Amyris, Inc.

considering all aspects of cost of goods sold. A reconciliation of this non-GAAP measure is included in the tables to our earnings release. Non-GAAP gross profit was 11.6 million or 21% of revenue, compared to 10.6 million or 18% of revenue in Q1 of 2022. Non-GAAP gross profit increased by $1 million and was 300 basis points higher as a percent of revenue than in the prior year. This was primarily due to lower freight expense, as well as favorable mix of higher margin revenue. We experienced significantly higher freight spending in 2022, particularly due to increased inbound air freight rates and volume to support our growing consumer brand revenue, as well as the importation of ingredients into immediate product. We were very pleased with our progress to reduce costs in these areas, yielding a reduction in inbound freight from 8.5 million in Q1 2022 to 2.4 million in the first quarter of 23. We expect most of these freight and logistic expanders to operate at a lower level compared to 2022 due to the commissioning of the new Brazil fermentation plant and our plan to transition to Brazilian source components and manufacturing for our largest consumer brands. Before I move to discussing operating expense, I want to spend a moment on our consumer portfolio. In the first quarter of 23, we entered into a JV and brand collaboration agreement with Tia Mowry, launching for you by Tia in January, a new clean hairline, a new clean hair care brand. The brand collaboration agreement with actress and celebrity Tia Mowry will market this new hair care line to women of color using clean ingredients. In connection with our fit-to-win strategy, the company decided to exit the EcoFabulous brand and reorganize the Beauty Labs business. during the first quarter of 23. Accordingly, we booked a $28.5 million favorable non-cash change in the fair value of acquisition-related contingent consideration, as well as asset impairments totaling $95.4 million. We also incurred a $4.2 million inventory write-off related to the EcoFabulous brand, which was adjusted out when calculating gross profit. Next, I'd like to touch on operating expense. Non-GAAP cash operating expense of $112.8 million was 4% lower than Q1 2022 and 24% lower than the fourth quarter of 2022. This was primarily due to lower marketing and media spend related to working capital constraints. In Q1 2023, more than $1 million of cost savings resulted from headcount reduction initiatives and approximately $14 million resulted from lower consumer marketing expenses versus the previous run rate. This was mostly related to spend on paid media such as Google and Meta and related agencies. We started the quarter with a cash balance of $71 million and raised $42 million primarily through a bridge loan to fund the purchase of our Pranova assets in April 2023. We used $101 million during the quarter on operational adjusted EBITDA offset in part by favorable working capital leverage of $17 million driven by action taken with supplies to improve terms and our cash conversion cycle. We also, we closed out the quarter with $17 million of cash on hand. Before I discuss our quarter-on-quarter progress, in connection with our ongoing strategic review as previously communicated on April 24th, we are focused on cost efficiency, capital structure, and liquidity required to fund the business. We updated our going concern disclosure, as you will see in our quarterly report on Fund 10Q, and we have signed forbearance agreements with the company's lenders. Forrest Ventures LLC, Parara Ventures LLC, and DSM Finance BV related to the maturity of an aggregate $92.5 million of debt principal. The lenders have agreed to forbear from exercising any rights and remedies with respect to certain payment defaults until June 23, 2023. As described in our 10Q, our current cash position, as well as short-term debt payments due, raises substantial doubt about our ability to continue as a going concern within the one-year period. As referenced earlier, we are actively working on plans that are intended to address this going concern. As it relates to our Q1 performance, we have sequentially reduced cash use for operating and investing activities, beginning with 199.7 million in Q1 2022 through 94.8 million in the first quarter of 23, as the result of a focused effort on cost containment and the need to navigate liquidity constraints. We used a total of $90 million for operating activities, which includes all our costs of goods sold, operating expense, and working capital needs. We used a total of $5 million for investing activities, all of which was related to capital expenditures for R&D facilities, as well as the construction of our Abada Bonita fermentation plant. We have worked hard on reducing our use of cash by taking various steps, including bringing in proceeds from a strategic transaction. Let me summarize. And John referenced this earlier, the two transactions that we recently completed in early April, given their importance to cash flow. We completed the acquisition of an additional 49% of our JV in Apronova on April 3rd. We paid $49 million to bring our ownership percentage in Apronova up to 99%. Also on April 3rd, we closed on our transaction with Jivadan to license certain cosmetic ingredients business and received $200 million and up from cash and expect to receive up to $150 million in performance-based burnout payments over the three-year period. We are delivering on our strategy to provide technology access in a meaningful way to partners that are sector leaders and to bring in meaningful cash. Also, John described three activities with a view to bring in funding. Each of these are in process and are critical components of our plan to fund the business. With that, let me turn the call back to John.

Thanks, Anne. Before we move to Q&A, let me confirm that our current outlook for the full year, including revenue guidance provided on March 15, 2023, remains unchanged. We are focused on and committed to improving our cost structure, making strategic portfolio choices, improving our cash conversion cycle, and delivering on the transactions that self-fund our business. With that, Kate, can you please help us go to Q&A?

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