Executive Summary / Key Takeaways

• Aemetis is executing a strategic transformation centered on producing low and negative carbon intensity renewable fuels, leveraging favorable government policies and developing advanced technologies across its California Ethanol, California Dairy RNG, and India Biodiesel segments, alongside future SAF/CCUS projects.
• Recent financial performance reflects a period of transition, with Q1 2025 revenues impacted by a temporary pause in India biodiesel shipments, offset by stronger ethanol pricing and increased RNG volumes. Significant operating losses persist, driven by costs and interest expense.
• The core investment thesis hinges on the successful execution of key growth projects (RNG expansion, Keyes MVR) and the realization of value from environmental credits (LCFS, D3 RINs, 45Z, 48) and policy tailwinds (LCFS amendments, E15 approval), which management expects to drive a significant ramp in revenues and cash flow starting in the second half of 2025 and into 2026.
• Key catalysts and indicators to watch include the timing of California LCFS pathway and amendment finalization, the issuance of federal 45Z tax credit guidance, progress on USDA guaranteed financing for RNG expansion, successful resumption and expansion of India biodiesel contracts, and the operational startup of the Keyes MVR project (targeted H1 2026).
• Significant risks remain, particularly related to liquidity, reliance on the senior secured lender for debt extensions, market volatility for inputs and products, and the timing and value realization of government incentives and project financing.

The Aemetis Story: Building a Circular Bioeconomy

Founded in 2006, Aemetis, Inc. is an international renewable natural gas and renewable fuels company dedicated to replacing petroleum products and reducing greenhouse gas emissions through innovative technologies. The company's mission is deeply rooted in building a local circular bioeconomy, utilizing agricultural products and waste to produce low and negative carbon intensity fuels. This strategic focus has evolved from its early days, including the acquisition of the Keyes Plant in California, to its current diversified portfolio spanning ethanol, biodiesel, and renewable natural gas production, alongside ambitious development projects in sustainable aviation fuel and carbon capture.

Aemetis operates across three reportable segments: California Ethanol, California Dairy Renewable Natural Gas (RNG), and India Biodiesel. Each segment plays a role in the company's overarching strategy to leverage waste feedstocks, improve energy efficiency, and capitalize on environmental credits and mandates designed to accelerate the transition to a lower-carbon future. The company's strategic pillars are centered on optimizing existing operations, rapidly expanding its high-growth RNG business, growing its international presence, and developing next-generation low-carbon fuel and carbon sequestration projects.

Central to Aemetis's strategy is its technological differentiation and innovation pipeline. The company employs various technologies across its segments:

• Waste Feedstock Conversion: At the Keyes ethanol plant and India biodiesel plant, Aemetis utilizes agricultural byproducts and waste oils. This approach offers tangible benefits, including lower feedstock costs compared to traditional methods and the potential to achieve lower carbon intensity scores for the final fuels. Specific, universally comparable quantitative data on cost advantages versus all alternatives is not detailed, but the use of waste feedstocks is a stated strategic advantage for cost reduction and CI improvement.
• Anaerobic Digestion: In the California Dairy RNG segment, anaerobic digesters convert dairy manure into biogas. This technology is foundational to producing RNG with a significantly negative carbon intensity. Under the California GREET model, Aemetis's dairy RNG has a carbon intensity as low as negative 380, starkly contrasting with the federal GREET default of negative 33. This quantifiable difference is critical for generating high-value LCFS credits.
• Mechanical Vapor Recompression (MVR): A significant energy efficiency project underway at the Keyes Plant is the installation of an MVR system. This technology is designed to reduce fossil natural gas use by 80%. Management targets this project to add an estimated $32 million in annual cash flow starting in 2026 by reducing energy costs and increasing revenue through a lower ethanol carbon intensity. The project has a budgeted direct cost of approximately $30 million, with about $20 million secured through grants and tax credits. Operational startup is targeted for the first half of 2026.
• Sustainable Aviation Fuel (SAF) / Renewable Diesel (RD) Process: The planned Riverbank plant will utilize renewable vegetable and animal oils. The process is designed to incorporate low-carbon hydroelectricity and renewable hydrogen generated from byproducts of the SAF/RD production itself. This integrated approach aims to produce ultra-low carbon fuels for the aviation and transportation sectors.
• Carbon Capture and Underground Sequestration (CCUS): At Riverbank, Aemetis is developing CCUS technology to compress and inject CO₂ into deep geologic formations. This technology directly addresses emissions reduction and is expected to generate revenue through LCFS and Section 45Q tax credits. The initial projects at Keyes and Riverbank are designed to capture and sequester over 2 million metric tons of CO₂ per year, with the Riverbank site alone targeting approximately 1.4 million tons annually.

The "so what" for investors is that these technologies and development initiatives are designed to create a competitive moat by enabling the production of fuels with significantly lower, or even negative, carbon intensity. This positions Aemetis favorably within regulatory frameworks like California's LCFS and federal tax credit programs (45Z, 45Q), which assign value to carbon reduction. While some technologies are mature (anaerobic digestion), others like MVR, SAF/RD production from waste oils, and CCUS represent significant R&D and capital investment aimed at capturing future market opportunities and enhancing long-term profitability by commanding premium pricing or generating substantial environmental credit revenue.

In the competitive landscape, Aemetis operates alongside larger, more established players like Archer-Daniels-Midland (ADM) and Valero Energy (VLO), who benefit from significant scale and integrated supply chains, often achieving higher production volumes and lower operating costs per unit through economies of scale. AMTX's operational efficiency, particularly in ethanol, trails these giants, who can achieve 10-25% greater efficiency in some metrics. However, Aemetis differentiates itself through its focus on negative carbon intensity pathways and waste feedstocks, which can result in lower carbon emissions (e.g., 15% lower in biodiesel compared to some alternatives) and potentially higher margins in niche, policy-driven markets like California RNG.

Compared to more technology-focused peers like Amyris (AMRS) and Gevo (GEVO), Aemetis may lag in the speed of innovation in cutting-edge synthetic biology or advanced fuel molecules. GEVO's technology, for instance, might offer higher energy density (20% greater than ethanol), while AMRS's bioengineered processes can be faster in development. However, Aemetis's strength lies in its operational execution, established production assets, and regulatory licenses in key markets (California, India), which provide a foundation for scaling and revenue generation that some R&D-heavy companies may lack. AMTX's diversified segments, particularly the unique position in California Dairy RNG and its leadership in India Biodiesel, offer broader market positioning and resilience compared to competitors focused on single technologies or regions. While supply chain dependencies can be a vulnerability, potentially leading to higher costs compared to vertically integrated players like ADM, Aemetis leverages established relationships (e.g., with J.D. Heiskell for corn) and vendor financing to mitigate some risks. The company's competitive advantages stem from its specific technology applications for low/negative CI fuels and its ability to navigate complex regulatory environments to monetize environmental attributes.

Operational Performance and Financial Health

Aemetis's recent financial performance reflects the dynamic nature of its markets and the ongoing investment phase of its growth strategy. For the three months ended March 31, 2025, the company reported total revenues of $42.886 million, a significant decrease from $72.634 million in the same period of 2024. This decline was primarily driven by the India Biodiesel segment, where revenues plummeted from $32.753 million in Q1 2024 to just $2.695 million in Q1 2025 due to a six-month pause in shipments to government OMCs.

Offsetting this, the California Ethanol segment saw a modest revenue increase to $37.748 million in Q1 2025 from $36.089 million in Q1 2024, primarily attributed to stronger ethanol pricing. The California Dairy RNG segment, while showing a revenue decrease to $2.443 million in Q1 2025 from $3.792 million in Q1 2024, did see a 17% year-over-year increase in RNG volumes produced. The revenue decrease in RNG was due to lower RIN and LCFS credit prices compared to the prior year period, despite higher volumes.

The consolidated gross loss widened to $5.080 million in Q1 2025 from $0.612 million in Q1 2024, largely reflecting the impact of the India segment's reduced activity and increased costs in the growing RNG segment (primarily depreciation from a higher number of operating digesters). Selling, general, and administrative (SG&A) expenses increased by $1.625 million to $10.475 million in Q1 2025, partly due to legal and transaction costs associated with investment tax credit sales. This contributed to an operating loss of $15.555 million, compared to $9.462 million in Q1 2024.

Interest expense also rose, totaling $13.693 million in Q1 2025, up from $10.513 million in Q1 2024, driven by higher variable interest rates and increased debt balances. The net loss for Q1 2025 was $24.529 million, relatively flat compared to a net loss of $24.231 million in Q1 2024.

From a liquidity perspective, Aemetis's cash position remains constrained. As of March 31, 2025, cash and cash equivalents were $0.5 million. The company's current liabilities significantly exceed its current assets, resulting in a current ratio of 0.16 at March 31, 2025. The company has historically been reliant on its senior secured lender for extensions on debt maturities and has directed cash from asset sales (like tax credits) towards debt obligations. This reliance and the need for continued cooperation from the senior lender for debt extensions over the next twelve months are critical factors for the company's ability to meet its obligations. The company explicitly states that substantial doubt about its ability to continue as a going concern remains, pending the successful implementation of its strategies and securing additional financing.

Cash flow from operations in Q1 2025 was positive at $0.160 million, significantly influenced by a $12.3 million receipt from tax credit sales. Investing activities used $1.825 million, primarily for capital projects in the RNG and India segments. Financing activities provided $1.252 million, including proceeds from borrowings ($3.8 million) and equity sales ($5.1 million from the at-the-market program), offset by debt repayments ($5.181 million) and payments on Series A Preferred financing ($2.2 million). The sale of investment tax credits generated $19 million in cash proceeds in Q1 2025, highlighting the importance of monetizing these incentives for liquidity.

Strategic Execution and Outlook

Aemetis's strategic outlook is heavily tied to the successful execution of its growth projects and the realization of value from supportive government policies. Management anticipates a significant ramp-up in revenues and improved cash flow starting in the second half of 2025 and continuing into 2026.

The California Dairy RNG segment is a key driver of this expected growth. The company is rapidly scaling production, targeting 550,000 MMBtu of capacity this year and 1,000,000 MMBtu annually by the end of 2026. This expansion is supported by USDA guaranteed financing, with $75 million in new funding currently in process. A critical near-term catalyst is the expected approval of seven dairy LCFS pathways by CARB in Q2 2025, which management states will "unlock meaningful LCFS revenue starting in Q3." Once provisional pathways are fully approved and production reaches 1 million MMBtu/year, Aemetis Biogas could generate over $60 million annually from LCFS credits alone (based on a $150/ton LCFS price). Combined with D3 RINs (valued at $28-$40/MMBtu), potential revenue from RNG could reach up to $100 million in 2026. Furthermore, the federal Section 45Z production tax credit, effective January 1, 2025, is expected to provide an additional cash source, which the company plans to monetize through sales to third parties, pending further Treasury guidance. Additional sales of both investment and production tax credits are expected in 2025.

At the Keyes Ethanol Plant, the focus is on operational efficiency and carbon intensity reduction. The planned MVR system, targeted to be operational in the first half of 2026, is expected to add an estimated $32 million in annual cash flow by significantly reducing natural gas consumption and lowering the ethanol CI. Policy tailwinds, including the EPA's approval of summer E15 blending and efforts to allow E15 in California, are expected to support ethanol margins in the near term.

The India Biodiesel business is expected to recover following the pause in OMC shipments. Deliveries resumed in April 2025 under a $31 million allocation for May-July, and management expects revenue to "rebound meaningfully in Q2." The business is stated to remain EBITDA positive and self-funding. Plans for an IPO of the India subsidiary are targeting late 2025 or early 2026, intended to fund further expansion (including potential diversification into RNG and ethanol in India) and potentially reduce parent company debt.

Development of the Riverbank SAF/RD and CCUS projects continues, with key permits secured (Air permits for SAF/RD, characterization well permit for CCUS). The characterization well is planned for construction in 2025, supporting the application for a federal Class VI sequestration permit targeted for 2026. Financing for these large-scale projects is dependent on clarity and implementation of federal tax credits (45Z for SAF/RD, 45Q for CCUS) and state-level SAF mandates.

Overall, the outlook is for a period of accelerating growth driven by the ramp-up of RNG production and associated credit generation, the recovery and potential expansion of the India business, and the anticipated impact of the Keyes MVR project and Riverbank developments. Management is actively pursuing various financing avenues, including USDA loans, EB-5 funding, equity sales, and tax credit monetization, to fund this growth and improve the balance sheet.

Risks and Challenges

Despite the compelling growth narrative and policy tailwinds, Aemetis faces significant risks and challenges that warrant careful consideration by investors. The most prominent risk highlighted in the financial statements is related to liquidity and the company's ability to continue as a going concern. The company's negative capital position and reliance on its senior secured lender for extensions of debt maturities pose a substantial risk. Failure to secure continued cooperation or alternative financing could severely impact operations and the ability to meet obligations.

Market volatility remains a persistent challenge. Fluctuations in the prices of key inputs like corn, natural gas, waste fats and oils, and the market prices for products (ethanol, biodiesel, glycerin) and environmental attributes (LCFS credits, D3 RINs) directly impact gross margins and operating cash flow. While policy changes are expected to increase the value of credits, delays or changes in these policies, as seen with the recent unexpected delay in California LCFS amendment implementation and uncertainty surrounding 45Z guidance, can disrupt revenue expectations and project financing timelines.

Execution risk is also present. The successful ramp-up of RNG production to targeted levels, the timely and on-budget completion of the MVR project and future SAF/CCUS facilities, and the expansion of the India business are all subject to operational and construction challenges. Delays or cost overruns could impact the expected financial benefits and timelines.

Furthermore, the company's ability to secure the necessary project-specific debt and equity financing, including USDA guaranteed loans and EB-5 funding, is crucial for funding its planned expansion. Delays or inability to access these funding sources could slow down growth or necessitate more dilutive forms of financing. Litigation, such as the recently initiated action by a broker related to EB-5 fees, also presents a potential financial and operational risk.

Management acknowledges these risks and outlines mitigation strategies focused on operational efficiency improvements, diversifying funding sources, actively engaging with regulatory bodies, and maintaining relationships with key lenders and partners. However, the successful navigation of these challenges is critical for realizing the potential value creation outlined in the company's strategic outlook.

Conclusion

Aemetis is a company in the midst of a significant strategic transformation, aiming to capitalize on the growing demand for low and negative carbon intensity renewable fuels. The core investment thesis is predicated on leveraging supportive government policies, executing a pipeline of high-impact growth projects, and realizing substantial value from environmental credits. While recent financial results reflect the challenges of market volatility and temporary setbacks in key segments, the outlook points towards a potential inflection point driven by the anticipated ramp-up of the California Dairy RNG business, the recovery of the India Biodiesel segment, and the future impact of the Keyes MVR project and Riverbank developments.

The company's technological focus on waste feedstock conversion, anaerobic digestion for negative CI RNG, and advanced projects like MVR, SAF/RD, and CCUS provides a foundation for differentiation in the competitive landscape, particularly in policy-driven markets. However, successfully translating these capabilities into sustained profitability and positive cash flow requires overcoming significant financial hurdles, including managing a strained liquidity position and securing substantial project financing. Investors should closely monitor the progress on LCFS pathway and amendment finalization, the clarity and implementation of federal tax credits, the pace of USDA funding, and the operational execution of key projects. If Aemetis can effectively navigate its financial constraints and execute its strategic plan amidst a favorable policy environment, it is positioned for potentially significant growth and value creation within the evolving bioeconomy.