GOING CONCERN UNCERTAINTY

We have incurred substantial net losses since our inception; we incurred net losses of $101.6 million, $141.4 million and $162.1 million in 2016, 2015 and 2014, respectively. Accumulated deficit was $711.5 million as of December 31, 2016. Net cash used in operating activities was $64.5 million, $85.1 million and $118.1 million in 2016, 2015 and 2014, respectively. Cash and cash equivalents and marketable securities available for sale were $64.0 million as of December 31, 2016.

We are an emerging growth company with a limited operating history. We only recently began commercializing our products. To date, a substantial portion of revenues has consisted of funding from third party collaborative research agreements and government grants. We intend to focus on growing product revenues primarily in the unconsolidated SB Oils JV in 2017. As a result, we expect our reported consolidated revenues to decrease in 2017 compared to 2016, primarily due to lower research and development programs revenues as certain funded programs shift toward commercial product revenue in the unconsolidated SB Oils JV.

Net losses may continue as we ramp up manufacturing capacity and build out our product pipeline. We expect to incur additional costs and expenses related to the continued development and expansion of our business, including research and development, the operation of our Peoria facility, the ramp up and operation of the SB Oils JV plant and other facilities.

As of December 31, 2016, there was $32.5 million outstanding of convertible notes (2018 Notes), due on February 1, 2018, and $148.1 million outstanding of convertible notes (2019 Notes), due on October 1, 2019. Accordingly, we had $32.5 million due in 13 months from December 31, 2016 or 10.5 months from March 16, 2017 (the date of the filing of this Form 10-K), and $148.1 million due in 2.7 years from December 31, 2016 or 2.5 years from March 16, 2017. Cash and cash equivalents and forecasted cash flows from operations are not sufficient to sustain our operations and meet such obligations through March 31, 2018.

On February 24, 2017, we announced that we had retained Rothschild Inc. (Rothschild) as our financial advisor and that we were in discussions with a number of potential investors to raise additional capital and/or recapitalize our outstanding convertible senior subordinated notes. However, no agreements have been made and such discussions may not lead to a transaction.

We have directed Rothschild to assist us in the following objectives:


•	restructure or refinance a substantial portion of our 2018 and 2019 Notes;


•	raise additional capital via a combination of the following potential activities

•Issuance of new equity

•Issuance of new debt;

•Entering partnerships for our AlgaVia® food powders and/or our Thrive® Consumer businesses;


•	and/or the outright sale of certain other assets

In addition to the above activities directed by our financial advisor, we also have the ability to execute a combination of the following initiatives:


•	sell additional equity through an existing effective registration statement (we sold common stock for cash proceeds of approximately $4.8 million in the last five months of 2016);


•	convert individual holders of the convertible 2018 and 2019 Notes into our common stock through induced conversions (in 2016, we exchanged 2018 and 2019 Notes totaling approximately $30.6 million by issuing 9.0 million shares (including 4.6 million inducement shares); and/or


•	further streamline operations which may result in further reduction in headcount and other expenses (in 2016, we reduced our workforce by approximately 20%).

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. There is significant uncertainty regarding our ability to meet our obligations and sustain our operations through March 31, 2018. These conditions raise substantial doubt as to our ability to continue as a going concern. Management’s plans concerning these matters are discussed above. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this going concern uncertainty.