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5. Notes Payable

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

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

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 (“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 April 1, 2016*.

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.

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. 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. On May 29, 2015, the Company gave notice to extend the maturity date of the Notes to April 1, 2016 and added the 3% fee to the Notes.

On August 5, 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 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 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:

A.

Term Notes. As of June 30, 2015, AAFK had $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 April 1, 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.

B.

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 the Note Purchase Agreement, the amount of the Revolving Credit Facility was increased to $24.0 million. The Revolving Credit Facility accrues at the prime rate plus 13.75% (17% as of June 30, 2015) payable monthly in arrears. The Revolving Credit Facility matures on April 1, 2016*. As of June 30, 2015, AAFK had $22.7million in principal and interest outstanding, net of unamortized debt issuance costs of $0.6 million on the Revolving Credit Facility.

C.

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

D.

Acquisition Term Notes. The Acquisition Term Notes accrue interest at prime rate plus 10.75% (14% per annum as of June 30, 2015) and matures on April 1, 2016*. As of June 30, 2015, Aemetis Facility Keyes, Inc. had $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 2017. As a condition to any such extension, the Company would be required to pay a fee of 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 notes bear interest at 3% per annum and are due and payable after the Third Eye Capital Notes have been paid in full. As of 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.

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 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. No principal payments were 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 June 30, 2015 and December 31, 2014, the State Bank of India loan had $2.6 million in principal outstanding and accrued interest plus default interest of $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”). 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.

The Company agreed to an Amendment No. 1 to the Sub Notes to extend the maturity of the January 2012 Sub Notes to July 1, 2014 and 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 a 10 percent cash extension fee paid by adding the fee to the balance of the new note and 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 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 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 July 1, 2015, the Sub Notes above 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 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. We will evaluate these July 1, 2015 amendments and the refinancing terms of the notes and determine the accounting in accordance with ASC 470-50 Debt – Modification and Extinguishment.

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 June 30, 2015 and December 31, 2014, the Company owed, in aggregate, subordinated notes in the amount of $5.8 million and $5.4 million in principal and interest outstanding, net of unamortized issuance and fair value discounts of 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 and 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, $17.5 million during the first quarter of 2015 and $2.5 million in the second quarter of 2015. As of June 30, 2015, $21.5 million in principal and $185 thousand in accrued interest remained outstanding on the notes. The availability of the remaining $14.5 million will be determined by the ability of Advanced BioEnergy, LP to attract additional qualified investors.

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 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 $1.0 million and $2.3 million, respectively, under the agreement and interest payments of approximately $23 thousand and $74 thousand, respectively, for working capital funding. At June 30, 2015 and December 31, 2014, the Company had approximately $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