Aemetis, Inc.
Q3 2020 Earnings Call Transcript

Published: 12 Nov 2020

[Operator:]

Welcome to the Aemetis Third Quarter 2020 Earnings Review Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this call is being recorded. It is now my pleasure to introduce your host, Mr. Todd Waltz, Executive Vice President and Chief Financial Officer of Aemetis, Inc. Mr. Waltz, you may begin.

[Todd Waltz:]

Thank you, Melinda. Welcome to Aemetis third quarter 2020 earnings review conference call. We suggest visiting our website at aemetis.com to review today's earnings press release, updated corporate presentation, filings with the Securities and Exchange Commission, recent press releases and previous earnings conference calls. This presentation is available for review or download on the aemetis.com homepage.

[Eric McAfee:]

Thank you, Todd. Aemetis was founded in 2006. We have grown into four lines of business, which are focused on producing renewable fuels, including low carbon and below zero carbon intensity ethanol, biodiesel, waste wood ethanol and byproducts, including carbon dioxide and corn oil, renewable natural gas, including below zero carbon intensity dairy biogas for transportation fuel. Health safety products including high grade alcohol, refined glycerine, blended hand sanitizer gel and liquid, sanitizer wipes and other health safety products and technology development to maximize the value of our products and processes. We own and operate production facilities with more than 110 million gallons per year of capacity in the U.S. and India. Included in our production portfolio is a 65 million gallon per year high-grade alcohol, fuel ethanol, distillers grain and corn oil plant located in Keyes, California, near Modesto. We also built, own and operate a 50 million gallon per year capacity refined glycerin and distilled biodiesel biorefinery on the East Coast of India near the port City of Kakinada. I encourage you to consider viewing our updated video and slide presentation about Aemetis, which can be found on the homepage of our website. During the third quarter of 2020, Aemetis achieved important milestones toward revenue growth and sustained profitability in each of our four lines of business. Let's start with a review of our new Aemetis health products business. In response to a national shortage of hand sanitizer which is recommended by the Centers for Disease Control to help slow the spread of the COVID-19 virus. In late March, 2020, the FDA and the TTB issued temporary regulations allowing fuel ethanol plants to produce alcohol for hand sanitizers, responding to this approval and the spike in demand for sanitizer products, Aemetis delivered our first sanitizer alcohol within a few days after the announcement, through a post processing arrangement that was formed with a local wine and spirits producer. Then we installed equipment, and process upgrades at our ethanol plant to produce higher quality ethanol for health safety and personal care markets.

[Operator:]

Thank you. The floor is now open for questions. And first, we go to Ed Woo with Ascendiant Capital. Please, go ahead.

[Ed Woo:]

Yes. Thank you. Can you give us any updates on when the Riverbank project may begin construction and actually when it may become operational?

[Eric McAfee:]

Currently, we're planning to do the project financing in 2021, and the construction cycle should be about 24 months.

[Ed Woo:]

Great. And then, also on -- congratulations on getting the biogas projects up and running. When do you think we're going to see more, I guess, dairies being connected and when will we start seeing a greater impact on your financials from this project?

[Eric McAfee:]

The second quarter of next year should see some additional dairies come online. It's a ramp up over the next 18 months, but we're doing them in roughly five dairies -- five to six dairies per group. So, we have two done now, another five to six, another five or six, another five or six to get to 18. And so, we'll see. Every couple of quarters, you'll see another cluster of dairies that get added. We're building a pipeline as well as dairy digesters. So we extend the pipeline and then we gather up the dairies in that area that have already signed the 25 year agreements to connect to the pipeline.

[Ed Woo:]

Great. And my last question is what, you know, what's your overall outlook for oil and ethanol prices? I know, obviously we're -- looks like we're going to have a new President. What's your view on his take in terms of renewable fuel standards and ethanol of standards?

[Todd Waltz:]

Ethanol is a 10% blend currently. Under the Trump administration, it was largely approved to become a 15% blend. That's increase of about 50%, which represents about 7 billion gallons a year of additional demand got it -- at a 15% blend. And at the fuel pump of even 15% of what you would see at the pump is a very small amount, when you subtract the taxes paid at the pump then multiply the remaining balance with $0.15. You're only talking about maybe $0.25 or $0.30 of the entire cost of fuel is all of the ethanol. So if ethanol goes up by only 10%, you're talking about $0.02 or $0.03 difference at the pump really the rounding error between choosing between which gas station you're going to pull into is the actual ethanol margin, that is anywhere from $0.30 to $1 of profit for an ethanol plant. So the function of the fuel ethanol business is solely about supply and demand. And there's been 7.2 billion gallons of waivers by the federal government of the renewable fuel standards since 2013. And I think it's informative, especially, for people that might be newer investors in our company to note that in the last 12 months of enforcement of the federal law, our company made $10 million per quarter, a total of $40 million of positive cash flow from operating our corn ethanol plant. And that was when federal law was simply enforced. And so, the Biden administration and two federal court decisions support the idea that we would begin again to enforce federal law that would represent $40 million per year -- by the way it would represent for us about $0.60 per gallon of margin. And so at the pump, it would convert into roughly a $0.06 cent difference at the pump for us to make $40 million per year. So it's not difficult to see a scenario in which either Trump or Biden, -- certainly looking like Biden, simply this doesn't violate federal law. And in so doing, we're well-positioned to do quite well in the fuel ethanol business.

[Ed Woo:]

Great. Thank you for answering my questions, and good luck.

[Todd Waltz:]

Thank you, Ed. I appreciate your call.

[Operator:]

Next we go to Craig Irwin with ROTH Capital Partners. Please go ahead.

[Craig Irwin:]

Hi. Good afternoon. Thanks for taking my questions. So Eric congratulations on the momentum in your biogas business. This looks like it could become something really interesting. You know $40 million a year over 25 years, a $1 billion in profit off this business and that's nothing -- to sneeze at, right? So, I wanted to ask about some of the underpinning assumptions that you're using to get to the 40 million a year, obviously, that's all 18 plants up and running. There's a cost of debt on the 55 from Third Eye. But there's some basic fundamental assumptions, including the carbon intensity of these plants -- some of the pig slurry facilities out there have CIs of negative 350, the dairy guys typically range in their, you know $200 to $250 range. I mean, are you are you assuming you'll sort of be in that range, and then LCFS credit values, I mean, are you using a full 200 or do you have a discounted value in there? And then, like green gas for landfill gas, right? Very often, the developer has to give away some of the economics to the landfill owner to facilitate the permitting process. Is there much of an economic sharing agreement with the dairies that are adopting this exciting technology?

[Todd Waltz:]

Excellent insights, Craig. Thank you very much. We're assuming current market price in LCFS, as you know that's been generally rising curve and under California State law increases every year by essentially a fixed amount. So we're assuming it does not increase and it frankly is not at its maximum, this year's maximum is $217 in our model. We're assuming approximately $195. So, CI score flat hundred 185 over 25 years, ignoring cost of living index increases allowed by the state of California. Second is, we have the good fortune of being our own consumer. So we generate LCFS credits by putting biogas into our corn ethanol plants. We also generated it by putting it into our own CNG fueling stations. So your question about discount, we obviously captured the entire value chain by putting it in our own trucks and putting it into our own plant. If we went into the utility pipeline, the discounts we're seeing today are relatively small. And there's a proposal that they would capture more market value that offset much of that discount. It used to be the discount was pretty large. It was one of the reasons we drove to a building a model where we didn't actually have to use any outside trucks or parties. And so we have about 75 truckloads a day to go in and out of our plant and just feeling our own trucks could really be a built in customer base. And then lastly, the 18 that we have on the schedule right now are what is already what's called part of our relationship with Third Eye Capital. We do anticipate, we will be 30 or more dairies, we're just going to continue to grow the opportunity, it's just that this first two phases. Phase one is completed, second phase is to be completed in the next 18 months, does layout a full year picture, which should be in excess of $40 million per year using the numbers I've described for you.

[Craig Irwin:]

Excellent, excellent. So then, when we talk to some of the larger green gas developers in the market right, there's short list of names. They all describe the cow slurry or pig slurry opportunity, I guess dairy gas opportunity as difficult to address. I know there's something like 280 projects that are in development in California, but the big boys, all downplay the dairy gas market, saying that it's actually very hard to serve given the proportionate size of the plants. It seems like you don't find these issues that you found farmers that -- we'll be able to give you half dozen plants and make the commitment on one piece of paper. That kind of puts things back in the range or sort of proportionate size closer to that of a landfill gas facility. But can you maybe speak from your experience in the dairy industry, how Aemetis is doing things different? And what's allowing you to find success here versus some of the other larger project developers that have actually chosen to deemphasize this right now?

[Eric McAfee:]

Right. Craig, you've obviously spent some time talking to large developers. California is the largest dairy shed in the world. They have over a million dairy cows in a very small area, really within about 100 to 150 miles of our plant is about 1,200 dairies. And we feed dairy cows at about 75 of those dairies already. They’re existing customers. What most of the developers, even the two other major developers in California have trouble with, is they have no pre-existing relationship, credibility, or confidence frankly to enter into a 25-year relationship with some guy who shows up with a pickup truck and a cell phone and says, he's a Biogas developer, whereas we have $150 million of cash invested in the ground. We're feeding their cows every day and have very, very long-term well established relationships, not only through us but also through our grain supplier and market distillers' grain to them and it goes back decades. And so, we have a very simple relationship with dairies. They have a liability coming, under Senate Bill 1383 in which they're going to have to start acting like little oil refiners that are emitting methane, they're going to have the be buyers of carbon credits, unless they can find a way to spend, literally, 10s of millions of dollars to build the system we're building, cleaned it up and sell it to somebody. And what we offer is, they don't have to invest anything, we actually are paying cash bonuses when they sign, and then they get positive cash flow for a 25-year span. And it ends up being a very synergistic, sustainable, circular bioeconomy where we're selling them the animal feed that creates the manure. We're then turning that into Biogas at our cost, cleaning it up, pipelining it, cleaning up again, selling it, and then giving them participation in that cash. So, that's accelerated our ability to attract dairies. And once we put a pipeline into the ground, as you probably know, if you bypass a dairy, they are the disadvantaged one, because their neighbor can sell milk, frankly, at a lower cost than they can, because they don't have the revenue from biogas. So we're sort of picking the winners, making the big, bigger is really what's happening, to tell you the truth. And so, when we put a pipeline in the ground, we just tend to talk to the neighbors and say that we're going right by your place, you want us to add you in. And it doesn't take long for people to say well, if you don't add me in then, I don't get the cash every month, do I, and then, eventually going to have to start buying carbon credits. So, it's a monopoly business. I would say that directly to dairies. Is it -- there's only one of the gas pipeline, there's only one owner of the gas pipeline. And if you're the guy who put the gas pipeline in the ground and you do that by signing up the biggest dairies in an area, all the other dairies will end up interconnecting at very low cost. So that's our strategy. It's worked very well. And it takes only a couple, not a couple years, but maybe a decade to build relationships that can execute as quickly as we have.

[Craig Irwin:]

So then, last question, if I may, I mean, knowing the weight of some of these regulations in California economically, what they mean and how they change behavior? Is it feasible for us to take the 18 that you've announced -- intend, and maybe extrapolate there's an opportunity for that to get much bigger, over the next single-digit number of years?

[Eric McAfee:]

I'll give you -- the answer is, yes, I'll give you the -- the next follow-up question, as a response as well. We are physically close to 75 dairies, because we trucked to them every day with water and animal feed that's what distillers grain is, so they need to be kind of relatively close to our plant. And so our pipeline systems are intended to maximize number of large dairies that we can connect up directly to our plant. We do have an ability to expand beyond just the ones connected to our plant to putting them -- put up smaller clouds or pipeline clusters that are farther away from our plant. And with approximately 1,250 dairies in California, I'm going to estimate about 300 of them are extremely attractive biogas customers. We expect to be the largest actual dairy biogas producer in the United States. I mean, it's pretty easy because California is the biggest, and so if you are big, California is the biggest in U.S. And that would entail 30 plus dairies, perhaps many more than that. So the scalability is really based upon our partnership with our capital partners, a $3 billion company has been funding us for 12 years. And I think they have a very strong appetite for us to execute well and execute steadily, but just keep on growing. And I wouldn't be surprised at all to end up with more than 50 or even 100 dairies over time, because of our ability to execute, while other competitors are still struggling to find credibility with the dairies.

[Craig Irwin:]

Great. Thanks for taking my questions.

[Eric McAfee:]

Thank you, Craig.

[Operator:]

Next, we go to the line of Marco Rodriguez with Stonegate Capital Partners. Please go ahead.

[Marco Rodriguez:]

Good afternoon, Eric. Thanks for taking the question. I was wondering if maybe you could talk a little bit more on the health care product side of the business. It kind of sounded like in your press release and maybe you guys saw a little bit of pressure for some competitive environment, and maybe you can kind of provide a little color there and just kind of how we should be thinking about the competitive environment there as the year unfolds and into next?

[Eric McAfee:]

I kind of expected there would be some questions about it. We had a tremendous second quarter in a booming market. And what we saw as an industry is unrelated product coming in from Mexico, approximately 200 hand sanitizer brands got FDA warnings for violating methanol content. And when you drink hand sanitizer, which you shouldn't do by the way, if it's Apple alcohol, it makes you drunk, if its methanol, it actually causes paralysis, blindness or death. So, not a good thing, and over 200 brands came in from Mexico that. And then China, again, largely not tested product coming in from China. So, as retailers and the customers scrambled for product, they bought the product that didn't meet specification, the FDA then stepped in and started writing warnings and bans and recalls, and that cleaning up the market is what we're seeing now. The final cleanup is going to be when the temporary waiver ceases. Then the product has to meet the traditional good manufacturing practices, facility, plus the U.S. Pharmacopoeia medical grade alcohol, which will significantly curtail the number of producers and largely that's what we're investing in and it is in second quarter next year, that there's really only one large scale sanitizer alcohol producer in the Western United States. Now what we decided is, not to sit here and sell a bulk alcohol product at commodity prices, but rather to take advantage of the geographical advantage that does not ever go away. That is up to $1 a gallon of cost to produce alcohol in the Midwest, ship it 2,000 miles to California and put it on the store shelf at Cosco, right next to ours. It literally cost an extra dollar and that never goes away. So, by going to branded products, and even private label products, you could go into Costco and see our Aemetis brand, as well as you could see the Kirkland brand which is Costco, both of which would be made by us. And so, we have moved forward with a fully integrated process to take full advantage of what we believe to be an ongoing -- slightly growing market, but larger market than what it was certainly before COVID. And our customers are the full gamut of consumers government and corporate and academic customers that will need an ongoing supply, of not just hand sanitizer, but sanitizer wipes and sprays and aerosols, all stuff that Lysol is 58% alcohol, that's what kills germs with Lysol. So, we've taken long-term view, and we're upgrading our plant to be able to be 100% medical grade by the second quarter of next year. And we've spent over 12 million of the 15 million required, we just have some additional equipment to arrive and install to be completed with it. And I think it will be a sustainable competitive advantage we have, as we all know, I think we're all kind of wondering how long COVID is going to last, but we certainly have seen people are much more attentive to the protocols of sanitization and that's requiring alcohol supply to be increased.

[Marco Rodriguez:]

Got it. And it sounds like you answer kind of my next question just kind of wanted to get an update on the expansion for your healthcare Pharmacopoeia hand sanitizer or alcohol rather, is that -- that's all on track?

[Todd Waltz:]

It is on track with the volatility we expected. And what you probably saw was a lot of shelves getting filled after the second quarter, and then a lot of product that had to be pulled off the shelves. Costco, I mentioned, but they did massive recall on several of their products, and now having to turn to their supply chain and look for more stable long-term direct relationships, preferably local relationships. Our product to both the private label, as well as the branded product have made in California stickers on them. So you're able to end up with basically long-term relationships that are trusted relationships with a customer that really spend the dollar a gallon no matter how they look at it, if they're not going to buy product from us. And that's the -- what is it 80 million people on the West Coast United States and Columbia -- British Columbia, that all would need to basically just buy our product. So that's why we're making the investment is, we think that there's not a good solution. If we don't do it, these people are stuck with buying products 2,000 miles away.

[Marco Rodriguez:]

All right. Thanks, Todd. Really appreciate your time.

[Todd Waltz:]

Sure. Thank you. Appreciate.

[Operator:]

Next we go to Tom Welch, Private Investor. Please go ahead.

[Unidentified Analyst:]

Hey, Eric. Thanks for taking my call. When the FDA temporary alcohol waiver goes away -- whenever that is -- when we don't know, I would guess that you're hoping that by that time you are then producing USP grade alcohol. I believe, you're producing GNS grade alcohol currently. So, do you expect any kind of a waiver from the FDA that would allow you to continue to produce, essentially, food grade, alcohol for use in sanitizers.

[Eric McAfee:]

We're looking forward to the FDA ending the waiver. We think that we've got at least another six months past December before that waiver is going to happen. But we would expect middle of next year that all hand sanitizer will go back to being an over the counter drug regulated product, which requires USP medical-grade alcohol. So, we are scheduled to be a producer of USP grade alcohol by the end of the second quarter in order to kind of match up with that timeframe. And I would not expect that we'd be submitting a request for waiver, we would have to pass the have in excess of 65 million gallons a year of sanitizer alcohol that we could ship at the time.

[Unidentified Analyst:]

Very good. Thank you. Second question again regards to sanitizer. What percent of your alcohol is currently going -- alcohol production is currently going to the specifically the Aemetis branded sanitizer. Now in Q2, your goal was to essentially move to 100% alcohol production going to your own branded Aemetis sanitizer. So, can you give us some color on what percent of your production is currently going towards the Aemetis branded sanitizer?

[Eric McAfee:]

Yes. Just to clarify one point, we -- our goal is to move toward sanitizer production, and to fully meet the bulk sanitizer, the branded Aemetis sanitizer, but also private-label sanitizer markets. And we even frankly are blending the product; we're putting it together in what essentially is a hand sanitizer gel formula, and then selling it in totes. So, our goal is to just maximize our market position and not really have a reason for any producer, bottler, consumer, retailer, school, anybody west of Colorado to buy any product that doesn't have Aemetis alcohol on it. So, our -- because of our transportation cost advantage, and very soon the fact that we're USP and nobody else is, we see that as a logical outcome of this thing. So, just clarifying it, we're moving toward a multi-market segment strategy, not just Aemetis brand. And that by the way also might include exports to countries like South Korea and in Japan, who don't really have much domestic supply, but to have a lot of domestic demand for this product, but we're only about 30 miles from or 40 miles from deepwater ports, we can export to Asia without too much room. So, that's our real goal. For competitive reasons, we do not talk about what percentage we're shipping on a given month or given week or given day. We -- on these earnings calls, we’ve to report the overall number of gallons of ethanol, so we definitely report that. But we will see a transition toward Aemetis branded product, because that is the highest margin product, we are taking the full value chain and selling directly on the online marketplace, which I mentioned we'd been approved for one and we should be up and going, you'll see a press release from us on that, that is where we can maximize our margins. And you'll see hopefully at some emphasis on how governments can buy from us directly, just basically through the online marketplaces, as well as through a bidding process where we're bidding directly for government contracts.

[Unidentified Analyst:]

Very good. Switching gears just a little bit, but really on the same track, I just thought it was so brilliant on your part to be switching from a bulk commodity low margin fuel supplier to a retail supplier of finished products. I mean, I mean that's just brilliant. Have you ever thought about doing that with your biodiesel sales? Let me just give you a for instance. Right now, when I go into Walmart, I typically will spend $15 to $20 on a diesel fuel additive, just to increase the lubricity, and the cetane of the diesel's that I drive. 90% of the stuff in that jug that I buy is essentially just diesel fuel, with a 10% of additive. And it would be really exciting, if you folks had ever entertained the idea of taking your biodiesel doing a retail sanitizer move on it with the increased added value of being able to boil your own biodiesel based fuel at diesel fuel additive in India. Has that ever crossed the desk? Have you guys ever thought of that?

[Eric McAfee:]

Not specifically as a fuel additive, but interestingly enough, you're right on target. I don't know, maybe it's your own personal experience it gets you got to here. But interestingly enough in India, you're dealing with very poor population, where $3 or $4 is sometimes their entire day's income. And so we have begun the process of selling at retail in small one liter pouches, essentially it's literally a pouch, not -- it's not a can. And it's enough to fuel a tractor for a few hours or for a day. And it's quite fascinating that that's exactly what we ended up in India was in order to meet the needs of the population. We started packaging our product into small pouches and eventually could do half gallons or something that a person could walk out of a retail store with some biodiesel. And what's interesting is the personal experience of the people, especially the tractors, is that you're dramatically reducing particulate emissions, and if you've been a tractor driver, it sounds like you've got a diesel vehicle. That having exhaust blown in your face with a bunch of black smoke is quite miserable. In India, one of the reasons our product is quite popular. Is it smells, not like petroleum but frankly smells a little bit like -- like more of a food product, and the particular emissions are reduced by more than 90%. So they're not getting smoke blown in their face, and there's of what, 1.1 billion people in India. Over time, I think the channel of being able to supply through retail gas stations through packets at retail stores, as well as bulk to government, as well as directly to trucking companies, which is a major market for us, and the mining companies, mining companies have very large vehicles that might only get one mile per gallon, and they save a tremendous amount of money buying our product. So, we’re well positioned. We are the leader in the market. We are the biggest supplier in India, and we're well positioned for very strong growth and even expanding beyond the $150 million of revenue by expanding our capacity to 100 million gallons a year. Our business plans to be over 300 million of revenue in India, and we're well positioned to do that, our capital costs do that's less than $20 million.

[Unidentified Analyst:]

Well, I know the, the quality of diesel fuel in India is horrible. It's like the diesel fuel that we used to get back here back in the 1950s, and we all remember driving on a California road highways with smoke belching our face from the diesel trucks. So I know that biodiesel burns cleanly, it improves your gas mileage, your cetane goes up, it lubricates your engine, your engine is actually cleaner after running even just a 5% to 10% blend of biodiesel. Even with your regular diesel, so I just thought, Wow, what a great opportunity to -- essentially to some degree bypass the powers that be in the bulk supplies to the government controlled oil companies and get right to the people, even if it’s -- people are just adding a 5% blend or a 10% blend. I know, when I was driving diesel's back in the 70s, we had to use some type of an additive package. Otherwise we'd be cleaning out our injectors after 60,000 miles. So, just a thought, and I appreciate that.

[Todd Waltz:]

We've mentioned this in the past, but the Indian stock market is very excited about the national biofuels policy that was adopted by the Indian government, in which they're currently importing their crude oil and spending approximately $50 billion a year buying crude oil, and so the national biofuels policy said, let's use 5% of biodiesel to displace having to import as much crude oil, and after we achieve 5%, let's go to 10% and after 10%, let's go to 20%. And so, that's why their purchase order is literally three times as much as the industry can even produce. They're trying to signal that they'd like us, at Aemetis to invest -- increasing our capacity from 50 million gallons to 100 million gallons. What's interesting is that, the stock market in India can fund that activity. We currently own a 100% of the subsidiary, and have had a round of discussions with investment banking firms in the past about valuing our subsidiary, and some of those valuations are very, very high, multi $100 million valuations because of the fact we're the biggest -- it's a big market, fast growth, you do a billion gallons of biodiesel; when you're talking about $3 billion revenue company. And so, funding rapid growth in India has been a primary goal of our building, our position there. And we knew, it was going to take time. We knew it was going to be slower than anybody wanted, but it's one of those, wow, how did that happen kind of deals when you see the valuation on our subsidiary IPO in India, which we could still retain 60% to 75% ownership, but have a multi $100 million holding because of that.

[Operator:]

And ladies and gentlemen, we are running short on time. We do have time for one more brief question. We go to the line of Massimo Fiorella, Private Investor. Please go ahead.

[Unidentified Analyst:]

Hello, Eric. So, first of all, I appreciate that most of this quarter, your plan ran out more than 100% capacity. This is very good in a moment where 50% of ethanol plant in California are idled. And then I also appreciate that you are probably the only company in the sector without always not dilutive, the number you're sharing is around $20 million? I want to ask you one thing and then I want to do like a question about the electric cab sector. This time the result certainly that I was expecting that would be a bit better than it exceed. I think that this is a time where you should boost investor confidence. So, in this moment also seen the evaluation of the company's law, personally how you hope to see in the next days and weeks like commitment from you that is the founder and the Board of Director, I would appreciate if in the next weeks, the Board can consider to buy shares on the open market feeling a spectrum fall? Then I want to do a question because about the electric car because, what I see is like the Aemetis maybe is like the one perfect feature for company like Tesla and Nikola. These are very hot at the moment. I think these one because electric cars require a big moment dense biofuel to produce electricity in high volume onboard. For example, now is going out Nissan e-Bio van, which uses 8 gallon ethanol tank to fuel hydrogen, fuel cell to provide 400 mile range. High power long range electric vessel requires energy dense, storable, transportable fuel and the electric cars will need head on the fuel cell for power and range. So I wanted to ask you, if you consider to enter like in this market, and if you are maybe considering this opportunity to work close with the electric car, if you are in discussion with that, if you have thought about this opportunity?

[Eric McAfee:]

You're correct that we have two different very central roles in the electric vehicles. First is the confidence we have in our renewable natural gas business that’s driven by a very low carbon intensity score allows us to potentially produce electricity that powers heavy trucks and buses. And in California they've made it very, very attractive to produce carbon negative fuels for buses and trucks, because they're driving on diesel which is a very carbon intensive fuel and batteries are not large enough to give them long distance. The ability to power those batteries with electricity that's carbon negative helps the overall transition to a climate change policy, that's already been adopted as well on the way in California. So renewable natural gas, puts us right in the middle of the elect -- the carbon negative electricity business for vehicles. The second one though, I spoke about briefly at the end of my presentation. And that is the actual engine in a diesel vehicle is a compression engine that does not have spark plugs. It does not use a little flame to explode the fuel. It squeezes the fuel, compresses the fuel to make the fuel explode. Ethanol has a 114 octane rating, which allows you to compress it to a very high degree, before it explodes. So it's very efficient at its combustion in a diesel engine. And there's a technology came out of Stanford University is now being commercialized to actually replace the diesel engine in a regular diesel heavy duty bus for example, with an engine that uses ethanol and it creates 30% more torque, more pulling power, if it uses ethanol than if it diesel. If you use that engine then as the generator for a range extender on an electric vehicle let's say, you have a truck and you want to drive 1,000 miles, your batteries might only take you 50 miles or 100 miles. You then need some dense fuel to generate electricity. So an ethanol generator on board would have more than a 95% reduction in particulates. Have virtually no other emissions issues that are currently problems in diesel engines that require very expensive equipment and ongoing diesel exhaust fluid expense and everything else. And would have better performance, 30% more torque is a tremendous step forward and performance for the -- the non-generator version. And of course you put a generator on board and now you're driving an ethanol and dairy renewable natural gas vehicle, very low carbon emissions, probably the negative carbon emissions for your dairy natural gas, electricity. And if we make the ethanol out of wood waste, it's also carbon negative ethanol, very inexpensive, very low carbon and you can imagine regulators are interested in trying to remove diesel trucks, diesel buses, even tractors and other diesel equipment and converted to this low emissions, low air pollution, low carbon solution that Aemetis has. So, we're taking a very serious look at how we support the players in the industry. We are a very, very large supporters of the ethanol engine to displace diesel engines. And we think the entire industry is behind us on that one and we're looking for the industry to make major moves to do even a 20% replacement of the existing diesel truck fleet would double the size of the ethanol market in the United States from 15 billion gallons to 30 billion gallons. And they would have a tremendous financial impact on our core business, but also reduce air pollution and carbon emissions throughout the United States. So, we are very much in the center of the electric vehicle revolution and hybrid vehicles, and replacing diesel engines with ethanol engines.

[Unidentified Analyst:]

Okay. Then I have the last two very, very short questions. The first one is about Amazon.com, I didn't have same -- as of today you are selling or you are not selling your Amazon.com. And if you are not selling, when will you start to sell there? And the second one is about India. India -- I mean, I see this like the India, did like a request to get shape by diesel for 900 million, this is something huge. I just saw the last year in 2019, you won the $23 million contract, and it generates like $6 million EBITDA. This year, the contract will be a lot higher because India is putting on the table like almost $1 billion. So, I want to ask you what is like a projection of -- how much you are going to win in 2020 because in 2020, you won $23 million, how much you are going to win in 2020, there will be probably impact on 2021 revenue. And then another thing I would appreciate if you -- as mentioned before, can consider since it is very, very hot at this moment like a meteor of the Indian business. That according to me all the Indian business -- the India factory could be valued maybe $200 million, $300 million something similar. So, if you do like an IPO for 20%, you will be like $50 million and with this $50 million, you will pay back debt, they have here that is very, very high interest, and what are your option in order to let this I call the depth degreaser?

[Todd Waltz:]

What’s the stickman in order, the online major marketplace has approved us and we should send out a press release as soon as you can buy our product on that, online major marketplace. So, look for press releases. We have definitely an opportunity in India to IPO our subsidiary; we've had long discussions on it. We think that the $900 million tender offer from the government is in this case only for about six months, actually, it's December, January, February, March, April, May, that's the entire period for the $900 million that's not for the entire year. So, when we got the $23 million order last time that was for the entire year. And so when we announced the bid process outcome here which should happen in just a couple weeks or less. We would be only in a six-month period not a 12-month period, and would expect to see a much higher number. So, what we're seeing is very strong demand from the India government. And now we need to match that with pricing. And we'll be fine. We're the largest producer in the country. There's only about four other producers. So it's not a very large fractured fragmented industry, it's us and four other guys. And we're looking to expand and then take advantage of the market opportunity in the stock market, when that when that happens.

[Operator:]

There are no further questions at this time. I'd like to turn the floor back over to management, for closing remarks.

[Todd Waltz:]

Thank you. Melinda. I appreciate that. And thanks to the Aemetis shareholders, analysts and others who joined us today. We look forward to talking with you to continue our dialogue, about the growth opportunities at our company. Thank you for attending today's Aemetis Earnings Conference Call. Please visit the investor section of the Aemetis website, where we'll post a written version and an audio version of this Aemetis review -- earnings review and business update, Melinda?

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.