.6 million at June 30, 2025, with $0.6 million held in our North American entities and $1.0 million in our India entity. Our current ratio was 0.06 at June 30, 2025, compared to 0.31 at December 31, 2024. We expect that our future available cash resources will be generated from operations, sales of equity, sales of tax credits, and new debt. Incurrence of new debt and the associated use of proceeds from future debt financings are subject to approval by our senior lender.

Liquidity

Cash and cash equivalents, current assets, current liabilities, and debt at the end of each period were as follows (in thousands):

Our principal sources of liquidity have been cash provided by the sale of equity, operations, and borrowings under various debt arrangements.

We operate in a volatile market in which we have limited control over major components of input costs and product revenues. We are making investments in future facilities and facility upgrades that improve overall margins while lessening the impact of volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil, natural gas, LCFS credits, and D3 RINs. To the extent that we experience periods in which the spread between ethanol prices and corn and energy costs narrow or the value of environmental attributes or tax credits is reduced, we require additional working capital to fund operations.

We are implementing several strategies to improve our cash flow from operations, as described in more detail in Note 16 Liquidity of our Consolidated Financial Statements in Item 1 of Part 1 above.

Senior Secured Debt

As of June 30, 2025, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes totals $225.7 million. The maturity dates for the debts to Third Eye Capital are as follows:

• Due on demand: $45.6 million
• March 1, 2026: $27.7 million
• April 1, 2026: $152.4 million

Third Eye Capital has provided a series of accommodating amendments to our debt facilities as described in further detail in Note 5. Debt of the Notes to Consolidated Financial Statements in this Form 10-Q. However, future amendments or accommodations will continue to be at the discretion of the lender. In the event our senior lender does not extend our debt, we would likely not have sufficient cash to pay the debt when due unless we are able to obtain alternative financing.

Change in Debt, Working Capital and Cash Flows

The following table describes the changes in current and long-term debt (in thousands) during the six months ended June 30, 2025:

27

Working capital changes reflect (i) a $13 million decrease in inventories primarily due to restarting shipment of biodiesel to the OMCs after a delay in tenders; (ii) a $12.3 million decrease in tax credit sale receivable due to our receipt of the credit sale proceeds; (iii) an increase in trade accounts receivable of $0.9 million; and (iv) a $0.9 million decrease in other current assets in the India Biodiesel segment.

Cash used in operating activities was $5.6 million, derived from a net loss of $47.9 million, non-cash changes of $16.6 million, and changes in operating assets and liabilities of $25.8 million. The non-cash changes primarily consisted of: (i) $3.7 million in stock-based compensation expense, (ii) $4.7 million in depreciation expenses, (iii) $3.8 million in amortization of debt issuance costs and other intangible assets, (iv) $4.3 million in preferred unit accretion and other expenses of Series A Preferred Units. Cash increases related to changes in operating assets and liabilities consisted primarily of (i) a decrease in inventory of $13.0 primarily due to the India biodiesel segment selling feedstock and biodiesel inventory, (ii) $12.3 million receipt from tax credit sales, (iii) $0.4 million reduction in other assets and prepaid expenses, (iv) $9.4 million increase in accrued interest expense and fees, and (v) $0.6 million increase in other liabilities. This was offset by (i) a $9.5 million decrease in accounts payable and (ii) an increase in accounts receivable of $0.4 million.

Cash used in investing activities was $4.9 million, of which $4.9 million was used for capital projects associated with production of RNG and energy efficiency projects in California offset by $0.4 million grants received, and $0.4 million was used for capital projects at the Kakinada Plant.

Cash provided by financing activities was $11.3 million, consisting primarily of (i) $21.3 million proceeds from borrowings, and (ii) $18.2 million from sales of common stock, offset by (i) $25.4 million in repayments of borrowings, (ii) $2.2 million in payments on Series A Preferred financing, and (iii) $0.5 million in debt renewal and waiver fee payments.

Our ongoing at-the-market stock sales registration allows us to sell shares of our common stock into the publicly traded market. During the three months ended June 30, 2025, we sold 7.6 million shares of common stock for net proceeds of $12.9 million net of commissions. During the six months ended June 30, 2025, we sold 10.0 million shares of common stock for net proceeds of $18.0 million net of commissions, which is included in the cash provided by financing activities noted above.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported net sales and expenses for each period. We believe that of our most significant accounting policies and estimates, defined as those policies and estimates that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain are: liquidity; debt covenant forecast; and recoverability of long-lived assets. These significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Issued Accounting Pronouncements

None reported beyond those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Off Balance Sheet Arrangements

None.

Evaluation of Disclosure Controls and Procedures.

Management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our CEO and CFO concluded that, although remediation plans were initiated to address the material weaknesses over financial reporting as identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, IT general controls along with certain internal controls over financial reporting were not effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting.

As discussed in greater detail under Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2024, we are executing our remediation plans to address the material weaknesses in our internal controls related to information technology general controls and information technology systems as well as documentation.