amtx_10k.htm

		Incorporated by Reference				Filed
Exhibit No.	Description	Form	Film No.	Exhibit	Filing Date	Herewith
3.1.1	Articles of Incorporation	10-Q	000-51354	3.1	Nov. 14, 2008
3.1.2	Certificate of Amendment to Articles of Incorporation	10-Q	000-51354	3.1.1	Nov. 14, 2008
3.1.3	Certificate of Designation of Series B Preferred Stock	8-K	000-51354	3.2	Dec. 13, 2007
3.1.4	Certificate of Amendment to Articles of Incorporation	8-K	000-51354	3.3	Dec. 13, 2007
3.1.5	Certificate of Amendment to Articles of Incorporation	Pre14C	111136140		October 26, 2011
3.2.1	Bylaws	8-K	000-51354	3.4	Dec. 13, 2007
4.1	Specimen Common Stock Certificate	8-K	000-51354	4.1	Dec. 13, 2007
4.2	Specimen Series B Preferred Stock Certificate	8-K	000-51354	4.2	Dec. 13, 2007
4.3	Form of Common Stock Warrant	8-K	000-51354	4.3	Dec. 13, 2007
4.4	Form of Series B Preferred Stock Warrant	8-K	000-51354	4.4	Dec. 13, 2007
10.1	Amended and Restated 2007 Stock Plan	14A	000-51354		Apr. 15, 2008
10.2	Amended and Restated 2007 Stock Plan form of Stock Option Award Agreement	14A	000-51354		Apr. 15, 2008
10.4	Eric McAfee Executive Chairman Agreement dated January 30, 2006	8-K	000-51354	10.4	Dec. 13, 2007
10.7	Andrew Foster Executive Employment Agreement, dated May 22, 2007	8-K	000-51354	10.7	Dec. 13, 2007
10.10	Todd Waltz Executive Employment Agreement, dated March 15, 2010	8-K	000-51354		May 20, 2009	X
10.11	Sanjeev Gupta Executive Employment Agreement, dated September 1, 2007	10-K	000-51354	10.11	May 20, 2009
10.12	Agreement of Loan for Overall Limit dated June 26, 2008 between Universal Biofuels Pvt Limited and State Bank of India	10-Q	000-51354	10.12	Aug. 14, 2008
10.14	$5 million Note and Warrant Purchase Agreement dated May 16, 2008 among Third Eye Capital Corporation, as Agent; the Purchasers; and Aemetis, Inc., including the form of Note	8-K	000-51354	10.1	May 21, 2008
10.16	Revolving Line of Credit Agreement dated August 17, 2009 between International Biodiesel, Inc. and Laird Cagan	10-K	000-51354	10.16	Mar. 15, 2010
10.17	Project Agreement dated December 1, 2009 among Cilion, Inc., Aemetis, Inc., AE Advanced Fuels, Inc., and AE Advanced Fuels Keyes, Inc.	8-K	000-51354	10.1	Dec. 2, 2009
10.18	Lease Agreement dated December 1, 2009, among Cilion Inc., AE Advanced Fuels Keyes, Inc., and AE Advanced Fuels, Inc., a Delaware corporation	8-K	000-51354	10.2	Dec. 2, 2009
10.19	Amendment No. 4 and Limited Waiver to Note and Warrant Purchase Agreement dated December 10, 2009, between Aemetis, Inc. and Third Eye Capital Corporation	8-K	000-51354	10.1	Dec. 22, 2009
10.20	Assignment of Proceeds Agreement dated December 10, 2009, between Aemetis, Inc. and Third Eye Capital Corporation	8-K	000-51354	10.2	Dec. 22, 2009
10.21	Guaranty Agreement dated December 10, 2009, between AE Advanced Fuels Keyes, Inc. and Third Eye Capital Corporation	8-K	000-51354	10.3	Dec. 22, 2009
10.24	Note Purchase Agreement dated October 18, 2010, among Third Eye Capital Corporation, the Purchasers and AE Advanced Fuels Keyes, Inc., including the Form of Note	8-K	000-51354	10.1	Nov. 3, 2010
10.25	Amendment No. 5 and Limited Waiver to Note and Warrant Purchase Agreement dated October 18, 2010, between Aemetis, Inc. and Third Eye Capital Corporation	8-K	000-51354	10.1	Nov. 3, 2010
10.27	Amendment #1 to Project Agreement dated October 29, 2010 among Cilion, Inc., Aemetis, Inc., AE Advanced Fuels, Inc., and AE Advanced Fuels Keyes, Inc.	10-Q	000-51354	10.3	Dec. 1, 2010
10.28	Amendment #1 to Lease Agreement dated October 29, 2010, among Cilion, Inc., AE Advanced Fuels Keyes, Inc., and AE Advanced Fuels, Inc.	10-Q	000-51354	10.4	Dec. 1, 2010
10.29	Subordination Agreement, dated October 29, 2010 among Laird Cagan, Aemetis, Inc., AE Advanced Fuels Keyes, Inc., and Third Eye Capital Corporation	10-Q	000-51354	10.5	Dec. 1, 2010
10.30	Ethanol Marketing Agreement, dated October 29, 2010 between AE Advanced Fuels Keyes, Inc. and Kinergy Marketing, LLC	10-Q	000-51354	10.6	Dec. 1, 2010

10.31	Zymetis, Inc. 2006 Stock Incentive Plan					X
10.32	Zymetis Inc. Incentive Stock Option Agreement					X
10.33	Zymetis Inc. Non-Incentive Stock Option Agreement					X
10.34	Amendment No. 1 to Note Purchase Agreement dated March 10, 2011 among Third Eye Capital Corporation, as Agent; the Purchasers; and AE Advanced Fuels Keyes, Inc.	8-K	000-51354	10.1	March 16, 2011
10.35	Amendment No. 2 to Project Agreement dated March 9, 2011 among Cilion, Inc., AE Biofuels, Inc., AE Advanced Fuels, Inc., and AE Advanced Fuels Keyes, Inc.	8-K	000-51354	10.2	March 16, 2011
10.36	Amendment No. 2 to Lease Agreement dated March 9, 2011 among Cilion, Inc., AE Advanced Fuels Keyes, Inc., and AE Advanced Fuels, Inc.	8-K	000-51354	10.3	March 16, 2011
10.37	Limited Waiver to Note and Warrant Purchase Agreement dated May 24, 2011, between Third Eye Capital Corporation, as Agent and AE Biofuels, Inc.	8-K	000-51354	10.1	June 1, 2011
10.38	Limited Waiver and Amendment No. 2 to Note Purchase Agreement dated June 20, 2011, among Third Eye Capital Corporation, as Agent; the Purchasers; and AE Advanced Fuels Keyes, Inc.	8-K	000-51354	10.1	June 24, 2011
10.39	First Amendment to Ethanol Marketing Agreement dated September 6, 2011, between AE Advanced Fuels Keyes, Inc. and Kinergy Energy Marketing	8-K	000-51354	10.1	September 8, 2011
10.40	Limited Waiver and Amendment No. 4 to Note Purchase Agreement dated as of November 8, 2011 and effective as of October 18, 2011 among AE Advanced Fuels Keyes, Inc., Third Eye Capital Corporation, and the Purchasers	8-K	000-51354	10.1	November 15, 2011
10.41	Form of Note and Warrant Purchase Agreement	8-K	000-51354	10.1	January 1, 2012
10.42	Form of 5% Subordinated Note	8-K	000-51354	10.2	January 1, 2012
10.43	Form of Common Stock Warrant	8-K	000-51354	10.3	January 1, 2012
10.44	Limited Waiver, Consent and Amendment No. 5 to Note Purchase Agreement dated January 31, 2012 among Aemetis Advanced Fuels Keyes, Inc., Third Eye Capital Corporation, as agent and the Purchasers	8-K	000-51354	10.1	February 6, 2012
10.45	Amendment No. 6 to Note Purchase Agreement dated April 13, 2012 among Aemetis Advanced Fuels Keyes, Inc., Third Eye Capital Corporation, as agent, and the Purchasers	8-K	000-51354	10.1	April 19, 2012
10.46	Limited Waiver to Note Purchase Agreement dated March 31, 2012 among Aemetis Advanced Fuels Keyes, Inc., and Third Eye Capital Corporation, an Ontario corporation, as agent	8-K	000-51354	10.1	April 19, 2012
10.47	Limited Waiver to Note and Warrant Purchase Agreement dated March 31, 2012 among Aemetis, Inc., Third Eye Capital Corporation, an Ontario corporation, as agent, and the Purchasers	8-K	000-51354	10.1	April 19, 2012
10.48	Amendment No. 7 to Note Purchase Agreement dated May 15, 2012 among Aemetis Advanced Fuels Keyes, Inc., Third Eye Capital Corporation, as agent, and the Purchasers	8-K	000-51354	10.1	May 22, 2012
10.49	Form of Note and Warrant Purchase Agreement	8-K	000-51354	10.1	June 6, 2012
10.50	Form of 5% Subordinated Note	8-K	000-51354	10.1	June 6, 2012
10.51	Form of Common Stock Warrant	8-K	000-51354	10.1	June 6, 2012
10.52	Note and Warrant Purchase Agreement dated June 21, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc.	8-K	000-51354	10.1	June 28, 2012
10.53	5% Subordinated Promissory Note dated June 21, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc.	8-K	000-51354	10.2	June 28, 2012
10.54	Form of Warrant to Purchase Common Stock	8-K	000-51354	10.3	June 28, 2012
10.55	Note Purchase Agreement dated June 27, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc.	8-K	000-51354	10.1	July 3, 2012
10.56	15% Subordinated Promissory Note dated June 27, 2012 among Third Eye Capital Corporation, Aemetis Advanced Fuels Keyes, Inc., and Aemetis, Inc.	8-K	000-51354	10.2	July 3, 2012
10.57	Agreement and Plan of Merger, dated July 6, 2012, among Aemetis, Inc., AE Advanced Fuels, Inc., Keyes Facility Acquisition Corp., and Cilion, Inc.	8-K	000-51354	2.1	July 10, 2012
10.58	Stockholders’ Agreement, dated July 6, 2012, among Aemetis, Inc., and Western Milling Investors, LLC, as Securityholders’ Representative.	8-K	000-51354	10.1	July 10, 2012
10.59	Amended and Restated Note Purchase Agreement, dated July 6, 2012 among Aemetis Advanced Fuels Keyes, Inc., Keyes Facility Acquisition Corp., Aemetis, Inc., Third Eye Capital Corporation, as Administrative Agent, and the Noteholders	8-K	000-51354	10.2	July 10, 2012

10.60	Amended and Restated Guaranty, dated July 6, 2012 among Aemetis, Inc., certain subsidiaries of Aemetis and Third Eye Capital Corporation, as Agent.	8-K	000-51354	10.3	July 10, 2012
10.61	Amended and Restated Security Agreement, dated July 6, 2012 among Aemetis, Inc., certain subsidiaries of Aemetis and Third Eye Capital Corporation, as Agent.	8-K	000-51354	10.4	July 10, 2012
10.62	Investors’ Rights Agreement, dated July 6, 2012, by and among Aemetis, Inc., and the investors listed on Schedule A thereto.	8-K	000-51354	10.5	July 10, 2012
10.63	Technology License Agreement dated August 9, 2012 between Chevron Lummus Global LLC and Aemetis Advanced Fuels, Inc.	8-K	000-51354	10.1	August 22, 2012
10.64	Corn Procurement and Working Capital Agreement dated March 9, 2011 between J.D. Heiskell Holdings LLC and Aemetis Advanced Fuels Keyes, Inc.**					X
10.65	Purchasing Agreement dated March 9, 2011 between J.D. Heiskell Holdings LLC and Aemetis Advanced Fuels Keyes, Inc.**					X
10.66	WDG Purchase and Sale Agreement dated March 23, 2011 between A.L. Gilbert Company and Aemetis Advanced Fuels Keyes, Inc.					X
10.67	Keyes Corn Handling Agreement dated March 23, 2011 among A. L. Gilbert Company, AE Advanced Fuels Keyes, Inc., and J.D. Heiskell Holdings, LLC**					X
10.68	Limited Waiver and Amendment No. 1 to Amended and Restated Note Purchase Agreement dated as of October 18, 2012 by and among Aemetis Advanced Fuels Keyes, Inc., a Delaware corporation, Aemetis Facility Keyes, Inc., a Delaware corporation, Third Eye Capital Corporation, an Ontario corporation as agent, Third Eye Capital Credit Opportunities Fund – Insight Fund, and Sprott PC Trust.	8-K	000-51354	10.1	October 23, 2012
10.69	Amendment No. 1 to Revolving Line of Credit Agreement dated October 16, 2012 by and among Aemetis International, Inc., a Nevada corporation, and Laird Q. Cagan	8-K	000-51354	10.2	October 23, 2012
10.70	Note Purchase Agreement effective as of March 4, 2011, amended January 19, 2012 and July 24, 2012 by and among AE Advanced Fuels, Inc., a Delaware corporation, and Advanced BioEnergy, LP a California limited partnership and Advanced BioEnergy GP, LLC, a California limited liability company.	8-K	000-51354	10.3	October 23, 2012
10.71	Form of Convertible Subordinated Promissory Note by and among AE Advanced Fuels, Inc., a Delaware corporation and Advanced FioEnergy, LP, a California limited partnership.	8-K	000-51354	10.4	October 23, 2012
14	Code of Ethics	10-K	000-51354	14	May 20, 2009
21.1	Subsidiaries of the Registrant					X
24	Power of Attorney (see signature page)					X
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

**Confidential treatment has been requested for portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: October 31, 2012	/s/ Eric A. McAfee
	Eric A. McAfee
	Chief Executive Officer
	(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric A. McAfee and Todd A. Waltz, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him in any and all capacities, to sign any amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:



Name	Title	Date
/s/ Eric A. McAfee	Chairman/Chief Executive Officer	October 30, 2012
Eric A. McAfee	(Principal Executive Officer and Director)

/s/Todd Waltz	Chief Financial Officer	October 30, 2012
Todd Waltz	(Principal Financial and Accounting Officer)

/s/ Francis Barton	Director	October 30, 2012
Francis Barton

/s/ John R. Block	Director	October 29, 2012
John R. Block

/s/ Dr. Steven Hutcheson	Director	October 31, 2012
Dr. Steven Hutcheson

/s/ Harold Sorgenti______	Director	October 29, 2012
Harold Sorgenti

AEMETIS, INC.

Consolidated Financial Statements

Index To Financial Statements

	Page Number
Report of Independent Registered Public Accounting Firm		73

Consolidated Financial Statements
Consolidated Balance Sheets		74
Consolidated Statements of Operations and Comprehensive Loss		75
Consolidated Statements of Cash Flows		76
Consolidated Statements of Stockholders' Deficit		77
Notes to Consolidated Financial Statements		78-110

Report of Independent Registered Public Accounting Firm

October 31, 2012

Board of Directors and Stockholders

Aemetis, Inc.

Cupertino, CA

We have audited the accompanying consolidated balance sheets of Aemetis, Inc. as of December 31, 2011 and 2010, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aemetis, Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ McGladrey LLP

Des Moines, Iowa

AEMETIS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2011 AND 2010

	2011			2010
Assets
Current assets:
Cash and cash equivalents	$	249,466		$	683,016
Accounts receivable, less allowance of $143,089 and $0		1,379,668			113,583
Inventories		3,981,997			666,854
Prepaid expenses		491,308			228,040
Other current assets		1,026,477			390,891
Total current assets		7,128,916			2,082,384

Property, plant and equipment, net		15,530,905			16,404,550
Assets held for sale		885,000			2,885,000
Intangible assets and goodwill		2,767,994			-
Other assets		905,106			222,101
Total assets	$	27,217,921		$	21,594,035

Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	14,337,536		$	4,689,420
Current portion of long term secured notes		2,425,588			2,793,427
Secured notes, net of discount for issuance costs		5,161,191			5,306,742
Short term notes and unsecured working capital lines of credit		2,066,720			547,596
Mandatorily redeemable Series B convertible preferred stock		2,320,164			2,221,872
Other current liabilities		3,116,868			2,741,103
Total current liabilities		29,428,067			18,300,160

Long term liabilities:
Long term portion of secured notes, net of discount for issuance costs		15,701,023			8,168,980
Long term debt (related party), net of discount for issuance costs		4,291,913			4,574,603
Total long term liabilities		19,992,936			12,743,583

Commitments and contingencies

Stockholders' deficit:
Series B convertible preferred stock, $0.001 par value, 7,235,565 authorized, 3,115,225 and 3,165,225 shares issued and outstanding in 2011 and 2010, respectively (aggregate liquidation preference of $9,345,675 and $9,495,675 in 2011 and 2010, respectively)		3,115			3,165
Common stock, $0.001 par value, 400,000,000 authorized, 130,746,890 and 90,342,032 shares issued and outstanding in 2011 and 2010, respectively		130,747			90,342
Additional paid-in capital		45,432,447			38,557,376
Accumulated deficit		(65,526,029	)		(47,229,670	)
Accumulated other comprehensive loss		(2,243,362	)		(870,921	)
Total stockholders' deficit		(22,203,082	)		(9,449,708	)

Total liabilities and stockholders' deficit	$	27,217,921		$	21,594,035

The accompanying notes are an integral part of the financial statements

AEMETIS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

		2011			2010

Revenues	$	141,857,914		$	8,132,108

Cost of goods sold		137,216,040			8,254,123

Gross profit/(loss)		4,641,874			(122,015	)

Research and development expenses		576,625			322,561
Selling, general and administrative expenses		8,570,591			4,709,744

Operating loss		(4,505,342	)		(5,154,320	)

Other income/(expense)
Interest income		23,436			24,464
Interest expense		(13,561,285	)		(4,034,447	)
Other income, net of expenses		52,960			603,294
Loss on land sale		(401,407	)		-

Loss before income taxes		(18,391,638	)		(8,561,009	)

Income taxes benefit/(expense)		95,279			(3,200	)

Net loss		(18,296,359	)		(8,564,209	)
Less: Net loss attributable to noncontrolling interest		-			(138,956	)
Net loss attributable to Aemetis, Inc.	$	(18,296,359	)	$	(8,425,253	)


Other comprehensive loss
Foreign currency translation adjustment		(1,372,441	)		505,461
Comprehensive loss	$	(19,668,800	)	$	(7,919,792	)

Loss per common share attributable to Aemetis, Inc.
Basic and diluted	$	(0.18	)	$	(0.10	)
Weighted average shares outstanding
Basic and diluted		103,536,643			87,403,213

The accompanying notes are an integral part of the financial statement

AEMETIS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	2011			2010
Operating activities:
Net loss	$	(18,296,359	)	$	(8,564,209	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		177,278			377,669
Depreciation and amortization		1,141,007			760,051
Inventory provision		201,887			283,176
Amortization of debt issuance discount		4,624,705			1,343,004
Loss/(gain) on extinguishment of debt		33,926			(14,757	)
Loss on sale of assets and disposal		401,407			56,378
Deferred tax liability		(98,479	)		-
Changes in assets and liabilities:
Accounts receivable		(1,316,028	)		(78,711	)
Inventory		(3,724,088	)		(331,519	)
Prepaid expenses		(172,840	)		(205,869	)
Other current assets and other assets		(1,476,557	)		(158,649	)
Accounts payable		9,597,694			1,056,939
Accrued interest expense		7,470,040			2,384,300
Other liabilities		189,508			(589,892	)
Net cash used in operating activities		(1,246,899	)		(3,682,089	)

Investing activities:
Purchase of property, plant and equipment, net		(2,568,001	)		(672,965	)
Proceeds from land sale		1,598,593			-
Cash obtained through merger		1,451			-
Net cash used in investing activities		(967,957	)		(672,965	)

Financing activities:
Proceeds from borrowings under secured debt facilities		3,621,500			4,500,044
Repayments of borrowings under secured debt facilities		(3,053,426	)		(850,000	)
Proceeds from borrowings under related party credit arrangements		-			2,612,000
Payments of borrowings under related party credit arrangements		-			(1,600,000	)
Proceeds from borrowings under short term debt facilities		8,773,415			4,457,667
Repayments of borrowings under short term facilities		(7,476,182	)		(4,260,425	)
Net cash provided by financing activities		1,865,307			4,859,286

Effect of exchange rate changes on cash and cash equivalents		(84,001	)		126,606
Net increase (decrease) in cash and cash equivalents		(433,550	)		630,838

Cash and cash equivalents at beginning of period		683,016			52,178
Cash and cash equivalents at end of period	$	249,466		$	683,016

Supplemental disclosures of cash flow information, cash paid:

Interest payments, net of capitalized interest of $184,933 in 2011 and $53,724 in 2010		1,021,188			151,572
Income taxes		3,200			3,200

Supplemental disclosures of cash flow information, non-cash transactions:

Issuance of shares for acquisition		1,890,135			-
Stock issued to pay interest and fees on borrowings		1,662,323			202,500
Payment of loans and fees by issuance of stock to related party		1,452,818			162,000
Beneficial conversion discount on related party debt		1,732,872			1,556,559
Property, plant & equipment purchases included in accounts payable		-			466,493

The accompanying notes are an integral part of the financial statement

AEMETIS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

																	Accumulated Other
	Series B Preferred Stock						Common Stock				Additional			Accumulated			Comprehensive			Noncontrolling			Total
	Shares			Dollars			Shares		Dollars		Paid-in Capital			Deficit			Income/(Loss)			Interest			Dollars

Balance at December 31, 2009		3,320,725		$	3,321			86,181,532	$	86,181	$	36,763,984		$	(38,804,417	)	$	(1,376,382	)	$	(362,375	)	$	(3,689,688	)

Stock-based compensation		-			-			-		-		259,691			-			-			-			259,691
Shares issued to consultants		-			-			155,000		155		14,895			-			-			-			15,050
Debt issuance discount		-			-			2,250,000		2,250		200,250			-			-			-			202,500
Energy Enzymes, Inc. merger		-			-			1,000,000		1,000		(502,331	)		-			-			501,331			-
Issuance of shares to related party		-			-			600,000		600		161,400			-			-			-			162,000
Issuance of warrants		-			-			-		-		102,928			-			-			-			102,928
Series B to Common conversion		(155,500	)		(156	)		155,500		156					-			-			-			-
Beneficial conversion feature on related party notes								-		-		1,556,559			-			-			-			1,556,559
Other comprehensive income		-			-			-		-		-			-			505,461			-			505,461
Net loss		-			-			-		-		-			(8,425,253	)		-			(138,956	)		(8,564,209	)

Balance at December 31, 2010		3,165,225		$	3,165			90,342,032	$	90,342	$	38,557,376		$	(47,229,670	)	$	(870,921	)	$	-		$	(9,449,708	)

Stock-based compensation		-			-			5,585		6		152,736			-			-			-			152,742
Shares issued to consultants		-			-			30,000		30		24,506			-			-			-			24,536
Debt issuance discount and waiver shares		-			-			4,589,360		4,589		1,657,734			-			-			-			1,662,323
Issuance of shares to related party		-			-			29,056,356		29,056		1,423,762			-			-			-			1,452,818
Beneficial conversion feature on related party notes								-		-		1,732,872			-			-			-			1,732,872
Conversion of Series B preferred to common stock		(50,000	)		(50	)		50,000		50		-			-			-			-			-
Zymetis Inc. merger		-			-			6,673,557		6,674		1,883,461			-			-			-			1,890,135
Other comprehensive loss		-			-			-		-		-			-			(1,372,441	)		-			(1,372,441	)
Net loss		-			-			-		-		-			(18,296,359	)		-			-			(18,296,359	)

Balance at December 31, 2011		3,115,225		$	3,115			130,746,890	$	130,747	$	45,432,447		$	(65,526,029	)	$	(2,243,362	)	$	-		$	(22,203,082	)

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

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. 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. (formerly “American Ethanol, Inc.”), a Nevada corporation and its subsidiaries Sutton Ethanol, LLC, a Nebraska limited liability company, Illinois Valley Ethanol, LLC, an Illinois limited liability company, Danville Ethanol, Inc., an Illinois corporation, and AE Biofuels, Inc., a Delaware corporation;

●	Biofuels Marketing, a Delaware corporation;

●	Aemetis International, Inc. (formerly International Biodiesel, 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. (formerly AE Zymetis, Inc.), a Delaware corporation;

●	Aemetis Biochemicals, Inc., a Nevada corporation;

●	Aemetis Biofuels, Inc. (formerly AE Biofuels Technologies, Inc.), a Delaware corporation and its subsidiary Energy Enzymes, Inc., a Delaware corporation;

●	AE Advanced Fuels, Inc., a Delaware corporation;

●	Aemetis Advanced Fuels, Inc., a Nevada corporation; and,

●	Aemetis Advanced Fuels Keyes, Inc. (formerly AE Advanced Fuels Keyes, Inc.), a Delaware corporation.

Aemetis, Inc. is an international advanced fuels and specialty chemical company focused on the production of renewable fuels and chemicals and the acquisition, development and commercialization of innovative technologies that are substitutes for traditional petroleum-based products. In 2010, the Company began retrofitting an ethanol production facility in Keyes, California and in April 2011 began high volume production of ethanol and wet distiller’s grain (WDG).

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its subsidiaries. All material inter-company accounts and transactions are eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revenue 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.

Cost of Goods Sold. Cost of goods sold include those costs directly associated with the production of revenues, such as raw material purchases, factory overhead, and other direct production costs.

Shipping and Handling Costs. Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations.

Research and Development. Research and development costs are expensed as incurred, unless they have alternative future uses to the Company.

Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at various financial institutions domestically and abroad. Domestic accounts are insured by the FDIC. The Company’s accounts at these institutions may at times exceed federally insured limits. The Company has not experienced any losses in such accounts.

Accounts Receivable, net. The Company sells ethanol and wet distillers grains through third-party marketing arrangements generally without requiring collateral. The Company sells biodiesel and glycerin to a variety of customers and may require advanced payment based on the size and credit worthiness of the customer. Accounts receivables consist of product sales made to large credit worthy customers. Trade accounts receivable are presented at original invoice amount, net of the allowance for doubtful accounts.

The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once uncollectibility has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate additional allowances may be required.

Inventories. Inventories are stated at the lower of cost, using the first-in and first-out (FIFO) method, or market.

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 acquired for development of production facilities, and the biodiesel plant in India. It is the Company policy to depreciate capital assets over their estimated useful lives using the straight-line method.

Intangible Assets. Intangible assets consist of intellectual property in the form of patents pending, in-process research and development and goodwill. Once the patents pending or in-process R&D have secured a definite life in the form of a patent or product, they will be carried at initial fair value less accumulated amortization over the estimated useful life. Amortization commences upon granting of the patent and is amortized over the patent protection period or shorter period upon abandonment of the patent.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company intangible assets such as goodwill have indefinite lives and as a result need to be evaluated at least annually, or more frequently, if impairment indicators arise. In the Company’s review, we determined the fair value of segment reporting assets using market indicators and discounted cash flow modeling and compare it to the net book value of the acquired assets. If the fair value is less than the carrying value of the asset, the Company then determined the fair value of the asset. An impairment loss would be recognized when the fair value is less than the related net book value, and an impairment expense would be recorded in the amount of the difference. Forecasts of future cash flows are judgments based on the Company’s experience and knowledge of the Company’s operations and the industries in which the Company operates. These forecasts could be significantly affected by future changes in market conditions, the economic environment, including inflation, and the purchasing decisions of the Company’s customers.

California Ethanol Producer Incentive Program – The Company is eligible to participate in the California Ethanol Producer Incentive Program (“CEPIP”). Under the CEPIP an eligible California ethanol facility may receive up to $3 million in cash per plant per year of operations through 2013 when current production corn crush spreads, measured as the difference between specified ethanol and corn index prices, drop below $0.55 per gallon. For any month in which a payment is made by the CEPIP, the Company may be required to reimburse the funds within the subsequent five years from each payment date, if the corn crush spreads exceed $1.00 per gallon. Since these funds are provided to subsidize current production costs and encourage eligible facilities to either continue production or start up production in low margin environments, the Company records the proceeds, if any, as a credit to cost of goods sold. The Company will assess the likelihood of reimbursement in future periods as corn crush spreads approach $1.00 per gallon. If it becomes likely that amounts may be reimbursable by the Company, the Company will accrue a liability for such payment and recognize the costs as an increase in cost of goods sold. The Company recorded $1,803,380 and $0 as a reduction to cost of goods sold for the years ended December 31, 2011 and 2010, respectively, in respect of CEPIP payments received. To date, the Company has not been required to reimburse any amounts.

Income Taxes. The Company recognizes income taxes in accordance with ASC 740 Income Taxes using an asset and liability approach. This approach requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. The measurement of current and deferred taxes is based on provisions of enacted tax law.

ASC 740 provides for recognition of deferred tax assets if the realization of such assets is more likely than not to occur. Otherwise, a valuation allowance is established for the deferred tax assets, which may not be realized. As of December 31, 2011 and 2010, the Company recorded a full valuation allowance against its net deferred tax assets due to operating losses incurred since inception. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets were fully offset by a valuation allowance.

We are subject to income tax audits by the respective tax authorities in all of the jurisdictions in which it operates. The determination of tax liabilities in each of these jurisdictions requires the interpretation and application of complex and sometimes uncertain tax laws and regulations. The recognition and measurement of current taxes payable or refundable and deferred tax assets and liabilities requires that the Company make certain estimates and judgments. Changes to these estimates or a change in judgment may have a material impact on the Company’s tax provision in a future period.

Long - Lived Assets. The Company evaluates the recoverability of long-lived assets with finite lives in accordance with ASC Subtopic 360-10-35 Property Plant and Equipment –Subsequent Measurements, which requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, based on estimated undiscounted cash flows, the impairment loss would be measured as the difference between the carrying amount of the assets and its fair value based on the present value of estimated future cash flows.

Assets held for sale. The Company analyzes land holdings, buildings and equipment for their strategic importance to the future of the company, and if determined asset is disposable, the asset will be sold opportunistically in the open market for the highest bidder.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Basic and Diluted Net Loss per Share. Basic loss per share is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding for the period, net of shares subject to repurchase. Diluted loss per share reflects the dilution of common stock equivalents such as options, convertible preferred stock and warrants to the extent the impact is dilutive. As the Company incurred net losses for the years ended December 31, 2011 and 2010, potentially dilutive securities have been excluded from the diluted net loss per share computation, as their effect would be anti-dilutive.

The following table shows the weighted-average number of potential dilutive shares excluded from the diluted net loss per share calculated for the year ended December 31, 2011, and 2010:

	For the year ended December 31,
	2011		2010

Aemetis Series B preferred stock		3,142,485		3,239,154
Aemetis Series B warrants		427,396		443,853
Aemetis Common stock options and warrants		8,519,855		5,985,691
Convertible interest & fees on note – related party		20,636,157		17,615,521
Total weighted average number of potentially dilutive shares excluded from the diluted net loss per share calculation		32,725,893		27,284,219

Comprehensive Income. ASC 220 Comprehensive Income requires 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 and accumulated other comprehensive income consists solely of cumulative currency translation adjustments resulting from the translation of the financial statements of its foreign subsidiaries. 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. subsidiaries that operate 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 income. Income and expense accounts are translated at average exchange rates during the year. Gains and losses from foreign currency transactions are recorded in other income (loss), net.

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 (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The operations in India as well as the retrofit of the Keyes, California ethanol plant resulted in the Company’s reevaluation of its management structure and reporting around business segments.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Aemetis recognized three reportable geographic segments: “India”, “North America” and “Other.”

●	The “India” operating segment encompasses the Company’s 50 MGY nameplate capacity biodiesel plant in Kakinada, India, the administrative offices in Hyderabad, India, and the holding companies in Nevada and Mauritius.

●	The “North America” operating segment includes the Company’s leased 55 MGY nameplate capacity ethanol plant in Keyes, CA and the assets (principally land) held for sale in Sutton, NE and in Danville, IL.

●	The “Other” segment encompasses the Company’s costs associated with new market development, company-wide fund raising, formation, executive compensation and other corporate expenses.

Fair Value of Financial Instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, other current liabilities, mandatorily redeemable Series B preferred stock and debt. The fair value of the Company’s debt was unable to be determined based on the operating structure of the cross-collateralized debt and the short-term maturity of these instruments. The Company’s long-term debt carrying value approximates fair value based upon the borrowing rates currently available to the Company for bank loans in India with similar terms and maturities. The Company is also unable to estimate the fair value of the long-term debt (related party) due to the lack of comparable available credit facilities. The fair value of all other financial instruments was estimated to approximate carrying value due to the short-term nature these instruments.

Share-Based Compensation. The Company recognizes share based compensation in accordance with ASC 718 Stock Compensation requiring the Company to recognize expense related to the estimate 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 450 Contingencies. 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.

Business Combinations. The Company applies the acquisition method of accounting to account for business combinations. The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. Identifiable assets, liabilities, and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date. The excess of the cost of the acquisition over our interest in the fair value of the identifiable net assets acquired is recorded as goodwill. If our interest in the fair value of the identifiable net assets acquired in a business combination exceeds the cost of the acquisition, a gain is recognized in earnings on the acquisition date. The Company will adjust the preliminary purchase price allocation, as necessary, after the acquisition closing date through the end of the measurement period (up to one year) as the valuations for the assets acquired and liabilities assumed are finalized.

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.

Modification Accounting. The Company evaluates amendments to its debt under the FASB guidance for modification and extinguishment accounting. This evaluation included 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 determines the fair value of its debt based on factors available to the Company for similar borrowings and applied extinguishment accounting method.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Sequencing Policy. In the event partial reclassification of contracts subject to ASC 815-40-25 is necessary due to the Company’s inability to demonstrate it has sufficient authorized shares, Shares will be allocated on the basis of maturity dates of potentially dilutive instruments, with the latest maturity date receiving first allocation of shares. If a reclassification of an instrument were required it would result in the earliest maturity instrument being reclassified first.

Recent Accounting Pronouncements.

Effective January 1, 2011, the Company adopted the amended guidance in ASC Topic 805, Business Combinations, which, if the Company completed a material business combination during the reporting period, requires the Company to disclose the Company’s pro forma revenue and earnings as though the business combinations that occurred during the current period had occurred as of the beginning of the comparable prior annual reporting period. The amended guidance also requires the Company to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.

Effective January 1, 2011, the Company adopted the second phase of the amended guidance in ASC Topic 820, Fair Value Measurements and Disclosures, which requires the Company to disclose information in the reconciliation of recurring Level 3 measurements regarding purchases, sales, issuances and settlements on a gross basis, with a separate reconciliation for assets and liabilities. The Company did not experience an impact from the additional disclosure requirements, as the Company does not have any recurring Level 3 measurements.

Effective January 1, 2012, the Company will be required to adopt the third phase of amended guidance in ASC Topic 820, Fair Value Measurements and Disclosures. The purpose of the amendment is to achieve common fair value measurement and disclosure requirements by improving comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and those prepared in conformity with International Financial Reporting Standards, or IFRS. The amended guidance clarifies the application of existing fair value measurement requirements and requires additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The Company currently would not be impacted by the additional disclosure requirements, as the Company does not have any recurring Level 3 measurements.

Effective January 1, 2012, the Company will be required to adopt the amended guidance in ASC Topic 220, Comprehensive Income. This accounting standards update, which helps to facilitate the convergence of GAAP and IFRS, is aimed at increasing the prominence of other comprehensive income in the financial statement by eliminating the option to present other comprehensive income in the statement of stockholders’ equity, and requiring comprehensive income to be reported in either a single continuous statement or in two separate but consecutive statements reporting net income and other comprehensive income. This amended guidance will be implemented retroactively. The Company has determined that the changes to the accounting standards will not materially affect the presentation of consolidated financial.

Effective January 1, 2012, the Company will be permitted to adopt the amended guidance in ASC Topic 350, Intangibles – Goodwill and Other. The amended guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. The Company has determined that the changes to the accounting standards will not impact the Company’s disclosure or reporting requirements.

2. Inventory

Inventory consists of the following:

	As of December 31,
	2011		2010

Raw materials	$	628,366	$	465,451
Work-in-progress		2,056,771		60,873
Finished goods		1,296,860		140,530
Total inventory	$	3,981,997	$	666,854

As of December 31, 2011 and 2010, the Company has recognized a lower of cost or market reserve of $223,069 and $179,225 respectively, related to inventory.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Property, Plant and Equipment

Property, plant and equipment consist of the following:

	As of December 31,
	2011			2010

Land	$	667,008		$	792,036
Buildings		10,429,402			12,237,853
Furniture and fixtures		152,373			104,199
Machinery and equipment		1,025,105			907,651
Leasehold and tenant improvements		2,800,339			1,024,831
Construction in progress		3,186,551			3,066,928
Total gross property, plant & equipment		18,260,778			18,133,498
Less accumulated depreciation		(2,729,873	)		(1,728,948	)
Total net property, plant & equipment	$	15,530,905		$	16,404,550

The Company recorded depreciation for the years ended December 31, 2011 and 2010 of $1,141,007 and $760,051, respectively.

As of December 31, 2011 and 2010, the components of construction in progress include $3,186,551 and $3,066,928, respectively, related to the Company’s Kakinada, India biodiesel pre-treatment and glycerin units.

As of December 31, 2011 and 2010, leasehold improvements and tenant improvements relate to the Keyes, California ethanol plant.

Management is required to evaluate these long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Based on the evaluation, management determined no assets required impairment as of December 31, 2011 and 2010.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Intangible Assets and Goodwill

Intangible assets consist of goodwill, patents, and in-process research and development. In July 2011 the Company acquired Zymetis, Inc., a biochemical research and development firm, with several patents pending and in-process R&D valued at $1,800,000 at the time of the acquisition. $967,994 in goodwill resulted from the excess in consideration paid over the fair value of the net assets acquired from the Zymetis acquisition. According to ASC 350-20-35 goodwill will be tested for impairment at the Zymetis reporting unit level, which has been named Aemetis Technologies, Inc. Intangible assets will be measured for impairment and abandonment until fully amortized.

As of December 31, 2011 in process R&D is still in development and thus no amortization has been taken.

5. Notes Payable and Subsequent Events

	December 31, 2011		December 31, 2010

Third Eye Capital senior secured term notes, including accrued interest of $1,593,378 and revenue participation of $5,277,753 less unamortized issuance discount of $513,943 for 12/31/2011 and accrued interest of $653,376 less unamortized issuance discount of $733,924 for 12/31/2010. For the years ending 12/31/2011 and 12/31/2010, the Company issued debt discount shares of 4,589,360 and 2,250,000, respectively.	$	18,126,611	$	10,962,407
State Bank of India secured term loan, including accrued interest of $1,485,614 and $949,336 less unamortized issuance discount of $14,902 and $24,838, respectively.		5,161,191		5,306,742
Revolving line of credit (related party), including accrued interest and fees of $1,428,403 and $1,089,691 less unamortized issuance discount of $873,292 and $1,370,079, respectively.		4,291,913		4,574,603
Unsecured working capital loans and short-term notes, including accrued interest of $103,382 and $10,931, respectively.		2,066,720		547,596
Total debt		29,646,435		21,391,348
Less current portion of debt		9,653,499		8,647,765
Total long term debt	$	19,992,936	$	12,743,583

Third Eye Capital Senior secured note. The Company had $7,092,514, and $6,815,056 in principal and accrued interest outstanding net of $0 and $381,276 in debt discounts on a senior secured note as of December 31, 2011 and 2010, respectively. The Note bears interest at 10% and matured in June 2011, but allowed for the continuation with the payment of monthly $75,000 extension fees settled in cash or stock. During the year ending December 31, 2011, the Company issued 1,083,903 shares of stock for the extension or payment of waiver fees associated with this note.

The Note is secured by first-lien deeds of trust on real property located in Nebraska and Illinois (Danville, IL property was sold in May 2011), by a first priority security interest in equipment located in Montana, pledge and assignment of 50% of all cash dividends, cash royalties and all other proceeds received from Aemetis Advanced Fuels Keyes, Inc. and initially a guarantee of $1 million, and later as part of the Cilion merger subsequent event occurring on July 6, 2012, a $10 million guarantee by McAfee Capital LLC (solely owned by Eric McAfee), plus all interest accrued and expenses to enforce Guaranty. The note restricts the payment of dividends by the Company and any of its subsidiaries.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Third Eye Capital Term notes. The Company had $5,756,344 and $4,147,351 in principal and accrued interest outstanding, net of $513,943 and $352,649 in debt discounts, on the term notes as of December 31, 2011 and 2010, respectively. The term notes accrues at 12% per annum, and at 14% per annum subsequent to June 2011, on the unpaid principal balance and is payable monthly in arrears. The first two term notes provide for payment of an additional 2% of total revenues at the Keyes plant until repayment of the term notes after which time the amount was reduced to 1% over the lesser of 5 years or the term of the lease. Upon the issuance of the additional term notes, in February 2011, the terms were revised to increase the additional payment to 4% of total revenues until repayment and 2% over the lesser of 7 years or the term of the lease. In March 2011, the Company issued 1,750,000 shares of common stock to secure the sale of additional notes at a fair value of $175,000. As of December 31, 2011 and 2010, the 4% revenue participation fee totaled $5,277,753 and $0, respectively. The Term Notes and the Senior Secured Notes contain cross-collateral and cross-default provisions.

The Term notes contain various covenants, including but not limited to, minimum free cash flow and production requirements and restrictions on capital expenditures. Throughout the year ending December 31, 2011, the Company was in violation of covenants, but was waived by the note holders through the payment of fees. As a result during, the Company issued a total of 1,755,457 shares of common stock as waiver or extension fees at a fair market value on the dates of issuance of $964,436. The payment requirements on the notes as of December 31, 2011 were $50,000 per week plus the greater of $0.05 per gallon of ethanol produced or 50% of free cash flows, as defined in the agreement. In addition, a $300,000 principal payment shall be paid on the final business day of each fiscal quarter beginning the fourth quarter of 2011 until maturity.

The Term notes are secured by first-lien deeds of trust on all real and personal property, and assignment of proceeds of all government grants, and guarantee of Aemetis, Inc., a $5,000,000 guarantee from McAfee Capital and a personal guarantee from Eric McAfee equal to $2,400,000 in principal plus any interest and fees accrued. Later as part of the Cilion merger subsequent event occurring on July 6, 2012, McAfee Capital LLC (solely owned by Eric McAfee) agreed to a $10 million guarantee against all Third Eye Capital debt, plus all interest accrued and expenses to enforce Guaranty.

As disclosed in the subsequent events footnote, the maturity of the Third Eye Capital Senior secured note and the Term notes were refinanced subsequent to year-end to extend the maturities of these agreements. The Company has revised the maturities of the related debt agreements based on these subsequent events.

State Bank of India Secured Term Loan. On July 17, 2008, Universal Biofuels Private Limited (“UBPL”), the Company’s India operating subsidiary, entered into a six year $6 million loan commitment with the State Bank of India. The term loan matures in March 2014 and is secured by UBPL’s biodiesel plant and land in Kakinada with an asset value of approximately $15.6 million.

In July 2008, the Company drew approximately $4.6 million against the secured term loan. The loan principal amount is repayable in 20 quarterly installments of approximately $270,000, using exchange rates as of December 31, 2009, with the first installment due in June 2009 and the last installment payment due in March 2014. The interest rate under this facility is subject to adjustment every two years, based on 0.25% above the Reserve Bank of India advance rate of 7.5 percent during 2011.

The principal payments scheduled for June, September and December in 2009, and quarters of 2010 and 2011 were not made. The term loan provides for liquidating damages at a rate of 2% per annum for the period of default. As of December 31, 2011 and 2010, UBPL had accrued interest of $1,485,614 and $949,336, respectively.

On October 7, 2009, UBPL received a demand notice from the State Bank of India. The notice informed UBPL an event of default had occurred for failure to make an installment payment on the loan due in June 2009 and demanded repayment of the entire outstanding indebtedness of 19.60 crores (approximately $4 million) together with all accrued interest and applicable fees and expenses. As of December 31, 2011, UBPL is in default on over twenty-eight months of interest, eleven principal repayments, and all covenants, including asset coverage and debt service coverage ratios. Additional provisions of default include the bank having the unqualified right to disclose or publish the Company’s name and the Company’s Directors’ names as defaulters on any communication media. At the bank’s option, it may also demand payment of the entire balance of the loan, since the principal payments have been in default since June 2009. As a result the Company has classified the entire loan amount as a current liability. State Bank of India has filed a legal case before the Debt Recovery Tribunal (DRT), Hyderabad, for recovery of approximately $5 million against the company and also impleaded Andhra Pradesh Industrial Infrastructure Corporation (APIIC) to expedite the process of registration of Factory land for which counter reply is yet to be filed by APIIC. In the case that the Company is unable to prevail with its legal case, DRT may pass a Decree for recovery of due amount, which will impact operations of the company including action up to seizing company property for recovery of their dues.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revolving line of credit – related party. The Company has a Revolving Line of Credit Agreement with Mr. Cagan, a significant shareholder and ex-board member, for $5,000,000 secured by certain accounts, investments, intellectual property, securities and other collateral of Aemetis, Inc., excluding the collateral securing the Company’s obligations with Third Eye Capital and the collateral securing the Company’s obligations with the State Bank of India. The Revolving Line of Credit bears interest at the rate of 10% per annum and matured on July 1, 2012. As of December 31, 2011, no additional borrowings were available on the line.

In September and October, 2010, Aemetis, Inc.’s Board of Directors and Mr. Cagan approved the terms of an agreement subordinating collateral on the Revolving Line of Credit behind Third Eye Capital. As an inducement to accept this subordination risk, Mr. Cagan was given the right to convert accrued interest and fees on the Revolving Line of Credit into shares of Aemetis common stock at a conversion price of $0.05 per share. Additionally, the Board of Directors approved a 5% subordination fee on the outstanding balance payable in cash or in stock. On the maturity date of July 1, 2011, the Board of Directors approved the accrual of an additional 5% fee on the outstanding balance to extend the line of credit through July 2012. For the years ending December 31, 2011 and 2010, the Company recorded a debt discount related to the conversion feature on this related party debt of $1,732,872 and $1,556,559, respectively.

On September 30, 2011, Mr. Cagan converted $1,452,818 of eligible accrued interest and fees into 29,056,356 shares of common stock. Future conversions of interest and fees are limited to a conversion price equal to the average closing stock price for the 22 trailing days prior to the date of conversion.

As disclosed in the subsequent events footnote, the maturity of the Revolving line of credit was extended and, as a result, the Company has revised the maturities schedule related to the line.

Note payable – related party. On January 30, 2010, Aemetis Advanced Fuels Keyes, Inc., entered into an Unsecured Promissory Note with Mr. Cagan for $1,600,000 as bridge financing to repair and retrofit the Keyes plant. The note bears no interest. The Company repaid the $1,600,000 credit facility on May 11, 2010. Fees in connection with this bridge financing were paid with the issuance of 600,000 shares of Aemetis, Inc.’s common stock to Mr. Cagan.

Working Capital Operating Agreement. In November 2008, the Company entered into an operating agreement with Secunderabad Oils Limited (“Secunderabad”). Under this agreement Secunderabad agreed to provide the Company with working capital, on an as needed basis, to fund the purchase of feedstock and other raw materials for the Company’s Kakinada biodiesel facility. The working capital loans are unsecured. Secunderabad as the right to decide whether or not to extend additional loans. Working capital advances bear interest at the actual bank borrowing rate of Secunderabad of fifteen percent (15%). In return, the Company agreed to pay Secunderabad an amount equal to 30% of the plant’s monthly net operating loss. In the event that the Company’s biodiesel facility operates at a loss, Secunderabad owes the Company 30% of the losses. The agreement can be terminated by either party at any time without penalty.

During the years ended December 31, 2011 and 2010, the Company paid Secunderabad $101,408 and $135,019, respectively, in connection with the profit sharing portion of this agreement. In addition, during the same periods paid approximately $143,788 and $64,284 respectively, in interest for working capital funding. At December 30, 2011 and December 31, 2010 the Company had $1,652,162 and $547,596, respectively, outstanding under this agreement.

As noted above, the maturities schedule presented below have been adjusted for the subsequent amendments to the Third Eye Capital and Revolving loan agreements. Scheduled debt repayments based on these amendments for the debt outstanding at December 31, 2011 are:

	Debt Repayments

2012	$	9,653,499
2013		9,964,111
2014		10,028,825
Total	$	29,646,435

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. Operating Leases

The Company, through its subsidiaries, has non-cancelable operating leases for office space in Cupertino.

Subsequent future minimum operating lease payments as of December 31, 2011 as adjusted for subsequent acquisition are approximately $1,592,000 for the year ended December 31, 2012.In July 2009, the Company entered into a sublease agreement with Nevo Energy, Inc. (formerly known as Solargen Energy, Inc.) for approximately 3,000 square feet of leased space. For the year ended December 31, 2010, the Company invoiced, collected and offset as rent expense $85,670 under this agreement. For the year ending December 31, 2011, the Company invoiced Nevo Energy for $86,291 in rents due, but reserved all the payments due to Nevo Energy’s inability to pay. See Note 13. Related Party Transactions. On April 12, 2011, the Company agreed to convert $62,151 of its then outstanding rent bills to a promissory note bearing a 10 percent annual interest rate and a maturity date of April 12, 2018. As of December 31, 2011 a balance of $66,812 remains outstanding on the note. The Company has fully reserved for the Nevo Energy promissory note, due to the high probability of not being able to collect on the Note.

On December 1, 2009, the Company entered into a lease for a 55 million gallon nameplate ethanol facility located in Keyes, CA for a term of 36 months at a monthly lease payment of $250,000. The Lease term and rental began upon substantial completion of the repair and retrofit of the plant on April 1, 2011, which was amended in April 2012 to a 60-month term ending March 2016.

On July 6, 2012, Aemetis, Inc. acquired the Keyes, CA ethanol plant. As a result, no additional lease obligations remain for the ethanol plant lease after the acquisition date. See Note 15. Subsequent Events.

For the year ended December 31, 2011 and 2010, the Company recognized rent expense of $3,314,712 and $714,718, respectively.

7. Stockholders’ Deficit

The Company is authorized to issue up to 400,000,000 shares of common stock, $0.001 par value and 65,000,000 shares of preferred stock, $0.001 par value.

Convertible Preferred Stock

The following is a summary of the authorized, issued and outstanding convertible preferred stock:

			Shares Issued and
	Authorized		Outstanding December 31,
	Shares		2011		2010

Series B preferred stock		7,235,565		3,115,225		3,165,225
Undesignated		57,764,435		-		-
		65,000,000		3,115,225		3,165,225

Our Articles of Incorporation authorize the Company’s board to issue up to 65,000,000 shares of preferred stock, $0.001 par value, in one or more classes or series within a class upon authority of the board without further stockholder approval.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Significant terms of the designated preferred stock are as follows:

Voting. Holders of the Company’s Series B preferred stock are entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series B preferred stock held by such holder could be converted as of the record date. Cumulative voting with respect to the election of directors is not allowed. Currently each share of Series B preferred stock is entitled to one vote per share of Series B preferred stock. In addition, without obtaining the approval of the holders of a majority of the outstanding preferred stock, the Company cannot:

●	Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series B preferred stock;

●	Effect an exchange, reclassification, or cancellation of all or a part of the Series B preferred stock, including a reverse stock split, but excluding a stock split;

●	Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series B preferred stock; or

●	Alter or change the rights, preferences or privileges of the shares of Series B preferred stock so as to affect adversely the shares of such series.

Dividends. Holders of all of the Company’s shares of Series B preferred stock are entitled to receive non-cumulative dividends payable in preference and before any declaration or payment of any dividend on common stock as may from time to time be declared by the board of directors out of funds legally available for that purpose at the rate of 5% of the original purchase price of such shares of preferred stock. No dividends may be made with respect to the Company’s common stock until all declared dividends on the preferred stock have been paid or set aside for payment to the preferred stock holders. To date, no dividends have been declared.

Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Series B preferred stock are entitled to receive, prior and in preference to any payment to the holders of the common stock, $3.00 per share plus all declared but unpaid dividends (if any) on the Series B preferred stock. If the Company’s assets legally available for distribution to the holders of the Series B preferred stock are insufficient to permit the payment to such holders of their full liquidation preference, then the Company’s entire assets legally available for distribution are distributed to the holders of the Series B preferred stock in proportion to their liquidation preferences. After the payment to the holders of the Series B preferred stock of their liquidation preference, the Company’s remaining assets legally available for distribution are distributed to the holders of the common stock in proportion to the number of shares of common stock held by them. A liquidation, dissolution or winding up includes (a) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) that results in the voting securities of the Company outstanding immediately prior thereto failing to represent immediately after such transaction or series of transactions (either by remaining outstanding or by being converted into voting securities of the surviving entity or the entity that controls such surviving entity) a majority of the total voting power represented by the outstanding voting securities of the Company, such surviving entity or the entity that controls such surviving entity, or (b) a sale, lease or other conveyance of all or substantially all of the assets of the Company.

Conversion. Holders of Series B preferred stock have the right, at their option at any time, to convert any shares into common stock. Each share of preferred stock will convert into one share of common stock, at the current conversion rate. The conversion ratio is subject to adjustment from time to time in the event of certain dilutive issuances and events, such as stock splits, stock dividends, stock combinations, reclassifications, exchanges and the like. In addition, at such time as the Registration Statement covering the resale of the shares of common stock is issuable, then all outstanding Series B preferred stock shall be automatically converted into common stock at the then effective conversion rate.

Mandatorily Redeemable Series B preferred stock. In connection with the election of dissenters’ rights by the Cordillera Fund, L.P., at December 31, 2008 the Company reclassified 583,334 shares with an original purchase price of $1,750,002 out of shareholders’ equity to a liability called “mandatorily redeemable Series B preferred stock” and accordingly reduced stockholders equity by the same amount to reflect the Company’s obligations with respect to this matter. At December 31, 2011 and 2010, the Company obligation was $2,320,164 and $2,221,872, respectively, which accrues interest at the rate of 5.25% per annum. The payment is currently past due. The Company expects to pay these obligations upon settlement of senior secured obligations and the availability of funds.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. Outstanding Warrants

A summary of warrant activity for the years ended December 31, 2011 and 2010 is as follows:

Preferred Stock	Warrants Issued & Outstanding			Weighted - Average Exercise Price		Warrants Issued & Exercisable			Average Remaining Term in Years

Outstanding December 31, 2009		443,853		$	3.00		443,853			2.18
Granted		-			-		-			-
Outstanding December 31, 2010		443,853			3.00		443,853			1.18
Expired		(51,374	)		3.00		(51,374	)
Outstanding December 31, 2011		392,479			3.00		392,479			0.25


Common Stock	Warrants Issued & Outstanding			Weighted - Average Exercise Price		Warrants Issued & Exercisable			Average Remaining Term in Years

Outstanding December 31, 2009		477,734		$	0.79		477,734			3.34
Granted		950,856			0.13		950,856			-
Outstanding December 31, 2010		1,428,590			0.35		1,428,590			4.08
Expired		-			-		-			-
Outstanding December 31, 2011		1,428,590			0.35		1,428,590			3.08


Total	Warrants Issued & Outstanding			Weighted - Average Exercise Price		Warrants Issued & Exercisable			Average Remaining Term in Years

Outstanding December 31, 2009		921,587		$	1.85		921,587			2.78
Granted		950,856			0.13		950,856			-
Outstanding December 31, 2010		1,872,443			0.98		1,872,443			3.39
Expired		(51,374	)		3.00		(51,374	)
Outstanding December 31, 2011		1,821,069			0.92		1,821,069			2.47

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

9. Stock-Based Compensation

Common Stock Reserved for Issuance

Aemetis authorized the issuance of 8,600,434 shares under its 2007 Stock Plan and the former Zymetis, Inc. Stock Plan for stock option awards, which includes both incentive and non-statutory stock options. These options generally expire five years from the date of grant and are exercisable at any time after the date of the grant, subject to vesting.

The following is a summary of options granted under the employee stock plans:

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

Balance as of December 31, 2009		185,410			4,697,000		$	1.37
Authorized		908,734			-			-
Granted		(1,694,144	)		1,694,144			0.19
Forfeited		610,167			(610,167	)		1.32
Balance as of December 31, 2010		10,167			5,780,977			1.02
Authorized		959,290			-			-
Merger with Zymetis, Inc. Plan		323,817			1,421,183			0.41
Exercised		-			(35,585	)		0.06
Forfeited/Expired/Shares from Cashless exercise		362,874			(362,874	)		0.20
Balance as of December 31, 2011		1,656,148			6,803,701			0.94

The weighted average remaining contractual term for the Stock Plans at December 31, 2011 and 2010 were 2.59 and 3.41 years, respectively. The weighted average grant date fair value per share of the awards issued during the year ended 2010 was $0.07.

The 35,585 shares of common stock exercised from the Company’s stock plans during 2011 had an intrinsic value of $24,041 at time of exercise. The weighted average strike price for the shares exercised was $0.06 per share and the weighted average closing market price at time of exercise was $0.74. The exercised shares hold a restrictive legend.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2011 and 2010 the weighted average remaining contractual term of shares issued to Aemetis consultants were 1.66 and 2.21 years, respectively. The Company recorded an expense for the years ended December 31, 2011 and 2010 in the amount of $24,533 and $4,553, respectively, which reflects periodic fair value re-measurement of outstanding consultant options under ASC 505-50-30 Equity Based Payments to Non Employees. The valuation using the Black-Scholes-Merton model is based upon the current market value of the Company’s common stock and other current assumptions, including the expected term (contractual term for consultant options). The Company records the expense related to consultant options using the accelerated expense pattern prescribed in ASC 505-50-30. Vested and unvested options outstanding under the Aemetis Stock Option Plans as of December 31, 2011 and 2010 follow:

			Weighted		Remaining
			Average		Contractual		Aggregate
	Number of		Exercise		Term		Intrinsic
	Shares		Price		(In Years)		Value1

2010
Vested		4,027,916	$	1.37		3.36	$	-
Unvested		1,753,061		0.23		4.01		-
Total		5,780,977	$	1.02		3.56	$	-

2011
Vested		5,960,116	$	1.05		2.57	$	316,388
Unvested		843,585		0.17		3.15		-
Total		6,803,701	$	0.94		2.64	$	316,388

———————

(1) Based on the $0.70 closing price of Aemetis stock on December 31, 2011, as reported on the Over-the-Counter Bulletin Board, certain option holders of 946,050 shares from the 2006 Employee Option Plan had $316,388 in aggregate intrinsic value. The option holders under the 2007 Amended and Restated Stock Option Plan carried no aggregate intrinsic value on December 31, 2011. Based on the $0.14 closing price of Aemetis stock on December 31, 2010, as reported on the Over-the-Counter Bulletin Board, options had no aggregate intrinsic value.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Valuation and Expense Information

The weighted-average fair value calculations for options granted within the period are based on the following weighted average assumptions:

	Fiscal Year Ended December 31
	2011			2010

Dividend-yield		0	%	0		%
Risk-free interest rate		0.20-1.80	%	1.22-2.37		%
Expected volatility		90.38-103.22	%		58.88-120.90	%
Expected life (years)		0.2-4.0			3.12
Weighted average fair value per share of common stock	$	0.10		$	0.07

The Company incurred non-cash stock compensation expense of $177,278 and $377,669 in fiscal 2011 and 2010, respectively, for options granted to employees and consultants. As of December 31, 2011 and 2010, the Company had $38,690 and $16,325 respectively, of total unrecognized compensation expenses that the Company will amortize over the next five fiscal years.

10. Acquisitions, Divestitures and Material Agreements

Technology Company Formation. On February 28, 2007, the Company acquired a 51% interest in Energy Enzymes, Inc. On October 14, 2010, the Company issued 1,000,000 shares of common stock in Aemetis in exchange for the remaining 49% interest in Energy Enzymes. The acquisition of the remaining 49% interest was accounted for as an equity transaction as the Company already controlled Energy Enzymes, and therefore the non-controlling interest accumulated loss of ($501,331) was transferred to paid-in capital. Losses of $138,956 from Energy Enzymes operations through October 14, 2010 were allocated to the non-controlling interest owner.

Alcamar Oil and Fats, Ltd. termination: On January 23, 2008, International Biofuels, Ltd agreed to end the joint venture with Acalmar Oils and Fats, Ltd. including termination of Acalmar’s right to own or receive any ownership interest in the joint venture. The total cancellation price payable by International Biofuels was $900,000 and was expensed in 2008. In 2010 the Company negotiated the remaining balance of $600,000 to $150,000 and other income of $450,000 was recognized.

Technology Company Acquisition. On July 1, 2011, the Company completed the acquisition of Zymetis, Inc., a Delaware corporation in exchange for 6,673,557 shares of Aemetis common stock. The acquisition was made as a strategic purchase related to the research and development work that Zymetis was performing. The purchase price was determined based on an arms-length negotiated value, which resulted in the recognition of goodwill. See following for Zymetis merger Purchase Price Allocation and Goodwill Reconciliation:

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

	2011

Issuance of Stock as merger consideration	$	1,801,860
Fair Value of stock options attributable to the pre-combination service		88,275
Consideration paid	$	1,890,135

Working capital assets	$	11,201
Property, Plant & Equipment		65,493
Working capital liabilities		(509,078	)
Debt assumed		(346,995	)
Deferred Taxes		(98,479	)

Intangibles		1,800,000
Net Assets Acquired	$	922,141

Goodwill	$	967,994

Post-merger, the Zymetis subsidiary was renamed Aemetis Technologies, Inc and continued its R&D development work. Aemetis Technologies generated $1,750 in consulting income and $174,488 in losses for the year ending December 31, 2011. The proforma adjustments for this acquisition are not material.

Working Capital Arrangement. On March 9, 2011, the Company entered into a Purchasing Agreement and Corn Procurement and Working Capital Agreement with J.D. Heiskell pursuant to which J.D. Heiskell agrees to supply 100% of the Company’s requirements for whole yellow corn until December 31, 2011 with automatic one year renewal terms. Heiskell further agrees to sell all ethanol to Kinergy Marketing or other marketing purchaser designated by the Company and all WDG and syrup to A.L. Gilbert. These agreements are ordinary purchase and sale agency agreements for an ethanol plant. See following for J.D. Heiskell & Company sales, purchases and accounts receivable as of and for the year ended 2011.

J.D. Heiskell & Company:
	2011
Sales
Ethanol	$	105,447,012
Distillers Grains		20,558,034
Total Sales		126,005,046

Corn Purchases		106,194,420

Accounts Receivable	$	841,729

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Ethanol Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy Marketing. Under the terms of the agreement, subject to certain conditions, the agreement term is August 31, 2013 with automatic one-year renewals thereafter. For the year ended December 31. 2011, Kinergy Marketing earned $928,548 under the terms of this agreement.

11. Segment Information

Summarized financial information by reportable segment for the years ended December 31, 2011 and 2010, based on the internal management system, is as follows:

Statement of Operations Data	Year ended December 31,
	2011		2010
Revenues
India	$	9,911,616	$	8,132,108
North America		131,946,298		-
Other		-		-
Total revenues	$	141,857,914	$	8,132,108

Cost of goods sold
India	$	9,494,395		8,254,123
North America		127,721,645		-
Other		-		-
Total cost of goods sold	$	137,216,040	$	8,254,123

Gross profit (loss)
India	$	417,221	$	(122,015	)
North America		4,224,653		-
Other		-		-
Total gross profit (loss)	$	4,641,874	$	(122,015	)

India: In 2010 all of the Company’s revenues were from sales to external customers in the Company’s India Segment. During 2010, customer Essar Steel Limited accounted for approximately 10% of the Company’s biodiesel sales, but no customer accounted for 10% or more of consolidated 2010 sales. In 2011, customer Gunvor International B.V.Amsterdam represented approximately 70% of total revenues by purchasing biodiesel for export to Europe.

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

North America: In 2011, all of the Company’s revenues from sales of ethanol and WDG were sold to J.D. Heiskell pursuant to the Corn Procurement and Working Capital Agreement. Sales to J.D. Heiskell accounted for 93% of the Company’s consolidated revenues.

	Year Ended December 31
Total Assets Data	2011		2010
India	$	15,654,763	$	16,349,504
North America		11,563,132		5,244,421
Other		26		110
Total Assets	$	27,217,921	$	21,594,035

12. Quarterly Financial Data (Unaudited)

The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2011 and 2010:

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2011

	For the three months ended												For the year ended
	March 31, 2011			June 30, 2011			September 30, 2011			December 31, 2011			December 31, 2011

Revenues	$	738,469		$	27,253,190		$	56,571,595		$	57,294,660		$	141,857,914

Cost of goods sold		787,472			27,567,654			55,789,374			53,071,540			137,216,040

Gross profit/(loss)		(49,003	)		(314,464	)		782,221			4,223,120			4,641,874

Research and development expenses		32,569			71,400			337,229			135,427			576,625
Selling, general and administrative expenses		2,103,409			1,989,282			2,212,510			2,265,390			8,570,591
														-
Operating loss		(2,184,981	)		(2,375,146	)		(1,767,518	)		1,822,303			(4,505,342	)

Other income/(expense)
Interest income		4,021			2,796			351			16,268			23,436
Interest expense		(2,103,163	)		(3,649,359	)		(3,785,857	)		(4,022,906	)		(13,561,285	)
Other income, net of expenses		24,031			54,207			4,070			(29,348	)		52,960
Loss on asset sales		-			(401,407	)		-			-			(401,407	)
Loss before income taxes		(4,260,092	)		(6,368,909	)		(5,548,954	)		(2,213,683	)		(18,391,638	)

Income taxes benefit/(expense)		(3,200	)		-			98,479			-			95,279

Net loss		(4,263,292	)		(6,368,909	)		(5,450,475	)		(2,213,683	)		(18,296,359	)
Less: Net loss attributable to the noncontrolling interest					-			-			-			-
Net loss attributable to Aemetis, Inc.	$	(4,263,292	)	$	(6,368,909	)	$	(5,450,475	)	$	(2,213,683	)	$	(18,296,359	)

Other comprehensive loss
Foreign currency translation adjustment		20,286			(16,031	)		(727,992	)		(648,704	)		(1,372,441	)
Comprehensive loss attributable to Aemetis, Inc.	$	(4,243,006	)	$	(6,384,940	)	$	(6,178,467	)	$	(2,862,387	)	$	(19,668,800	)

Loss per common share attributable to Aemetis, Inc.
Basic and diluted	$	(0.05	)	$	(0.07	)	$	(0.05	)	$	(0.02	)	$	(0.18	)
Weighted average shares outstanding
Basic and diluted		90,789,254			92,384,340			100,446,788			130,127,853			103,536,643

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2010

	For the three months ended												For the year ended
	March 31, 2010			June 30, 2010			September 30, 2010			December 31, 2010			December 31, 2010

Revenues	$	2,236,838		$	1,805,710		$	1,592,932		$	2,496,628		$	8,132,108

Cost of goods sold		2,209,593			1,941,674			1,671,989			2,430,867			8,254,123

Gross profit/(loss)		27,245			(135,964	)		(79,057	)		65,761			(122,015	)

Research and development expenses		144,530			109,847			29,206			38,978			322,561
Selling, general and administrative expenses		1,009,982			1,101,128			903,680			1,694,954			4,709,744
														-
Operating loss		(1,127,267	)		(1,346,939	)		(1,011,943	)		(1,668,171	)		(5,154,320	)

Other income/(expense)
Interest income		180			1,914			147			22,223			24,464
Interest expense		(909,018	)		(917,037	)		(726,564	)		(1,481,828	)		(4,034,447	)
Other income, net of expenses		27,974			18,810			15,789			540,721			603,294
Loss before income taxes		(2,008,131	)		(2,243,252	)		(1,722,571	)		(2,587,055	)		(8,561,009	)

Income taxes benefit/(expense)		(3,200	)		-			-			-			(3,200	)

Net loss		(2,011,331	)		(2,243,252	)		(1,722,571	)		(2,587,055	)		(8,564,209	)
Less: Net loss attributable to the noncontrolling interest		(70,820	)		(53,825	)		(14,311	)		-			(138,956	)
Net loss attributable to Aemetis, Inc.	$	(1,940,511	)	$	(2,189,427	)	$	(1,708,260	)	$	(2,587,055	)	$	(8,425,253	)

Other comprehensive loss
Foreign currency translation adjustment		427,800			(309,086	)		33,782			352,965			505,461
Comprehensive loss		(1,583,531	)		(2,552,338	)		(1,688,789	)		(2,234,090	)		(8,058,748	)
Comprehensive loss attributable to the noncontrolling interest		-			-			-			-			-
Comprehensive loss attributable to Aemetis, Inc.	$	(1,512,711	)	$	(2,498,513	)	$	(1,674,478	)	$	(2,234,090	)	$	(7,919,792	)

Loss per common share attributable to Aemetis, Inc.
Basic and diluted	$	(0.02	)	$	(0.03	)	$	(0.02	)	$	(0.03	)		(0.10	)
Weighted average shares outstanding
Basic and diluted		86,182,765			86,566,702			86,987,032			89,840,728			87,403,213

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. Related Party Transactions

The Company owes Eric McAfee and McAfee Capital, solely owned by Eric McAfee, amounts of $1,254,188 and $803,370 in connection with employment agreements and expense reimbursements, which are included in accrued expenses and accounts payable on the balance sheet as of December 31, 2011 and 2010. For the years ended December 31, 2011 and 2010, the Company expensed $519,828 and $608,874 in connection with compensation and expense reimbursements.

The Company owes various Board Members amounts of $638,563 and $490,658 as of December 31, 2011 and 2010, respectively, in connection with board compensation fees, which are included in accounts payable on the balance sheet. For the years ended December 31, 2011 and 2010 the Company expensed $228,654 and $188,198, respectively, in connection with board compensation fees.

In July 2009, the Company entered into a sublease agreement with Nevo Energy, Inc. (formerly known as Solargen Energy, Inc.) for approximately 3,000 square feet of leased space. For the year ended December 31, 2010, the Company invoiced, collected and offset as rent and utilities expense $125,858 under this agreement and collected a prepayment of $11,876, which the Company received for April 2010 rent. For the year ending December 31, 2011, the Company invoiced Nevo Energy $86,291 in rents, but reserved all the payments during 2011 due to Nevo Energy’s inability to pay. The future minimum lease payments above exclude collections of rents under this sublease agreement. Eric McAfee is a member of the Board of Directors and a significant shareholder of Nevo Energy, Inc. Michael Peterson, a former member of the Company’s Board of Directors, was also the Chief Executive Officer of Nevo Energy, Inc. during 2011. See Note 6 Operating Leases.

14. Income Tax

The Company files a consolidated federal income tax return. This return includes all corporate companies 80% or more owned by the Company as well as the Company’s pro-rata share of taxable income from pass-through entities in which Company holds an ownership interest. On October 14, 2010 AE Biofuels acquired the remaining 49% interest in Energy Enzymes, Inc. During 2011 Energy Enzymes was included as a 100% consolidated entity for financial reporting purposes. State tax returns are filed on a consolidated, combined or separate basis depending on the applicable laws relating to the Company and its subsidiaries.

Components of tax expense consist of the following:

	Year Ended December 31,
	2011			2010
Current:
Federal		-			-
State and local	$	3,200		$	3,200
Foreign		-			-
		3,200			3,200

Deferred:
Federal		(83,707	)		-
State and local		(14,772	)		-
Foreign		-			-
Income tax expense/(benefit)		(95,279	)	$	3,200

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. loss and foreign loss before income taxes are as follows:

	Year Ended December 31,
	2011			2010

United States	$	(17,188,080	)	$	(7,635,366	)
Foreign		(1,203,558	)		(925,643)3	)
Loss before income taxes	$	(18,391,638	)	$	(8,561,009	)

Income tax expense differs from the amounts computed by applying the statutory U.S. federal income tax rate (34%) to income before income taxes as a result of the following:

	Year Ended December 31,
	2011			2010

Income tax expense at the federal statutory rate	$	(6,253,156	)	$	(2,910,743	)
Increase (decrease) resulting from:
State tax		(1,441,008	)		(232,303	)
Stock-based compensation		41,703			134,497
Foreign loss		290,821			244,847
Interest expense		404,972			10,089
Credits		(990,000	)		—
Other		9,457			21,711
Valuation allowance		7,841,932			2,735,102
Income tax expense	$	(95,279	)	$	3,200

Effective tax rate		0.52	%		(0.04	)%

100

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The components of the net deferred tax asset or (liability) are as follows:

	December 31,
	2011			2010
Deferred tax assets (liabilities):
Organization, start-up costs & intangible assets	$	8,916,114		$	9,113,611
Stock-based compensation		588,192			749,458
Property, plant and equipment		2,511,067			2,964,914
Net operating loss carryforward		11,578,808			5,062,449
Convertible debt		(103,127	)		(462,471	)
Credit carryforward		1,500,000			—
Other, net		589,890			492,153
Total deferred tax assets (liabilities)		25,580,944			17,920,114
Less valuation allowance	$	(25,580,944	)	$	(17,920,114	)
Deferred tax assets (liabilities)		—			—

Based on the Company’s evaluation of current and anticipated future taxable income, the Company believes it is more likely than not that insufficient taxable income will be generated to realize the net deferred tax assets, and accordingly, a valuation allowance has been set against these net deferred tax assets.

We do not provide for U.S. income taxes for any undistributed earnings of the Company’s foreign subsidiaries, as the Company considers these to be permanently reinvested in the operations of such subsidiaries and have a cumulative foreign loss. At December 31, 2011 and 2010, these undistributed earnings (losses) totaled $(7,195,566), and $(5,980,052), respectively. If any earnings were distributed, some countries may impose withholding taxes. However, due to the Company’s overall deficit in foreign cumulative earnings and its U.S. loss position, the Company does not believe a material net unrecognized U.S. deferred tax liability exists.

ASC 740 Income Taxes provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Tax positions that meet the recognition threshold are reported at the largest amount that is more-likely-than-not to be realized. This determination requires a high degree of judgment and estimation. The Company periodically analyzes and adjusts amounts recorded for the Company’s uncertain tax positions, as events occur to warrant adjustment, such as when the statutory period for assessing tax on a given tax return or period expires or if tax authorities provide administrative guidance or a decision is rendered in the courts. The Company does not reasonably expect the total amount of uncertain tax positions to significantly increase or decrease within the next 12 months. As of December 31, 2011, the Company’s uncertain tax positions were not significant for income tax purposes.

101

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

We conduct business globally and, as a result, one or more of the Company’s subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as India, Mauritius, and the United States. The Company files a U.S. federal income tax return and tax returns in nine U.S. states, as well as in two foreign jurisdictions. Penalties and interest are classified as general and administrative expenses.

The following describes the open tax years, by major tax jurisdiction, as of December 31, 2011:

United States — Federal	2006 – present
United States — State	2005 – present
India	2006 – present
Mauritius	2006 – present

As of December 31, 2011, the Company had federal net operating loss carryforwards of $20,809,989 and state net operating loss carryforwards of $23,075,789. The Company also has approximately $1,500,000 of alcohol and cellulosic biofuel credit carryforwards. The federal net operating loss and other tax credit carryforwards expire on various dates between 2027 and 2031. The state net operating loss carryforwards expire on various dates between 2027 through 2030. Under the current tax law, net operating loss and credit carryforwards available to offset future income in any given year may be limited by US or India statute regarding net operating loss carryovers and timing of expirations or upon the occurrence of certain events, including significant changes in ownership interests. The Company’s India subsidiary also has net operating loss carryforwards as of March 31, 2012, its tax fiscal year end, of ($7,272,501) in US dollars, which expire from March 30, 2017 to March 30, 2020.

15. Subsequent Events

Third Eye Capital Debt Agreements

Subsequent to year-end and prior to the acquisition of Cilion, the debt agreements with Third Eye Capital (“Existing Notes”) were amended to waive covenant violations, extend the terms of the debt and issue additional debt. In connection with these agreements, the Company; (i) incurred fees of $588,000 of which $100,000 was paid in cash and the remainder was added to the principal balance of the notes, (ii) issued 1,340,000 shares of common stock as fees with a fair value on date of issuance of $801,200, and (iii) received additional loans of $2,640,000.

In connection with the acquisition of Cilion, the financing agreement with Third Eye Capital was amended and restated to include three new credit facilities. The new credit agreement provides for (i) a new senior secured term loan in the principal amount of $15 million, used to pay the cash portion of the Cilion acquisition (the “Term Loan”), (ii) a senior secured loan in the aggregate principal amount of $10 million to finance outstanding balance and terminate future liabilities under the Revenue Participation obligations (the “RevPar Loan”); (iii) a senior secured $18 million revolving credit facility (the “Revolving Loan”) used to redeem approximately $7.3 million in remaining outstanding debt with Third Eye Capital at time of acquisition, pay fees related to the transaction and provide working capital. Upon the close of the Cilion acquisition, the amount of $3 million remained available on the Revolving Loan. The Company issued 15,000,000 shares of its common stock in connection with this financing. The notes bear interest at rates ranging from 5% to 17%. The Revolving Notes mature on July 2013 and provide one-year extensions. The Term Loan and RevPar Loan mature on July 6, 2014.

102

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On October 18, 2012, Third Eye Capital agreed to (i) extend the maturity date of the Existing Notes to July 6, 2014; (ii) to increase the amount of the Revolving Loan Facility by $6,000,000, to a total of $24,000,000; (iii) to modify the redemption waterfall so that any payments would be applied first to the increase in the Revolving notes; (iv) granted waivers to the Borrowers’ obligation to pay or comply, and any event of default which has occurred or may occur as a result of such failures of the Borrowers to pay or comply with certain financial covenants and principal payments, including financial covenants for the quarter ended September 30 and December 31, 2012; and (v) agreed to accrue interest until the earlier of certain events described in the Limited Waiver or February 1, 2013. In consideration for the Limited Waiver and Amendment, the Borrowers, among other things, agreed to pay the Lenders a waiver fee in the amount of $4,000,000; and (ii) cash in the amount of $28,377 for certain unreimbursed costs. After paying the $4 million waiver fee, $2 million remained available for draw on the Revolving Loan Facility.

$3 Million Note and Warrant Purchase Agreement

On January 6 and January 9, 2012, Aemetis Advanced Fuels Keyes, Inc. sold to two accredited investors 5% Subordinated Promissory Notes in the aggregate principal amount of $3,000,000 and 5-year warrants exercisable for 1,000,000 shares of Aemetis common stock at an exercise price of $0.001 per share. Interest is due at maturity. The promissory notes are guaranteed by Aemetis and are due and payable upon the earlier of (i) December 31, 2013; (ii) completion of an equity financing by AAFK or Aemetis in an amount of not less than $25,000,000; (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. Neither AAFK nor Aemetis may make any principal payments under the Promissory Notes until all loans made by Third Eye Capital to AAFK are paid in full.

Related Party Revolving Line of Credit Agreement

On October 16, 2012, Aemetis International, Inc. (AII), a subsidiary of Aemetis, Inc. entered into an amendment to the Revolving Line of Credit Agreement with Laird Q. Cagan and co-owners of financing arrangement, pursuant to which AII extended the maturity date of the loan until July 1, 2014 and placed an average trailing daily closing price minimum of $0.05 per share for conversion of fees and accrued interest. In exchange for the extension, the Company agreed to pay a fee of 5% of the outstanding balance of the Revolving Line, payable in cash or stock, at the same conversion price and terms as the accrued interest conversion terms.

On October 16, 2012, the Company entered into Amendment No 1. to Revolving Line of Credit Agreement with Laird Q. Cagan to extend the maturity date of the revolving line of credit until July 1, 2014 and placed an average trailing daily closing price minimum of $0.05 per share for conversion of fees and accrued interest.

Issuance of Convertible Promissory Notes

On March 4, 2011, and amended January 19, 2012, and July 24, 2012, the Company entered into a Note Purchase Agreement with Advanced BioEnergy, LP, a California limited Partnership for the issuance of up to 72 subordinated convertible promissory notes bearing interest at 3%, each note in the principal amount of $500,000 due and payable four years from the date of the note for a total aggregate principal amount of up to $36,000,000.

Advanced BioEnergy, LP arranges investments with foreign investors, who each make investments in the Keyes plant project in investment increments of $500,000. The Company sold notes in the amount of $1,000,000 to the first two investors. The availability of the remaining $35,000,000 will be determined by the ability of Advanced BioEnergy, LP to attract additional qualified investors.

103

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note and Warrant Purchase Agreement

On June 21, 2012, Aemetis Advanced Fuels Keyes, Inc. (AAFK), a subsidiary of Aemetis, Inc., entered into Note and Warrant Purchase Agreements with TEC pursuant to which AAFK sold 5% Subordinated Promissory Notes in the aggregate principal amount of $400,000 and 5-year warrants exercisable for 133,333 shares of Aemetis common stock, at an exercise price of $0.001 per share, and paid a fee of $50,000. These Notes were subsequently refinanced as part of the restructuring in connection with the Cilion acquisition discussed above.

Land Held for Sale

On May 10, 2012, the Company sold its land held for sale with a carrying value of $885,000 for $1,126,867. Proceeds from the sale were used to repay a portion of the outstanding indebtedness owed to TEC.

Acquisition of Cilion (unaudited)

On July 6, 2012, the Company acquired Cilion, Inc. through a merger. The Company has been leasing the property owed by Cilion. The Company’s primary lender supported the financing of the acquisition in anticipation the merger will be accretive to earnings in the long term. Acquiring the real property and assets associated with the ethanol plant provides assets beneficial to the Company in securing additional financing and much needed flexibility not available under the lease in the development, testing, and commercialization of next generation biofuels technologies owed by the Company.

At the effective time of the Merger, each issued and outstanding share of Cilion Preferred Stock was automatically converted into the right to receive an aggregate of (a) $16,500,000 and (b) 20,000,000 shares of Aemetis common stock and (c) the right to receive an additional cash amount of $5,000,000 plus interest at the rate of 3% per annum, which is payable upon the satisfaction by the Company of certain conditions set forth in the merger agreement.

The fair value of the contingent consideration was determined by discounting the anticipated cash flow stream at an estimated market rate of interest based on potential payment timing. The merger agreement is the basis for determining the amount of the payment. The $5,000,000 contingent consideration is payable when the Third Eye Capital loans have been satisfied. The Company anticipates the contingent consideration will be redeemed after satisfaction of amounts owed under senior secured debt arrangements with Third Eye Capital. Management projects full satisfaction of the Third Eye Capital obligations will occur within the next two to three years.

The preliminary purchase price for Cilion, Inc. is recapped below based on the trading value of the stock at the time of the acquisition and the expected fair value of the contingent consideration (in thousands):

Cash	$	16,500
Fair value of shares issued		15,600
Contingent Consideration		3,824
	$	35,924

104

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The preliminary acquisition date fair value of consideration was allocated to Cilion’s net tangible and identifiable intangible assets based on their estimated fair values as of July 6, 2012 as set forth below (in thousands).

Tangible Assets:
Accounts receivable	$	3,114
Prepaid assets		5
Equipment held for resale		1,367
Property, plant and equipment		70,464
Other assets		147
Total Tangible Assets Acquired		75,097

Liabilities Assumed
Accounts payable		(6	)

Identified Intangible Assets
Permits		926
Net Assets Acquired	$	76,017

The Company believes the Cilion shareholders valued the equity component of the consideration higher than the current quoted market price. The Company believes the lower market share price is due to the recent lack of information available to the market. Cilion shareholders valued Aemetis common stock at a value higher than the current trading price on the OTC market, which gave rise to the gain on bargain purchase accounting of approximately $40 million dollars.

The pro forma financial information below presents the combined revenue and net income for Cilion and the Company for the years ending December 31, 2010 and 2011, as if the acquisition occurred as of January 1, 2010 (in thousands):

	Historical						Pro Forma
	Aemetis, Inc.			Cilion, Inc.			Adjustments			Combined
2010
Revenue	$	8,132		$	500		$	(500	)	$	8,132
Net loss		(8,425	)		(44,218	)		35,405			(17,238	)

2011
Revenue		141,858			2,700			(2,700	)		141,858
Net loss	$	(18,296	)	$	(3,487	)	$	(4,365	)	$	(26,148	)

The adjustment columns above include the elimination of the intercompany rental activity received by Cilion from the Company, the recognition of the bargain purchase gain, adjustments necessary for the revaluation of the assets, and increase in financing costs associated with the acquisition.

105

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16. Parent Company Financial Statements (Unaudited)

The following is a summary of the Parent Company financial statements for the years ended December 31, 2011 and 2010:

106

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Aemetis, Inc. (Parent Company)

Consolidated Condensed Balance Sheets

As of December 31, 2011 and 2010

Assets	2011			2010
Current assets
Cash and cash equivalents	$	747		$	17,631
Intercompany receivables		3,168,587			-
Prepaid expenses		88,000			5,827
Total current assets		3,257,334			23,458

Investments in Subsidiaries, net of advances
Investment in Aemetis International, Inc.		5,979,020			9,831,430
Investment in Aemetis Americas, Inc		-			259,473
Total investments in Subsidiaries, net of advances		5,979,020			10,090,903

Property, plant and equipment, net		-			2,193
Other assets		23,095			23,096
Total Assets	$	9,259,449		$	10,139,650

Liabilities & stockholders' deficit
Current liabilities
Accounts payable	$	3,800,250		$	3,056,268
Mandatorily redeemable Series B convertibe preferred		2,320,164			2,221,872
Secured notes, net of discount for issuance cost		1,075,588			900,000
Interecompany payables		-			233,717
Other current liabilities		1,786,962			1,714,229
Total current liabilities		8,982,964			8,126,086


Parent Company long term debt portion of secured notes, net of discount for issuance cost		6,016,926			5,915,056

Subsidiary obligation in excess of investment
Investment in AE Advanced Fuels, Inc.		440			200
Investment in Aemetis Advanced Fuels Keyes, Inc.		13,252,571			2,699,096
Investment in Aemetis Americas, Inc		118,252			-
Investment in Aemetis Biofuels, Inc.		2,567,894			2,488,735
Investment in Aemetis Technologies, Inc.		174,488			-
Investment in Biofuels Marketing, Inc.		348,996			360,185
Total subsidiary obligation in excess of investment		16,462,641			5,548,216

Total long term liabilities		22,479,567			11,463,272

Stockholders' deficit
Series B Preferred convertible stock		3,115			3,165
Common stock		130,747			90,342
Additional paid-in capital		45,432,447			38,557,376
Accumulated deficit		(65,526,029	)		(47,229,670	)
Accumulated other comprehensive loss		(2,243,362	)		(870,921	)
Total stockholders' deficit		(22,203,082	)		(9,449,708	)
Total liabilities & stockholders' deficit	$	9,259,449		$	10,139,650

107

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Aemetis, Inc. (Parent Company)

Consolidated Statements of Operations and Comprehensive Loss

For the Years Ended December 31, 2011 and 2010

		2011			2010

Equity in subsidiary earnings (losses)		$	(15,386,811	)	$	(4,970,719	)

Selling, general and administrative expenses			1,003,879			1,673,873

Operating loss			(16,390,690	)		(6,644,592	)

Other income/(expense)
	Interest expense		(1,918,750	)		(1,890,304	)
	Other income, net of expenses		16,281			112,843

Loss before income taxes			(18,293,159	)		(8,422,053	)

	Income taxes benefit/(expense)		(3,200	)		(3,200	)

Net loss		$	(18,296,359	)	$	(8,425,253	)

108

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Aemetis, Inc. (Parent Company)

Consolidated Statements of Cash Flows

For the years ended December 31, 2011 and 2010

	2011			2010
Operating activities:
Net loss	$	(18,296,359	)		(8,564,209	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		177,278			377,669
Depreciation and amortization		2,193			11,386
Amortization of debt issuance discount		1,177,413			717,466
Loss/(gain) on extinguishment of debt		-			(14,757	)
Changes in assets and liabilities:
Subsidiary portion of net losses		15,386,811			5,109,675
Prepaid expenses		1,160			(1,380	)
Other current assets and other assets		1			15,504
Accounts payable		743,982			1,044,483
Accrued interest expense		894,475			1,350,501
Other liabilities		72,733			209,657
Net cash provided in operating activities		159,687			255,995

Investing activities:
Subsidiary advances, net		723,429			598,801
Net cash used in investing activities		723,429			598,801

Financing activities:
Repayments of borrowings under secured debt facilities		(900,000	)		(850,000	)
Net cash provided by financing activities		(900,000	)		(850,000	)

Net increase (decrease) in cash and cash equivalents		(16,884	)		4,796

Cash and cash equivalents at beginning of period		17,631			12,835
Cash and cash equivalents at end of period	$	747		$	17,631

109

AEMETIS, INC.

December 31, 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17. Management’s Plan

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced losses and negative cash flow and currently has a working capital deficit and total stockholders’ deficit. The Company has been reliant on their senior secured lender to provide additional funding requirements when cash flows do not support the payment requirements on the Company’s debt. Although the current agreements in place with this lender do not require any payments or covenant requirements through February 2013, the continuation of the Company depends on management being able to maintain this relationship with the lender or find other financing options to provide cash as the company expands its technologies. Management’s plans to continue to operate the Company include:

●	As discussed in the subsequent event footnote, the acquisition of Cilion provided the Company with a substantial asset to use as collateral both with their current lender and with future financings.

●	Continue to work with the Company’s senior lender to provide financing as well as explore other financing arrangements including working with Advanced BioEnergy LP to attract investors for the remaining $35 million of notes available under the program, or through the issuance of additional equity.

●	Development of Joint Venture agreements for the expansion of the Company’s technologies.

●	Continued support from major shareholders and board of directors in providing cash financing.

Management believes that through the above mentioned actions it will be able to sustain the company as a going concern. There can be no assurance that the existing credit facilities and cash from operations will be sufficient nor that we will be successful at maintaining adequate relationships with our senior lender or significant shareholders that will result in additional financings. Should the Company require additional financing, there can be no assurances that the additional financing will be available on terms satisfactory to the Company.

110

Nevada		26-1407544
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check if a smaller reporting company)

		Page
PART I

Special Note Regarding Forward-Looking Statements			1

Explanatory Note			1

Item 1.	Business		1

Item 1A.	Risk Factors		9

Item 2.	Properties		15

Item 3.	Legal Proceedings		16

Item 4.	Mine Safety Disclosures		16

PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		17

Item 6.	Selected Financial Information		18

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		51

Item 8.	Financial Statements and Supplementary Data		51

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		51

Item 9A.	Controls and Procedures		52

Item 9B.	Other Information		53

PART III

Item 10.	Directors, Executive Officers and Corporate Governance		54

Item 11.	Executive Compensation		60

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		63

Item 13.	Certain Relationships and Related Transactions, and Director Independence		66

Item 14.	Principal Accounting Fees and Services		66

PART IV

Item 15.	Exhibits and Financial Statement Schedules		67

Index to Financial Statements			68

SIGNATURES			71

	2010		2009		% Change
Biodiesel
Tons Sold(1)		7,598		13,349		(43	%)
Average Sales Price/Ton	$	849	$	658		29	%
Crude Glycerin
Tons Sold		1,046		1,964		(47	%)
Average Sales Price/Ton	$	350	$	237		48	%
NRPO
Tons Sold		1,434		-		(100	%)
Average Sales Price/Ton	$	923		-		100	%

	2011
Ethanol
Gallons Sold (in 000s)		37,389
Average Sales Price/Gallon	$	2.89
WDG
Tons Sold (in 000s)		274
Average Sales Price/Ton	$	85.37

Quarter Ending	High Bid		Low Bid
March 31, 2010	$	0.33	$	0.18
June 30, 2010	$	0.23	$	0.05
September 30, 2010	$	0.10	$	0.05
December 31, 2010	$	0.15	$	0.06
March 31, 2011	$	0.16	$	0.08
June 30, 2011	$	0.28	$	0.10
September 30, 2011	$	1.01	$	0.25
December 31, 2011	$	0.95	$	0.34

Fiscal Year Ended December 31 (in thousands)
	2011		2010		Increase/(Decrease)
North America	$	131,946		-	$	131,946
India		9,912	$	8,132		1,780
Total	$	141,858	$	8,132	$	133,726

Three Months Ended March 31 (in thousands)

	2011		2010		Increase/(Decrease)
North America		-		-		-
India	$	738	$	2,237	$	(1,499	)
Total	$	738	$	2,237	$	(1,499	)

Three Months Ended June 30 (in thousands)

	2011		2010		Increase/(Decrease)
North America	$	27,253		-	$	27,253
India		-	$	1,806		(1,806	)
Total	$	27,253	$	1,806	$	25,447

Three Months Ended September 30 (in thousands)

	2011		2010		Increase/(Decrease)
North America	$	52,178	$	-	$	52,178
India		4,394		1,593		2,801
Total	$	56,572	$	1,593	$	54,979

	2011						2010
	For the six			For the nine			For the six			For the nine
	months ended			months ended			months ended			months ended
	June 30, 2011			September 30, 2011			June 30, 2010			September 30, 2010
Revenues	$	27,991,659		$	84,563,254		$	4,042,548		$	5,635,480

Cost of goods sold		28,355,126			84,144,500			4,151,267			5,823,256

Gross profit (loss)		(363,467	)		418,754			(108,719	)		(187,776	)

Research and development expenses		103,969			441,198			254,377			283,583
Selling, general and administrative expenses		4,092,691			6,305,201			2,111,110			3,014,790

Operating loss		(4,560,127	)		(6,327,645	)		(2,474,206	)		(3,486,149	)

Other income / (expense)
Interest income		6,817			7,168			2,094			2,241
Interest expense		(5,752,522	)		(9,538,379	)		(1,826,055	)		(2,552,619	)
Other income, net of expenses		78,238			82,308			46,784			62,573
Loss on land sale		(401,407	)		(401,407	)		-			-

Loss before income taxes		(10,629,001	)		(16,177,955	)		(4,251,383	)		(5,973,954	)

Income tax benefit/(expense)		(3,200	)		95,279			(3,200	)		(3,200	)

Net loss		(10,632,201	)		(16,082,676	)		(4,254,583	)		(5,977,154	)
Less: Net loss attributable to the noncontrolling interest		-			-			(124,645	)		(138,956	)
Net loss attributable to Aemetis, Inc.		(10,632,201	)		(16,082,676	)		(4,129,938	)		(5,838,198	)


Other comprehensive loss, net of tax
Foreign currency translation adjustment		4,255			(723,737	)		118,714			152,496
Comprehensive loss, net of tax		(10,627,946	)		(16,806,413	)		(4,135,869	)		(5,824,658	)
Comprehensive loss attributable to the noncontrolling interest		-			-			-			-
Comprehensive loss attributable to Aemetis, Inc.	$	(10,627,946	)	$	(16,806,413	)	$	(4,011,224	)	$	(5,685,702	)

Loss per common share attributable to Aemetis, Inc.
Basic and diluted		(0.12	)		(0.17	)		(0.05	)		(0.07	)
Weighted average shares outstanding
Basic and diluted		91,591,203			94,575,503			86,375,794			86,581,779

Six Months Ended June 30 (in thousands)
	2011		2010		Increase/(Decrease)
North America	$	27,253		-	$	27,253
India		738		4,043		(3,305	)
Total	$	27,991	$	4,043	$	23,948

Nine Months Ended September 30 (in thousands)

	2011		2010		Increase/(Decrease)
North America	$	79,431		-	$	79,431
India		5,132	$	5,636		(504	)
Total	$	84,563	$	5,636	$	78,927

	For the three			For the six			For the nine			For the three			For the six			For the nine
	months ended			months ended			months ended			months ended			months ended			months ended
	March 31, 2011			June 30, 2011			September 30, 2011			March 31, 2010			June 30, 2010			September 30, 2010
Operating activities:
Net loss		(4,263,292	)		(10,632,201	)		(16,082,676	)		(2,011,331	)		(4,254,583	)		(5,977,154	)
Adjustments to reconcile net loss to
net cash provided/(used) in operating activities:
Stock-based compensation		53,421			104,468			221,124			100,512			169,687			245,776
Depreciation and amortization		189,789			544,676			885,811			140,761			377,033			569,337
Inventory provision		-			239,446			-			44,310			230,204			282,700
Amortization of debt issuance discount		1,483,786			3,066,693			3,737,320			278,772			583,985			583,985
Loss on extinguishment of debt		33,926			33,926			33,926			-			-			-
Loss on sale or disposal of assets		-			401,407			401,407			-			-			-
Deferred tax liability		-			-			(98,479	)		-			-			-
Changes in assets and liabilities:
Accounts receivable		96,013			(1,584,636	)		(702,608	)		(141,638	)		26,830			(78,777	)
Inventory		477,841			(2,387,855	)		(4,436,268	)		(363,571	)		(50,494	)		(916,303	)
Prepaid expenses		117,113			121,521			(101,669	)		(26,701	)		(12,987	)		964
Other current assets and other assets		(29,817	)		(345,794	)		(764,533	)		(50,034	)		(42,368	)		26,039
Accounts payable		1,307,362			5,736,068			9,649,206			767,555			1,226,994			1,793,911
Accrued interest expense and fees, net of payments		536,478			2,803,608			4,603,570			398,429			1,013,704			1,658,442
Other liabilities		56,794			693,521			596,752			560,865			127,753			293,639
Net cash provided by/(used in) operating activities		59,414		$	(1,205,152	)	$	(2,057,117	)	$	(302,071	)	$	(604,242	)	$	(1,517,442	)

Investing activities:
Purchase of property, plant and equipment, net		(1,708,729	)		(2,040,661	)		(2,517,883	)		(12,043	)		(32,071	)		(52,435	)
Proceeds from sale of assets		-			1,598,593			1,598,593			-			-			-
Cash obtained through merger		-			-			1,451			-			-			-
Net cash used in investing activities		(1,708,729	)		(442,068	)		(917,839	)		(12,043	)		(32,071	)		(52,435	)

Financing activities:
Proceeds from borrowings under secured debt facilities		1,750,776			3,500,000			3,500,000			-			-			-
Repayments of borrowings under secured debt facilities		-			(920,000	)		(1,944,994	)		-			-			-
Proceeds from borrowings under related party credit arrangements		-			-			-			2,100,000			2,373,000			2,612,000
Payments of borrowings under related party credit arrangements		-			-			-			(1,600,000	)		(1,600,000	)		(1,600,000	)
Proceeds from borrowings under short term debt facilities		-			-			5,658,030			1,196,528			1,770,248			3,189,946
Repayments of borrowings under short term facilities		(538,614	)		(1,051,541	)		(4,762,790	)		(1,089,343	)		(2,049,874	)		(2,752,368	)
Net cash provided by financing activities		1,212,162			1,528,459			2,450,246			607,185			493,374			1,449,578

Effect of exchange rate changes on cash and cash equivalents		(7,746	)		(5,635	)		54,830			(13,200	)		113,905			110,073
Net increase (decrease) in cash and cash equivalents		(444,899	)		(124,396	)		(469,880	)		279,871			(29,034	)		(10,226	)
Cash and cash equivalents at beginning of period		683,016			683,016			683,016			52,178			52,178			52,178
Cash and cash equivalents at end of period		238,117		$	558,620		$	213,136		$	332,049		$	23,144		$	41,952

Name	Age	Position	Director Since
Eric A. McAfee	50	Chief Executive Officer and Chairman of the Board	2006
Fran Barton (1)	65	Director	2012
John R. Block	77	Director	2008
Dr. Steven W. Hutcheson (2)	58	Director	2011
Michael Peterson (1)	50	Director	2006
Harold Sorgenti	78	Director	2007

Fiscal Year Ended December 31 (in thousands)
	2010		2009		Increase/Decrease
North America	$	4,006	$	4,260	$	(254	)
India		396		1,843		(1,447	)
Other		308		157		151
Total	$	4,710	$	6,260	$	(1,550	)

Name	Age	Position
Andrew B. Foster	47	Executive Vice President and Chief Operating Officer
Sanjeev Gupta	53	Executive Vice President and Managing Director, Chairman and President (Universal Biofuels Private, Ltd.)
Todd Waltz	51	Chief Financial Officer

Name of Director	Audit		Governance, Compensation and Nominating
Michael Peterson*		C		M
Harold Sorgenti		M		C
Francis Barton*		C		M
John R. Block*		M
Dr. Hutcheson*				M
M = Member
C = Chair

Name and Principal Position	Year	Salary $		Option/ Warrant Awards(1) $		Total Compensation $

Eric A. McAfee, Chief Executive Officer	2011		140,000		-		140,000
	2010		120,000		-		120,000

Andrew B. Foster, Executive Vice President	2011		180,000		-		180,000
	2010		180,000		9,050		189,050

Sanjeev Gupta, Executive Vice President	2011		180,000		-		180,000
	2010		180,000		28,567		208,567

Todd A. Waltz, Chief Financial Officer	2011		180,000		-		180,000
	2010		173,750		77,182		250,932

		Option/Warrant Awards
Name	Award Date	No. of Securities underlying unexercised options (#) exercisable			No. of securities underlying unexercised options (#) unexercisable	Equity incentive plan awards: # of securities underlying unexercised unearned options (#)	Option exercise price $ ( )		Option expiration date
Andrew B. Foster	12/09/10		2,946	(2)				0.12	12/08/15
	12/15/10		41,163	(4)				0.13	12/15/15
	3/17/10		29,167	(2)				0.21	3/17/15
	5/21/09		440,000	(3)				0.16	5/20/14
	7/17/07		300,000	(1)				3.00	7/16/17
	11/26/07		90,000	(2)				3.00	11/26/12

Sanjeev Gupta	12/09/10		2,964	(2)				0.12	12/08/15
	12/15/10		164,650	(4)				0.13	12/15/15
	3/17/10		58,333	(2)				0.21	3/17/15
	5/21/09		291,667	(3)				0.16	5/20/14
	11/26/07		45,000	(1)				3.00	11/26/12
	6/17/08		20,000	(1)				3.70	6/16/13

Todd A. Waltz	12/09/10		17,675	(2)				0.12	12/08/15
	12/15/10		246,976	(4)				0.13	12/15/15
	3/17/10		475,000	(3)				0.21	3/17/15
	5/21/09		201,667	(3)				0.16	5/20/14
	11/26/07		90,000	(1)				3.00	11/26/12
	6/17/08		20,000	(1)				3.70	6/16/13

Name	Fees Earned or Paid in Cash ($)		Option Awards (1) ($)		Total ($)

2010
Michael Peterson		110,000		18,097		128,097
Harold Sorgenti		85,000		18,097		103,097
John R. Block		77,750		18,097		95,847

2011
Michael Peterson		107,750		–		107,750
Harold Sorgenti		82,750		–		82,750
John R. Block		58,500		–		58,500
Dr. Steven Hutcheson		37,500		–		37,500

	Common Stock					Series B Preferred Stock
	Amount and Nature of Beneficial Ownership		Percentage of Class			Beneficial Ownership		Percentage of Class
Officers & Directors
Eric A. McAfee (1)		27,885,000		16.35	%
John R. Block (2)		485,775		*	%
Dr. Steven Hutcheson (3)		2,057,570		1.21	%
Harold Sorgenti (4)		485,775		*	%
Andrew Foster (5)		1,012,887		*	%
Sanjeev Gupta (6)		1,079,884		*	%
Todd A. Waltz (7)		2,187,325		1.28	%
Francis Barton		100,000		-
All officers and directors as a group (8 persons)		35,294,216		20.69	%

5% or more Holders

Third Eye Capital (9)		24,921,865		14.61	%
161 Bay Street, Suite 3930
Toronto, Ontario, M5J 2S1

Laird Cagan (8)		22,014,496		12.91	%
20400 Stevens Creek Blvd., Suite 700
Cupertino, CA 95014

Michael Orsak		2,178,333		1.28	%		166,667		5.38	%
1125 San Mateo Drive,
Menlo Park, California 94025

David J. Lies		1,606,587		0.94	%		200,000		6.46	%
1210 Sheridan Road
Wilmette, Illinois 60091

Michael C Brown Trust dated June 30, 2000		481,676		0.28	%		599,999		19.37	%
34 Meadowview Drive
Northfield, Illinois 60093

Mahesh Pawani		535,358		0.31	%		400,000		12.91	%
Villa No. 6, Street 29, Community 317, Al Mankhool,
Dubai, United Arab Emirates

Frederick WB Vogel		440,678		0.26	%		408,332		13.18	%
1660 N. La Salle Drive, Apt 2411
Chicago, Illinois 60614

Fred Mancheski		-		-			300,000		9.68	%
1060 Vegas Valley Dr
Las Vegas, NV 89109

Crestview Capital, LLC		-		-			166,667		5.38	%
95 Revere Dr., Ste A
Northbrook, Illinois 60062
*Less than 1%

Plan category	Number of securities to be issued upon exercise of outstanding options (a)		Weighted average exercise price of outstanding options (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders (1)		6,803,701	$	0.94		1,656,148	(2)
Equity in the form of warrants issued to officers, directors and employees not approved by security holders		950,856		0.13		-

	2011		2010
Audit Fees	$	52,500	$	163,925
Audit-Related Fees		––		––
Total Audit and Audit-Related Fees		52,500		163,925
Tax Fees		2,747		17,747
All Other Fees		––		––

Total	$	55,247	$	181,672