May 14, 2020
Operator
Good day and welcome to the Aemetis First Quarter 2020 Earnings Review Conference Call. [Operator Instructions].
As a reminder, today's 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. Mr.
Waltz, you may begin, sir.
Todd Waltz
Thank you, Melinda. Welcome to the Aemetis first quarter 2020 earnings review conference call.
We suggest visiting our website at aemetis.com to review today's earnings press release, updated corporate presentation, filing 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.
Before we begin our discussion today, I'd like to read the following disclosure statement. During today's call, we'll be making forward-looking statements, including, without limitation, statements with respect to our future stock performance, plans, opportunities and expectations with respect to financing activities and the execution of our business plan.
These statements must be considered in conjunction with the disclosures and cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements made on this call involve risks and uncertainties, and that future events may differ materially from the statements made.
For additional information, please refer to the company's Securities and Exchange Commission filings which are posted on our website and are available from the company without charge. Our discussion on this call will include a review of non-GAAP measures as a supplement to financial results based on GAAP.
A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release for the quarter ended on March 31, 2020, which is available on our website. Adjusted EBITDA is defined as net income or loss plus to the extent deducted in calculating such net income, interest expense, loss on extinguishment, income tax expense, intangible and other amortization expense, accretion expense, depreciation expense, loss contingency on litigation and share-based compensation expense.
Now I'd like to review the financial results for the first quarter of 2020. Revenue during the first quarter of 2020, was $39.5 million compared to $41.9 million for the first quarter of 2019.
North America volume of ethanol sold during the first quarter was 15.7 million gallons, compared to 16.2 million gallons in the first quarter of 2019 at an average price of $1.56 per gallon, compared to $1.68 per gallon. India's biodiesel price was $786 per metric ton compared to $839 per metric ton, with tons sold decreasing to 3,554 metric ton compared to 5,182 ton.
Gross loss for the first quarter of 2020 was a $433,000 compared to a $351,000 loss during the first quarter of 2019. Selling, general and administrative expenses decreased from $4.2 million during the first quarter of 2019 to $3.9 million during the first quarter of 2020.
Operating loss decreased to $4.5 million for the first quarter of 2020, compared to operating loss of $4.6 million for the same period in 2019. Interest expense including - excluding accretion of Series A preferred units in the Aemetis Biogas LLC subsidiary, was $6.9 million during the first quarter of 2020 compared to $6.2 million during the first quarter of 2019.
Additionally, our Aemetis Biogas initiative recognized $960,000 of accretion of the preference payments on its preferred stock during the first quarter of 2020 compared to $449,000 during the first quarter of 2019. Net loss increased to $12.1 million for the first quarter of 2020, compared to a net loss of $10.7 million for the first quarter of 2019.
Cash at the end of the first quarter of 2020 was $303,000 compared to $656,000 at the close of the fourth quarter of 2019. That completes our financial review.
Now, I'd like to introduce the Founder, Chairman and Chief Executive Officer of Aemetis, Eric McAfee for business update. Eric?
Eric McAfee
Thank you, Todd. Aemetis was founded in 2006 and we've grown into four lines of business focusing on supplying low carbon and below zero carbon, renewable fuels, biochemicals and byproducts to markets including transportation, renewable natural gas and carbon dioxide.
Recently, we began shipping hand sanitizer alcohol and refined glycerin into the rapidly expanding antiviral sanitizer market. We own and operate production facilities with more than 110 million gallon per year capacity in the U.S.
and India including our production portfolio is a 60 million gallon per year capacity 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 distilled biodiesel and refined glycerin biorefinery on the east coast of India near the port City of Kakinada.
As you may know, high quality alcohol and refined glycerin are the two key ingredients in hand sanitizer. Aemetis operates the largest production plant for high quality alcohol in California, and is one of the largest refined glycerin producers in India.
The global COVID-19 crisis that began during Q1 2020 provided challenges to our business including protecting the health of our employees, while continuing to operate our California ethanol plant to supply animal feed to more than 100,000 dairy cows during a time period in which the demand for biofuels decreased significantly. Aemetis operates in three of the Federal Essential Critical Infrastructures, and has continued to operate our California ethanol plant and the construction of renewable natural gas project without interruption.
To a large extent, the ability to continue to operate our California plant while fueled ethanol demand and price declined significantly during Q1 and then recovered recently in Q2 has been due to a rapid conversion of our alcohol production to produce hand sanitizer alcohol. In response to a severe lack of hand sanitizer in late March 2020, the FDA and the Treasury Department issued an approval to alcohol fuel producers to allow ethanol plants to produce alcohol for hand sanitizers.
We delivered our first sanitizer alcohol within a few days thereafter, and installed upgrades to our California plant to produce higher quality ethanol for broader personal care and industrial markets. To our knowledge, Aemetis is now the largest producer of alcohol for hand sanitizer in the western US.
In April, Aemetis received a distilled spirits producer certification. And we continue to invest in the upgrading of our production facilities to achieve US Pharmacopoeia and Food Grade quality for our ethanol within a few months.
Our expanding production of high quality alcohol for the sanitizer market used for hand sanitizer, alcohol wipes and alcohol sprays is expected to be a long term growth market driven by the adoption of antiviral markets and products by governments, schools, private industry and consumers. About a year ago, we signed a $30 million equity funding and launched a renewable natural gas project to build biogas digesters at about a dozen local dairies near our ethanol plant in California.
Construct a pipeline connecting the digesters to our plant and installed gas conditioning to reduce carbon negative renewable natural gas to reduce the carbon content of our ethanol production and to displace diesel by fueling natural gas trucks. We now have signed participation agreements with 17 dairies built and tested two dairy lagoon digesters at a cost of about $5 million.
And have designed and permitted a four mile pipeline that is now under construction to connect the dairy digesters to our ethanol plant. In 2019 we signed financing term sheets to fund an advanced ethanol production facility in California to convert waste orchard wood and other waste biomass into about 12 million gallons of cellulosic ethanol per year.
We're now in the final engineering and procurement cycle prior to completion of project financing and commencement of construction of the plant. The combination of these growth and cost reduction initiatives are expected to increase our revenue to more than $500 million per year, and annual cash flow the more than $130 million per year.
This projected growth in revenues and cash flow reflects certain planned and completed upgrades of our existing plants, as well as planned completion of the new dairy renewable natural gas and waste wood ethanol production facilities. With the consistent support of California regulators and continued strong California low carbon fuel standard credit crisis, Aemetis has made positive progress in each of our four businesses during the first quarter of 2020.
Let's first review our biodiesel business in India. After two years of investment in construction, we completed the upgrade of our India plant in 2019, including installation of a pretreatment unit to process lower cost and waste feedstock into oil.
The biodiesel and refined glycerin plant is now fully commissioned using the new feedstock pretreatment unit, the new boiler unit, and other upgrades that enabled expanded plant operations toward full plant capacity of 50 million gallons per year. The stay at home order in India has restricted our production but we continue to ship biodiesel and refined glycerin from inventory.
This month, we expect to begin production at the India plant to meet expanding biodiesel and refined glycerin needs in India. Though the global price of diesel has declined, along with the price of crude oil, the domestic price of diesel in India has remained largely unchanged due to the increased India government taxes that offset crude oil price declines.
Since our biodiesel sold to the price linked to India domestic diesel prices, our biodiesel prices in India have remained steady, despite the significant decrease in the price of crude oil. In addition, refined glycerin prices have increased in response to the need for hand sanitizer and other consumer products.
In May of last year, we announced that our Universal Biofuels India subsidiary was awarded a $23 million biodiesel supply contract with the three Indian government owned oil marketing companies in the public tender process. Additional oil marketing company purchase requests for biodiesel have been issued for year 2020 and the award of supply agreements should occur in the next month.
We expect to continue to participate as a key supplier under these biodiesel contracts. During the months of December and January the primary constraint on biodiesel revenues growth in India is a seasonal colder weather from lower winter temperatures.
And the high cost of feedstock in late 2019 has now decreased significantly. Our three businesses in the U.S.
have achieved major milestones toward increasing revenues and sustained profitability. Let's review our California ethanol business.
Similar to our strategy in India, where we added a technology that allowed the use of the lower cost waste feedstock to produce biofuels, we've been upgrading our Keyes, California ethanol plant to lower input costs, reduce the carbon intensity of our biofuel, and significantly increase the value of the ethanol we supply to the 1.5 billion gallon California ethanol market and now the sanitizer alcohol market. To produce higher quality ethanol for the sanitizer market, we installed the carbon filtering units and now we're doubling the amount of carbon filter systems this week.
We are also engineering and planning to install upgrades to our distillation system in order to produce high quality of alcohol that exceeds U.S. pharmacopoeia and food grade standards in the third quarter of 2020.
A second upgrade to the Keyes plant has now been completed. In early May, we announced the completion of construction and commencement of commercial shipments of CO2 to the newly constructed Messer Gas Plant next to our ethanol plant to capture and reuse carbon dioxide.
After three years of project development, Messer leased about five acres owned by Aemetis adjacent to the Keyes ethanol plants to build a CO2 liquification plant. We are now converting more than 150,000 tons per year of renewable CO2 produced by our ethanol plant into liquid CO2 for sale to local food processors, beverage producers and other CO2 industrial users.
Ethanol plants produce about 40% of the CO2 in the U.S. So a significant national shortage of CO2 has occurred due to the shutdown or idling of ethanol plants.
About $1.5 million per year of cash is expected to be received from CO2 sales and the land lease for the CO2 plant. We also expect to qualify for a CO2 carbon capture and reuse federal tax credit that we calculate is initially worth about $4 million per year and grows to $6 million per year over the next five years under the IRS 45(Q) rules.
We are currently working on an arrangement to monetize the tax credits with a financial partner. The third upgrade to the Keyes plan is a construction of an $8 million membrane dehydration system financed by Mitsubishi Chemical of Japan and a $1.5 million PG&E grant as a strategic implementation of the Mitsubishi Zebrogs Technology for the first time at a corn ethanol plant.
The Mitsubishi unit was delivered to the Keyes plant in late February 2020 and is in the installation process. The ethanol dehydration unit is designed to significantly reduce petroleum natural gas usage and decrease the carbon intensity of our ethanol.
And once implemented, is expected to generate an estimated $3 million per year of increased cash flow. A fourth upgrade to the Keyes plant is a solar microarray and artificial intelligence energy management system that received an $8 million grant from the California Energy Commission.
This solar system will decrease the carbon intensity of our biofuel, through the use of solar energy to displace higher carbon energy sources. This upgrade to the Keyes plant is a high efficiency heat exchanger project that was awarded a $1.3 million Pacific Gas and Electric grant.
And the sixth grade to the Keyes plant is mechanical vapor recompression system that was awarded a $6 million grant from the California Energy Commission that is expected to reduce natural gas use significantly. These projects at the Keyes plant are targeted to reduce petroleum natural gas usage and costs by up to 80% while increasing the number of low carbon fuel standard credits generated each year.
The combined impact of these projects is expected to be a $30 million per year increase in operating cash flow at the Keyes plant, not including any improvement in profit margins that are expected to occur if the EPA decides to enforce existing federal biofuels laws. Let's briefly review our Aemetis Biogas dairy digester and pipeline project.
Methane, commonly known as natural gas, is a potent greenhouse gas that is up to 30x more powerful than carbon dioxide at capturing earth's heat. About 25% of California's methane emissions are from the waste ponds on dairy farms.
To reduce damaging methane emissions, in late 2016, California passed the law known as Senate Bill 1383 that mandates the capture of biogas from dairies. Biomethane sourced from dairies can be used to replace gasoline or diesel fuel in trucks and in buses to significantly reduce carbon emissions and air pollution.
Along with the State mandate, California has funded about $75 million of annual matching grants to dairies to build biogas digesters and related systems. We believe that capturing biogas from dairies and converting it into renewable natural gas to generate negative carbon intensity biofuels is an excellent way to reduce climate change, and create value for dairies while lowering costs for diesel truck fleets and electric vehicles.
Based on our existing animal feed supply relationships with about 100 dairies and the ability to use biogas in our plant until utility pipeline approvals are obtained and pipeline injection is completed, we believe that Aemetis is uniquely positioned as 1 of only 3 ethanol companies in California who can use existing infrastructure in this manner. After more than a year of project development and financing work, last year, we announced $30 million of equity financing and a grant award from the California Department of Food and Agriculture of 2 matching grants for a total of about $3 million to build the first 2 dairies in our biogas project.
Construction of the first 2 dairy digesters was completed and we are now building the 4-mile pipeline to connect the digesters with the Aemetis ethanol plant with an expectation of beginning renewable natural gas revenues during late Q2 2020. We have signed 17 participation agreements with diaries and plan to complete construction of the next 15 lagoon digesters by approximately the end of the year 2021.
Let's finish with an update on our below zero carbon cellulosic ethanol project in Riverbank California. We were pleased with the Aemetis advanced biorefinery under development in Riverbank California near Modesto was named as the number one waste to value projects in the world by Biofuels Digest, the world's largest daily biofuels publisher.
The Aemetis project earned its number 1 ranking as a result of our fixed price, low-cost, almond and walnut wood waste contract for 20 years with a cost of about $20 per ton for the first half of the contract period. Planned production of high-value cellulosic ethanol is expected to be worth more than $5 per gallon, as well as valuable fish meal and other byproducts and our use of the patented LanzaTech gas microbe ethanol production technology.
The LanzaTech technology is now in full commercial operation at a plant that opened in 2018 in Northern China that converts waste gases from a steel plant to produce ethanol. During 2019, we announced 3 significant financings related to the Riverbank project.
A $5 million California Energy Commission grant to fund engineering and equipment, a $12.5 million tax waiver that offsets equity funding required for the project, and the signing of a $125 million U.S. Department of Agriculture conditional commitment letter for a 20-year debt financing under the 9003 Biorefinery program.
We are working to update the USDA loan to match the current capital expenditure budget for the project. We're focused on completing engineering of the plant required for the negotiation of the EPC contract.
That will include a bonded maximum construction cost. The Riverbank cellulosic ethanol plant is expected to generate more than $80 million of revenue and more than 50 million per year of positive cash flow by producing cellulosic ethanol from low cost waste, orchard vineyard, forest and construction demolition of wood as feedstock.
The financial closing to begin construction of the Riverbank plant is dependent on completing the engineering and procurement work required for the signing of the construction contract. In summary, we believe that Aemetis holds a unique position with the production of both higher quality ethanol and refined glycerin for the rapidly expanding sanitizer market.
We also have diversified production of low carbon renewable fuels in two attractive markets, in California and India. The profitability and 120% of revenue growth at our India plant during 2019 was achieved while repaying a 100% of our long-term debt in the India subsidiary.
The increased margins from plant upgrades related to the Keyes biorefinery are expected to begin to be realized in Q2 2020. The Aemetis Biogas dairy digester and pipeline project is expected to begin first gas production in late Q2 2020.
And our planned deployment of the patented LanzaTech cellulosic ethanol technology at the Riverbank plant has positioned Aemetis to rapidly produce expanding positive cash flow from the production of low carbon clean burning, high performance renewable fuels from abundant low cost waste of biomass feedstocks. Now let's take a few questions from of our call participants.
Melinda?
Operator
Thank you, Mr. McAfee.
We will now be conducting a question-and-answer session. [Operator Instructions] And it looks like our first question will come from Ed Woo with Ascendiant Capital.
Please go ahead.
Ed Woo
Thank you for taking my question. My question is on the biogas project.
You mentioned that it's going to start up in late second quarter, which is I guess the current quarter. How quickly will that ramp up in terms of revenue?
Eric McAfee
We are going to have two dairies online. So our initial revenue would be a pretty rapid ramped to approximately 20% of our projected revenue for the project.
So it's about 18% of the projected revenue. And then as additional dairies come online, over the next 18 months, we'll just piecing a rapid ramp up.
That rapid ramp up starts in early 2021. But we are awaiting an additional grant application we have filed that we expect to have announced in September.
Soon after that we will be at full construction pace. There really will be no - nothing we're waiting for to complete the remaining dairies to end up with about a dozen dairies in this first phase.
Ed Woo
Great. And then moving back to India, you mentioned that your class has been, I guess production is suspended, but you expected to resume by the end of this month?
Eric McAfee
That's our current expectation. They've relaxed a lot of the conditions and frankly, they've approved the operation of our facility in India.
So we're in the process of just getting things organized and back in production. The demand for diesel is increased nicely.
And the price, of course, never really decreased. So it's an attractive market for us.
And we're looking forward to getting production going again.
Ed Woo
And then in terms of getting into shutting down the plant and starting the plant back up again. Is there any technical challenges with that or is it as simple as once you started, you will be able to get back up to full production pretty quickly?
Eric McAfee
Yes, we actually have a maintenance cycle every winter already. And we already did the recommissioning.
So we're basically already through that process of being ready to restart. So it's a rather quick process.
Ed Woo
Great. And then pivoting back to, I guess, your ethanol plant.
Congratulations on being able to make the change into the hand sanitizer market, ethanol production market. How difficult was it for you to be able to shift from fuel ethanol into the hand sanitizer market?
And have you completely shifted 100% of your business or are you still selling ethanol into the fuel market as well?
Eric McAfee
The shift is very difficult for fuel alcohol producers to do, because there's a combination of a variety of qualities that come out of a fuel ethanol plant, nobody really cares what the order of fuel ethanol is, because you blend it with gasoline obviously. And so order matters a tremendous amount in this market, as well as there are some carcinogenic in fuel alcohol acetaldehyde is one that has been focused on by the FDA.
And on April 15th, after about two weeks of operations by the fuel alcohol business, the FDA actually issued a notice stating that fuel alcohol producers could not produce for the hand sanitizer business unless they went through three steps with the FDA, which included disclosing the composition of their product. The FDA then went about closing down plants that had higher levels of acetaldehyde.
It's a carcinogenic and obviously not a very good thing to have in hand sanitizer. So, having consistent quality and being a low acetaldehyde and other components that the FDA is not interested in seeing in hand sanitizer is not an easy task.
It's one of our reasons why we have doubled our carbon filtering capacity this week, which is another substantial investment we've made is to achieve what we seek to be which is the highest quality alcohol fuel producer product. And then within the next couple months, be in a position to be shipping the traditional FDA quality, medical quality and food grade alcohol.
So we're basically going through a process of a variety of changes that at every change, improve the quality and consistency of our product. And by mid-summer are seeking to be at a very high quality products which actually open up more markets, even beyond sanitizers.
So it's an expansion of the business into an entirely new industry that it's been done and completed really during the stay at home orders. So you can imagine the issues of launching a new industry where you don't know who the customer is and conducting a substantial amount of transactions without ever meeting them.
So we've achieved that and continue along that path.
Ed Woo
Just for clarification, is your ethanol currently meeting the FDA requirement or will it meet later on?
Eric McAfee
We currently meet the FDA and TTB requirements that were issued for alcohol fuel producers. There's a separate set of rules that were in place prior to late March 2020 that we expect to meet over the course of the summer as we complete the distillation system upgrades, etcetera.
So then the temporary waiver which ends December of 2020, will no longer be relevant to us. So, our target is to try to be six months ahead of the termination of the alcohol fuel producer quality standard and be producing at the food grade standard, long before other companies might have a chance to make the investments to get to the standard.
Ed Woo
Great. That sounds wonderful.
My last question is just on the economics. Is the ethanol that you sell into the hand sanitizer market is comparable to selling into the fuel market?
Eric McAfee
No, it's definitely a different market. There is a lot of price discovery going on in that market.
And we'll see how it matures because it will continue to change as we go toward the USP and FCC grades that’s the Pharmacopoeia and Food Grades. So, we'll see over the next quarter or two, how the pricing matures.
Ed Woo
Great. And one last question if I may.
Just love to hear your view on the oil market now. Obviously, it's changed a lot last quarter.
But just curious about what's your current view?
Eric McAfee
My current view is that we're going to see a rebound in gasoline demand, which we've already seen dramatic increases than any other market. But there was a significant decline.
So, the perception here will be of increasing gasoline demand. At the same time, the Saudis I think have finally figured out that they can make more money selling 6 million barrels a day than they can make in 12 million barrels a day.
And so with that constraint in the market and other participants in OPEC, participating along with them, we saw price of oil went from $12 to $25, in about 10 trading days. So, my personal view is there's plenty of oil in the world that there's shale oil available at $30 a barrel that will act as a lid on the market and so we're probably in a $30 oil market for quite a long time as the Saudis and the Russians constrain production and the shale oil folks continue to produce.
And so $25 to $30 oil will probably be here for a while. If the Saudis and others get serious about price of crude oil, gasoline demand is absolutely recovered.
There's no question about that. And so sometime later this year, could be as early as the third quarter but maybe the fourth quarter.
The Saudis will be back in control of the price of oil. At that point in time, it would be not surprised at all to see a $40 to $60 price of oil.
If the Saudis are very committed to this, they'll get a $60 price of oil by the end of the year, simply by putting a crimp on the global supply of oil and forcing the shale guys to try to get more capital from the debt markets, which they will have a very difficult time doing. So the play for the Saudis is to bet the shale oil guys keep on running their rigs having scared the market so badly.
And I think that will win. So if the Saudis are serious, we'll have $50 or $60 or crude oil by the end of the year, because the shale oil guys which have to have 70% to 80% decline rates in their first year, they have to invest a massive amount of capital to keep drilling more wells.
And we could see a rapid increase in the price of crude oil if the Saudis decide to.
Ed Woo
Great. Well, thank you and good luck.
Eric McAfee
Thank you. I appreciate it.
Thanks Ed.
Operator
Next, I apologize. Next, we go to Shane Martin with Stonegate Capital Partners.
Please proceed.
Shane Martin
Hey, guys, thanks for taking my questions. A quick follow up to, I think before me.
It looks like less than 3% of your revenue was from the high proof alcohol this quarter. And again, kind of a quick follow up.
Can you give me an idea on how much output you guys would be targeting there? And then also an idea of maybe some of your customers in that market?
Is it several intermediaries right now or is it one singular purchaser at this time?
Eric McAfee
There were only I think, two or three days in the first quarter that included alcohol shipments because the approval was on March 27. And our expectation is we're going to have a blend of sanitizer product and fuel product until we get to a USPA grade and FCC grade sometime this summer.
At which time it's very possible that a large percentage of our product is actually going to sanitizer product line and a very small amount, just mostly for balancing would be going to fuel ethanol. So I see it as an upward trend.
We have had a dozen or more customers probably if I look at customer list it is probably more than 15 customers. And so we do have some large customers but we have an emerging market in which new markets are opening up for us that did not exist before.
And there's entire customer bases that are coming from those markets, including international markets. So I think that the business in the second quarter will be maturing with sustained high quality product from us.
And then the third quarter, when we hit USP I think it's going to stabilize with a stable of probably 10 to 12 ongoing consistent customers. And much of our production will probably be going to that market if it matures the way we think it will.
Shane Martin
Great. And then my next question is you guys mentioned on the carbon dioxide capture system that it should benefit about $1.5 million annually to you.
Is there any sort of ramp up there? And then again, assuming that there's some sort of switchover into the alcohol market.
Would you still expect to have that sort of annual revenue from it as well or would it decrease or increase?
Eric McAfee
Good questions. The $1.5 million is under long-term contracts.
And we don't expect that to change much. We do get an additional $4 million tax credit that we're working on monetizing that grows pretty much every year for the next five years to a little over $6 million per year.
And so the overall revenue opportunity here is in excess of $7.5 million per year. But the production of hand sanitizer or ethanol does not really impact the amount of CO2 we produce.
It is obviously factory is running at capacity, we produce the same amount of CO2. It comes off the fermentation process.
Shane Martin
Okay, great. And then switching gears over to the India side.
Can you give me a feel for what percentage of the sales volume decrease was due to the repairs that you guys have just general scheduled maintenance and then what was attributable to the actual COVID related shutdowns, any kind of color there?
Eric McAfee
I would say repairs, which were completed in early February would have not had much impact. It was the inability to restart in February and operate in February and March that is largely the result of the volume declines in India.
And so we would have expected to have a tremendous amount of products flowing in late February and early through March, literally twice the rate of the prior year if we would have not had this shutdown.
Shane Martin
Okay, great. And then just last question, can you give me any color for this year on working capital needs over this year and then as well as any CapEx expectations that you guys have?
Eric McAfee
Working capital has been - on one hand from operations, we’re funding an increase amount of our working capital, where we have been able to paydown several of our key vendors. India is already debt free from a term loan perspective and sits on substantial amount of cash.
So we have in California replicated what our status in India and reduced our amount of cash that our vendors have extended to us. And so doing have invested more in our working capital.
But we've done that all through positive cash flow from operations. And we're expecting to fund our capital expenditures from a combination of three things, cash flow from operations as well as the $21 million with the grants we've received and the $30 million of equity that is already in place and has already been partially drawn about half of it's been drawn already.
So at the current time we're fully funded for all of our activities except for the Riverbank project, which requires some additional funding, which we described in our project financing plans. But the other activities we have are largely in place, I say largely because they're subject to future financings, they haven't closed yet.
And why all we should throw in the COVID-19 conditions and talking about future financings.
Shane Martin
Okay, great. Thanks for taking the question guys.
Eric McAfee
Sure. Thank you, Shane.
Operator
Next, we go to private investor, Tom Welch. Please proceed.
Unidentified Analyst
Thank you. Great call.
I have really only one question. Everybody else covered questions that I have.
But do you have any future refinancing plan that you're working on that you can talk about besides EB-5?
Eric McAfee
I would say that EB-5 had, as you saw in our earnings release this morning and the quote that I put in. It had a major breakthrough that should be understood by all investors.
In the EB-5 program, there is a category called national interest expedite that takes what is otherwise a up to three year process of investor getting their application reviewed. And then being able to move the U.S.
down to a 90 day process. That's what the regulation says.
And so to be sitting in India, when the shutdown condition and have the prospect that within 90 days you could be approved to move the U.S. and send your kids to U.S.
schools and go spend time with your family members. It's a dramatic change in the attractiveness of our process.
And we have had a several hundred new interested investors happen. Each investor is $900,000 of investment by the way.
And so we in our job studies have 200 investors that we showed our plant qualifies for. And so if you just do the math, you could find that's a tremendous amount of capital for our business at 0.25% interest rate.
And the first phase of our funding, which we raised approximately $35 million from largely happened in one week. If you really are following the company, you would notice that, we went to China and in one week, two sets of weekends, we oversubscribed that entire offering.
It was a window of time in which things lined up. And though years had passed, we closed that largely the entire $35 million in that one week.
This is not one week, but the pace of interest the pace of excitement the COVID-19 shutdown restrictions in foreign countries and how it's affecting people has definitely significantly increased the interest and the real activity of people investing. And so I think investors should be fully aware of its impact on the company.
And that those funds flow directly to the reduction of our senior secured debt, which is the bridge financing we use to fund these projects. Secondly, the financing of our Riverbank project, which has a USDA loan and also mentioned the municipal bond market has a component of those proceeds that also reduces our debt by refinancing it into 20-year, relatively low interest debt with no principal payments for two year periods.
So that is as the impact of reducing our expensive senior debt, replacing it with long-term lower cost debt. Other than that, we do not see the bond markets or the high yield credit markets as being open to ethanol plants at this point in time and certainly if it was, we would be very active there.
But currently, we don't see that those refinancing alternatives are available.
Unidentified Analyst
Very good. Just a clarification.
The EB5 to financing was posted $50 million in the year they see the minimum required from $500,000 to $900,000 investor. And there are, I believe, you're qualified for up to 100 for those units.
So has the EB5 phase two financing gone from $50 million to $90 million?
Eric McAfee
We're actually in our, what's called an exemplar business plan and project proposal that was approved by the government. It's actually 200 investors.
But there's a function of the market, specifically the Chinese market that used to be the most aggressive funding of this EB5 set of projects in which they wanted to have significant coverage, because most projects never produced the number of jobs that were approved by the government. And so a project like ours with 200 jobs being created, I'm sorry, 200 investors EB5 opportunities being created.
When it's marketed in China, you would typically go out and say, we have 100 slots available, and then just increase the number of slots after those hundreds are taken care of. We did that in our first offering and increase the offering by about 20%.
The Chinese are no longer in this market, really. It's now primarily Indians and other countries.
And because we have a plant in India, we have a lot of credibility compared to other project developers. And because we completed our first project, completed all the jobs, actually exceeded the number of jobs we originally projected.
And all those investors have now been approved and many have moved to the US we are considered to be a proven developer, which opens up the opportunity for us to do 200 investors because we don't have to market the idea that we might not achieve the number of jobs available. And at $900,000 that's an additional amount of funding that isn't under the more conservative model.
So we're going through a gradual process of obtaining investors filing with the US government doing in the amendments as it grows. And the project is under construction.
So, you create jobs as this happens, which continues to build competence. So, we're seeing a replication of what happened last time.
But this national interest expedite was an effort that took us about a year and a half and has now succeeded. And we, I believe are the only national interest expedite that we know of has been approved for the last year or so except for casino and glom.
And it is considered to be in the national interest because it was an entertainment facility for military person's personnel that didn't have a lot of alternatives in glom. So, they got a small amount approved as national interest expedite.
So, it's a major breakthrough that we worked on for more than a year and a half, in spite of many rejections we were successful in getting that achieved.
Unidentified Analyst
Very good. That answers my question.
Thank you.
Eric McAfee
Sure. Thank you.
Appreciate your time.
Operator
And we take our last question or comment from Massimo Siarala, a private investor. You may go ahead.
Unidentified Analyst
Hello, Eric. So, first of all, I want to make my own [indiscernible] first producer over [indiscernible] sanitizer in Western United States.
That this according to me a big achievement because sanitizer other company warehousing production [indiscernible]. I just want to know the fact because I did some research and I saw this like ethanol for fuel were sold at around $1.05 to [indiscernible] and sanitizer is like $50 per gallon, $100 per gallon.
So I wanted to know like with some or for how many gallon for ethanol and sanitizer you ship each day? And the number they give you they are analytic or they are too much [ph]?
Eric McAfee
Thank you, Massimo. Good to hear from you.
We are definitely getting a higher price for the sanitizer market than we are getting in the fuel ethanol market. There's a lot of price discovery going on in the marketplace.
So the range of prices is quite wide. You mentioned $50 to a $100 and actually that's true at retail, even discounted pricing is considered to be reasonable that sits in the $30 or $40 range and there's many prices that are in excess of a $100 when you're buying it in a smaller product sizes such as two to four ounces.
But this is a market in which we are a major player in the Western United States. And we entered the market as a supplier of just the alcohol itself.
We see the market maturing in which we're partnering with major customers to make them successful in the market. And that's really focusing on quality.
So I think we're at the phase in which upgrades to our plant and our ability to sustain high quality will have a biggest impact on our ability to continue to supply the marketplace and continuing to be a leader. So we'll see as this quarter completes and we report our financial returns how that market matures.
But I really do think that the third quarter is when we become a regular player, because of the USP and FCC grades that we expect to be shipping at that point in time. Until then, we're at a transitional market with a lot of up and down in terms of customers' desire for product that really the alcohol producers don't make.
And so it's a transitional quarter we're in right now. Regarding our number of gallons, et cetera.
It's very, very volatile. So we will get the end of the quarter and then report what it is.
And I think it's one of those things where you get out and you ship a lot of different customers and learn a lot about the market. And we've done that very successfully.
And then in the third quarter, I think we're going to stabilize by focusing on a small group of maybe a dozen customers and longer term relationships that are coming out of that.
Unidentified Analyst
So to-date how many gallons will you ship, like 700 more or less?
Eric McAfee
Yes, it is pretty volatile. So day to day numbers are all over the place.
Unidentified Analyst
Okay. So another question that I want to ask you, is about the $1 rule about NASDAQ because we have time to comply until end of July.
And according to me its fundamental that they may be say, we will be complying with this rule because according to [indiscernible] is very important that you will be listed on that NASDAQ. Also related to this question, I will speak and also now the market capitalization is very, very low it's $15 million this is like something like very cheap.
So if you commit, like for example, $5 million, it means that has to be about where [indiscernible] like 30% of the share. The future according to me will be bright because in May or in June people will tell you [indiscernible] demand will be up, the soybean will be up.
There are a lot of new projects going online. There are name [indiscernible] is that according to me the best investment is [indiscernible] is to invest on itself and to buy and start buyback program.
What do you think about these ones? Do you think that is capable do you want to do this one?
Eric McAfee
NASDAQ has…
Unidentified Analyst
[Indiscernible] what is the plan to be listed in the NASDAQ in procedure to $1 condition?
Eric McAfee
Right NASDAQ has extended our time window past the original time period by an additional 90 days. They have a large number of NASDAQ listed companies that due to the COVID-19 crisis would be delisted off the NASDAQ.
So they have extended it voluntarily. We didn't apply for that or anything.
They just gave it - they gave us the extension. So we're talking about approximately late August there.
And we can apply for an extension after that. So we're not currently concerned about the dollar price.
We think just our performance will solve that pricing issue.
Unidentified Analyst
Okay. And about the buyback.
Do you want to comment anything relating to this $50?
Eric McAfee
I'm sorry, say that again.
Unidentified Analyst
The buyback. Do you think because in last month like last year, as compared to [indiscernible] plant started share buyback program?
According to me, it's also a good option for maybe. So I wanted to know is there anything that maybe [indiscernible]?
Eric McAfee
A buyback of shares is absolutely in the shareholders' best interest at such a low stock price. We think the market largely doesn't understand what's happened in the fuel ethanol business.
And then, of course in the case of medicine doesn't fully comprehend the positive impacts of number of things we're doing. But I think they will come to understand it as they see the combination of increased cash flow from operations and the refinancing of debt.
So our expectation is that at appropriate time that a stock buyback would absolutely be in the best interests of shareholders. And we are considering that as our, our board of directors looks at shareholder value increases that we could achieve.
Certainly a shareholder buyback will be something that would cause a tremendous amount of shareholder value to be created. We're buying their shares at extremely low value - low prices.
Unidentified Analyst
Okay, thanks a lot.
Eric McAfee
Sure. Thank you, Massimo.
Good luck with what you're doing in Italy.
Unidentified Analyst
Thanks.
Operator
There are no further questions at this time, I'd like to turn the floor back over to management for closing comments.
Eric McAfee
Thank you, Melinda. I appreciate it very much.
Thanks to Aemetis shareholders, analysts and others for joining us today. We look forward to talking with you to continue our dialogue about the growth opportunities at Aemetis.
Todd Waltz
Thank you for attending today's Aemetis earnings conference call. Please visit our Investors section of the Aemetis website where we will post a written version and an audio version this Aemetis earnings review and business update.
Melinda?
Operator
This concludes our teleconference. You may disconnect your lines at this time.
Thank you for your participation.