ITEM 1. FINANCIAL STATEMENTS
AMYRIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In thousands, except shares and per share amounts) | September 30, 2018 | December 31, 2017 |
| Assets |
| Current assets: |
| Cash and cash equivalents | $ | 19,045 | $ | 57,059 |
| Restricted cash | 1,258 | 2,994 |
| Accounts receivable, net of allowance of $642 as of September 30, 2018 and December 31, 2017 | 35,564 | 24,281 |
| Unbilled receivable | 56 | 9,340 |
| Inventories | 6,260 | 5,408 |
| Prepaid expenses and other current assets | 5,541 | 5,525 |
| Total current assets | 67,724 | 104,607 |
| Property, plant and equipment, net | 16,622 | 13,892 |
| Unbilled receivable, noncurrent | 9,767 | 7,940 |
| Restricted cash, noncurrent | 959 | 959 |
| Recoverable taxes from Brazilian government entities | 1,053 | 1,445 |
| Other assets | 26,557 | 22,640 |
| Total assets | $ | 122,682 | $ | 151,483 |
| Liabilities, Mezzanine Equity and Stockholders' Deficit |
| Current liabilities: |
| Accounts payable | $ | 11,380 | $ | 15,921 |
| Accrued and other current liabilities | 27,263 | 29,402 |
| Deferred revenue | 6,698 | 4,880 |
| Debt, current portion | 61,904 | 36,924 |
| Related party debt, current portion | 47,020 | 20,019 |
| Total current liabilities | 154,265 | 107,146 |
| Long-term debt, net of current portion | 43,667 | 61,893 |
| Related party debt, net of current portion | 18,526 | 46,541 |
| Derivative liabilities | 98,662 | 119,978 |
| Other noncurrent liabilities | 8,152 | 10,632 |
| Total liabilities | 323,272 | 346,190 |
| Commitments and contingencies (Note 9) |
| Mezzanine equity: |
| Contingently redeemable common stock (Note 5) | 5,000 | 5,000 |
| Stockholders’ deficit: |
| Preferred stock - $0.0001 par value, 5,000,000 shares authorized as of September 30, 2018 and December 31, 2017, and 14,656 and 22,171 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | — | — |
| Common stock - $0.0001 par value, 250,000,000 shares authorized as of September 30, 2018 and December 31, 2017; 64,090,445 and 45,637,433 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 6 | 5 |
| Additional paid-in capital | 1,202,850 | 1,048,274 |
| Accumulated other comprehensive loss | (42,148 | ) | (42,156 | ) |
| Accumulated deficit | (1,367,235 | ) | (1,206,767 | ) |
| Total Amyris, Inc. stockholders’ deficit | (206,527 | ) | (200,644 | ) |
| Noncontrolling interest | 937 | 937 |
| Total stockholders' deficit | (205,590 | ) | (199,707 | ) |
| Total liabilities, mezzanine equity and stockholders' deficit | $ | 122,682 | $ | 151,483 |

See the accompanying notes to the unaudited condensed consolidated financial statements.
| 3 |

AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands, except shares and per share amounts) | 2018 | 2017 | 2018 | 2017 |
| Revenue: |
| Renewable products (includes related party revenue of $854, $787, $2,092 and $1,512, respectively) | $ | 9,639 | $ | 10,996 | $ | 21,467 | $ | 28,925 |
| Licenses and royalties (includes related party revenue of $(39), $703, $18,248 and $703, respectively) | 142 | 1,022 | 18,466 | 6,774 |
| Grants and collaborations (includes related party revenue of $1,748, $634, $5,611 and $783, respectively) | 5,085 | 12,179 | 21,125 | 27,158 |
| Total revenue (includes related party revenue of $2,563, $2,124, $25,951 and $2,998, respectively) | 14,866 | 24,197 | 61,058 | 62,857 |
| Cost and operating expenses: |
| Cost of products sold | 8,574 | 17,637 | 19,873 | 47,684 |
| Research and development | 16,445 | 15,185 | 50,545 | 44,141 |
| Sales, general and administrative | 21,026 | 15,454 | 59,972 | 44,253 |
| Total cost and operating expenses | 46,045 | 48,276 | 130,390 | 136,078 |
| Loss from operations | (31,179 | ) | (24,079 | ) | (69,332 | ) | (73,221 | ) |
| Other income (expense): |
| Interest expense | (8,658 | ) | (7,733 | ) | (25,687 | ) | (29,219 | ) |
| Gain (loss) from change in fair value of derivative instruments | (25,048 | ) | (18,728 | ) | (64,596 | ) | 9,933 |
| Gain (loss) upon extinguishment of derivative liability | (1,782 | ) | 16,036 | 75 | 25,489 |
| Gain (loss) upon extinguishment of debt | — | 461 | (26 | ) | (3,067 | ) |
| Other income (expense), net | (1,654 | ) | (136 | ) | 1,282 | (576 | ) |
| Total other income (expense), net | (37,142 | ) | (10,100 | ) | (88,952 | ) | 2,560 |
| Loss before income taxes | (68,321 | ) | (34,179 | ) | (158,284 | ) | (70,661 | ) |
| (Provision for) benefit from income taxes | — | 318 | — | 49 |
| Net loss attributable to Amyris, Inc. | (68,321 | ) | (33,861 | ) | (158,284 | ) | (70,612 | ) |
| Less deemed dividend on capital distribution to related parties | — | — | — | (8,648 | ) |
| Less deemed dividend related to beneficial conversion feature on Series A preferred stock | — | — | — | (562 | ) |
| Less deemed dividend related to beneficial conversion feature on Series B preferred stock | — | (634 | ) | — | (634 | ) |
| Less deemed dividend related to beneficial conversion feature on Series D preferred stock | — | (5,757 | ) | — | (5,757 | ) |
| Less cumulative dividends on Series A and B preferred stock | (279 | ) | (2,567 | ) | (1,073 | ) | (4,242 | ) |
| Net loss attributable to Amyris, Inc. common stockholders | $ | (68,600 | ) | $ | (42,819 | ) | $ | (159,357 | ) | $ | (90,455 | ) |
| Loss per share attributable to common stockholders, basic and diluted | $ | (1.13 | ) | $ | (1.14 | ) | $ | (2.86 | ) | $ | (3.32 | ) |
| Weighted-average shares of common stock outstanding used in computing loss per share of common stock, basic and diluted | 60,966,071 | 37,529,694 | 55,735,571 | 27,280,894 |

See the accompanying notes to the unaudited condensed consolidated financial statements.
| 4 |

AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands, except shares and per share amounts) | 2018 | 2017 | 2018 | 2017 |
| Comprehensive loss: |
| Net loss attributable to Amyris, Inc. | $ | (68,321 | ) | $ | (33,861 | ) | $ | (158,284 | ) | $ | (70,612 | ) |
| Foreign currency translation adjustment, net of tax | 670 | 1,402 | 8 | 303 |
| Total comprehensive loss attributable to Amyris, Inc. | $ | (67,651 | ) | $ | (32,459 | ) | $ | (158,276 | ) | $ | (70,309 | ) |

See the accompanying notes to the unaudited condensed consolidated financial statements.
| 5 |

AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Cash flows from operating activities |
| Net loss | $ | (158,284 | ) | $ | (70,612 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
| Loss (gain) from change in fair value of derivative instruments | 64,596 | (9,565 | ) |
| Amortization of debt discount | 10,568 | 10,108 |
| Stock-based compensation | 6,115 | 3,942 |
| Depreciation and amortization | 3,957 | 8,124 |
| Loss on disposal and impairment of property, plant and equipment | 943 | 37 |
| Loss (gain) on foreign currency exchange rates | 34 | (205 | ) |
| Loss upon extinguishment of debt | 26 | 3,067 |
| Receipt of equity in connection with collaboration arrangements revenue | — | (2,660 | ) |
| Gain upon extinguishment of derivative liability | (75 | ) | (25,489 | ) |
| Gain on change in fair value of equity investment | (3,460 | ) | — |
| Changes in assets and liabilities: |
| Accounts receivable | (10,756 | ) | (10,947 | ) |
| Unbilled receivables | 7,457 | — |
| Inventories | (890 | ) | (126 | ) |
| Prepaid expenses and other assets | (1,781 | ) | (12,962 | ) |
| Accounts payable | (5,201 | ) | 3,119 |
| Accrued and other liabilities | (2,216 | ) | 404 |
| Deferred revenue | 1,014 | 1,113 |
| Net cash used in operating activities | (87,953 | ) | (102,652 | ) |
| Cash flows from investing activities |
| Sales of short-term investments, net | — | 2,999 |
| Purchases of property, plant and equipment | (6,362 | ) | (487 | ) |
| Net cash (used in) provided by investing activities | (6,362 | ) | 2,512 |
| Cash flows from financing activities |
| Proceeds from exercises of warrants, net | 60,544 | — |
| Proceeds from issuance of debt, net of issuance costs | 35,149 | 13,965 |
| Proceeds from issuance of common stock in private placement | 1,416 | — |
| Proceeds from exercises of ESPP purchases | 270 | — |
| Proceeds from exercises of common stock options | 301 | 147 |
| Proceeds from issuance of convertible preferred stock | — | 101,427 |
| Payment of minimum employee taxes withheld upon net share settlement of restricted stock units | (196 | ) | (87 | ) |
| Principal payments on capital leases | (848 | ) | — |
| Principal payments on debt | (41,970 | ) | (26,708 | ) |
| Net cash provided by financing activities | 54,666 | 88,744 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (101 | ) | (136 | ) |
| Net decrease in cash, cash equivalents and restricted cash | (39,750 | ) | (11,532 | ) |
| Cash, cash equivalents and restricted cash at beginning of period | 61,012 | 32,433 |
| Cash, cash equivalents and restricted cash at end of the period | $ | 21,262 | $ | 20,901 |
| Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets |
| Cash and cash equivalents | $ | 19,045 | $ | 15,865 |
| Restricted cash, current | 1,258 | 4,078 |
| Restricted cash, noncurrent | 959 | 958 |
| Total cash, cash equivalents and restricted cash | $ | 21,262 | $ | 20,901 |

See the accompanying notes to the unaudited condensed consolidated financial statements.
| 6 |

AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(Unaudited)
| Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Supplemental disclosures of cash flow information: |
| Cash paid for interest | $ | 14,783 | $ | 6,805 |
| Supplemental disclosures of non-cash investing and financing activities: |
| Derecognition of derivative liabilities upon exercise of warrants | $ | 57,637 | $ | — |
| Accrued interest added to debt principal | $ | 2,029 | $ | 1,745 |
| Acquisition of property, plant and equipment under accounts payable, accrued liabilities and notes payable | $ | 783 | $ | 1,045 |
| Financing of equipment | $ | 764 | $ | 953 |
| Issuance of convertible preferred stock upon conversion of debt | $ | — | $ | 40,204 |
| Issuance of common stock upon conversion of debt | $ | — | $ | 28,702 |
| Issuance of common stock for settlement of debt principal and interest payments | $ | — | $ | 14,144 |
| Financing of insurance premium under notes payable | $ | — | $ | 191 |

See the accompanying notes to the unaudited condensed consolidated financial statements.
| 7 |

AMYRIS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| 8 |
| 9 |
| 10 |
| 11 |
| Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 |
| (In thousands) | As Reported | Adjustments | Amounts Without the Adoption of ASC 606 | As Reported | Adjustments | Amounts Without the Adoption of ASC 606 |
| Renewable products | $ | 9,639 | $ | — | $ | 9,639 | $ | 21,467 | $ | — | $ | 21,467 |
| Licenses and royalties | 142 | 1,656 | 1,798 | 18,466 | (14,091 | ) | 4,375 |
| Grants and collaborations | 5,085 | (1,555 | ) | 3,530 | 21,125 | (3,820 | ) | 17,305 |
| Total revenue from all customers | $ | 14,866 | $ | 101 | $ | 14,967 | $ | 61,058 | $ | (17,911 | ) | $ | 43,147 |
| 12 |
| 13 |
| • | The condensed consolidated statements of operations previously presented license fee revenue in combination with grants and collaborations revenue, and royalties (formerly referred to as “value share”) were previously presented in combination with renewable products revenue. Licenses and royalties revenue is presented as a separate line within the condensed consolidated statements of operations. The reclassifications reflect the growth in the Company’s business model of licensing its technology and earning royalties from customers utilizing the Company’s technology in the products it produces and sells. The reclassifications had no impact on total revenue. |
| • | The condensed consolidated statements of operations and condensed consolidated statements of cash flows previously presented gains or losses upon extinguishment of derivative liabilities in combination with gains or losses from change in fair value of derivative instruments. In 2018, the Company has begun separately identifying gains or losses upon extinguishment of derivative liabilities in the condensed consolidated statements of operations and condensed consolidated statements of cash flows, resulting in the need to present prior year amounts on the same basis. The reclassification had no impact on net loss. |
| • | In the statements of cash flows, the prior period has been restated to reflect accounting standards changes for reporting restricted cash. |

| (In thousands) | September 30, 2018 | December 31, 2017 |
| Raw materials | $ | 1,129 | $ | 819 |
| Work-in-process | 929 | 364 |
| Finished goods | 4,202 | 4,225 |
| Inventories | $ | 6,260 | $ | 5,408 |
| (In thousands) | September 30, 2018 | December 31, 2017 |
| Machinery and equipment | $ | 46,725 | $ | 49,277 |
| Leasehold improvements | 40,703 | 40,036 |
| Computers and software | 10,666 | 9,555 |
| Furniture and office equipment, vehicles and land | 3,705 | 3,415 |
| Construction in progress | 19,343 | 17,438 |
| 121,142 | 119,721 |
| Less: accumulated depreciation and amortization | (104,520 | ) | (105,829 | ) |
| Property, plant and equipment, net | $ | 16,622 | $ | 13,892 |
| 14 |
| (In thousands) | September 30, 2018 | December 31, 2017 |
| Contingent consideration | $ | 7,805 | $ | 8,151 |
| Prepaid royalty | 6,847 | 7,409 |
| Equity investment in SweeGen | 5,313 | 3,233 |
| Deposits | 4,171 | 2,462 |
| Goodwill | 560 | 560 |
| Other | 1,861 | 825 |
| Other assets | $ | 26,557 | $ | 22,640 |
| (In thousands) | September 30, 2018 | December 31, 2017 |
| Payroll and related expenses | $ | 9,774 | $ | 7,238 |
| Accrued interest | 6,010 | 8,213 |
| SMA relocation accrual | 2,964 | 3,587 |
| Tax-related liabilities | 2,154 | 5,837 |
| Professional services | 1,402 | 1,894 |
| Contract termination | 1,000 | — |
| Other | 3,959 | 2,633 |
| Total accrued and other current liabilities | $ | 27,263 | $ | 29,402 |

| 15 |

| (In thousands) | September 30, 2018 | December 31, 2017 |
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets |
| Money market funds | $ | — | $ | — | $ | — | $ | — | $ | 53,199 | $ | — | $ | — | $ | 53,199 |
| Certificates of deposit | — | — | — | — | 7,813 | — | — | 7,813 |
| Equity investment in SweeGen | — | 5,313 | — | 5,313 | — | — | — | — |
| Total assets measured and recorded at fair value | $ | — | $ | 5,313 | $ | — | $ | 5,313 | $ | 61,012 | $ | — | $ | — | $ | 61,012 |
| Liabilities |
| Embedded derivatives in connection with the issuance of debt and equity instruments | $ | — | $ | — | $ | 9,379 | $ | 9,379 | $ | — | $ | — | $ | 4,203 | $ | 4,203 |
| Freestanding derivative instruments in connection with the issuance of equity instruments | — | — | 89,283 | 89,283 | — | — | 115,775 | 115,775 |
| Total liabilities measured and recorded at fair value | $ | — | $ | — | $ | 98,662 | $ | 98,662 | $ | — | $ | — | $ | 119,978 | $ | 119,978 |
| (In thousands) | Equity-related Derivative Liability | Debt-related Derivative Liability | Total Derivative Liability |
| Balance at December 31, 2017 | $ | 112,368 | $ | 7,610 | $ | 119,978 |
| Change in fair value of derivative liabilities | 49,442 | 15,154 | 64,596 |
| Derecognition upon extinguishment of derivative liabilities | (85,912 | ) | — | (85,912 | ) |
| Balance at September 30, 2018 | $ | 75,898 | $ | 22,764 | $ | 98,662 |
| 16 |
| September 30, 2018 | December 31, 2017 |
| Risk-free interest rate | 2.12% | - | 3.01% | 1.68% | - | 2.40% |
| Risk-adjusted yields | 13.90% | - | 24.03% | 18.40% | - | 28.53% |
| Stock price volatility | 45% | - | 80% | 45% | - | 80% |
| Probability of change in control | 0% | - | 5% | 5% |
| Stock price | $7.94 | $3.75 |
| Credit spread | 11.69% | - | 21.65% | 16.63% | - | 26.70% |
| Estimated conversion dates | 2018 | - | 2025 | 2018 | - | 2025 |
| (In thousands) | September 30, 2018 | December 31, 2017 |
| Fair Value | Carrying Value | Fair Value | Carrying Value |
| Total debt | $ | 166,218 | $ | 171,117 | $ | 156,900 | $ | 165,377 |

| 17 |

| September 30, 2018 | December 31, 2017 |
| (In thousands) | Principal | Unamortized Debt Discount | Net Balance | Principal | Unamortized Debt Discount | Net Balance |
| Nonrelated Party |
| Convertible notes |
| 2015 Rule 144A convertible notes | $ | 37,887 | $ | (3,268 | ) | $ | 34,619 | $ | 37,887 | $ | (6,872 | ) | $ | 31,015 |
| 2014 Rule 144A convertible notes | 24,004 | (1,445 | ) | 22,559 | 24,004 | (3,170 | ) | 20,834 |
| December 2017 convertible note | — | — | — | 5,000 | (25 | ) | 4,975 |
| August 2013 financing convertible notes | 4,416 | (1,709 | ) | 2,707 | 4,009 | (2,918 | ) | 1,091 |
| 66,307 | (6,422 | ) | 59,885 | 70,900 | (12,985 | ) | 57,915 |
| Loans payable and credit facilities |
| GACP term loan facility | 36,000 | (1,489 | ) | 34,511 | — | — | — |
| Senior secured loan facility | — | — | — | 28,566 | (253 | ) | 28,313 |
| Ginkgo notes | 12,000 | (4,390 | ) | 7,610 | 12,000 | (4,983 | ) | 7,017 |
| Other loans payable | 4,643 | (1,203 | ) | 3,440 | 6,463 | (1,277 | ) | 5,186 |
| Other credit facilities | 126 | — | 126 | 381 | — | 381 |
| 52,769 | (7,082 | ) | 45,687 | 47,410 | (6,513 | ) | 40,897 |
| Subtotal nonrelated party | 119,076 | (13,504 | ) | 105,572 | 118,310 | (19,498 | ) | 98,812 |
| Related Party |
| Related party convertible notes |
| August 2013 financing convertible notes | 23,334 | 205 | 23,539 | 21,711 | 897 | 22,608 |
| 2014 Rule 144A convertible notes | 24,705 | (1,731 | ) | 22,974 | 24,705 | (3,784 | ) | 20,921 |
| R&D note | — | — | — | 3,700 | (18 | ) | 3,682 |
| 48,039 | (1,526 | ) | 46,513 | 50,116 | (2,905 | ) | 47,211 |
| Related party loans payable |
| DSM note | 25,000 | (6,474 | ) | 18,526 | 25,000 | (8,039 | ) | 16,961 |
| Other DSM loan | 506 | — | 506 | 393 | — | 393 |
| February 2016 private placement | — | — | — | 2,000 | — | 2,000 |
| 25,506 | (6,474 | ) | 19,032 | 27,393 | (8,039 | ) | 19,354 |
| Subtotal related party | 73,545 | (8,000 | ) | 65,545 | 77,509 | (10,944 | ) | 66,565 |
| Total debt | 192,621 | (21,504 | ) | 171,117 | 195,819 | (30,442 | ) | 165,377 |
| Less: current portion | (108,924 | ) | (56,943 | ) |
| Long-term debt, net of current portion | $ | 62,193 | $ | 108,434 |
| • | Senior Secured Loan Facility Repayment: On June 29, 2018, the Company repaid in full the $27.3 million outstanding principal balance owed under the Senior Secured Loan Facility between the Company and Stegodon Corporation (Stegodon). |
| • | GACP Term Loan Facility: On June 29, 2018, the Company, certain of the Company’s subsidiaries and GACP Finance Co., LLC (GACP) entered into a Loan and Security Agreement (the LSA) to borrow $36.0 million (the GACP Term Loan Facility). The LSA also provides for an incremental secured term loan facility in an aggregate principal amount of up to $35.0 million (the Incremental GACP Term Loan Facility and, together with the GACP Term Loan Facility, the GACP Term Loan Facilities), subject to certain conditions and approvals, to fund the construction of a custom-built manufacturing facility in Brazil. The majority of the net proceeds from the GACP Term Loan Facility were used to repay all amounts outstanding under the Senior Secured Loan Facility between the Company and Stegodon (see Note 4, “Debt” in Part II, Item 8 of the Annual Report on Form 10-K). The remaining net proceeds were used on July 2, 2018 to repay amounts outstanding under the R&D Note (see Note 4, “Debt” in Part II, Item 8 of the Annual Report on Form 10-K) at maturity. |
| 18 |
| • | August 2013 Financing Convertible Notes: In August 2018, in connection with certain amendments to the August 2017 Vivo Cash Warrants (see Note 6, “Stockholders' Deficit”), the conversion price of the August 2013 financing convertible notes was reduced from $5.2977 per share to $4.40 per share. |
| Years ending December 31 (In thousands) | Convertible Notes | Loans Payable and Credit Facilities | Related Party Convertible Notes | Related Party Loans Payable and Credit Facilities | Total |
| 2018 (remaining three months) | $ | 2,580 | $ | 1,508 | $ | 803 | $ | 1,132 | $ | 6,023 |
| 2019 | 69,333 | 9,068 | 25,508 | 2,500 | 106,409 |
| 2020 | — | 8,915 | — | 2,500 | 11,415 |
| 2021 | — | 34,178 | — | 27,521 | 61,699 |
| 2022 | — | 13,416 | — | — | 13,416 |
| Thereafter | — | 2,565 | — | — | 2,565 |
| Total future minimum payments | 71,913 | 69,650 | 26,311 | 33,653 | 201,527 |
| Less: amount representing interest | (5,159 | ) | (16,881 | ) | (1,606 | ) | (8,146 | ) | (31,792 | ) |
| Add: amount mandatorily convertible into common stock upon maturity | — | — | 24,970 | — | 24,970 |
| Less: future conversion of accrued interest to principal | (447 | ) | — | (1,636 | ) | — | (2,083 | ) |
| Present value of minimum debt payments | 66,307 | 52,769 | 48,039 | 25,507 | 192,622 |
| Less: current portion of debt principal | (66,307 | ) | (2,739 | ) | (48,039 | ) | (507 | ) | (117,592 | ) |
| Noncurrent portion of debt principal | $ | — | $ | 50,030 | $ | — | $ | 25,000 | $ | 75,030 |

| (In thousands) | September 30, 2018 | December 31, 2017 |
| Contingently redeemable common stock | $ | 5,000 | $ | 5,000 |
| 19 |

| Transaction | Number Outstanding as of December 31, 2017 | Additional Warrants Issued | Exercises | Number Outstanding as of September 30, 2018 |
| July 2015 private placement | 81,197 | — | — | 81,197 |
| July 2015 related party debt exchange | 2,082,010 | 471,204 | — | 2,553,214 |
| February 2016 related party private placement | 171,429 | — | — | 171,429 |
| May 2017 cash and dilution warrants | 18,042,568 | — | (10,784,933 | ) | 7,257,635 |
| August 2017 cash and dilution warrants | 9,543,234 | — | (5,575,118 | ) | 3,968,116 |
| April 2018 warrant exercise agreements | — | 3,616,174 | — | 3,616,174 |
| August 2018 warrant exercise agreements | — | 12,097,164 | — | 12,097,164 |
| Other | 1,406 | — | — | 1,406 |
| 29,921,844 | 16,184,542 | (16,360,051 | ) | 29,746,335 |
| 20 |

| (In thousands) | September 30, 2018 | December 31, 2017 |
| Assets | $ | 38,422 | $ | 36,781 |
| Liabilities | $ | 1,960 | $ | 3,187 |
| 21 |
| Carrying Value of Investment on Condensed Consolidated Balance Sheets |
| (Amounts in thousands) | Amyris Equity Ownership % | September 30, 2018 | December 31, 2017 |
| Equity-method investments: |
| Novvi LLC | 20 | % | $ | — | $ | — |
| Total Amyris BioSolutions B.V. | 25 | % | $ | — | $ | — |
| Other unconsolidated equity investment: |
| SweeGen, Inc. | 3 | % | $ | 5,313 | $ | 3,233 |

| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands, except shares and per share amounts) | 2018 | 2017 | 2018 | 2017 |
| Numerator: |
| Net loss attributable to Amyris, Inc. | $ | (68,321 | ) | $ | (33,861 | ) | $ | (158,284 | ) | $ | (70,612 | ) |
| Less deemed dividend on capital distribution to related parties | — | — | — | (8,648 | ) |
| Less deemed dividend related to beneficial conversion feature on Series A preferred stock | — | — | — | (562 | ) |
| Less deemed dividend related to beneficial conversion feature on Series B preferred stock | — | (634 | ) | — | (634 | ) |
| Less deemed dividend related to beneficial conversion feature on Series D preferred stock | — | (5,757 | ) | — | (5,757 | ) |
| Less cumulative dividends on Series A and B preferred stock | (279 | ) | (2,567 | ) | (1,073 | ) | (4,242 | ) |
| Net loss attributable to Amyris, Inc. common stockholders, basic and diluted | $ | (68,600 | ) | $ | (42,819 | ) | $ | (159,357 | ) | $ | (90,455 | ) |
| Denominator: |
| Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted | 60,966,071 | 37,529,694 | 55,735,571 | 27,280,894 |
| Basic and diluted loss per share | $ | (1.13 | ) | $ | (1.14 | ) | $ | (2.86 | ) | $ | (3.32 | ) |
| 22 |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| 2018 | 2017 | 2018 | 2017 |
| Period-end stock options to purchase common stock | 5,449,701 | 949,023 | 5,449,701 | 949,023 |
| Convertible promissory notes (1) | 9,397,134 | 8,133,594 | 9,397,134 | 8,133,594 |
| Period-end common stock warrants | 25,986,432 | 31,303,080 | 25,986,432 | 31,303,080 |
| Period-end restricted stock units | 5,324,092 | 599,425 | 5,324,092 | 599,425 |
| Period-end preferred stock | 2,955,732 | — | 2,955,732 | — |
| Total potentially dilutive securities excluded from computation of diluted loss per share | 49,113,091 | 40,985,122 | 49,113,091 | 40,985,122 |
| (1) | The potentially dilutive effect of convertible promissory notes was computed based on conversion ratios in effect as of the respective period end dates. A portion of the convertible promissory notes issued carries a provision for a reduction in conversion price under certain circumstances, which could potentially increase the dilutive shares outstanding. Another portion of the convertible promissory notes issued carries a provision for an increase in the conversion rate under certain circumstances, which could also potentially increase the dilutive shares outstanding. |

| Years ending December 31: (In thousands) | Capital Leases | Operating Leases | Total Lease Obligations |
| 2018 (remaining three months) | $ | 143 | $ | 2,776 | $ | 2,919 |
| 2019 | 513 | 9,966 | 10,479 |
| 2020 | 199 | 7,675 | 7,874 |
| 2021 | 3 | 7,237 | 7,240 |
| 2022 | — | 7,410 | 7,410 |
| Thereafter | — | 3,270 | 3,270 |
| Total future minimum payments | $ | 858 | $ | 38,334 | $ | 39,192 |
| Less: amount representing interest | (46 | ) |
| Present value of minimum lease payments | 812 |
| Less: current portion | (503 | ) |
| Long-term portion | $ | 309 |
| 23 |

| Three Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total |
| United States | $ | 4,884 | $ | — | $ | 626 | $ | 5,510 | $ | 5,873 | $ | — | $ | 6,141 | $ | 12,014 |
| Europe | 1,175 | 142 | 3,908 | 5,225 | 2,314 | 1,022 | 3,935 | 7,271 |
| Asia | 3,544 | — | — | 3,544 | 2,773 | — | 125 | 2,898 |
| South America | 36 | — | 551 | 587 | 36 | — | 1,978 | 2,014 |
| Other | — | — | — | — | — | — | — | — |
| $ | 9,639 | $ | 142 | $ | 5,085 | $ | 14,866 | $ | 10,996 | $ | 1,022 | $ | 12,179 | $ | 24,197 |
| Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total |
| United States | $ | 9,185 | $ | — | $ | 6,457 | $ | 15,642 | $ | 8,871 | $ | 2,673 | $ | 15,510 | $ | 27,054 |
| Europe | 6,596 | 18,466 | 11,723 | 36,785 | 5,621 | 1,468 | 9,295 | 16,384 |
| Asia | 5,335 | — | 1,000 | 6,335 | 14,242 | 2,633 | 375 | 17,250 |
| South America | 251 | — | 1,945 | 2,196 | 180 | — | 1,978 | 2,158 |
| Other | 100 | — | — | 100 | 11 | — | — | 11 |
| $ | 21,467 | $ | 18,466 | $ | 21,125 | $ | 61,058 | $ | 28,925 | $ | 6,774 | $ | 27,158 | $ | 62,857 |
| 24 |
| Three Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total |
| DSM - related party | $ | 17 | $ | (39 | ) | $ | 1,748 | $ | 1,726 | $ | — | $ | 703 | $ | 634 | $ | 1,337 |
| Givaudan | 525 | — | 1,500 | 2,025 | 1,331 | — | 1,500 | 2,831 |
| Firmenich | 904 | 181 | 1,212 | 2,297 | 4,525 | 319 | 1,351 | 6,195 |
| Nenter | — | — | — | — | 1,678 | — | — | 1,678 |
| DARPA | — | — | 241 | 241 | — | — | 1,252 | 1,252 |
| Subtotal revenue from significant revenue agreements | 1,446 | 142 | 4,701 | 6,289 | 7,534 | 1,022 | 4,737 | 13,293 |
| Revenue from all other customers | 8,193 | — | 384 | 8,577 | 3,462 | — | 7,442 | 10,904 |
| Total revenue from all customers | $ | 9,639 | $ | 142 | $ | 5,085 | $ | 14,866 | $ | 10,996 | $ | 1,022 | $ | 12,179 | $ | 24,197 |
| Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total |
| DSM - related party | $ | 17 | $ | 18,248 | $ | 5,611 | $ | 23,876 | $ | 10 | $ | 703 | $ | 783 | $ | 1,496 |
| Givaudan | 3,710 | — | 4,358 | 8,068 | 1,950 | — | 4,500 | 6,450 |
| Firmenich | 1,110 | 218 | 3,698 | 5,026 | 6,178 | 765 | 4,562 | 11,505 |
| Nenter | — | — | 1,000 | 1,000 | 8,003 | 2,633 | — | 10,636 |
| DARPA | — | — | 5,278 | 5,278 | — | — | 6,894 | 6,894 |
| Subtotal revenue from significant revenue agreements | 4,837 | 18,466 | 19,945 | 43,248 | 16,141 | 4,101 | 16,739 | 36,981 |
| Revenue from all other customers | 16,630 | — | 1,180 | 17,810 | 12,784 | 2,673 | 10,419 | 25,876 |
| Total revenue from all customers | $ | 21,467 | $ | 18,466 | $ | 21,125 | $ | 61,058 | $ | 28,925 | $ | 6,774 | $ | 27,158 | $ | 62,857 |
| (In thousands) | September 30, 2018 | December 31, 2017 |
| Unbilled receivable, current | $ | 56 | $ | 9,340 |
| Unbilled receivable, noncurrent | $ | 9,767 | $ | 7,940 |
| Deferred revenue, current | $ | 6,698 | $ | 4,880 |
| Deferred revenue, noncurrent | $ | 383 | (1) | $ | 383 | (1) |
| Accounts receivable, net | $ | 35,564 | $ | 24,281 |
| 25 |
| (In thousands) | As of September 30, 2018 |
| Remaining 2018 | $ | 3,592 |
| 2019 | 9,742 |
| 2020 | 7,742 |
| 2021 and thereafter | 672 |
| Total from all customers | $ | 21,748 |

| (In thousands) | September 30, 2018 | December 31, 2017 |
| Accounts receivable, net: |
| DSM | $ | 20,419 | $ | 3,483 |
| Novvi | 24 | 1,607 |
| Total | 120 | 238 |
| $ | 20,563 | $ | 5,328 |
| Unbilled receivable, current: |
| DSM | $ | 56 | $ | 9,340 |
| Unbilled receivable, noncurrent: |
| DSM | $ | 9,767 | $ | 7,940 |
| 26 |
| • | Aprinnova joint venture with Nikko, and |
| • | TAB joint venture with Total |

| Quantity of Stock Options | Weighted- average Exercise Price | Weighted- average Remaining Contractual Life, in Years | Aggregate Intrinsic Value, in Thousands |
| Outstanding - December 31, 2017 | 1,338,367 | $ | 33.40 | 7.7 | $ | 97 |
| Granted | 4,296,337 | $ | 5.18 |
| Exercised | (61,750 | ) | $ | 3.68 |
| Forfeited or expired | (123,253 | ) | $ | 28.18 |
| Outstanding - September 30, 2018 | 5,449,701 | $ | 11.60 | 9.0 | $ | 13,721 |
| Vested or expected to vest after September 30, 2018 | 5,031,524 | $ | 12.14 | 8.9 | $ | 12,552 |
| Exercisable at September 30, 2018 | 942,636 | $ | 41.25 | 6.7 | $ | 1,536 |
| Quantity of Restricted Stock Units | Weighted- average Grant- date Fair Value | Weighted- average Remaining Contractual Life, in Years |
| Outstanding - December 31, 2017 | 683,554 | $ | 8.62 | 1.4 |
| Awarded | 4,993,022 | $ | 5.38 |
| RSUs released | (226,129 | ) | $ | 10.38 |
| RSUs forfeited | (126,355 | ) | $ | 6.16 |
| Outstanding - September 30, 2018 | 5,324,092 | $ | 5.57 | 1.8 |
| Vested or expected to vest after September 30, 2018 | 5,065,108 | $ | 5.57 | 1.8 |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 | 2018 | 2017 |
| Research and development | $ | 495 | $ | 395 | $ | 1,191 | $ | 1,320 |
| Sales, general and administrative | 2,442 | 863 | 4,924 | 2,622 |
| Total stock-based compensation expense | $ | 2,937 | $ | 1,258 | $ | 6,115 | $ | 3,942 |
| 27 |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| 2018 | 2017 | 2018 | 2017 |
| Expected dividend yield | — | % | — | % | — | % | — | % |
| Risk-free interest rate | 2.8 | % | 2.0 | % | 2.7 | % | 2.0 | % |
| Expected term (in years) | 6.87 | 6.20 | 6.85 | 6.10 |
| Expected volatility | 79.1 | % | 92.2 | % | 79.6 | % | 81.6 | % |
| Stock Option Award with Performance and Market Vesting Conditions: |
| Fair value of the Company’s common stock on grant date | $ | 5.08 |
| Expected volatility | 70 | % |
| Risk-free interest rate | 2.75 | % |
| Dividend yield | 0.0 | % |

| 28 |

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. These discussions contain forward-looking statements reflecting our current expectations that involve risks and uncertainties which are subject to safe harbors under the Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934 (the Exchange Act). These forward-looking statements include, but are not limited to, statements concerning our strategy of achieving a significant reduction in net cash outflows in 2018 and 2019, aspects of our future operations, our future financial position, including the expected extension of debt maturities and obtaining project financing for a new manufacturing facility, expectations for our future revenues, margins and projected costs, expectations regarding demand and acceptance for our technologies, introductions of new products, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.
Overview and Recent Developments
Amyris, Inc. (the Company, Amyris, we, us or our) is a leading industrial biotechnology company that applies its technology platform to engineer, manufacture and sell high performance, natural, sustainably sourced products into the Health & Wellness, Clean Beauty, and Flavor & Fragrance markets. Our proven technology platform enables us to rapidly engineer microbes and use them as catalysts to metabolize renewable, plant-sourced sugars into large volume, high-value ingredients. Our biotechnology platform and industrial fermentation process replace existing complex and expensive manufacturing processes. We have successfully used our technology to develop and produce eight distinct molecules at commercial volumes.
We believe that industrial biotechnology represents a third industrial revolution, bringing together biology and engineering to generate new, more sustainable materials to meet the growing global demand for bio-based replacements for petroleum-based and traditional animal- or plant-derived ingredients. We continue to build demand for our current portfolio of products through an extensive sales network provided by our collaboration partners that represent the leading companies in the world for our target market sectors. We also have a small group of direct sales and distributors who support our Clean Beauty market. Via our partnership model, our partners invest in the development of each molecule to bring it from the lab to commercial scale and use their extensive sales force to sell our ingredients and formulations to their customers as part of their core business. We capture long-term revenue both through the production and sale of the molecule to our partners and through royalty revenues (previously referred to as value share) from our partners' product sales to their customers.
We were founded in 2003 in the San Francisco Bay area by a group of scientists from the University of California, Berkeley. Our first major milestone came in 2005 when, through a grant from the Bill & Melinda Gates Foundation, we developed technology capable of creating microbial strains that produce artemisinic acid, which is a precursor of artemisinin, an effective anti-malarial drug. In 2008, we granted royalty-free licenses to allow Sanofi-Aventis to produce artemisinic acid using our technology. Building on our success with artemisinic acid, in 2007 we began applying our technology platform to develop, manufacture and sell sustainable alternatives to a broad range of markets.
We focused our initial development efforts primarily on the production of Biofene®, our brand of renewable farnesene, a long-chain, branched hydrocarbon molecule that we manufacture through fermentation using engineered microbes. Our farnesene derivatives are sold in more than 1,000 products as nutraceuticals, skincare products, fragrances, solvents, polymers, and lubricant ingredients. The commercialization of farnesene pushed us to create a more cost efficient, faster and accurate development process in the lab and drive manufacturing costs down. This investment has enabled our technology platform to rapidly develop microbial strains and commercialize target molecules. In 2014, we began manufacturing additional molecules for the Flavor & Fragrance industry; in 2015 we began investing to expand our capabilities to other small molecule chemical classes beyond terpenes via our collaboration with the Defense Advanced Research Projects Agency (DARPA), and in 2016 we expanded into proteins.
We have invested over $500 million in infrastructure and technology to create microbes that produce molecules from sugar or other feedstocks at commercial scale. This platform has been used to design, build, optimize, and upscale strains producing eight distinct molecules, leading to more than 15 commercial ingredients used in over 1,000 consumer products. Our time to market for molecules has decreased from seven years to less than a year, mainly due to our ability to leverage the technology platform we have built.
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Our technology platform has been in active use since 2008 and has been integrated with our commercial production since 2011, creating an organism development process that makes us an industry leader in the successful scale-up and commercialization of biotech-produced ingredients. The key performance characteristics of our platform that differentiate us include our proprietary computational tools, strain construction tools, screening and analytics tools, and advanced lab automation and data integration. Full integration of the platform with our large-scale manufacturing capability enables us to engineer precisely with the end specification and commercial production requirements guiding our developments. Our state-of-the-art infrastructure includes industry-leading strain engineering and lab automation located in Emeryville, California, pilot scale production facilities in Emeryville, California and Campinas, Brazil, a demonstration-scale facility in Campinas, Brazil and a commercial-scale production facility in Leland, North Carolina, which is owned and operated by our Aprinnova joint venture to convert our Biofene into squalane and other final products.
Several years ago, we made the strategic decision to transition our business model from collaborating and commercializing molecules in low margin commodity markets to higher margin specialty markets. We began the transition by commercializing and supplying farnesene-derived squalane as a cosmetic ingredient sold to formulators and distributors. We then entered into collaboration and supply agreements for the development and commercialization of molecules within the Flavor & Fragrance and Cosmetic Ingredients markets where we utilize our strain generation technology to develop molecules that meet the customer’s rigorous specifications.
During this transition, we solidified the business model of partnering with our customers to create sustainable, high performing, low-cost molecules that replace an ingredient in their supply chain, commercially scale and manufacture those molecules, and share in the profits earned by our customers once our customer sells its product into these specialty markets. These three steps constitute our collaboration revenues, renewable product revenues, and royalty revenues (previously referred to as value share revenues).
During 2017, we completed several development agreements with DSM and others for new products such as Vitamin A, a human nutrition molecule and others. We plan to bring two to three new molecules a year to commercial production.
In the first half of 2017, management made the decision to monetize the use of one of our lower margin molecules, farnesene, in certain fields of use (e.g., the human and animal health and nutrition field) while retaining any associated royalties. We began discussions with our partners and ultimately made the decision to license farnesene to DSM for use in these fields, which we announced in November 2017. Management also made the decision to sell to DSM our subsidiary Amyris Brazil Ltda, which operated our Brotas manufacturing facility. We completed the transaction on December 28, 2017.
Brotas was built to batch manufacture one commodity product at a time (originally for high-volume production of biofuels, a business the Company has exited), which is an inefficient manufacturing process that is not suited for the high margin specialty markets in which we operate today. We currently manufacture nine specialty products and will be increasing the number of specialty products we manufacture by two to three products a year. The inefficiencies we experienced included idling the facility for two weeks at a time to prepare for the next product batch manufacture. These inefficiencies caused our cost of goods sold to be significantly higher. With the sale of Brotas, we expect that our gross margins will markedly improve due to the reduction in manufacturing costs caused by these inefficiencies. Additionally, we are currently constructing our new production facility in Brazil, which will allow for the manufacture of four products concurrently and over 10 different products annually. As part of the December 2017 sale of Brotas, we contracted with DSM for the use of Brotas to manufacture products for us to fulfill our product supply commitments to our customers until our new production facility becomes operational in late 2019. We have expanded the new facility's design to produce both our specialty ingredients portfolio and our new sweetener product.
As discussed above, on December 28, 2017, we completed the sale of Amyris Brasil, which operated our Brotas production facility, to DSM and concurrently entered into a series of commercial agreements and a credit agreement with DSM. At closing, we received $33.0 million in cash for the capital stock of Amyris Brasil, which is subject to certain post-closing working capital adjustments and reimbursements from DSM contingent on DSM’s utilization of certain Brazilian tax benefits it acquired with its purchase of Amyris Brasil. We used $12.6 million of the cash proceeds received to repay certain indebtedness of Amyris Brasil. The total fair value of the consideration in connection with the sales agreement for Amyris Brasil was $56.9 million and resulted in a pretax gain of $5.7 million from continuing operations.
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Concurrent with the sale of Amyris Brasil, we entered into a series of commercial agreements with DSM including (i) a license agreement to DSM of our farnesene product for DSM to use in the Vitamin E and Lubricants specialty markets; (ii) a value share agreement that DSM will pay specified royalties representing a portion of the profit on the sale of Vitamin E produced from farnesene sold under the supply agreement with Nenter & Co., Inc. (“Nenter”) assigned to DSM; (iii) a performance agreement to perform research and development to optimize farnesene for production and sale of farnesene products; and (iv) a transition services agreement where we provide finance, legal, logistics, and human resource services to support the Brotas facility under DSM ownership for a six-month period with a DSM option to extend for six additional months. At closing, DSM paid to us a nonrefundable license fee of $27.5 million and a nonrefundable minimum royalty revenue payment (previously referred to as value share) of $15.0 million. DSM also agreed to pay the Company nonrefundable minimum royalty amounts in 2018 and 2019. The future nonrefundable minimum annual royalty payments were determined to be fixed and determinable with a fair value of $17.8 million, and were included as part of the total arrangement consideration subject to allocation of this overall multiple-element divestiture transaction. See Note 10, “Significant Revenue Agreements” in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the 10-K) for a full listing and details of agreements entered into with DSM. Additionally, we entered into a $25.0 million credit agreement with DSM that we used to repay all outstanding amounts under the Guanfu Note; see Note 4, “Debt” in Part II, Item 8 of our Annual Report on Form 10-K.
In the second quarter of 2018, we successfully demonstrated our industrial process at full scale to produce a high-purity, zero calorie sweetener derived from sugar cane. The molecule we are producing from sugar cane, Reb M, is recognized as the leading natural sweetener, but when derived from the Stevia plant, is found in very limited quantities along with many impurities that leave an unacceptable taste in the mouth of the consumer. The Reb M we produce from sugar cane is more sustainable, lower cost, and has a specific technical profile that is advantaged in taste and total process economics for blends and formulations. Initial feedback on our samples has been very positive due to this unique sweetness profile and the lack of the undesired taste impact of Stevia plant sourced and other fermentation and bio transformation Reb products on the market. Our FDA Generally Regarded As Safe (GRAS) filing has been initiated and we will have commercial quantities of product produced at DSM's Brotas facility by the end of the year.
In June 2018, we and our contract manufacturer, Antibióticos de León (“ADL”), executed an amendment to our January 2018 production agreement, thereby providing us additional tank capacity at ADL’s production facility in León, Spain. This amendment was necessary to provide additional, cost-effective manufacturing capability to meet higher than expected product demand from our partners. The amended agreement includes a commitment to running a certain number of batches at ADL’s production facility from the period September 1, 2018 through December 31, 2019 for up to four of our products.
On June 29, 2018, we closed a $36 million term loan with Great American Capital Partners, LLC (GACP), a subsidiary of B. Riley Capital Management, LLC, an SEC Registered Investment Advisor and wholly-owned subsidiary of B. Riley Financial, Inc. The term loan matures on July 1, 2021, subject to certain early maturity conditions. Cash proceeds from the term loan were used to pay off the Company’s senior secured loan facility with Stegodon and the related party R&D Note with Total Raffinage Chimie SA. The term loan also includes an additional $35 million accordion credit facility that provides us with another option for financing construction of a production facility, if necessary. See Note 4. "Debt" in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
In the second quarter of 2018, we executed an agreement for a significant project consortium in Europe with the Universidade Católica Portuguesa (UCP) Porto Campus and AICEP Portugal Global (AICEP). UCP is a university system, including the leading biotech school in Portugal, and operates 15 research centers. AICEP is an independent public entity of the Government of Portugal, focused in encouraging the best foreign companies to invest in Portugal. In conjunction with this agreement, we opened a subsidiary in Porto, Portugal. The primary purpose of this subsidiary is to conduct a research and development project together with Escola Superior de Biotecnologia o Universidade Católica Portuguese. This subsidiary will be the second R&D center of Amyris and will be responsible for certain areas of research, namely valorization of fermentation residues and wastes and the advancement of the Company's Artificial Intelligence (AI) and Informatics platform.
The overall multi-year project is valued up to approximately $50 million including investment funding and incentives allotted across the parties involved. Amyris believes this is the largest biotechnology grant ever awarded in Portugal and one of the largest ever approved by the AICEP for commercial applications. Amyris has sole responsibility for commercialization and majority ownership of all intellectual property (IP) generated.
In the third quarter of 2018, we entered into a supply and distribution agreement for our new, sugarcane-derived, zero calorie sweetener with ASR Group, the world’s largest cane sugar refiner. Also in the third quarter of 2018, we entered into a license and collaboration agreement with a subsidiary of Yifan Pharmaceutical Co., Ltd., which is one of the leading Chinese pharmaceutical companies.
Sales and Revenue
We recognize revenue from product sales, license fees and royalties, and grants and collaborations.
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We have research and development collaboration arrangements for which we receive payments from our collaborators, which include The Defense Advanced Research Projects Agency (DARPA), affiliates of Koninklijke DSM N.V. (DSM), Firmenich SA (Firmenich), Givaudan International SA (Givaudan), and others. Some of our collaboration arrangements provide for advance payments to us in consideration for grants of exclusivity or research efforts that we will perform, and others require us to achieve milestones prior to receiving payments. In addition, all of our non-government partnerships include commercial terms for the supply of molecules we successfully scale-up and produce at commercial volumes, and we expect such partnerships will contribute revenues from product sales and royalties (previously referred to as value share) if and when such molecules are commercialized. See Note 10, “Revenue Recognition” in Part I, Item 1 of this Quarterly Report on Form 10-Q, and Note 10, “Significant Revenue Agreements” in Part II, Item 8 of our Annual Report on Form 10-K, for additional information.
We currently, through contract manufacturers, produce nine specialty products and are continuing to identify new opportunities to apply our technology and deliver sustainable access to key molecules. As a result, we have a pipeline that is expected to commercialize two to three new molecules each year over the coming years. We are currently finalizing the commercial terms for the molecules we expect to commercialize during the fourth quarter of 2018, including our Reb-M product that is a superior sweetener and sugar replacement for food and beverages.
As part of the DSM acquisition of our farnesene-for-Vitamin-E business, we will receive a royalty payment on all Nenter sales of Vitamin E utilizing farnesene produced and sold by DSM from our technology. DSM agreed to pay us minimum royalties totaling $33.1 million for 2018, 2019 and 2020, the first three years of the agreement. These minimum royalty payments are creditable against future royalties due should the total royalties from Nenter not meet or exceed the minimum royalty payments.
We have several other molecules in our development pipeline with partners including DSM, Givaudan and Firmenich that we expect will contribute revenues from product sales and royalties (previously referred to as value share) if and when they are commercialized.
Critical Accounting Policies and Estimates
Management's discussion and analysis of results of operations and financial condition are based on the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe that the critical accounting policies described in this section are those that significantly impact our financial condition and results of operations and require the most difficult, subjective or complex judgements, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates.
Our most critical accounting estimates include:
| • | recognition of revenue involving arrangements with multiple revenue-generating activities; and |

| • | the valuation of financial instruments including embedded derivatives and freestanding financial instruments such as warrants, which impact gains or losses on derivatives, the carrying value of debt, preferred stock, interest expense and deemed dividends. |

For more information about our critical accounting estimates and policies, see Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 8 of our Annual Report on Form 10-K.
Results of Operations
Revenue
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 | 2018 | 2017 |
| Revenue |
| Renewable products | $ | 9,639 | $ | 10,996 | $ | 21,467 | $ | 28,925 |
| Licenses and royalties | 142 | 1,022 | 18,466 | 6,774 |
| Grants and collaborations | 5,085 | 12,179 | 21,125 | 27,158 |
| Total revenue | $ | 14,866 | $ | 24,197 | $ | 61,058 | $ | 62,857 |

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Three Months Ended September 30, 2018 and 2017
Total revenue decreased by 39% to $14.9 million for the three months ended September 30, 2018, compared to the same period in 2017. The decrease was primarily due to a $7.1 million decrease in grants and collaborations revenue and a $1.4 million decrease in renewable products revenue.
Renewable products revenue decreased by 12% to $9.6 million for the three months ended September 30, 2018, compared to the same period in 2017, primarily due to the assignment of certain farnesene supply agreements to DSM and discontinuing the sales of low-margin products, partly offset by a $1.6 million increase in revenue from Biossance products.
Licenses and royalties revenue decreased by 86% to $0.1 million for the three months ended September 30, 2018, compared to the same period in 2017, due to a license fee in 2017 from DSM for which there was no comparable revenue in 2018.
Grants and collaborations revenue decreased by 58% to $5.1 million for the three months ended September 30, 2018, compared to the same period in 2017, primarily due to one-time revenue in 2017 upon the termination of a Braskem/Michelin agreement, and lower grant revenue from DARPA.
Nine Months Ended September 30, 2018 and 2017
Total revenue decreased by 3% to $61.1 million for the nine months ended September 30, 2018, compared to the same period in 2017, due to decreases in revenue from renewable products and grants and collaborations, partially offset by a substantial increase in revenue from licenses and royalties.
Renewable products revenue decreased by 26% to $21.5 million for the nine months ended September 30, 2018, compared to the same period in 2017. The decline was primarily attributable to the assignment of certain farnesene supply agreements to DSM and discontinuing low-margin product sales, partially offset by a $3.0 million increase in revenue from Biossance products.
Licenses and royalties revenue increased by 173% to $18.5 million for the nine months ended September 30, 2018, compared to the same period in 2017, due to Vitamin E royalty revenues from DSM.
Grants and collaborations revenue decreased by 22% to $21.1 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to no collaboration revenue in 2018 from Braskem/Michelin and Biogen and decreased grant revenue from DARPA, partially offset by an increase in collaboration revenue from DSM.
Costs and Operating Expenses
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 | 2018 | 2017 |
| Cost and operating expenses |
| Cost of products sold | $ | 8,574 | $ | 17,637 | $ | 19,873 | $ | 47,684 |
| Research and development | 16,445 | 15,185 | 50,545 | 44,141 |
| Sales, general and administrative | 21,026 | 15,454 | 59,972 | 44,253 |
| Total cost and operating expenses | $ | 46,045 | $ | 48,276 | $ | 130,390 | $ | 136,078 |

Cost of Products Sold
Cost of products sold includes the costs of raw materials, labor and overhead, amounts paid to contract manufacturers, inventory write-downs resulting from applying lower of cost or net realizable value inventory adjustments, and costs related to production scale-up. Because of our product mix, our overall cost of products sold does not necessarily increase or decrease proportionately with changes in our renewable product revenues.
Three Months Ended September 30, 2018 and 2017
Cost of products sold decreased by 51% to $8.6 million for the three months ended September 30, 2018, compared to the same period in 2017, primarily due to the (i) December 2017 sale of our Brotas production facility to DSM, which substantially reduced our fixed production costs, (ii) the assignment of certain farnesene supply agreements to DSM with a resulting 12% decrease in renewable products revenue, and (iii) our discontinuing manufacturing of low-margin products.
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Nine Months Ended September 30, 2018 and 2017
Cost of products sold decreased by 58% to $19.9 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to (i) December 2017 sale of our Brotas production facility to DSM, which substantially reduced our fixed production costs, (ii) the assignment of certain farnesene supply agreements to DSM with a resulting 26% decrease in renewable products revenue, and (iii) our discontinuing manufacturing of low-margin products.
Research and Development Expenses
Three Months Ended September 30, 2018 and 2017
Research and development expenses increased by 8% to $16.4 million for the three months ended September 30, 2018, compared to the same period in 2017, due to increases in headcount to support new product development and one-time costs related to product development.
Nine Months Ended September 30, 2018 and 2017
Research and development expenses increased by 15% to $50.5 million for the nine months ended September 30, 2018, compared to the same period in 2017, due to increases in headcount to support new product development and one-time costs related to product development.
Sales, General and Administrative Expenses
Three Months Ended September 30, 2018 and 2017
Sales, general and administrative expenses increased by 36% to $21.0 million for the three months ended September 30, 2018, compared to the same period in 2017, primarily due to increases in headcount to support our growth and expansion, professional services costs, and one-time costs associated with a contract termination.
Nine Months Ended September 30, 2018 and 2017
Sales, general and administrative expenses increased by 36% to $60.0 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to increases in headcount to support our growth and expansion, and professional services costs.
Other (Expense) Income, Net
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 | 2018 | 2017 |
| Other income (expense): |
| Interest expense | $ | (8,658 | ) | $ | (7,733 | ) | $ | (25,687 | ) | $ | (29,219 | ) |
| Gain (loss) from change in fair value of derivative instruments | (25,048 | ) | (18,728 | ) | (64,596 | ) | 9,933 |
| Gain (loss) upon extinguishment of derivative liability | (1,782 | ) | 16,036 | 75 | 25,489 |
| Gain (loss) upon extinguishment of debt | — | 461 | (26 | ) | (3,067 | ) |
| Other income (expense), net | (1,654 | ) | (136 | ) | 1,282 | (576 | ) |
| Total other income (expense), net | $ | (37,142 | ) | $ | (10,100 | ) | $ | (88,952 | ) | $ | 2,560 |

Three Months Ended September 30, 2018 and 2017
Total other expense, net was $37.1 million for the three months ended September 30, 2018, compared to total other expense, net of $10.1 million for the same period in 2017. The $27.0 million increase was primarily due to a $17.8 million change from gain to loss upon extinguishment of derivative liabilities, a $6.3 million increase in loss from change in fair value of derivative instruments, and a $1.5 million increase in other expense, which was comprised of $3.2 million of issuance costs incurred in connection with our August 2018 secondary offering, less a $1.7 million mark-to-market gain on our equity investment in SweeGen.
The loss upon extinguishment of derivative liability of $1.8 million in 2018 was due to warrant exercises and exchanges that occurred in the three months ended September 30, 2018; see Note 6, “Stockholders’ Deficit” in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
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Nine Months Ended September 30, 2018 and 2017
Total other expense, net was $89.0 million for the nine months ended September 30, 2018, compared to total other income, net of $2.6 million for the same period in 2017. The $91.5 million change was primarily due to (i) a $74.5 million change from gain to loss from change in fair value of derivative instruments, and (ii) a $25.4 million change from gain to loss upon extinguishment of derivative liabilities. These increases in loss were partly offset by (i) a $3.5 million decrease in interest expense that resulted from a decrease in average debt balances, (ii) a $3.0 million decrease in loss upon extinguishment of debt, and (iii) a $1.9 million change from other expense to other income, which was comprised of a $3.5 million mark-to-market gain related to our equity investment in SweeGen, partially offset by $3.2 million of issuance costs incurred in connection with our August 2018 secondary offering
The loss from change in fair value of derivative instruments for the nine months ended September 30, 2018 was the result of a significant increase in derivative instruments issued, and a 112% increase in our stock price during the nine months ended September 30, 2018.
(Provision for) Benefit from Income Taxes
| Three Months Ended September 30, | Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 | 2018 | 2017 |
| (Provision for) benefit from income taxes | $ | — | $ | 318 | $ | — | $ | 49 |

Three Months Ended September 30, 2018 and 2017
For the three months ended September 30, 2018, we recorded a provision for income taxes of zero, and for the three months ended September 30, 2017, we recorded a benefit from income taxes of $318,000. The benefit for the three months ended September 30, 2017 was comprised of an accrual of Brazilian withholding tax on intercompany interest, offset by an income tax benefit in continuing operations related to foreign exchange movement in other comprehensive income. No additional provision for income taxes has been made, net of the valuation allowance, due to cumulative losses since the commencement of operations.
Nine Months Ended September 30, 2018 and 2017
For the nine months ended September 30, 2018, we recorded a provision for income taxes of zero, and for the nine months ended September 30, 2017, we recorded a benefit from income taxes of $49,000. The benefit for the nine months ended September 30, 2017 was comprised of an accrual of Brazilian withholding tax on intercompany interest, offset by an income tax benefit in continuing operations related to foreign exchange movement in other comprehensive income. No additional provision for income taxes has been made, net of the valuation allowance, due to cumulative losses since the commencement of operations.
Liquidity and Capital Resources
| (In thousands) | September 30, 2018 | December 31, 2017 |
| Working capital deficit, excluding cash and cash equivalents and short-term investments | $ | (105,586 | ) | $ | (59,598 | ) |
| Cash and cash equivalents | $ | 19,045 | $ | 57,059 |
| Debt and capital lease obligations | $ | 171,929 | $ | 166,318 |
| Accumulated deficit | $ | (1,367,235 | ) | $ | (1,206,767 | ) |

| Nine Months Ended September 30, |
| (In thousands) | 2018 | 2017 |
| Net cash (used in) provided by: |
| Operating activities | $ | (87,953 | ) | $ | (102,652 | ) |
| Investing activities | $ | (6,362 | ) | $ | 2,512 |
| Financing activities | $ | 54,666 | $ | 88,744 |

Liquidity. We have incurred significant operating losses since our inception, and we expect to continue to incur losses and negative cash flows from operations through at least the next 12 months following issuance of the financial statements. As of September 30, 2018, we had negative working capital, excluding cash and cash equivalents and short-term investments, of $105.6 million, (compared to negative working capital (excluding cash) of $59.6 million as of December 31, 2017), an accumulated deficit of $1.4 billion, and cash and cash equivalents of $19.0 million (compared to $57.1 million as of December 31, 2017).
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As of September 30, 2018, our debt (including related party debt), net of deferred discount and issuance costs of $21.5 million, totaled $171.1 million, of which $108.9 million is classified as current. However, $23.3 million of current maturities was converted into common stock in October and November 2018, thereby reducing our short-term maturities by $23.3 million; see Note 13, "Subsequent Events" in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. The Company's debt service obligations through November 30, 2019 are $111.4 million (excluding $25.0 million of principal that will be mandatorily converted into common stock upon maturity), including $15.7 million of anticipated cash interest payments. Our debt agreements contain various covenants, including certain restrictions on our business that could cause us to be at risk of defaults, such as restrictions on additional indebtedness and cross-default clauses. A failure to comply with the covenants, or cure non-compliance or obtain waivers for covenants violations, and other provisions of our debt instruments, including any failure to make a payment when required, would generally result in events of default under such instruments, which could permit acceleration of such indebtedness. If such indebtedness is accelerated, it would generally also constitute an event of default under our other outstanding indebtedness, permitting acceleration of a substantial portion of our outstanding indebtedness. During the three months ended September 30, 2018, we did not meet certain covenants with one lender and obtained waivers; see Note 4, “Debt” in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. However, there is no guarantee that we will not violate these covenants in the future or be able to obtain waivers for future violations.
Our consolidated financial statements as of and for the three months ended September 30, 2018 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Due to the factors described above, there is substantial doubt about our ability to continue as a going concern within one year after the date that these financial statements are issued. Our ability to continue as a going concern will depend, in large part, on our ability to begin achieving positive cash flows from operations within the next 12 months, to extend existing debt maturities, which is uncertain. The financial statements do not include any adjustments that might result from the outcome of this uncertainty, which could have a material adverse effect on our financial condition. In addition, if we are unable to continue as a going concern, we may be unable to meet our obligations under our existing debt facilities, which could result in an acceleration of our obligation to repay all amounts outstanding under those facilities, and we may be forced to liquidate our assets. In such a scenario, the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.
Our operating plan for the next 12 months contemplates a significant reduction in our net cash outflows, resulting from (i) revenue growth from sales of existing and new products such as Reb-M with positive gross margins, (ii) reduced production costs as a result of anticipated efficiencies, and (iii) cash inflows from grants, collaborations and license fees.
If we are unable to generate sufficient cash contributions from product sales, licenses and royalties, and payments from existing and new collaboration partners, and new financing commitments due to contractual restrictions and covenants, we may need to obtain additional funding from equity or debt financings, which may not occur in a timely manner or on reasonable terms, if at all, agree to burdensome covenants, grant further security interests in our assets, enter into collaboration and licensing arrangements that require us to relinquish commercial rights, or grant licenses on terms that are not favorable.
If we do not achieve our planned operating results, our ability to continue as a going concern would be jeopardized and we may need to take the following actions to support our liquidity needs during the next 12 months:
| • | Shift focus to existing products and customers with significantly reduced investment in new product and commercial development efforts; |

| • | Reduce expenditures for third party contractors, including consultants, professional advisors and other vendors; |

| • | Reduce or delay uncommitted capital expenditures, including non-essential facility and lab equipment, and information technology projects; and |

| • | Closely monitor our working capital position with customers and suppliers, as well as suspend operations at pilot plants and demonstration facilities. |

Implementing this plan could have a negative impact on our ability to continue our business as currently contemplated, including, without limitation, delays or failures in our ability to:
| • | Achieve planned production levels; |

| • | Develop and commercialize products within planned timelines or at planned scales; and |

| • | Continue other core activities. |

We expect to fund operations for the foreseeable future with cash and investments currently on hand, cash inflows from collaborations, grants, product sales, license and royalties and equity and debt financings, to the extent necessary. Some of our research and development collaborations are subject to risk that we may not meet milestones. Future equity and debt financings, if needed, are subject to the risk that we may not be able to secure financing in a timely manner or on reasonable terms, if at all. Our planned working capital and capital expenditure needs for the remainder of 2018 are dependent on significant inflows of cash from renewable product sales, license and royalties and existing collaboration partners, as well as additional funding from new collaborations.
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For additional information, see the following Notes in “Notes to Condensed Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q and/or in “Notes to Consolidated Financial Statements” included in Part II, Item 8 of the 10-K:
| • | Note 4, "Debt" |

| • | Note 5, "Mezzanine Equity" |

| • | Note 6, "Stockholders' Deficit" |

Cash Flows during the Nine Months Ended September 30, 2018 and 2017
Cash Flows from Operating Activities
Our primary uses of cash from operating activities are costs related to the production and sale of our products and personnel-related expenditures, offset by cash received from renewable product sales, licenses and royalties, and grants and collaborations.
For the nine months ended September 30, 2018, net cash used in operating activities was $88.0 million, consisting primarily of a $158.3 million net loss, partially offset by $82.7 million of favorable non-cash adjustments that were primarily comprised of a $64.6 million loss on change in fair value of derivative instruments, $10.6 million of debt discount amortization, $6.1 million of stock-based compensation and $4.0 million of depreciation and amortization on property, plant and equipment. Additionally, there was a $12.4 million decrease in working capital.
For the nine months ended September 30, 2017, net cash used in operating activities was $102.7 million, consisting primarily of a $70.6 million net loss, a $19.4 million decrease in working capital and $12.6 million of unfavorable non-cash adjustments primarily comprised of $35.1 million of non-cash gains in connection with derivative instruments, partially offset by $10.1 million of debt discount amortization, $8.1 million of depreciation and amortization on property, plant and equipment, and $3.9 million of stock-based compensation.
Cash Flows from Investing Activities
Our investing activities consist primarily of capital expenditures and changes in short-term investments.
For the nine months ended September 30, 2018, net cash used in investing activities was $6.4 million, primarily comprised of $6.4 million of property, plant and equipment purchases, which included $2.1 million of capitalized internal labor costs required to automate, integrate and ready certain laboratory and plant equipment for its intended use.
For the nine months ended September 30, 2017, net cash provided by investing activities was $2.5 million, which was comprised of a $3.0 million decrease in short-term investments, partly offset by $0.5 million of property, plant and equipment purchases.
Cash Flows from Financing Activities
For the nine months ended September 30, 2018, net cash provided by financing activities was $54.7 million, primarily due to $60.5 million of net proceeds from the issuance of common stock upon the exercise of warrants and $35.1 million of net proceeds from debt issuance, partly offset by $42.0 million of debt principal payments.
For the nine months ended September 30, 2017, net cash provided by financing activities was $88.7 million, primarily due to $101.4 million of net proceeds from the issuance of convertible preferred stock and $14.0 million of net proceeds from debt issuance, partly offset by $26.7 million of debt principal payments.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any material off-balance sheet arrangements, as defined under the rules of the Securities and Exchange Commission, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our condensed consolidated financial statements.
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Contractual Obligations
The following is a summary of our contractual obligations as of September 30, 2018:
| Year Ended December 31, (In thousands) | Total | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter |
| Principal payments on debt (1) | $ | 169,735 | $ | 625 | $ | 95,035 | $ | 3,827 | $ | 55,839 | $ | 12,251 | $ | 2,158 |
| Interest payments on debt (2) | 31,792 | 5,398 | 11,374 | 7,588 | 5,860 | 1,165 | 407 |
| Operating leases | 38,334 | 2,776 | 9,966 | 7,675 | 7,237 | 7,410 | 3,270 |
| Principal payments on capital leases | 812 | 130 | 484 | 195 | 3 | — | — |
| Interest payments on capital leases | 46 | 13 | 29 | 4 | — | — | — |
| Purchase obligations (3) | 15,738 | 650 | 2,436 | 12,652 | — | — | — |
| Total | $ | 256,457 | $ | 9,592 | $ | 119,324 | $ | 31,941 | $ | 68,939 | $ | 20,826 | $ | 5,835 |

_____________
| (1) | Principal payments on debt shown above include a total of $25.0 million in 2018 and 2019 subject to a Maturity Treatment Agreement, which will be converted to common stock at maturity, subject to there being no default under the terms of the debt. |

| (2) | Does not include any obligations related to make-whole interest or down-round provisions. The fixed interest rates are more fully described in Note 4, "Debt" in Part 1, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 8 of the 10-K. |

| (3) | Purchase obligations are comprised of noncancelable contractual obligations. |

Recently Issued Accounting Standards Not Yet Adopted
See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recently issued accounting standards not yet adopted.
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The market risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in: commodity market prices, foreign currency exchange rates and interest rates as described below.
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our outstanding debt obligations, including embedded derivatives therein. We generally invest our cash in accounts and instruments with short maturities or with frequent interest reset terms. Accordingly, our interest income fluctuates with short-term market conditions. As of September 30, 2018, our investment portfolio consisted of certificates of deposit, which are highly liquid. Due to the short-term nature of our investment portfolio, we do not believe that an immediate 10% increase in interest rates would have a material effect on the fair value of our portfolio. Since we believe we have the ability to liquidate our investment portfolio, we expect that our operating results or cash flows would not be materially affected by a sudden change in market interest rates on the portfolio.
As of September 30, 2018, 81% of our outstanding debt is in fixed rate instruments. The remaining 19% of our outstanding debt is comprised of variable-rate loans under the GACP secured term loan facility, for which the interest rate is based on the U.S. prime rate, subject to a rate floor (see Note 4, “Debt” in Part 1, Item 1 of this Quarterly Report on Form 10-Q for additional information). As a result, changes in interest rates could affect interest expense and payments in relation to that component of our debt.
In addition, changes in interest rates may significantly affect the fair value of our derivative liabilities (see Note 3, "Fair Value Measurement" in Part 1, Item 1 of this Quarterly Report on Form 10-Q).
Foreign Currency Risk
Most of our sales contracts are denominated in U.S. dollars, and therefore our revenues are not currently subject to significant foreign currency risk.
The functional currency of our consolidated Brazilian subsidiary is the local currency (Brazilian real), in which recurring business transactions occur. We do not use currency exchange contracts as hedges against our investment in that subsidiary.
Our permanent investment in Brazil was $17.8 million as of September 30, 2018 ($17.8 million as of December 31, 2017), using the exchange rate at each date. A hypothetical 10% adverse change in Brazilian real exchange rates would have had an adverse impact to Other Comprehensive Loss of $1.8 million as of September 30, 2018 ($1.8 million as of December 31, 2017).
We have also evaluated foreign currency exposure in relation to our other non-U.S. Dollar denominated assets and liabilities and determined that there would be an immaterial effect on our results of operations from 10% exchange rate fluctuations between those currencies and the U.S. Dollar.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the rules of the Securities and Exchange Commission (the SEC), “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) are controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.
At September 30, 2018, our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of September 30, 2018. This conclusion was based on the material weakness in our internal control over financial reporting described in Part II, Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the 10-K). The material weakness has not been remediated as of September 30, 2018.
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A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. If not remediated, the material weakness in our internal control over financial reporting described in the 10-K could result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected on a timely basis.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended September 30, 2018, having completed our assessment and analysis of key control deficiencies during the previous quarter, we continued to implement additional review controls over routine transactions and more robust review procedures over our more complex and non-routine transactions. We continue to address and supplement our resource needs with qualified personnel possessing the appropriate level of technical accounting expertise and we continue to make progress in addressing the material weakness in our internal control over financial reporting described in the 10-K. Otherwise, there were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are taking further actions to remediate the material weakness in our internal control over financial reporting and will report on those actions in upcoming Quarterly and Annual Reports on Form 10-Q and 10-K, respectively.
Limitations on the Effectiveness of Controls and Procedures
Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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PART II
On April 20, 2017, a securities class action complaint (the Securities Class Action Complaint) was filed against the Company and its CEO, John G. Melo, and CFO, Kathleen Valiasek, in the U.S. District Court for the Northern District of California (Case No. 3:17-cv-02210-WHO). The Securities Class Action Complaint sought unspecified damages on behalf of a purported class that would comprise all individuals who acquired the Company’s common stock between March 2, 2017 and April 17, 2017. The Securities Class Action Complaint alleged securities law violations based on statements made by the Company in its earnings press release issued on March 2, 2017 and Form 12b-25 filed with the Securities and Exchange Commission on April 3, 2017. On September 21, 2017, an order of dismissal was entered on the plaintiff’s notice of voluntary dismissal without prejudice.
Subsequent to the filing of the Securities Class Action Complaint, four separate purported shareholder “derivative” complaints were filed based on substantially the same facts as the Securities Class Action Complaint (the Derivative Complaints). The Derivative Complaints named Amyris, Inc. as a nominal defendant and named a number of the Company’s then-current officers and directors as additional defendants. . The lawsuits seek to recover, on the Company's behalf, unspecified damages purportedly sustained by the Company in connection with allegedly misleading statements and/or omissions made in connection with the Company’s securities filings. The Derivative Complaints also seek a series of changes to the Company’s corporate governance policies, restitution to the Company from the individual defendants, and an award of attorneys’ fees. Two of the Derivative Complaints were filed in the U.S. District Court for the Northern District of California (together, the Federal Derivative Cases): Bonner v. John Melo, et al., Case No. 4:17-cv-04719, filed August 15, 2017, and Goldstein v. John Melo, et al., Case No. 3:17-cv-04927, filed on August 24, 2017. On September 19, 2017, an order was entered consolidating the Federal Derivative Cases into a single consolidated action, captioned: In re Amyris, Inc., Shareholder Derivative Litigation, Lead Case No. 2:15-cv-04719, and ordering the plaintiffs to file a consolidated complaint or designate an operative complaint by November 3, 2017. On November 3, 2017, the plaintiffs in the Federal Derivative Cases filed a Notice of Designation of Operative Complaint, designating the complaint filed in the Bonner case as the operative complaint. On December 21, 2017, the defendants filed a motion to dismiss the Federal Derivative Cases; and on March 9, 2018, the Court granted defendants’ motion to dismiss. On March 29, 2018, the plaintiffs filed an Amended Complaint with the Court. On May 4, 2018, the defendants filed a motion to dismiss the Amended Complaint; and on July 23, 2018, the Court granted defendants’ motion to dismiss the amended complaint with prejudice and entered judgment in favor of the defendants. The remaining two Derivative Complaints were filed in the Superior Court for the State of California (together, the State Derivative Cases): Gutierrez v. John G. Melo, et al., Case. No. BC 665782, filed on June 20, 2017, in the Superior Court for the County of Los Angeles, and Soleimani v. John G. Melo, et al., Case No. RG 17865966, filed on June 29, 2017, in the Superior Court for the County of Alameda. On August 31, 2017, the Gutierrez case was transferred to the Superior Court for the State of California, County of Alameda and assigned a case number, RG17876383. On August 30, 2018, the parties in the State Derivative Cases filed a joint stipulation and proposed order to dismiss the State Derivative Cases without prejudice, and on September 4, 2018, the court entered an order to that effect.
The risks described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the 10-K) could materially and adversely affect our business, financial condition and results of operations, and the trading price of our common stock could decline. These risk factors do not identify all risks that we face; our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. The “Risk Factors” section of the 10-K remains current in all material respects.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On August 17, 2018 and August 20, 2018, we issued warrants to purchase an aggregate of 12,097,164 shares of our common stock (the August 2018 Warrants) to Foris Ventures, LLC, Vivo Capital Fund VIII, L.P. and Vivo Capital Surplus Fund VIII, L.P., in exchange for such holders exercising for cash certain of their outstanding warrants to purchase shares of our common stock, representing an aggregate of 10,452,504 shares issued and proceeds to the Company of $46.0 million, and surrendering certain of their other outstanding warrants to purchase shares of our common stock, which were not then exercisable for any shares, for cancellation, pursuant to warrant exercise agreements (the Warrant Exercise Agreements) entered into with such holders. The August 2018 Warrants have an exercise price of $7.52 per share and a term of 21 months from the date of issuance, do not contain any non-standard anti-dilution protection, only permit exercise after the six-month anniversary of issuance, and only permit “cashless” or “net” exercise after such time to the extent that there is not an effective registration statement covering the resale of the shares of common stock issuable upon exercise. See Note 6, “Stockholders’ Deficit” in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
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B. Riley FBR, Inc. acted as our advisor in connection with the issuance of the August 2018 Warrants. The August 2018 Warrants were issued in private placements pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act), and Regulation D promulgated under the Securities Act. The holders of the August 2018 Warrants are existing stockholders and are affiliated with members of our Board of Directors: Foris Ventures, LLC, which acquired August 2018 Warrants to purchase 4,877,386 shares of our common stock, is affiliated with director John Doerr; and Vivo Capital Fund VIII, L.P. and Vivo Capital Surplus Fund VIII, L.P., which acquired August 2018 Warrants to purchase an aggregate of 7,219,778 shares of our common stock, are affiliated with director Frank Kung. The holders acquired the August 2018 Warrants for investment purposes only and without intent to resell, were able to fend for themselves in these transactions, and are accredited investors as defined in Rule 501 of Regulation D promulgated under Section 3(b) of the Securities Act, and appropriate restrictions were set forth in the warrant exercise agreements and the August 2018 Warrants. These holders had adequate access, through their relationships with us, to information about us.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 5. OTHER INFORMATION
Loan and Security Agreement Amendment
On November 14, 2018, we entered into an amendment to the LSA (see Note 4, “Debt” in Part I, Item 1 of this Quarterly Report on Form 10-Q) with GACP Finance Co., LLC. Pursuant to the amendment, (i) the minimum revenue requirement in the LSA for the two fiscal quarters ending December 31, 2018 was reduced, (ii) the interest rate for the loans under the LSA was increased to the sum of (i) the greater of (A) the prime rate as reported in the Wall Street Journal and (B) 4.0%, plus (ii) 8.25%, (iii) the prepayment charge for the loans under the LSA was increased to (A) if the prepayment occurs prior to June 29, 2019, the sum of (x) 3% of the amount being prepaid plus (y) all required remaining scheduled interest payments which would have been due on the amount being prepaid through June 28, 2019, (B) if the prepayment occurs on or after June 29, 2019 and prior to June 29, 2020, 2% of the amount being prepaid and (C) if the prepayment occurs on or after June 29, 2020 and prior to June 29, 2021, 1% of the amount being prepaid and (iv) the minimum liquidity requirement in the LSA was increased by $5.0 million.
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ITEM 6. EXHIBITS
| Exhibit |
| No. | Description |
| 4.01 | Common Stock Purchase Warrant issued August 17, 2018 by registrant to Foris Ventures, LLC |
| 4.02 | Common Stock Purchase Warrant issued August 17, 2018 by registrant to Vivo Capital Fund VIII, L.P. |
| 4.03 | Common Stock Purchase Warrant issued August 17, 2018 by registrant to Vivo Capital Surplus Fund VIII, L.P. |
| 4.04 | Amendment, dated August 17, 2018, to Common Stock Purchase Warrant issued May 11, 2017 by registrant to Foris Ventures, LLC |
| 4.05 | Amendment, dated August 17, 2018, to Common Stock Purchase Warrant issued May 11, 2017 by registrant to Foris Ventures, LLC |
| 4.06 | Amendment, dated August 17, 2018, to Common Stock Purchase Warrant issued August 3, 2017 by registrant to Vivo Capital Fund VIII, L.P. |
| 4.07 | Amendment, dated August 17, 2018, to Common Stock Purchase Warrant issued August 3, 2017 by registrant to Vivo Capital Surplus Fund VIII, L.P. |
| 4.08 | Common Stock Purchase Warrant issued August 20, 2018 by registrant to Vivo Capital Fund VIII, L.P. |
| 4.09 | Common Stock Purchase Warrant issued August 20, 2018 by registrant to Vivo Capital Surplus Fund VIII, L.P. |
| 10.01 | Warrant Exercise Agreement, dated August 17, 2018, between registrant and Foris Ventures, LLC |
| 10.02 | Warrant Exercise Agreement, dated August 17, 2018, between registrant and Vivo Capital Fund VIII, L.P. |
| 10.03 | Warrant Exercise Agreement, dated August 17, 2018, between registrant and Vivo Capital Surplus Fund VIII, L.P. |
| 10.04 | Amendment No. 1, dated August 24, 2018, to the Loan and Security Agreement, dated June 29, 2018, by and among registrant, certain of registrant’s subsidiaries and GACP Finance Co., LLC, as administrative agent and lender |
| 31.01 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.02 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.01* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.02* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |

*This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
| 43 |

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMYRIS, INC. |
| By: | /s/ John G. Melo |
| John G. Melo |
| President and Chief Executive Officer (Principal Executive Officer) |
| November 15, 2018 |
| By: | /s/ Kathleen Valiasek |
| Kathleen Valiasek |
| Chief Financial Officer (Principal Financial Officer) |
| November 15, 2018 |

44

Question: What is the change in total value of assets measured and recorded at fair value from December 31, 2017 to September 30, 2018 in thousands?

Solution:
def solution():
    #Define variables name and value
    Total_assets_2018 = 5313 
    Total_assets_2017 = 61012 

    #Do math calculation to get the answer
    change_in_Total_assets= Total_assets_2018 - Total_assets_2017
    answer = change_in_Total_assets
    return answer


Answer: -55699