AEMETIS, INC 10-K

Item 9A. Controls and Procedures The information contained in this section covers management’s evaluation of our disclosure controls and procedures and our assessment of our internal control over financial reporting for the year ended December 31, 2021. Evaluation of Disclosure Controls and Procedures. Management (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our CEO and CFO concluded that, although remediation plans were initiated to address the material weakness over financial reporting as identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, the disclosure controls and procedures along with the related internal controls over financial reporting were not effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. 44 Table of Contents Inherent Limitations on Effectiveness of Controls Our management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Our controls and procedures are designed to provide reasonable assurance that our control system’s objective will be met, and our CEO and CFO have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures by us are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the period covered by this report based on the criteria for effective internal control described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Tread way Commission - 2013. Based on the results of management's assessment and evaluation, our CEO and CFO concluded that our internal control over financial reporting was not effective due to not maintaining sufficient information technology general controls (ITGCs) and segregation of duties in the areas of user access and change-management over certain information technology systems used in the Company's financial reporting processes and the application of controls relating to the design of supervision and review controls over the completeness and accuracy of complex transactions. Changes in Internal Control over Financial Reporting Discussed below are changes made to our internal control over financial reporting during the quarter ended December 31, 2021, in response to an identified material weakness. 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. A material weakness was identified in our failure to design and maintain effective controls over our supervision and review of the completeness and accuracy of complex transactions. Our efforts to improve our internal controls are ongoing and focused on replacing our ERP system with a system that includes the higher levels of control required by an accelerated filer, expanding our organizational capabilities to improve our control environment and on implementing process changes to strengthen our internal control and monitoring activities. As part of our ongoing efforts to remediate the weaknesses in our internal controls identified, we are evaluating our staff and outsourced resources, and hiring personnel or engaging third-parties with appropriate level of technical accounting knowledge and experience in the application of generally accepted accounting principles commensurate with the volume and complexity of our financial accounting and reporting requirements to address the material weakness and replacing our core information technology system to strengthen the areas of user access and change management. There are, however, inherent limitations in all control systems and no evaluation of controls can provide absolute assurance that all deficiencies have been detected. While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, we are committed to the continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting. Item 9B. Other Information Third Eye Reserve Liquidity Facility On March 8, 2022, Third Eye agreed to extend a one year reserve liquidity facility governed by a promissory note of $40.0 million to April 1, 2023. Borrowings under the facility are available until maturity on April 1, 2023. Interest on borrowed amounts accrues at a rate of 30% per annum, paid monthly in arrears and may be capitalized and due upon maturity, or 40% if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (b) April 1, 2023. Any amounts may be reborrowed up to repaid amounts up until the maturity date of April 1, 2023. The promissory note is secured by liens and security interests upon the property and assets of the Company. In addition, if any initial advances are drawn under the facility, the Company will pay a nonrefundable onetime fee in the amount of $0.5 million provided that such fee may be added to the principal amount of the promissory note on the date of such initial advance. Third Eye Capital Limited Waiver and Amendment No. 22 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. 45 Table of Contents PART III Item 10. Directors, Executive Officers and Governance The information required by this Item 10 will be included in our Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed no later than 120 days after December 31, 2021, and is incorporated herein by reference. Item 11. Executive Compensation The information required by this Item 11 will be included in our Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed no later than 120 days after December 31, 2021, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item 12 will be included in our Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed no later than 120 days after December 31, 2021, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item 13 will be included in our Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed no later than 120 days after December 31, 2021, and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services The information required by this Item 14 will be included in our Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed no later than 120 days after December 31, 2021, and is incorporated herein by reference. 46 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as a part of this Form 10-K: 1. Financial Statements: The following financial statements of Aemetis, Inc. are filed as a part of this Annual Report: · Report of Independent Registered Public Accounting Firm (PCAOB ID 49 ) · Consolidated Balance Sheets · Consolidated Statements of Operations and Comprehensive Loss · Consolidated Statements of Cash Flows · Consolidated Statements of Stockholders’ Deficit · Notes to Consolidated Financial Statements 2. Financial Statement Schedules: All schedules have been omitted as the required information is inapplicable or the information is presented in the Consolidated Financial Statements and notes thereto under Item 8 in Part II of this Form 10-K. 47 Table of Contents 3. Exhibits: INDEX TO EXHIBITS Incorporated by Reference Exhibit No. Description Form File No. Exhibit Filing Date Filed Herewith 3.1.1 Certificate of Incorporation 8-K 001-35475 3.1 Nov. 2, 2021 3.1.2 Certificate of Designation of Series B Preferred Stock 8-K 001-35475 3.2 Nov. 2, 2021 3.2.1 By Laws 8-K 001-35475 3.3 Nov. 2, 2021 4.1 Specimen Common Stock Certificate 8-K 000-51354 4.1 Dec. 13, 2007 4.2 Specimen Series B Preferred Stock Certificate 8-K 000-51354 4.2 Dec. 13, 2007 4.3 Form of Common Stock Warrant 8-K 000-51354 4.3 Dec. 13, 2007 4.4 Form of Series B Preferred Stock Warrant 8-K 000-51354 4.4 Dec. 13, 2007 10.1 Amended and Restated 2007 Stock Plan 14A 000-51354 Apr. 3, 2015 10.2 Amended and Restated 2007 Stock Plan form of Stock Option Award Agreement 14A 000-51354 Apr. 15, 2008 10.3 Eric McAfee Executive Employment Agreement dated September 1, 2011 8-K 000-51354 10.2 Sep. 8, 2011 10.4 Andrew Foster Executive Employment Agreement, dated May 22, 2007 8-K 000-51354 10.7 Dec. 13, 2007 10.5 Todd Waltz Executive Employment Agreement, dated March 15, 2010 8-K 000-51354 May 20, 2009 10.6 Sanjeev Gupta Executive Employment Agreement, dated September 1, 2007 10-K 000-51354 10.11 May 20, 2009 10.7 Agreement of Loan for Overall Limit dated June 26, 2008 between Universal Biofuels Private Limited and State Bank of India 10-Q 000-51354 10.12 Aug. 14, 2008 10.8 Ethanol Marketing Agreement, dated October 29, 2010 between AE Advanced Fuels Keyes, Inc. and Kinergy Marketing, LLC 10-Q 000-51354 10.6 Dec. 1, 2010 10.9 Zymetis, Inc. 2006 Stock Incentive Plan 10-K 000-51354 10.31 Oct. 31, 2012 10.10 Zymetis Inc. Incentive Stock Option Agreement 10-K 000-51354 10.32 Oct. 31, 2012 10.11 Zymetis Inc. Non-Incentive Stock Option Agreement 10-K 000-51354 10.33 Oct. 31, 2012 10.12 First Amendment to Ethanol Marketing Agreement dated September 6, 2011, between AE Advanced Fuels Keyes, Inc. and Kinergy Energy Marketing 8-K 000-51354 10.1 Sept. 8, 2011 10.13 Form of Note and Warrant Purchase Agreement 8-K 000-51354 10.1 Jan. 1, 2012 10.14 Form of 5% Subordinated Note 8-K 000-51354 10.2 Jan. 1, 2012 10.15 Form of Common Stock Warrant 8-K 000-51354 10.3 Jan. 1, 2012 10.16 Amendment No. 6 to Note Purchase Agreement dated April 13, 2012 among Aemetis Advanced Fuels Keyes, Inc., Third Eye Capital Corporation, as agent, and the Purchasers 8-K 000-51354 10.1 Apr. 19, 2012 48 Table of Contents 10.17 Limited Waiver to Note Purchase Agreement dated March 31, 2012 among Aemetis Advanced Fuels Keyes, Inc., and Third Eye Capital Corporation, an Ontario corporation, as agent 8-K 000-51354 10.1 Apr. 19, 2012 10.18 Limited Waiver to Note and Warrant Purchase Agreement dated March 31, 2012 among Aemetis, Inc., Third Eye Capital Corporation, an Ontario corporation, as agent, and the Purchasers 8-K 000-51354 10.1 Apr. 19, 2012 10.19 Amendment No. 7 to Note Purchase Agreement dated May 15, 2012 among Aemetis Advanced Fuels Keyes, Inc., Third Eye Capital Corporation, as agent, and the Purchasers 8-K 000-51354 10.1 May 22, 2012 10.20 Form of Note and Warrant Purchase Agreement 8-K 000-51354 10.1 Jun. 6, 2012 10.21 Form of 5% Subordinated Note 8-K 000-51354 10.1 Jun. 6, 2012 10.22 Form of Common Stock Warrant 8-K 000-51354 10.1 Jun. 6, 2012 10.23 Note and Warrant Purchase Agreement dated June 21, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc. 8-K 000-51354 10.1 Jun. 28, 2012 10.24 5% Subordinated Promissory Note dated June 21, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc. 8-K 000-51354 10.2 Jun. 28, 2012 10.25 Form of Warrant to Purchase Common Stock 8-K 000-51354 10.3 Jun. 28, 2012 10.26 Note Purchase Agreement dated June 27, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc. 8-K 000-51354 10.1 July 3, 2012 10.27 15% Subordinated Promissory Note dated June 27, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc. 8-K 000-51354 10.2 July 3, 2012 10.28 Agreement and Plan of Merger, dated July 6, 2012, among Aemetis, Inc., AE Advanced Fuels, Inc., Keyes Facility Acquisition Corp., and Cilion, Inc. 8-K 000-51354 2.1 July 10, 2012 10.29 Stockholders’ Agreement dated July 6, 2012, among Aemetis, Inc., and Western Milling Investors, LLC, as Security holders’ Representative. 8-K 000-51354 10.1 July 10, 2012 10.30 Amended and Restated Note Purchase Agreement, dated July 6, 2012 among Aemetis Advanced Fuels Keyes, Inc., Keyes Facility Acquisition Corp., Aemetis, Inc., Third Eye Capital Corporation, as Administrative Agent, and the Note holders 8-K 000-51354 10.2 July 10, 2012 10.31 Amended and Restated Guaranty, dated July 6, 2012 among Aemetis, Inc., certain subsidiaries of Aemetis and Third Eye Capital Corporation, as Agent. 8-K 000-51354 10.3 July 10, 2012 10.32 Amended and Restated Security Agreement, dated July 6, 2012 among Aemetis, Inc., certain subsidiaries of Aemetis and Third Eye Capital Corporation, as Agent. 8-K 000-51354 10.4 July 10, 2012 10.33 Investors’ Rights Agreement dated July 6, 2012, by and among Aemetis, Inc., and the investors listed on Schedule A thereto. 8-K 000-51354 10.5 July 10, 2012 10.34 Technology License Agreement dated August 9, 2012 between Chevron Lummus Global LLC and Aemetis Advanced Fuels, Inc. 8-K 000-51354 10.1 Aug. 22, 2012 10.35 Corn Procurement and Working Capital Agreement dated March 9, 2011 between J.D. Heiskell Holdings LLC and Aemetis Advanced Fuels Keyes, Inc.* 10-K 000-51354 10.64 Oct. 31, 2012 10.36 Purchasing Agreement dated March 9, 2011 between J.D. Heiskell Holdings LLC and Aemetis Advanced Fuels Keyes, Inc.* 10-K 000-51354 10.65 Oct. 31, 2012 49 Table of Contents 10.37 WDG Purchase and Sale Agreement dated March 23, 2011 between A.L. Gilbert Company and Aemetis Advanced Fuels Keyes, Inc. 10-K 000-51354 10.66 Oct. 31, 2012 10.38 Keyes Corn Handling Agreement dated March 23, 2011 among A. L. Gilbert Company, AE Advanced Fuels Keyes, Inc., and J.D. Heiskell Holdings, LLC 10-K 000-51354 10.67 Oct. 31, 2012 10.39 Limited Waiver and Amendment No. 1 to Amended and Restated Note Purchase Agreement dated as of October 18, 2012 by and among Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis Facility Keyes, Inc., a Delaware corporation, Third Eye Capital Corporation, an Ontario corporation as agent, Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 8-K 000-51354 10.1 Oct. 23, 2012 10.40 Amendment No. 1 to Revolving Line of Credit Agreement dated October 16, 2012 by and among Aemetis International, Inc., a Nevada corporation, and Laird Q. Cagan 8-K 000-51354 10.2 Oct. 23, 2012 10.41 Note Purchase Agreement effective as of March 4, 2011, amended January 19, 2012 and July 24, 2012 by and among AE Advanced Fuels, Inc., a Delaware corporation, and Advanced BioEnergy, LP a California limited partnership and Advanced BioEnergy GP, LLC, a California limited liability company. 8-K 000-51354 10.3 Oct. 23, 2012 10.42 Form of Convertible Subordinated Promissory Note by and among AE Advanced Fuels, Inc., a Delaware corporation and Advanced BioEnergy, LP, a California limited partnership. 8-K 000-51354 10.4 Oct. 23, 2012 10.43 Amendment to the Purchasing Agreement dated March 9, 2011 between J.D. Heiskell Holdings LLC and Aemetis Advanced Fuels Keyes, Inc. dated September 29, 2012 10-K 000-51354 10.72 Apr. 4, 2013 10.44 Agreement for Repayment of Note by Share Issuance dated as of December 31, 2012 by and among Aemetis, Inc., Aemetis International, Inc., (formerly known as “International Biodiesel, Inc.”), a Nevada corporation and wholly-owned subsidiary of the Company, and Laird Q. Cagan for himself and on behalf of all other holders of interests in the Revolving Line of Credit (as defined in the Agreement). 8-K 000-51354 10.1 Jan. 7, 2013 10.45 Agreement for Repayment of Note by Share Issuance dated as of December 31, 2012 by and among Aemetis, Inc., Aemetis International, Inc., (formerly known as “International Biodiesel, Inc.”), a Nevada corporation and wholly-owned subsidiary of the Company, and Laird Q. Cagan for himself and on behalf of all other holders of interests in the Revolving Line of Credit (as defined in the Agreement). 8-K/A 000-51354 10.1 Feb. 27, 2013 10.46 Limited Waiver and Amendment No. 2 to Amended and Restated Note Purchase Agreement dated as of February 27, 2013 by and among Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis Facility Keyes, Inc., a Delaware corporation, Third Eye Capital Corporation, an Ontario corporation as agent, Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 8-K 000-51354 10.1 Mar. 11, 2013 50 Table of Contents 10.47 Amendment No. 1 to Agreement for Repayment of Note by Share Issuance dated as of April 10, 2013 by and among Aemetis, Inc., Aemetis International, Inc., a Nevada corporation and wholly-owned subsidiary of the Company, and Laird Q. Cagan for himself and on behalf of all other holders of interests in the Revolving Line of Credit (as defined in the Agreement). 10-K 000-51354 10.77 Apr. 4, 2013 10.48 Amendment to the Purchasing Agreement dated March 9, 2011 between J.D. Heiskell Holdings LLC and Aemetis Advanced Fuels Keyes, Inc. dated January 2, 2013. 10-K 000-51354 10.76 Apr. 4, 2013 10.49 Limited Waiver and Amendment No.3 to Amended and Restated Note Purchase Agreement dated as of April 15, 2013 by and among Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis Facility Keyes, Inc., a Delaware corporation, Third Eye Capital Corporation, an Ontario corporation as agent, Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 8-K 000-51354 10.1 Apr. 16, 2013 10.505 Amendment No. 4 to Amended and Restated Note Purchase Agreement dated as of April 19, 2013 by and among Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis Facility Keyes, Inc., a Delaware corporation, Aemetis, Inc., a Nevada corporation, and Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Insight Fund 8-K/A 000-51354 10.2 May 14, 2013 10.5 Special Bridge Advance dated as of March 29, 2013 by and among Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis, Inc., a Nevada corporation, Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Insight Fund 8-K 000-51354 10.2 Apr. 16, 2013 10.51 Agreement For Satisfaction of Note by Share and Note Issuance dated as of April 18, 2013 between Aemetis, Inc., Aemetis International, Inc. and Laird Q. Cagan for himself and on behalf of all other holders of interests in the Revolving Line of Credit dated August 17, 2009 as amended. 8-K 000-51354 10.1 Apr. 24, 2013 10.52 Amended and Restated Heiskell Purchasing Agreement dated May 16, 2013, by and between Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation and a wholly-owned subsidiary of Aemetis, Inc. and J.D. Heiskell Holdings, LLC, a California limited liability company doing business as J.D. Heiskell & Co.* 8-K 000-51354 10.1 May 23, 2013 10.53 Amended and Restated Aemetis Keyes Corn Procurement and Working Capital Agreement, dated May 2, 2013, by and between Aemetis Advanced Fuels Keyes, Inc., and J.D. Heiskell Holdings, LLC 8-K 000-51354 10.2 May 23, 2013 10.54 Limited Waiver and Amendment No.5 to Amended and Restated Note Purchase Agreement, dated as of July 26, 2013 by and among Aemetis, Inc., Aemetis Advanced Fuels Keyes, Inc. Aemetis Facility Keyes, Inc., Third Eye Capital Corporation, an Ontario corporation, as agent, Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust 8-K 000-51354 10.1 July 31, 2013 10.55 Limited Waiver and Amendment No.6 to Amended and Restated Note Purchase Agreement, dated as of October 28, 2013 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 8-K 000-51354 10.1 Nov. 1, 2013 51 Table of Contents 10.62 Limited Waiver and Amendment No.7 to Amended and Restated Note Purchase Agreement, dated as of May 14, 2014 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 10-Q 000-51354 10.1 Mar. 31, 2014 10.64 Limited Waiver and Amendment No. 8 to Amended and Restated Note Purchase Agreement, dated as of November 7, 2014 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 10-Q/A 000-51354 10.1 Nov. 13, 2014 10.65 Limited Waiver and Amendment No. 9 to Amended and Restated Note Purchase Agreement, dated as of March 12, 2015 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 10K 000-51354 10.1 Mar. 12,2015 10.66 Limited Waiver and Amendment No. 10 to Amended and Restated Note Purchase Agreement, dated as of April 30, 2015 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 10-Q 000-51354 10.1 May 7, 2015 10.67 Limited Waiver and Amendment No. 11 to Amended and Restated Note Purchase Agreement, dated as of August 6, 2015 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust (incorporated by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q filed on August 7, 2015). 10-Q 000-51354 10.1 Nov. 5, 2015 10.68 Limited Waiver and Amendment No. 12 to Amended and Restated Note Purchase Agreement, dated as of March 21, 2016 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 10-K 000-51354 10.68 Mar. 28, 2016 10.69 Binding letter of intent for the purchase of certain property, plant and equipment in Goodland, Kansas by Aemetis Advanced Fuels Goodland, Inc., or such other subsidiary of Aemetis Inc., dated March 22, 2016 from Third Eye Capital Corporation, in its capacity as attorney-in-fact for New Goodland Energy Center, LLC. 10-K 000-51354 10.69 Mar. 28, 2016 10.70 Limited Waiver and Amendment No. 13 to Amended and Restated Note Purchase Agreement, dated as of March 1, 2017by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Sprott PC Trust. 10-K 000-51354 10.70 Mar. 16, 2017 10.71 Limited Waiver and Amendment No. 14 to Amended and Restated Note Purchase Agreement, dated as of March 27, 2018 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 10-K 000-51354 10.71 Mar. 27, 2018 52 Table of Contents 10.72 Promissory Note, dated as of March 27, 2018 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc., Aemetis, Inc.; and Third Eye Capital Corporation, an Ontario corporation, 10-K 000-51354 10.72 Mar. 27, 2018 10.73 Promissory Note, dated as of March 11, 2019 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc., Aemetis, Inc.; and Third Eye Capital Corporation, an Ontario corporation, 10-K 000-51354 10.73 Mar. 14, 2019 10.74 Limited Waiver and Amendment No. 15 to Amended and Restated Note Purchase Agreement, dated as of March 11, 2019 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 10-K 000-51354 10.74 Mar. 14, 2019 10.75 Promissory Note, dated as of March 6, 2020 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc., Aemetis, Inc.; and Third Eye Capital Corporation, an Ontario corporation, 10-K 000-51354 10.75 Mar. 6, 2020 10.76 Limited Waiver and Amendment No. 16 to Amended and Restated Note Purchase Agreement, dated as of March 11, 2019 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 000-51354 10.77 Limited Waiver and Amendment No. 17 to Amended and Restated Note Purchase Agreement, dated as of August 11, 2020 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 10-Q 000-51354 10.1 August 13, 2020 10.78 Limited Waiver and Amendment No. 18 to Amended and Restated Note Purchase Agreement, dated as of November 5, 2020 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust. 10-Q 000-51354 99.1 November 12, 2020 10.79 Promissory Note, dated as of March 10, 2021 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc., Aemetis, Inc.; and Third Eye Capital Corporation, an Ontario corporation, 10-K 000-51354 10.79 March 14, 2021 10.80 Limited Waiver and Amendment No. 19 to Amended and Restated Note Purchase Agreement, dated as of March 14, 2021 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund – Insight Fund and Ninepoint. 10-K 000-51354 10.80 March 14, 2021 10.81 Limited Waiver and Amendment No. 20 to Amended and Restated Note Purchase Agreement, dated as of August 9, 2021 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund - Insight Fund, and Ninepoint Third Eye Capital Private Credit Fund. 10-Q 000-51354 10.1 August 12, 2021 10.82 Fourth Amended and Restated Promissory Note, dated as of August 9, 2021 by and among Aemetis, Inc.; Aemetis Advanced Fuels Keyes, Inc.; Aemetis Facility Keyes, Inc.; Third Eye Capital Corporation including Third Eye Capital Management Inc. 10-Q 000-51354 10.2 August 12, 2021 53 Table of Contents 10.83 Real Estate Purchase and Sale Agreement, dated as of December 14, 2021 by and between Aemetis Properties Riverbank, Inc. and City of Riverbank, California 8-K 001-36475 10.1 December 21, 2021 10.84 Lease Disposition and Development Agreement, dated as of December 14, 2021 by and between Aemetis Properties Riverbank, Inc. and City of Riverbank, California 8-K 001-36475 10.2 December 21, 2021 10.85 Guaranty Agreement, dated as of December 14, 2021 by and between Aemetis, Inc. and City of Riverbank, California 8-K 001-36475 10.3 December 21, 2021 10.86 Real Estate Purchase and Sale Agreement, dated as of December 14, 2021 by and between Aemetis Properties Riverbank, Inc. and City of Riverbank, California 8-K 001-36475 10.4 December 21, 2021 10.87 Warrant to Purchase Stock, dated as of March 2, 2022 ("Fuels Revolving Line Warrant") 8-K 001-36475 4.1 March 4, 2022 10.88 Warrant to Purchase Stock, dated as of March 2, 2022 ("Carbon Revolving Line Warrant") 8-K 001-36475 4.2 March 4, 2022 10.89 Amended and Restated Credit Agreement, dated as of March 2, 2022 8-K 001-36475 10.1 March 4, 2022 10.90 Amended and Restated General Security Agreement, dated as of March 2, 2022 8-K 001-36475 10.2 March 4, 2022 10.91 Intellectual Property Security Agreement Supplement, dated as of March 2, 2022 8-K 001-36475 10.3 March 4, 2022 10.92 Third Amended and Restated Guaranty, dated as of March 2, 2022 8-K 001-36475 10.4 March 4, 2022 10.93 Amended and Restated Pledge Agreement, dated as of March 2, 2022 8-K 001-36475 10.5 March 4, 2022 10.94 Limited Waiver and Amendment No. 22 to Amended and Restated Note Purchase Agreement dated as of March 8, 2022 by and Among Aemetis Inc.; Aemetic Advanced Fuels Keyes, Inc.; Aemetics Facility Keyes, Inc.; Third Eye Capital Corporation, an Ontario corporation, as agent for Third Eye Capital Credit Opportunities Fund- Insight Fund, and Ninepoint Third Eye Capital Private Credit Fund. 10-K 001-36475 10.1 December 31, 2021 X 14 Code of Ethics 10-K 000-51354 14 May 20, 2009 21 Subsidiaries of the Registrant x 23 Consent of Independent Registered Public Accounting Firm x 24 Power of Attorney (see signature page) x 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002 x 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002 x 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 x 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 x *Confidential treatment has been requested for portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 54 Table of Contents AEMETIS, INC. Index to Consolidated Financial Statements Page Number Report of Independent Registered Public Accounting Firm (PCAOB ID 49 ) 56 Consolidated Financial Statements Consolidated Balance Sheets 58 Consolidated Statements of Operations and Comprehensive Loss 59 Consolidated Statements of Cash Flows 60 Consolidated Statements of Stockholders' Deficit 61 Notes to Consolidated Financial Statements 62-95 55 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, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March —-9, 2022 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting. 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 audits 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 Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 matter 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 17 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. 56 We determined the adequacy of the available commitment on the reserve liquidity facility 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 by comparing to historical operating results as well as 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 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 needed to fund working capital. · We tested the Company’s ability to maintain compliance with covenants 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. /s/ RSM US LLP We have served as the Company's auditor since 2012. Des Moines, Iowa March 9, 2022 57 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, 2021, 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, 2021, 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, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2021, and the related notes to the consolidated financial statements of the Company and our report dated March 9, 2022 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 in the areas of user access and change-management 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 design of supervision and review controls over the completeness and accuracy of complex transactions. As a result, the objective of maintaining sufficient personnel with an appropriate level of technical accounting knowledge and experience in the application of generally accepted accounting principles commensurate with the volume and complexity of the financial accounting and reporting requirements was not met. These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2021 financial statements, and this report does not affect our report dated March 9, 2022 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 9, 2022 58 Table of Contents AEMETIS, INC. CONSOLIDATED BALANCE SHEETS AS OF December 31, 2021 and 2020 (In thousands except for par value) December 31, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents ($ 19 and $ 235 respectively from VIE) $ 7,751 $ 592 Accounts receivable, net of allowance for doubtful accounts of $ 1,404 and $ 1,260 as of December 31, 2021 and 2020, respectively 1,574 1,821 Inventories, net of allowance for excess and obsolete inventory of $ 1,040 and $ 0 as of December 31, 2021 and 2020, respectively 5,126 3,969 Prepaid expenses ($ 335 and $ 192 respectively from VIE) 5,598 750 Other current assets ($ 0 and $ 741 respectively from VIE) 644 1,551 Total current assets 20,693 8,683 Property, plant and equipment, net ($ 39,625 and $ 22,628 respectively from VIE) 135,101 109,880 Operating lease right-of-use assets ($ 10 and $ 28 respectively from VIE) 2,462 2,889 Other assets ($ 38 and $ 24 respectively from VIE) 2,575 3,687 Total assets $ 160,831 $ 125,139 Liabilities and stockholders' deficit Current liabilities: Accounts payable ($ 4,950 and $ 6,271 respectively from VIE) $ 16,415 $ 20,739 Current portion of long term debt 8,192 44,974 Short term borrowings ($ 9 and $ 0 respectively from VIE) 14,586 14,541 Mandatorily redeemable Series B convertible preferred stock 3,806 3,252 Accrued property taxes ($ 121 and $ 0 respectively from VIE) 6,830 5,674 Accrued contingent litigation fees 6,200 6,200 Current portion of operating lease liability ($ 11 and $ 10 respectively from VIE) 260 316 Current portion of Series A preferred units ($ 3,169 and $ 2,015 respectively from VIE) 3,169 2,015 Other current liabilities ($ 306 and $ 129 respectively from VIE) 5,872 4,524 Total current liabilities 65,330 102,235 Long term liabilities: Senior secured notes and revolving notes 121,451 125,624 EB-5 notes 32,500 32,500 Other long term debt ($ 40 and $ 0 respectively from VIE) 12,038 11,980 Series A preferred units ($ 44,978 and $ 32,022 respectively from VIE) 44,978 32,022 Operating lease liability ($ 0 and $ 11 respectively from VIE) 2,318 2,578 Other long term liabilities ($ 0 and $ 74 respectively from VIE) 2,454 2,944 Total long term liabilities 215,739 207,648 Stockholders' deficit: Series B convertible preferred stock, $ 0.001 par value; 7,235 authorized; 1,275 and 1,323 shares issued and outstanding each period, respectively (aggregate liquidation preference of $ 3,825 and $ 3,969 respectively) 1 1 Common stock, $ 0.001 par value; 80,000 authorized; 33,461 and 22,830 shares issued and outstanding each period, respectively 33 23 Additional paid-in capital 205,305 93,426 Accumulated deficit ( 321,227 ) ( 274,080 ) Accumulated other comprehensive loss ( 4,350 ) ( 4,114 ) Total stockholders' deficit ( 120,238 ) ( 184,744 ) Total liabilities and stockholders' deficit $ 160,831 $ 125,139 The accompanying notes are an integral part of the financial statements. 59 Table of Contents AEMETIS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED December 31, 2021, 2020, AND 2019 (In thousands, except for earnings per share) For the years ended December 31, 2021 2020 2019 Revenues $ 211,949 $ 165,557 $ 201,998 Cost of goods sold 204,010 154,532 189,300 Gross profit 7,939 11,025 12,698 Research and development expenses 88 213 205 Selling, general and administrative expenses 23,676 16,882 17,424 Operating loss ( 15,825 ) ( 6,070 ) ( 4,931 ) Other expense (income): Interest expense Interest rate expense 20,136 22,943 21,089 Debt related fees and amortization expense 3,921 3,401 4,666 Accretion and other expenses of Series A preferred units 7,718 4,673 2,257 Loss contingency on litigation - - 6,200 Gain on debt extinguishment ( 1,134 ) - - Other expense (income) 809 548 ( 797 ) Loss before income taxes ( 47,275 ) ( 37,635 ) ( 38,346 ) Income tax expense (benefit) ( 128 ) ( 976 ) 1,131 Net loss $ ( 47,147 ) $ ( 36,659 ) $ ( 39,477 ) Less: Net loss attributable to non-controlling interest - - ( 3,761 ) Net loss attributable to Aemetis, Inc. $ ( 47,147 ) $ ( 36,659 ) $ ( 35,716 ) Other comprehensive (loss) Foreign currency translation loss ( 236 ) ( 289 ) ( 249 ) Comprehensive loss $ ( 47,383 ) $ ( 36,948 ) $ ( 39,726 ) Net loss per common share Basic $ ( 1.54 ) $ ( 1.74 ) $ ( 1.75 ) Diluted $ ( 1.54 ) $ ( 1.74 ) $ ( 1.75 ) Weighted average shares outstanding Basic 30,682 21,012 20,467 Diluted 30,682 21,012 20,467 The accompanying notes are an integral part of the financial statements. 60 Table of Contents AEMETIS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED December 31, 2021, 2020, AND 2019 (In thousands) For the year ended December 31, 2021 2020 2019 Operating activities: Net loss ( 47,147 ) $ ( 36,659 ) $ ( 39,477 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 3,928 995 774 Depreciation 5,448 4,894 4,434 Debt related fees and amortization expense 3,921 3,401 4,666 Intangibles and other amortization expense 46 48 48 Accretion and other expenses of Series A preferred units 7,717 4,673 2,257 Gain on debt extinguishment ( 1,134 ) - - Deferred tax benefit - ( 984 ) 1,123 Provision for excess and obsolete inventory 1,040 - - Provision for bad debts 144 1,260 - Change in fair value of stock appreciation rights - - ( 80 ) Changes in operating assets and liabilities: Accounts receivable 94 ( 1,088 ) ( 963 ) Inventories ( 2,211 ) 2,392 ( 491 ) Prepaid expenses ( 4,849 ) 44 147 Other assets 2,368 253 ( 594 ) Accounts payable (5,198 ) 1,400 1,001 Accrued interest expense and fees 14,456 21,728 18,033 Other liabilities 730 123 7,088 Net cash (used in) provided by operating activities ( 20,647 ) 2,480 ( 2,034 ) Investing activities: Capital expenditures ( 26,652 ) ( 19,340 ) ( 8,578 ) Grant proceeds received for capital expenditures 3,758 2,031 - Net cash used in investing activities ( 22,894 ) ( 17,309 ) ( 8,578 ) Financing activities: Proceeds from borrowings - 12,648 56,314 Repayments of borrowings ( 55,523 ) ( 15,463 ) ( 51,878 ) TEC debt renewal and waiver fee payments ( 1,108 ) ( 350 ) ( 530 ) Grant proceeds received for capital expenditures 115 256 1,364 Payments on finance leases ( 505 ) ( 1,471 ) - Proceeds from issuance of common stock in equity offering 103,591 5,113 - Proceeds from the exercise of stock options 1,304 287 - Proceeds from Series A preferred units financing 3,130 13,755 4,815 Series A preferred financing redemption ( 300 ) - - Net cash provided by financing activities 50,704 14,775 10,085 Effect of exchange rate changes on cash and cash equivalents ( 4 ) ( 10 ) ( 5 ) Net change in cash and cash equivalents for period 7,159 ( 64 ) ( 532 ) Cash and cash equivalents at beginning of period 592 656 1,188 Cash and cash equivalents at end of period 7,751 $ 592 $ 656 Supplemental disclosures of cash flow information, cash paid: Cash paid for interest $ 5,682 $ 1,324 $ 2,476 Income taxes paid 7 8 8 Supplemental disclosures of cash flow information, non-cash transactions: Subordinated debt extension fees added to debt 680 680 680 Fair value of warrants issued to subordinated debt holders 1,546 181 162 Fair value of warrants issued for capital expenditures 1,344 - - TEC debt extension, waiver fees, promissory notes fees added to debt 608 1,747 1,602 Capital expenditures in accounts payable 7,693 5,931 2,391 Operating lease liabilities arising from obtaining right of use assets - 2,817 1,181 Financing lease liabilities arising from obtaining right of use assets 113 2,309 - Stock Appreciation Rights issued for GAFI Amendment No. 1 - - 1,050 Capital expenditures purchased on financing 55 5,652 - Issuance of equity to pay off accounts payable 893 - - The accompanying notes are an integral part of the financial statements. 61 Table of Contents AEMETIS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT FOR THE YEARS ENDED December 31, 2021, 2020 AND 2019 (In thousands) Series B Preferred Stock Common Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Noncontrolling Shares Dollars Shares Dollars Capital Deficit Loss Interest Total Balance at December 31, 2018 1,323 $ 1 20,345 $ 20 $ 85,917 $ ( 193,204 ) $ ( 3,576 ) $ ( 4,740 ) $ ( 115,582 ) Stock-based compensation - - - - 774 - - - 774 Issuance and exercise of warrants - - 225 1 161 - - - 162 Foreign currency translation loss - - - - - - ( 249 ) - ( 249 ) Net loss - - - - - ( 35,716 ) - ( 3,761 ) ( 39,477 ) Reclassification of GAFI noncontrolling interest - - - - - ( 8,501 ) - 8,501 - Balance at December 31, 2019 1,323 1 20,570 21 86,852 ( 237,421 ) ( 3,825 ) ( 154,372 ) Issuance of common stock - - 1,507 2 5,111 - - - 5,113 Stock options exercised - - 528 - 287 - - - 287 Stock-based compensation - - - - 995 - - - 995 Issuance and exercise of warrants - - 225 - 181 - - - 181 Foreign currency translation loss - - - - - - ( 289 ) - ( 289 ) Net loss - - - - - ( 36,659 ) - - ( 36,659 ) Balance at December 31, 2020 1,323 1 22,830 23 93,426 ( 274,080 ) ( 4,114 ) ( 184,744 ) Issuance of common stock - - 7,796 8 103,760 - - - 103,768 Sereis B conversion to common stock ( 48 ) - 5 - - - - - - Stock options exercised - - 2,499 2 1,249 - - - 1,251 Stock-based compensation - - - - 3,928 - - - 3,928 Issuance and exercise of warrants - - 331 - 2,942 - - - 2,942 Foreign currency translation loss - - - - - - ( 236 ) - ( 236 ) Net loss - - - - - ( 47,147 ) - - ( 47,147 ) Balance at December 31, 2021 1,275 $ 1 33,461 $ 33 205,305 $ ( 321,227 ) $ ( 4,350 ) $ - $ ( 120,238 ) The accompanying notes are an integral part of the financial statements. 62 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 wholly owned 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, Ltd., 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, and Aemetis Facility Keyes, Inc., a Delaware corporation, Aemetis Property Keyes, Inc., a Delaware corporation; · Aemetis Advanced Fuels, Inc., a Nevada corporation; · Aemetis Advanced Products Keyes, Inc., a Delaware corporation and its subsidiary Aemetis Properties Riverbank, Inc., a Delaware corporation, Aemetis Health Products, Inc., a Delaware corporation; 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 Biogas LLC, a Delaware limited liability company; and · Goodland Advanced Fuels, Inc., a Nevada corporation. Nature of Activities. Founded in 2006 and headquartered in Cupertino, California, Aemetis, Inc. (collectively with its subsidiaries on a consolidated basis, “Aemetis,” the “Company,” “we,” “our” or “us”) is an international renewable fuels and byproducts company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products. We own and operate a 65 million gallon per year ethanol production facility located in Keyes, California (the “Keyes Plant”). In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), all of which are sold as animal feed to local dairies and feedlots. In the fourth quarter of 2021, an ethanol zeolite membrane dehydration system was installed at the Keyes Plant and is in process of being commissioned at the Keyes Plant, a key first step in the electrification of the Keyes facility. During 2018, Aemetis Biogas, LLC (“ABGL”) was formed to construct bio-methane anaerobic digesters at local dairies near the Keyes Plant, many of whom also purchase WDG produced at the Keyes Plant. Our Dairy Renewable Natural Gas segment, ABGL, has completed Phase 1 of our California biogas digester network and pipeline system that converts waste dairy methane gas into Dairy Renewable Natural Gas (“RNG”) and is now executing Phase 2 construction. The digesters are connected via an underground private pipeline owned by ABGL to a gas cleanup and compression unit being built at the Keyes Plant to produce RNG. During the third quarter of 2020, ABGL completed construction of the first two dairy digesters along with four miles of pipeline that carries bio-methane from the dairies to the Keyes Plant. Upon receiving the bio-methane from the dairies, impurities are removed, and the bio-methane is converted to negative carbon intensity RNG where it will be either be sold to third parties or used as renewable process energy at the Keyes Plant. During the first quarter of 2021, we announced our “Carbon Zero” biofuels production plants designed to produce biofuels, including sustainable aviation fuel (“SAF”) and diesel fuel utilizing renewable hydrogen and non-edible renewable oils sourced from our existing biofuels plants and other sources. The first plant, in Riverbank, California, “Carbon Zero 1”, is expected to utilize hydroelectric and other renewable power available onsite to produce SAF, renewable diesel, and other byproducts. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels. On April 1, 2021, we established Aemetis Carbon Capture, Inc. to build Carbon Capture and Sequestration (CCS) projects to generate LCFS and IRS 45Q credits by injecting CO₂ into wells which are monitored for emissions to ensure the long-term sequestration of carbon underground. 63 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) During 2017, Goodland Advanced Fuels, Inc. (“GAFI”) was formed to acquire land, buildings and process equipment in Goodland, Kansas for the construction and development of a next generation biofuel facility for $15.4 million. GAFI entered into a Note Purchase Agreement with Third Eye Capital Corporation (“Third Eye Capital”). On December 31, 2019, we exercised an option to acquire all capital stock of GAFI for $10 and consolidated assets, liabilities, and equity. In addition, the period costs related to non-controlling interest are presented as separately on the Statement of Operations for the year ended December 31, 2019. Prior to December 31, 2019, GAFI was consolidated into the financial statements as a variable interest entity. We also own and operate the Kakinada Plant with a nameplate capacity of 150 thousand metric tons per year, or about 50 million gallons per year, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. The Kakinada Plant is capable of processing a variety of vegetable oils and animal fat waste feedstocks into biodiesel that meet international product standards. The Kakinada Plant also distills the crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive and other industries. Basis of Presentation and Consolidation. These consolidated financial statements include the accounts of Aemetis. Additionally, 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. Prior to December 31, 2019, GAFI was consolidated into the financial statements as a VIE. We concluded that GAFI did not have enough equity to finance its activities without additional subordinated financial support and GAFI’s shareholder did not have a controlling financial interest in the entity. Through providing a Limited Guaranty, pursuant to which, the Guarantors agreed to guarantee the prompt payment and performance of all unpaid principal and interest on the GAFI Loans and all other obligations and liabilities of GAFI to the GAFI Noteholders in connection with the GAFI Note Purchase Agreement, and signing the Option Agreement, pursuant to which the Company was granted an irrevocable option to purchase all, but not less than all, of the capital stock of GAFI for an aggregate purchase price equal to $0.01 per share for a total purchase price of $10.00, the Company took the risks related to operations, financing the Goodland Plant, and agreed to meet the financial covenants for GAFI to be in existence. Based upon this assessment, Aemetis has the power to direct the activities of GAFI and has been determined to be the primary beneficiary of GAFI and accordingly, the assets, liabilities, and operations of GAFI are consolidated into those of the Company. The assets and liabilities were initially recognized at fair value. On December 31, 2019, we exercised an option to acquire all capital stock of GAFI and consolidated it with 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, high-grade alcohol and related co-products in California Ethanol and India biodiesel and refined glycerin in India pursuant to supply agreements and purchase order contracts. We assessed 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: Until May 13, 2020, we sold all our ethanol to J.D. Heiskell & Co. (“J.D. Heiskell”) under the Working Capital and Purchasing Agreement (the “J.D. Heiskell Purchasing Agreement”). On May 13, 2020, we entered into an amendment to the Corn Procurement and Working Capital Agreement with J.D. Heiskell (the “Corn Procurement and Working Capital”), under the terms of which we buy all corn from J.D. Heiskell and sell all WDG and corn oil we produce to J.D. Heiskell. Following May 13, 2020 and until October, 2021, we sold the majority of our fuel ethanol production to one customer, Kinergy Marketing, LLC (“Kinergy”), through individual sales transactions. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex LLC (“Murex”), in which we will sell all our Ethanol to Murex. Given the similarity of the individual sales transactions with Kinergy and Murex, we have assessed them as a portfolio of similar contracts. The performance obligation is satisfied by delivery of the physical product to one of our customer’s contracted trucking companies. Upon delivery, the customer has the ability to direct the use of the product and receive substantially all of its benefits. The transaction price is determined based on daily market prices negotiated by Kinergy and Murex for ethanol and by our marketing partner A.L. Gilbert Company (“A.L. Gilbert”) for WDG. The transaction price is allocated to one performance obligation. 64 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) During the first quarter of 2020, Aemetis began selling high-grade alcohol for consumer applications directly to customers on the West Coast and Midwest using a variety of payment terms. These agreements and terms were evaluated according to ASC 606 guidance and such revenue is recognized upon satisfaction of the performance obligation by delivery of the product based on the terms of the agreement. Sales of high-grade alcohol were minimal for 2021 and were aggregated with ethanol sales. Sales of high-grade alcohol represented 0 %, 15 %, and 0 % of revenue for the years ended December 31, 2021, 2020, and 2019, respectively. The below table shows our sales in California Ethanol by product category: California Ethanol For the twelve months ended December 31, 2021 2020 2019 Ethanol and high-grade alcohol sales $ 162,428 $ 111,219 $ 114,593 Wet distiller's grains sales 41,476 32,048 34,510 Other sales 7,347 6,035 5,045 $ 211,251 $ 149,302 $ 154,148 We have elected to adopt the practical expedient that allows for ignoring the significant financing component of a contract when estimating the transaction price when the transfer of promised goods to the customer and customer payment for such goods are expected to be within one year of contract inception. Further, we have elected to adopt the practical expedient in which incremental costs of obtaining a contract are expensed when the amortization period would otherwise be less than one year. We also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those customers in some contractual agreements. For our California Ethanol segment, we buy corn as feedstock for the production of ethanol, from our working capital partner J.D. Heiskell. Prior to May 13, 2020, we sold all our ethanol, WDG, and corn oil to J.D. Heiskell and we bought all our corn to process into ethanol from J.D. Heiskell. After May 13, 2020, we sold most of our fuel ethanol to one customer, Kinergy, and sold all WDG and corn oil to J.D. Heiskell. During the second quarter of 2021, the Company signed a biofuels offtake agreement with Murex, LLC, and beginning on October 1, 2021 the Company sold all our fuel ethanol to Murex LLC. We only have customer relationships with Kinergy Marketing and Murex LLC, hence the principal and agent criteria is not applied. However, we are still buying corn and selling WDG and corn oil to J.D.Heiskell, we analyzed the principal vs agent relationship criteria below. We consider the purchase of corn as a cost of goods sold and the sale of WDG, corn oil, upon trucks leave the Keyes Plant, as revenue on the basis that (i) we control and bear the risk of gain or loss on the processing of corn which is purchased at market prices into ethanol and (ii) we have legal title to the goods during the processing time. The pricing for both corn WDG, and Corn oil is set independently. Revenues from WDG and Corn oil are billed net of the related transportation and marketing charges. The transportation component is accounted for in cost of goods sold and the marketing component is accounted for in sales, general and administrative expense. Transportation and marketing charges are known within days of the transaction and are recorded at the actual amounts. The Company has elected an accounting policy under which these charges have been treated as fulfillment activities provided after control has transferred. As a result, these charges are recognized in cost of goods sold and selling, general and administrative expenses, respectively, when revenue is recognized. Revenues are recorded at the gross invoiced amount. Hence, we are the principal in California Ethanol segment where our customer and vendor may be the same. We have a contract liability of $0 and $0.2 million as of December 31, 2021 and 2020. 65 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Dairy Renewable Natural Gas: All of our Dairy Renewable Natural Gas segment revenues during the years ended December 31, 2021 and 2020 were from sales of biogas to the Keyes Plant for use in boilers. This resulted in lowering the carbon intensity of the Keyes Plant and increased revenues on ethanol sold through the California Ethanol segment. These revenues have been eliminated once consolidated. Refer to Footnote 12 Segment Information for Dairy Renewable Natural Gas for the unconsolidated revenue. 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 daily based on reference market prices for biodiesel, refined glycerin, and PFAD net of taxes. Transaction price is allocated to one performance obligation. The below table shows our sales in India by product category: India Biodiesel (in thousands) For the twelve months ended December 31, 2021 2020 2019 Biodiesel sales $465 $13,796 $42,464 Refined glycerin sales 125 1,172 2,809 PFAD sales - 774 2,557 Other sales 106 53 20 $696 $15,795 $47,850 In India, we also assessed principal versus agent criteria as we buy our feedstock from our customers and process and sell finished goods to those same customers in certain contractual agreements. In those cases, we receive the legal title to feedstock from our customers once it is on our premises. We control the processing and production of biodiesel based on contract terms and specifications. The pricing for both feedstock and biodiesel is set independently. We hold the title and risk to biodiesel according to agreements we enter into in these situations. Hence, we are the principal in India Biodiesel sales scenarios where our customer and vendor may be the same. 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, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense. The company recorded, in cost of goods sold, in the year ended December 31, 2021, approximately $ 5.0 million related to our California triennial obligation on GHG emissions, of which approximately $ 3.2 million relates to periods prior to 2021 and is considered insignificant. Shipping and Handling Costs . Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations. Research and Development. Research and development costs are expensed as incurred, unless they have alternative future uses to the Company. Cash and Cash Equivalents . 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. Accounts Receivable. The Company sells ethanol and WDG through third-party marketing arrangements generally without requiring collateral and high-grade alcohol directly to customers on a variety of terms including advanced payment terms, based on the size and creditworthiness of the customer. DCO is marketed and sold to A.L. Gilbert under the J.D. Heiskell Purchasing Agreement. The Company sells CDS directly to customers on standard 30 day payment terms. The Company 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 receivables 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. 66 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. 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. We reserved $ 1.4 million and $ 1.3 million in the allowances for doubtful accounts as of December 31, 2021 and December 31, 2020, respectively. Inventories . Finished goods, raw materials, and work-in-process inventories are valued using methods which 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. For the years ended December 31, 2021, 2020 and 2019, the company experienced total write-offs of $ 1.0 million, none and none. 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 variable 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 variable 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. The Goodland Plant is partially completed and is not ready for operation. The first two dairy digesters and pipeline in the Biogas Project were completed, commissioned and began to be depreciated during the third quarter of 2020. The CO₂ Project was completed and commenced operations in the second quarter of 2020. Accordingly, any assets under the CO₂ Project began being depreciated starting in May 2020. 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, 2021, 2020, and 2019. California Energy Commission Technology Demonstration Grant. The Company has been awarded and completed the demonstration project associated with the $ 825 thousand matching grant program from the California Energy Commission (“CEC”) Natural Resources Agency to optimize the effectiveness of technologies to break down biomass to produce cellulosic ethanol. The Company has received all of the awarded grant proceeds as of December 31, 2020. The project focused on the deconstruction and conversion of sugars liberated from California-relevant feedstocks and then converting the sugars to ethanol. The Company receives these funds as reimbursement for actual expenses incurred. Due to the uncertainty associated with the expense approval process under the grant program, the Company recognized the grant as a reduction of the expenses in the period when payment is 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 $ 2.9 million from the LCFPP as of December 31, 2021 as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognizes the grant as a reduction of the costs in the period when payment is received. 67 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) California Department of Food and Agriculture Dairy Digester Research and Development Grant. In 2019, 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 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 $ 545 thousand from the CDFA 2020 grant program as of December 31, 2021 as reimbursement for actual costs incurred. Due to the uncertainty associated with the approval process under the grant program, the Company recognizes the grant as a reduction of the 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 Carbon Zero 1 plant. 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 grant for reimbursement of capital expenditures of $ 1.8 million and $ 1.7 million and is presented with long-term liabilities as of December 31, 2021 and 2020. Due to the uncertainty associated with meeting the minimum matching contribution, the reimbursement will be recognized when the Company makes the minimum matching contribution. 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, 2021 and 2020, 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 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 income (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 income (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, 2021, 2020 and 2019, potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive. 68 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 shows the number of potentially dilutive shares excluded from the diluted net loss per share calculation as of December 31, 2021, 2020, and 2019: As of December 31, 2021 December 31, 2020 December 31, 2019 Series B preferred (post split basis) 128 132 132 Common stock options and warrants 3,819 5,422 3,840 Debt with conversion feature at $30 per share of common stock 1,220 1,298 1,262 Total number of potentially dilutive shares excluded from the diluted net (loss) per share calculation 5,167 6,852 5,234 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 its foreign 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. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, 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. Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company further evaluates its operating segments to determine its reportable segments. Aemetis recognizes three reportable segments “California Ethanol”, “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 “Dairy Renewable Natural Gas” reportable segment includes, the dairy digesters, pipeline and gas condition unit for the production of biogas from dairies near Keyes, California. The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly. The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant, Kansas and the research and development facility in Minnesota. Refer to the “All Other” category. Share-Based Compensation. The Company recognizes share based compensation expense in accordance with ASC 718 Stock Compensation requiring the Company to recognize expenses related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted, adjusted to reflect only those shares that are expected to vest. Commitments and Contingencies. The Company records and/or discloses 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. 69 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 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. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date. 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 . ASU 2016-13: Measurement of Credit Losses on Financial Instruments. This ASU requires the use of an expected loss model for certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required. For available-for-sale debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset. The Company adopted the guidance in the fourth quarter of fiscal 2021 and there was no material impact on its Consolidated Financial Statements. ASU 2019-12: Simplifying the Accounting for Income Taxes . In December 2019, FASB issued ASU 2019-12, Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes. The ASU simplifies accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also improves consistent application of and simplifies generally accepted accounting principles ("GAAP") for other areas of Topic 740 by clarifying and amending existing guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted including adoption in any interim period for periods for which financial statements have not yet been issued. On January 1, 2021, we adopted this ASU on a prospective basis and the adoption of this standard did not have an impact on our consolidated financial statements. 2. Inventories Inventories consist of the following: As of December 31, 2021 December 31, 2020 Raw materials $ 727 $ 1,382 Work-in-progress 2,083 1,266 Finished goods 2,316 1,321 Total inventories $ 5,126 $ 3,969 As of December 31, 2021 and December 31, 2020, the Company recognized a lower of cost or net realizable value of none and $ 0.7 million respectively, related to inventory. 70 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, 2021 December 31, 2020 Land $ 4,082 $ 4,092 Plant and buildings 97,110 97,398 Furniture and fixtures 1,334 1,195 Machinery and equipment 5,294 5,188 Construction in progress 55,859 25,397 Property held for development 15,437 15,408 Finance lease right of use assets 2,317 2,308 Total gross property, plant & equipment 181,433 150,986 Less accumulated depreciation ( 46,332 ) ( 41,106 ) Total net property, plant & equipment $ 135,101 $ 109,880 Interest capitalized in property, plant, and equipment was $ 4.7 million, $ 1.9 million and $ 0.3 million for the years ended December 31, 2021, 2020, and 2019, respectively. Construction in progress contains incurred costs for the Biogas Project, Riverbank Project, and Zebrex equipment installation at the Keyes Plant. Given there are several ongoing capital projects, their capital expenses have been accumulated in construction in progress and will be capitalized and depreciated once the capital projects are finished and are in 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 approximately $ 5.4 million, $ 4.9 million, and $ 4.4 million respectively, for the years ended December 31, 2021, 2020, and 2019. 71 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 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, 2021 December 31, 2020 Third Eye Capital term notes $ 7,095 $ 7,066 Third Eye Capital revolving credit facility 75,980 80,310 Third Eye Capital revenue participation term notes 11,915 11,864 Third Eye Capital acquisition term notes 26,461 26,384 Third Eye Capital promissory note - 1,444 Cilion shareholder seller notes payable 6,619 6,274 Subordinated notes 14,304 12,745 EB-5 promissory notes 40,692 43,120 GAFI Term and Revolving loans - 33,626 Term loans on capital expenditures 5,701 5,652 PPP loans - 1,134 Total debt 188,767 229,619 Less current portion of debt 22,778 59,515 Total long term debt $ 165,989 $ 170,104 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 April 1, 2020, the Company exercised the option to extend the maturity of Third Eye Capital Notes to April 1, 2021 for a fee of 1 % of the outstanding note balance. We have evaluated the reduction in extension fee to 1% in accordance with ASC 470-60 Troubled Debt Restructuring. According to the guidance, we considered the 1 % extension fee to be a troubled debt restructuring. On August 11, 2020, Third Eye Capital agreed to Limited Waiver and Amendment No. 17 to the Note Purchase Agreement (“Amendment No. 17”), to (i) provide that the maturity date of the Third Eye Capital Notes may be further extended at our election to April 1, 2022 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) provide for a waiver of the ratio of note indebtedness covenant for the quarters ended March 31, 2021 and June 30, 2021. 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. 17 Fee”). On November 5, 2020, Third Eye Capital agreed to Limited Waiver and Amendment No. 18 to the Note Purchase Agreement (“Amendment No. 18”) to provide for a waiver of the ratio of note indebtedness covenant for the quarter ended September 30, 2021. As consideration for such amendment and waivers, the borrowers also agreed to pay Third Eye Capital an amendment fee of $ 50 thousand. We have evaluated the 1% extension fee in Amendment No. 17, and the $ 50 k waiver fee in Amendment No. 18 in accordance with ASC 470-60 Troubled Debt Restructuring. According to the guidance, we considered the $ 0.3 million fee in Amendment No.17 and the $ 50 thousand waiver fee in Amendment No. 18 to be troubled debt restructurings. In order to assess whether the creditor granted a concession, we calculated the post-restructuring effective interest rate by projecting cash flows on the new terms and calculated a discount rate equal to the carrying amount of pre-restructuring of debt, and by comparing this calculation to the terms of Amendment No. 15, we determined that Third Eye Capital provided a concession in accordance with the provisions of ASC 470-60 and thus applied troubled debt restructuring accounting, resulting in no gain or loss from the application of this accounting. Using the effective interest method of amortization, the Amendment No. 17 waiver fee of $ 0.3 million is being amortized over the stated remaining life of the Third Eye Capital Notes. 72 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) On February 27, 2019, a promissory note (the “February 2019 Note”, together with the Original Third Eye Capital Notes, the “Third Eye Capital Notes”) for $ 2.1 million was advanced by Third Eye Capital to Aemetis, Inc., as a short-term credit facility for working capital and other general corporate purposes with an interest rate of 14 % per annum maturing on the earlier of (a) receipt of proceeds from any financing, refinancing, or other similar transaction, (b) extension of credit by payee, as lender or as agent on behalf of certain lenders, to the Company or its affiliates, or (c) April 30, 2019. In consideration of the February 2019 Note, $ 0.1 million of the total proceeds were paid to Third Eye Capital as financing charges. On April 30, 2019, the February 2019 Note was modified to remove the stated maturity date and instead be due on demand by Third Eye Capital. In third quarter of 2019, the February 2019 Note was modified to include additional borrowings of $ 0.7 million. In first quarter of 2020, the February 2019 Note was modified to include additional borrowings of $ 0.6 million. The February 2019 note was fully repaid in the first quarter of 2021. On March 14, 2021, Third Eye Capital agreed to Limited Waiver and Amendment No. 19 to the Note Purchase Agreement (“Amendment No. 19”), to (i) provide for a waiver of the ratio of note indebtedness covenant for the quarter ended December 31, 2021, (ii) provide for a waiver of the consolidated unfunded capital expenditures covenant for the quarters through March 31, 2021. 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 in cash (the “Amendment No. 19 Fee”). We gave the notice to extend the maturity date of the Notes to April 1, 2022 and the extension fee equal to 1% of the Note Indebtedness in respect to each Note, provided that half of such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension and rest of the balance may be payable in cash or common stock within 60 days of the date of such relevant extension. We evaluated the terms of the Amendment No. 19 and the maturity date extension and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment. On August 9, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 20 to the Note Purchase Agreement (“Amendment No. 20”) to: (i) provide that, upon written notice to Third Eye Capital, the maturity date may be further extended to April 1, 2023 in exchange for an extension fee equal to 1 % of the Note Indebtedness in respect of each Note, where half of such fee may be added to the outstanding principal balance of each Note on the effective date of each such extension; (ii) provide for a waiver of the ratio of note indebtedness covenant for the quarters ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022; and (iii) provide for a waiver of the unfunded capital expenditures covenant for the quarter ended June 30, 2021 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 $ 0.3 million in cash. We evaluated the terms of the Amendment No.20 and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment. On November 5, 2021, Third Eye Capital agreed to the Limited Waiver and Amendment No. 21 to the Note Purchase Agreement (“Amendment No. 21”) to: (i) provide a waiver for the Blocked Account Agreement Violation in which the Borrowers failed to deliver Blocked Account Control Agreements by August 31, 2021 and (ii) provide for a waiver for the Subordinated Debt Violation, in which the Company made a repayment to a Subordinated Debt lender. 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 in cash. We evaluated the terms of the Amendment No.21 and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment. As Amendments No. 19, No. 20, and No. 21 waived certain covenants over the net four quarters and given the Company's projected compliance with other terms of the agreement, the notes are classified as long-term debt. On March 6, 2020, we and a subsidiary entered into a one-year reserve liquidity facility governed by a promissory note, payable to Third Eye Capital, in the principal amount of $ 18 million. On March 14, 2021, Third Eye agreed to increase the amount available under the reserve liquidity facility to $ 70.0 million and extend the maturity date to April 1, 2022. Borrowings under the facility are available from March 14, 2021 until maturity on April 1, 2022. Interest on borrowed amounts accrues at a rate of 30% per annum, paid monthly in arrears and may be capitalized and due upon maturity, or 40 % if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (b) April 1, 2022. Any amounts may be re-borrowed up to repaid amounts up until the maturity date of April 1, 2022. The promissory note is secured by liens and security interests upon the property and assets of the Company. In return, the Company will pay a non-refundable standby fee at 2 % per annum of the difference between the aggregate principal amount outstanding and the commitment, payable monthly in cash. In addition, if any initial advances are drawn under the facility, the Company will pay a non-refundable one-time fee in the amount of $ 0.5 million provided that such fee may be added to the principal amount of the promissory note on the date of such initial advance. 73 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) On August 9, 2021, Third Eye Capital agreed to decrease the amount available under the reserve liquidity facility notes governed by a promissory note to $ 40.0 million. Interest on borrowed amounts accrues at a rate of 30 % per annum, paid monthly in arrears and may be capitalized and due upon maturity, or 40% if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (b) April 1, 2022. Any amounts may be re-borrowed up to repaid amounts up until the maturity date of April 1, 2022. The promissory note is secured by liens and security interests upon the property and assets of the Company. In return, the Company will pay a non-refundable standby fee at 2 % per annum of the difference between the aggregate principal amount outstanding and the commitment, payable monthly in cash. In addition, if any initial advances are drawn under the facility, the Company will pay a non-refundable one-time fee in the amount of $0.5 million provided that such fee may be added to the principal amount of the promissory note on the date of such initial advance. On March 8, 2022, Third Eye Capital agreed to extend the maturity of the reserve liquidity facility to April 1, 2023. Terms of Third Eye Capital Notes A. Term Notes . As of December 31, 2021, the Company had $ 7.1 million in principal and interest outstanding under the Term Notes net of $ 37 thousand unamortized debt issuance costs. The Term Notes accrue interest at 14 % per annum. The Term Notes mature on April 1, 2023 . B. Revolving Credit Facility . The Revolving Credit Facility accrues interest at the prime rate plus 13.75 % ( 17 % as of December 31, 2021), 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, 2023 . As of December 31, 2021, AAFK had $ 76.0 million in principal and interest and waiver fees outstanding under the Revolving Credit Facility net of $ 0.7 million unamortized discount issuance costs. C . Revenue Participation Term Notes . The Revenue Participation Term Note bears interest at 5 % per annum and matures on April 1, 2023 . As of December 31, 2021, AAFK had $11.9 million in principal and interest outstanding on the Revenue Participation Term Notes net of $ 57 thousand unamortized discount issuance costs. D . Acquisition Term Notes . The Acquisition Term Notes accrue interest at the prime rate plus 10.75 % ( 14 % per annum as of December 31, 2021 and mature on April 1, 2023 . As of December 31, 2021, Aemetis Facility Keyes, Inc. had $ 26.5 million in principal and interest and redemption fees outstanding net of unamortized discount issuances costs of $ 98 thousand. The outstanding principal balance includes a total of $ 7.5 million in redemption fees. E. Reserve Liquidity Notes . The Reserve Liquidity Notes, with available borrowing capacity in the amount of $ 40.0 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, 2023 . We have no borrowings outstanding under the Reserve Liquidity Notes as of December 31, 2021. 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 terms of the notes allow interest to be capitalized. 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. 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, 2021, Aemetis Facility Keyes, Inc. had $ 6.6 million in principal and interest outstanding on the Cilion Notes. 74 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 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 generally extended 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 % and is due at maturity. Neither AAFK nor Aemetis, Inc. may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full. The Subordinated Notes were amended to extend the maturity date on January 1, 2021 and again on July 1, 2021 with six months extension for maturity until December 31, 2021. We evaluated the January 1, 2021 amendment and the refinancing terms of the Notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment . We evaluated the July 1, 2021 amendment and the refinancing terms of the Notes and determined in accordance with ASC 470-50 Debt – Modification and Extinguishment that the loans were extinguished, however, the Company was not required to record a gain or loss on the debt extinguishment. At December 31, 2021 and 2020, the Company had, in aggregate, the amount of $ 14.3 million and $ 12.7 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, 2021, $ 35.5 million has been released from the escrow amount to the Company, with $ 0.5 million remaining to be funded to escrow. During the year ended December 31, 2021, the Company repaid $ 3.0 million for six investors who obtained green card approval under the EB-5 Phase I funding. As of December 31, 2021, $ 32.5 million in principal and $ 4.1 million in accrued 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, so 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. 75 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Advanced BioEnergy II, LP arranges investments with foreign investors, who each make loans to the Riverbank Carbon Zero 1 Facility in increments of $ 0.9 million after November 21, 2019. 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, 2020, $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, 2020, $4.1 million was outstanding on the EB-5 Notes under the EB-5 Phase II funding. Unsecured working capital loans . On April 16, 2017, 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 working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for the Kakinada Plant. Working capital cash advances bear interest at 12 %. In return, the Company agreed to pay Gemini an amount equal to 30 % of the plant’s monthly net operating profit and recognized these as operational support charges in the financials. In the event that the Company’s biodiesel facility operates at a loss, Gemini owes the Company 30 % of the losses as operational support charges. Either party can terminate the agreement at any time without penalty. Additionally, Gemini received a first priority lien on the assets of the Kakinada Plant. During the year ended December 31, 2021, we have accrued no interest on Gemini balance as the investment was for feedstock purchase and finished goods trade. During the years ended December 31, 2021 and 2020, the Company made principal payments to Gemini of none and $ 8.5 million respectively. As of December 31, 2021 and December 31, 2020, the Company had no balance outstanding under this agreement. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad Oils”). The 2008 agreement provided the working capital and had the first priority lien on assets in return for 30% of the plant’s monthly net operating profit. These expenses were recognized as selling, general, and administrative expenses by the Company in the financials. All terms of the 2008 agreement with Secunderabad Oils were terminated to amend the agreement as below. On July 15, 2017, the agreement with Secunderabad Oils was amended to provide the working capital funds for British Petroleum business operations only in the form of inter-corporate deposit for an amount of approximately $2.3 million over a 95 day period at the rate of 14.75% per annum interest rate. The term of the agreement continues until either party terminates it. Secunderabad Oils has a second priority lien on the assets of the Company’s Kakinada Plant after this agreement. On April 15, 2018, the agreement was amended to purchase the raw material for business operations at 12% per annum interest rate. During the years ended December 31, 2021 and 2020, the Company made principal and interest payments to Secunderabad Oils of none and $3.3 million, respectively. As of December 31, 2021 and 2020, the Company had no balance outstanding under this agreement. GAFI Term loan and Revolving loan. On July 10, 2017, GAFI entered into a Note Purchase Agreement (“Note Purchase Agreement”) with Third Eye Capital (Noteholders). Pursuant to the Note Purchase Agreement, the Noteholders agreed, subject to the terms and conditions of the Note Purchase Agreement and relying on each of the representations and warranties set forth therein, to make (i) a single term loan to GAFI in an aggregate amount of $ 15 million (“Term Loan”) and (ii) revolving advances not to exceed ten million dollars in the aggregate (“Revolving Loan”). The interest rate per annum applicable to the Term Loan is equal to ten percent ( 10 %). The interest rate per annum applicable to the revolving Loans is the greater of Prime Rate plus seven and three quarters percent ( 7.75 %) and twelve percent ( 12.00 %). The maturity date of the loans (“Maturity Date”) was extended to July 10, 2021 by exercising an option to extend the GAFI Loan Maturity Date for a fee of $ 0.5 million. The Company fully repaid the GAFI notes in the first quarter of 2021. As of December 31, 2021, and December 31, 2020, GAFI had none and $ 22.2 million net of debt issuance costs of none and $ 0.4 million outstanding on the Term Loan and none and $ 11.8 million on the Revolving Loan respectively, classified as current portion of long-term debt. Payroll Protection Program. On May 5, 2020, certain wholly owned subsidiaries of the Company received loan proceeds of approximately $ 1.1 million; (“PPP Loans”) under the Paycheck Protection Program (“PPP”). In the second quarter of 2021, the Company received notification from the Small Business Administration that all loan proceeds received by the Company were forgiven. Due to the forgiveness of the loan, the Company recorded a gain on debt extinguishment in the statements of operations and comprehensive loss in the amount of approximately $ 1.1 million during the year ended December 31, 2021. Financing Agreement for Equipment Purchase. The Company entered into an agreement with Mitsubishi Chemical America, Inc. (“Mitsubishi”) to purchase membrane dehydration equipment to save energy used in 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 commissioned date and interest will be charged based on the certain performance metrics after operation of the equipment. The equipment was delivered in March 2020; however, the installation has been delayed due to the COVID-19 pandemic. In the fourth quarter of 2021, we started the installation of dehydration equipment. Hence, we recorded the asset in property, plant and equipment, net and the related liability of $ 0.3 million in short term borrowings and $ 5.4 million in other long-term debt, respectively as of December 31, 2021 and 2020. 76 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Debt repayments for the Company’s loan obligations follow: Twelve months ended December 31, Debt Repayments 2022 $ 22,778 2023 154,826 2024 6,945 2025 2,564 2026 945 There after 1,640 Total debt 189,698 Debt issuance costs ( 931 ) Total debt, net of debt issuance costs $ 188,767 5. Commitments and Contingencies Leases We have identified assets as the corporate office, warehouse, monitoring equipment and laboratory facilities over which we have control and obtain economic benefits fully. We classified these identified assets as operating leases after assessing the terms under classification guidance. We have entered into several leases for trailers and carbon units with purchase option at the end of the term. We have concluded that it is reasonably certain that we would exercise the purchase option at the end of the term, hence the leases were classified as finance leases. All of our leases have remaining term of less than a year to 7 years. We made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses. When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and ROU assets. The incremental borrowing rate used by the Company was 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 will be used. On December 14, 2021, we entered into a real estate purchase agreements and lease disposition and development agreement with the City of Riverbank. We plan to utilize the purchased and leased properties, located at 5300 Claus Road in the city of Riverbank, California, for the construction of the Carbon Zero 1 Facility. The lease commences in 2022 and the Company will evaluate and assess the lease upon commencement. 77 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 was as follows: Twelve Months ended December 31, 2021 2020 2019 Operating lease cost Operating lease expense $ 812 $ 566 $ 712 Short term lease expense 207 118 85 Variable lease expense 107 105 102 Sub lease income - - ( 117 ) Total operating lease cost $ 1,126 $ 789 $ 782 Finance lease cost Amortization of right-of-use assets $ 230 $ 249 $ - Interest on lease liabilities 81 68 - Total finance lease cost $ 311 $ 317 $ - Cash paid for amounts included in the measurement of lease liabilities: Twelve Months ended December 31, 2021 2020 2019 Operating cash flows used in operating leases $ 698 $ 616 $ 571 Operating cash flows used in finance leases 81 68 - Financing cash flows used in finance leases $ 506 1,471 - Supplemental non-cash flow information related to the operating ROU asset and lease liabilities was as follows for the year ended December 31, 2021 and 2020: Twelve Months ended December 31, 2021 2020 2019 Operating leases Accretion of the lease liability $ 378 $ 258 $ 125 Amortization of right-of-use assets 434 308 587 Weighted Average Remaining Lease Term Operating leases 6.3 years Finance leases 2.3 years Weighted Average Discount Rate Operating leases 14.0 % Finance leases 6.1 % 78 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, 2021 December 31, 2020 December 31, 2019 Operating leases Operating lease right-of-use assets $ 2,462 $ 2,889 $ 557 Current portion of operating lease liability 260 316 377 Long term operating lease liability 2,318 2,578 200 Total operating lease liabilities 2,578 2,894 577 Finance leases Property and equipment, at cost $ 2,317 $ 2,308 $ - Accumulated depreciation ( 376 ) ( 249 ) - Property and equipment, net 1,941 2,059 - Other current liability 550 417 - Other long term liabilities 720 1,164 - Total finance lease liabilities 1,270 1,581 - Maturities of operating lease liabilities were as follows: Year ended December 31, Operating leases Finance leases 2022 $ 597 $ 611 2023 573 528 2024 590 201 2025 608 23 2026 626 - There after 918 - Total lease payments 3,912 1,363 Less imputed interest ( 1,334 ) ( 93 ) Total lease liability $ 2,578 $ 1,270 Property taxes The Company entered into a payment plan with Stanislaus County for unpaid property taxes for the Keyes Plant site on June 28, 2018 by paying $ 1.5 million as a first payment. Under the annual payment plan, the Company was set to pay 20% of the outstanding redemption amount, in addition to the current year property taxes and any interest incurred on the unpaid balance to date annually, on or before April 10 starting in 2019. After making one payment, the Company defaulted on the payment plan and as of December 31, 2021 and December 31, 2020, the balance in property tax accrual was $ 6.8 million and $ 5.7 million, respectively. On March 3, 2022, the company paid $ 6.1 million to Stanislaus County. 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. The lawsuit asserted that EdenIQ had fraudulently induced the Company into assisting EdenIQ to obtain EPA approval for a new technology that the Company would not have done but for the Company’s belief that the merger would occur. The relief sought included EdenIQ’s specific performance of the merger, monetary damages, as well as punitive damages, attorneys’ fees, and costs. In response to the lawsuit, EdenIQ filed a cross-complaint asserting causes of action relating to the Company’s alleged inability to consummate the merger, the Company’s interactions with EdenIQ’s business partners, and the Company’s use of EdenIQ’s name and trademark in association with publicity surrounding the merger. Further, EdenIQ named Third Eye Capital Corporation (“TEC”) as a defendant in a second amended cross-complaint alleging that TEC had failed to disclose that its financial commitment to fund the merger included terms that were not disclosed. Finally, EdenIQ claimed that TEC and the Company concealed material information surrounding the financing of the merger. By way of its cross-complaint, EdenIQ sought monetary damages, punitive damages, injunctive relief, attorneys’ fees and costs. In November 2018, the claims asserted by the Company were dismissed on summary judgment and the Company filed a motion to amend its claims, which remains pending. In December 2018, EdenIQ dismissed all of its claims prior to trial. In February 2019, the Company and EdenIQ each filed motions seeking reimbursement of attorney fees and costs associated with the litigation. 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. The Company recorded the $ 6.2 million as loss contingency on litigation during the year ended December 31, 2019. The Company has retained appellate counsel to appeal the award. If the appeal is successful, the award may be reduced or eliminated. If the appeal is not successful, the award for this judgement will be increased by approximately $1.8 million to $2.1 million. The parties may also enter into settlement discussions while the appeal is pending and settle the dispute. 79 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 6. Biogas LLC – 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., with Third Eye Capital acting as an agent. 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. The Preferred Unit Agreement includes (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 shall have an interest per annum rate equal to ten percent (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, (iv) one board seat of the three available to be elected by Series A Preferred Unit holders, (iii) 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), (iv) full redemption of the units on the sixth anniversary, (v) minimum cash flow requirements from each digester, and (vi) $ 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. Triggering events 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, 2021, 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. From inception of the agreement to date, ABGL issued 3,200,000 Series A Preferred Units on first tranche for a value of $ 16.0 million and also issued 2,800,000 of Series A Preferred Units on second tranche for a value of $ 14.0 million, reduced by a redemption of 20,000 Series A Preferred Units for $ 0.3 million. The Company is accreting these two tranches to the redemption value of $ 89.7 million over the estimated future cash flow periods of six years using the effective interest method. In addition, the Company identified freestanding future tranche rights and the accelerated redemption feature related to a change in control provision as derivatives which required bifurcation. These derivative features were assessed to have minimal value as of December 31, 2021 and December 31, 2020 based on the evaluation of the other conditions included in the agreement. During the year ended December 31, 2021, ABGL issued 626,000 of Series A Preferred Units for incremental proceeds of $ 3.1 million as part of the second tranche of the Preferred Unit Agreement and redeemed 20,000 of Series A Preferred Units for $ 0.3 million. Consistent with the previous issuances which were treated as a liability as the conversion option was deemed to be non-substantive, the current issuances are treated as a liability as the conversion option was still deemed to be non-substantive. 80 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 Series A Preferred Unit liabilities, net of unit issuance costs and inclusive of accretive preference pursuant to this agreement, and accrued preference payments, classified as current portion of Series A Preferred Units, of $ 3.2 million and $ 2.0 million, and long-term liabilities of $ 45.0 million and $ 32.0 million as of December 31, 2021 and 2020, 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 were $ 41.5 million primarily related to biodigesters at two dairies and a pipeline which serve as collateral for the Series A Preferred Unit totaling $48.1 million. The Series A Preferred Units are not collateralized by any other assets or guarantees from Aemetis or its subsidiaries. 7. Stockholders’ Equity The Company is authorized to issue up to 80 million shares of common stock, $ 0.001 par value per share and 65 million shares of preferred stock, $ 0.001 par value per share. Convertible Preferred Stock The following is a summary of the authorized, issued and outstanding convertible preferred stock: Shares Issued and Authorized Outstanding December 31, Shares 2021 2020 Series B preferred stock 7,235 1,278 1,323 Undesignated 57,765 — — 65,000 1,278 1,323 Our Articles of Incorporation authorize the Company’s board to issue up to 65 million shares of preferred stock, $0.001 par value, in one or more classes or series within a class upon authority of the board without further stockholder approval. Significant terms of the designated preferred stock are as follows: Voting. Holders of the Company’s Series B preferred stock are entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series B preferred stock held by such holder could be converted as of the record date. Cumulative voting with respect to the election of directors is not allowed. Currently each share of Series B preferred stock is entitled to a 1 for 10, as converted, vote per share of Series B preferred stock. In addition, without obtaining the approval of the holders of a majority of the outstanding preferred stock, the Company cannot: · Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series B preferred stock; · Effect an exchange, reclassification, or cancellation of all or a part of the Series B preferred stock, including a reverse stock split, but excluding a stock split; · Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series B preferred stock; or · Alter or change the rights, preferences or privileges of the shares of Series B preferred stock so as to affect adversely the shares of such series. 81 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Dividends Holders of all of the Company’s shares of Series B preferred stock are entitled to receive non-cumulative dividends payable in preference and before any declaration or payment of any dividend on common stock as may from time to time be declared by the board of directors out of funds legally available for that purpose at the rate of 5% of the original purchase price of such shares of preferred stock. No dividends may be made with respect to the Company’s common stock until all declared dividends on the preferred stock have been paid or set aside for payment to the preferred stockholders. To date, no dividends have been declared. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Series B preferred stock are entitled to receive, prior and in preference to any payment to the holders of the common stock, $3.00 per share plus all declared but unpaid dividends (if any) on the Series B preferred stock. If the Company’s assets legally available for distribution to the holders of the Series B preferred stock are insufficient to permit the payment to such holders of their full liquidation preference, then the Company’s entire assets legally available for distribution are to be distributed to the holders of the Series B preferred stock in proportion to their liquidation preferences. After the payment to the holders of the Series B preferred stock of their liquidation preference, the Company’s remaining assets legally available for distribution are distributed to the holders of the common stock in proportion to the number of shares of common stock held by them. A liquidation, dissolution or winding up includes (a) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) that results in the voting securities of the Company outstanding immediately prior thereto failing to represent immediately after such transaction or series of transactions (either by remaining outstanding or by being converted into voting securities of the surviving entity or the entity that controls such surviving entity) a majority of the total voting power represented by the outstanding voting securities of the Company, such surviving entity or the entity that controls such surviving entity, or (b) a sale, lease or other conveyance of all or substantially all of the assets of the Company. Conversion. Holders of Series B preferred stock have the right, at their option at any time, to convert any shares into common stock. Every 10 shares of preferred stock will convert into one share of common stock, at the current conversion rate. The conversion ratio is subject to adjustment from time to time in the event of certain dilutive issuances and events, such as stock splits, stock dividends, stock combinations, reclassifications, exchanges and the like. In addition, at such time as a Registration Statement covering the resale of the shares of common stock is declared effective, then all outstanding Series B preferred stock shall be automatically converted into common stock at the then effective conversion rate. Mandatorily Redeemable Series B preferred stock. In connection with the election of dissenters’ rights by the Cordillera Fund, L.P., at December 31, 2008 the Company reclassified 583 thousand shares with an original purchase price of $ 1.8 million out of shareholders’ equity to a liability called “mandatorily redeemable Series B preferred stock” and accordingly reduced stockholders’ equity by the same amount to reflect the Company’s obligations with respect to this matter. The obligation accrues interest at the rate of prime + 2% per year ( 5.25 % at 12/31/2021). At December 31, 2021 and 2020, the Company had accrued an outstanding obligation of $ 3.8 million and $ 3.3 million, respectively. Full cash payment to the Cordillera Fund is past due. The Company expects to pay this obligation upon availability of funds after paying senior secured obligations. 8. Outstanding Warrants During the years ended December 31, 2021, 2020 and 2019, the Company granted 227 thousand common stock warrants, respectively, for the extension of certain Notes for each period, respectively. In addition, for the year ending December 31, 2021, the Company granted 65 thousand common stock warrants for milestones related to the Aemetis Carbon Capture, Inc carbon sequestration project. The accredited investors received 2-year warrants exercisable at $0.01 per share as part of note agreements. 82 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The weighted average fair value calculations for warrants granted are based on the following weighted average assumptions: Description For the year ended December 31, 2021 2020 2019 Dividend-yield 0 % 0 % 0 % Risk-free interest rate 0.21 % 0.84 % 2.13 % Expected volatility 136.16 % 108.8 % 103.0 % Expected life (years) 2 2 2 Exercise price per share $ 0.01 $ 0.01 $ 0.01 Market value per share on grant date $ 9.92 $ 0.81 $ 0.73 Fair value per share on grant date $ 9.91 $ 0.80 $ 0.72 A summary of historical warrant activity for the years ended December 31, 2021, 2020 and 2019 follows: Warrants Outstanding & Exercisable Weighted - Average Exercise Price Average Remaining Term in Years Outstanding December 31, 2018 95 $ 2.59 6.95 Granted 227 0.01 Exercised ( 227 ) 0.01 Outstanding December 31, 2019 95 $ 2.59 5.95 Granted 227 0.01 Exercised ( 227 ) 0.01 Outstanding December 31, 2020 95 $ 2.59 4.95 Granted 292 0.01 Exercised ( 332 ) 0.32 Outstanding December 31, 2021 55 $ 2.59 3.95 All of the above outstanding warrants are vested and exercisable as of December 31, 2021. As of December 31, 2021 and 2020, the Company had no unrecognized compensation expense related to warrants, respectively. 10. Stock-Based Compensation 2019 Plan On April 29, 2019, the Aemetis 2019 Stock Plan (the “2019 Stock Plan”) was approved by stockholders of the Company. This plan permits the grant of 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 as the Administrator may determine in its discretion. The 2019 Stock Plan’s term is 10 years and supersedes all prior plans. The 2019 Stock Plan authorized the issuance of 200,000 shares of common stock for the 2019 calendar year, in addition to permitting transferring and granting any available and unissued or expired options under the Amended and Restated 2007 Stock Plan in an amount up to 177,246 options. With the approval of the 2019 Stock Plan, the Zymetis 2006 Stock Plan, and Amended and Restated 2007 Stock Plan are terminated for granting any options under either plan. However, any options granted before the 2019 Stock Plan approved will remain outstanding and can be exercised, and any expired options will be available to grant under the 2019 Stock Plan. During the year ended December 31, 2019, 1,116,000 stock option grants were issued and approved by the Board for employees, consultants, and directors under the 2019 Stock Plan with 10 -year terms and vesting terms from immediately to 3 years. During the year ended December 31, 2020, 2,320,000 stock option grants were issued and approved by the Board for employees and directors under the 2019 Stock Plan with 10 -year terms and vesting terms from immediately to 3 years. On January 7, 2021, 945,000 incentive stock option grants were issued for employees and directors under the 2019 Stock Plan. In addition, 5,200 restricted stock award grants, with a fair value of $ 3.09 per award, were issued to the Company’s board of directors (“Board”) with the restriction that this grant would satisfy board compensation fees. 83 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) On April 8, 2021, 34,114 restricted stock award grants, with a fair value of $ 26.19 per award, were issued to the Board with the restriction that this grant would pay off outstanding accounts payable owed to the Board members and was included in the summary of awards granted. On June 3, 2021, 30,000 stock option grants were approved by the Board for new employees under the 2019 Stock Plan with 10 -year term and 3 -year vesting. On November 18, 2021, 165,800 incentive stock option grants were issued for employees and directors under the 2019 Stock Plan. In addition, 80,588 restricted stock award grants, with an average fair value of $ 18.53 per award, were issued to the Company’s board of directors (“Board”). Inducement Equity Plan Options In March 2016, the Board of Directors of the Company (the “Board”) approved an Inducement Equity Plan authorizing the issuance of 100,000 non-statutory stock options to purchase common stock. As of December 31, 2021, no options were outstanding under the Inducement Equity Plan. Common Stock Reserved for Issuance The following is a summary of awards granted under the above Plans: Shares Available for Grant Number of Shares Outstanding Weighted-Average Exercise Price Balance as of December 31, 2018 149 2,889 $ 1.80 Authorized 855 - - Granted ( 1,116 ) 1,116 0.78 Forfeited/expired 259 (259 ) 3.53 Balance as of December 31, 2019 147 3,746 $ 1.38 Authorized 2,342 - - Granted ( 2,320 ) 2,320 0.69 Exercised - ( 528 ) 0.96 Forfeited/expired 211 ( 211 ) 0.89 Balance as of December 31, 2020 380 5,327 $ 1.14 Authorized 816 - - Options Granted ( 1,141 ) 1,141 5.60 RSAs Granted ( 154 ) - Exercised - ( 2,498 ) 1.39 Forfeited/expired 241 ( 207 ) 1.84 Balance as of December 31, 2021 289 7,509 $ 2.29 84 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The following is a summary of vested and unvested awards outstanding as of December 31, 2021, 2020, and 2019: Number of Shares Weighted Average Exercise Price Remaining Contractual Term (In Years) Aggregate Intrinsic Value 1 2021 Vested and Exercisable 2,346 $ 1.32 7.68 $ 25,771 Unvested 1,417 3.89 8.64 12,961 Total 3,763 $ 2.29 8.04 $ 38,732 2020 Vested and Exercisable 3,718 $ 1.30 7.42 $ 4,592 Unvested 1,609 0.77 8.82 2,771 Total 5,327 $ - 7.84 $ 7,363 2019 Vested and Exercisable 2,659 $ 1.56 7.45 $ 145 Unvested 1,087 0.93 8.78 77 Total 3,746 $ 1.38 7.84 $ 222 (11) Intrinsic value based on the $ 12.30 , $ 2.49 , and $ 0.83 closing price of Aemetis stock on December 31, 2021, 2020, and 2019 respectively, as reported on the NASDAQ Exchange. Stock-based compensation for employees Stock-based compensation is accounted for in accordance with the provisions of ASC 718, Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. For the years ended December 31, 2021, 2020, and 2019 the Company recorded option expense in the amount of $ 3.9 million, $ 1.0 million and $ 0.8 million, respectively. Valuation and Expense Information All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, 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, and expected dividends. We also estimate forfeitures of unvested stock options. To the extent actual forfeitures differ from our estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. Compensation cost is recorded only for vested options. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods 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 and the plan. 85 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) The weighted average fair value calculations for options granted during the year ended 2021, 2020, and 2019 are based on the following assumptions: Description For the year ended December 31, 2021 2020 2019 Dividend-yield 0 % 0 % 0 % Risk-free interest rate 0.83 % 0.94 % 2.38 % Expected volatility 100.47 % 87.37 % 88.54 % Expected life (years) 6.59 6.55 6.55 Market value per share on grant date $ 5.60 $ 0.69 $ 0.78 Fair value per share on grant date $ 4.68 $ 0.51 $ 0.59 As of December 31, 2021, the Company had $ 4.4 million of total unrecognized compensation expense for employees which the Company will amortize over the weighted remaining term of 2.5 years. 11. Agreements Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily 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. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2022 and the term can be automatically renewed for additional one-year terms. WDG continues to be sold to A.L.Gilbert and DCO is sold to other customers under the J.D.Heiskell Purchase Agreement. 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 building working capital relationships. These agreements are ordinary purchase and sale agency agreements for the Keyes Plant. On May 13, 2020, J.D. Heiskell and the Company entered into Amendment No.1 to the J.D. Heiskell Purchasing Agreement to remove J.D. Heiskell’s obligations to purchase ethanol from the Company under the J.D. Heiskell Purchasing Agreement. As of December 31, 2021 and 2020, Aemetis made prepayments to J.D. Heiskell of $ 4 million and none. 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, 2021 and 2020 were as follows: As of and for the twelve months ended December 31, 2021 2020 2019 Ethanol sales $ - $ 26,049 $ 114,593 Wet distiller's grains sales 41,476 32,049 34,510 Corn oil sales 6,184 3,623 3,536 Corn purchases 159,309 107,033 119,786 Accounts receivable 308 94 554 Accounts payable 862 169 2,027 Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy and a Wet Distillers Grains Marketing Agreement with A.L. Gilbert. Under the terms of the agreements the Wet Distillers Grains Marketing Agreement matures on December 31, 2021 with automatic one-year renewals thereafter. We terminated the Ethanol Marketing Agreement with Kinergy as of September 30, 2021. Effective October 1, 2021, we entered into Fuel Ethanol Purchase and Sale Agreement with Murex LLC. Under the terms of the agreement, the initial term matures on October 31, 2023 with automatic one-year renewals thereafter. Sales to Kinergy were $ 110.7 million, $ 62.1 million, and none and accounts receivable associated with Kinergy was none, $ 200 thousand and none during the years ended December 31, 2021, 2020, and 2019. 86 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) Sales to Murex were $51.7 million, $ 46 thousand, and none and accounts receivable associated with Murex was $ 1.0 million, none, and none during the years ended December 31, 2021, 2020, and 2019. For the years ended December 31, 2021, 2020 and 2019, the Company expensed marketing costs of $ 2.9 , $ 2.3 , and $ 2.6 million for each period 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, 2021, 2020 and 2019, the Company expensed shipping and handling costs related to sales of ethanol and high-grade alcohol sales of $ 3.3 million, $ 4.8 million, and $ 3.2 million and expensed transportation costs related to sales of WDG of $ 3.1 million, $ 2.9 million and $ 3.2 million As of December 31, 2021, the Company has no forward sales commitments. 12. Segment Information Aemetis recognizes three reportable segments “California Ethanol”, “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 “Dairy Renewable Natural Gas” reportable segment includes, the dairy digesters, pipeline and gas condition unit for the production of biogas from dairies near Keyes, California. The “India Biodiesel” reportable segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing Kakinada Plant, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly. The Company has additional operating segments that were determined not to be reportable segments, including the Carbon Zero 1 facility in Riverbank, the Goodland Plant, Kansas and the research and development facility in Minnesota. Refer to the “All Other” category. Summarized financial information by reportable segment for the years ended December 31, 2021, 2020, and 2019 follow: For the year ended December 31, 2021 California Ethanol Dairy Renewable Natural Gas India Biodiesel All other Total Revenues from external customers $ 211,251 $ - $ 696 $ 2 $ 211,949 Intersegment revenues - 1,445 - - 1,445 Gross profit (loss) 9,565 ( 488 ) ( 23 ) ( 1,115 ) 7,939 Interest expense 18,092 13 - 2,031 20,136 Accretion and other expenses of Series A preferred units - 7,718 - - 7,718 Gain on debt extinguishment ( 713 ) - - ( 421 ) ( 1,134 ) Capital expenditures 2,763 17,702 142 6,045 26,652 Depreciation 4,132 577 686 53 5,448 Total Assets 75,909 40,027 10,779 34,115 160,831 87 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) For the year ended December 31, 2020 California Ethanol Dairy Renewable Natural Gas India Biodiesel All other Total Revenues from external customers $ 149,302 $ - $ 15,795 $ 460 $ 165,557 Intersegment Revenues - 40 - 88 128 Gross profit (loss) 9,734 ( 303 ) 1,602 ( 8 ) 11,025 Interest expense (income) 18,572 6 38 4,327 22,943 Accretion and other expenses of Series A preferred units - 4,673 - - 4,673 Capital expenditures 1,281 15,687 1,371 1,001 19,340 Depreciation 4,044 174 661 15 4,894 Total Assets 61,418 23,847 12,827 27,047 125,139 For the year ended December 31, 2019 California Ethanol Dairy Renewable Natural Gas India Biodiesel All other Total Revenues from external customers $ 154,148 $ - $ 47,850 $ - $ 201,998 Gross profit 3,951 - 8,747 - 12,698 Interest expense (income) 16,667 - 351 4,071 21,089 Accretion and other expenses of Series A preferred units - 2,257 - - 2,257 Loss contingency on litigation - - - 6,200 6,200 Capital expenditures 2,255 4,214 1,059 1,050 8,578 Depreciation 3,810 1 612 11 4,434 Total Assets 56,561 4,776 16,906 21,652 99,895 A reconciliation of reportable segment revenues to consolidated totals for the years 2021, 2020, and 2019 follow: Revenues 2021 2020 2019 Total revenues for reportable segments $ 213,392 $ 165,137 $ 201,998 Other revenues 2 548 - Elimination of intersegment revenues ( 1,445 ) ( 128 ) - Total consolidated revenues $ 211,949 $ 165,557 $ 201,998 California Ethanol: During the year ended December 31, 2021, 2020, and 2019, 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 WDG and corn oil the Company produces to J.D. Heiskell. Sales of ethanol to two customers accounted for 52 % and 24 % of the California Ethanol segment’s revenue for the year ended December 31, 2021. Sales of WDG, and corn oil to one customer accounted for 23 % of the Company’s California Ethanol segment revenues for the year ended December 31, 2021. Sales of ethanol, WDG, corn oil, and high-grade alcohol to two customers accounted for 42 % and 41 % of the Company’s California Ethanol segment revenues for the year ended December 31, 2020. Sales of ethanol, WDG, and corn oil to one customer accounted for 99.1 % of the Company’s California Ethanol segment revenues for the year ended December 31, 2019. Dairy Renewable Natural Gas: Substantially all of our Dairy Renewable Natural Gas segment revenues during the years ended December 31, 2021 and 2020 were from sales of biogas to the Keyes Plant for use in boilers, which allowed qualification of carbon credits for the ethanol produced in the Keyes Plant. India Biodiesel: During the year ended 2021, one biodiesel customers accounted for 66 % of the Company’s India Biodiesel segment revenues while one of the refined glycerin customers accounted for 16 % of the Company’s India Biodiesel segment revenues. During the year ended December 30, 2020, two biodiesel customers accounted for 42 % and 26 % of the Company’s consolidated India segment revenues while none of the refined glycerin customers accounted for more than 10%. During the year ended December 31, 2019, three biodiesel customers accounting for 33 %, 15 % and 13 % of the Company’s consolidated India Biodiesel segment revenues and none of the refined glycerin customers accounting for more than 10%. 88 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 13. Related Party Transactions The Company owes Eric McAfee, the Company’s Chairman and CEO, and McAfee Capital LLC (“McAfee Capital”), owned by Eric McAfee, $0.4 million in connection with employment agreements and expense reimbursements. The balance accrued related to these employment agreements was $1.1 million as of December 31, 2020. For the years ended December 31, 2021, 2020, and 2019, the Company expensed $ 15 thousand, $ 23 thousand, and $ 36 thousand, to reimburse actual expenses incurred by McAfee Capital and related entities. The Company previously prepaid $0.2 million to Redwood Capital, a company controlled by Eric McAfee, for the Company’s use of flight time on a corporate jet. As of December 31, 2021, $ 0.1 million remained as a prepaid expense. As of December 31, 2021, one executive owes the Company $ 106 thousand related to stock option exercises. This was repaid in January 2022. On May 7, 2020, the Audit Committee of the Company approved a guarantee fee of 0.1 % quarterly on the outstanding balance of Third Eye Capital Notes or $ 0.6 million. On November 4, 2021, the Audit Committee of the Company approved a guarantee fee of $ 0.4 million. The balance of $ 0.3 million and $ 0.8 million, for guaranty fees, remained as an accrued liability as of December 31, 2021 and 2020, respectively. On January 12, 2022, the Audit Committee of the Company approved a one-time guarantee fee of $ 2.0 million to McAfee Capital in connection with McAfee Capitals extension of certain guarantees of the Company’s indebtedness with Third Eye Capital. The Company owes various members of the Board amounts totaling $0.2 million and $1.2 million as of December 31, 2021 and December 31, 2020, 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, 2021, 2020, and 2019 the Company expensed $ 0.4 million, $ 0.4 million, and $ 0.3 million respectively, in connection with board compensation fees. During the year ended December 31, 2021 the company issued $ 0.9 million of restricted stock awards to pay off outstanding accounts payable owed to members of the Board. 14. Income Tax The Company files a consolidated federal income tax return including all its domestic subsidiaries. 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: 2021 2020 2019 Current: Federal $ - $ - $ - State and Local 11 8 8 Foreign - - - 11 8 8 Deferred: Federal - - - State and Local - - - Foreign ( 139 ) ( 984 ) 1,123 Income tax expense/(benefit) $ ( 128 ) $ ( 976 ) $ 1,131 The Company recorded $ 0 and $ 0.1 million deferred tax liability as of December 31, 2021 and 2020 which is recorded 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, 2020. U.S. loss and foreign income (loss) before income taxes are as follows: Year Ended December 31, 2021 2020 2019 United States $ ( 45,723 ) $ ( 37,496 ) $ ( 43,419 ) Foreign ( 1,552 ) ( 139 ) 5,073 Pretax loss $ ( 47,275 ) $ ( 37,635 ) $ ( 38,346 ) 89 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, 2021 2020 2019 Income tax benefit at the federal statutory rate $ ( 9,928 ) $ ( 7,903 ) $ ( 8,052 ) State tax benefit ( 2,875 ) ( 4,066 ) ( 48 ) Foreign tax differential ( 96 ) ( 185 ) 900 Stock-based compensation 252 166 133 Interest Expense 1,842 1,315 478 GILTI Inclusion - - 849 Prior year true-ups 140 ( 770 ) 1,493 Other 497 258 166 Credits ( 2,074 ) ( 1,388 ) - Valuation Allowance 12,114 11,597 5,212 Income Tax Benefit ( 128 ) ( 976 ) 1,131 Effective Tax Rate 0.27 % 2.59 % - 2.95 % The components of the net deferred tax asset or (liability) are as follows: Year Ended December 31, 2021 2020 Deferred Tax Assets Organizational Costs, Start-up and Intangible Assets $ 5,068 $ 6,325 Stock Based Compensation 1,174 397 NOLs, Unabsorbed Depreciation and R&D Credits C/F's 61,624 56,530 Interest expense carryover 17,436 13,389 Ethanol Credits 1,500 1,500 Carbon Oxide Sequestration Credit 3,460 1,387 Accrued Expenses 3,312 2,813 Operating Lease Liability 1,082 1,232 Other, net 737 486 Total Deferred Tax Assets 95,392 84,059 Valuation Allowance ( 83,260 ) ( 71,145 ) Net Deferred Tax Assets 12,133 12,914 Deferred Tax Liabilities Right of Use Asset ( 1,238 ) ( 1,362 ) Property, Plant & Equipment ( 10,882 ) ( 11,600 ) Other, net ( 13 ) ( 91 ) Total Deferred Tax Liabilities ( 12,133 ) ( 13,053 ) Net Deferred Tax Liabilities $ - $ ( 139 ) 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. 90 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, 2021, 2020, and 2019 these undistributed earnings losses totaled $8.9 million, $8.0 million, and $7.0 million, respectively. 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, 2021, 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, 2021: United States — Federal 2007 – present United States — State 2008 – present India 2013 – present Mauritius 2006 – present As of December 31, 2021, the Company had U.S. federal NOL carryforwards of approximately $ 201.0 million and state NOL carryforwards of approximately $ 252.0 million. The Company also has approximately $ 1.5 million of alcohol and cellulosic biofuel credit carryforwards. The Company also has approximately $ 3.5 million of Carbon Oxide Sequestration Credit carryforwards The federal net operating loss and other tax credit carryforwards expire on various dates between 2027 and 2037. The state net operating loss carryforwards expire on various dates between 2027 through 2041. 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. The Company’s India subsidiary has unabsorbed depreciation loss carryforwards as of December 31, 2021 of approximately $ 5.1 million in U.S. dollars, which do not expire. 91 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 15. 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 distributions 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, 2021 and 2020 Assets 2021 2020 Current assets Cash and cash equivalents $ - $ 318 Receivables due from subsidiaries 93,571 - Prepaid expenses 290 252 Other current assets 116 - Total current assets 93,977 570 Investment in AE Advanced Products Keyes , Inc. - 12 Investment in Aemetis Property Keyes, Inc. 496 - Investment in Aemetis International, Inc. 2,546 4,196 Investment in Aemetis Advanced Products Riverbank, Inc. 23 - Investment in Aemetis Carbon Capture, Inc. 54 - Total investments in Subsidiaries, net of advances 3,119 4,208 Property, plant and equipment, net 36 9 Other assets 2,475 2,700 Total Assets $ 99,607 $ 7,487 Liabilities & stockholders' deficit Current liabilities Accounts payable $ 3,024 $ 4,881 Payables due to subsidiaries - 4,390 Mandatorily redeemable Series B convertible preferred 3,806 3,252 Other current liabilities 9,521 11,930 Total current liabilities 16,351 24,453 Long term liabilities: Other long term debt - 150 Operating lease liability 2,318 - Subsidiary obligation in excess of investment Investment in AE Advanced Fuels, Inc. 150,424 131,432 Investment in Aemetis Americas, Inc 205 205 Investment in Aemetis Biofuels, Inc. 2,738 2,738 Investment in Aemetis Technologies, Inc. 4,536 4,446 Investment in Aemetis Property Keyes, Inc. - 247 Investment in AE Advanced Products Keyes , Inc. 383 - Investment in Aemetis Health Products, Inc. 2,137 441 Investment in Goodland Advanced Fuels, Inc. 13,587 12,201 Investment in Aemetis Biogas LLC 27,166 15,918 Total subsidiary obligation in excess of investment 201,176 167,628 Total long term liabilities 203,494 167,778 Stockholders' deficit Series B Preferred convertible stock 1 1 Common stock 33 23 Additional paid-in capital 205,305 93,426 Accumulated deficit ( 321,227 ) ( 274,080 ) Accumulated other comprehensive loss ( 4,350 ) ( 4,114 ) Total stockholders' deficit ( 120,238 ) ( 184,744 ) Total liabilities & stockholders' deficit $ 99,607 $ 7,487 92 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, 2021, 2020, and 2019 2021 2020 2019 Equity in subsidiary losses $ ( 34,400 ) $ ( 28,820 ) $ ( 21,745 ) Selling, general and administrative expenses 11,806 6,707 6,673 Operating loss ( 46,206 ) ( 35,527 ) ( 28,418 ) Other (income) expense Interest expense 1,031 677 1,392 Other (income) expense ( 97 ) 448 5,899 Loss before income taxes ( 47,140 ) ( 36,652 ) ( 35,709 ) Income tax expense 7 7 7 Net loss ( 47,147 ) ( 36,659 ) ( 35,716 ) Other comprehensive loss Foreign currency translation adjustment ( 27 ) ( 289 ) ( 249 ) Comprehensive loss $ ( 47,174 ) $ ( 36,948 ) $ (35,965 ) 93 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, 2021, 2020, and 2019 2021 2020 2019 Operating activities: Net loss ( 47,147 ) ( 36,659 ) ( 35,716 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 3,928 995 774 SARs Amortization - - 800 Depreciation 8 4 8 Subsidiary portion of net losses 34,400 28,820 21,745 Change in fair value of SARs liability - - ( 82 ) Gain on debt extinguishment ( 421 ) - - Changes in assets and liabilities: Prepaid expenses ( 38 ) 38 74 Accounts payable ( 1,043 ) ( 216 ) 71 Accrued interest expense 998 525 1,184 Other liabilities ( 902 ) ( 578 ) 5,891 Other assets 109 236 ( 232 ) Net cash used in operating activities ( 10,108 ) ( 6,835 ) ( 5,483 ) Investing activities: Subsidiary advances, net ( 95,105 ) 1,332 6,781 Net cash provided by (used in) investing activities ( 95,105 ) 1,332 6,781 Financing activities: Proceeds from borrowings under secured debt facilities - 421 - Repayments of borrowings under secured debt facilities - - ( 1,298 ) Proceeds from the exercise of stock options 1,304 287 - Proceeds from issuance of common stock in equity offering 103,591 5,113 - Net cash provided by (used in) financing activities 104,895 5,821 (1,298 ) Net increase in cash and cash equivalents ( 318 ) 318 - Cash and cash equivalents at beginning of period 318 - - Cash and cash equivalents at end of period $ - $ 318 $ - Supplemental disclosures of cash flow information, cash paid: Interest payments $ - $ - $ - Income taxes paid 7 7 8 Supplemental disclosures of cash flow information, non-cash transactions: Fair value of warrants issued to subordinated debt holders 1,546 181 162 Fair value of warrants issued for capital expenditures 1,344 - - Exercise of Stock Appreciation Rights added to GAFI debt - - 1,050 Reclassification of GAFI Non-controlling interest - - 8,501 Operating lease liabilities arising from obtaining right of use assets - 2,632 640 Issuance of equity to pay off accounts payable 893 - - 94 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 16. Subsequent Events Subordinated Notes On January 1, 2022, the maturity on two accredited investor's Subordinated Notes was extended until the earlier of (i) June 30, 2022; (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 cash extension fee was paid by adding the fee to the balance of the new Subordinated Note and 113 thousand Aemetis, Inc. common stock warrants were granted with a term of two years and an exercise price of $ 0.01 per share. Amended and Restated Credit Agreement On March 2, 2022, Goodland Advanced Fuels, Inc. and Aemetis Carbon Capture, Inc. entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with Third Eye Capital Corporation, as administrative agent and collateral agent, and the lender party there to (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 ”), in each case upon satisfaction of certain conditions provided in the Credit Agreement (collectively, the “ Revolving Loans ”). 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%), 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%). The Revolving Loans made under the Fuels Revolving Line will be available for working capital purposes and the Revolving Loans made under the Carbon Revolving Line will be 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, $0.001 par value per share, of the Company at an exercise price equal to $ 10.20 per share, exercisable for a five-year period from the Closing Date; and (ii) warrants entitling holders thereof to purchase 250,000 shares of Aemetis, Inc. $0.001 par value common stock, at an exercise price equal to $ 20.00 per share, exercisable for a ten-year period from March 02, 2022. Upon closing of the Credit Agreement, the Company drew on the revolving lines to repay $ 16.0 million on the higher interest rate Revolving Credit Facility and to pay $ 6.1 million to Stanislaus County for property taxes. Third Eye Reserve Liquidity Facility On March 8, 2022, Third Eye agreed to extend a one-year reserve liquidity facility governed by a promissory note of $ 40.0 million to April 1, 2023. Borrowings under the facility are available until maturity on April 1, 2023 . Interest on borrowed amounts accrues at a rate of 30 % per annum, paid monthly in arrears and may be capitalized and due upon maturity, or 40 % if an event of default has occurred and continues. The outstanding principal balance of the indebtedness evidenced by the promissory note, plus any accrued but unpaid interest and any other sums due thereunder, shall be due and payable in full at the earlier to occur of (a) receipt by the Company or its affiliates of proceeds from any sale, merger, equity or debt financing, refinancing or other similar transaction from any third party and (b) April 1, 2023. Any amounts may be re-borrowed up to repaid amounts up until the maturity date of April 1, 2023. The promissory note is secured by liens and security interests upon the property and assets of the Company. In addition, if any initial advances are drawn under the facility, the Company will pay a non-refundable one-time fee in the amount of $ 0.5 million provided that such fee may be added to the principal amount of the promissory note on the date of such initial advance. Third Eye Capital Limited Waiver and Amendment No. 22 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. 95 Table of Contents AEMETIS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tabular data in thousands, except par value and per share data) 17. 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 and 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 provide the necessary liquidity, the senior lender provided an extension of the $40 million reserve liquidity facility through of April 1, 2023 (see Note 16) that will allow the company to meet its obligations as they come due beyond twelve months after these financial statements are issued. The Company plans to pursue the following strategies to improve the course of the business. For the Keyes plant, we plan to operate the plant and continue to improve financial performance by adopting new technologies or process changes that allow for energy efficiency, cost reduction or revenue enhancements, execute upon awarded grants that improve energy and operational efficiencies resulting in lower cost, lower carbon demands and overall margin improvement. For the ABGL biogas project, we plan to operate the biogas digesters to capture and monetize biogas as well as continue to build new dairy digesters and extend the existing pipeline in order to capture the higher carbon credits available in California. Funding for continued construction is based upon, obtaining government guaranteed loans and executing on existing and new state grant programs. For the Riverbank project, we plan to raise the funds necessary to construct and operate the Carbon Zero 1 plant using loan guarantees and public financings based upon the licensed technology that generate federal and state carbon credits available for ultra-low carbon fuels utilizing lower cost, non-food advanced feedstocks to significantly increase margins. For the India plant, we plan to secure higher volumes of shipments of fuels at the India plant by developing the sales channels and expanding the existing domestic markets or exporting to North America markets. In addition to the above 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, selling equity through the ATM and otherwise, selling the current EB-5 Phase II offering, or by vendor financing arrangements. 96 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Aemetis, Inc. Date: March 10, 2022 By: /s/ Eric A. McAfee Eric A. McAfee Chief Executive Officer (Principal Executive Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric A. McAfee and Todd A. Waltz, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him in any and all capacities, to sign any amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Name Title Date /s/ Eric A. McAfee Chairman of the Board/Chief Executive Officer March 10, 2022 Eric A. McAfee (Principal Executive Officer and Director) /s/ Todd Waltz Chief Financial Officer March 10, 2022 Todd Waltz (Principal Financial and Accounting Officer) /s/ Francis Barton Director March 10, 2022 Fran Barton /s/ Lydia I. Beebe Director March 10, 2022 Lydia I. Beebe /s/ John R. Block Director March 10, 2022 John R. Block /s/ Naomi L Boness Director March 10, 2022 Naomi L. Boness /s/ Timothy Simon Director March 10, 2022 Timothy Simon 97