Our ability to operate our Keyes plant depends on maintaining our working capital arrangementagreement with J.D. Heiskell (Heiskell), and our ability to operate our biodiesel plant in India depends on maintaining our working capital arrangementagreement with Secunderabad Oils Limited.  The Heiskell agreement provides for an initial term of one year with automatic one-year renewals; provided, however, that Heiskell may terminate the agreement by notice 90 days prior to the end of the initial term or any renewal term.  The current term extends through March 8, 2013.December 31, 2015.  In addition, the agreement may be terminated at any time upon default.a default, such as payment default, bankruptcy, acts of fraud or material breach under one of our related agreements with Heiskell.  The Secunderabad agreement may be terminated at any time by either party upon written notice.  If we are unable to maintain these strategic relationships, we will be required to locate alternative sources of working capital and corn procurement logistics,or sorghum supply, which we may be unable to do in a timely manner or at all.  If we are unable to maintain our current working capital arrangements or locate alternative sources of working capital, our ability to operate our plants will be negatively affected.

The value of our long-lived assets is based on our ability to execute our business plan principally in India and Keyes, California and generate sufficient cash flow to justify the carrying value of this asset.our assets.  Should we fall short of our cash flow projections, we may be required to write down the value of these assets under the accounting rules and further degradereduce the value of our business.assets.  We can make no assurances that our future cash flows will develop and provide us with sufficient cash to maintain the value of these assets, thus avoiding future impairment to our asset carrycarrying values.  As a result, we may need to write down the carrying value of the Company’sour long-lived assets.

On Under our note facilities with Third Eye Capital Corporation, we owe approximately $57.6 million, excluding debt discounts, as of December 31, 2014.  Our indebtedness and interests payments under these note facilities are currently substantial and may adversely affect our cash flow, cash position and stock price.  These notes are currently due in July 6, 2012, we entered into an amended and restated note purchase agreement for a term note2015 although the maturity can be extended to January 2016 upon payment of certain fees.  We have been able to extend our indebtedness in the amount of $15 million, a revolving facility in the amount of $18 million and a revenue participation note in the amount of $10 million.  These three facilities have varying maturities over the next two years.  Wepast, but we may not be able to continue to extend the maturity of these notes,notes.  We may not have sufficient cash available at the time of maturity to repay this indebtedness,indebtedness.  We have defaultsdefault covenants that may accelerate the maturities orof these notes.  We may not have sufficient assets or cash flow available to support refinancing these notes at market rates or on terms that are satisfactory to us, or at all.us.  If we are unable to extend the maturity of the notes or refinance on terms satisfactory to us, we may be forced to refinance on terms that are materially less favorable, seek funds through other means such as a sale of some of our assets, or otherwise significantly alter our operating plan, any of which could have a material adverse effect on our business, financial condition, and results of operation.operations. Additionally, if we are unable to amend our current note purchase agreement with Third Eye Capital, our ability to pay dividends could be restrained.

Our operations are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, access to and impacts on water supply, and the health and safety of our employees.  In addition, our operations and sales in India subject us to risks associated with foreign laws, policies, and regulations.  Some of these laws and regulations require our facilities to operate under permits or licenses that are subject to renewal or modification.  These laws, regulations and permits can require expensive emissions testing and pollution control equipment or operational changes to limit actual or potential impacts to the environment.  A violation of these laws and regulations or permitpermits or license conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and facility shutdowns.  We may not be at all times in compliance with these laws, regulations, permits or permitslicenses or we may not have all permits or licenses required to operate our business.  We may be subject to legal actions brought by environmental advocacy groups and other parties for actual or alleged violations of environmental laws, permits or permits.licenses.  In addition, we may be required to make significant capital expenditures on an ongoing basis to comply with increasingly stringent environmental laws, regulations, permit and permits.license requirements.

We may be liable for the investigation and cleanup of environmental contamination at the Keyes plant and at off-site locations where we arrange for the disposal of hazardous substances.  If thesehazardous substances have been or are disposed of or released at sites that undergo investigation or remediation by regulatory agencies, we may be responsible under CERCLA or other environmental laws for all or part of the costs of investigation and remediation, and for damage to natural resources.  We also may be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials at or from those properties. Some of these matters may require us to expend significant amounts for investigation, cleanup or other costs.

New laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make additional significant expenditures.  Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at our production facilities.  Environmental laws and regulations applicable to our operations now or in the future, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a negative impact on our results of operations and financial condition.  For example, carbon dioxide is a co-product of the ethanol manufacturing process and may be released into the atmosphere.

Emissions of carbon dioxide resulting from the manufacturing processethanol are not currently subject to applicable permit requirements.  If new laws or regulations are passed relating to the production, disposal or emissions of carbon dioxide, we may be required to incur significant costs to comply with such new laws or regulations.

Our business The operations at our Keyes plant will result in the emission of carbon dioxide into the atmosphere.  In March 2010, the EPA released its final regulations on the Renewable Fuels Standard Program, or RFS2.  We believe the EPA’s final RFS2 regulations grandfather the Keyes facility we operate at its current capacity, however, compliance with future legislation may suffer if we cannot maintain necessary permitsrequire us to take action unknown to us at this time that could be costly, and require the use of working capital, which may or licenses.

The domestic ethanol industry is highly dependent upon a myriad of federal and state regulations and pending legislation, and any changes in legislation or regulation could adversely affect our results of operations and financial position.  Other federal and state programs benefiting ethanol generally are subject to U.S. government obligations under international trade agreements, including those under the World Trade Organization Agreement on Subsidies and Countervailing Measures, and may be the subject of challenges, in whole or in part.  Growth and demand for ethanol and biodiesel is largely driven by federal and state government mandates or blending requirements, such as the Renewable Fuel Standard (RFS).  Any change in government policies which negatively affects our business, maycould have a material adverse effect our business and the results of our operations.

Ethanol can be imported into the United States duty-free from some countries, which may undermine the domestic ethanol industry.  Production costs for ethanol in these countries can be significantly less than in the United States and the import of lower price or lower carbon value ethanol from these countries may reduce the demand for domestic ethanol and depress the price at which we sell our ethanol.

Waivers of the RFS minimum levels of renewable fuels included in gasoline could have a material adverse effect on our results of operations.  Under the Energy Policy Act, the U.S. Department of Energy, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the renewable fuels mandate with respect to one or more states if the Administrator of the Environmental Protection Agency determines that implementing the requirements would severely harm the economy or the environment of a state, a region or the nation, or that there is inadequate supply to meet the requirement.  Any waiver of the RFS with respect to one or more states would reduce demand for ethanol and could cause our results of operations to decline and our financial condition to suffer.

We are subject In November 2013, the EPA initially proposed a waiver to the FCPA, which generally prohibits companiesRFS by reducing the RFS for 2014 from the previous requirement of 18.15 billion gallons to a revised level of 15.21 billion gallons.  The EPA proposal represents a reduction of approximately 16% from the original RFS fuel volume for 2014. The EPA subsequently indicated that they would release the requirements in late fall, and their intermediaries from making improper paymentsthen again pushed the final rule release date to foreign officials for the purpose of obtaining or keeping business and/or other benefits, along with various other anticorruption laws. Although we have implemented policies and procedures designed to ensure that we, our employees and other intermediaries comply with the FCPA and other anticorruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively allearly 2015. As of the time or protect us against liability underdate of this report, the FCPA or other laws for actions taken by our employees and other intermediaries with respectEPA has yet to our business or any businesses that we may acquire. We have manufacturing operations in India, which poses elevated risks of anti-corruption violations, and we export our products for sale internationally. This puts us in frequent contact with persons who may be considered “foreign officials” underrelease the FCPA, resulting in an elevated risk of potential FCPA violations. If we are not in compliance withfinal determination on the FCPA and other laws governing the conduct of business with government entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Any investigation of any potential violations of the FCPA or other anticorruption laws by U.S. or foreign authorities could harm our reputation and have an adverse impact on our business, financial condition and results of operations.revised 2014 RFS requirements.

In order to improve the operations of the Keyes plant and execute on our business plan, we intend to modify the plant to accommodate alternative feedstocks and new chemical and/or mechanical production processes.  We may not be able successfully to implement these modifications, and they may not function as we expect them to.  These modifications may cost significantly more to complete than our estimates.  The plant may not operate at nameplate capacity once the changes are complete.  If any of these risks materialize, they could have a material adverse impact on our results of operation and financial position.

Our employees and facilities are subject to the hazards associated with producing ethanol and biodiesel.  Operating hazards can cause personal injury and loss of life, damage to, or destruction of, property, plant and equipment and environmental damage.  We maintain insurance coverage in amounts and against the risks that we believe are consistent with industry practice.  However, we could sustain losses for uninsurable or uninsured risks, or in amounts in excess of existing insurance coverage.  Events that result in significant personal injury or damage to our property or to property owned by third parties or other losses that are not fully covered by insurance could have a material adverse effect on our results of operations and financial position.

Insurance liabilities are difficult to assess and quantify due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety program.  If we were to experience insurance claims or costs above our coverage limits or that are not covered by our insurance, we might be required to use working capital to satisfy these claims rather than to maintain or expand our operations.  To the extent that we experience a material increase in the frequency or severity of accidents or workers’ compensation claims, or unfavorable developments on existing claims, our operating results and financial condition could be materially and adversely affected.

The construction, repairs, Our success depends on our continued ability to attract, retain and upgrades ofmotivate highly qualified management, manufacturing and scientific personnel, in particular our ethanolChairman and biodiesel plants, along with working capital, were financedChief Executive Officer, Eric McAfee.  We do not maintain any key man insurance. Competition for qualified personnel in part through debt facilities.  We may need to seek additional financing to continue or grow our operations.  However, our recent financial performancethe renewable fuel and generally unfavorable credit market conditions may make it difficult to obtain necessary capital or additional debt financingbio-chemicals manufacturing fields is intense.  Our future success will depend on, commercially viable terms or at all.  If we are unable to pay our debt we may be forced to delay or cancel capital expenditures, sell assets, restructure our indebtedness, seek additional financing, or file for bankruptcy.  Debt levels or debt service requirements may limitamong other factors, our ability to borrow additional capital, make us vulnerableretain our current key personnel and attract and retain qualified future key personnel, particularly executive management.  Failure to increases in prevailing interest rates, subject our assets to liens, limit our ability to adjust to changing market conditions,attract or place us at a competitive disadvantage to our competitors because of our leverage.  Should we be unable to generate enough cash from our operations or secure additional financing to fund our operations and debt service requirements, we may be required to postpone or cancel growth projects, reduce our operations, or may be unable to meet our debt repayment schedules.  Any one of these events mayretain key personnel could have a material adverse effect on our operationsbusiness and financial position.results of operations.

Our sales and manufacturing operations in foreign countries are subject to the laws, policies, regulations, and markets of the countrycountries in which we operate.  As a result, our foreign manufacturing operations and sales are subject to inherent risks associated with the countries in which we operate.  Risks involving our foreign operations include differences or unexpected changes in regulatory requirements, political and economic instability, terrorism and civil unrest, work stoppages or strikes, natural disasters, interruptions in transportation, restrictions on the export or import of technology, difficulties in staffing and managing international operations, variations in tariffs, quotas, taxes, and other market barriers, longer payment cycles, changes in economic conditions in the international markets in which our products are sold, and greater fluctuations in sales to customers in developing countries.  If we are unable to effectively manage the risks associated with our foreign operations, our business may experience a material adverse effect on the results of our operations or financial condition.

We conduct substantially all of our operations through subsidiaries and are dependent on cash distributions, dividends or other intercompany transfers of funds from our subsidiaries to finance our operations. Our subsidiaries have not made significant distributions to the Company and may not have funds legally available for dividends or distributions in the future.  In addition, we may enter into credit, or other, agreements that would contractually restrictThe ability of our subsidiaries from paying dividends, making distributions, or making intercompany loans to our parent company ortransfer funds to any other subsidiary.  In particular, ourus will be dependent upon their respective abilities to achieve sufficient cash flows after satisfying their respective cash requirements, including subsidiary-level debt service on their respective credit agreements. Our current credit agreement, may requirethe Third Eye Capital Note Purchase Agreement, as amended from time to time, described in the Notes to Consolidated Condensed Financial Statements, requires us to obtain the prior consent of Third Eye Capital, as the lender for dividendsAdministrative Agent of the Note holders, to make cash distributions or otherany intercompany fund transfers. If the amountThe ability of our Indian operating subsidiary to transfer funds to us is restricted by Indian laws and maybe adversely affected by US tax laws.  Under Indian laws, our capital we are ablecontributions, or future capital contributions, to raise from financing activities, together with our revenues from operations that are available for distribution, are not sufficient to satisfy our ongoing working capital and corporate overhead requirements needs, evenIndian operation cannot be remitted back to the extentUS. Remittance of funds by our Indian subsidiary to us may subject us to significant tax liabilities under US tax laws.

 Eric McAfee, our Chairman and Chief Executive Officer, has outside business interests which include his ownership of McAfee Capital.  In addition, Mr. McAfee’s employment agreement requires his devotion of reasonable business efforts and time to the Company.  Furthermore, Mr. McAfee is prohibited from engaging in any competitive employment, occupational or consulting services.  Although Mr. McAfee’s employment agreement requires that we reducehe devote reasonable business efforts to our operations accordingly, we may be requiredcompany, this agreement also permits him to cease operations.devote time to his outside business interests consistent with past practice.  As a result, these outside business interests could interfere with Mr. McAfee’s ability to devote time to our business and affairs.

Earthquakes, floods, droughts, tsunamis, and other unfavorable weather conditions may affect our operations.  Natural catastrophes may have a detrimental effect on our supply and distribution channels, causing a delay or prevention of our receipt of raw materials from our suppliers or delivery of finished goods to our customers.  In addition, weather conditions may adversely impact the planting, growth, harvest, storage, and general availability of any number of the products we may process at our facilities or sell to our customers.  The severity of these occurrences, should they ever occur, will determine the extent to which and if our business is materially and adversely affected.

Our operations may experience unscheduled downtimes due to technical or structural failure, political and economic instability, terrorism and civil unrest, natural disasters, and other operational hazards inherent to our operations.  These hazards may cause personal injury or loss of life, severe damage to or destruction of property, equipment, or the environment, and may result in the suspension of operations andor the imposition of civil or criminal penalties.  Our insurance may not be adequate to cover thesuch potential hazards described and we may not be able to renew our insurance on commercially reasonable terms or at all.  In addition, any reduction in the yield or quality of the products we produce could negatively impact our ability to market our products.  Any decrease in the quality, reduction in volume, or cessation of our operations due to these hazards would have a material adverse effect on the results of our business and financial condition.

Our strategy envisions a period of rapid growth that may impose a significant burden on our administrative and operational resources and personnel, which if not effectively managed, could impair our growth.  The growth of our business will require significant investments of capital and management’s close attention.  If we are unable to successfully manage our growth, our sales may not increase commensurately with capital expenditures and investments.  Our ability to effectively manage our growth will require us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage and retain qualified management, technicians and other personnel; we may be unable to do so.personnel.  In addition to our plans to adopt technologies that expand our operations and product offerings at our biodiesel and ethanol plants, we may seek to enter into strategic business relationships with companies to expand our operations.  If we are unable to successfully manage our growth, we may be unable to achieve our business goals, which may have a material adverse effect on the results of our operations and financial condition.

We have increased our operations through mergers, acquisitions, partnerships, and joint ventures and intend to continue to explore these opportunities in the future.  The anticipated benefits of these transactions may take longer to realize than expected, may never be fully realized, or even realized at all.  Furthermore, partnerships and joint ventures generally involve restrictive covenants on the parties involved, which may limit our ability to manage these agreements in a manner that is in our best interest.  Future mergers, acquisitions, partnerships, and joint ventures may involve the issuance of debt or equity, or a combination of the two, as payment for or financing of the business or assets involved, which may dilute ownership interest in our business.  Any failure to adequately evaluate and address the risks of and execute on our mergers, acquisitions, partnerships, and joint ventures could have an adverse material effect on our business, results of operations, and financial position.  In connection with such acquisitions and strategic transactions, we may incur unanticipated expenses, fail to realize anticipated benefits, have difficulty incorporating the acquired businesses, our management may become distracted from our core business, and we may disrupt relationships with current and new employees, customers and vendors, incur significant debt, or have to delay or not proceed with announced transactions.  The occurrence of any of these events could have an adverse effect on our business.

We rely on a combination of patents, trademarks, trade name, confidentiality agreements, and other contractual restrictions on disclosure to protect our intellectual property rights.  We also enter into confidentiality agreements with our employees, consultants, and corporate partners, and control access to and distribution of our confidential information.  These measures may not preclude the disclosure of our confidential or proprietary information.  Despite efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our proprietary information.  Monitoring unauthorized use of our confidential information is difficult, and we cannot be certain that the steps we have taken to prevent unauthorized use of our confidential information, particularly in foreign countries where the laws may not protect proprietary rights as fully as in the U.S., will be effective.

Since 2007, we have been developing patent-pending enzyme technology to enable the production of ethanol from a combination of starch and cellulose, or from cellulose alone, and in July 2011, we acquired Zymetis, Inc., a biochemical research and development firm, with several patents pending and in-process R&D utilizing the Z-microbe™ to produce renewable chemicals and advanced fuels from renewable feedstocks.  Although, the viability of our technology has been demonstrated in the lab, there can be no assurance that we will be able to commercialize our technology.  To date, we have not completed a large-scale commercial prototype of our technology and are uncertain at this time when completion of a commercial scale prototype will occur.  Commercialization risks include economic financial feasibility at commercial scale, availability of funding to complete large-scale commercial prototype, ability of Z-microbeTM to function at commercial scale and ability to obtain regulatory approvals, and market acceptance of product.

We may issue equity or convertible securities in the Middle East, U.S. energy policies, federalfuture.  To the extent we do so, our stockholders may experience substantial dilution.  We may sell common stock, convertible securities, or other equity securities in one or more transactions at prices and state regulatory changes that affect the price of ethanolin a manner we determine from time to time.  If we sell common stock, convertible securities, or biodiesel,other equity securities in more than one transaction, investors may be materially diluted by subsequent sales and the existence or discontinuation of legislative incentives for renewable fuels.  Our stock price will also be affected by the trading price of the stock of our competitors, investor perceptions of us, interest rates, general economic conditions and those specific to the ethanol or biodiesel industry, developments with regardnew investors could gain rights superior to our operations and activities, our future financial condition, and changes in our management.existing stockholders.

The market price of our common stock has fluctuated significantly in the past and may continue to fluctuate significantly in the future. The market price of our common stock may continue to fluctuate in response to one or more of the following factors, many of which are beyond our control:

The price at which you purchase shares of our common stock may not be indicative of the price that will prevail in the trading market. You may be unable to sell it.your shares of common stock at or above your purchase price, which may result in substantial losses to you and which may include the complete loss of your investment. In the past, securities class action litigation has often been brought against a company following periods of high stock price volatility. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and our resources away from our business.