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 Nevada corporation, and its wholly owned subsidiaries (collectively, “Aemetis” or the “Company”):

●	Aemetis Americas, Inc., a Nevada corporation, and its subsidiary AE Biofuels, Inc., a Delaware corporation;

●	Biofuels Marketing, 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 Biochemicals, Inc., a Nevada 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 Advanced Fuels, Inc., a Nevada corporation;

●	Aemetis Advanced Products Keyes, Inc., a Delaware corporation; and,

●	Aemetis Advanced Fuels Goodland, Inc., a Delaware corporation.

Aemetis is an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products by the conversion of first generation ethanol and biodiesel plants into advanced biorefineries. The Company owns and operates a plant in Keyes, California where the Company manufactures and produces ethanol, wet distillers’ grain (WDG), condensed distillers solubles (CDS) and corn oil and a manufacturing and refining facility in Kakinada, India where the Company manufactures and produces fatty acid methyl ester (biodiesel), crude and refined glycerin and refined palm oil. In September 2013, the Company received approval by the US Environmental Protection Agency to produce ethanol using grain sorghum and biogas along with the Keyes plant existing combined heat and power systems to generate higher value D5 Advanced Biofuel Renewable Identification Numbers (RIN’s). In April 2014, the Company received the International Sustainability and Carbon Certification for the production of biodiesel at the India plant from certain oils and fats for sale into European markets. In addition, the Company is continuing research and development focused on microbial technologies for the commercialization of renewable industrial biofuels and biochemicals.

~~Use of Estimates~~. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Basis of Presentation and ~~Consolidation~~Consolidation. . The consolidated condensed financial statements include the accounts of Aemetis, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated condensed balance sheet as of ~~March 31,~~June 30, 2015, the consolidated condensed statements of operations and comprehensive income (loss) for the three and six months ended ~~March 31,~~June 30, 2015 and 2014, and the consolidated condensed statements of cash flows for the ~~three~~six months ended ~~March 31,~~June 30, 2015 and 2014 are unaudited. The consolidated condensed balance sheet as of December 31, 2014 was derived from the 2014 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the 2014 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the SEC.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the unaudited interim consolidated condensed financial statements for the three and six months ended ~~March 31,~~June 30, 2015 and 2014 have been prepared on the same basis as the audited consolidated statements as of December 31, 2014 and reflect all adjustments, consisting primarily of normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and six months ended ~~March 31,~~June 30, 2015 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.

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. The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed or determinable and collection is reasonably assured. The Company records revenues based upon the gross amounts billed to its customers. Revenue from nonmonetary transactions, principally in-kind by-products received in exchange for material processing where the by-product is contemplated by contract to provide value, is recognized at the quoted market price of those goods ~~received~~ or ~~by-products.~~by-products received.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

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.

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 (FDIC) 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, wet ~~distillers~~distiller’s grains, corn syrup and corn oil through third-party marketing arrangements generally without requiring collateral. 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. Accounts receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of the allowance for doubtful accounts.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, 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 receivable are charged against the allowance for doubtful accounts once uncollectibility 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. There is no allowance for doubtful accounts balance as of ~~March 31,~~June 30, 2015 and December 31, 2014.

Inventories. Inventories are stated at the lower of cost, using the first-in and first-out (FIFO) method, or market.

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, and the biodiesel plant in India. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.

Goodwill and Intangible Assets. Intangible assets consist of intellectual property in the form of patents pending, in-process research and development and goodwill. Once the patents pending or in-process R&D have secured a definite life in the form of a patent or product, they will be carried at cost less accumulated amortization over their estimated useful life. Amortization commences upon the commercial application or generation of revenue and is amortized over the shorter of the economic life or patent protection period.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

Company intangible assets such as goodwill have indefinite lives and as a result need to be evaluated at least annually, or more frequently, if impairment indicators arise. In the Company’s review, we determined the fair value of the reporting unit using market indicators and discounted cash flow modeling. The Company compares the fair value to the net book value of the reporting unit. An impairment loss would be recognized when the fair value is less than the related net book value, and an impairment expense would be recorded in the amount of the difference. Forecasts of future cash flows are judgments based on the Company’s experience and knowledge of the Company’s operations and the industries in which the Company operates. These forecasts could be significantly affected by future changes in market conditions, the economic environment, including inflation, and the purchasing decisions of the Company’s customers.

California Ethanol Producer Incentive Program. The Company was eligible to participate in the California Ethanol Producer Incentive Program ~~(“CEPIP”)~~(CEPIP). Under the CEPIP, an eligible California ethanol facility could receive up to $3 million in cash per plant per year of operations through 2013 when current production corn crush spreads, measured as the difference between specified ethanol and corn index prices, dropped below $0.55 per gallon. For any month in which a payment iswas made by the CEPIP, the Company may be required to reimburse the funds within the subsequent five years from each payment date, if the corn crush spreads exceed $1.00 per gallon. Since these funds ~~are~~were provided to subsidize current production costs and encourage eligible facilities to either continue production or start up production in low margin environments, the Company ~~records~~recorded the proceeds, if any, as a credit to cost of goods sold. With respect to CEPIP payments received and applied as reductions to cost of goods sold, the Company recorded none for the three and six months ended ~~March 31,~~June 30, 2015 and 2014. During 2013 and 2014, the strength of the crush spread resulted in an obligation to repay CEPIP funding in the amount of $1.8 million, the entire amount of funds received from the program. As of ~~March 31,~~June 30, 2015 and December 31, 2014, the Company carried a remaining liability of ~~$0.5~~$0.3 million and $0.8 million, respectively, for repayment of funds received.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

Warrant liability: The Company adopted guidance related to distinguishing liabilities from equity for certain warrants which contain a conditional obligation to repurchase feature. As of ~~March 31,~~June 30, 2015 and December 31, 2014, there were 18,644 warrants outstanding with a conditional obligation to repurchase feature that require liability treatment. As a result, a warrant liability was recorded to recognize the fair value upon issuance of each warrant. The Company estimates the fair value of future liability on warrants using the Black-Scholes pricing model. Assumptions within the pricing model include: 1) the risk-free interest rate, which comes from the U.S. Treasury yield curve for periods within the contractual life of the warrants, 2) the expected life of the warrants which is assumed to be the contractual life of the warrants, and 3) the volatility which is estimated based on an average of the historical volatilities.

The Company computes the fair value of the warrant liability at each reporting period and the change in the fair value is recorded through earnings. The key component in the value of the warrant liability is the Company's stock price, which is subject to significant fluctuation and is not under the Company's control. The resulting effect on the Company's net loss is therefore subject to significant fluctuation and will continue to be so until the warrants are exercised, amended or expired. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when the stock price increases and non-cash income when the stock price decreases.

Long - Lived Assets. 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 Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset 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 assets and its estimated fair value.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

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 net loss for the three and six months ended ~~March 31,~~June 30, 2015, potentially dilutive securities have been excluded from the diluted net income per share computations as their effect would be anti-dilutive. As the Company incurred net income for the three and six months ended ~~March 31,~~June 30, 2014, potentially dilutive securities have been included in the diluted net income per share computations and any potentially anti-dilutive shares have been excluded and are shown below.

The following table reconciles the number of shares utilized in the net income (loss) per share calculations for the three and six months ended ~~March 31,~~June 30, 2015 and 2014:

Three months ended March 31,
2015 2014
(In thousands, except per share amounts)

Net income (loss) $ (8,643 ) $ 7,687

Shares:
    Weighted average shares outstanding—basic 20,595 20,007

    Weighted average dilutive share equivalents from preferred shares - 2,384
    Weighted average dilutive share equivalents from stock options - 167
    Weighted average dilutive share equivalents from common warrants - 94
    Weighted average dilutive share equivalents from convertible promissory note - 5
Weighted average shares outstanding—diluted 20,595 22,657

         Earnings (loss) per share—basic $ (0.42 ) $ 0.38

         Earnings (loss) per share—diluted $ (0.42 ) $ 0.34

~~The following table shows the number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation as of March 31, 2015 and 2014:~~

As of
March 31, 2015 March 31, 2014

Series B preferred (convertible on a 10 to 1 basis) 1,558 -
Common stock options and warrants 1,251 1,137
Total number of potentially dilutive shares excluded from the basic and diluted net income (loss) per share calculation 2,809 1,137

1011

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
	(In thousands, except per share amounts)					(In thousands, except per share amounts)

Net income (loss)	$	(6,287	)	$	2,722	$	(14,930	)	$	10,409

Shares:
Weighted average shares outstanding—basic		19,590			20,284		20,090			20,146

Weighted average dilutive share equivalents from preferred shares		-			238		-			238
Weighted average dilutive share equivalents from stock options		-			232		-			134
Weighted average dilutive share equivalents from common warrants		-			194		-			781
Weighted average dilutive share equivalents from convertible promissory note		-			-		-			-

Weighted average shares outstanding—diluted		19,590			20,948		20,090			21,299


Earnings (loss) per share—basic	$	(0.32	)	$	0.13	$	(0.74	)	$	0.52

Earnings (loss) per share—diluted	$	(0.32	)	$	0.13	$	(0.74	)	$	0.49

The following table shows the number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation as of June 30, 2015 and 2014:

	As of
	June 30, 2015		June 30, 2014

Series B preferred (1:10 post split basis)		146		-
Common stock options and warrants		1,352		587
EB-5 debt convertible to Common stock at $30 per share		717		50
Total number of potentially dilutive shares excluded from the diluted net income (loss) per share calculation		2,215		637

Comprehensive Loss. ASC 220 Comprehensive Loss 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 income (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; with 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. Gains and losses from foreign currency transactions are recorded in other income (loss).

Operating 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. Aemetis recognized two reportable geographic segments: “India” and “North America.”

The “North America” operating segment includes the Company’s 55 million gallons per year nameplate capacity ethanol plant in Keyes, California and the research facilities in College Park, Maryland.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

The “India” operating segment encompasses the Company’s 50 million gallon per year nameplate capacity biodiesel plant in Kakinada, India, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius.

Fair Value of Financial Instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, other current liabilities, warrant liability, and debt. The fair value of current financial instruments was estimated to approximate carrying value due to the short term nature of these instruments. The carrying amount of debt obligations, including debt discount issuance costs, held by our senior lender, subordinated debt and seller note payable, at ~~March 31,~~June 30, 2015 amounted to an aggregate of approximately ~~$66.7~~$68.5 million in outstanding obligations. The above debts were determined to have an estimated fair value of ~~$67.7~~$69.2 million based on interest rates for comparable debt. The Company’s debt was valued using inputs from independent consultants evaluating external market inputs and internal financings to determine appropriate discount rates to determine fair value. The warrant liability fair value was estimated using the Black-Scholes valuation pricing model at the end of each reporting period. Due to the unique terms of our notes payable under the EB-5 program, State Bank of India secured term loan and our unsecured working capital loans and other short-term notes, the fair value of the debt is not determinable

Share-Based Compensation. The Company recognizes share based compensation expense in accordance with ASC 718 Stock Compensation requiring the Company to recognize expense 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.

In valuing restricted common shares issued to consultants, debt holders, or affiliated investors, the Company estimates the discount for lack of marketability on restricted stock issued, using the Black-Scholes model for pricing call options, which assists in deriving the implied price of put options using the put-call parity principle. The price of the put option divided by the market price quoted on the NASDAQ market exchange implies the discount for lack of marketability.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

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.

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.

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.

Recently Issued Accounting Pronouncements.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The new standard will be effective for us on January 1, ~~2018.~~2017. We are currently evaluating the potential impact that Topic 606 may have on our financial position and results of operations.

2. Inventory

Inventory consists of the following:

	March 31, 2015		December 31, 2014		June 30, 2015		December 31, 2014
Raw materials	$	1,262	$	1,522	$	1,318	$	1,522
Work-in-progress		1,464		1,453		1,356		1,453
Finished goods		1,915		1,516		2,753		1,516
Total inventory	$	4,641	$	4,491	$	5,427	$	4,491

3. Property, Plant and Equipment

Property, plant and equipment consist of the following:

	June 30, 2015			December 31, 2014
Land	$	2,749		$	2,753
Plant and Buildings		82,265			82,338
Furniture and fixtures		492			458
Machinery and equipment		4,061			4,063
Construction in progress		124			148
Total gross property, plant & equipment		89,691			89,760
Less accumulated depreciation		(16,315	)		(13,950	)
Total net property, plant & equipment	$	73,376		$	75,810

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 & Equipment		5 - 7
Furniture & Fixtures		3 - 5

For the three months ended June 30, 2015 and 2014, the Company recorded depreciation expense of $1.2 million and $1.1 million, respectively. For the six months ended June 30, 2015 and 2014, the Company recorded depreciation expense of $2.4 million and $2.3 million, respectively.

1214

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share ~~data)~~

For the twelve months ending March 31, Amortization
2016 $ 80
2017 88
2018 112
2019 134
2020 180
Thereafter 922
Total $ 1,516

For the twelve months ending June 30,	Amortization
2016	$	80
2017		96
2018		112
2019		157
2020		157
Thereafter		894
Total	$	1,496

5. Notes Payable

Debt consists of the notes from our senior lender, Third Eye Capital, acting as Agent for the Purchasers (Third Eye Capital), other working capital lenders and subordinated lenders as follows:

	June 30, 2015		Dece mber 31, 2014
Third Eye Capital term note	$	6,189	$	7,394
Third Eye Capital revolving credit facility		22,736		22,330
Third Eye Capital revenue participation term note		10,397		10,195
Third Eye Capital acquisition term note		18,053		17,728
Cilion shareholder seller note payable		5,448		5,373
State Bank of India secured term loan		6,399		6,032
Subordinated notes		5,751		5,428
EB-5 long term promissory notes		21,685		1,534
Unsecured working capital loans and short-term notes		2,750		1,287
Total debt		99,408		77,301
Less current portion of debt		14,781		12,746
Total long term debt	$	84,627	$	64,555

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share ~~data)~~data

March 31, 2015 December 31, 2014
Third Eye Capital term note $ 7,300 $ 7,394
Third Eye Capital revolving credit facility 21,267 22,330
Third Eye Capital revenue participation term note 10,065 10,195
Third Eye Capital acquisition term note 17,525 17,728
Cilion shareholder seller note payable 5,410 5,373
State Bank of India secured term loan 6,318 6,032
Subordinated notes 5,282 5,428
EB-5 long term promissory notes 19,075 1,534
Unsecured working capital loans and short-term notes 656 1,287
Total debt 92,898 77,301
Less current portion of debt 12,138 12,746
Total long term debt $ 80,760 $ 64,555

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 (“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~~note (“Revenue Participation Term Notes”); and (iv) senior secured term loans in an aggregate principal amount of $15.0 million (“Acquisition Term Notes”) used to fund the cash portion of the acquisition of Cilion, Inc. After this financing transaction, Third Eye Capital obtained sufficient equity ownership in the Company to be considered a related party (the Term Notes, Revolving Credit Facility, Revenue Participation Term Notes and Acquisition Term Notes are referred to herein collectively as the “Notes”). The Notes mature on ~~July~~April 1, 2015*2016*. On November 4, 2014, Third Eye Capital agreed to Amendment No. 8 to the Note Purchase Agreement to extend a line of credit in the amount of $6.0 million available for advance to Aemetis, such advance was added to the outstanding principal balance of the existing Notes under the Note Purchase Agreement. In addition, Third Eye Capital agreed to give Aemetis the right to extend the maturity date of the Notes to January 1, 2016 upon notice and payment of a 3% extension fee.

On March 12, 2015, Third Eye Capital agreed to Amendment No. 9 to the Note Purchase Agreement to allow for the repurchase of 1,000,000 shares of common stock of the Company at an average price of $5.52 per share for an aggregate purchase price of approximately $5.5 million. The repurchase price was added to the outstanding principal balance of the Revolving Credit Facility. Third Eye Capital also agreed to remove the covenant that the Company must complete an equity offering of its preferred stock for net proceeds of not less than $20 million with all of such net proceeds to be used to repay the principal outstanding under the Note Purchase Agreement. In addition, Third Eye Capital waived the free cash flow financial covenant under the Note Purchase Agreement for the three months ended March 31, 2015. We evaluated the amendment of the Notes and applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and ~~Extinguishment.~~Extinguishment.

On April 30, 2015, Third Eye Capital agreed to Amendment No. 10 to the Note Purchase Agreement to allow for the repurchase of 500,000 shares of common stock of the Company at a repurchase price of $5.00 per share for an aggregate purchase price of approximately $2.5 million. The repurchase price was added to the outstanding principal balance of the ~~revolver notes under the Note Purchase Agreement.~~Revolving Credit Facility. In addition, Third Eye Capital agreed to extend the maturity date of the Notes to April 1, 2016 upon notice and payment of a 3% extension fee. The existing guarantees were reaffirmed. ~~As a result of~~On May 29, 2015, the ~~Company’s ability~~Company gave notice to extend the maturity date of the Notes ~~under Amendment No.10,~~to April 1, 2016 and added the ~~Note balances have been classified as long term debt in~~3% fee to the ~~accompanying March 31, 2015 balance sheet.~~Notes.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data~~On August 6, 2015, Third Eye Capital agreed to Amendment No. 11 to the Note Purchase Agreement to allow for the extension of the maturity date of the Notes to April 1, 2017 provided that the Company i) has $11.5 million in ~~thousands except par~~EB-5 funds in escrow as of August 31, 2015, ii) enters into an investment banking engagement by October 1, 2015 to complete a capital market transaction for the sale of shares in the India subsidiary, and iii) repurchases 100,000 shares of common stock at the greater of $4.00 and the closing price on the date of the amendment. In addition, Third Eye Capital waived the free cash flow financial covenant under the Note Purchase Agreement for the three months ended June 30, 2015 and for the three months ending September 30, 2015, and revised the market value to note indebtedness to 65%. As consideration, Third Eye Capital charged an amendment fee of $1.0 million to be added to the outstanding principal balance of the Revolving Credit Facility and ~~per share data)~~an extension fee equal to 5% of the Note indebtedness to be charged at the time of exercise. We will evaluate the amendment of the Notes and will determine accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.

Further details regarding the terms of the Notes are set forth below under the heading “Terms of Third Eye Capital Notes.”

Terms of Third Eye Capital Notes

Details about each portion of the Third Eye Capital financing facility are as follows:

Term Notes. As of ~~March 31,~~June 30, 2015, AAFK had ~~$7.3~~$6.2 million in principal and interest outstanding under the Term Notes, net of unamortized fair value discounts of $0.2 million. The Term Notes mature on ~~July~~April 1, 2015*2016*. Interest on the Term Notes accrues at 14% per annum. The Term Notes contain various covenants, including but not limited to, minimum free cash flow and production requirements and restrictions on capital expenditures.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data

Revolving Credit Facility. On July 6, 2012, AAFK entered into a Revolving Credit Facility with a commitment of $18.0 million. Through various amendments to ~~increase the amount of the credit facility available for borrowings under~~ the Note Purchase Agreement, the ~~outstanding~~ amount of the Revolving ~~Loan~~Credit Facility was ~~at approximately $22.0 million at March 31, 2015. During the three months ended March 31, 2015, interest on the~~increased to $24.0 million. The Revolving Credit Facility ~~accrued~~accrues at the prime rate plus 13.75% (17% as of ~~March 31,~~June 30, 2015) payable monthly in arrears. The Revolving Credit Facility matures on ~~July~~April 1, 2015*2016*. As of ~~March 31,~~June 30, 2015, AAFK had ~~$21.3 million~~$22.7million in principal and interest outstanding, net of unamortized debt issuance costs of ~~$0.7~~$0.6 million on the Revolving Credit Facility.

Revenue Participation Term Notes. The Revenue Participation Term Note bears interest at 5% per annum and matures on ~~July~~April 1, 2015*2016*. As of ~~March 31,~~June 30, 2015, AAFK had ~~$10.1~~$10.4 million in principal and interest outstanding, net of unamortized discounts of $0.3 million, on the Revenue Participation Term Note.

Acquisition Term Notes. The Acquisition Term Notes accrue interest at prime rate plus 10.75% (14% per annum as of ~~March 31,~~June 30, 2015) and ~~mature~~matures on ~~July~~April 1, 2015*2016*. As of ~~March 31,~~June 30, 2015, Aemetis Facility Keyes, Inc. had ~~$17.5~~$18.1 million in principal and interest outstanding, net of unamortized discounts of $0.5 million, on the Acquisition Term Notes.

*The note maturity date can be extended by the Company to April ~~2016.~~2017. As a condition to any such extension, the Company would be required to pay a fee of 3%5% of the carrying value of the debt.

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 Aemetis, Inc. The Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (McAfee Capital), solely 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 on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The ~~liability bears~~notes bear interest at 3% per annum and isare due and payable after the Third Eye Capital Notes have been paid in full. As of ~~March 31,~~June 30, 2015, Aemetis Facility Keyes, Inc. had $5.4 million in principal and interest outstanding under the Cilion shareholder seller notes payable.

State Bank of India secured term loan. On July 17, 2008, Universal Biofuels Private Limited (“UBPL”), the Company’s India operating subsidiary, entered into a six year secured term loan with the State Bank of India in the amount of approximately $6.0 million. The term loan matured in March 2014 and is secured by UBPL’s assets, consisting of the biodiesel plant and land in Kakinada.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

In July 2008, the Company drew approximately $4.6 million against the secured term loan. The loan principal amount is repayable in 20 quarterly installments of approximately $0.3 million, using exchange rates corresponding to the date of payment, with the first installment due in June 2009 and the last installment payment due in March 2014. As of ~~March 31,~~June 30, 2015, the 12% interest rate under this facility is subject to adjustment every two years, based on 0.25% above the Reserve Bank of India advance rate. ~~The~~No principal payments ~~scheduled through March 2015~~ were ~~not made.~~made except for payments of $0.2 million each in May 2014 and June 2014 to obtain an interim stay. The term loan provides for liquidating damages at a rate of 2% per annum for the period of default. As of ~~March 31,~~June 30, 2015 and December 31, 2014, the State Bank of India loan had ~~$2.7 million and~~ $2.6 million ~~respectively,~~ in principal outstanding and accrued interest plus default interest of ~~$3.6~~$3.8 million and $3.4 million, respectively. See Note 6 - Commitments and Contingencies for further details.

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 $3.0 million in 5% annual interest rate notes to the investors (the “Sub Notes”). An additional $0.6 million and $0.8 million in Sub Notes were added to one of the existing accredited investor’s Sub Notes balance in May and December 2012, respectively. This same accredited investor received payments of $0.6 million in principal and $3 thousand in interest in July 2012. The Sub Notes included 2-year warrants exercisable for 170 thousand shares of Aemetis common stock at a price of $0.01 per share, subject to adjustment. Interest is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Sub Notes until all loans made by Third Eye Capital to AAFK are paid in ~~full, except for a few exceptions where Sub Note investors will receive funds from EB-5 investments or sale of equipment.~~full.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data

The Company agreed to an Amendment ~~No.1~~No. 1 to the Sub Notes to extend the maturity of the January 2012 Sub Notes to July 1, 2014 and ~~refinanced the additional December 2012 Sub Note as~~issued two Sub Notes dated December 2012 and January 19, 2013, with principal amounts of $0.5 million and $0.1 million, respectively. Both the December 2012 Sub Note and the January 19, 2013 Sub Note had a maturity date of April 30, 2013. On January 24, 2013, an additional $0.3 million Sub Note was issued with a maturity date of April 30, 2013. On May 23, 2013, all Sub Notes above with a maturity date of April 30, 2013 were refinanced as a $1.0 million Sub Note (“May 2013 Note”) with a maturity date of December 31, 2013. On January 1, 2014, the May 2013 Sub Note was amended to extend the maturity date to June 30, 2014 in exchange for ~~(i)~~ a 10 percent cash extension fee paid by adding the fee to the balance of the new note and ~~(ii)~~ 30 thousand in common stock warrants with a term of two years and an exercise price of $0.01 per share. In March 2014, the Company received $0.5 million from EB-5 investments and ~~paid to~~repaid one of the accredited investors holding a January 2012 Sub Note of $0.5 million. On July 1, 2014 and again on January 1, 2015, the January 2014 Sub Note and two January 2013 Sub Notes with two accredited investors were amended to extend the maturity date to December 31, 2014 and June 30, 2015, respectively in exchange for ~~(i)~~ a 10 percent cash extension fee paid by adding the fee to the balance of the new note and 118 thousand in common stock warrants with a term of two years and an exercise price of $0.01 per share. On March 24, 2015, the Company paid off $180 thousand in Sub Note principal and interest held by one of the accredited investors with the money received from the EB-5 program.

On ~~January~~July 1, 2015, the Sub Notes above were amended to extend the maturity date until the earlier of (i) ~~June 30,~~December 31, 2015; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 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 10 percent cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 116 thousand inshares of common stock ~~warrants~~ were granted with a term of two years and an exercise price of $0.01 per share. We ~~evaluated~~will evaluate these ~~January~~July 1, 2015 amendments and the refinancing terms of the notes and ~~determined~~determine the accounting in accordance with ASC 470-50 Debt – Modification and Extinguishment ~~that the loans were extinguished and an extinguishment loss of $0.3 million recognized in the three months ended March 31, 2015.~~

~~On March 24, 2015, the Company paid off $180 thousand in subordinated note principal and interest held by one of the accredited investors with the money received from the EB-5 program.~~

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~.

On January 14, 2013, Laird Cagan, a related party, loaned $0.1 million through a promissory note maturing on April 30, 2013 with a five percent annualized interest rate and the right to exercise 5 thousand warrants exercisable at $0.01 per share. In February 2015, the Cagan related party promissory note was amended to extend the maturity date until the earlier of (i) December 31, 2016; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 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.

At ~~March 31,~~June 30, 2015 and December 31, 2014, the Company owed, in aggregate, subordinated notes in the amount of ~~$5.3~~$5.8 million and $5.4 million in principal and interest outstanding, net of unamortized issuance and fair value discounts of ~~$0.6 million~~none and $0.2 million, respectively.

EB-5 long-term promissory notes. EB-5 is a US 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. On March 4, 2011, and amended January 19, 2012 and July 24, 2012, the Company entered into a Note Purchase Agreement 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 bearing interest at 3%, each note in the principal amount of $0.5 million isand due and payable four years from the date of the note, for a total aggregate principal amount of up to $36.0 million. The notes are convertible after three years at a conversion price of $30.00 per share.

Advanced BioEnergy, LP arranges investments with foreign investors, who each make investments in the Keyes plant project in investment increments of $0.5 million. The Company sold notes in the amount of $1.0 million during the first quarter of 2012, $0.5 million during the first quarter of 2014, ~~and~~ $17.5 million during the first quarter of 2015 and $2.5 million in the second quarter of 2015. As of ~~March 31,~~June 30, 2015, ~~$75~~$21.5 million in principal and $185 thousand in accrued interest remained outstanding on the notes. The availability of the remaining ~~$17.0~~$14.5 million will be determined by the ability of Advanced BioEnergy, LP to attract additional qualified investors.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data

Unsecured working capital loans. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad”). Under this agreement, Secunderabad agreed to provide the Company with working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for its Kakinada biodiesel facility. Working capital advances bear interest at the actual bank borrowing rate of Secunderabad of fifteen percent (15%). In return, the Company agreed to pay Secunderabad an amount equal to 30% of the plant’s monthly net operating profit. In the event that the Company’s biodiesel facility operates at a loss, Secunderabad owes the Company 30% of the losses. The agreement can be terminated by either party at any time without penalty.

During the three and six months ended ~~March 31,~~June 30, 2015, the Company made principal payments to Secunderabad of approximately $0.3 million and $1.0 million, respectively, under the agreement and interest payments of approximately $66 thousand and $104 thousand, respectively, for working capital funding. During the three and six months ended June 30, 2014, the Company made principal payments to Secunderabad of approximately ~~$0.7~~$1.0 million and ~~$1.5~~$2.3 million, respectively, under the agreement and interest payments of approximately ~~$37~~$23 thousand and ~~$51~~$74 thousand, respectively, for working capital funding. At ~~March 31,~~June 30, 2015 and December 31, 2014, the Company had approximately ~~$0.7~~$2.8 million and $1.3 million outstanding under this agreement, respectively.

Scheduled debt repayments for loan obligations follow:

Twelve months ended June 30,	Debt Repayments
2016	$	14,781
2017		63,017
2018		3,198
2019		20,000
Total debt		100,996
Discounts		(1,588	)
Total debt, net of discounts	$	99,408

6. Operating Leases

The Company, through its subsidiaries, has non-cancelable operating leases for office space in Cupertino and India. Future minimum operating lease payments as of June 30, 2015 are as follows:

Twelve months ended June 30,	Future Rent Payments
2016	$	439
2017		455
2018		470
2019		487
2020		461
Total	$	2,312

For the three months ended June 30, 2015 and 2014, the Company recognized lease and rent expense of $116 thousand and $106 thousand, respectively, under existing operating leases. For the six months ended June 30, 2015 and 2014, the Company recognized lease and rent expense of $222 thousand and $212 thousand, respectively, under existing operating leases.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

Twelve months ended March 31,   Debt Repayments
2016 $             12,138
2017                61,879
2018                  3,160
2019                17,500
Total debt                94,677
Discounts             (1,779)
Total debt, net of discounts $             92,898

~~6. Commitments and Contingencies~~

~~The Company, through its subsidiaries, has non-cancelable operating leases for office space in Cupertino and India. Future minimum operating lease payments as of March 31, 2015 are as follows:~~

Twelve months ended March 31, Future Rent Payments
2016 $ 427
2017 451
2018 466
2019 483
2020 500
Thereafter 84
Total $ 2,411

~~For the three months ended March 31, 2015 and 2014, the Company recognized lease and rent expense of $107 thousand and $106 thousand, respectively, under existing operating leases.~~

Legal Proceedings

On March 10, 2011, UBPL received a demand notice from the State Bank of India under the Agreement of Loan for Overall Limit dated as of June 26, 2008. The notice informed UBPL that an event of default had occurred for failure to make an installment payment on the loan commencing June 2009 and demanded repayment of the entire outstanding indebtedness of 19.60 crore rupees (approximately $3.2 million) together with all accrued interest thereon and any applicable fees and expenses. Upon the occurrence and during the continuance of an Event of Default, interest accrues at the default interest rate of 2% above the State Bank of India Advance Rate. The default period began on July 1, 2009 when the principal payment was deemed past due; and we have accrued interest at the default rate since the beginning of the default period. In addition, since the bank demanded payment of the balance, we have classified the entire loan amount as current. On March 12, 2011, the State Bank of India filed a legal case before the Debt Recovery Tribunal (“DRT”), Hyderabad, for recovery of approximately $5.0 million against the Company and also impleaded Andhra Pradesh Industrial Infrastructure Corporation (“APIIC”) to expedite the process of registration of the factory land for which counter reply is yet to be filed by APIIC. UBPL asserts that the State Bank of India did not provide the committed funding of the working capital loan and only funded a portion of the term loan, thus requiring the Company to enter into a working capital facility at unfavorable terms which served to hinder the business from developing at the planned rate. The State Bank of India has additionally required the personal guarantee of our Executive Officer and the registration of the land underlying the factory as conditions prior to restructure of the loan. Payments have recently been made against the facility; however, the State Bank of India has rejected these payments as a good faith effort. In January 2014, the Company made payment of $162 thousand (1 crore rupees) against principal on the facility which was accepted by the State Bank of India. UBPL filed for a stay against further collection efforts pending the development of sufficient business in a domestic or international market that would allow UBPL to make meaningful repayments against the facility. In May 2014, the Company obtained an interim stay in exchange for payments of approximately $0.4 million. In the event that the Company is unable to prevail in the aforementioned legal case, DRT may pass a decree for recovery of the amount due, which could include seizing company property for recovery of amounts due. As of ~~March 31,~~June 30, 2015 and December 31, 2014, the State Bank of India loan had ~~$2.7 million and~~ $2.6 million ~~respectively,~~ in principal outstanding and accrued interest plus default interest of ~~$3.6~~$3.8 million and $3.4 million, respectively.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

On August 4, 2013, GS Cleantech Corporation, a subsidiary of Greenshift Corporation (“Greenshift”), filed a complaint in the United States District Court for the Eastern District of California – Fresno Division against the Company and its subsidiary, AAFK. The case was transferred to the Southern District of Indiana and joined as tag-along defendants to a pending Multidistrict Litigation with over a dozen original defendants. The complaint alleges infringement of patent rights assigned to Greenshift that pertain to certain corn oil extraction processes that the Company employs and seeks royalties, damages, treble damages, and attorney’s fees, along with injunctions precluding the Company from infringing its patent rights. The corn oil extraction process we use is licensed to us by Valicor Separation Technologies LLC, formerly called Solution Recovery Services LLC (“SRS”). The process provider has no obligations to indemnify us. On September 12, 2013, the Company, along with its subsidiary, filed its answer and counterclaims. In response to a motion for summary judgment filed by the original defendants, on October 23, 2014, the Court ruled that all the claims of all the patents at issue in the case are invalid. Further, in a January 16, 2015 decision, the District Court for the Southern District of Indiana ruled in favor of a stipulated motion for partial summary judgment for the Company, along with its subsidiary, finding that all of the GS Cleantech patents in the suit were invalid and, therefore, not infringed. GS Cleantech has said it will appeal this decision when the remaining claim in the suit has been decided. Regardless of when it may be appealed, we believe that the likelihood of Greenshift succeeding on appeal with respect to patent invalidity findings is small since the Court’s findings included summary judgments on several grounds for each allegedly infringed patent. If Greenshift successfully appeals the District Court’s findings of invalidity, damages may be $1 million or more.

The only remaining claim alleges that GS Cleantech inequitably conducted itself before the United States Patent Office when obtaining the patents at issue. A trial in the District Court for the Southern District of Indiana on that single issue is ~~anticipated but has not yet been scheduled.~~currently scheduled to begin October 5, 2015. If the defendants, including the Company and its subsidiary, succeed in proving inequitable conduct, the patents at issue will be invalidated such that no damages will be awarded to GS Cleantech for infringement and the Court will be asked to determine whether GS Cleantech’s behavior makes this an “exceptional case”. A finding that this is an exceptional case would allow the Court to award tothe Company and its subsidiary the attorneys’ fees each has expended to date for defense in this case. It is unknown whether GS Cleantech would appeal such a ruling.

7. Outstanding Warrants

During the three months ended ~~March 31,~~June 30, 2015 the Company did not issue any common stock warrants. During the six months ended June 30, 2015, the Company issued 116 thousand common stock warrants ~~which have the potential~~ to ~~enhance returns for~~ accredited investors who entered into amendments to ~~Notes~~Note and Warrant Purchase Agreements.

The warrants, dated January 1, 2015, have a two year term and are exercisable at $0.01 per share. The fair value of the warrants granted was $668 thousand as determined in accordance with the Black-Scholes option pricing model based on the below assumptions:

Expected dividend yield 0 %
Risk-free interest rate 0.66 %
Expected volatility 76.71 %
Expected Life (years) 2
Exercise price $ 0.01
Company Stock Price $ 5.79

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

For the ~~three~~six months ended ~~March 31,~~June 30, 2015, note investors exercised 116 thousand warrant shares at the weighted average exercise price of $0.01 per share.

A summary of warrant activity for the three and six months ended ~~March 31,~~June 30, 2015 follows:

Warrants Outstanding & Exercisable
Weighted - Average Exercise Price Average Remaining Term in Years
Outstanding December 31, 2014 351 $ 3.05 2.69
Granted 116 0.01
Exercised (116) 0.01
Outstanding March 31, 2015 351 $ 3.05 2.45

	Warrants Outstanding & Exercisable			Weighted - Average Exercise Price		Average Remaining Term in Years
Outstanding December 31, 2014		351		$	3.05		2.69
Expired		-			-		-
Granted		116			0.01		-
Exercised		(116	)		0.01		-
Outstanding March 31, 2015		351		$	3.05		2.45
Expired		-			-		-
Granted		-			-		-
Exercised		-			-		-
Outstanding June 30, 2015		351		$	3.05		2.20

8. Fair Value of Warrants

The following ~~tables summarize~~table summarizes the assumptions used in computing the fair value of ~~liability~~ warrants subject to liability and fair value accounting at the date of issue during the three months ended ~~March 31,~~June 30, 2015:

Expected dividend yield
Risk-free interest rate		0. 64% - 0.83%
Expected volatility		73.12% - 76.64%
Expected Life (years)		2.0 - 2.5
Exercise price	$	0.01
Company stock price	$	3.60

Expected dividend yield 0 %
Risk-free interest rate 0. 56% - 0.73 %
Expected volatility 78.34% - 79.43 %
Expected Life (years) 2.2 - 2.8
Exercise price $ 0.01
Company stock price $ 4.22

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

9. Fair Value Measurements

The Company complies with the fair value measurements and disclosures standard which defines fair value, establishes a framework for measuring fair value, and expands disclosure for those assets and liabilities carried on the balance sheet on a fair value basis.

The Company's balance sheet contains derivative financial instruments that are recorded at fair value on a recurring basis. Fair value measurements and disclosures require that assets and liabilities carried at fair value be classified and disclosed according to the process for determining fair value. There are three levels of determining fair value.

Level 1 uses quoted market prices in active markets for identical assets or liabilities.

Level 2 uses observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 uses unobservable inputs that are not corroborated by market data.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Warrant liability: The warrant liability consists of stock warrants issued by the Company that contain a conditional obligation to repurchase feature. In accordance with accounting for warrants as liabilities, the Company calculated the fair value of warrants under Level 3 using the assumptions described in ~~“Fair~~the Note 8 - Fair Value of ~~Warrants”.~~Warrants. Realized and unrealized gains and losses related to the change in fair value of the warrant liability are included in other income on the Statement of Operations.

The following table summarizes financial liabilities measured at fair value on a recurring basis as of ~~March 31,~~June 30, 2015, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Total Level 1 Level 2 Level 3
Warrant liability $ 79 $ - $ - $ 79

		Total				Level 1				Level 2				Level 3
Warrant liability		$	67			$	-			$	-			$	67

The following table reflects the activity for liabilities measured at fair value using Level 3 inputs for the three and six months ended ~~March 31,~~June 30, 2015:

Balance as of December 31, 2014	$	108		$	108
Issuances of warrant liabilities		-
Exercise of warrant liabilities		-
Related change in fair value		(29	)		(29	)
Balance as of March 31, 2015	$	79		$	79

Related change in fair value					(12	)
Balance as of June 30, 2015				$	67

10. Stock-Based Compensation

Common Stock Reserved for Issuance

Aemetis authorized the issuance of 1.2 million shares of common stock under its Zymetis 2006 Stock Plan and Amended and Restated 2007 Stock Plan (together, the “Company Stock Plans”), which includes both incentive and non-statutory stock ~~options. These~~options and restricted stock awards. The options generally expire five years from the date of grant ~~with~~for all options granted before May 2015 and the expiration term of the options granted from May 2015 is seven years from the date of grant. The options have a general vesting term of 1/12th every three months and are exercisable at any time after vesting subject to continuation of employment.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

Non-Plan Stock Options

In November 2012, the Company issued 98 thousand stock options to board members and consultants outside of any Company stock option plan. ~~None of the non-plan options have been exercised.~~ As of ~~March 31,~~June 30, 2015, all options were ~~vested.~~vested and 9 thousand options had been exercised at a weighted average exercise price of $5.50 and 89 thousand options were ~~outstanding as of March 31, 2015.~~outstanding.

Inducement Equity Plan Options

In March 2015, the Board of Directors of the Company approved an Inducement Equity Plan authorizing the issuance of 100,000 non-statutory ~~stock~~ options to purchase common stock. The Company issued 25 thousand options during March 2015 with a three year vesting period and five year term at a weighted average exercise price of $3.88. As of ~~March 31,~~June 30, 2015, the 25 thousand options were outstanding.

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited, tabular data in thousands except par value and per share data)~~

The following is a summary of options granted under the ~~all above~~employee stock ~~plans:~~plans and the inducement equity plan:

	Shares Available for Grant			Number of Shares Outstanding			Weighted-Average Exercise Price		Shares Available for Grant			Number of Shares Outstanding			Weighted-Average Exercise Price

Balance as of December 31, 2014		5			1,015		$	5.51		5			1,015		$	5.51
Authorized		200			—			—		200			—			—
Granted		(25	)		25			3.88		(173	)		173			4.28
Exercised		-			(71	)		2.12		-			(137	)		3.79
Forfeited/expired		43			(43	)		2.12		50			(50	)		2.04
Balance as of March 31, 2015		223			926		$	5.89
Balance as of June 30, 2015										82			1,001		$	5.84

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share ~~data)~~data

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, tabular data in thousands except par value and per share data)

Three Months Ended ~~March 31~~June 30 (in thousands)

	2015		2014		Inc/(dec)			% change

North America	$	1,465	$	26,958	$	(25,493	)		-94.6	%
India		256		19		237			1247.4	%

Total	$	1,721	$	26,977	$	(25,256	)		-93.6	%

India. The increase in gross profit was attributable to the increase of 14% in overall revenues in addition to the expansion of sales volume into the domestic market in the six months ended June 30, 2015 compared to only one international shipment of distilled biodiesel besides regular domestic biodiesel and refined glycerin sales in the six months ended June 30, 2014.

	2015		2014		Inc/(dec)			% change

North America	$	6,312	$	5,689	$	623			11.0	%
India		470		602		(132	)		-21.9	%

Total	$	6,782	$	6,291	$	491			7.8	%

Payments due by Period ( In thousands)
Contractual Obligations Total Less than 1 year 1-3 years 3 - 5 years More than 5 years

Long-term debt obligations $ 92,898 $ 12,138 $ 63,260 $ 17,500 $ -

Commodity	Estimated Total Volume Requirements for the Next 3 Months (1)		Unit of Measure	Net Income Effect of Approximate 10% Change in Price
Ethanol		18.3	Gallons	$	~~3.04~~3.20
Corn		6.5	Bushels	$	~~3.41~~3.45
Distillers grains		0.1	Tons (2)	$	~~1.11~~0.99
Natural gas		0.4	MMBTU (3)	$	~~0.02~~
~~(1) Volume requirements assume production at name-plate capacity.~~
~~(2) Distillers grains quantities are stated on an equivalent ton basis.~~
~~(3) Millions of Thermal Units~~0.01

~~Corn Oil~~

(1) Volume requirements assume production at name-plate capacity.

A sensitivity analysis has been prepared to estimate our corn oil production segment exposure to corn oil price risk. Market risk related to these factors is estimated as the potential change in net income resulting from hypothetical 10% changes in prices

(2) Distillers grains quantities are stated on an equivalent ton basis.

(3) Millions of our expected corn oil output for the three months ended March 31, 2015. The corn oil market risk at March 31, 2015, based on the estimated net income effect resulting from a hypothetical 10% change in such prices, was approximately $0.1 million.Thermal Units

In our India operations we are subject to market risk with respect to the price and availability of the main raw materials we use to produce our products including refined palm oil, palm stearin, animal fats, waste oils, crude glycerin, and chemicals. Unfavorable commodity margins result from a narrowing or surpassing of the feedstock costs over finish goods sales revenues, which represents an unfavorable market condition. This is especially true when market conditions do not allow us to pass along increased feedstock costs to our customers due to the commodity nature of our finished goods sales. The availability and pricing of feedstock for our biodiesel plant fluctuate with unpredictable factors such as global demand and supply of raw materials, weather conditions, and governmental policies toward agriculture and biofuels and international trade agreements.

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from issuing term and revolving loans that bear variable interest rates. Specifically, we had ~~$57.9~~$59 million, before unamortized debt issuance costs, in US Dollar denominated outstanding variable interest-rate term debt as of ~~March 31,~~June 30, 2015. Interest rates on our variable-rate debt are determined based upon the market interest rate of LIBOR. A 1% increase in LIBOR would increase our annual interest cost on such debt by approximately $0.6 million in the aggregate. Other details of our outstanding debt are discussed in 5. Notes Payable in the Notes to the consolidated financial statements included as a part of this report.

The interest rate on our India operations debt facility is subject to adjustments based on the Reserve Bank of India advance rate. Based on the amount of our senior secured floating-rate term debt as of ~~March 31,~~June 30, 2015, each 100 basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately ~~$63~~$64 thousand US dollars. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of ~~March 31,~~June 30, 2015 with no subsequent change in rates for the remainder of the period.

Foreign Currency Exchange Rate Risk

We do expect to have exposure to foreign currency risk as we conduct most of our India business in Indian Rupees. Our India subsidiaries use the Indian Rupee local currency as their functional currency. Our primary exposure with respect to foreign currency exchange rate risk is the change in the Indian Rupee (INR) to US Dollar (USD) exchange rate. For consolidation purposes, assets and liabilities are translated at month-end exchange rates. Items of income and expense are translated at average exchange rates. Translation gains and losses are not included in determining year-to-date net income (loss) on the Balance Sheet, but are accumulated as a separate component of shareholders’ equity. Gains (losses) arising from foreign currency transactions are included in determining net income (loss) on the Statement of Operations. For the three months ended ~~March 31,~~June 30, 2015 and 2014, we recognized a ~~gain~~loss of ~~$38~~$84 thousand and ~~$108 thousand,~~no adjustment, respectively, associated with foreign currency translation adjustments to other comprehensive income (loss). We prepared a foreign currency exchange rate risk sensitivity analysis to estimate our exposure to currency fluctuations. Using the three months ended ~~March 31,~~June 30, 2015 Indian subsidiary financials and applying the appropriate actual weighted average or end exchange rate and then incrementing by 10 points each respective INR to USD exchange rate resulted in a ~~$78~~$36 thousand impact to Net income (loss), a ~~$4.5~~$4.8 million change in Total Liabilities, a $2.4 million change in Stockholders’ equity (deficit), and a ~~$2.1~~$2.3 million change in Total Assets in our Indian subsidiary.

As of ~~March 31,~~June 30, 2015, we did not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts.

Item 4.

Controls and Procedures.

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 principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures along with the related internal controls over financial reporting were 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 principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

Item 1. Legal Proceedings

On March 10, 2011, UBPL received a demand notice from the State Bank of India under the Agreement of Loan for Overall Limit dated as of June 26, 2008. The notice informed UBPL that an event of default had occurred for failure to make an installment payment on the loan commencing June 2009 and demanded repayment of the entire outstanding indebtedness of 19.60 crore rupees (approximately $3.2 million) together with all accrued interest thereon and any applicable fees and expenses. Upon the occurrence and during the continuance of an Event of Default, interest accrues at the default interest rate of 2% above the State Bank of India Advance Rate. The default period began on July 1, 2009 when the principal payment was deemed past due; and we have accrued interest at the default rate since the beginning of the default period. In addition, since the bank demanded payment of the balance, we have classified the entire loan amount as current. On March 12, 2011, the State Bank of India filed a legal case before the Debt Recovery Tribunal (“DRT”), Hyderabad, for recovery of approximately $5.0 million against the Company and also impleaded Andhra Pradesh Industrial Infrastructure Corporation (“APIIC”) to expedite the process of registration of the factory land for which counter reply is yet to be filed by APIIC. UBPL asserts that the State Bank of India did not provide the committed funding of the working capital loan and only funded a portion of the term loan, thus requiring the Company to enter into a working capital facility at unfavorable terms which served to hinder the business from developing at the planned rate. The State Bank of India has additionally required the personal guarantee of our Executive Officer and the registration of the land underlying the factory as conditions prior to restructure of the loan. Payments have recently been made against the facility; however, the State Bank of India has rejected these payments as a good faith effort. In January 2014, the Company made payment of $162 thousand (1 crore rupees) against principal on the facility which was accepted by the State Bank of India. UBPL filed for a stay against further collection efforts pending the development of sufficient business in a domestic or international market that would allow UBPL to make meaningful repayments against the ~~facility~~facility. In May 2014 the Company obtained an interim stay in exchange for payments of approximately $0.4 million. In the event that the Company is unable to prevail in the aforementioned legal case, DRT may pass a decree for recovery of the amount due, which could include seizing company property for recovery of amounts due.

The only remaining claim alleges that GS Cleantech inequitably conducted itself before the United States Patent Office when obtaining the patents at issue. A trial in the District Court for the Southern District of Indiana on that single issue is ~~anticipated but has not yet been scheduled.~~currently scheduled to begin October 5, 2015. If the defendants, including the Company and its subsidiary, succeed in proving inequitable conduct, the patents at issue will be invalidated such that no damages will be awarded to GS Cleantech for infringement and the Court will be asked to determine whether GS Cleantech’s behavior makes this an “exceptional case”. A finding that this is an exceptional case would allow the Court to award to the Company and its subsidiary the attorneys’ fees each has expended to date for defense in this case. It is unknown whether GS Cleantech would appeal such a ruling.

Item 1A. Risk Factors.

No change in risk factors since the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 12, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On ~~January 1,~~April 14, 2015, we issued ~~116 thousand~~an aggregate of 50,000 shares of our common stock to ~~two subordinated promissory note holders pursuant~~consultants at the market price of $4.26 per share in exchange for services rendered or to be rendered to the ~~note holders’ warrant exercise at an exercise price of $0.01 per share.~~Company.

Each of these issuances was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as sales of securities not involving any public offering.

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share
April 2015 (1)		500,000	$	5.00
May 2015		-		-
June 2015		-		-

(1) On April 30, 2015, Third Eye Capital agreed to Amendment No. 10 to the Note Purchase Agreement to allow for the repurchase of 500,000 shares of common stock of the Company at a repurchase price of $5.00 per share for an aggregate purchase price of approximately $2.5 million. The repurchase price was added to the outstanding principal balance of the Revolving Credit Facility.

Item 3. Defaults Upon Senior Securities.

No unresolved defaults on senior securities occurred during the three months ended ~~March 31, 2015.~~June 30, 2015

Item 4. Mine Safety Disclosures.

None

Item 5. Other Information.

On ~~April 30,~~July 1, 2015, the January 2014 Sub Note and two January 2013 Sub Notes with two accredited investors were amended to extend the maturity date until the earlier of (i) December 31, 2015; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 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 10 percent cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 116,000 shares of common stock were granted with a term of two years and an exercise price of $0.01 per share.

On August 6, 2015, Third Eye Capital agreed to Amendment No. 1011 to the ~~note purchase agreement~~Note Purchase Agreement to allow for the ~~repurchase~~extension of ~~500,000~~the maturity date of the Notes to April 1, 2017 provided that the Company i) has $11.5 million in EB-5 funds in escrow as of August 31, 2015, ii) enters into an investment banking engagement by October 1, 2015 to complete a capital market transaction for the sale of shares in the India subsidiary, and iii) repurchases 100,000 shares of common stock at the greater of $4.00 and the ~~Company effective as of~~closing price on the date of the amendment. ~~Shares were repurchased at a price per share equal to $5.00 per share, for an aggregate purchase price of approximately $2.5 million. An extension of~~In addition, Third Eye Capital waived the ~~credit facility allows~~free cash flow financial covenant under the Note Purchase Agreement for the ~~repurchase price~~three months ended June 30, 2015 and for the three months ending September 30, 2015, and revised the market value to note indebtedness to 65%. As consideration, Third Eye Capital charged an amendment fee of $1.0 million to be added to the outstanding principal balance of the ~~existing notes. In addition, Third Eye Capital agreed~~Revolving Credit Facility and an extension fee equal to ~~extend~~5% of the ~~maturity date~~Note indebtedness to be charged at the time of exercise. We will evaluate the amendment of the Notes ~~to April 1, 2016 upon notice~~ and ~~payment of a 3% extension fee.~~

~~The foregoing description of Amendment No. 10 is only a summary~~will determine accounting treatment in accordance with ASC 470-50 Debt – Modification and ~~does not purport to be complete and is qualified in its entirety by reference to the full text of Amendment No. 10, which is filed as Exhibit 10.1 hereto, and is incorporated by reference herein.~~Extinguishment.

3842

Item 6.

Exhibits.

3.1	Certificate of Change to Articles of Incorporation of Aemetis, Inc. as filed with the Secretary of State of the State of Nevada on May 9, ~~2014.~~2014 (incorporated by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q filed on May 15, 2014).
10.1	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.~~Trust (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed on May 7, 2015).
10.2	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.
31.1	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
32.1	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

3943

SIGNATURES

Pursuant to the requirements 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: May 7, 2015~~	By:	/s/ Eric A. McAfee
		Eric A. McAfee	Chief Executive Officer (Principal Executive Officer)
		Eric A. McAfee

Date: August 7, 2015

~~Chief Executive Officer~~	AEMETIS, INC.
		~~(Principal Executive Officer)~~

	~~AEMETIS, INC.~~

~~Date: May 7, 2015~~	By:	/s/ ~~TODD WALTZ~~	Todd Waltz
		Todd Waltz
		Todd Waltz	Executive Vice President and Chief Financial Officer	(Principal Financial Officer)
		~~(Principal Financial Officer)~~

Date: August 7, 2015

Nevada		26-1407544
(State or other jurisdiction	~~(I.R.S. Employer~~
of incorporation or organization)		(I.R.S. Employer Identification No.)

Item 11.	Financial Statements.	4

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	2728

Item 3.	Quantitative and Qualitative Disclosures about Market ~~Risk.~~Risk	3337

Item 4	Controls and Procedures	39

	PART II - - OTHER INFORMATION

Item 4.	~~Controls and Procedures.~~	35

~~PART II--OTHER INFORMATION~~

~~Item~~ 1.	Legal Proceedings	3640

Item 1A.	Risk ~~Factors.~~Factors	3741

Item 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds	3741

Item 3.	Defaults Upon Senior ~~Securities.~~Securities	3742

Item 4.	Mine Safety ~~Disclosures.~~Disclosures	3742

Item 5.	Other ~~Information.~~Information	3842

Item 6.	~~Exhibits.~~Exhibits	3943

Signatures			4044

	June 30, 2015				December 31, 2014
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	3,325		$	332
Accounts receivable		2,143			1,262
Inventories		5,427			4,491
Prepaid expenses		961			1,392
Other current assets		403			456
Total current assets		12,259			7,933

Property, plant and equipment, net		73,376			75,810
Goodwill		968			968
Intangible assets, net of accumulated amortization of $304 and $264, respectively		1,496			1,536
Other assets		3,052			2,929
Total assets	$	91,151		$	89,176

Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	8,208		$	8,339
Current portion of long term debt		6,399			6,032
Short term borrowings		8,382			6,714
Mandatorily redeemable Series B convertible preferred stock		2,690			2,641
Other current liabilities		4,294			3,590
Total current liabilities		29,973			27,316

Long term liabilities:
Senior secured notes		57,375			57,648
EB-5 notes		21,685			1,534
Other long term		5,800			5,650
Total long term liabilities		84,860			64,832

Stockholders' deficit:
Series B convertible preferred stock, $0.001 par value; 7,235 authorized; 1,458 and 1,665 shares issued and outstanding each period, respectively (aggregate liquidation preference of $4,374 and $4,995, respectively)		1			2
Common stock, $0.001 par value; 40,000 authorized; 19,473 and 20,650 shares issued and outstanding, respectively		19			21
Additional paid-in capital		81,349			87,080
Accumulated deficit		(102,043	)		(87,113	)
Accumulated other comprehensive loss		(3,008	)		(2,962	)
Total stockholders' deficit		(23,682	)		(2,972	)

Total liabilities and stockholders' deficit	$	91,151		$	89,176

	March 31, 2015			December 31, 2014
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	5,509		$	332
Accounts receivable		1,651			1,262
Inventories		4,641			4,491
Prepaid expenses		903			1,392
Other current assets		414			456
Total current assets		13,118			7,933

Property, plant and equipment, net		74,764			75,810
Goodwill		968			968
Intangible assets, net of accumulated amortization of $284 and $264, respectively		1,516			1,536
Other assets		2,948			2,929
Total assets	$	93,314		$	89,176

Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	8,909		$	8,339
Current portion of long term debt		6,318			6,032
Short term borrowings		5,820			6,714
Mandatorily redeemable Series B convertible preferred stock		2,665			2,641
Other current liabilities		4,185			3,590
Total current liabilities		27,897			27,316

Long term liabilities:
Senior secured notes		56,157			57,648
EB-5 notes		19,075			1,534
Other long term		5,784			5,650
Total long term liabilities		81,016			64,832

Stockholders' deficit:
Series B convertible preferred stock, $0.001 par value; 7,235 authorized; 1,558 and 1,665 shares issued and outstanding each period, respectively (aggregate liquidation preference of $4,675 and $4,995, respectively)		2			2
Common stock, $0.001 par value; 40,000 authorized; 19,847 and 20,650 shares issued and outstanding, respectively		20			21
Additional paid-in capital		83,059			87,080
Accumulated deficit		(95,756	)		(87,113	)
Accumulated other comprehensive loss		(2,924	)		(2,962	)
Total stockholders' deficit		(15,599	)		(2,972	)

Total liabilities and stockholders' deficit	$	93,314		$	89,176

	For the three months ended March 31,						For the three months ended June 30,						For the six months ended June 30,
	2015			2014			2015			2014			2015			2014
Revenues	$	34,726		$	60,665		$	38,067		$	57,195		$	72,793		$	117,860

Cost of goods sold		34,954			45,041			36,118			45,842			71,072			90,883

Gross profit (loss)		(228	)		15,624
Gross profit								1,949			11,353			1,721			26,977

Research and development expenses		109			100			104			141			213			241
Selling, general and administrative expenses		3,634			2,842			3,148			3,449			6,782			6,291

Operating income (loss)		(3,971	)		12,682			(1,303	)		7,763			(5,274	)		20,445

Other income (expense)

Interest expense
Interest rate expense		(2,546	)		(2,920	)		(2,485	)		(2,530	)		(5,031	)		(5,450	)
Amortization expense		(1,723	)		(2,118	)		(2,405	)		(2,502	)		(4,128	)		(4,620	)
Loss on debt extinguishment		(330	)		(115	)		-			-			(330	)		(115	)
Gain (loss) on sale or disposal of assets								-			(119	)		-			(119	)
Other income (expense)		(67	)		164			(94	)		110			(161	)		274

Income (loss) before income taxes		(8,637	)		7,693			(6,287	)		2,722			(14,924	)		10,415

Income tax expense		(6	)		(6	)		-			-			(6	)		(6	)

Net income (loss)		(8,643	)		7,687		$	(6,287	)	$	2,722		$	(14,930	)	$	10,409

Other comprehensive income
Foreign currency translation adjustment		38			108			(84	)		-			(46	)		108
Comprehensive income (loss)	$	(8,605	)		7,795		$	(6,371	)	$	2,722		$	(14,976	)	$	10,517

Net income(loss) per common share
Basic	$	(0.42	)	$	0.38		$	(0.32	)	$	0.13		$	(0.74	)	$	0.52
Diluted	$	(0.42	)	$	0.34		$	(0.32	)	$	0.13		$	(0.74	)	$	0.49

Weighted average shares outstanding
Basic		20,595			20,007			19,590			20,284			20,090			20,146
Diluted		20,595			22,657			19,590			20,948			20,090			21,299

	Three months ended March 31,
	2015			2014
	(In thousands, except per share amounts)

Net income (loss)	$	(8,643	)	$	7,687

Shares:
Weighted average shares outstanding—basic		20,595			20,007

Weighted average dilutive share equivalents from preferred shares		-			2,384
Weighted average dilutive share equivalents from stock options		-			167
Weighted average dilutive share equivalents from common warrants		-			94
Weighted average dilutive share equivalents from convertible promissory note		-			5
Weighted average shares outstanding—diluted		20,595			22,657


Earnings (loss) per share—basic	$	(0.42	)	$	0.38

Earnings (loss) per share—diluted	$	(0.42	)	$	0.34

	As of
	March 31, 2015		March 31, 2014

Series B preferred (convertible on a 10 to 1 basis)		1,558		-
Common stock options and warrants		1,251		1,137
Total number of potentially dilutive shares excluded from the basic and diluted net income (loss) per share calculation		2,809		1,137

For the twelve months ending March 31,	Amortization
2016	$	80
2017		88
2018		112
2019		134
2020		180
Thereafter		922
Total	$	1,516

Twelve months ended March 31,	Debt Repayments
2016	$	12,138
2017		61,879
2018		3,160
2019		17,500
Total debt		94,677
Discounts		(1,779)
Total debt, net of discounts	$	92,898

Expected dividend yield		0	%
Risk-free interest rate		0.66	%
Expected volatility		76.71	%
Expected Life (years)		2
Exercise price	$	0.01
Company Stock Price	$	5.79

Expected dividend yield		0	%
Risk-free interest rate		0. 56% - 0.73	%
Expected volatility		78.34% - 79.43	%
Expected Life (years)		2.2 - 2.8
Exercise price	$	0.01
Company stock price	$	4.22

	For the quarter ended March 31
	2015			2014
Description							Three months ended June 30, 2015
Dividend-yield		0	%		0	%		0	%
Risk-free interest rate		0.89	%		0.74	%		1.53	%
Expected volatility		78.79	%		78.73	%		69.34	%
Expected life (years)		3			3			5
Market value per share on grant date	$	3.88		$	4.20		$	4.35
Weighted average fair value per share on grant date	$	1.99		$	2.14
Fair value per share on grant date							$	2.52

		Three months ended June 30,				Six months ended June 30,
		2015		2014		2015		2014
Ethanol sales	$	24,247	$	40,799	$	46,859	$	87,747
Wet distiller's grains sales		6,609		11,708		13,959		21,423
Corn oil sales		1,071		1,344		1,936		2,245
Corn purchases		24,934		33,619		50,893		66,947
Accounts receivable		329		458		329		458
Accounts payable		1,673		2,122		1,673		2,122

	Payments due by Period ( In thousands)
Contractual Obligations	Total		Less than 1 year		1-3 years		3 - 5 years		More than 5 years

Long-term debt obligations	$	92,898	$	12,138	$	63,260	$	17,500	$	-