AEMETIS, INC 10-K

Item 8. Financial Statements and Supplementary Data. AEMETIS, INC. Index to Consolidated Financial Statements Page Number Report of Independent Registered Public Accounting Firm (PCAOB ID 49 ) 34 Consolidated Financial Statements Consolidated Balance Sheets 37 Consolidated Statements of Operations and Comprehensive Loss 38 Consolidated Statements of Cash Flows 39 Consolidated Statements of Stockholders' Deficit 40 Notes to Consolidated Financial Statements 41 33 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Aemetis, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Aemetis, Inc. and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated March 28, 2024, expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Liquidity & Management ’ s Plan As disclosed in Note 16 of the consolidated financial statements, the Company has been reliant on their senior secured lender for liquidity and has been required to remit substantially all excess cash from operations to the senior secured lender. Management believes, based on the Company’s business plan, that cash flows from operations and established financing arrangements, including financing available under the reserve liquidity facility provided by the Company’s senior secured lender, and potential additional issuances of common stock are sufficient to fund future cash flow requirements and satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance date. We determined the adequacy of the available commitment on the reserve liquidity facility and the Company's overall cash flow projections to be a critical audit matter because management’s plan includes certain significant assumptions related to the Company's cash flow needs. Auditing management’s assumptions related to the Company's cash flow needs involved a high degree of auditor judgment and increased audit efforts. Our audit procedures related to the Company’s liquidity evaluation and the adequacy of the commitment on the reserve liquidity facility included the following, among others: ● We evaluated the reasonableness of forecasted cash needs, for at least one year from the financial statement issuance date, by comparing to historical operating results as well as external forecasted market data for both ethanol and corn. ● We evaluated the reasonableness of management’s estimated reduction in current liabilities from the Company's cash needs for a period of greater than a year from the financial statement issuance date by evaluating subordination agreements that are in place and the ability for the company to defer interest payments on various debt agreements. ● We evaluated management’s forecasted cash needs, for at least one year from the financial statement issuance date, in the context of other audit evidence obtained, including, but not limited to, board of director minutes and investor presentation to determine whether the other audit evidence supported or contradicted the forecast. ● We tested the subsequent event activity related to additional cash available or needs to additional funding of working capital. ● We tested the Company's ability to maintain compliance with covenants, for at least one year from the financial statement issuance date, under the existing loan agreements and the ability of the Company's senior lender to provide the additional funding under the amended reserve liquidity facility. 34 Table of Contents Investment Tax Credit Sale As disclosed in Note 1 of the consolidated financial statements, the Company entered into an investment tax credit sale agreement with a third-party resulting in a $55.2 million income tax benefit recognized for the year ended December 31, 2023. We determined the Company's investment tax credit sale to be a critical audit matter as there was a high degree of auditor judgment and increased audit effort, including the use of income tax and revenue recognition specialists, when performing procedures to evaluate the appropriateness of the accounting determinations for the investment tax credit sale. Our audit procedures related to the investment tax credit sale included the following, among others: ● We read the relevant investment tax credit sale documents and compared to the terms to the Company's accounting documentation. ● We evaluated the Company's accounting determination and the application of the relevant accounting guidance, including an evaluation of audit evidence regarding the determination that control of the investment tax credit had been transferred to the purchaser. /s/ RSM US LLP We have served as the Company's auditor since 2012. Des Moines, Iowa March 28, 2024 35 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Aemetis, Inc. Opinion on the Internal Control Over Financial Reporting We have audited Aemetis, Inc. and its subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years then ended, and the related notes to the consolidated financial statements of the Company and our report dated March 28, 2024 expressed an unqualified opinion. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's assessment: ● There were ineffective information technology general controls (ITGCs) and segregation of duties, specifically in the areas of user access, passwords, change-management, and third-party service provider report review over certain information technology systems used in the Company’s financial reporting processes. As a result of the pervasive impact of these controls, automated and manual business process controls that are dependent on ITGCs and appropriate segregation of duties were also ineffective. ● There were ineffective controls relating to the Company maintaining sufficient personnel in the proper roles to allow for timely and precise completion and documentation of the performance of controls. As a result of this deficiency, we note that all financial statement transaction cycles could be impacted such that material misstatements may not be detected in a timely manner. We specifically note the following items impacted by this deficiency that rise to the level of a material weakness: o Controls over the amount of revenue recognized for ethanol sales and wet distillers grain sales were ineffective due to a lack of verification of prices invoiced. o Controls over debt covenants, debt classification, and going concern were ineffective due to untimely completion, imprecise review of inputs, and insufficient written documentation regarding the performance of related controls. o Controls over financial statement tie outs were ineffective due to untimely completion of such review. o Controls over cash were ineffective due to untimely performance of bank reconciliations performed on related cash accounts. o Controls over property, plant and equipment and related depreciation expense and accumulated depreciation were ineffective due to the untimely performance of such review and reconciliation of such accounts. o Controls over income tax disclosures were ineffective due to imprecise review and approval of the income tax provision. These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 financial statements, and this report does not affect our report dated March 28, 2024 on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Des Moines, Iowa March 28, 2024 36 Table of Contents AEMETIS, INC. CONSOLIDATED BALANCE SHEETS AS OF December 31, 2023 and 2022 (In thousands except for par value) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents ($ 1,093 and $ 165 respectively from VIE) $ 2,667 $ 4,313 Accounts receivable ($ 55 and $ 165 respectively from VIE) 8,633 1,264 Inventories, net of allowance for excess and obsolete inventory of $ 1,040 as of December 31, 2023 and 2022 18,291 4,658 Prepaid expenses ($ 1,438 and $ 858 respectively from VIE) 3,347 4,248 Other current assets ($ 289 and $ 725 respectively from VIE) 3,462 3,653 Total current assets 36,400 18,136 Property, plant and equipment, net ($ 81,966 and $ 71,633 respectively from VIE) 195,108 180,441 Operating lease right-of-use assets ($ 145 and $ 224 respectively from VIE) 2,056 2,449 Other assets ($ 4,881 and $ 3,458 respectively from VIE) 9,842 6,088 Total assets $ 243,406 $ 207,114 Liabilities and stockholders' deficit Current liabilities: Accounts payable ($ 3,815 and $ 9,192 respectively from VIE) $ 32,132 $ 26,168 Current portion of long term debt ($ 190 and $ 0 from VIE) 13,585 12,465 Short term borrowings ($ 9 and $ 19,831 respectively from VIE) 23,443 36,754 Mandatorily redeemable Series B convertible preferred stock 4,521 4,082 Current portion of operating lease liability ($ 48 and $ 41 respectively from VIE) 406 338 Other current liabilities ($ 0 and $ 645 respectively from VIE) 10,302 8,474 Total current liabilities 84,389 88,281 Long term liabilities: Senior secured notes and revolving notes 176,476 155,843 EB-5 notes 29,500 29,500 Other long term debt ($ 40,857 and $ 31 respectively from VIE) 51,717 11,678 Series A preferred units ($ 113,189 and $ 116,000 respectively from VIE) 113,189 116,000 Operating lease liability ($ 67 and $ 115 respectively from VIE) 1,783 2,189 Other long term liabilities 3,329 5,477 Total long term liabilities 375,994 320,687 Stockholders' deficit: Series B convertible preferred stock, $ 0.001 par value; 7,235 authorized; 0 and 1,270 shares issued and outstanding each period, respectively (aggregate liquidation preference of $ 0 and $ 3,810 respectively) - 1 Common stock, $ 0.001 par value; 80,000 authorized; 40,966 and 35,869 shares issued and outstanding each period, respectively 41 36 Additional paid-in capital 264,058 232,546 Accumulated deficit ( 475,405 ) ( 428,985 ) Accumulated other comprehensive loss ( 5,671 ) ( 5,452 ) Total stockholders' deficit ( 216,977 ) ( 201,854 ) Total liabilities and stockholders' deficit $ 243,406 $ 207,114 The accompanying notes are an integral part of the financial statements. 37 Table of Contents AEMETIS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED December 31, 2023 and 2022 (In thousands, except for earnings per share) For the years ended December 31, 2023 2022 Revenues $ 186,717 $ 256,513 Cost of goods sold 184,700 262,048 Gross (loss) profit 2,017 ( 5,535 ) Research and development expenses 152 180 Selling, general and administrative expenses 39,266 28,686 Operating loss ( 37,401 ) ( 34,401 ) Other expense (income): Interest expense Interest rate expense 32,995 21,407 Debt related fees and amortization expense 6,524 7,363 Accretion and other expenses of Series A preferred units 25,313 9,888 Loss on debt extinguishment - 49,386 Gain on litigation - ( 1,400 ) Other income ( 2,077 ) ( 14,340 ) Loss before income taxes ( 100,156 ) ( 106,705 ) Income tax expense (benefit) ( 53,736 ) 1,053 Net loss $ ( 46,420 ) $ ( 107,758 ) Other comprehensive (loss) Foreign currency translation loss ( 219 ) ( 1,102 ) Comprehensive loss $ ( 46,639 ) $ ( 108,860 ) Net loss per common share Basic $ ( 1.22 ) $ ( 3.12 ) Diluted $ ( 1.22 ) $ ( 3.12 ) Weighted average shares outstanding Basic 38,061 34,585 Diluted 38,061 34,585 The accompanying notes are an integral part of the financial statements. 38 Table of Contents AEMETIS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED December 31, 2023 and 2022 (In thousands) For the year ended December 31, 2023 2022 Operating activities: Net loss $ ( 46,420 ) $ ( 107,758 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 7,660 6,410 Depreciation 6,933 5,535 Debt related fees and amortization expense 6,524 7,363 Intangibles and other amortization expense 72 46 Accretion and other expenses of Series A preferred units 25,313 9,888 Warrants issued for working capital agreement 409 - Loss on asset disposals - 47 Loss on debt extinguishment - 49,386 Gain on litigation - ( 1,400 ) Loss on lease termination - 736 Deferred tax (benefit) expense ( 750 ) 832 Changes in operating assets and liabilities: Accounts receivable ( 7,422 ) 294 Inventories ( 13,843 ) 360 Prepaid expenses 1,838 1,777 Other assets ( 2,016 ) ( 3,941 ) Accounts payable 13,726 2,183 Accrued interest expense and fees 23,558 15,501 Other liabilities ( 1,757 ) ( 10,125 ) Net cash provided by (used in) operating activities 13,825 ( 22,866 ) Investing activities: Capital expenditures ( 33,119 ) ( 39,157 ) Grant proceeds received for capital expenditures 9,432 7,851 Net cash used in investing activities ( 23,687 ) ( 31,306 ) Financing activities: Proceeds from borrowings 75,482 69,356 Repayments of borrowings ( 56,130 ) ( 26,266 ) Lender debt renewal and waiver fee payments ( 1,681 ) ( 1,169 ) Payments on Series A preferred financing ( 30,000 ) - Payments on finance leases ( 428 ) ( 481 ) Proceeds from issuance of common stock in equity offering 21,718 11,987 Proceeds from the exercise of stock options 133 206 Net cash provided by financing activities 9,094 53,633 Effect of exchange rate changes on cash and cash equivalents 49 ( 213 ) Net change in cash and cash equivalents for period ( 719 ) ( 752 ) Cash, cash equivalents, and restricted cash at beginning of period 6,999 7,751 Cash, cash equivalents, and restricted cash at end of period 6,280 6,999 Supplemental disclosures of cash flow information, cash paid: Cash paid for interest $ 9,813 $ 19,515 Income taxes paid 20 10 Supplemental disclosures of cash flow information, non-cash transactions: Subordinated debt extension fees added to debt 680 680 Debt fees added to revolving lines - 800 Fair value of warrants issued to subordinated debt holders 1,278 1,939 Fair value of stock issued to a related party for guarantee fees - 2,012 Fair value of warrants issued to lender for debt issuance costs 318 3,158 Fair value of stock issued to lender - 1,335 Lender debt extension, waiver, and other fees added to debt - 583 Capital expenditures in accounts payable 7,900 15,411 Payment of debt added to revolving lines - 16,266 Operating lease liabilities arising from obtaining right of use assets - 306 Financing lease liabilities arising from obtaining right of use assets - 2,932 Capital expenditures purchased on financing - 290 The accompanying notes are an integral part of the financial statements. 39 Table of Contents AEMETIS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ DEFICIT FOR THE YEARS ENDED December 31, 2023 and 2022 (In thousands) Series B Preferred Stock Common Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Shares Dollars Shares Dollars Capital Deficit Loss Total Balance at December 31, 2021 1,275 $ 1 33,461 $ 33 $ 205,305 $ ( 321,227 ) $ ( 4,350 ) $ ( 120,238 ) - Issuance of common stock - - 1,885 3 15,530 - - 15,533 Series B conversion to common stock ( 5 ) - 1 - - - - - Stock options exercised - - 296 - 205 - - 205 Stock-based compensation - - - - 6,410 - - 6,410 Issuance and exercise of warrants - - 226 - 5,096 - - 5,096 Foreign currency translation loss - - - - - - ( 1,102 ) ( 1,102 ) Net loss - - - - - ( 107,758 ) - ( 107,758 ) Balance at December 31, 2022 1,270 1 35,869 36 232,546 ( 428,985 ) ( 5,452 ) ( 201,854 ) Issuance of common stock - - 4,499 4 21,714 - - 21,718 Series B conversion to common stock ( 1,270 ) ( 1 ) 127 1 - - - - Stock options exercised - - 183 - 133 - - 133 Stock-based compensation - - - - 7,660 - - 7,660 Issuance and exercise of warrants - - 288 - 2,005 - - 2,005 Foreign currency translation loss - - - - - - ( 219 ) ( 219 ) Net loss - - - - - ( 46,420 ) - ( 46,420 ) Balance at December 31, 2023 - $ - 40,966 $ 41 264,058 $ ( 475,405 ) $ ( 5,671 ) $ ( 216,977 ) The accompanying notes are an integral part of the financial statements. 40 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 1. Nature of Activities and Summary of Significant Accounting Policies Nature of Activities . These consolidated financial statements include the accounts of Aemetis, Inc. (formerly AE Biofuels, Inc.), a Delaware corporation, and its subsidiaries (collectively, “Aemetis” or the “Company”): ● Aemetis Americas, Inc., a Delaware corporation, and its subsidiary AE Biofuels, Inc., a Delaware corporation; ● Aemetis International, Inc., a Nevada corporation, and its subsidiary International Biofuels Ltd, a Mauritius corporation, and its subsidiary Universal Biofuels Private Limited, an India company; ● Aemetis Technologies, Inc., a Delaware corporation; ● Aemetis Biofuels, Inc., a Delaware corporation, and its subsidiary Energy Enzymes, Inc., a Delaware corporation; ● AE Advanced Fuels, Inc., a Delaware corporation, and its subsidiaries Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis Facility Keyes, Inc., a Delaware corporation, and Aemetis Property Keyes, Inc., a Delaware corporation; ● Aemetis Advanced Fuels, Inc., a Nevada corporation; ● Aemetis Advanced Products Keyes, Inc., a Delaware corporation, and its subsidiaries Aemetis Properties Riverbank, Inc., a Delaware corporation, Aemetis Health Products, Inc., a Delaware corporation; and Aemetis Riverbank, Inc., a Delaware corporation, and its subsidiary Aemetis Advanced Products Riverbank, Inc., a Delaware corporation; ● Aemetis Advanced Biorefinery Keyes, Inc., a Delaware corporation; ● Aemetis Carbon Capture, Inc. a Nevada corporation; ● Aemetis Biogas LLC, a Delaware Limited Liability Company and its subsidiaries Aemetis Biogas Services LLC, a Delaware Limited Liability Company, and Aemetis Biogas Holdings LLC, a Delaware Limited Liability Company, and its subsidiaries Aemetis Biogas 1 LLC, a Delaware Limited Liability Company, Aemetis Biogas 2 LLC, a Delaware Limited Liability Company, Aemetis Biogas 3 LLC, a Delaware Limited Liability Company, Aemetis Biogas 4 LLC, a Delaware Limited Liability Company, Aemetis Biogas 5 LLC, a Delaware Limited Liability Company, Aemetis Biogas 6 LLC, a Delaware Limited Liability Company, Aemetis Biogas 7 LLC, a Delaware Limited Liability Company, and Aemetis Biogas 8 LLC, a Delaware Limited Liability Company; ● Goodland Advanced Fuels, Inc., a Nevada corporation. Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis referred to herein as, “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable natural gas and renewable fuels company focused on the operation, acquisition, development, and commercialization of innovative low and negative carbon intensity products and technologies that replace traditional petroleum-based products. 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 reportable segments and are collectively represented by the “All Other” category. Our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this by building a local circular bioeconomy utilizing agricultural waste to produce low and negative carbon, advanced renewable fuels that reduce greenhouse gas ("GHG") emissions and improve air quality by replacing traditional petroleum-based products. Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis, Inc. and its subsidiaries. We consolidate all entities in which we have a controlling financial interest. A controlling financial interest is usually obtained through ownership of a majority of the voting interests. However, an enterprise must consolidate a variable interest entity (“VIE”) if the enterprise is the primary beneficiary of the VIE, even if the enterprise does not own a majority of the voting interests. The primary beneficiary is the party that has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. ABGL was assessed to be a VIE and through the Company's ownership interest in all of the outstanding common stock, the Company has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates . The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. Revenue Recognition . We derive revenue primarily from sales of ethanol and related co-products in California Ethanol segment, renewable natural gas for California Dairy Renewable Natural Gas segment, and biodiesel in India Biodiesel segment pursuant to supply agreements and purchase order contracts. We assess the following criteria under the ASC 606 guidance: (i) identify the contracts with customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when the entity satisfies the performance obligations. California Ethanol: From 2022 until the second quarter of 2023, we sold our ethanol production to Murex who marketed it to oil companies as a gasoline blend stock. Starting in the second quarter of 2023, we began selling all our ethanol to J.D. Heiskell who sells it to customers designated by us, and we have designated Murex, who continues to market the product. J.D. Heiskell does not charge a fee for reselling the ethanol but they receive the payments from the ultimate customer. We also buy our corn feedstock from J.D. Heiskell, and J.D. Heiskell pays us the net balance between ethanol and other product sales and our corn purchases. Our accounting (i) treats us as the purchaser/customer for corn purchases from J.D. Heiskell and we record the full purchase cost in cost-of-good sold, and (ii) treats us as the seller for ethanol and other product sales, so we treat all sales as revenue. 41 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Given the similarity of the individual sales transactions with J.D. Heiskell, we have assessed them as a portfolio of similar contracts. Prior to May 25, 2023, the performance obligation was satisfied by delivery of the physical product from our finished goods tank to our customer’s contracted trucks. Effective on May 25, 2023, the performance obligation is satisfied by delivery of the physical product to our finished goods tank leased by J.D. Heiskell. The transaction price is determined based on daily market prices and quarterly contract pricing negotiated by Murex for its customers for ethanol and based on dry distillers' market and local demand by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation. During the last two weeks of December 2022, we undertook an extended maintenance cycle and accelerated the implementation of several important ethanol plant energy efficiency upgrades. Our decision was partly driven by the high natural gas prices in California during the period. Furthermore, after monitoring natural gas pricing and margin profitability, we decided to extend the maintenance cycle into the first and second quarters of 2023 and restarted the plant at the end of May 2023. The following table shows our sales in California Ethanol by product category: California Ethanol For the twelve months ended December 31, 2023 2022 Ethanol sales $ 78,403 $ 165,876 Wet distiller's grains sales 21,963 50,930 Other sales 3,702 11,388 $ 104,068 $ 228,194 California Dairy Renewable Natural Gas: Our facilities as of December 31, 2023, consist of seven anaerobic digesters that process feedstock from dairies into biogas, a 26 -mile collection pipeline leading to a central upgrading hub, and an interconnect to inject the RNG into the utility natural gas pipeline for delivery to customers for use as transportation fuel. During 2023, Renewable Natural Gas ("RNG") produced at our seven operating dairy digesters was delivered to the regional natural gas pipeline. In connection with dispensing the RNG, we also began generating and inventorying sellable credits under the federal Renewable Fuel Standard (referred to as "D3 RINs") and the California Low Carbon Fuel Standard credits ("LCFS"). We began selling D3 RINs in the third quarter of 2023 and began selling LCFS credits in the first quarter of 2024. We recognize revenue from sales of RNG concurrent with our production and injection into the transportation pipeline. We recognize revenue from sales of D3 RINs and LCFS credits at the time we sell the credits. Dairy Renewable Natural Gas For the twelve months ended December 31, 2023 2022 Molecule and RIN sales $ 5,455 $ 208 India Biodiesel: We sell products pursuant to purchase orders (written or verbal) or by contract with governmental or international parties, in which performance is satisfied by delivery and acceptance of the physical product. Given that the contracts are sufficiently similar in nature, we have assessed these contracts as a portfolio of similar contracts as allowed under the practical expedient. Doing so does not result in a materially different outcome compared to individually accounting for each contract. All domestic and international deliveries are subject to certain specifications as identified in contracts. The transaction price is determined based on reference market prices for biodiesel, refined glycerin, and PFAD net of taxes. Transaction price is allocated to one performance obligation. The following table shows our sales in India by product category: India Biodiesel For the twelve months ended December 31, 2023 2022 Biodiesel sales $ 74,503 $ 27,041 Other sales 2,691 1,070 $ 77,194 $ 28,111 Cost of Goods Sold . Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead, and other direct production costs. During periods of idle plant capacity from January to May 2023, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense. Shipping and Handling Costs . When incurred, shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations. 42 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Research and Development. Research and development costs are expensed as incurred, unless they have alternative future uses to the Company. Cash, Cash Equivalents, and Restricted Cash . The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at various financial institutions domestically and abroad. The Federal Deposit Insurance Corporation insures domestic cash accounts. The Company’s accounts at these institutions may at times exceed federally insured limits. The Company has not experienced any losses in such accounts. Amounts included in restricted cash represent those required to be set aside by the AB1 and AB2 Loan Agreements with Greater Nevada Credit Union ("GNCU") and Magnolia Bank, respectively, and will be released at times specified in each agreement. The following table reconciles cash, cash equivalents, and restricted cash reported in the Consolidated Balance Sheet to the total of the same such amounts shown in the statement of cash flows. As of December 31, 2023 December 31, 2022 Cash and cash equivalents $ 2,667 $ 4,313 Restricted cash included in other current assets 289 725 Restricted cash included in other assets 3,324 1,961 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 6,280 $ 6,999 Accounts Receivable. The Company sells all of its products to J.D. Heiskell under the J.D. Heiskell Purchasing Agreement. Our third -party marketing partners arrange to buy ethanol and WDG generally without requiring collateral and sell directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO and CDS are marketed and sold to various customers under the J.D. Heiskell Purchasing Agreement. The Comp any sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Usually, invoices are due within 30 days on net terms. Accounts receivable mostly consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of any allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues and estimates an allowance for expected credit losses. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivables are charged against the allowance for doubtful accounts once un-collectability has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. Inventories . Finished goods, raw materials, and work-in-process inventories are valued using methods that approximate the lower of cost ( first -in, first -out) or net realizable value (NRV). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Other current assets . The other current assets contain input tax credits of $ 1.6 million, employee advance receivables of $ 69 thousand, and advances to customers of $ 1.2 million by our India biodiesel segment. Variable Interest Entities. We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other interests in is considered a variable interest entity (VIE). We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: ( 1 ) has the power to make decisions that most significantly affect the economic performance of the VIE; and ( 2 ) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment or other interests in a VIE in accordance with applicable GAAP. Property, Plant and Equipment. Property, plant, and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of buildings, furniture, machinery, equipment, land, biogas dairy digesters, and the Keyes Plant, Goodland Plant and Kakinada Plant. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method. The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360 - 10 - 35 Property Plant and Equipment – Subsequent Measurement, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of asset groups may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the asset group and its estimated fair value. The Company has not recorded any impairment as of December 31, 2023 and 2022 . 43 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Grants Received. California Energy Commission Low-Carbon Fuel Production Program . The Company has been awarded $ 4.2 million in matching grants from the California Energy Commission Low-Carbon Fuel Production Program (“LCFPP”). The LCFPP grant reimburses the Company for costs to design, procure, and install processing facility to clean-up, measure and verify negative-carbon intensity dairy renewable natural gas fuel at the production facility in Keyes, California. The Company has received $ 3.8 million from the LCFPP as of December 31, 2023 , as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received. California Department of Food and Agriculture Dairy Digester Research and Development Grant . In 2 019, the Company was awarded $ 3.2 million in matching grants from the California Department of Food and Agriculture (“CDFA”) Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct two of the Company’s biogas capture systems under contract with central California dairies. The Company received all the awarded grant proceeds as of the second quarter of 2021. In October 2020, the Company was awarded $ 7.8 million in matching grants from the CDFA Dairy Digester Research and Development program. The CDFA grant reimburses the Company for costs required to permit and construct six of the Company’s biogas capture systems under contract with central California dairies. The Company has received $ 6.2 million from the CDFA 2020 grant program as of December 31, 2023 , as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received. California Energy Commission Low Carbon Advanced Ethanol Grant Program. In May 2019, the Company was awarded the right to receive reimbursements from the California Energy Commission Community-Scale and Commercial-Scale Advanced Biofuels Production Facilities grant under the Alternative and Renewable Fuel and Vehicle Technology Program in an amount up to $ 5.0 million (the “CEC Reimbursement Program”) in connection with the Company’s expenditures toward the development of the Riverbank Cellulosic Ethanol Facility. To comply with the guidelines of the CEC Reimbursement Program, the Company must make a minimum of $ 7.9 million in matching contributions to the Riverbank project. The Company receives funds under the CEC Reimbursement Program for actual expenses incurred up to $ 5.0 million as long as the Company makes the minimum matching contribution. Given that the Company has not made the minimum matching contribution, the California Energy Commission did not extend the due date and would not move forward with this grant program. Given the nature of the project, the grant for reimbursement of capital expenditures of $ 1.7 million is presented with other current liabilities as of December 31, 2023 and 2022 U.S. Department of Food and Agriculture Forest Service Grant. Aemetis Advanced Products Keyes (“AAPK”) has been awarded $ 245 thousand in matching grants from the U.S. Department of Food and Agriculture Forest Service (“US Forest Service”) under the Wood Innovation and Community Wood program. The grant reimburses the Company for continued development of technologies and processes to valorize forest waste for the production of cellulosic ethanol. AAPK has received $ 166 thousand from the US Forest Service as reimbursement for actual allowable program costs incurred through December 31, 2023 . California Energy Commission Grant for Solar Microgrid, DSC and Battery Backup System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded an $ 8.0 million grant to design, construct and commission a grid-connected 1.56 MW photovoltaic microgrid and 1.25MW/2.5MWh Battery Energy Storage System integrated with an artificial intelligence-driven distributed control system (DCS). The grant requires $ 1.6 million in matching contribution in which the Company has made. AAFK received $ 4.4 million in grant funds from this program as reimbursement for actual expenditures incurred through December 31, 2023 . Due to the uncertainty associated with the approval process under the grant program, the Company recognized the grant as a reduction of costs in the period when payment is received. California Department of Forestry and Fire Protection Grant. AAPK has been awarded $ 2 million in matching grants from the CAL FIRE Business and Workforce Development Grant Program (“CAL Fire”) in May 2022. This CAL Fire grant program reimburses AAPK for costs to design, construct, and commission a 2 million gallon per year cellulosic ethanol facility that will convert conifer biomass from forested regions of the Sierra Nevada into an ultra‐low carbon biofuel derived from 100% forest biomass (“CAL Fire Conversion Program”). AAPK must contribute $ 5.8 million in cost share contributions to the project to receive grant proceeds. AAPK has received no grant funds from the CAL Fire Conversion Program as reimbursement for actual costs through December 31, 2023 . California Department of Forestry and Fire Protection Grant. AAPK has been awarded $ 500 thousand in grants from CAL Fire in May 2022. This CAL Fire grant program reimburses AAPK for costs to advance a new‐to‐the world technology that circumvents current limitations surrounding the extraction of cellulosic sugars by pioneering a novel route for deconstructing woody biomass using ionic liquids (“CAL Fire Extraction Program”). AAPK has received no grant funds from the CAL Fire Extraction Program as reimbursement for actual costs through December 31, 2023 . U.S. Forest Service Community Wood Grant. Aemetis Advanced Products Riverbank (“AAPR”) has been awarded $ 642 thousand in matching grants from the U.S Forest Service Wood Innovations Program (“USFS”) in May 2022. The USFS grant program reimburses AAPR for costs to design, construct, and commission a plant to produce cellulosic ethanol using preliminary research and development in partnership with the Joint Bioenergy Institute (JBEI). USFS grant funds will be used to complete the FEL- 3 design phase of the entire process, construct a biomass pretreatment unit to extract sugars at the Aemetis Riverbank site and ferment sugars into ethanol at the Keyes Plant. AAPR must contribute $ 2.4 million in cost share contributions to the project to receive grant proceeds. AAPK has received no grant funds from the USFS grant program as reimbursement for actual costs through December 31, 2023 . USDA Biofuel Producer Program Grant. During the second quarter of 2022, a grant in the amount of $ 14.2 million was received from the USDA’s Biofuel Producer Program, created as part of the CARES Act, to compensate biofuel producers who experienced market losses due to the COVID- 19 pandemic. This was recorded in the other expense (income) section of the Consolidated Statements of Operations and Comprehensive Loss. California Energy Commission Grant for Mechanical Vapor Recompression System. Aemetis Advanced Fuels Keyes (“AAFK”) has been awarded a $ 6.0 million grant to design, construct and commission a mechanical vapor recompression (MVR) system. The additional evaporation stages will eliminate natural gas consumption and related greenhouse gas emissions in the evaporation portion of the process by installing metering equipment and software to monitor and optimize the plant’s energy consumption. The MVR system will compress vapor to a higher pressure and temperature so that it can be recycled multiple times as steam heat in the evaporation process, which will dramatically reduce natural gas use. The grant requires $ 5.3 million in matching contributions. AAFK has received no grant funds from this program as reimbursement for actual expenditures incurred through December 31, 2023 . Due to the uncertainty associated with the approval process under the grant program, the Company will recognize future grant proceeds received as a reduction of costs in the period when payment is received. 44 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) PG&E A2313 Pipeline Interconnection Recovery Grant. In February 2023, Aemetis Biogas received $ 5 million from Pacific Gas and Electric (PG&E) as part of qualification under a California Public Utility Commission Biomethane incentive program reimbursing actual Aemetis Biogas costs to interconnect biogas cleanup hub with PG&E utility pipeline. Incentive payment earned after validating renewable natural gas flowed into PG&E interconnect successfully for required period of time. Pacific Gas and Electric SEM Manufacturer ’ s Incentive Program. During the fourth quarter of 2022, AAFK received $ 374 thousand in PG&E SEM Incentive Program reimbursements for installing more efficient beer feed heat exchangers. Third party consultants verified the reduction in natural gas usages from the new heat exchangers to obtain the incentive program funds. Investment Tax Credits. In the third quarter of 2023, the Company sold to a third -party purchaser certain transferrable Investment Tax Credits (ITCs) that had been generated by the Company from its investments in the California Dairy Renewable Natural Gas segment. The Company accounted for the ITC sale in accordance with ASC 740 by electing the flow-through method. The net value of the tax credits sale of $ 55.2 million is recorded as an income tax benefit in the income statement for the period ending December 31, 2023. The cash was received in October 2023, and it was used to make certain principal and interest payments on revolving notes and Series A preferred financing. Income Taxes . The Company recognizes income taxes in accordance with ASC 740 Income Taxes using an asset and liability approach. This approach requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. The measurement of current and deferred taxes is based on provisions of enacted tax law. ASC 740 provides for recognition of deferred tax assets if the realization of such assets is more likely than not to occur. Otherwise, a valuation allowance is established for the deferred tax assets, which may not be realized. As of December 31, 2023 and 2022 , the Company recorded a full valuation allowance against its U.S. federal and state net deferred tax assets due to operating losses incurred since inception. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets were fully offset by a valuation allowance. The Company is subject to income tax audits by the respective tax authorities in all of the jurisdictions in which it operates. The determination of tax liabilities in each of these jurisdictions requires the interpretation and application of complex and sometimes uncertain tax laws and regulations. The recognition and measurement of current taxes payable or refundable and deferred tax assets and liabilities requires that the Company make certain estimates and judgments. Changes to these estimates or a change in judgment may have a material impact on the Company’s tax provision in a future period. In 2018, the Company adopted certain tax accounting policies related to the new global intangible low-taxed income (“GILTI”) provisions under the Tax Cuts and Jobs Act such that the Company will: ( 1 ) account for all GILTI related book-tax differences as period costs and ( 2 ) use the Incremental Cash Tax Savings approach in evaluating its valuation allowance assessment related to the GILTI inclusion. Basic and Diluted Net Income (Loss) per Share. Basic net loss per share is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt and warrants to the extent the impact is dilutive. As the Company incurred a net loss for the years ended December 31, 2023 and 2022 , potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive. The following table shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of December 31, 2023 and 2022 : As of December 31, 2023 December 31, 2022 Series B preferred (post split basis) - 127 Common stock options and warrants 6,056 5,050 Debt with conversion feature at $ 30 per share of common stock 1,267 1,240 Total number of potentially dilutive shares excluded from the diluted net (loss) per share calculation 7,323 6,417 Comprehensive Loss. ASC 220 Comprehensive Income requires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive loss and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of our India subsidiary. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments. Foreign Currency Translation/Transactions. The Company’s India subsidiary operates in a local currency environment where the local currency is the functional currency used for transactions and accounting. Assets and liabilities of that subsidiary are translated into U.S. dollars at exchange rates in effect at the balance sheet date and the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. Transactional gains and losses from foreign currency transactions are recorded in other (income) loss, net. Fair Value of Financial Instruments. Financial instruments include accounts receivable, accounts payable, accrued liabilities, current and non-current portion of subordinated debt, notes payable, Series A preferred units, and long-term debt. Due to the unique terms of our notes payable and long-term debt and the financial condition of the Company, the fair value of the debt is not readily determinable. The fair value determined using level 3 inputs of all other current financial instruments is estimated to approximate carrying value due to the short-term nature of these instruments. 45 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Share Based Compensation. We recogn ize share-based compensation expense in accordance with ASC 718 Stock Compensation, which requires the Company to recognize expenses related to the estimated fair value of the Company’s share-based compensation awards over the vesting period, adjusted to reflect only those shares that are expected to vest. Commitments and Contingencies. We record and/or disclose commitments and contingencies in accordance with ASC 450 Contingencies . ASC 450 applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible Instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Debt Issuance Costs. The Company records debt issuance costs related to specific incremental costs directly attributable to issuing, modifying, or extending a debt instrument. The debt issuance costs are reported as an adjustment to the carrying amount of the debt. The debt issuance costs are amortized using the interest rate method over the life of the debt instrument. Troubled Debt Restructuring Accounting. The evaluation for troubled debt restructuring includes assessing whether the creditor granted a concession. To determine this, we calculate the post-restructuring effective interest rate by projecting cash flows on the new terms and calculating a discount rate equal to the carrying amount of pre-restructuring debt and comparing this calculation to the terms of prior amendments. If the post restructuring effective interest rate is less than the prior terms effective interest rate, we assess this as having been granted a concession. We then apply troubled debt restructuring accounting to any debt in which the creditor granted a concession. Debt Modification Accounting . The Company evaluates amendments to its debt in accordance with ASC 540 - 50 Debt – Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company. Recently Adopted Accounting Pronouncements . In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses that are regularly provided to the CODM. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023 - 07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. The amendments are effective for the Company’s annual periods beginning January 1, 2024, and for interim periods within fiscal years beginning January 1, 2025. Retrospective application is required, with early adoption permitted. The Company is currently evaluating the impact ASU 2023 - 07 will have on its consolidated financial statements. In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact ASU 2023 - 09 will have on its consolidated financial statements. There were no other recently issued and effective authoritative guidance that are expected to have a material impact on the Company’s Consolidated Financial Statements through the reporting date. 2. Inventories Inventories consist of the following: As of December 31, 2023 December 31, 2022 Raw materials $ 9,907 $ 2,971 Work-in-progress 1,682 127 Finished goods 6,702 1,560 Total inventories $ 18,291 $ 4,658 As of December 31, 2023 and December 31, 2022 , the Company recognized a lower of cost or net realizable value of $ 58 thousand and $ 0.1 million respectively, related to inventory. 46 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 3. Property, Plant and Equipment Property, plant and equipment consist of the following: As of December 31, 2023 December 31, 2022 Land $ 7,345 $ 7,344 Plant and buildings 136,318 99,116 Furniture and fixtures 2,266 1,831 Machinery and equipment 14,982 15,209 Construction in progress 73,057 88,990 Property held for development 15,431 15,437 Finance lease right of use assets 2,889 3,045 Total gross property, plant & equipment 252,288 230,972 Less accumulated depreciation ( 57,180 ) ( 50,531 ) Total net property, plant & equipment $ 195,108 $ 180,441 Interest capitalized in property, plant, and equipme nt was $ 5.6 million and $ 11.1 million for the years ended December 31, 2023 and 2022 , respectively. Construction in progress includes costs for the biogas construction projects (dairy digesters and pipeline), Riverbank projects (sustainable aviation fuel and renewable diesel plant as well as carbon capture characterization well), and energy efficiency projects at the Keyes Plant. Property held for development is the partially completed Goodland Plant which is not ready for operation. Depreciation will begin for each project when the project is finalized and placed into service. Depreciation on the components of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Years Plant and buildings 20 - 30 Machinery and equipment 5 - 15 Furniture and fixtures 3 - 5 The Company recorded depreciation expense of approximat ely $ 6.9 million and $ 5.5 million respectively, for the years ended December 31, 2023 and 2022 . 4. Debt Debt consists of the notes from the Company’s senior lender, Third Eye Capital, acting as Agent for the Purchasers (Third Eye Capital), other working capital lenders and subordinated lenders as follows: December 31, 2023 December 31, 2022 Third Eye Capital term notes $ 7,159 $ 7,141 Third Eye Capital revolving credit facility 20,922 60,602 Third Eye Capital revolving notes Series B 54,412 - Third Eye Capital revenue participation term notes 12,011 11,963 Third Eye Capital acquisition term notes 26,655 26,578 Third Eye Capital Fuels Revolving Line 32,511 27,410 Third Eye Capital Carbon Revolving Line 23,486 22,710 Construction Loan 41,024 19,820 Cilion shareholder seller notes payable 7,028 6,821 Subordinated notes 17,625 15,931 EB-5 promissory notes 42,211 41,404 Working capital loans 3,827 - Term loans on capital expenditures 5,850 5,860 Total debt 294,721 246,240 Less current portion of debt 37,028 49,219 Total long term debt $ 257,693 $ 197,021 47 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Third Eye Capital Note Purchase Agreement On July 6, 2012, Aemetis, Inc. and Aemetis Advanced Fuels Keyes, Inc. (“AAFK”), entered into an Amended and Restated Note Purchase Agreement with Third Eye Capital (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, Third Eye Capital extended credit in the form of (i) senior secured term loans in an aggregate principal amount of approximately $ 7.2 million to replace existing notes held by Third Eye Capital (the “Term Notes”); (ii) senior secured revolving loans in an aggregate principal amount of $ 18.0 million (the “Revolving Credit Facility”); (iii) senior secured term loans in the principal amount of $ 10.0 million to convert the prior revenue participation agreement to a note (the “Revenue Participation Term Notes”); and (iv) senior secured term loans in an aggregate principal amount of $ 15.0 million (the “Acquisition Term Notes”) used to fund the cash portion of the acquisition of Cilion, Inc. (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the “Original Third Eye Capital Notes”). On March 8, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 22 to the Note Purchase Agreement (“Amendment No. 22” ) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by December 31, 2021, ( ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender, and (iii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through December 31, 2021. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $ 0.1 million in cash. On May 11, 2022, Third Eye Capital agreed to the Limited Waiver and Amendment No. 23 to the Note Purchase Agreement (“Amendment No. 23” ) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by March 31, 2022, ( ii) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended March 31, 2023 and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended March 31, 2022 in which the Company exceeded the $ 100,000 capital expenditures limit. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $ 0.1 million. On August 8, 2022, Third Eye Capital agreed to Limited Waiver and Amendment No. 24 to the Note Purchase Agreement ("Amendment No. 24" ) to: (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2024 in exchange for an extension fee equal to 1 % of the Note Indebtedness in respect to each Note, provided that such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension, and (ii) provide for a waiver for certain covenant defaults. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $ 0.3 million in cash (the "Amendment No. 24 Fee"). On March 6, 2023, Third Eye Capital agreed to the Limited Waiver and Amendment No. 25 to the Note Purchase Agreement (“Amendment No. 25” ) to: provide a waiver for the Keyes Plant Minimum Quarterly Production violation for the quarter ended March 31, 2023, in which the Borrowers did not meet the 10 -million-gallon production requirement. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $ 0.1 million in cash. On May 4, 2023, Third Eye Capital agreed to the Limited Waiver and Amendment No. 26 to the Note Purchase Agreement (“Amendment No. 26” ) to: provide a waiver for (i) the Keyes Plant Minimum Quarterly Production violation for the quarter ended June 30, 2023, in which the Borrowers did not meet the minimum production of 10 million gallons requirement and (ii) the lender agrees to waive the cash payment of certain fees which are required by the Third Eye Capital Notes and allowed these fees to be added to the outstanding balance of the Revolving Notes. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment and waiver fee of $ 0.1 million. We evaluated the terms of Amendment No. 26 and the maturity date extension in accordance with ASC 470 - 50 Debt – Modification and Extinguishment and ASC 470 - 60 Troubled Debt Restructuring and applied modification accounting treatment. On May 16, 2023, Third Eye Capital agreed to the Limited Waiver and Amendment No. 27 to the Note Purchase Agreement (“Amendment No. 27” ) to: (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2025 in exchange for an extension fee equal to 1 % of the Note Indebtedness in respect to each Note, provided that such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension, (ii) create a new series of Revolving Notes ("Revolving Notes Series B"), and (iii) provide for the issuance of new Revolving Notes Series B to facilitate the funding. As consideration for such waivers, the borrowers also agreed to pay Third Eye Capital an amendment fee of $ 0.5 million, by adding the balance to the Revolving Notes Series B and issued a warrant exercisable for 80,000 shares of the Company's common stock with an exercise price of $ 2.00 per each share issuable under the warrant. We evaluated the terms of Amendment No. 27 in accordance with ASC 470 - 50 Debt – Modification and Extinguishment and ASC 470 - 60 Troubled Debt Restructuring and applied modification accounting treatment. According to ASC 470 - 10 - 45 Debt–Other Presentation Matters, if it is probable that the Company will not be able to cure the default at measurement dates within 12 months, the related debt needs to be classified as current. To assess this guidance, the Company performed ratio and cash flow analysis using its cash flow forecast and debt levels for plant to debt ratio covenant over the next four quarters. The Company forecasted sufficient cash flows to reduce debt levels of Third Eye Capital and meet the operations of the Company. Based on this analysis, the Company believes that it is reasonably possible that through a combination of cash flows from operations, EB- 5 investments, and proceeds from the sale of common stock, it will be able to meet the ratio of the note indebtedness covenant during the relevant period. In addition, in February 2024, Aemetis extended the maturity date by one year to April 1, 2025. As such, the notes are classified as long-term debt as of December 31, 2023. 48 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) On March 25, 2024, the Company and Third Eye Capital Corporation entered into a “Limited Waiver and Amendment No. 28 to Amended and Restated Note Purchase Agreement” (“Amendment No. 28” ) that (i) revised the loan covenant related to Keyes plant note indebtedness to exclude certain draws on Third Eye credit facilities and to exclude the "Redemption Fee," as defined in the Amended and Restated Note Purchase Agreement, and (ii) changed the maximum ratio of Note Indebtedness to the Keyes Plant market value to 120%. As consideration for Amendment No. 28, the Company agreed to pay Third Eye Capital an amendment fee of $ 0.1 million. We will evaluate the terms of Amendment No. 28 in accordance with ASC 470 - 50 Debt – Modification and Extinguishment. On March 6, 2020, we entered into a one -year reserve liquidity facility governed by a promissory note, payable to Third Eye Capital Corporation, in the principal amount of $ 18 million. On March 14, 2021, Third Eye Capital agreed to increase the amount available under the reserve liquidity facility to $ 70.0 million. On August 9, 2021, Third Eye Capital agreed to decrease the amount available under the reserve liquidity notes governed by a promissory note to $ 40.0 million. On March 25, 2024, the Company and Third Eye Capital entered into a "Seventh Amended and Restated Promissory Note" that increased the amount available under the Company's reserve liquidity facility to $ 85 million and extended the maturity date to April 1, 2025. Borrowings under the Note are available until maturity on April 1, 2025. Interest on borrowed amounts accrues at a rate of 30 % per annum, to be paid monthly in arrears, or 40 % if an event of default has occurred and continues. Interest payments due may be capitalized into the principal balance of the Note. The Company will pay a standby fee of 2 % per annum of the difference between the aggregate principal outstanding under the Note and the commitment, payable monthly arrears in either cash or stock. The Note also requires the Company to pay a fee in the amount of $ 0.5 million in connection with a request for an advance on the Note, provided that such fee may be added to the principal amount of the Note. The outstanding principal balance of the indebtedness evidenced by the Note, plus any accrued but unpaid interest and any other sums due thereunder, is due and payable in full on April 1, 2025. In addition, the Company must make payments on the Note with funds received from the closing of certain new debt or equity financing or transactions, as described in the Note. The Note is secured by liens and security interests upon the property and assets of the Company. Terms of Third Eye Capital Notes A. Term Notes . As of December 31, 2023 , the Company had $ 7.2 million in principal and interest outstanding under the Term Notes and $ 45 thousand unamortized debt issuance costs. The Term Notes accrue interest at 14 % per annum. The Term Notes mature on April 1, 2025. B. Revolving Credit Facility . The Revolving Credit Facility accrues interest at the prime rate plus 13.75 % ( 22.25 % as of December 31, 2023 ), payable monthly in arrears. Interest was accrued and accrued interest from all notes can be capitalized to the Revolving Credit Facility. The Revolving Credit Facility matures on April 1, 2025. As of December 31, 2023 , AAFK had $ 21.9 million in principal and interest and waiver fees outstanding under the Revolving Credit Facility and $ 0.9 million unamortized discount issuance costs. C. Revolving Notes Series B. The Revolving Notes Series B accrues interest at the prime rate plus 13.75 % ( 22.25 % as of December 31, 2023) payable monthly in arrears. The Revolving Notes Series B matures on April 1, 2025. As of December 31, 2023, AAFK had $ 54.8 million in principal and interest and waiver fees outstanding and $ 0.4 million unamortized debt issuance costs under the Revolving Notes Series B. D. Revenue Participation Term Notes . The Revenue Participation Term Note bears interest at 5 % per annum and matures on April 1, 2025. As of December 31, 2023 , AAFK had $ 12.1 million in principal and interest outstanding on the Revenue Participation Term Notes and $ 81 thousand unamortized discount issuance costs. E. Acquisition Term Notes . The Acquisition Term Notes accrue interest at the prime rate plus 10.75 % ( 19.25 % per annum as of December 31, 2023 and mature on April 1, 2025. As of December 31, 2023 , Aemetis Facility Keyes, Inc. had $ 26.8 million in principal and interest and redemption fees outstanding and unamortized discount issuances costs of $ 184 thousand. The outstanding principal balance includes a total of $ 7.5 million in redemption fees on which interest is not charged. F. Reserve Liquidity Notes . The Reserve Liquidity Notes, with available borrowing capacity in the amount of $ 85.0 million, accrues interest at the rate of 30 % per annum and are due and payable upon the earlier of: (i) the closing of new debt or equity financings, (ii) receipt from any sale, merger, debt or equity financing, or (iii) April 1, 2025. We have no borrowings outstanding under the Reserve Liquidity Notes as of December 31, 2023 . 49 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The Third Eye Capital Notes contain various covenants, including but not limited to, debt to plant value ratio, minimum production requirements, and restrictions on capital expenditures. The terms of the Notes allow the lender to accelerate the maturity in the event of default that could reasonably be expected to have a material adverse effect, such as any change in the business, operations, or financial condition. The Company has evaluated the likelihood of such an acceleration event and determined such an event to not be probable in the next twelve months. The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from the Company’s North American subsidiaries. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $ 8.0 million. Third Eye Capital Revolving Credit Facility for Fuels and Carbon Lines. On March 2, 2022, GAFI and Aemetis Carbon Capture, Inc. (“ACCI”) entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital , as administrative agent and collateral agent, and the lender party thereto (the “New Credit Facility”). The New Credit Facility provides for two credit facilities with aggregate availability of up to $ 100 million, consisting of a revolving credit facility with GAFI for up to $ 50 million (the “Fuels Revolving Line”) and a revolving credit facility with ACCI for up to $ 50 million (the “Carbon Revolving Line” and together with the Fuels Revolving Line, the “Revolving Lines”). The revolving loans made under the Fuels Revolving Line have a maturity date of March 1, 2025 and will accrue a rate of interest per annum equal to the greater of (i) the prime rate plus 6.00 % and (ii) ten percent ( 10.0 %) ( 14.50 % per annum as of December 31, 2023 , and the revolving loans made under the Carbon Revolving Line will have a maturity date of March 1, 2026 and accrue a rate of interest per annum equal to the greater of (i) the prime rate plus 4.00 % and (ii) eight percent ( 8.0 %) ( 12.50 % per annum as of December 31, 2023 . The revolving loans made under the Fuels Revolving Line are available for working capital purposes and the revolving loans made under the Carbon Revolving Line are available for projects that reduce, capture, use or sequester carbon with the objective of reducing carbon dioxide emissions. In connection with the New Credit Facility, the Company agreed to issue to the lender under the New Credit Facility: (i) warrants entitling the lender to purchase 50,000 shares of common stock of the Company at an exercise price equal to $ 10.20 per share, exercisable for a five -year period from March 2, 2022; and (ii) warrants entitling holders thereof to purchase 250,000 shares of common stock of the Company, at an exercise price equal to $ 20.00 per share, exercisable for a ten -year period from March 2, 2022. In addition, under the Fuels Revolving Line, we issued 100,000 shares of common stock to existing note holders under the GAFI note purchase agreement. The shares were accounted at fair value and are being amortized over the life of the Fuels Revolving Line. Upon closing of the New Credit Facility, the Company drew on the revolving lines to repay $ 16.0 million on the higher interest rate AAFK Revolving Credit Facility, $ 6.1 million in property taxes, and to fund the capital projects and working capital projects. As of December 31, 2023 ., GAFI had $ 33.9 million in principal and interest outstanding and $ 1.3 million unamortized debt issuance costs. As of December 31, 2023 , ACCI had $ 25.2 million in principal and interest outstanding and $ 1.7 million in unamortized debt issuance costs. Cilion shareholder seller notes payable . In connection with the Company’s merger with Cilion, Inc., (Cilion) on July 6, 2012, the Company issued $ 5.0 million in notes payable to Cilion shareholders (Cilion Notes) as merger compensation, subordinated to the Third Eye Capital Notes. The Cilion Notes bear interest at 3 % per annum and are due and payable after the Third Eye Capital Notes have been paid in full. As of December 31, 2023 , Aemetis Facility Keyes, Inc. had $ 7.0 million in principal and interest outstanding on the Cilion Notes. Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $ 0.9 million and $ 2.5 million in original notes to the investors (Subordinated Notes). The Subordinated Notes mature every six months. Upon maturity, the Subordinated Notes are renewable automatically at the Company's election for six month periods with a fee of 10 % added to the balance outstanding plus issuance of warrants exercisable at $ 0.01 with a two -year term. Interest accrues at 10 % per annum and is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full. On January 1, 2023, the maturity on two Subordinated Notes was extended until the earlier of (i) June 30, 2023; ( ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $ 90 thousand and $ 250 thousand cash extension fee was paid by adding the fee to the balance of the new Subordinated Notes and 113 thousand common stock warrants were granted with a term of two years and an exercise price of $ 0.01 per share. On July 1, 2023, the maturity on two Subordinated Notes was extended until the earlier of (i) December 31, 2023; ( ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $ 90 thousand and $ 250 thousand cash extension fee was paid by adding the fee to the balance of the new Subordinated Notes and 113 thousand common stock warrants were granted with a term of two years and an exercise price of $ 0.01 per share. The Company evaluated the January 1, 2023 and July 1 2023 amendments and the refinancing terms of the notes and applied modification accounting treatment in accordance with ASC 470 - 50 Debt – Modification and Extinguishment. On January 1, 2024, the maturity on two Subordinated Notes was extended until the earlier of (i) June 30, 2024; ( ii) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $ 90 thousand and $ 250 thousand cash extension fee was paid by adding the fee to the balance of the new Subordinated Notes and 113 thousand common stock warrants were granted with a term of two years and an exercise price of $ 0.01 per share. 50 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) At December 31, 2023 and 2022 , the Company had, in aggregate, the amount of $ 17.6 million and $ 15.9 million in principal and interest outstanding, respectively, under the Subordinated Notes. EB- 5 promissory notes. EB- 5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. The Company entered into a Note Purchase Agreement dated March 4, 2011 ( as further amended on January 19, 2012 and July 24, 2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a Regional Center to receive EB- 5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB- 5 Notes”) bearing interest at 2 - 3%. Each note was issued in the principal amount of $ 0.5 million and due and payable four years from the date of each note, for a total aggregate principal amount of up to $ 36.0 million (the “EB- 5 Phase I funding”). The original maturity date on the promissory notes can be extended automatically for a one or two -year period initially and is eligible for further one -year automatic extensions as long as there is no notice of non-extension from investors and the investors’ immigration process is in progress. On February 27, 2019, Advanced BioEnergy, LP, and the Company entered into an Amendment to the EB- 5 Notes which restated the original maturity date on the promissory notes with automatic six -month extensions as long as the investors’ immigration processes are in progress. Except for six early investor EB- 5 Notes, the Company was granted 12 months from the date of the completion of immigration process to redeem these EB- 5 Notes. Given the COVID- 19 situation and processing delays for immigration process, Advanced BioEnergy, LP extended the maturity dates for debt repayment based on their projected processing timings as long as the investors don’t give notice of withdrawal or I- 829 gets approved. Accordingly, the notes have been recognized as long-term debt while investor notes who obtained green card approval have been classified as current debt. The EB- 5 Notes are convertible after three years at a conversion price of $ 30 per share. Advanced BioEnergy, LP arranges investments with foreign investors, who each make loans to the Keyes Plant in increments of $ 0.5 million. The Company has sold an aggregate principal amount of $ 36.0 million of EB- 5 Notes under the EB- 5 Phase I funding since 2012 to the date of this filing. As of December 31, 2023 , $ 35.5 million has been released from the escrow amount to the Company, with $ 0.5 million remaining to be funded to escrow. As of December 31, 2023 , $ 37.9 million in principal and interest was outstanding on the EB- 5 Notes sold under the EB- 5 Phase I funding. On October 16, 2016, the Company launched its EB- 5 Phase II funding, with plans to issue $ 50.0 million in additional EB- 5 Notes on substantially similar terms and conditions as those issued under the Company’s EB- 5 Phase I funding, to refinance indebtedness and capital expenditures of Aemetis, Inc. and GAFI (the “EB- 5 Phase II funding”). On November 21, 2019, the minimum investment was raised from $ 0.5 million per investor to $ 0.9 million per investor. The Company entered into a Note Purchase Agreement dated with Advanced BioEnergy II, LP, a California limited partnership authorized as a Regional Center to receive EB- 5 Phase II funding investments, for the issuance of up to 100 EB- 5 Notes bearing interest at 3 %. On May 1, 2020 Supplement No. 3 amended the offering documents and lowered the total eligible new EB- 5 Phase II funding investors to 60. Eight EB- 5 investors have funded at the $ 0.5 million per investor amount, while 52 new EB- 5 Phase II funding investors are eligible at the new $ 0.9 million per investor amount under the current offering. Job creation studies show additional investors may be possible to increase the total offering amount in the future. Each new note will be issued in the principal amount of $ 0.9 million and due and payable five years from the date of each note, for a total aggregate principal amount of up to $ 50.8 million. The Company has sold an aggregate principal amount of $ 4.0 million of EB- 5 Notes under the EB- 5 Phase II funding since 2016 to the date of this filing. As of December 31, 2023 , $4.0 million has been released from escrow to the Company and $ 46.8 million remains to be funded to escrow. As of December 31, 2023 , $ 4.3 million was outstanding on the EB- 5 Notes under the EB- 5 Phase II funding. Working capital loans. On July 26, 2022, the Company entered into a short-term loan with Secunderabad Oils Limited in an amount not to exceed $ 1.88 million. On August 1, 2022, the Company entered into a short-term loan with Leo Edibles & Fats Limited in an amount not to exceed $ 1.27 million. The loans bears interest at 18 % and are payable monthly. The loans are repayable on demand by the lender or within one year from the date of issuance. The loans are renewable, and the Company can obtain the loan to the extent they paid back. As of December 31, 2023 and 2022, the Company had $ 3.8 million and none, respectively, under these agreements. Secured loans . In the first quarter of 2023, the Company entered into several short-term loans with IndusInd Bank and HDFC Bank. The loans are secured by fixed deposits made by the Company. The loans bear interest at rates that range from 6 % to 8 %. The loans mature between November 15, 2023 and May 3, 2024. As of December 31, 2023 , and December 31, 2022, the Company had no balance, respectively, under these agreements. Aemetis Biogas 1 LLC Construction and Term Loans. On October 4, 2022, the Company entered into a Construction Loan Agreement ( “AB1 Construction Loan”) with Greater Nevada Credit Union (“GNCU”). Pursuant to the AB1 Construction Loan, the lender made available an aggregate principal of $ 25 million, secured by all personal property collateral and real property collateral of Aemetis Biogas 1 LLC. The AB1 Construction Loan contained certain financial covenants to be measured as of the last day of each fiscal year end, and annually for the term of the loan. Effective as of December 22, 2023, the AB1 Construction Loan was refinanced and replaced with a term loan ( "AB1 Term Loan"). The AB1 Term Loan is secured by all personal property collateral and real property collateral of Aemetis Biogas 1 LLC. It bears interest at a rate of 9.25 % per annum, to be adjusted every five years thereafter to equal the five -year Treasury Constant Maturity Rate, as published by the Board of Governors of the Federal Reserve System as of the adjustment date, plus 5.00 % or (ii) the index floor. Other material terms of the loan include: (i) payments of interest only to be paid in monthly installments beginning January 22, 2024, ( ii) payments of equal combined monthly installments of principal and interest beginning on January 22, 2025, and (iii) a maturity date of December 22, 2042, at which time the entire unpaid principal amount, together with accrued and unpaid interest thereon, shall become due and payable. AB1 Term Loan contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2025, and annually for the term of the loan. The AB1 Term Loan also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of December 31, 2023 and December 31, 2022, the Company had $ 25.1 million and none, respectively, outstanding under the AB1 Term Loan. 51 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Aemetis Biogas 2 Construction Loan. On July 28, 2023, the Company entered into a second Construction and Term Loan Agreement ( “AB2 Loan") with Magnolia Bank, Incorporated. Pursuant to the AB2 Loan, the lender has made available an aggregate principal amount not to exceed $ 25 million. The loan is secured by all personal property collateral and real property collateral of Aemetis Biogas 2 LLC. The loan bears interest at a rate of 8.75 % per annum, to be adjusted every five years thereafter to equal the five -year Treasury Constant Maturity Rate, as published by the Board of Governors of the Federal Reserve System as of the adjustment date, plus 5.00 %. Other material terms of the AB2 Loan include: (i) payments of interest only to be paid in monthly installments beginning August 15, 2023, ( ii) payments of equal combined monthly installments of principal and interest beginning on August 15, 2025, and (iii) a maturity date of July 28, 2043, at which time the entire unpaid principal amount, together with accrued and unpaid interest thereon, shall become due and payable. The AB2 Loan contains certain financial covenants to be measured as of the last day of each fiscal year beginning fiscal year end 2025, and annually for the term of the loan. The AB2 Loan also contains other affirmative and negative covenants, representations and warranties and events of default customary for loan agreements of this nature. As of December 31, 2023 and December 31, 2022, the Company had $ 16.8 million and none, respectively, outstanding and unamortized discount issuances costs of $ 0.8 million and none, respectively, under the AB2 Loan. Financing Agreement for capital expenditures. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase ZEBREX TM membrane dehydration equipment to conserve energy and improve operating efficiencies at the Keyes Plant. The Company also entered into a financing agreement with Mitsubishi for $ 5.7 million for this equipment. Payments pursuant to the financing transaction will commence after the installation date and interest will be charged based on the certain performance metrics after operation of the equipment. After an initial start-up process, process bottlenecks were encountered, and operations were suspended pending further examination and optimization. We recorded the asset in property, plant and equipment, net and recorded the related liability of $ 2.0 million in short term borrowings and $ 3.8 million in other long-term debt, respectively as of December 31, 2023 . Debt repayments for the Company’s loan obligations follow: Twelve months ended December 31, Debt Repayments 2024 $ 37,028 2025 181,464 2026 37,912 2027 4,128 2028 2,108 There after 37,545 Total debt 300,185 Debt issuance costs ( 5,464 ) Total debt, net of debt issuance costs $ 294,721 5. Commitments and Contingencies Leases The Company is a party to operating leases for the Company's corporate office in Cupertino, modular offices, and laboratory facilities. We have also entered into several finance leases for mobile equipment and for the Riverbank Industrial Complex. These finance leases have a purchase option at the end of the term that we are reasonably certain we will exercise, so the leases are classified as finance leases. All of our leases have remaining term of one year to 13 years. We made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses. The Company evaluates leases in accordance with ASC 842 – Lease Accounting. When discount rates implicit in leases cannot be readily determined, we use the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and right of use (ROU) assets. The incremental borrowing rate used by the Company is based on weighted average baseline rates commensurate with the Company’s secured borrowing rate, over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter are used. 52 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The components of lease expense and sublease income is as follows: Twelve Months Ended December 31, 2023 2022 Operating lease cost Operating lease expense $ 722 $ 673 Short term lease expense 223 176 Variable lease expense 93 91 Total operating lease cost $ 1,038 $ 940 Finance lease cost Amortization of right-of-use assets $ 121 $ 179 Interest on lease liabilities 340 310 Total finance lease cost $ 461 $ 489 Cash paid for amounts included in the measurement of lease liabilities: Twelve Months Ended December 31, 2023 2022 Operating cash flows used in operating leases $ 668 $ 766 Operating cash flows used in finance leases 340 310 Financing cash flows used in finance leases 428 481 Supplemental non-cash flow information related to the operating ROU asset and lease liabilities for the year ended December 31, 2023 and 2022 : Twelve Months Ended December 31, 2023 2022 Operating leases Accretion of the lease liability $ 249 $ 340 Amortization of right-of-use assets 293 333 Weighted Average Remaining Lease Term Operating leases (in years) 4.2 5.2 Finance leases (in years) 13.0 14.0 Weighted Average Discount Rate Operating leases 14.1 % 14.2 % Finance leases 13.2 % 13.2 % 53 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Supplemental balance sheet information related to leases was as follows: As of December 31, 2023 December 31, 2022 Operating leases Operating lease right-of-use assets $ 2,056 $ 2,449 Current portion of operating lease liability 406 338 Long term operating lease liability 1,783 2,189 Total operating lease liabilities 2,189 2,527 Finance leases Property and equipment, at cost $ 2,889 $ 3,045 Accumulated depreciation ( 228 ) ( 112 ) Property and equipment, net 2,661 2,933 Other current liability 30 71 Other long term liabilities 2,687 2,911 Total finance lease liabilities 2,717 2,982 Maturities of operating lease liabilities were as follows: Year Ended December 31, Operating leases Finance leases 2024 $ 682 $ 179 2025 681 168 2026 626 145 2027 645 145 2028 272 145 There after - 10,105 Total lease payments 2,906 10,887 Less imputed interest ( 717 ) ( 8,170 ) Total lease liability $ 2,189 $ 2,717 The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on net basis on the consolidated financial statements. Sublease income is recorded in the other operating income section of the Consolidated Statements of Operations and Comprehensive Loss. 54 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The components of lease income for the years ended December 31, 2023 and 2022 were as follows: December 31, 2023 December 31, 2022 Lease income $ 2,075 $ 1,255 Future lease commitments to be received by the Company as of December 31, 2023 , are as fo llows: Year ended December 31, 2024 $ 948 2025 773 2026 562 2027 508 2028 508 There after 635 Total future lease commitments $ 3,934 Legal Proceedings On August 31, 2016, the Company filed a lawsuit in Santa Clara County Superior Court against defendant EdenIQ, Inc. (“EdenIQ”). The lawsuit was based on EdenIQ’s wrongful termination of a merger agreement that would have effectuated the merger of EdenIQ into a new entity that would be primarily owned by Aemetis. On July 24, 2019, the court awarded EdenIQ a portion of the fees and costs it had sought in the amount of approximately $ 6.2 million and the Company recorded these fees based on the court order. On May 6, 2022 the parties settled the dispute for $ 4.8 million by entering into a settlement agreement. The settlement was paid and a gain on litigation of $ 1.4 million was recognized on the income statement in the second quarter of 2022. The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. While the ultimate outcome of these matters is not presently determinable, it is in the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. Due to the uncertainties in the litigation and settlement process, it is at least reasonably possible that management's view of outcomes will change in the near term. 6. Aemetis Biogas - Series A Preferred Financing and Variable Interest Entity On December 20, 2018, ABGL entered into a Series A Preferred Unit Purchase Agreement for the sale of Series A Preferred Units to Protair- X Americas, Inc. (Purchaser), with Third Eye Capital acting as an agent for the sale of 6,000,000 preferred units of ABGL. ABGL is authorized to issue 11,000,000 common units, and up to 6,000,000 convertible, redeemable, secured, preferred membership units (the “Series A Preferred Units”). ABGL issued 6,000,000 common units to the Company at $ 5.00 per common unit for a total of $ 30,000,000 in funding. Additionally, 5,000,000 common units of ABGL are held in reserve as potential conversion units issuable to the Purchaser upon certain triggering events discussed below. Prior to August 8, 2022, the Preferred Unit Purchase Agreement included (i) preference payments of $ 0.50 per unit on the outstanding Series A Preferred Units commencing on the second anniversary, with any outstanding preference payments subject to interest at 10 percent per annum (ii) conversion rights for up to 1,200,000 common units or up to maximum number of 5,000,000 common units (also at a one Series A Preferred Unit to one common unit basis) if certain triggering events occur, (iii) one board seat of the three available to be elected by Series A Preferred Unit holders, (iv) mandatory redemption value at $ 15 per unit payable at an amount equal to 75 % of free cash flow generated by ABGL, up to $ 90 million in the aggregate (if all units are issued), (v) full redemption of the units on the sixth anniversary, (vi) minimum cash flow requirements from each digester, and (vii) $ 0.9 million paid as fees to the Agent from the proceeds. Until paid, the obligations of ABGL under the Preferred Unit Agreement are secured by the assets of ABGL in an amount not to exceed the sum of (i) $ 30,000,000 , plus (ii) all interest, fees, charges, expenses, reimbursement obligations and indemnification obligations of ABGL. Prior to August 8, 2022, triggering events would be deemed to occur upon ABGL’s failure to redeem units, comply with covenants, any other defaults or cross defaults, or to perform representations or warranties. Upon a triggering event: (i) the obligation of the Purchaser to purchase additional Series A Preferred Units is terminated, (ii) cash flow payments for redemption payments increases from 75 % to 100 % of free cash flows, and (iii) total number of common units into which preferred units may be converted increases from 1,200,000 common units to 5,000,000 common units on a one for one basis. As of December 31, 2023 , ABGL has not generated minimum quarterly operating cash flows by operating the dairies. As a result of the violation of this covenant, free cash flows, when they occur, may be applied for redemption payments at the increased rate of 100% instead of the initial rate of 75% of free cash flows. 55 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) From inception of the agreement to August 8, 2022, ABGL issued 3,200,000 Series A Preferred Units in the first tranche for a value of $ 16.0 million and also issued 2,800,000 of Series A Preferred Units in a second tranche for a value of $ 14.0 million, reduced by a redemption of 20,000 Series A Preferred Units for $ 0.3 million. On August 8th, 2022, ABGL entered into a Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Amendment") providing for: (i) a waiver of certain covenants prohibiting the internal reorganization of ABGL subsidiaries and the incurrence of indebtedness by ABGL and its subsidiaries pursuant to a USDA loan; (ii) a waiver of certain operational defaults under the PUPA; and (iii) an amendment which (a) requires ABGL to redeem all of the outstanding Series A Preferred Units by December 31, 2022, ( the “Final Redemption Date”) for $ 116 million; and (b) provides ABGL the right to redeem all of the outstanding Series A Preferred Units by September 30, 2022, for $ 106 million. The PUPA Amendment further provides the failure to redeem the Series A Preferred Units by the Final Redemption Date would constitute a triggering event requiring ABGL to enter into a credit agreement with Protair and Third Eye Capital effective as of January 1, 2023. We evaluated the terms of the PUPA Amendment and applied extinguishment accounting treatment in accordance with ASC 470 - 50 Debt – Modification and Extinguishment and recorded a loss on extinguishment of $ 49.4 million. On January 1, 2023, ABGL entered into the Second Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Second Amendment") providing for: (i) a waiver for not redeeming all Series A Preferred Units by December 31, 2022, and (ii) the right by ABGL to redeem all of the outstanding Series A Preferred Units by May 31, 2023, for an aggregate redemption price of $ 125 million. The PUPA Second Amendment further provides that failure to redeem the Series A Preferred Units by the redemption date, ABGL is required to enter into a credit agreement with Protair and Third Eye Capital effective as of June 1, 2023 and maturing on May 31, 2024, in substantially the form attached to the PUPA Second Amendment. We determined that Third Eye Capital provided a concession to redeem the preferred shares at lower effective borrowing rate than the credit agreement interest rate or prior amendment rate. In accordance with the provisions of ASC 470 - 60 Troubled Debt Restructuring, we applied troubled debt restructuring accounting, resulting in no gain or loss from the application of this accounting. In addition, given that the Company could turn the agreement into a credit agreement, the Company began accreting the redemption price from an initial carrying value at December 31, 2022, of $ 116.0 million to $ 159.0 million over the seventeen months ending May 31, 2024. On May 31, 2023, ABGL entered into the Third Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Third Amendment") providing: (i) a waiver to ABGL for not redeeming all Series A Preferred Units by May 31, 2023 and (ii) the right by ABGL to redeem all of the outstanding Series A Preferred Units by August 31, 2023, for an aggregate redemption price of $ 135 million. The PUPA Third Amendment further provides that failure to redeem the Series A Preferred Units by the redemption date, ABGL is required to enter into a credit agreement with Protair and Third Eye Capital effective, as of September 1, 2023 and maturing on August 31, 2024, in substantially the form attached to the PUPA Third Amendment. We determined that Third Eye Capital provided a concession to redeem the preferred shares at lower effective borrowing rate than the credit agreement interest rate or prior amendment rate. In accordance with the provisions of ASC 470 - 60 Troubled Debt Restructuring, we applied troubled debt restructuring accounting, resulting in no gain or loss from the application of this accounting. In addition, given that the Company could turn the agreement into a credit agreement, the Company is accreting these tranches from a carrying value at May 31, 2023 of $ 127.2 million to $ 171.7 million over the fifteen months ending August 31, 2024. . On October 6, 2023, ABGL partially repaid $ 30 million of Series A Preferred Units using the partial proceeds from tax credit sale of $ 55.2 million. On November 8, 2023, ABGL entered into the Fourth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Fourth Amendment") providing: (i) a waiver to ABGL for not redeeming all Series A Preferred Units by August 31, 2023 and (ii) the right by ABGL to redeem all of the outstanding Series A Preferred Units by December 31, 2023, for an aggregate redemption price of $ 108 million which included $ 5.5 million closing fee. The PUPA fourth Amendment further provides that failure to redeem the Series A Preferred Units by the redemption date, ABGL is required to enter into a credit agreement with Protair and Third Eye Capital effective, as of January 1, 2024 and maturing on December 31, 2024, in substantially the form attached to the PUPA fourth Amendment. We determined that Third Eye Capital provided a concession to redeem the preferred shares at lower effective borrowing rate than the credit agreement interest rate or prior amendment rate. In accordance with the provisions of ASC 470 - 60 Troubled Debt Restructuring, we applied troubled debt restructuring accounting, resulting in no gain or loss from the application of this accounting. In addition, given that the Company could turn the agreement into a credit agreement, the Company began accreting the redemption price from a carrying value at November 8, 2023 of $ 110.6 million to $ 130.0 million over the period ending December 31, 2024. On February 8, 2024, ABGL entered into the Fifth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Fourth Amendment") providing: (i) a waiver to ABGL for not redeeming all Series A Preferred Units by December 31, 2023 and (ii) the right by ABGL to redeem all of the outstanding Series A Preferred Units by April 30, 2024, for an aggregate redemption price of $ 111.0 million which includes a closing fee of $ 5.5 million. The PUPA Fifth Amendment further provides that if ABGL does not redeem the Series A Preferred Units by the redemption date, ABGL will enter into a credit agreement with Protair and Third Eye Capital effective as of May 1, 2024 and maturing April 30, 2025, in substantially the form attached to the PUPA fifth Amendment. We will evaluate the PUPA fifth amendment according to ASC 470. Based on the terms of the PUPA Fifth Amendment, the deferred PUPA redemption balance is classified as long term liability as of December 31, 2023. 56 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The Company recorded carrying value of Series A Preferred Unit liabilities as long-term liabilities of $ 113.2 million and $ 116.0 million as of December 31, 2023 and 2022 , respectively. Variable interest entity assessment After consideration of ABGL’s operations and the above agreement, we concluded that ABGL did not have enough equity to finance its activities without additional subordinated financial support. ABGL is capitalized with Series A Preferred Units that are recorded as liabilities under U.S. GAAP. Hence, we concluded that ABGL is a VIE. Through the Company's ownership interest in all of the outstanding common stock, its current ability to control the board of directors, the management fee paid to Aemetis and control of subordinated financing decisions, Aemetis has been determined to be the primary beneficiary and accordingly, the assets, liabilities, and operations of ABGL are consolidated into those of the Company. Total assets, before intercompany eliminations, of ABGL as of December 31, 2023 were $ 90.3 million which serve as collateral for the Series A Preferred Units. 7. Stockholders ’ Equity Common Stock The Company is authorized to issue 80 million shares of common stock, $ 0.001 par value per share. Convertible Preferred Stock The company is authorized to issue up to 65 million shares of preferred stock, $ 0.001 par value per share. Effective as of December 12, 2023, the Company converted all of its outstanding Preferred Stock into by issuing one share of common stock for each 10 shares of preferred stock outstanding. As a result, as of December 31, 2023, the Company has no outstanding shares of preferred stock. The following table shows the number of preferred shares authorized and outstanding: Shares Issued and Authorized Outstanding December 31, Shares 2023 2022 Series B preferred stock 7,235 - 1,270 Undesignated 57,765 - - 65,000 - 1,270 8. Warrants to Purchase Common Stock During 2023, the Company granted the following warrants: ● A warrant issued to a vendor exercisable for the purchase of 100,000 shares at an exercise price of $ 2.50 per share with a two -year term. This warrant was exercised in 2023 using cashless exercise resulting in the issuance of 62,293 shares of common stock. ● Warrants issued to the Company's senior lender exercisable for 160,000 shares of the Company's common stock at an exercise price of $ 2.00 per share with a five -year term. These warrants are outstanding as of December 31, 2023. ● In connection with a credit line increase, a warrant issued to the Company's senior lender was automatically modified to increase the number of shares that may be purchased by 25,000 shares. The warrant has an exercise price of $ 10.20 per share and a remaining term of about 3 years. ● Warrants issued to subordinated lenders exercisable for 226,666 at an exercise price of $ 0.01 per share and a term of two years. These warrants were exercised in 2023 with a combination of cashless exercise and cash payments. The following table shows the weighted average fair value calculations for warrants granted based on the listed weighted average assumptions: Description For the year ended December 31, 2023 2022 Dividend-yield 0 % 0 % Risk-free interest rate 3.85 % 1.75 % Expected volatility 117.90 % 151.41 % Expected life (years) 5 3 Exercise price per share $ 1.62 $ 10.47 Market value per share on grant date $ 4.13 $ 11.29 Fair value per share on grant date $ 3.92 $ 9.68 57 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) A summary of historical warrant activity for the years ended December 31, 2023 and 2022 follows: Warrants Outstanding & Exercisable Weighted - Average Exercise Price Average Remaining Term in Years Outstanding December 31, 2021 55 $ 2.59 4.95 Granted 527 10.47 Exercised ( 227 ) 0.01 Outstanding December 31, 2022 355 $ 15.92 7.48 Granted 511 1.62 Exercised ( 336 ) 0.83 Outstanding December 31, 2023 530 $ 11.70 5.77 All of the above outstanding warrants are vested and exercisable as of December 31, 2023 . 9. Stock-Based Compensation 2019 Stock Plan On August 26, 2021, the stockholders of the Company approved the Aemetis, Inc. Amended and Restated 2019 Stock Plan (the “2019 Stock Plan”). This plan allows our Board or delegated Board committee to grant Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, and other stock or cash awards to employees, Directors, and consultants. The 2019 Stock Plan has a term of 10 years from the original version adoption date of April 25, 2019, and supersedes all prior stockholder approved plans with respect to new grants. Options issued under prior plans and the prior version of the 2019 stock plan remain outstanding and exercisable according to their terms. The 2019 Stock Plan authorizes a total pool of 4,558,621 shares as of July 1, 2021, including all outstanding option grants under all plans and all shares then available for issuance under the 2019 Stock Plan as of that date. Shares within this pool that expire or terminate unused become available for a subsequent grant. In addition, the number of shares available for issuance automatically increases on January 1 of each year by an amount equal to 4 % of the sum of total common stock outstanding on January 1 and 2,541,823 shares. Pursuant to the 2019 Stock Plan, the company issued stock options to employees exercisable for 1.3 million and 1.3 million shares during the years ended December 31, 2023 and 2022, each with a 10 year term and 3 year vesting schedule. The Company issued restricted stock award grants with immediate vesting to directors for 244 thousand shares and 89 thousand shares during the years ended December 31, 2023 and 2022, respectively, with a weighted average fair value on date of grant of $ 3.75 and $ 10.92 per share, respectively for those same time periods. The following table summarizes activity under the 2019 Stock Plan during 2022 and 2023: Shares Available for Grant Number of Shares Outstanding Weighted-Average Exercise Price Balance as of December 31, 2021 42 3,763 $ 2.29 Authorized 1,338 - - Options Granted ( 1,307 ) 1,307 10.97 RSAs Granted ( 89 ) - - Exercised - ( 295 ) 0.93 Forfeited/expired 81 ( 81 ) 11.63 Balance as of December 31, 2022 65 4,694 $ 4.63 Authorized 1,644 - - Options Granted ( 1,278 ) 1,278 3.60 RSAs Granted ( 244 ) - - Exercised - ( 177 ) 1.83 Forfeited/expired 269 ( 269 ) 5.93 Balance as of December 31, 2023 456 5,526 $ 4.42 58 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The following table summarizes vested and unvested option awards outstanding as of December 31, 2023 and 2022 : Number of Shares Weighted Average Exercise Price Remaining Contractual Term (In Years) Aggregate Intrinsic Value1 2023 Vested and Exercisable 3,986 $ 3.58 6.47 $ 11,695 Unvested 1,540 6.55 8.67 1,621 Total 5,526 $ 4.42 7.04 $ 13,316 2022 Vested and Exercisable 3,170 $ 2.46 6.98 $ 7,419 Unvested 1,524 9.13 8.81 647 Total 4,694 $ 4.63 7.58 $ 8,066 ( 1 ) Intrinsic value based on the $ 5.24 and $ 3.96 closing price of Aemetis, Inc. common stock on December 31, 2023 and 2022 respectively, as reported on the NASDAQ Exchange. Inducement Equity Plan Options In March 2016, the Board of Directors of the Company approved an Inducement Equity Plan authorizing the issuance of 100,000 non-statutory stock options to purchase common stock. As of December 31, 2023 , no options were outstanding under the Inducement Equity Plan. This plan was not approved by stockholders so is available only for grants to prospective employees. Stock-based Compensation Expense Stock-based compensation is accounted for in accordance with ASC 718, Compensation - Stock Compensation , which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and consultants based o n estimated fair value on the grant date. We estimate the fair value using the Black-Scholes option pricing model and recognize that fair value as an expense over the vesting period of each grant using the straight-line method. W e only record compensation cost for vested options. The Black-Scholes valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, expected dividends, and expected forfeitures. We use the simplified calculation of expected term described in SEC Staff Accounting Bulletin No. 107, Share-Based Payment . Volatility is based on an average of the historical volatility of Aemetis, Inc. common stock during the period of time preceding the date of option issuance that matches the term of the option grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the treasury maturity term corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants. To the extent actual forfeitures occur, the difference is recorded as an adjustment in the scheduled expense during the period of the forfeiture. The weighted average fair value for options granted during the years ended 2023 and 2022 are based on the following assumptions: Description For the year ended December 31, 2023 2022 Dividend-yield 0 % 0 % Risk-free interest rate 3.86 % 2.03 % Expected volatility 124.62 % 117.21 % Expected life (years) 7.00 7.00 Market value per share on grant date $ 3.60 $ 10.97 Fair value per share on grant date $ 3.29 $ 9.71 For the years ended December 31, 2023 and 2022 , the Company recorded stock-based compensation expense in the amount of $ 7.7 million, and $ 6.4 million, respectively. As of December 31, 2023 , the Company had $ 7.3 million of total unrecognized compensation expense for employees that the Company will amortize over the remaining vesting period of each individual option grant. The outstanding unvested options have a remaining weighted average vesting term of 1.5 years. 59 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 10. Agreements Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company procures whole yellow corn from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. Pursuant to a separate agreement entered in May 2023, J.D. Heiskell also purchases all of our ethanol and other products under separate agreements and sells them to customers designated by us. We have designated Murex to purchase ethanol and WDG and corn oil are sold to A.L Gilbert. The Company’s relationships with J.D. Heiskell, and A.L. Gilbert are well established, and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and providing working capital relationships. As of December 31, 2023 and 2022 , Aemetis made prepayments to J.D. Heiskell of none and $ 2.4 million, respectively. The J. D. Heiskell purchases and sales activity associated with the Purchasing Agreement, Corn Procurement and Working Capital Agreements during the years ended December 31, 2023 and 2022 were as follows: As of and for the twelve months ended December 31, 2023 2022 Ethanol sales $ 77,359 $ - Wet distiller's grains sales 21,963 50,930 CDO and CDS sales 3,296 10,168 Corn purchases 83,128 191,401 Accounts receivable 1,073 - Accounts payable 1,207 27 Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into a Fuel Ethanol Purchase and Sale Agreement with Murex, which matures on October 31, 2023, with automatic one -year renewals thereafter. On May 30, 2023 the Company entered into Amendment No. 1 to the Fuel Ethanol Purchase and Sale Agreement that provides (i) the Company temporarily suspend the agreement for the duration of the Company's Working Capital Agreement with J.D. Heiskell, and (ii) the initial term shall be automatically renewed beginning on October 1, 2023 and ending on March 31, 2025. The Company also entered into a Wet Distillers Grains Marketing Agreement with A.L. Gilbert, with a maturity date of December 31, 2024, with automatic one -year renewals thereafter. For the years ended December 31, 2023 and 2022 , the Company expensed marketing co sts of $ 1.5 million and $ 2.9 million, respectively, under the terms of both the Ethanol Marketing Agreement and the Wet Distillers Grains Marketing Agreement and are presented in Selling, General, and Administration expense. For the years ended December 31, 2023 and 2022 , the Company expensed shipping and handling costs related to sales of ethan ol $ 1.7 million and $ 3.3 million for each period and expensed transportation costs related to sales of WDG of $ 3.3 million and $ 5.3 million. Supply Trade Agreement. On July 1, 2022, the Company entered into an operating agreement with Gemini Edibles and Fats India Private Limited (“Gemini”). Under this agreement, Gemini agreed to provide the Company with a supply of feedstock up to a credit limit of $ 12.7 million. If the Company fails to pay the invoice within the ten -day credit period, the outstanding amount will bear interest at 12 %. The term of the agreement is for one year. Either party can terminate the agreement by giving one month notice in writing. The agreement was terminated. As of December 31, 2023 and 2022 , the Company had no outstanding balance under this agreement. As of December 31, 2023 , the Company has no forward sales commitments. 60 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 11. Segment Information Aemetis recognizes three reportable segments “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.” The “California Ethanol” reportable segment includes the Company’s 65 million gallon per year ethanol plant in Keyes, California, and the adjacent land leased for the production of CO₂. The “California Dairy Renewable Natural Gas” reportable segment including the production and sale of Renewable Natural Gas and associated environmental attributes, consisting of anaerobic digesters located at diaries, at 36 mile biogas collection pipeline, and biogas upgrading hub and pipeline interconnect that produces Renewable Natural Gas from the biogas. The “India Biodiesel” reportable segment includes the Company’s 60 million gallon per year nameplate capacity biodiesel manufacturing plant in Kakinada India, and administrative offices in Hyderabad, India. The Company has additional operating segments that were determined not to be reportable segments, including our key projects under development which consists of sustainable aviation fuel and renewable diesel production in Riverbank and Carbon Capture and Underground Sequestration wells in California. Additionally, our corporate offices, Goodland Plant in Kansas, and the research and development facility in Minnesota are included in the “All Other” category. Summarized financial information by reportable segment for the years ended December 31, 2023 and 2022 follow: For the year ended December 31, 2023 California Ethanol California Dairy Renewable Natural Gas India Biodiesel All other Total Revenues from external customers $ 104,068 $ 5,455 $ 77,194 $ - $ 186,717 Intersegment revenues - - - - - Gross profit (loss) ( 6,602 ) ( 331 ) 8,950 - 2,017 Interest expense, including amortization of debt fees 25,258 2,809 447 11,005 39,519 Accretion and other expenses of Series A preferred units - 25,313 - - 25,313 Loss on Income tax expense (benefit) - ( 55,159 ) 1,416 7 ( 53,736 ) Capital expenditures 5,695 24,744 1,281 1,399 33,119 Depreciation 3,995 2,116 576 246 6,933 Total Assets 67,991 92,794 34,769 47,852 243,406 For the year ended December 31, 2022 California Ethanol California Dairy Renewable Natural Gas India Biodiesel All other Total Revenues from external customers $ 228,194 $ 208 $ 28,111 $ - $ 256,513 Intersegment revenues - 1,002 - - 1,002 Gross profit (loss) ( 13,017 ) ( 778 ) 8,273 ( 13 ) ( 5,535 ) Interest expense, including amortization of debt fees 20,637 742 119 7,272 28,770 Accretion and other expenses of Series A preferred units - 9,888 - - 9,888 Income tax expense - 6 1,040 7 1,053 Loss on debt extinguishment - 49,386 - - 49,386 Capital expenditures 8,399 22,884 129 7,745 39,157 Depreciation 4,148 615 650 122 5,535 Total Assets 66,794 77,714 16,120 46,486 207,114 61 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) A reconciliation of reportable segment revenues to consolidated totals for the years 2023 and 2022 follow: Revenues 2023 2022 Total revenues for reportable segments $ 186,717 $ 257,515 Elimination of intersegment revenues - ( 1,002 ) Total consolidated revenues $ 186,717 $ 256,513 California Ethanol: During the year ended December 31, 2023 and 2022 , the Company amended the Corn Procurement and Working Capital Agreement and the J.D. Heiskell Purchasing Agreement to procure corn from J.D. Heiskell and sell all ethanol, WDG, CDO, and CDS the Company produces to J.D. Heiskell. Sales of ethanol, WDG, CDO, and CDS to one customer accounted for 100 % of the California Ethanol segment’s revenue for the year ended December 31, 2023 . Sales of ethanol to one customer accounted for 73 % of the California Ethanol segment’s revenue for the year ended December 31, 2022 . Sales of WDG, and corn oil to one customer accounted for 26 % of the Company’s California Ethanol segment revenues for the year ended December 31, 2022 . California Dairy Renewable Natural Gas: 100 % of our sales of renewable natural gas during the twelve months ended December 31, 2023 were from sales to one customer. In the third quarter of 2023, we started selling D3 RINs and one customer accounted for 98 % of the 2023 sales. For the twelve months ended December 31, 2022, all sales were associated with intercompany sales to the Keyes Plant for use in boilers. India Biodiesel: During the year ended December 31, 2023 , three biodiesel customers accounted for 47 %, 25 % and 23 % of the Company’s India Biodiesel segment revenues. During the year ended December 31, 2022 , three biodiesel customers accounted for 48 %, 29 %, 12 % of the Company’s India Biodiesel segment revenues. 12. Related Party Transactions The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital LLC (“McAfee Capital”), owned by Eric McAfee and his wife, $ 0.4 millio n in connection with employment agreements and expense reimbursements. T he balance accrued related to these employment agreements was $ 0.4 million as of December 31, 2023. On February 28, 2023, the Audit Committee of the Company approved a one -time fee of $ 350 thousand payable to McAfee Capital in connection with McAfee Capital’s guarantees of the Company’s indebtedness with Third Eye Capital. As of December 31, 2023, the outstanding balance is $ 175 thousand. The Company owes various members of its Board of Directors amounts totaling $ 0.3 million as of December 31, 2023 and December 31, 2022 , for each period, in connection with board compensation fees, which are included in accounts payable on the balance sheet. For the years ended December 31, 2023 and 2022 the Company expensed $ 0.4 million, and $ 0.4 million, respectively, in connection with board compensation fees. 13. Income Tax The Company files a consolidated federal income tax return including all its domestic subsidiaries except for Aemetis Biogas LLC, which files its own returns. State tax returns are filed on a consolidated, combined or separate basis depending on the applicable laws relating to the Company and its subsidiaries. Components of tax expense consist of the following: 2023 2022 Current: Federal $ ( 55,164 ) $ - State and Local 13 13 Foreign 1,489 230 ( 53,662 ) 243 Deferred: Federal - - State and Local - - Foreign ( 74 ) 810 Income tax (benefit) expense $ ( 53,736 ) $ 1,053 The Company records deferred tax liability in other long term liabilities in the Consolidated Balance Sheets. The deferred tax liability resulted as India subsidiary had income for the year ended December 31, 2023 . U.S. loss and foreign income (loss) before income taxes are as follows: Year Ended December 31, 2023 2022 United States $ ( 107,191 ) $ ( 112,959 ) Foreign 7,035 6,254 Pretax loss $ ( 100,156 ) $ ( 106,705 ) 62 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Income tax benefit differs from the amounts computed by applying the statutory U.S. federal income tax rate ( 21% ) to loss before income taxes as a result of the following: Year Ended December 31, 2023 2022 Income tax benefit at the federal statutory rate $ ( 21,033 ) $ ( 22,408 ) State tax benefit ( 999 ) ( 496 ) Sale of tax credits ( 55,164 ) - Foreign tax differential 11 168 Stock-based compensation 2,048 295 Interest Expense 92 58 GILTI Inclusion - 1,126 Prior year true-ups ( 18,031 ) 55 Non-includible US Entities - 13,499 Other 67 46 Credits ( 869 ) ( 2,373 ) Valuation Allowance 40,142 11,083 Income Tax Expense (Benefit) ( 53,736 ) 1,053 Effective Tax Rate 53.65 % ( 0.99 )% The components of the net deferred tax asset or (liability) are as follows: Year Ended December 31, 2023 2022 Deferred Tax Assets Organizational Costs, Start-up and Intangible Assets $ 34,217 $ 2,309 Stock Based Compensation 1,239 1,842 NOLs, Unabsorbed Depreciation and R&D Credits C/F's 67,621 68,201 Interest expense carryover 29,066 22,374 Ethanol Credits 1,500 1,500 Carbon Oxide Sequestration Credit 6,696 5,827 Accrued Expenses 2,249 2,001 Operating Lease Liability 1,282 1,512 Other, net 248 113 Total Deferred Tax Assets 144,118 105,679 Valuation Allowance ( 135,354 ) ( 95,214 ) Net Deferred Tax Assets 8,764 10,465 Deferred Tax Liabilities Right of Use Asset ( 1,230 ) ( 1,477 ) Property, Plant & Equipment ( 8,266 ) ( 9,788 ) Other, net ( 3 ) ( 10 ) Total Deferred Tax Liabilities ( 9,499 ) ( 11,275 ) Net Deferred Tax Liabilities $ ( 735 ) $ ( 810 ) Based on the Company’s evaluation of current and anticipated future taxable income, the Company believes it is more likely than not that insufficient taxable income will be generated to realize the net deferred tax assets, and accordingly, a valuation allowance has been set against these net deferred tax assets. The $ 0.8 million deferred tax liability is recorded in other long-term liabilities on the balance sheet. 63 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) We do not provide for U.S. income taxes for any undistributed earnings of the Company’s foreign subsidiaries, as the Company considers these to be permanently reinvested in the operations of such subsidiaries and have a cumulative foreign loss. At December 31, 2023 and 2022 these undistributed earnings totaled $ 1.3 million compared to undistributed losses of $ 2.5 million for December 31, 2022. If any earnings were distributed, some countries may impose withholding taxes. However, due to the Company’s overall deficit in foreign cumulative earnings and its U.S. loss position, the Company does not believe a material net unrecognized U.S. deferred tax liability exists. ASC 740 Income Taxes provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more-likely-than- not of being sustained on audit, based on the technical merits of the position. Tax positions that meet the recognition threshold are reported at the largest amount that is more-likely-than- not to be realized. This determination requires a high degree of judgment and estimation. The Company periodically analyzes and adjusts amounts recorded for the Company’s uncertain tax positions, as events occur to warrant adjustment, such as when the statutory period for assessing tax on a given tax return or period expires or if tax authorities provide administrative guidance or a decision is rendered in the courts. The Company does not reasonably expect the total amount of uncertain tax positions to significantly increase or decrease within the next 12 months. As of December 31, 2023 , the Company’s uncertain tax positions were not significant for income tax purposes. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2023 : United States — Federal 2007 – present United States — State 2008 – present India 2013 – present Mauritius 2006 – present As of December 31, 2023 , the Company had U.S. federal NOL carryforwards of approximately $ 253.0 million and state NOL carryforwards of approximately $ 336.0 million. The Company also has approximately $ 1.5 million of alcohol and cellulosic biofuel credit and $ 6.7 million of carbon oxide sequestration credit carry forwards. The federal net operating loss and other tax credit carryforwards expire on various dates between 2027 and 2043. The state net operating loss carryforwards expire on various dates between 2027 through 2042. Under the current tax law, net operating loss and credit carryforwards available to offset future income in any given year may be limited by US or India statute regarding net operating loss carryovers and timing of expirations or upon the occurrence of certain events, including significant changes in ownership interests. As of December 31, 2023 , the Company's India subsidiary had no loss carryforwards. 64 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 14. Parent Company Financial Statements (Unaudited) We conduct substantially all of our operations through subsidiaries and are dependent on cash distributions, dividends and other intercompany transfers of funds from our operations. Our subsidiaries have not made significant distributions to us and may not have funds available for dividends or distributi ons in the future. The ability of our subsidiaries to transfer funds to us will be dependent upon their respective abilities to achieve sufficient cash flows after satisfying their respective cash requirements, including subsidiary level debt service on their respective credit agreements. The following is a summary of the Parent Company Financial statements. Aemetis, Inc. (Parent Company) Balance Sheets As of December 31, 2023 and 2022 2023 2022 Assets Current assets Cash and cash equivalents $ 1,454 $ 286 Receivables due from subsidiaries 110,083 98,780 Prepaid expenses 437 611 Other current assets 12 7 Total current assets 111,986 99,684 Investment in Aemetis Property Keyes, Inc. 1,556 1,274 Investment in Aemetis International, Inc. 12,059 6,659 Investment in Aemetis Advanced Products Riverbank, Inc. 638 173 Investment in AE Advanced Products Keyes , Inc. 246 - Total investments in Subsidiaries, net of advances 14,499 8,106 Property, plant and equipment, net 149 135 Other assets 2,096 2,377 Total Assets $ 128,730 $ 110,302 Liabilities & stockholders' deficit Current liabilities Accounts payable $ 3,633 $ 2,934 Mandatorily redeemable Series B convertible preferred 4,521 4,082 Other current liabilities 5,031 4,269 Total current liabilities 13,185 11,285 Long term liabilities: Operating lease liability 1,716 2,047 Subsidiary obligation in excess of investment Investment in AE Advanced Fuels, Inc. 220,571 177,856 Investment in Aemetis Americas, Inc 202 205 Investment in Aemetis Biofuels, Inc. 2,721 2,738 Investment in Aemetis Technologies, Inc. 4,868 4,716 Investment in AE Advanced Products Keyes , Inc. - 270 Investment in Aemetis Health Products, Inc. 2,084 2,076 Investment in Goodland Advanced Fuels, Inc. 22,982 16,869 Investment in Aemetis Biogas LLC 70,471 91,292 Investment in Aemetis Carbon Capture Inc 5,895 2,323 Investment in Aemetis Properties Riverbank, Inc. 1,012 479 Total subsidiary obligation in excess of investment 330,806 298,824 Total long term liabilities 332,522 300,871 Stockholders' deficit Series B Preferred convertible stock - 1 Common stock 41 36 Additional paid-in capital 264,058 232,546 Accumulated deficit ( 475,405 ) ( 428,985 ) Accumulated other comprehensive loss ( 5,671 ) ( 5,452 ) Total stockholders' deficit ( 216,977 ) ( 201,854 ) Total liabilities & stockholders' deficit $ 128,730 $ 110,302 65 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Aemetis, Inc. (Parent Company) Statements of Operations and Comprehensive Loss For the Years Ended December 31, 2023 and 2022 2023 2022 Equity in subsidiary losses $ ( 25,370 ) $ ( 91,561 ) Selling, general and administrative expenses 19,218 15,203 Operating loss ( 44,588 ) ( 106,764 ) Other (income) expense Interest expense 1,073 806 Debt related fees and amortization expense 781 1,581 Other income ( 30 ) ( 1,400 ) Loss before income taxes ( 46,412 ) ( 107,751 ) Income tax expense 8 7 Net loss ( 46,420 ) ( 107,758 ) Other comprehensive loss Foreign currency translation adjustment ( 219 ) ( 1,102 ) Comprehensive loss $ ( 46,639 ) $ ( 108,860 ) 66 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Aemetis, Inc. (Parent Company) Statements of Cash Flows For the years ended December 31, 2023 and 2022 2023 2022 Operating activities: Net loss ( 46,420 ) ( 107,758 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 7,660 6,410 Depreciation 51 29 Debt related fees and amortization expense 782 1,776 Subsidiary portion of net losses 25,370 91,561 Gain on litigation - ( 1,400 ) Warrants issued for working capital agreement 409 - Changes in assets and liabilities: Prepaid expenses ( 608 ) 111 Accounts payable 699 ( 90 ) Accrued interest expense 785 778 Other liabilities 85 ( 4,625 ) Other assets 276 207 Net cash used in operating activities ( 10,911 ) ( 13,001 ) Investing activities: Capital expenditures ( 65 ) ( 128 ) Subsidiary advances, net ( 9,707 ) 1,222 Net cash provided by (used in) investing activities ( 9,772 ) 1,094 Financing activities: Proceeds from the exercise of stock options 133 206 Proceeds from issuance of common stock in equity offering 21,718 11,987 Net cash provided by financing activities 21,851 12,193 Net increase in cash, cash equivalents, and restricted cash 1,168 286 Cash, cash equivalents and restricted cash at beginning of period 286 - Cash, cash equivalents, and restricted cash at end of period $ 1,454 $ 286 Supplemental disclosures of cash flow information, cash paid: Income taxes paid 7 7 Supplemental disclosures of cash flow information, non-cash transactions: Fair value of warrants issued to subordinated debt holders 1,278 1,939 Fair value of stock issued to a related party for guarantee fees - 2,012 Fair value of warrants issued for capital expenditures 318 - Fair value of warrants issued to lender for debt issuance costs - 3,158 Fair value of stock issued to lender - 1,335 67 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 15. Subsequent Events Subordinated Notes On January 1, 2024, the maturity on two accredited investor's Subordinated Notes was extended until the earlier of (i) June 30, 2024; ( ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $ 25 million; (iii) the completion of an Initial Public Offering by AAFK or Aemetis; or (iv) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A $ 90 thousand and $ 250 thousand extension fee was paid by adding the fee to the balance of the new Subordinated Note and Aemetis issued the lenders warrants exercisable for 113 thousand shares of common stock with a term of two years and an exercise price of $ 0.01 per share. The warrants have been fully exercised. Series A Preferred Unit Purchase Agreement On February 8, 2024, ABGL entered into a Fifth Waiver and Amendment to Series A Preferred Unit Purchase Agreement (“PUPA Fifth Amendment"). The PUPA Fifth Amendment: (i) provides an extension of time for ABGL to redeem all of the outstanding Series A Preferred Units until April 30, 2024, and changes the redemption price to $ 111 million, including fees, (ii) requires ABGL to enter into a twelve -month credit agreement in the amount of $ 111 million with the lenders if the Series A Preferred Units are not redeemed by such date, and specifies that entry of the credit agreement will satisfy the obligation to redeem the units; and (iii) provides ABGL with a waiver of the obligations of prior agreements to redeem the Series A Preferred Units by any prior dates. Third Eye Capital Reserve Liquidity Facility On March 25, 2024, the Company and Third Eye Capital Corporation entered into a "Seventh Amended and Restated Promissory Note" that increased the amount available under the Company's reserve liquidity facility to $ 85 million and extended the maturity date to April 1, 2025. Borrowings under the Note are available until maturity on April 1, 2025. Interest on borrowed amounts accrues at a rate of 30% per annum, to be paid monthly in arrears, or 40% if an event of default has occurred and continues. Interest payments due may be capitalized into the principal balance of the Note. The Company will pay a standby fee of 2% per annum of the difference between the aggregate principal outstanding under the Note and the commitment, payable monthly arrears in either cash or stock. The Note also requires the Company to pay a fee in the amount of $ 0.5 million in connection with a request for an advance on the Note, provided that such fee may be added to the principal amount of the Note. The outstanding principal balance of the indebtedness evidenced by the Note, plus any accrued but unpaid interest and any other sums due thereunder, is due and payable in full on April 1, 2025. In addition, the Company must make payments on the Note with funds received from the closing of certain new debt or equity financing or transactions, as described in the Note. The Note is secured by liens and security interests upon the property and assets of the Company. Third Eye Capital Limited Waiver and Amendment No. 28 On March 25, 2024, the Company and Third Eye Capital Corporation entered into a “Limited Waiver and Amendment No. 28 to Amended and Restated Note Purchase Agreement” (“Amendment No. 28” ) that (i) revised the loan covenant related to Keyes plant note indebtedness to exclude certain draws on Third Eye credit facilities and to exclude the "Redemption Fee," as defined in the Amended and Restated Note Purchase Agreement, and (ii) changed the maximum ratio of Note Indebtedness to the Keyes Plant market value to 120%. As consideration for Amendment No. 28, the Company agreed to pay Third Eye Capital an amendment fee of $ 0.1 million. 68 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 16. Liquidity The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. As a result of negative capital, negative operating results, and collateralization of substantially all of the Company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet our obligations during the next twelve months, we have extended our reserve liquidity credit facility through April 1, 2025, at an amount of up to $ 85 million, and we plan to refinance debt with our senior lender for amounts becoming due in the next twelve months and sell equity through our at-the-market registration at levels consistent with the year ended December 31, 2023. We believe these plans alleviate substantial doubt about our ability to continue as a going concern. While the Company believes we will be able to implement these plans to provide sufficient liquidity, there are inherent risks and uncertainties regarding our ability to execute our plans. In addition, we plan to pursue the following strategies to improve liquidity: Operations and Project Development For the Keyes Plant, we plan to operate the plant and continue to improve its financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction, or revenue enhancements, as well as, execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon emissions, and overall margin improvement. For Aemetis Biogas, we plan to operate our existing biogas digesters to produce and sell Renewable Natural Gas (RNG) and the associated Federal D3 RINs and California LCFS credits. We are continuing to build new dairy digesters and pipeline extensions. We began generating revenue from biogas operations in 2023 and this revenue will continue for the full year 2024, as well as increase as we build new digesters. We also expect revenue to increase when the California Air Resource Board processes our LCFS pathway applications and approves a provisional carbon intensity that is lower than the temporary carbon intensity we currently use to calculate the quantity of LCFS credits that we generate. We are seeking debt from a variety of sources to accelerate the construction of additional digesters. For the Kakinada Plant, we plan to continue to sell our biodiesel to OMCs pursuant to cost-plus contracts. We are also continuing to upgrade the plant to increase feedstock flexibility (and thereby lower feedstock costs), increase production capacity, and produce new products. Additionally, we are in the process of obtaining approval and contractual arrangements for the export of refined animal tallow into international markets. Financing We plan to continue to locate funding for existing and new business opportunities through a combination of working with our senior lender, restructuring existing loan agreements, entering into additional debt agreements for specific projects, obtaining project specific equity and debt for development projects, and obtaining additional debt from the current EB- 5 Phase II offering. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 69 Table of Contents