SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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þ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~June 30, 2016~~March 31, 2017

¨☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number: 001-36475

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20400 Stevens Creek Blvd., Suite 700

(Registrant’s telephone number, including area code)

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Quarterly Period Ended ~~June 30, 2016~~March 31, 2017

PART I--FINANCIAL INFORMATION

Financial Statements.

PART II--OTHER INFORMATION

SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements.

(In thousands except for par value)

	June 30, 2016			December 31, 2015			March 31, 2017	December 31, 2016
Assets	(Unadudited)						(Unaudited)
Current assets:
Cash and cash equivalents	$	591		$	283		$231	$1,486
Accounts receivable		684			1,166		1,004	1,557
Inventories		3,070			4,804		2,784	3,241
Prepaid expenses		408			527		698	555
Other current assets		2,756			1,222		213	206
Total current assets		7,509			8,002		4,930	7,045

Property, plant and equipment, net		68,524			70,718		65,670	66,370
Intangible assets, net of accumulated amortization of $384 and $344, respectively	��	1,340			1,380
Intangible assets, net of accumulated amortization of $444 and $424, respectively							1,280	1,300
Other assets		3,084			3,041		3,097	3,095
Total assets	$	80,457		$	83,141		$74,977	$77,810

Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	6,903		$	10,183		$7,812	$7,842
Current portion of long term debt		4,815			5,607		1,575	2,027
Short term borrowings		9,945			6,340		11,280	9,382
Mandatorily redeemable Series B convertible preferred stock		2,792			2,742		2,869	2,844
Accrued property taxes							2,947	2,648
Other current liabilities		5,248			4,425		2,518	2,473
Total current liabilities		29,703			29,297		29,001	27,216

Long term liabilities:
Senior secured notes		67,277			60,925		64,524	61,631
EB-5 notes		22,500			22,500		33,500	33,000
Long term subordinated debt		5,598			5,523		5,711	5,674
Other long term liabilities		146			190		80	102
Total long term liabilities		95,521			89,138		103,815	100,407

Stockholders' deficit:
Series B convertible preferred stock, $0.001 par value; 7,235 authorized; 1,328 and 1,398 shares issued and outstanding each period, respectively (aggregate liquidation preference of $3,984 and $4,194, respectively)		1			1
Common stock, $0.001 par value; 40,000 authorized; 19,745 and 19,619 shares issued and outstanding, respectively		20			20
Series B convertible preferred stock, $0.001 par value; 7,235 authorized; 1,328 and 1,328 shares issued and outstanding each period, respectively (aggregate liquidation preference of $3,984 and $3,984, respectively)							1
Common stock, $0.001 par value; 40,000 authorized; 19,696 and 19,858 shares issued and outstanding, respectively							20
Additional paid-in capital		82,844			82,115		83,573	83,441
Accumulated deficit		(124,347	)		(114,251	)	(138,414)	(129,887)
Accumulated other comprehensive loss		(3,285	)		(3,179	)	(3,019)	(3,388)
Total stockholders' deficit		(44,767	)		(35,294	)	(57,839)	(49,813)

Total liabilities and stockholders' deficit	$	80,457		$	83,141		$74,977	$77,810

(Unaudited, in thousands except for earnings per share)

	For the three months ended June 30,						For the six months ended June 30,						For the three months ended March 31,
	2016			2015			2016			2015			2017	2016
Revenues	$	33,059		$	38,067		$	66,385		$	72,793		$31,574	$33,326

Cost of goods sold		31,115			36,118			62,355			71,072		32,161	31,240

Gross profit		1,944			1,949			4,030			1,721
Gross profit (loss)													(587)	2,086

Research and development expenses		106			104			203			213		86	97
Selling, general and administrative expenses		2,902			3,148			5,901			6,782		3,295	2,999

Operating loss		(1,064	)		(1,303	)		(2,074	)		(5,274	)	(3,968)	(1,010)

Other income (expense)
Other (income) expense:

Interest expense
Interest rate expense		(2,955	)		(2,485	)		(5,633	)		(5,031	)	2,842	2,678
Amortization expense		(1,489	)		(2,405	)		(2,844	)		(4,128	)	1,683	1,355
Loss on debt extinguishment		-			-			-			(330	)
Other income (expense)		525			(94	)		461			(161	)
Other expense													28	64

Loss before income taxes		(4,983	)		(6,287	)		(10,090	)		(14,924	)	(8,521)	(5,107)

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

Net loss	$	(4,983	)	$	(6,287	)	$	(10,096	)	$	(14,930	)	$(8,527)	$(5,113)

Other comprehensive loss
Other comprehensive income (loss)
Foreign currency translation adjustment		(100	)		(84	)		(106	)		(46	)	369	(6)
Comprehensive loss	$	(5,083	)	$	(6,371	)	$	(10,202	)	$	(14,976	)	$(8,158)	$(5,119)

Net loss per common share
Basic	$	(0.25	)	$	(0.32	)	$	(0.51	)	$	(0.74	)	$(0.43)	$(0.26)
Diluted	$	(0.25	)	$	(0.32	)	$	(0.51	)	$	(0.74	)	$(0.43)	$(0.26)

Weighted average shares outstanding
Basic		19,741			19,590			19,695			20,090		19,776	19,648
Diluted		19,741			19,590			19,695			20,090		19,776	19,648

(Unaudited, in thousands)

	For the six months ended June 30,						For the three months ended March 31,
	2016			2015			2017	2016
Operating activities:
Net loss	$	(10,096	)	$	(14,930	)	$(8,527)	$(5,113)
Adjustments to reconcile net loss to net cash used in operating activitites:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:							Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share-based compensation		401			533		409	117
Stock issued in connection with consultant services		-			204
Depreciation		2,353			2,388		1,146	1,175
Debt related amortization expense		2,844			4,128		1,683	1,355
Intangibles and other amortization expense		63			64		33	32
Change in fair value of warrant liability		12			(41	)	5	16
Loss on extinguishment of debt		-			330

Changes in operating assets and liabilities:
Accounts receivable		472			(888	)	569	210
Inventories		1,682			(963	)	498	2,003
Prepaid expenses		118			431		(142)	-
Other current assets and other assets		(1,624	)		(98	)
Other current and long-term assets							1	(578)
Accounts payable		(3,141	)		(78	)	(303)	(1,948)
Accrued interest expense and fees, net of payments		5,243			4,799		1,977	2,947
Other liabilities		766			592		181	501
Net cash used in operating activities		(907	)		(3,529	)
Net cash provided by (used in) operating activities							(2,470)	717

Investing activities:
Capital expenditures		(400	)		(15	)	(44)	(308)
Net cash used in investing activities		(400	)		(15	)	(44)	(308)

Financing activities:
Proceeds from borrowings		4,006			25,459		3,043	777
Repayments of borrowings		(2,310	)		(18,939	)	(2,050)	(1,143)
Issuance of common stock for services, option and warrant exercises		-			21
Net cash provided by financing activities		1,696			6,541
Net cash provided by (used in) financing activities							993	(366)

Effect of exchange rate changes on cash and cash equivalents		(81	)		(4	)	266	(1)
Net cash and cash equivalents increase for period		308			2,993
Net cash and cash equivalents (decrease) increase for period							(1,255)	42
Cash and cash equivalents at beginning of period		283			332		1,486	283
Cash and cash equivalents at end of period	$	591		$	3,325		$231	$325

Supplemental disclosures of cash flow information, cash paid:
Interest payments	$	542		$	245
Income tax expense		6			6

Interest paid							$1,004	$86
Income taxes paid							6
Supplemental disclosures of cash flow information, non-cash transactions:							Supplemental disclosures of cash flow information, non-cash transactions:
Proceeds from exercise of stock options applied to accounts payable		-			21
Issuance of warrants to subordinated debt holders		328			668
Repurchase of common stock on revolver loan advance		-			7,818
Stock issued in connection with services		-			204
Subordinated debt extension fees added to debt							340
Fair value of warrants issued to subordinated debt holders							174	328
Repurchase of common stock on agent advance sub debt							451	-
Senior debt extension and waiver fees added to debt							4,446	4,940
Settlement of accounts payable through transfer of equipment		66			-		-	66

The accompanying notes are an integral part of the financial statements.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Nature of Activities and Summary of Significant Accounting Policies

Nature of Activities. These consolidated financial statements include the accounts of Aemetis, Inc. (formerly AE Biofuels, Inc.), a Nevada corporation, and its wholly owned subsidiaries (collectively, “Aemetis” or the “Company”):

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

●

·	~~Biofuels Marketing, Inc., a Delaware corporation;~~

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

·	~~Aemetis International, Inc., a Nevada corporation, and its subsidiary International Biofuels, Ltd., a Mauritius corporation, and its subsidiary Universal Biofuels Private, Ltd., an India company;~~

●

·	~~Aemetis Technologies, Inc., a Delaware corporation;~~

Biofuels Marketing, Inc., a Delaware corporation;

·	~~Aemetis Biochemicals, Inc., a Nevada corporation;~~

●

·	~~Aemetis Biofuels, Inc., a Delaware corporation, and its subsidiary Energy Enzymes, Inc., a Delaware corporation;~~

Aemetis International, Inc., a Nevada corporation, and its subsidiary International Biofuels, Ltd., a Mauritius corporation, and its subsidiary Universal Biofuels Private, Ltd., an India company;

·	~~AE Advanced Fuels, Inc., a Delaware corporation, and its subsidiaries Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, and Aemetis Facility Keyes, Inc., a Delaware corporation;~~

●

·	~~Aemetis Advanced Fuels, Inc., a Nevada corporation;~~

Aemetis Technologies, Inc., a Delaware corporation;

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

●

·	~~Aemetis Advanced Fuels Goodland, Inc., a Delaware corporation.~~

Aemetis Biochemicals, Inc., a Nevada corporation;

●

Aemetis Biofuels, Inc., a Delaware corporation, and its subsidiary Energy Enzymes, Inc., a Delaware corporation;

●

AE Advanced Fuels, Inc., a Delaware corporation, and its subsidiaries Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, and Aemetis Facility Keyes, Inc., a Delaware corporation;

●

Aemetis Advanced Fuels, Inc., a Nevada corporation;

●

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

●

Aemetis Advanced Fuels Goodland, Inc., a Delaware corporation; and,

●

Aemetis Advanced Biorefinery Keyes, Inc., a Delaware corporation.

Basis of Presentation and Consolidation.The consolidated condensed financial statements include the accounts of Aemetis, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated condensed balance sheet as of ~~June 30, 2016,~~March 31, 2017, the consolidated condensed statements of operations and comprehensive loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ and the consolidated condensed statements of cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~ are unaudited. The consolidated condensed balance sheet as of December 31, ~~2015~~2016 was derived from the ~~2015~~2016 audited consolidated financial statements and notes thereto. The consolidated condensed financial statements in this report should be read in conjunction with the ~~2015~~2016 audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2015.~~2016.

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. To the extent there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.

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

Cost of Goods Sold. Cost of goods sold includes those costs directly associated with the production of revenues, such as raw material consumed, factory overhead and other direct production costs. During periods of idle plant capacity, costs otherwise charged to cost of goods sold are reclassified to selling, general and administrative expense.

Accounts Receivable.The Company sells ethanol, WDG, ~~corn syrup~~CDS, and distillers’ corn oil through third-party marketing arrangements generally without requiring collateral. The Company sells biodiesel, glycerin, and processed natural oils to a variety of customers and may require advanced payment based on the size and creditworthiness of the customer. Accounts ~~receivable consists~~receivables consist of product sales made to large creditworthy customers. Trade accounts receivable are presented at original invoice amount, net of ~~the~~any allowance for doubtful accounts.

Inventories. Ethanol inventory, raw materials, and work-in-process are valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value (NRV). Distillers’ grains and related products are stated at NRV. In the valuation of inventories, NRV is determined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Property, Plant and Equipment. Property, plant and equipment are carried at cost less accumulated depreciation after assets are placed in service and are comprised primarily of buildings, furniture, machinery, equipment, land, and the biodiesel plant in India. It is the Company’s policy to depreciate capital assets over their estimated useful lives using the straight-line method.

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Basic and Diluted Net ~~Income (Loss)~~Loss per Share. Basic ~~income (loss)~~net loss per share is computed by dividing ~~income or~~net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted ~~income (loss)~~net loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock, debt, and warrants to the extent the impact is dilutive. As the Company incurred net losses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ potentially dilutive securities have been excluded from the diluted net loss per share computations as their effect would be anti-dilutive.

	As of				As of
	June 30, 2016		June 30, 2015		March 31, 2017	March 31, 2016

Series B preferred (1:10 post split basis)		133		146	133
Common stock options and warrants		1,953		1,352	2,613	1,316
Debt with conversion feature at $30 per share of common stock		806		717	1,168	801
Total number of potentially dilutive shares excluded from the diluted net loss per share calculation		2,892		2,215	3,914	2,250

Comprehensive Loss. ASC 220 Comprehensive Incomerequires that an enterprise report, by major components and as a single total, the change in its net assets from non-owner sources. The Company’s other comprehensive income (loss) and accumulated other comprehensive loss consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiary. The investment in this subsidiary is considered indefinitely invested overseas, and as a result, deferred income taxes are not recorded related to the currency translation adjustments.

Foreign Currency Translation/Transactions. Assets and liabilities of the Company’s non-U.S. subsidiary that operates in a local currency environment, where that local currency is the functional currency, are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates. Gains and losses from other foreign currency transactions are recorded in other income (expense).

Operating Segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Aemetis recognizes two reportable geographic segments: “North America” and “India.”

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Fair Value of Financial Instruments. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate their estimated fair values due to the short-term maturities of those financial instruments. These financial instruments are considered Level 21 measurements under the fair value hierarchy. Due to the unique terms of our notes payable and lines of credit and the financial condition of the Company, the fair value of the debt is not readily determinable ~~upon~~and outside valuation experts are used to estimate the discount rate using the similar instruments in case of application of extinguishment ~~accounting to our debt instruments. We use outside valuation experts to estimate the applicable discount rate using similar instruments.~~accounting.

Share-Based Compensation. The Company recognizes share-based compensation expense in accordance with ASC 718 Stock Compensation, requiring the Company to recognize expense related to the estimated fair value of the Company’s share-based compensation awards at the time the awards are granted adjusted to reflect only those shares that are expected to vest.

Commitments and Contingencies. The Company records and/or discloses commitments and contingencies in accordance with ASC 450Contingencies. ASC 450 applies to an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.

Debt Modification Accounting. The Company evaluates amendments to its debt in accordance with ASC 470-50 Debt – Modification and Extinguishments for modification and extinguishment accounting. This evaluation includes comparing the net present value of cash flows of the new debt to the old debt to determine if changes greater than 10 percent occurred. In instances where the net present value of future cash flows changed more than 10 percent, the Company applies extinguishment accounting and determines the fair value of its debt based on factors available to the Company.

Convertible Instruments. The Company evaluates the impacts of convertible instruments based on the underlying conversion features. Convertible instruments are evaluated for treatment as derivatives that could be bifurcated and recorded separately. Any beneficial conversion feature is recorded based on the intrinsic value difference at the commitment date.

Recently Issued Accounting Pronouncements.

	March 31, 2017	December 31, 2016
Raw materials	$979	$1,044
Work-in-progress	1,405	1,360
Finished goods	400	837
Total inventories	$2,784	$3,241

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

~~2. Inventories~~

~~Inventory consists of the following:~~

June 30,
2016

December 31,
2015

Raw materials $ 1,310 $ 1,219
Work-in-progress 1,390 1,807
Finished goods 370 1,778
Total inventories $ 3,070 $ 4,804

Property, Plant and Equipment

	Years
Plant and buildings		20 - 30
Machinery & ~~Equipment~~equipment		5 - 7
Furniture ~~and~~& fixtures		3 - 5

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

	March 31, 2017	December 31, 2016
Third Eye Capital term notes	$6,645	$6,577
Third Eye Capital revolving credit facility	27,450	24,927
Third Eye Capital revenue participation term notes	11,153	11,042
Third Eye Capital acquisition term notes	19,276	19,085
Third Eye Capital promissory note	2,124	-
Cilion shareholder seller notes payable	5,711	5,674
Subordinated notes	7,785	7,565
EB-5 long term promissory notes	35,075	35,027
Unsecured working capital loans	1,371	1,817
Total debt	116,590	111,714
Less current portion of debt	12,855	11,409
Total long term debt	$103,735	$100,305

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Third Eye Capital Note Purchase Agreement

On March 1, 2017, Third Eye Capital agreed to Amendment No. 1213 to the Note Purchase Agreement to: (i) extend the maturity date of the Third Eye Capital Notes to April 1, ~~2017~~2018 in exchange for a 5% extension fee consisting of adding $3.1 million to the outstanding principal balance of the ~~Revolving Credit Facility~~Note Purchase Agreement and ~~to allow~~allowing for the further extension of the maturity date of the Third Eye Capital Notes to April 1, ~~2018,~~2019, at the Company’s election, for an additional extension fee of 5% of the then outstanding Third Eye Capital Notes, (ii) waive the free cash flow financial covenant under the Note Purchase Agreement for the three months ended December 31, ~~2015,~~2016, (iii) provide that such covenant ~~need not~~will be ~~complied with for~~deleted prospectively from the ~~fiscal quarters ending March 31, June 30~~Note Purchase Agreement, (iv) waive the default under the Note Purchase Agreement relating to indebtedness outstanding to Laird Cagan and ~~September 30, 2016, (iv) revise~~(v) waive the ~~Keyes Plant market value~~covenant under the Note Purchase Agreement to ~~note indebtedness ratio to 70%, (v) add a covenant that~~permit the Company ~~shall have received I-924 approval~~to pay off the defaulted Laird Cagan subordinated note by issuing stock. The borrowers agreed to use their best efforts to close the transaction to purchase assets in Goodland, Kansas from the U.S. Citizenship and Immigration Services (USCIS) for additional EB-5 Program financing of at least $35 million by June 1, 2016 and (vi) increase the basket for all costs and expenses that may be reimbursedThird Eye Capital as described in a non-binding offer to ~~directors~~purchase letter between an affiliate of the Company and ~~its affiliates to $0.3 million in any given fiscal year.~~Third Eye Capital. As consideration for such amendment and waiver, the borrowers agreed to pay Third Eye Capital an amendment and waiver fee of ~~$1.5 million~~$750 thousand to be added to the outstanding principal balance of the Revolving Credit ~~Facility,~~Facility. As a result of the extension of the maturity date in Amendment No. 13, the Third Eye Capital Notes are classified as non-current debt. We evaluated the Amendment of the Notes and ~~to deliver~~applied modification accounting treatment in accordance with ASC 470-50Debt – Modification and Extinguishment.

On April 28, 2017, the Company entered into a ~~binding letter of intent from Aemetis Advanced Fuels Goodland, Inc. to acquire the plant, property~~short-term credit facility for working capital and ~~equipment located in Goodland, Kansas and previously owned~~other general corporate purposes governed by ~~New Goodland Energy Center for $15,000,000 in assumed debt. In addition,~~ a Promissory Note ~~dated February 9, 2016~~ for ~~$0.3~~$1.5 million ~~was added~~payable to Third Eye Capital with an interest rate of 14% per annum maturing on the earliest of (a) closing of the Financing, (b) receipt of proceeds from any financing, refinancing or other similar transaction, (c) extension of credit by the Lender, or Agent on behalf of certain lenders or the Noteholders, to the Debtors or their affiliates, and (d) June 15, 2017.

Terms of Third Eye Capital Notes

Term Notes.As of March 31, 2017, the Company had $6.6 million in principal and interest outstanding under the Term Notes, net of unamortized fair value discounts of $0.4 million. The Term Notes mature on April 1, 2018. Interest on the Term Notes accrues at 14% per annum.

Revolving Credit Facility.The Revolving Credit Facility accrues interest at the prime rate plus 13.75% (17.75% as of March 31, 2017), payable monthly in arrears. The Revolving Credit Facility matures on April 1, 2018. As of March 31, 2017, AAFK had $27.5 million in principal ~~balance~~and interest outstanding, net of unamortized debt issuance costs of $1.5 million on the Revolving Credit ~~Facility as part of the Amendment No. 12.~~Facility.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

~~On April 15, 2016, a Promissory Note for $1.2 million (April Promissory Note) was advanced by Third Eye Capital to Aemetis Inc., as a bridge loan with 12%~~Revenue Participation Term Notes.The Revenue Participation Term Notes bear interest at 5% per annum ~~maturing~~and mature on ~~the earlier of (a) receipt of proceeds from any financing to Aemetis Advanced Fuels Goodland, Inc., and (b) 60 days from the Note date or June 14, 2016. The~~ April Promissory Note was subject to cross default provisions on other Third Eye Capital Notes and the waiver was obtained on July 31, 2016 to extend the maturity date of the April Promissory Note to September 30, 2016 with an increase in interest per annum to 18%.1, 2018. As of ~~June 30, 2016, the Company~~March 31, 2017, AAFK had ~~$1.2~~$11.2 million in principal and interest outstanding, net of unamortized discounts of $0.6 million, on the ~~April Promissory Note.~~Revenue Participation Term Notes.

~~Terms~~

Acquisition Term Notes.The Acquisition Term Notes accrue interest at the prime rate plus 10.75% (14.75% per annum as of March 31, 2017) and mature on April 1, 2018. As of March 31, 2017, Aemetis Facility Keyes, Inc. had $19.3 million in principal and interest outstanding, net of unamortized discounts of $1.0 million, on the Acquisition Term Notes.

January 2017 Note.The January 2017 Note accrues interest at 14% and matures on May 30, 2017. As of March 31, 2017, the outstanding balance on the January 2017 Note was $2.1 million.

~~Term Notes~~. ~~As of June 30, 2016, the Company had $6.3 million in principal and interest outstanding under the Term Notes, net of unamortized fair value discounts of $0.3~~The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from Aemetis, Inc. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $8.0 million. ~~The Term Notes mature on April 1, 2017*. Interest on the Term Notes accrues at 14% per annum.~~

~~Revolving Credit Facility~~. The Revolving Credit Facility accrues interest at the prime rate plus 13.75% (17.25% as of June 30, 2016) payable monthly in arrears. The Revolving Credit Facility matures on April 1, 2017*. As of June 30, 2016, AAFK had $31.8 million in principal and interest outstanding, net of unamortized debt issuance costs of $1.5 million on the Revolving Credit Facility.

~~Revenue Participation Term Note~~. The Revenue Participation Term Note bears interest at 5% per annum and matures on April 1, 2017*. As of June 30, 2016, AAFK had $10.7 million in principal and interest outstanding, net of unamortized discounts of $0.6 million, on the Revenue Participation Term Note.

~~Acquisition Term Notes~~. The Acquisition Term Notes accrue interest at prime rate plus 10.75% (14.25% per annum as of June 30, 2016) and mature on April 1, 2017*. As of June 30, 2016, Aemetis Facility Keyes, Inc. had $18.5 million in principal and interest outstanding, net of unamortized discounts of $0.9 million, on the Acquisition Term Notes.

~~The Third Eye Capital Notes contain various covenants, including but not limited to, minimum free cash flow debt ratio and production requirements and restrictions on capital expenditures.~~

The Third Eye Capital Notes are secured by first priority liens on all real and personal property of, and assignment of proceeds from all government grants and guarantees from Aemetis, Inc. The Third Eye Capital Notes all contain cross-collateral and cross-default provisions. McAfee Capital, LLC (“McAfee Capital”), owned by Eric McAfee, the Company’s Chairman and CEO, provided a guaranty of payment and performance secured by all of its Company shares. In addition, Eric McAfee provided a blanket lien on substantially all of his personal assets, and McAfee Capital provided a guarantee in the amount of $8.0 million.

*The note maturity date can be extended by the Company to April 2018. As a condition to any such extension, the Company would be required to pay a fee of 5% of the carrying value of the debt. By this ability to extend the maturity at the Company's will, the Third Eye Capital Notes are classified under the non-current debt.

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

Cilion shareholder seller notes payable. In connection with the Company’s merger with Cilion, Inc., ~~(Cilion)~~(“Cilion”) on July 6, 2012, the Company issued $5.0 million in notes payable to Cilion shareholders as merger compensation subordinated to the senior secured Third Eye Capital Notes. The liability bears interest at 3% per annum and is due and payable after the Third Eye Capital Notes have been paid in full. As of ~~June 30, 2016,~~March 31, 2017, Aemetis Facility Keyes, Inc. had ~~$5.6~~$5.7 million in principal and interest outstanding under the Cilion shareholder seller notes payable.

Subordinated Notes. On January 6 and January 9, 2012, AAFK entered into Note and Warrant Purchase Agreements with two accredited investors pursuant to which it issued $0.9 million and $2.5 million in original notes to the investors (Subordinated Notes). The Subordinated Notes mature every six months. Upon maturity, the notes are generally extended with a fee of 10% added to the balance outstanding plus issuance of warrants exercisable at $0.01 with a two year term. Interest is due at maturity. Neither AAFK nor Aemetis may make any principal payments under the Subordinated Notes until all loans made by Third Eye Capital to AAFK are paid in full.

On ~~July~~January 1, ~~2016,~~2017, the Subordinated Notes were amended to extend the maturity date until the earlier of (i) ~~December 31, 2016;~~June 30, 2017; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; (iii) the completion of an Initial Public Offering by AAFK or Aemetis; or (iv) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10% cash extension fee was paid by adding the fee to the balance of the new note and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. We ~~will evaluate these July~~evaluated the January 1, ~~2016 amendments~~2017 amendment and the refinancing terms of the notes and ~~determine the~~applied modification accounting treatment in accordance with ASC 470-50 Debt – Modification and Extinguishment.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

EB-5 long-term promissory notes. EB-5 is a U.S. government program authorized by the Immigration and Nationality Act designed to foster employment-based visa preference for immigrant investors to encourage the flow of capital into the U.S. economy and to promote employment of U.S. workers. OnThe Company entered into a Note Purchase Agreement dated March 4, 2011, ~~and~~(as further amended on January 19, 2012 and July 24, ~~2012, the Company entered into a Note Purchase Agreement~~2012) with Advanced BioEnergy, LP, a California limited partnership authorized as a Regional Center to receive EB-5 investments, for the issuance of up to 72 subordinated convertible promissory notes (the “EB-5 Notes”) bearing interest at 3%, with each note in the principal amount of $0.5 million and due and payable four years from the date of ~~the~~each note, for a total aggregate principal amount of up to $36.0 ~~million.~~million (the “EB-5 Phase I funding”). The ~~notes~~EB-5 Notes are convertible after three years at a conversion price of ~~$30.00~~$30 per share.

Unsecured working capital loans. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad Oils”). Under this agreement, Secunderabad Oils agreed to provide the Company with working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for its Kakinada biodiesel facility. Working capital advances bear interest at the actual bank borrowing rate of Secunderabad Oils of ~~fifteen percent (15%)~~12%. In return, the Company agreed to pay Secunderabad Oils an amount equal to 30% of the plant’s monthly net operating profit. In the event that the Company’s biodiesel facility operates at a loss, Secunderabad Oils ~~owes~~would owe the Company 30% of the losses. The agreement can be terminated by either party at any time without penalty. On January 1, 2016, Secunderabad Oils suspended the agreement to use any funds provided under the agreement to buy feedstock until commodity prices returned to economically viable levels. On June 1, 2016, the agreement was reinitiated on the terms described above.

Twelve months ended June 30, Debt Repayments
2017 $             14,760
2018                73,146
2019                20,500
2020                  5,098
Total debt              113,504
Discounts             (3,369)
Total debt, net of discounts $           110,135

~~5. Stock-Based Compensation~~

~~Common Stock Reserved for Issuance~~

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Twelve months ended March 31,	Debt Repayments
2018	$12,855
2019	88,569
2020	8,000
2021	10,711
Total debt	120,135
Discounts	(3,545)
Total debt, net of discounts	$116,590

5. Stock-Based Compensation

Common Stock Reserved for Issuance

Aemetis authorized the issuance of ~~1.9~~2.6 million shares of common stock under its Zymetis 2006 Stock Plan and Amended and Restated 2007 Stock Plan (together, the “Company Stock Plans”), which ~~include~~includes both incentive and non-statutory stock options. These options generally expire five to ten years from the date of grant with a general vesting term of 1/12th every three months and are exercisable at any time after vesting subject to continuation of employment.

Non-Plan Stock Options

Inducement Equity Plan Options

Shares Available

for Grant

Number of Shares Outstanding

Weighted-Average

Exercise Price

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Stock-based compensation for employees

Valuation and Expense Information

There were 637 thousand options granted during the three months ended March 31, 2017.

Description	For the three months ended March 31, 2017
Dividend-yield	0%
Risk-free interest rate	2.28%
Expected volatility	74.83%
Expected life (years)	7
Market value per share on grant date	$1.72
Fair value per share on grant date	$1.21

As of March 31, 2017, the Company had $1.5 million of total unrecognized compensation expense for employees which the Company will amortize over the 2.3 years of weighted average remaining term.

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

~~The Company granted 699 thousand stock options during the three months ended June 30, 2016.~~

~~The fair value calculations for options granted to employees under the employee stock plans during the quarter are based on the following assumptions:~~

Agreements

Description
Three months ended
June 30, 2016

Dividend-yield 0 %
Risk-free interest rate 1.67 %
Expected volatility 77.75 %
Expected life (years) 7
Market value per share on grant date $ 2.54
Fair value per share on grant date $ 1.81

~~As of June 30, 2016, the Company had $1.5 million of total unrecognized compensation expense for employees, which the Company will amortize over a 2.6 years of weighted average remaining term.~~

~~6. Agreements~~

Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, wethe Company agreed to procure whole yellow corn and ~~grain sorghum~~milo primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions, however, in the past all of our grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn and milo pass to the Company when the corn isand milo are deposited into the weigh bin. The term of the Agreement expires on December 31, ~~2016~~2017 and is automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all ethanol to Kinergy Marketing or other marketing purchasers designated by the Company and all WDG and corn oil to A.L. Gilbert. Our relationships with J.D. Heiskell, Kinergy Marketing, and A.L. Gilbert are well established and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. Revenue is recognized upon delivery of ethanol to J. D. Heiskell as revenue recognition criteria have been met and any performance required of the Company subsequent to the ~~sale~~delivery to J.D. Heiskell is inconsequential. These agreements are ordinary purchase and sale agency agreements for the Keyes plant.

The J.D. Heiskell sales activity associated with the Purchasing Agreement and the Corn Procurement and Working Capital ~~Agreements~~Agreement during the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015 are~~were as follows:

~~AEMETIS, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

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

	As of and for the three months ended June 30,				As of and for the six months ended June 30,				As of and for the three months ended March 31,
	2016		2015		2016		2015		2017	2016
Ethanol sales	$	24,055	$	24,247	$	44,306	$	46,859	$22,544	$20,251
Wet distiller's grains sales		5,629		6,609		10,804		13,959	4,564	5,175
Corn oil sales		737		1071		1,444		1,936	798	707
Corn/milo purchases		23,315		24,934		44,668		50,893	23,468	21,353
Accounts receivable		374		329		374		329	336	302
Accounts payable		1,543		1,673		1,543		1,673	1,616	1,391

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company has entered into an Ethanol Marketing Agreement with Kinergy Marketing and a Wet Distillers Grains Marketing Agreement with A. L. Gilbert. Under the terms of the agreements, subject to certain conditions, the agreements with Kinergy Marketing and with A.L. Gilbert ~~matures~~mature on August 31, ~~2016~~2017 and on December 31, ~~2016,~~2017, respectively, each with automatic one-year renewals thereafter. For the three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ the Company expensed marketing costs of ~~$0.6~~$0.5 million ~~for~~ each, ~~period, respectively,~~ under the terms of both ~~ethanol~~the Ethanol Marketing Agreement and ~~wet distiller’s grains marketing agreements. For~~ the ~~six months ended June 30, 2016 and 2015, the Company expensed marketing costs of $1.1 million and $1.2 million, respectively.~~Wet Distillers Grains Marketing Agreement.

Segment Information

Aemetis recognizes two reportable geographic segments: “North America” and “India.” The “North America” operating segment includes the Company’s owned ethanol plant in Keyes, California and its technology lab in College Park, Maryland. As the Company’s technology gains market acceptance, this business segment ~~will~~is expected to include its domestic commercial application of cellulosic ethanol technology, its plant construction projects and any acquisitions of ethanol or ethanol related technology facilities in North America.

The “India” operating segment includes the Company’s 50 million gallon per year nameplate capacity biodiesel manufacturing plant in Kakinada, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius. The Company’s biodiesel is marketed and sold primarily to customers in India through brokers and by the Company directly.

~~Summarized financial information by reportable segment for the three and six months ended June 30, 2016 and 2015 follows:~~

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Summarized financial information by reportable segment for the three months ended March 31, 2017 and 2016 follows:

For the three months

ended March 31,

North ~~America:~~America. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, the Company’s revenues from ethanol, WDG, and corn oil were made pursuant to the Corn Procurement and Working Capital Agreement established between the Company and J.D. Heiskell. Sales of ethanol, WDG, and corn oil to J.D. Heiskell accounted for ~~95% and 94% of the Company’s North America segment revenues for the three and six months ended June 30, 2016, respectively.~~

India. During the three months ended ~~June 30, 2016,~~March 31, 2017, one customer in biodiesel ~~customer~~ accounted for ~~50%~~44% and one customer in refined glycerin ~~customer~~ accounted for ~~12%~~13% of the Company’s consolidated India segment ~~revenues, compared to two~~revenues. During the three months ended March 31, 2016, one customer in biodiesel ~~customers accounting~~accounted for ~~47% and 10%~~53% and no customer in refined glycerin ~~customers accounting~~accounted for more than 10% of the Company’s consolidated India segment ~~revenues during the three months ended June 30, 2015.~~revenues.

Related Party Transactions

AEMETIS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

Subsequent Events

~~8. Related Party Transactions~~

~~As of June 30, 2016 and December 31, 2015,~~On April 28, 2017, the Company ~~owes Eric McAfee~~entered into a short-term credit facility for working capital and ~~McAfee~~other general corporate purposes governed by a Promissory Note for $1.5 million payable to Third Eye Capital ~~solely owned by Eric McAfee, $360 thousand each in connection~~ with ~~employment agreements and expense reimbursements, which are included in accrued expenses and accounts payable~~an interest rate of 14% per annum maturing on the ~~balance sheet. For~~earliest of (a) closing of the ~~three months ended June 30, 2016 and 2015,~~Financing, (b) receipt of proceeds from any financing, refinancing or other similar transaction, (c) extension of credit by the ~~Company expensed $19 thousand and $11 thousand, respectively, to reimburse actual expenses incurred by McAfee Capital and related entities. For~~Lender, or Agent on behalf of certain lenders or the ~~six months ended June 30, 2016 and 2015, the Company expensed $42 thousand and $38 thousand, respectively, to reimburse actual expenses incurred by McAfee Capital and related entities.~~

~~9. Subsequent Events~~

~~Subordinated Debt Refinancing~~

On July 1, 2016, the Subordinated Notes with two accredited investors were amended to extend the maturity date until the earlier of (i) December 31, 2016; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25.0 million; (iii) the completion of an Initial Public Offering by AAFK or Aemetis; or (iv) after the occurrence of an Event of Default, including failure to pay interest or principal when due and breaches of note covenants. A 10% cash extension fee was paid by adding the feeNoteholders, to the ~~balance of the new Note~~Debtors or their affiliates, and warrants to purchase 113 thousand shares of common stock were granted with a term of two years and an exercise price of $0.01 per share. Accounting of the July 1, 2016 amendments and the refinancing terms of the Notes will be evaluated in accordance with ASC 470-50 ~~Debt – Modification and Extinguishment~~.(d) June 15, 2017.

10. Management’s ~~Plan~~Plans

The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. The Company has been reliant on their senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. Management’s plans for the Company ~~include:~~include, but are not limited to:

·	~~Operating the Keyes plant;~~

●

·	~~Continuing to incorporate lower-cost, non-food advanced biofuels feedstock at the Keyes plant when economical;~~

Operating the Keyes plant at a profitable level;

·	~~Obtaining $12.5 million of EB-5 funding at 3% interest rate;~~

●

·	~~Refinancing the senior debt with a lender who is able to offer terms conducive to the long term financing of the Keyes plant;~~

Continuing to incorporate lower-cost, advanced biofuels feedstock at the Keyes plant when economical;

·	~~Restructuring or refinancing the State Bank of India note to allow for additional working capital and reduce current financing costs;~~

●

·	~~Securing higher volumes of shipments from the Kakinada, India biodiesel and refined glycerin facility; and~~

Obtaining the remaining $1.0 million of EB-5 Phase I funding from escrow and $1.0 million from fund raising;

·	~~Offering our common stock by the ATM Registration Statement.~~

●

Obtaining $50.0 million in funding from EB-5 Phase II funding currently being offered to investors;

●

Refinancing the senior debt with a lender who is able to offer terms conducive to the long term financing of the Keyes plant;

●

Use the Company’s India facility as collateral for additional working capital or for reducing current financing costs;

●

Securing higher volumes of shipments from the Kakinada, India biodiesel and refined glycerin facility; and

●

Offering the Company’s common stock by the ATM Registration Statement.

Management believes that through the above mentioned actions it will be able to fund company operations and continue to operate the secured assets for ~~the foreseeable future.~~at least a year. There can be no assurance that the existing credit facilities and cash from operations will be sufficient ~~nor~~or that the Company will be successful at maintaining adequate relationships with the senior lenders or significant shareholders. Should the Company require additional financing, there can be no assurances that the additional financing will be available on terms satisfactory to the Company.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

~~Overview. Discussion of our business and overall analysis of financial and other highlights affecting us to provide context for the remainder of MD&A.~~

●

~~Results of Operations. An analysis of our financial results comparing the three and six months ended June 30, 2016 to the three and six months ended June 30, 2015.~~Overview. Discussion of our business and overall analysis of financial and other highlights affecting us to provide context for the remainder of MD&A.

~~Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition.~~

●

Results of Operations. An analysis of our financial results comparing the three months ended March 31, 2017 to the three months ended March 31, 2016.

●

Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition.

●

Critical Accounting Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

The following discussion should be read in conjunction with ~~the Aemetis, Inc.~~our consolidated financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect ~~the~~our plans, estimates and ~~beliefs of Aemetis, Inc.~~beliefs. As discussed in further detail above, the actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, specifically our most recent Annual Report on Form 10-K. All references to years relate to the calendar year ended December 31 of the particular year.

Overview

WeHeadquartered in Cupertino, California, we are an advanced renewable fuels and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products bythrough the conversion of ~~first generation~~second-generation ethanol and biodiesel plants into advanced biorefineries. Founded in 2006, we own and operate a 60 million gallon per year ethanol production facility ~~(Keyes plant),~~ in ~~California’s~~the California Central Valley near Modesto where we manufacture and produce ethanol, ~~Wet Distiller’s Grain (WDG)~~wet distillers’ grains (“WDG”), ~~Condensed Distillers Solubles (CDS)~~condensed distillers solubles (“CDS”), and distillers’ corn ~~oil~~oil. We also own and operate a 50 million gallon per year renewable chemical and advanced fuel production facility on the East Coast of India ~~(Kakinada plant), where we manufacture and produce~~producing high quality distilled biodiesel and refined ~~glycerin. In addition, we are continuing to~~glycerin for customers in India and Europe. We operate a research and development laboratory at the Maryland Biotech Center and hold a portfolio of patents and related technology licenses for the production of renewable fuels and biochemicals.

We continue to evaluate the acquisition of businesses and the licensing of technologies that expand the transition of traditional biofuels plants to the production of valuable advanced biofuels. During the second quarter, we announced the entry into an agreement to acquire EdenIQ, Inc., a cellulosic ethanol technology company. Once integrated, Edeniq’s technologies will extend our ethanol capabilities into cellulosic ethanol by providing capital light and operationally efficient solutions that can be easily integrated into existing corn ethanol plants. Using our position as a producer of ethanol and biodiesel, we are also focused on the licensing of technology and the development of capabilities that allow for the production of advanced biofuels at our own facilities.

Results of Operations

Three Months Ended ~~June 30, 2016~~March 31, 2017 Compared to Three Months Ended ~~June 30, 2015~~March 31, 2016

Revenues

Our revenues are derived primarily from sales of ethanol and WDG in North America and biodiesel and refined glycerin in India.

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

	2016		2015		Inc/(dec)			% change
											2017	2016	Inc/(dec)	% change
North America	$	32,038	$	34,144	$	(2,106	)		-6	%	$29,953	$28,052	$1,901	7%
India		1,021		3,923		(2,902	)		-74	%	1,621	5,274	(3,653)	-69%
Total	$	33,059	$	38,067	$	(5,008	)		-13	%	$31,574	$33,326	$(1,752)	-5%

North America. For the three months ended ~~June 30, 2016,~~March 31, 2017, we generated ~~77%~~79% of our ~~revenue~~revenues from sales of ethanol, ~~21%~~19% from sales of WDG, and 2% from sales of corn oil and ~~CDS.~~syrup. During the three months ended ~~June 30, 2016,~~March 31, 2017 plant production averaged 98% of the 55 million gallon per year nameplate capacity. The increase in revenues during the three months ended March 31, 2017 was due to a 5% increase in gallons of ethanol sold to 13.5 million gallons, compared to 12.8 million gallons in the three months ended March 31, 2016, and an increase in the average price of ethanol by 6% to $1.75 per gallon in the three months ended March 31, 2017, compared to $1.65 per gallon during the three months ended March 31, 2016. In addition, WDG sales volume increased 1% to 88.4 thousand tons during the three months ended March 31, 2017, compared to 87.7 thousand tons in the three months ended March 31, 2016, and the average price of WDG decreased 11% to $63 per ton compared to $71 per ton in the three months ended March 31, 2016. WDG pricing was impacted by China tariffs that resulted in over supply of the competing dry distillers' grain as well as narrowing dairy margins in the California region where we sell our product.

India.The decrease in revenues was primarily attributable to a decreased production of biodiesel due to a 55% increase in feedstock costs along with working capital constraints restricting our ability to purchase feedstock at higher prices. The sales volume of biodiesel a decreased by 87% to 850 metric tons in the three months ended March 31, 2017 compared to 6,750 metric tons in the three months ended March 31, 2016, partially offset by a 48% increase in average price of biodiesel to $981 per metric ton in the three months ended March 31, 2017, compared to $663 per metric ton in the three months ended March 31, 2016. In addition, refined glycerin sales volume decreased by 18% to 1,159 metric tons in the three months ended March 31, 2017, compared to 1,408 metric tons in the three months ended March 31, 2016, partially offset by a 20% increase in the average price per metric ton to $680 in the three months ended March 31, 2017, compared to $568 per metric ton in the three months ended March 31, 2016. For the three months ended March 31, 2017, we generated 51% of our revenues from the sale of biodiesel and 49% of our revenues from the sale of refined glycerin, compared to 85% of revenues from the sale of biodiesel and 15% of revenues from the sale of refined glycerin for the three months ended June 30, 2016 compared to June 30, 2015 was due to ethanol sales volumes decreasing by 5% to 13.4 million gallons while average ethanol prices increased by only 3% to $1.83 per gallon. The average price of WDG also decreased by 12% to $72 per ton while the WDG sales volume decreased 1% to 92 thousand tons during the quarter ended June 30, 2016 compared to the quarter ended June 30, 2015.March 31, 2016.

~~India.~~ For the three months ended June 30, 2016, we generated 77% of our sales from biodiesel and 23% of our sales from refined glycerin compared to the three months ended June 30, 2015, when we generated 73% of our sales from biodiesel and 27% of our sales from refined glycerin. The decrease in revenues for the three months ended June 30, 2016 compared to June 30, 2016 was due to the Kakinada plant shutdown for maintenance in the month of May 2016, which caused a decrease in biodiesel sales volume of 67% to 1,165 metric tons, while the average price decreased by 16% to $672 per metric ton. Similarly, the sales volume of refined glycerin decreased by 76% to 383 metric tons while the average price of glycerin decreased by 6% to $621 per metric ton.

Cost of Goods Sold

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

	2016		2015		Inc/(dec)			% change
											2017	2016	Inc/(dec)	% change
North America	$	29,624	$	32,517	$	(2,893	)		-9	%	$30,649	$26,159	$4,490	17%
India		1,491		3,601		(2,110	)		-59	%	1,512	5,081	(3,569)	-70%
Total	$	31,115	$	36,118	$	(5,003	)		-14	%	$32,161	$31,240	$921	3%

North ~~America.~~ America. We ground 4.7 million bushels of corn and ~~grain sorghum (milo)~~milo during the three months ended ~~June 30, 2016~~March 31, 2017 compared to ~~5.1~~4.5 million bushels of corn during the three months ended ~~June 30, 2015.~~March 31, 2016. Our cost of feedstock per bushel ~~decreased~~increased by 2%11% to an average price of ~~$4.83~~$4.93 per bushel during the three months ended ~~June 30, 2016~~March 31, 2017 compared to ~~$4.94~~$4.46 per bushel in the three months ended March 31, 2016 due to significantly higher freight costs caused by severe winter weather in California and ongoing rail dislocation to the region. The increase in cost of feed stock combined with a 6% increase in bushels of corn ground, increased our feedstock costs by 17%. In addition, natural gas and electricity costs increased by 56% to $1.9 million during the three months ended ~~June 30, 2015.~~March 31, 2017 compared to $1.2 million in the three months ended March 31, 2016 and other costs such as denaturant and transportation costs naturally increased with an increase in ethanol production.

India.The decrease in ~~cost~~costs of goods sold was attributable to the decrease in revenues from the sales of biodiesel and ~~glycerin. The volume~~refined glycerin and a decrease in average feed stock costs for refined glycerin of ~~total sales~~2% to $423 per metric ton for the three months ended March 31, 2017, compared to $430 per metric ton for the three months ended March 31, 2016, partially offset by an increase in average feedstock costs for biodiesel by 55% to $835 per metric ton for the three months ended March 31, 2017, compared to $539 per metric ton for the three months ended March 31, 2016.

Gross Profit (loss)

Three Months Ended March 31 (in thousands)

	2017	2016	Inc/(dec)	% change
North America	$(696)	$1,893	$(2,589)	-137%
India	109	193	(84)	-44%
Total	$(587)	$2,086	$(2,673)	-128%

North America.Gross profit decreased by ~~70% to 1,548 metric tons~~137% in the three months ended ~~June 30, 2016 compared~~March 31, 2017 due to ~~5,175 metric tons~~an increase in average price of corn and milo by 11 % to $4.93 per bushel in the three months ended ~~June 30, 2015, while average feedstock costs decreased by 2%~~March 31, 2017 compared to ~~$487~~$4.46 per ~~metric ton~~bushel in the three months ended ~~June 30,~~March 31, 2016, ~~compared to $498 per metric ton~~partially offset by the receipt of grant income for processing milo as feedstock in the three months ended ~~June 30, 2015.~~March 31, 2016.

~~Gross Profit (Loss)~~

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

2016 2015 Inc/(dec) % change

North America $ 2,414 $ 1,627 $ 787 48 %
India (470 ) 322 (792 ) -246 %
Total $ 1,944 $ 1,949 $ (5 ) -0.3 %

~~North America.~~ Gross profit increased by 48% due to a slight increase in the average price of ethanol of 3% and decrease in average price of feedstock of 2% in the three months ended June 30, 2016 compared to the same period in 2015.

India.~~Gross~~The decrease of 44% in gross profit ~~decreased~~was attributable to the decrease of 75% in overall sales volume, partially offset by ~~246% due to a 70% decrease~~increase in ~~volume of total sales and a 13% decrease in the~~ overall average ~~selling~~sales price in the three months ended June 30, 2016 compared to the volume of total sales and the overall average selling price in the three months ended June 30, 2015, resulting in a gross loss for the three months ended June 30, 2016.by 25%.

Operating Expenses

R&D

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

	2016		2015		Inc/(dec)		% change
										2017	2016	Inc/(dec)	% change
North America	$	106	$	104	$	2		2	%	$86	$97	$(11)	-11%
India		-		-		-		0	%	-			0%
Total	$	106	$	104	$	2		2	%	$86	$97	$(11)	-11%

The R&D ~~expenses~~expense in our North America segment was consistent for the three months ended ~~June 30, 2016~~March 31, 2017 compared to the three months ended ~~June 30, 2015.~~March 31, 2016.

~~Selling, General and Administrative Expenses (SG&A)~~

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

2016 2015 Inc/(dec) % change

North America $ 2,684 $ 2,902 $ (218 ) -8 %
India 218 246 (28 ) -11 %
Total $ 2,902 $ 3,148 $ (246 ) -8 %

SG&A expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in North America and biodiesel and other products in India, as well as professional fees, other corporate expenses, and related facilities expenses.

~~North America.~~ SG&A expenses as a percentage of revenue in the three months ended June 30, 2016 was consistent at 8% as compared to the corresponding period of 2015. SG&A expenses in the three months ended June 30, 2016 decreased by 8% compared to the three months ended June 30, 2015. The decrease was due to a decrease in salaries and stock based compensation of $0.2 million in the three months ended June 30, 2016.

~~India~~. SG&A expenses as a percentage of revenue in the three months ended June 30, 2016 increased to 21% as compared to 6% in the corresponding period of 2015 due to a decrease in sales and reclassification of certain cost of goods sold costs to SG&A as the Kakinada plant was shut down for maintenance in the month of May 2016. The 11% decrease in SG&A expenses in the three months ended June 30, 2016 compared to the same period of 2015 was due to a decrease in marketing expenses of $44 thousand, and professional fees, supplies, and travel expenses of $61 thousand, offset by increase in salaries of $74 thousand in the three months ended June 30, 2016.

~~Other Income and Expense~~

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

2016 2015 Inc/(dec) % change
North America
Interest expense $ 2,896 $ 2,192 $ 704 32 %
Amortization expense 1,489 2,405 (916 ) -38 %
Other (income) expense (501 ) 73 (574 ) -786 %

India
Interest expense 59 293 (234 ) -80 %
Other (income) (24 ) 21 (45 ) -214 %
Total $ 3,919 $ 4,984 $ (1,065 ) -21 %

~~Other (Income)/Expense.~~ Other (income) expense consisted primarily of interest, amortization and extinguishment expense attributable to debt facilities and interest accrued on the judgments obtained by Cordillera Fund. The debt facilities include stock or warrants issued as fees. The fair value of stock and warrants are amortized as amortization expense, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense and the difference in fair value is amortized. In addition, other (income)/expense consist of scrap sales from UBPL and gain or loss on sale of equipment in the North America entities.

~~North America~~. Interest expense was slightly higher in the quarter ended June 30, 2016 due to higher outstanding debt balances. The decrease in amortization expense is due to debt issuance costs present during the prior period becoming amortized as of June 30, 2016. The increase in other income in the three months ended June 30, 2016 was due to receipt of $0.5 million in mandated gas credit from PG&E.

~~India~~. Interest expense was lower compared with the prior period as a result of pay down of principal and interest on the State Bank of India loan. The increase in other income was caused primarily by an increase in foreign exchange gains and scrap sales.

~~Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015~~

~~Revenues~~

~~Our revenues are derived primarily from sales of ethanol and WDG in North America and biodiesel and glycerin in India.~~

~~Six Months Ended June 30 (in thousands)~~

2016 2015 Inc/(dec) % change

North America $ 60,090 $ 67,351 $ (7,261 ) -11 %
India 6,295 5,442 853 16 %
Total $ 66,385 $ 72,793 $ (6,408 ) -9 %

~~North America.~~ For the six months ended June 30, 2016, we generated 76% of our revenue from sales of ethanol, 21% from sales of WDG, and 3% from sales of corn oil and CDS. During the six months ended June 30, 2016, plant production averaged 95% of the 55 million gallon per year nameplate capacity. The decrease in revenues for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 is due to a decrease in ethanol sales volume of 8% to 26.3 million gallons, offset by a 1% increase in the average ethanol price to $1.74. In addition, the average price of WDG decreased by 17% to $71 per ton while WDG sales volume decreased by 4% to 180 thousand tons in the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

~~India.~~ For the six months ended June 30, 2016, we generated 84% of our sales from biodiesel and 16% of our sales from refined glycerin compared to 67% of our sales from biodiesel and 33% of our sales from refined glycerin during the six months ended June 30, 2015. The increase in revenues for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 was due to an 81% increase in biodiesel sales volume to 7,915 metric tons, partially offset by a 21% decrease in the average price of biodiesel to $664 per metric ton. Sales volume of refined glycerin decreased by 33% to 1,791 metric tons while the average price of glycerin decreased by 13% to $579 per metric ton in the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

~~Cost of Goods Sold~~

~~Six Months Ended June 30 (in thousands)~~

2016 2015 Inc/(dec) % change

North America $ 55,783 $ 65,886 $ (10,103 ) -15 %
India 6,572 5,186 1,386 27 %
Total $ 62,355 $ 71,072 $ (8,717 ) -12 %

~~North America.~~ We ground 9.2 million bushels of corn and milo during the six months ended June 30, 2016 compared to 10.1 million bushels of corn during the six months ended June 30, 2015. Our cost of corn per bushel decreased by 8% to $4.65 per bushel in the six months ended June 30, 2016 compared to the same period in 2015. The decrease in cost of goods sold during the six months ended June 30, 2016 compared to June 30, 2015 reflects the decrease in the ethanol sales volume by 8% combined with the decrease in average prices of feedstock.

~~India.~~ The increase in cost of goods sold during the six months ended June 30, 2016 compared to June 30, 2015 was attributable to an increase in sales volume of biodiesel of 81%. In addition, overall average feedstock costs increased by 2% to $502 per metric ton for the six months ended June 30, 2016 compared to $493 per metric ton in the six months ended June 30, 2015.

~~Gross Profit (Loss)~~

~~Six Months Ended June 30 (in thousands)~~

2016 2015 Inc/(dec) % change

North America $ 4,307 $ 1,465 $ 2,842 194 %
India (277 ) $ 256 (533 ) -208 %
Total $ 4,030 $ 1,721 $ 2,309 134 %

~~North America.~~ Gross profit for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 increased due to an increase in average ethanol price of 1% and a decrease in average price of feedstock of 8% .

~~India.~~ The decrease in gross profit for the six months ended June 30, 2016 was attributable to a decrease of the average price of biodiesel of 21% to $664 per metric ton and of the average price of refined glycerin of 13% to $579 per metric ton while average feedstock prices increased by 2% to $502 per metric ton as compared to the same period in 2015.

~~Operating Expenses~~

~~R&D~~

~~Six Months Ended June 30 (in thousands)~~

2016 2015 Inc/(dec) % change

North America $ 203 $ 213 $ (10 ) -5 %
India - - - 0 %
Total $ 203 $ 213 $ (10 ) -5 %

~~R&D expenses period over period remained constant.~~

Selling, General and Administrative Expenses (SG&A)

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

	2016		2015		Inc/(dec)			% change
											2017	2016	Inc/(dec)	% change
North America	$	5,162	$	6,312	$	(1,150	)		-18	%	$3,024	$2,478	$546	22%
India		739		470		269			57	%	271	521	(250)	-48%
Total	$	5,901	$	6,782	$	(881	)		-13	%	$3,295	$2,999	$296	10%

North America. SG&A expenses as a percentage of revenue in the ~~six~~three months ended ~~June 30,~~March 31, 2016 ~~were consistent at 9%~~increased to 10% as compared to 9% in the corresponding period of ~~2015.~~2016. The ~~decrease~~increase in SG&A expenses for the three months ended March 31, 2017 was ~~primarily~~ due to ~~a decrease~~an increase in salaries and stock compensation ~~expense~~ of ~~$0.3~~$0.4 million and a $0.1 million increase in ~~professional fees of $0.9 million for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.~~utilities, insurance, and penalties.

India. SG&A expenses as a percentage of revenue in the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 increased to ~~12%~~17% as compared to 9%10% in the corresponding period of ~~2015.~~2016. The ~~increase~~decrease in the dollar amount was ~~partially~~ due to the reclassification of salaries of $123 thousand from cost of goods sold to SG&A in the three months ended June 30, 2016 as utilization of capacity was lower in the period. In addition, the increase was partially attributable to increasesa decrease in operational support charges of $0.1 million and ~~supplies~~salaries, maintenance, and marketing costs of $206 thousand, partially offset by decreases in travel expenses, professional fees, and miscellaneous expenses by $61 thousand in the six months ended June 30, 2016 compared to the six months ended June 30, 2015.$0.1 million.

Other Income and Expense

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

2016 2015 Inc/(dec) % change
North America
Interest expense $ 5,510 $ 4,476 $ 1,034 23 %
Amortization expense 2,844 4,128 (1,284 ) -31 %
Loss on debt extinguishment 330 (330 ) -100 %
Other (income) expense (409 ) 204 (613 ) -300 %

India
Interest expense 123 555 (432 ) -78 %
Other (income) (52 ) (43 ) (9 ) -21 %
Total $ 8,016 $ 9,650 $ (1,634 ) -17 %

Other (income)/expense
	2017	2016	Inc/(dec)	% change
North America
Interest rate expense	$2,874	$2,614	$260	10%
Amortization expense	1,683	1,355	328	24%
Other (income) expense	49	92	(43)	-47%

India
Interest rate expense	(32)	64	(96)	-150%
Other (income)	(21)	(28)	7	25%
Total	$4,553	$4,097	$456	11%

Other (Income)/Expense. Other (income) expense ~~consisted~~consists primarily of interest rate and amortization ~~and extinguishment expense~~expenses attributable to debt facilities acquired by our parent company and our subsidiaries, and interest accrued on the judgments obtained by Cordillera ~~Fund.~~Fund and The Industrial Company. The debt facilities include stock or warrants issued as fees. The fair value of stock and warrants are amortized as amortization expense, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment ~~expense and the difference in fair value is amortized. In addition, the other (income)/expense consist of scrap sales from UBPL and gain~~loss or ~~loss on sale of equipment in the North America entities.~~gain.

North America. Interest expense was higher in the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 due to the addition of extension and waiver fees for senior debt and extension fees for subordinated debt and also an increase in ~~principal and~~the prime rate, causing slightly higher interest onrates during the ~~Third Eye Capital Notes and Subordinated Notes. The decrease~~quarter. Amortization expense in ~~amortization expense was~~the three months ended March 31, 2017 decreased due to debt issuance costs present during the prior period becoming fully amortized in 2016. The decrease in other expense was due to fully amortized guarantee fees in the ~~six~~three months ended ~~June 30,~~March 31, 2016 partially offset by the addition of maturity date extension fees on senior debt during the last six months of 2015. Debt extinguishment costs were higher in the six months ended June 30, 2015 as a result of the refinancing of three Subordinated Notes with two accredited investors being accounted for under extinguishment accounting in the 2015 period compared to the ~~refinancing of two Subordinated Notes with two accredited investors being accounted for under modification accounting in the 2016 period. The increase in other income in the six~~three months ended ~~June 30, 2016 was due to receipt of $0.5 million from a mandated gas credit from PG&E.~~March 31, 2017.

India. Interest expense decreased as a result of ~~a decrease~~carrying only working capital loans in the ~~outstanding balance~~three months ended March 31, 2017 and the payoff of the Budge Budge refineries’ raw material working capital loan in the three months ended March 31, 2017 was credited to the interest booked on ~~the State Bank of India~~that loan. The ~~slight increase~~decrease in other income was caused primarily by ~~other scrap sales~~smaller foreign exchange gains in the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017.

Liquidity and Capital Resources

Cash and Cash Equivalents

Cash and cash equivalents were ~~$0.6~~$0.2 million at ~~June 30, 2016,~~March 31, 2017, of which ~~$0.4 million~~$57 thousand was held in our North American entities and ~~$0.2 million~~$174 thousand was held in our Indian subsidiary. Our current ratio at ~~June 30, 2016~~March 31, 2017 was ~~0.25~~0.17, compared to a current ratio of ~~0.27~~0.26 at December 31, ~~2015.~~2016. We expect that our future available capital resources will consist primarily of cash generated from operations, remaining cash balances, EB-5 program borrowings, amounts available for borrowing, if any, under our senior debt facilities and our subordinated debt facilities, and any additional funds raised through sales of equity.

Liquidity

Cash and cash equivalents, current assets, current liabilities and debt at the end of each period were as follows (in thousands):

	June 30, 2016		December 31, 2015		March 31, 2017	December 31, 2016
Cash and cash equivalents	$	591	$	283	$231	$1,486
Current assets (including cash, cash equivalents, and deposits)		7,509		8,002	4,930	7,045
Current and long term liabilities (excluding all debt)		15,089		17,540	16,226	15,909
Current & long term debt		110,135		100,895	116,590	111,714

Our principal sources of liquidity have been cash provided by operations and borrowings under various debt arrangements. As of ~~June 30, 2016, funding from the EB-5 program was not released to Aemetis’s subsidiary, AE Advanced Fuels, Inc.;~~March 31, 2017, the EB-5 escrow account is holding funds from 25two investors pending approval by the USCIS. These funds represent ~~$12.5~~$1.0 million of funding that is expected to be released from the escrow account in the ~~third quarter~~first half of 2017. On October 16, 2016, we launched a new EB-5 Phase II funding, under which we expect to ~~early 2017.~~issue $50.0 million in additional EB-5 Notes on substantially similar terms and conditions as those issued under our EB-5 Phase I funding. Our principal uses of cash have been to service indebtedness and capital expenditures. We anticipate these uses will continue to be our principal uses of cash in the future. Global financial and credit markets have been volatile in recent years, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost or at all. ~~For additional discussion of our various debt arrangements see~~ ~~Note 4. Debt~~ ~~of the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.~~

We operate in a volatile market in which we have little control over the major components of production costs and product revenues. As such, we expect cash provided by operating activities to fluctuate in future periods primarily as a result of changes in the prices for corn, ethanol, WDG, distillers’ corn oil, CDS, biodiesel, waste fats and oils, non-refined palm oil and natural gas. To the extent that we experience periods in which the spread between ethanol prices and corn and energy costs narrow or the spread between biodiesel prices and waste fats and oils or ~~non-refined~~ palm oil and energy costs narrow, we may require additional working capital to fund operations.

Management believes that through: (i) operating the Keyes plant, (ii) continuing to incorporate lower-cost, ~~non-food~~ advanced biofuels feedstock at the Keyes plant when economical, thereby increasing operating margins, (iii) obtaining ~~cash~~the remaining $1.0 million of EB-5 Phase I funding from ~~sale of additional~~escrow and $1.0 million from fund raising, (iv) obtaining $50.0 million in funding from EB-5 ~~Notes, (iv)~~Phase II funding currently being offered to investors, (v) refinancing senior debt on terms more commensurate with the long-term financing of capital assets, ~~(v)~~(vi) securing higher volumes of sales from the Kakinada plant, ~~(vi)~~(vii) continuing to expand the domestic India markets, ~~(vii)~~(viii) using the availability on the existing working capital credit line, and ~~(viii)~~(ix) sales of common stock under the ATM registration statement, we will be able to obtain the liquidity necessary to fund company operations for the foreseeable future. However, there is no assurance that our operations will generate significant positive cash flow, or that additional funds will be available to us, through borrowings or otherwise, on favorable terms when required, or at all.

At ~~June 30, 2016,~~March 31, 2017, the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes equaled ~~$67.3~~$64.5 million. The current maturity date for all of the Third Eye Capital financing arrangements is April 1, ~~2017;~~2018; provided, however, that pursuant to Amendment No. ~~12,~~13, dated March ~~21, 2016,~~1, 2017, we have the right to extend the maturity date of the Third Eye Capital Notes to April 1, ~~2018~~2019 upon notice and payment of a 5% extension fee. We intend to pay the Third Eye Capital Notes through operational cash flow, proceeds from the issuance of the EB-5 ~~subordinated debt,~~Notes, a senior debt refinancing and/or equity financing.

As of March 31, 2017, the outstanding balance on the promissory note with Third Eye Capital was $2.1 million with a maturity date of May 30, 2017.

Our senior lender has provided a series of accommodating amendments to the existing and previous loan facilities in the past as described in further detail in Note ~~4. Debt~~4.Debt of the Notes to Consolidated Financial Statements in Part I ~~Item 1~~ of this Form 10-Q. However, there can be no assurance that our senior lender will continue to provide further amendments or accommodations or will fund additional amounts in the future.

We also rely on our working capital lines with J.D. Heiskell in California and Secunderabad Oils in India to fund our commercial arrangements for the ~~acquisition~~acquisitions of feedstock. J.D. Heiskell currently provides us with working capital for the Keyes plant and Secunderabad Oils currently provides us with working capital for the Kakinada plant. The ability of both J.D. Heiskell and Secunderabad Oils to continue to provide us with working capital depends in part on both of their respective financial strength and banking relationships.

Change in Working Capital and Cash Flows

During the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, current and long term debt increased ~~$9.2~~by $4.8 million, primarily due to (i) accrued interest of ~~$5.3~~$2.7 million, (ii) ~~$1.5~~payment of a $0.7 million waiver fee, ~~(iii)~~ $3.1 million maturity date extension fee, ~~(iv) $0.3~~and $2.1 million ~~drawn on the~~ promissory note ~~from~~for operations to our senior lender, ~~for operations, (v) $1.2 million drawn on the promissory note from our senior lender for State Bank of India repayment, (vi)~~(iii) $0.3 million in subordinated debt extension fees, and ~~(vii) $2.9~~(iv) $1.6 million drawn to pay a raw material vendor working capital loan from the Secunderabad ~~Oils~~Oil working capital loan. The increase in current and long term debt was partially offset by decreases due to: (i) ~~$0.7~~$2.0 million of principal ~~and interest~~ payments to ~~our senior lender, (ii) $2.1 million of principal and interest payments to the State Bank of India~~a raw material vendor working capital loan and Secunderabad ~~Oils~~ working capital loan in India, (ii) payments of interest of $1.0 million, and (iii) ~~$2.8~~$2.7 million in net discount issuance costs to be amortized. ~~Working capital changes resulted~~Current assets decreased by $2.1 million, primarily due to a (i) $0.5 million decrease in ~~(i) $0.3~~inventories, (ii) $1.2 million ~~increase~~decrease in cash and (ii) ~~$1.5 million increase in other assets, partially offset by a $1.7 million decrease in inventories and~~ $0.5 million decrease in accounts ~~receivable.~~receivable, partially offset by a $0.1 million increase in prepaids.

Net cash used by operating activities during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 was ~~$0.9~~$2.5 million, consisting of non-cash charges of ~~$5.7~~$3.3 million, net changes in operating assets and liabilities of ~~$3.5~~$2.8 million, and net loss of ~~$10.1~~$8.6 million. The non-cash charges consisted of: (i) ~~$2.9~~$1.7 million in amortization of debt issuance costs and patents, (ii) ~~$2.4~~$1.1 million in depreciation expenses, and (iii) $0.4 million in stock-based compensation expense. Net changes in operating assets and liabilities consisted primarily of ~~an increase~~decreases in ~~other assets~~accounts receivable of ~~$1.6~~$0.6 million, ~~increase in prepaid expenses~~inventory of ~~$0.1~~$0.5 million, and ~~decrease in~~ accounts payable of ~~$3.1~~$0.3 million, partially offset ~~by: (i) a $1.7 million decrease in inventories, (ii) a $0.8 million increase~~by increases in other liabilities ~~(iii) a $0.5~~of $0.2 million ~~decrease in accounts receivable~~ and ~~(iv) a $5.2 million increase in~~ accrued ~~interest.~~

interest of $2.0 million.

Cash used by investing activities ~~consist of capital expenditures of $0.4 million mostly from our UBPL operations.~~was minimal.

Cash provided by financing activities was ~~$1.7~~$1.0 million, primarily ~~from proceeds from borrowings~~consisting of ~~$4.0~~payments in principal and interest on working capital loans in India of $2.1 million, partially offset by ~~payments in principal on long-term term loans~~borrowings of ~~$2.3~~$3.0 million.

Critical Accounting Policies

Our discussion and analysis of ~~our~~ financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with ~~accounting principles generally accepted in the United States of America.~~U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. We believe that of our most significant accounting policies, ~~the following represents our critical accounting policies,~~ defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently ~~uncertain:~~uncertain are: revenue recognition; recoverability of long-lived assets, ~~convertible notes,~~and debt modification and extinguishment accounting. These significant accounting principles are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Recently Issued Accounting Pronouncements

None reported beyond those disclosed in our ~~2015~~2016 annual report.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

~~Not Applicable.~~

Not Applicable.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Management (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO)), carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our CEO and CFO concluded that, as of the end of the period covered in this report, our disclosure controls and procedures along with the related internal controls over financial reporting were effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Our controls and procedures are designed to provide reasonable assurance that our control system’s objective will be met and our CEO and CFO have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

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

PART II -- OTHER INFORMATION

Item 1.

Legal Proceedings

On ~~March 10, 2011, UBPL, our India operating subsidiary, received~~August 31, 2016, the Company filed a ~~demand notice from~~lawsuit in Santa Clara County Superior Court against defendants EdenIQ, Inc. (EdenIQ) and its CEO, Brian D. Thome and Trinity Capital Investments (Trinity). The lawsuit is based on EdenIQ’s wrongful termination of a merger agreement that would have effectuated the State Bank of India under the Agreement of Loan for Overall Limit dated as of June 26, 2008. The notice informed UBPL that an event of default had occurred for failure to make an installment payment on the loan commencing June 2009 and demanded repaymentmerger of the ~~entire outstanding indebtedness~~Company and EdenIQ. The lawsuit also asserts that EdenIQ and Mr. Thome fraudulently induced the Company into assisting EdenIQ to obtain EPA approval for a new technology, which the Company would not have done but for the merger agreement. The relief sought includes EdenIQ’s specific performance of ~~19.60 crore rupees (approximately $3.2 million) together with all accrued interest thereon~~the merger agreement and ~~any applicable~~monetary damages, as well as punitive damages, attorneys’ fees, and ~~expenses. Upon~~costs. In response to the ~~occurrence~~Company’s Santa Clara County lawsuit, EdenIQ has filed a cross-complaint asserting causes of action relating to the Company’s alleged inability to consummate the merger, the Company’s interactions with EdenIQ’s business partners, and ~~during~~ the continuance of an Event of Default, interest accrues at the default interest rate of 2% above the State Bank of India Advance Rate. The default period began on July 1, 2009 when the principal payment was deemed past due; and we have accrued interest at the default rate since the beginningCompany’s publicity of the ~~default period. On August 22, 2015, UBPL received~~status of the merger. EdenIQ seeks monetary damages, punitive damages, injunctive relief, attorneys’ fees and costs. Due to the early stage of the litigation an estimate as to any Company losses cannot be made at this time but it is probable that the Company’s damages will exceed EdenIQ’s damages thus resulting in a ~~One Time Settlement Sanction Letter from~~gain to the State Bank of India allowing for, among other things, four payments over a 360 day period amounting to $4.3 million, an interest rate holiday for 15 days after which the interest rate is payable at a rate of 2% above the base rate of Reserve Bank of India and certain releases by both parties. Upon performance under the agreement, including the payment of all stipulated amounts, UBPL will receive relief for prior accrued interest in the amount of approximately $2.1 million.Company.

On August 4, 2013, GS Cleantech Corporation, a subsidiary of Greenshift Corporation (“Greenshift”), filed a complaint in the United States District Court for the Eastern District of California – Fresno Division against us and our subsidiary, AAFK. The case was transferred to the Southern District of Indiana and joined to a pending Multidistrict Litigation. The complaint alleges infringement of patent rights assigned to Greenshift and pertaining to corn oil extraction processes we employ, and seeks royalties, treble damages, attorney’s fees, and injunctions precluding us from further infringement. The corn oil extraction process we use is licensed to us by Valicor Separation Technologies LLC. Valicor has no obligations to indemnify us. On October 23, 2014, the Court ruled that all the claims of all the patents at issue in the case are invalid and, therefore, not infringed and adopted this finding in our case on January 16, 2015. GS Cleantech has said it will appeal this decision when the remaining claim in the suit has been decided. We believe the likelihood of Greenshift succeeding on appeal of the invalidity findings is small since the Court’s findings included several grounds for invalidity of each allegedly infringed patent. If Greenshift successfully appeals the findings of invalidity, damages may be $1 million or more. The ~~only remaining claim in the~~ suit ~~alleges~~also alleged that GS Cleantech obtained the patents at issue by inequitably conducting itself before the United States Patent Office. A trial in the District Court for the Southern District of Indiana on that issue was concluded and ~~awaits judicial decision. If~~the Court found the patents ~~at issue are found invalid due to GS Cleantech’s~~unenforceable because of inequitable conduct ~~it would receive no damage award. If~~by GS Cleantech and its counsel before the Patent and Trademark Office. GS Cleantech has asked the Court ~~determines this is an “exceptional case” it may award us~~to reconsider its decision, citing the existence of a recently issued patent that the patent examiner allowed despite the Court’s findings and ~~our subsidiary~~ the ~~attorneys’ fees expended to date for defense in this case. It is unknown whether~~allowance of which the Court did not consider when making its decision of inequitable conduct. On March 20, 2017, GS Cleantech ~~would appeal such~~and its counsel, Cantor Colburn LLP filed a ~~ruling.~~Notice of Appeal regarding the current ruling on inequitable conduct. The Appeal has been stayed for 60 days to allow the parties an opportunity to discuss settlement. On April 5, 2017, the parties asked the Court for an extension of the current stay in the case which was granted.

Item 1A.

Risk Factors.

~~Item 1A. Risk Factors.~~

No change in risk factors since the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed with the SEC on March ~~28, 2016.~~17, 2017.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On ~~June 2, 2016,~~January 1, 2017, we issued ~~5,992~~113thousand shares of our common stock to atwo subordinated promissory note holders pursuant to the note holders’ warrant ~~holder who exercised warrants~~exercise at an exercise price of $0.01 per share.

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

Item 3.

Defaults Upon Senior Securities.

No unresolved defaults on senior securities occurred during the three months ended ~~June 30, 2016.~~March 31, 2017.

Item 4.

Mine Safety Disclosures.

None

Item 5.

Other Information.

~~None.~~None

Item 6.

Exhibits.

3.1	Amended and Restated Articles of Incorporation filed on ~~April 27, 2016.~~March 16, 2017.
31.1	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
~~32.1~~	32.1	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AEMETIS, INC.


	By:	/s/ Eric A. McAfee
		Eric A. McAfee Chief Executive Officer (Principal Executive Officer)

Date: ~~August~~May 11, ~~2016~~2017

	AEMETIS, INC.


	By:	/s/ ~~Todd Waltz~~TODD WALTZ
		Todd Waltz Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: ~~August~~May 11, ~~2016~~2017

3329

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

	June 30, 2016			December 31, 2015			March 31, 2017	December 31, 2016
Land	$	2,717		$	2,727		$2,738	$2,713
Plant and buildings		81,763			81,821		82,282	81,755
Furniture and fixtures		495			494		603	572
Machinery and equipment		4,289			4,052		4,353	4,308
Construction in progress		27			147		104	88
Total gross property, plant & equipment		89,291			89,241		90,080	89,436
Less accumulated depreciation		(20,767	)		(18,523	)	(24,410)	(23,066)
Total net property, plant & equipment	$	68,524		$	70,718		$65,670	$66,370

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

Balance as of December 31, 2015		95			980		$	5.76
Balance as of December 31, 2016									98	1,632	$4.37
Authorized		655			-			-	655	-
Granted		(699	)		699			2.54	(637)	637	1.72
Exercised		-			-			-
Forfeited/expired		69			(69	)		4.70	9	(9)	4.86
Balance as of June 30, 2016		120			1,610		$	4.41
Balance as of March 31, 2017									125	2,260	$3.62

Item 1	Financial Statements.	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	2120
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	2926
Item 4.	Controls and Procedures.	2926

Item 1.	Legal Proceedings	3026
Item 1A.	Risk Factors.	3127
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3127
Item 3.	Defaults Upon Senior Securities.	3127
Item 4.	Mine Safety Disclosures.	3127
Item 5.	Other Information.	3127
Item 6.	Exhibits.	3228
Signatures		3329

Twelve months ended June 30,	Debt Repayments
2017	$	14,760
2018		73,146
2019		20,500
2020		5,098
Total debt		113,504
Discounts		(3,369)
Total debt, net of discounts	$	110,135

Description	Three months ended June 30, 2016
Dividend-yield		0	%
Risk-free interest rate		1.67	%
Expected volatility		77.75	%
Expected life (years)		7
Market value per share on grant date	$	2.54
Fair value per share on grant date	$	1.81

	For the three months ended June 30,					For the six months ended June 30,					For the three months ended March 31,
	2016			2015		2016			2015		2017	2016
Revenues
North America	$	32,038		$	34,144	$	60,090		$	67,351	$29,953	$28,052
India		1,021			3,923		6,295			5,442	1,621	5,274
Total revenues	$	33,059		$	38,067	$	66,385		$	72,793	$31,574	$33,326

Cost of goods sold
North America	$	29,624		$	32,517	$	55,783		$	65,886	$30,649	$26,159
India		1,491			3,601		6,572			5,186	1,512	5,081
Total cost of goods sold	$	31,115		$	36,118	$	62,355		$	71,072	$32,161	$31,240

Gross profit (loss)
North America	$	2,414		$	1,627	$	4,307		$	1,465	$(696)	$1,893
India		(470	)		322		(277	)		256	109	193
Total gross profit	$	1,944		$	1,949	$	4,030		$	1,721
Total gross profit (loss)											$(587)	$2,086

	As of				As of
	June 30,		December 31,		March 31,	December 31,
	2016		2015		2017	2016

North America	$	69,638	$	69,165	$64,735	$67,279
India		10,819		13,976	10,242	10,531
Total Assets	$	80,457	$	83,141	$74,977	$77,810