PRELIMINARY OFFERING CIRCULAR DATED JANUARY 5, 2017

Blue Marble Energy Corporation

5840 Expressway

Missoula, Montana 59808

(406) 549-2100

www.bluemarblebio.com

14,400,000 SHARES OF COMMON STOCK

SEE “SECURITIES BEING OFFERED” AT PAGE 31

*See “Plan of Distribution” for details regarding the compensation payable to Primary Capital LLC, who is acting as placement agent for this offering. The company has engaged Primary Capital LLC to serve as its sole and exclusive placement agent to assist in the placement of its securities. The company will pay Primary Capital LLC on a tiered basis depending on its involvement in identifying and facilitating each investment. If the placement agent originates all the investors and the maximum amount of shares is sold, the maximum amount the company could pay Primary Capital LLC is $1,320,000 (the company has assumed it will pay $850,000 in the “Use of Proceeds to Issuer” below).

If we sell the maximum amount of shares and pay the maximum amount to the placement agent, we expect that the amount of expenses of the offering (including the commission as discussed above) that we will pay will be approximately $1,970,000, not including state filing fees (we have assumed that we will incur an aggregate of $1,500,000 of fees in the “Use of Proceeds to Issuer” section).

The company has engaged an escrow agent, see “Plan of Distribution”.

The offering will terminate at the earlier of: (1) the date at which the maximum offering amount has been sold, (2) the date which is one year from this offering being qualified by the Commission, or (3) the date at which the offering is earlier terminated by Blue Marble in our sole discretion. The offering is being conducted on a best-efforts basis without any minimum target. We may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to us. After the initial closing of this offering, we expect to hold closings on at least a monthly basis.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION GENERALLY NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

This offering is inherently risky. See “Risk Factors” on page 6.

Sales of these securities will commence on approximately                  , 2017.

Blue Marble is following the “Offering Circular” format of disclosure under Regulation A.

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY’S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

TABLE OF CONTENTS

In this Offering Circular, the terms “Blue Marble,” “Blue Marble Biomaterials,” “we,” “us,” “our,” or “the company” refers to Blue Marble Energy Corporation, and our subsidiary on a consolidated basis.

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

SUMMARY

Overview

Blue Marble Biomaterials is an ingredient manufacturer and technology provider. Blue Marble develops and manufactures natural and sustainable specialty chemicals from biomass for the global flavor, fragrance and personal care ingredient markets, which are estimated to be worth over $60 billion annually in 2016.

We have developed patented and proprietary technologies to utilize nature-based bacteria and novel fermentation/extraction techniques to produce natural chemicals that can be used as drop-in replacements for chemicals traditionally manufactured from petroleum.

The Problem

Approximately 96% of all consumer goods contain one or more petroleum-derived chemicals. The traditional chemical industry, and its upstream suppliers are reliant on fossil resources (petroleum, coal, and natural gas) as a feedstock (raw product) for chemical manufacturing. This has produced a global environment of price volatility and overdependence on these fossil feedstock sources. While some petrochemicals can now be replaced by renewable natural alternatives, the naturals sector is still plagued by price volatility, supply, and traceability issues.

Our Solution

Biomass is the world’s most abundant feedstock. Examples of biomass include agricultural byproducts, spent coffee grounds, spent dairy/cheese streams, spent tea leaves, spent fruit and vegetable pomace and wood waste. Blue Marble has developed and currently operates technologies to convert these starting materials into simple and complex chemical molecules. Blue Marble targets biochemicals that can be identical in quality and composition to petrochemicals, which we believe allows them to be marketed as drop-in replacements. Also, because biomass is an abundant, low-value resource, we believe we can provide stable pricing and predictable supply to our customers.

In addition, we believe that our process revolutionizes chemical manufacturing by eliminating energy and water intensive processes and reducing the carbon emissions of chemical manufacturing.

We currently have our research and development and manufacturing facility in Missoula, Montana.

The Offering

Selected Risks Associated with Our Business

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this summary. These risks include, but are not limited to, the following:

RISK FACTORS

The SEC requires us to identify risks that are specific to our business and our financial condition. We are still subject to all the same risks that all companies in our industry, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.

We have a relatively short operating history and are currently operating at a loss.

Blue Marble has a relatively short operating history and we are at a stage in our development where we are focused on our own research and development as well as partnering with food, agricultural, and forestry manufacturing companies to discover alternative uses for their byproduct streams. Because of our current stage in corporate development, it is more difficult to accurately assess growth rate and earnings potential. It is possible that our company will face many difficulties typical for development stage companies. These may include, among others: relatively limited financial resources; reliance on very few key customers and collaborators; limited experience at manufacturing and pricing products at a commercial scale; potential competition from larger, more established companies; and difficultly recruiting and retaining qualified employees for management and other positions. We may face these and other difficulties in the future, some of which may be beyond our control. There is no guarantee that our business model and plans will be successful or that we will successfully address any problems that may arise. Should Blue Marble be unable to address these issues, you can lose some if not all of your investment.

If we cannot raise sufficient funds we will not succeed.

We have limited working capital and there may not be sufficient financial resources available to carry out planned operations. We depend upon timely availability of adequate working capital in order to meet the objectives of our research and development and business plans, including increasing our commercial capacity over the next few years. In order to do so, we will most likely need additional capital through externally-generated equity investment, debt vehicles, and through collaborations with third parties. There can be no assurance that we will sell the maximum number of shares offered, or that our development and commercial operations will not require additional capital greater than or sooner than currently anticipated. If Blue Marble is unable to obtain additional capital if needed, in the amount and at the time needed, this may restrict planned commercialization; limit our ability to take advantage of future opportunities including collaboration with key partners in the agriculture and food industries; negatively affect our ability to implement our business strategies and meet our goals; and possibly limit our ability to continue operations. Our working capital requirements may significantly vary from those currently anticipated.

We face significant market competition.

We operate in the bio-based, sustainable chemistry market. Though this market is a niche market, some of our products will compete with similar products in the traditional specialty chemical market (e.g., petroleum-based products), the biotechnology market (e.g., GMO products) and companies, including those operating in traditional specialty chemical markets, can enter our niche space. While one of the benefits of our products is that they are not petroleum-based and therefore are not as impacted by the fluctuations in the oil markets, many of our competitors manufacture petroleum-based products and due to the recent trend of relatively inexpensive oil prices, can do so at reduced costs. Competitors may be better capitalized than Blue Marble or could undercut our costs by manufacturing these products in developing countries or by using petroleum-based products, which would give them a significant advantage.

We have limited experience producing products on a commercial scale.

To date, the majority of our revenue has been from collaborative research and development projects and producing small lots of targeted products. In order to effectuate our business plans, we need to continue to increase our manufacturing capacity, establish and maintain business relationships to secure biomass at reasonable prices as well as to advance and develop business relationship with strategic partners for constructing co-located facilities or for repurposing co-product streams. There is a substantial risk associated with companies as they scale up to commercialization using new technologies and a number of factors that could impede our growth. These factors include:

If we are unable to successfully scale up our operations, our business will be harmed.

We work in opaque markets, which makes it difficult to price our products.

To date, other than through collaborative projects, we have only produced small lots of targeted products. As we scale up, one of the difficulties will be our ability to effectively price our products with margins that will allow us to be profitable. We work in opaque markets, where it is difficult to determine pricing for our competitors’ products or to even understand the true characteristics of those products, including how much of the product is natural versus synthetic, shelf life, certifications, and compliance with regulatory and industry guidelines. If we cannot effectively price our product, it could hinder our profitability.

We currently have relied and in the near future will likely rely on a few key customers and collaborators.

As we expand commercial operations our revenues will likely be derived from a limited number of customers, and a large percentage of our revenues in 2014 and 2015 came from one customer. In order to succeed we will have to expand our customer base. Reliance on one or even a few partners limits our ability to successfully manage our revenue streams. Any strain or delays by the other party or parties, or our inability to successfully secure other agreements would materially negatively impact our business.

We operate in regulated industries.

We are focused on the marketing and continued development of sustainable specialty chemicals from biomass. Some of our products currently or will require regulatory approval by government agencies prior to marketing or sale in the U.S. or foreign markets. The regulatory process can be time consuming and expensive and for certain of our products such approval may never be obtained. As our operations develop we may need to engage in-house regulatory counsel, which we do not currently have. Further, our current facility and future planned facilities will most likely be in regimes with strict safety and environmental standards; compliance can be costly and accidents or other issues could result in significant liability.

We are subject to substantial regulation and industry standard guidelines related to quality standards applicable to our manufacturing and quality processes.

The FDA, other applicable U.S. and foreign government agencies, and industry associations regulate or provide guidance on the types of products that we can produce and how we manufacture products. These regulations relate to product quality, safety and effectiveness. As part of our business plan, we have previously partnered and plan in the future to partner with third parties in the development and manufacturing of these products. We may have limited ability to control any partners’ process and quality control. Further, we do not independently have regulatory counsel and rely on our partners’ specifications for compliance with their regulations and guidelines. Failure by us or our partners to comply with current or future government regulations and quality assurance guidelines or concerns related to safety and manufacturing issues could lead to product recalls, fines, temporary manufacturing shutdowns, product shortages, declines in sales, loss of approvals and certifications, and delays in manufacturing. Any or all of these actions could result in our failure to continue operations or become profitable.

We operate in a market that is subject to changing statutory provisions and regulations and interpretations of those statutory provisions and regulations.

Regulatory authorities and legislative bodies pass inconsistent and constantly-changing laws and regulations, including in the areas related to labeling requirements (e.g., the use and limitation on terms such as “natural”, organic, non-GMO), labor and employment laws, and import-export regulations. In particular, we are reliant on various domestic and international laws and regulations to determine the types of products we can market for consumption and personal care use, how we operate our facilities, including the quality standards we must use, and the means by which we can bring those products to market. Changes in laws and regulations or different interpretations of those laws and regulations could make it difficult or impossible to comply or increase our regulatory compliance burdens and therefore hinder our ability to operate profitably.

We may not be always able to obtain and maintain the certifications needed to effectively sell our products.

We have received, will receive or comply with the standards for several certifications that we are able to use when labeling and selling our products. See “The Company’s Business – Principal Products and Services” and “The Company’s Business – Regulations and Certifications”. We believe that these certifications will distinguish us and allow us to be profitable in certain niche markets. Our failure to maintain and obtain some if not all of these certifications could impair our ability to achieve our revenue goals.

We are dependent on raw materials.

Our manufacturing operations require the adequate supply of quality raw materials, such as biomass feedstock, nutrients (e.g., nitrogen and phosphorous), and fertilizers, in a timely manner. We rely on a global shipping network to transport our materials and any disruption could significantly increase the costs in producing our goods. Further, we could experience a shortage for some of the raw materials we use, which could limit our ability to acquire the materials or acquire them at a reasonable price. Our inability to obtain such raw materials in sufficient quantities or in a timely manner, or at reasonable prices, may limit our ability to produce our products profitably, or at all.

We may not be able to protect all of our intellectual property.

Our profitability may depend in part on our ability to effectively protect our proprietary rights, including obtaining patent protection for our methods of manufacturing our products, maintaining the secrecy of our internal workings and preserving our trade secrets, as well as our ability to operate without inadvertently infringing on the proprietary rights of others. There can be no assurance that we will be able to obtain future patents or defend our current and future patents. Further, policing and protecting our intellectual property against unauthorized use by third parties is time-consuming and expensive, and certain countries may not even recognize our intellectual property rights. There can also be no assurance that a third party will not assert patent infringement claims with respect to our products or technologies. Any litigation for both protecting our intellectually property or defending our use of certain technologies could have material adverse effect on our business, operating results and financial condition, regardless of the outcome of such litigation.

Our technology might not be successful or may not receive public acceptance.

We believe that the technologies that we have developed will allow us to successfully produce our current products as well as develop future products to be produced on a commercial scale. However, our technologies, and specifically those that relate to microbial culture stability, product composition and yields, might not prove successful or scalable. Technology failure or our inability to successfully modify these technologies would negatively impact our ability to succeed. Further, we believe that our technology is sustainable and environmentally friendly. However, public perception or new discoveries regarding the environmental and health impact of our technologies would limit our ability to achieve profits.

The insurance we maintain might not cover all of our losses.

The insurance we maintain, including property, casualty and workers’ compensation insurance, may not fully cover all potential exposures. Further, our policies are subject to limitations, including deductibles and maximum liabilities covered. For instance, we only have one facility, and a catastrophic event may not be fully covered by the insurance amounts. We may incur losses in excess of the limits or outside the scope of the coverage of our policies including any liabilities associated with product safety, environmental compliance and remediation.

We depend on key personnel and have a difficult time recruiting needed personnel.

Our future success depends on the efforts of a small number of key personnel, including our founder and Chief Science Officer, James Stephens, and our research and development and product team. Our research and development team and in particular James Stephens are critical to continually innovate and improve our lines of products. In addition, due to our location, financial resources, and specialized expertise required, we may not be able to recruit the individuals needed for our business needs. There can be no assurance that we will be successful in attracting and retaining the personnel we require to operate and be innovative in this specialty chemical field.

As a growing company, we have to develop reliable accounting resources. Failure to achieve and maintain effective internal accounting controls could prevent us from producing reliable financial reports. 

Effective internal controls and accounting resources are necessary for us to provide reliable financial reports, which, as a growing company, we are still building out. Failure to achieve and maintain an effective internal accounting and control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have an adverse effect on our business and financial results.

In response to a comment from the Security and Exchange Commission's review of our draft Form 1-A offering circular, we have determined that our convertible preferred stock should have been accounted for under ASC 480-10-S99-3A and classified in temporary equity.  Previously, convertible preferred stock was classified within shareholders' equity. We have restated the financial statements to correct this classification.  Restatement of the financial statements is regarded as a material weakness in internal controls over financial reporting.  A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. We are taking steps that we believe will improve the effectiveness of our internal control over financial reporting and will remediate the material weakness.  It is possible that other control deficiencies could be identified in the future or may occur without being identified. In the event additional material weaknesses in our internal controls are discovered in the future, they may adversely affect our ability to record, process, summarize and report financial information timely and accurately.

Our officers and directors control our company.

Our officers and directors currently hold a majority of our voting stock, and at the conclusion of this offering will continue to hold majority of our Common Stock. Further, one of our directors, Rajiv Shah, has the ability to designate one of our directors, and our director and officer, James Stephens, has the ability to designate another two directors. See “Directors, Executive Officers, and Significant Employees.” Investors in this offering will not have the ability to control a vote by the shareholders or the board of directors.

There is no guarantee that we will be able to fully utilize our net operating loss carryforwards.

We currently have significant tax net operating loss carryforwards (“NOLs”) available to us to use as offsets for future federal and state income tax liabilities. Full utilization of these assets could be limited by a variety of factors, including changes in federal and state tax laws and regulations and the interpretations thereof or not having enough future tax liabilities to allow us to recognize the full benefit. Our inability to use these assets or receive the full benefit from them, could negatively affect our bottom line.

There is no current market for our Common Stock.

There is no formal marketplace for the resale of our Common Stock. The shares may be traded over-the-counter to the extent any demand exists. These securities are illiquid and there will not be an official current price for them, as there would be if we were a publicly-traded company with a listing on a stock exchange. Investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares as collateral. Since we have not established a trading forum for the Common Stock, there will be no easy way to know what the Common Stock is “worth” at any time. Even if we seek a listing on the “OTCQX” or the “OTCQB” markets there may not be frequent trading and therefore no market price for the Common Stock.

We are not required to raise any minimum amount in this offering before accepting investor funds.

We have not established a minimum amount of capital that must be raised in this offering. You should be aware that there is no assurance that any monies beside your own will be invested in our company in this offering. All of your investment amount will be immediately available to us.

Holders of our Preferred Stock are entitled to potentially significant liquidation preferences over holders of our Common Stock if we are liquidated, including upon a sale of our company.

Holders of our outstanding Preferred Stock have liquidation preferences over holders of Common Stock, including the Common Stock being offered in this offering. This liquidation preference is paid if the amount a holder of Preferred Stock would receive under the liquidation preference in greater than the amount such holder would have received if holder’s shares of Preferred Stock had been converted to Common Stock immediately prior to the liquidation event. If a liquidation event, including a sale of our company, were to occur that resulted in a  distribution of less than approximately $18,000,000 to our stockholders, the holders of our Preferred Stock could be entitled to all proceeds of cash distributions.

DILUTION

Dilution means a reduction in value, control, or earnings of the shares the investor owns.

Immediate dilution

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into Blue Marble. Occasionally, strategic partners are also interested in investing at an early stage. When we seek cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders, early employees, or investors from prior financings, which means that the cash value of your stake is diluted because each share of the same type is worth the same amount, and you paid more for your shares than earlier investors did for theirs. Dilution may also be caused by pricing securities at a value higher than book value or expenses incurred in the offering.

The following table compares the price that new investors are paying for their shares with the effective cash price paid by existing shareholders, giving effect to full conversion of all outstanding stock options and warrants, and assuming that the shares are sold at $1.25 per share. The schedule presents shares and pricing as issued and reflects all transactions since inception, which gives investors a better picture of what they will pay for their investment compared to our insiders than just including such transactions for the last 12 months, which is what the SEC requires.

IMMEDIATE DILUTION

The following table demonstrates the dilution that new investors will experience upon investment in Blue Marble. This table uses our net tangible book value as of June 30, 2016 of $3,883,404, which is calculated as our tangible assets less liabilities in the June 30, 2016 financial statements. This tangible net book value is then adjusted to contemplate conversion of all other convertible instruments currently outstanding that would provide proceeds to us, which assumes exercise of all options (2,948,683 shares) and warrants (961,966 shares) currently outstanding. Such conversions would provide $772,654 of proceeds and result in the issuance of 3,910,649 shares of stock, which are considered in the figures used in the calculations presented in the table.

The table presents four scenarios for the convenience of the reader: a $1,000,000 raise from this offering, a $5,000,000 raise from this offering, a $10,000,000 raise from this offering, and a fully subscribed $18,000,000 raise from this offering (maximum offering).

ON BASIS OF FULL CONVERSION OF ISSUED INSTRUMENTS

USE OF PROCEEDS TO ISSUER

The net proceeds of a fully subscribed offering, after the expenses of the offering (payment to the placement agent, investment platform, legal, accounting, marketing and related expenses), will be approximately $16,500,000. Set forth below is a table showing the estimated uses of proceeds from this offering at selected levels of gross proceeds, up to the maximum offering amount.

Because the offering is a “best efforts” offering without a minimum offering amount, we may close the offering without sufficient funds for all the intended purposes set out above. In the case of raising varying levels of gross proceeds, Blue Marble will adjust its use of proceeds by scaling operations to most effectively allocate the proceeds received to targeted research of high value innovations, furthering negotiations of collaboration arrangements with key partners, and manufacturing of small lots of high value products.

In the event that $1,000,000 of gross proceeds is raised in the offering, we will utilize the net proceeds to continue research and development activities, sales of current products, and for working capital.

With gross proceeds of $5,000,000, we will utilize the net proceeds of the offering to accelerate research and development of innovations, accelerate commercialization of our products, and purchase equipment and add building improvements in our Missoula, Montana research and manufacturing facility.

Gross proceeds of $10,000,000 will allow us to complete all of the above on a larger scale, plus expand our technology portfolio and strengthen our intellectual property position.

At the maximum offering amount of $18,000,000, we will be able to complete a full-scale commercialization and manufacturing facility in Missoula, Montana, allocate funds to co-location facilities with partners, and enhance research and development activities on additional key innovations.

We reserve the right to change the above use of proceeds if management believes it is in our best interests.

THE COMPANY’S BUSINESS

Overview

Blue Marble Energy Corporation was incorporated in Washington State on March 23, 2007 with the goal of producing sustainable transport fuels from algae biomass. During most of our first year, we operated as Green Vision Energy and, in 2010, Blue Marble Energy rebranded itself as Blue Marble Biomaterials to reflect the pivot from the production of low-value, high volume fuel products to manufacturing high-value, low volume chemical products. Blue Marble Biomaterials is an advanced chemical manufacturer that utilizes non-GMO bacteria sourced from nature to manufacture specialty biochemicals from biomass side streams. Blue Marble focuses on producing specialty biochemicals that replace petrochemicals within the flavor, fragrance, and personal care industries. For instance, we currently produce a vegan bacon food and beverage flavoring biochemical from over a dozen different types of biomass, including spent coffee grounds, and tomato and grape pomace (the solid remains of fruit after being processed for juice). While many of the petroleum-derived products used throughout these industries can be replaced with bio-derived materials, few cost-competitive replacements are currently available on the market today.

Our mission is to replace petroleum-based chemicals with fully sustainable, zero-carbon biochemicals.

Principal Products and Services

Our primary objective is to use our core technologies to produce four classes of biochemicals based on natural starting materials: oils, esters, acids, and organosulfur compounds. Oils, esters, and acids can either be used in fragrance, food, personal care, or other cosmetic applications. Organosulfur compounds, however, are solely targeted for the food industry, as their scent profiles (dairy, cheese, meat, seafood, onion, garlic, savory) have little demand in other applications.

We are currently offering a small number of products to several of the largest customers in the fragrance, food, and personal care markets. In order to launch additional products into these marketplaces, Blue Marble must increase the scale of our manufacturing operations so that additional products sold into the target marketplaces are cost-competitive with petrochemical alternatives.

We plan to expand to a larger portfolio of esters, acids, terpenes, ketones, and organosulfur compounds once we have expanded our manufacturing capacity through co-location with feedstock providers. These initial chemicals are in demand by food, flavor and cosmetic manufacturers as consumers trend towards natural and sustainable chemicals and have been specifically requested by several of our multinational partners.

We believe our biochemicals are drop-in replacements to petrochemicals, requiring no change in process or regulations for our customers. Many are also considered Flavor & Extract Manufacturers Association (FEMA) G.R.A.S. (Generally Regarded As Safe) and as such, we believe do not need any additional government approval.

We are working to create products that can offer the following designations:

Technology

Blue Marble has the ability to manufacture bio-based chemicals from “waste” biomass feedstock streams. These bio-based chemicals (or biochemicals) are targeted to replace traditional chemicals manufactured from petroleum feedstocks. Examples of organic biomass that we may use as a feedstock stream include:

We believe that based on our technologies and the available types of “low value” feedstock streams, there could potentially be several thousands of types of feedstock streams that could be effectively used in our process. To date, we have completed testing of hundreds of unique feedstock streams.

To achieve our goal, Blue Marble has developed and deployed two proprietary non-GMO primary technologies:

The process begins with biomass entering our facility and undergoing strict quality control procedures. The biomass is emulsified then processed using our proprietary extraction technologies to produce oils, terpenes and carotenoids. Then, rather than becoming waste, the post-extracted biomass is fed into fermentation vessels along with water recycled from previous manufacturing cycles. From there, an ecosystem of bacteria breaks down the sugars in the biomass and excretes crude streams which are then refined to produce the target final products. The finished bio-based chemicals are then processed through quality control and packaging in our lab or food-grade production rooms before they are ready to enter the market. The steps of our process are fed by recycled by-products of our renewable biomass - making our facility limited waste, with a goal of zero waste in the future.

The following flow diagram is an example of how our technology can be deployed:

Suppliers

We currently source our raw materials from a variety of agricultural, ingredient, and food companies and manufacturers. We are currently in the process of working with several large well-known companies to develop trusted supplies of biomass streams including one of the largest food and beverage manufacturers in the United States for dairy/cheese biomass streams; one of the industry leading ethanol producers in the United States for agricultural biomass streams; and a market-leading fruit juice manufacturer for grape pomace. As we scale up, we believe producers of “waste” biomass (feedstock) will become some of our primary suppliers.

Target Markets

Blue Marble is focusing on the flavor, fragrance, and cosmetic ingredient markets, which we believe have combined approximate, global value of $60 billion annually. Specifically, the global flavoring market was valued at over $11 billion according to a Zion Market research report. And, we estimate that the combined fragrance and cosmetics markets have a global annual value of over $50 billion based on information from a 2012 Statista report on the global fragrance market and a 2015 Market and Markets report on the global personal care ingredients market. Further, using these reports, we estimate that these markets are growing at over $1 billion annually and that demand for natural and sustainable ingredients is booming not only in developed countries, but also in less developed regions.

Distribution and Customers

Blue Marble is targeting its sales towards small, medium and multinational sized consumer packaged goods (“CPG”) manufacturers, the flavoring and fragrance industries that serve such manufacturers, and global chemical distributors.  Partnerships with customers are aimed at gathering industry and technical knowledge in order to convert partners into customers - either through direct sales or co-located manufacturing agreements.

Competition

Traditional specialty chemical markets are highly competitive and global. The marketplace for natural chemicals is smaller but well established and growing as consumer preferences shift in its favor. We believe that bio-based, sustainable chemistry is a nascent but fast emerging industry, creating a market niche for high value applications. We believe that Blue Marble is positioned to become a market leader focusing on delivering sustainable, natural food, fragrance, and personal care ingredients manufactured with non-genetically modified processes. We believe some possible competitors include DSM Food Specialties, Isobionics Natural Ingredients, Green Biologics, Metabolic Explorer, TetraVitae Bioscience, Genencor, and Enerkem.

Value

We believe that we are currently one of the few, if not the only company, solely focusing on delivering sustainable, natural food, fragrance, and personal care ingredients manufactured with non-genetically modified processes and have the ability to become a market leader in this niche.

Our scientists have developed a biomass-to-chemicals conversion platform based on mixed culture fermentation. In this process, biomass is fermented with specific bacterial cassettes to produce target compounds: carboxylic acids, light molecular weight esters, specialty bio-gases, and sulfur compounds.

Blue Marble has also developed first of its kind, proprietary extraction technologies, which produce unique oil-based compounds for our target industries.

Regulations and Certifications

Regulations

Blue Marble products include those used in food production as well as those used in the fragrances and personal care products. The FDA and other applicable U.S. and foreign government agencies regulate food products and how we manufacture them. In addition, as a manufacturer we are subjected to the requirements of the EPA and OSHA along with other applicable U.S. and foreign government agencies that regulate the environment and workplace conditions. Further we are subjected to the procedures and guidelines that require certain quality and manufacturing standards in the jurisdictions where we intend to sell our products or where the end use recipients reside.

Certifications

The Missoula, Montana facility successfully completed a Kosher certification process with most of our products included under the scope of certification in early 2014. We also received Safe Quality Food (“SQF”) Level 2 certification from Scientific Certification Systems, Inc. dba SCS Global Services in April 2016 and are currently working toward SQF Level 3 certification. We also work to follow the procedures and requirements outlined in the European Flavor and Fragrance Association (“EFFA”) and Code of Federal Regulations (“CFR”) Title 21 Section 101.22 (a) 3 for natural products, and CFR Title 21 Sections 170.30 (D) and (H) for food grade products. We are also currently working towards Halal and Certified Organic certifications.

Employees

We currently have 24 full-time employees. Most of our employees are based in Missoula, Montana. Nine of our employees perform general and administration functions and 15 of our employees work primarily in research and development. Our Co-CEO and Chief Science Officer, James Stephens, splits his time between management and research and development in Missoula, Montana. Our Co-CEO and Chief Business Officer, Colby Underwood, and our CFO, Wayne Rebich, split their time between Missoula, Montana and our headquarters in Seattle, Washington.

Research and Development

During the 2016 and 2015 fiscal years, we spent approximately $1,200,000 and $1,007,631, respectively, on research and development activities.

Intellectual Property

We currently hold patents for our system and methods for anaerobic digestion and extraction of products in the following jurisdictions: African Regional Industrial Property Organization, Australia, Canada, China, Hong Kong and the United Kingdom. We hold pending patent applications for our system and methods for anaerobic digestion and extraction in the following jurisdictions: United States, Europe, and Hong Kong. The patents in Hong Kong and the United Kingdom are expected to expire on September 3, 2029. All other patents and pending patent applications are expected to expire on October 21, 2029.

Litigation

We are currently the plaintiff in litigation with a contractor we hired for restoration and construction services at our facility in 2013. Among other claims, we are suing for breach of contract, negligence and loss of business.

We are not involved in any other litigation, and our management is not aware of any pending or threatened legal actions relating to our intellectual property, conduct of our business activities, or otherwise.

Subsidiary

We currently have one wholly owned subsidiary, Blue Marble Biomaterials Expressway, LLC, a limited liability company formed in Delaware on September 16, 2009. Blue Marble Biomaterials Expressway, LLC is the owner of our facility in Missoula, Montana and is not an operating company.

THE COMPANY’S PROPERTY

We own our manufacturing facility and land at 5840 Expressway in Missoula, Montana through our wholly owned subsidiary, Blue Marble Biomaterials Expressway, LLC. The commercial bio-refinery is 19,142 square feet and sits on 3.81 acres of land. The facility includes three laboratories, five production rooms, and a large feedstock storage warehouse as well as specific equipment, including fractional distillation, pyrolysis equipment, molecular distillation, fermentation equipment, and feedstock extraction equipment.

The property was purchased in 2013 for $1,300,000 with funds received from the sale of a convertible promissory note. See “Interest of Management and Others in Certain Transactions.”

We also rent an apartment in Missoula, Montana used by Colby Underwood, our Co-CEO and Chief Business Officer, when he is working in the Missoula, Montana facility.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating Results

Blue Marble Energy Corporation, doing business as Blue Marble Biomaterials, is a developer and manufacturer of natural and sustainable specialty ingredients from biomass for the global flavor, fragrance and personal care industries. We have developed patented technologies to utilize naturally occurring bacteria and novel extraction techniques to produce natural, drop-in replacement chemicals traditionally manufactured from petroleum. Blue Marble was founded in 2007 and is incorporated in the state of Washington. Headquarters are in Seattle, Washington and operations are in Missoula, Montana.

Our primary activity since inception has been research and development and we have accumulated losses from operations.

In 2014 and 2015, over 90% of our revenues were derived from our strategic relationship with a multinational food and beverage manufacturer to analyze co-located facilities and repurposing co-product streams. This facet of our relationship was completed in 2015, and in 2016 to date we have not received revenue from this company. Currently we are in discussions with this company and several other large agriculture and food companies to launch commercial operations, though we have yet to finalize the details of these relationships. As evidenced from our past experience and in general, reliance on one or even a few partners limits our ability to successfully manage our revenue streams.

Because our primary activity since inception has been research and development, our focus has not been on generating revenue. However, we have engaged in several paid project development agreements that generated revenue in 2015 and 2014. Our revenues totaled $543,774 in 2015 and $1,267,736 in 2014, a decrease of 57%. Our revenues during these periods were derived mainly from research services performed under a collaboration agreement with a multinational food and beverage manufacturer. Research services included product development, ingredient development, product manufacturing and testing and technology research and development specifically related to conversion of by-products of the manufacturer’s processes into ingredients, flavorings, colors and fragrances for use in production processes or for sale to outside markets. Research services accounted for $513,736 of our revenues in 2015 and $1,207,857 in 2014. The decrease in research services revenue was due to a larger number of projects in process and completed in 2014 as compared to 2015. The remaining revenue, derived from product sales, was $30,038 in 2015 and $59,879 in 2014.

Our revenue for the six months ended June 30, 2016 was $39,327, compared to $460,014 for the six months ended June 30, 2015. This decrease was due to the completion of research projects with a multinational food and beverage manufacturer in 2015. No additional research projects were started in the six months ended June 30, 2016. Research services accounted for $480 and $454,736 of our revenues for the six months ended June 30, 2016 and the six months ended June 30, 2015, respectively.

Operating expenses totaled $1,863,393 in 2015 and $1,398,244 in 2014, an increase of $465,149 or about 33%. The primary components of this increase were:

In addition, during this period we credited our expenses for insurance payments we received for water damage to our property in 2013. Payments received from the insurance company in 2015 and 2014 were $439,263 and $760,729, respectively. The net gain from the claim amounts in 2015 and 2014 were $416,826 and $472,551, respectively.

For the period from January 1 to June 30, 2016, operating expenses increased to $1,253,273 from $1,122,942 during the same period in 2015. This increase was due to the increase in research and development expenses to $658,362 for the six month period ended June 30, 2016 from $419,568 for the six month period ended June 30, 2015. This increase was due to research activity related to potential new products and pathways. Offsetting this increase was a decrease in our selling, general and administrative expenses to $594,911 for the six-month period ended June 30, 2016 from $703,374 for the six month period ended June 30, 2015. This decrease was attributable to decreases in legal, travel and insurance expenses, offset by an increase in sales and marketing expenses.

In 2015, we had $632,804 in other income, which was entirely due to the gain on the extinguishment of debt and the change in fair value of convertible preferred stock warrant liabilities; together they accounted for $634,512 in income, offset by $1,708 in interest expense. During the same period in 2014, we had other expense of $349,400. This expense was primarily due to interest expense (including interest expense related to the accretion of debt discount) of $492,093 and was offset by income of $142,693 reflecting the change in fair value of convertible preferred stock warrant liability.

For the six month period ended June 30, 2016 our other income decreased to $58,959 from $552,973 for the same period in 2015. During the six month period ended June 30, 2016, income relating to the change in fair value of convertible preferred stock warrant liability was only $59,915 and we did not have any gain on extinguishment of debt, while during the same period in 2015, income relating to the change in fair value was $479,200 and the gain on extinguishment of debt was $74,708.

As of June 30, 2016, we had 23 full-time employees representing approximately $208,000 in monthly operating expenses. We intend to hire additional employees as warranted by research projects and operations.

Our net loss totaled $686,815 in 2015 compared with a net loss totaling $479,908 in 2014, for the reasons discussed above.

Our net loss for the six months ended June 30, 2016 was $1,154,987, compared to $109,955 for the six months ended June 30, 2015. This increase is due to lower revenue from research projects and higher operating expenses, primarily due to an increase in research and development.

Liquidity and Capital Resources

We do not currently have any significant loans or available credit facilities.

Blue Marble has raised approximately $13.0 million from inception through June 30, 2016 including:

Our activities since inception have consisted primarily of research and development. We continue to be subject to the risks and challenges associated with other companies at a similar stage of development, including dependence on key personnel, successful development and marketing of our products and services, successful collaborations with partners, and the ability to secure adequate financing to support future growth.

Since June 30, 2016, we have received proceeds of $202,652 from exercise of outstanding warrants for Series A-1 convertible preferred shares.

With the note proceeds and the cash on hand, we believe that we have the cash to fund operations through the summer of 2017. We will require additional capital to sustain current operations through the remainder of 2017 and beyond. If we raise at least $1,400,000 in this offering, then we believe that we have sufficient cash to fund our operations through December 31, 2017.

Trend Information

There are several trends affecting and shaping the specialty chemical industry, including trends in natural resources, consumer behavior, agriculture, and economics. Specifically these trends include:

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

(1) Date first became an officer in the company.

(2) The election of the members of the board of directors is governed by a voting agreement, dated July 7, 2014, by and among Blue Marble, the holders of Preferred Stock, and our founders, including James Stephens (the “Voting Agreement”). Shareholders who are parties to the Voting Agreement agree to vote their shares to elect to the board of directors one designee chosen by Rajiv Shah and two designees chosen by a majority of the shares held by our founders. Because Mr. Stephens holds a majority of such shares, Mr. Stephens effectively controls the designation of two designees under the Voting Agreement. The Voting Agreement terminates upon the earliest of (1) the conversion of all outstanding shares of Preferred Stock; (2) such time as Mr. Shah holds less than 50% of the shares of Series A Preferred Stock originally issued to him (as adjusted for recapitalization events); (3) a liquidation event; and (4) the mutual agreement of Mr. Shah and a majority of the shares held by the founders.

James Stephens - Co-CEO/Chief Science Officer

James Stephens is the co-founder, Chief Science Officer, and Co-Chief Executive Officer for Blue Marble Biomaterials. James has over 15 years of managerial and development experience with extensive technical and business background in product development in the fields of industrial microbiology, chemical engineering, remediation, food safety and clean technology from bench level research through commercialization. Before launching Blue Marble, Mr. Stephens worked extensively in the food safety and pharmaceutical research fields developing products from inception all the way through to sales with Fortune 500 companies such as Cargill, Costco, Safeway, and Tyson Foods. He has worked with Blue Marble Biomaterials since our inception in April of 2007.

Colby Underwood - Co-CEO/Chief Business Officer

Colby Underwood was hired in September of 2009 as the Vice President of Business Development and is currently the Chief Business Officer and Co-Chief Executive Officer. In 2002, Colby founded a development firm that developed business strategies and raised funds for start-up companies and non-profit organizations. His firm created financial models, business development and fundraising strategies, and strategic marketing campaigns for political candidates/groups, non-profit organizations and for-profit entities. Colby has raised a significant amount of funds for a large portfolio of projects. Over the past eight years, Colby has focused on shaping Blue Marble into an industry leader via business development, industry education campaigns, and innovative partnerships. Colby also has experience in international trade and investment. As a co-founder of UMC Pacific Holdings LLC, he managed import-export portfolios and consulted on international trade projects with Pacific Rim companies.

Wayne Rebich, Chief Financial Officer

Wayne Rebich has been the Chief Financial Officer for Blue Marble Biomaterials since October of 2014. Prior to that he was President and CEO of Tractionworks, Inc., a professional firm specializing in financial and strategic consulting services he founded in 2002. He is a licensed CPA and Chartered Global Management Accountant. His professional career includes more than twenty-five years of experience providing finance, accounting and operations expertise to entrepreneurial, growing and publicly held companies. He has assisted growth companies in a variety of industries, including biotech/pharma, information technology, and energy/environmental. He is a member of the American Institute of Certified Public Accountants and the Washington Society of CPAs.

Rajiv Shah, Director

Rajiv Shah has served on the Blue Marble Board of Directors since April 2009. For the past nine years, Rajiv has been the Managing Director and majority shareholder of Metal Crowns Ltd in Kenya. Rajiv is also a director and shareholder of Equator Bottlers, the second largest authorized bottler of Coca-Cola in Africa with over 700 employees. He also is a director and shareholder in a steel packaging company in India. Born in Kenya and educated in the United Kingdom, Rajiv holds a Master of Engineering and Master of Science and Finance from the Imperial College of Science, Technology, and Medicine at the London University.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

For the fiscal year ended December 31, 2016, we compensated our executive officers as follows:

(1) The executives received medical and health benefits, life insurance, short and long term disability generally available to all salaried employees. However, the executives were reimbursed to pay for the premiums for a higher-level coverage than the premium reimbursement available to other salaried employees. The compensation reflects this additional reimbursement.

(2) The compensation includes the value of the stock options granted in the fiscal year December 31, 2016. The Black-Scholes formula was used to determine the value of the option at the date of the grant.

(3) James Stephens and Colby Underwood had accrued a significant amount of unused vacation and it was determined that they would receive payment for vacation accrued through December 31, 2015 to be paid out monthly in twelve equal payments beginning in on April 15, 2016. The compensation includes payments for the accrued vacation.

(4) Colby Underwood has use of the company car as well as a company apartment in Missoula, Montana.

* On January 22, 2015, James Stephens and Colby Underwood each entered into an employment severance benefits agreement, copies of which have been filed as Exhibits to the Offering Statement of which this Offering Circular forms a part. For certain involuntary terminations and resignations with good cause, these agreements would provide for a lump sum payment of 1.5 times the officer’s annual salary and target bonus, accelerated vesting for stock options, and healthcare cost reimbursements. The lump sum amount multiplier would increase to 2 if the applicable termination or resignation occurs within 12 months following a change in control.

The company intends to continue to pay the executives their current cash compensation.

For the fiscal year ended December 31, 2016, none of our directors received cash compensation in their capacity as directors. Two of our directors had stock option grants from 2012 and 2014, a portion of which vested in 2016. A total of 16,667 of those stock options vested in 2016. In 2016, we had four directors until November 2, 2016 when one of our directors due to a potential conflict of interest with his current employer.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

(1) Based on 7,179,102 shares of Common Stock, 6,053,972 shares of Series A preferred stock, and 16,721,539 shares of Series A-1 preferred stock outstanding prior to this offering.

(2) This calculation is the amount the person owns now, plus the amount that person is entitled to acquire through March 5, 2017. That amount is then shown as a percentage of the outstanding amount of securities in that class if no other person exercised their rights to acquire those securities. The result is a calculation of the maximum amount that person could own through March 5, 2017 based on their current and acquirable ownership, which is why the amounts in this column may not add up to 100% for each class.

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

In 2013, Blue Marble borrowed $1,300,000 from one of our directors, Rajiv Shah, under a convertible promissory note in order to purchase the Missoula, Montana facility. In 2014, we issued 1,960,301 Series A-1 convertible preferred shares in exchange for cancellation of the outstanding convertible promissory note and accrued but unpaid interest of $4,777. The shares were issued at a price of $0.6656 per share. In accordance with terms of the promissory note, upon conversion of the promissory note in 2014, we granted a warrant to purchase 3,920,602 Series A-1 convertible preferred shares at an exercise price of $0.6656 per share. The fair value of the warrants issued was estimated at $473,360, which was determined using the Black-Scholes pricing model and these warrants were exercised in 2015.

SECURITIES BEING OFFERED

General

Blue Marble is offering Common Stock to investors in this offering.

The following description summarizes important terms of our capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of the Articles of Amendment, the Amended and Restated Articles of Incorporation and the Bylaws, copies of which have been filed as Exhibits to the Offering Statement of which this Offering Circular is a part. For a complete description of Blue Marble Energy Corporation’s capital stock, you should refer to our Articles of Amendment, the Amended and Restated Articles of Incorporation and our Bylaws, and applicable provisions of the Washington Business Corporation Act.

Blue Marble Energy Corporation authorized capital stock consists of 52,000,000 shares of Common Stock, $0.0001 par value per share, and 25,220,347 shares of Preferred Stock, $0.0001 par value per share, of which 7,016,638 designated as Series A Preferred Stock, 18,203,709 shares are designated as Series A-1 Preferred Stock.

As of June 30, 2016, the outstanding shares of Blue Marble Energy Corporation included: 7,172,123 shares of Common Stock, 6,053,972 shares of Series A Preferred Stock, and 16,417,074 shares of Series A-1 Preferred Stock.

Common Stock

Dividend Rights

Holders of Common Stock are entitled to receive dividends, as may be declared from time to time by the board of directors out of legally available funds, only after Preferred Shareholders have received assets and funds due to them under their preferential rights. After payment of the preferential dividend to the Preferred Shareholders, any dividend payable to the holders of Common Stock will be paid among all holders of Common Stock and Preferred Stock, collectively, in proportion to the numbers of shares of Common Stock and Preferred Stock (calculated on an as-converted to Common Stock basis) held by such holders. We have never declared or paid cash dividends on any of our capital stock and currently do not anticipate paying any cash dividends after this offering or in the foreseeable future.

Voting Rights

Each holder of Common Stock is entitled to one vote for each share on all matters submitted to a vote of the shareholders, including the election of directors, but excluding matters that relate solely to the terms of a series of Preferred Stock. Holders of Common Stock who are parties to the Voting Agreement agree to vote their shares to elect to the board of directors one designee chosen by Rajiv Shah and two designees chosen by a majority of the shares held by the founders.

Right to Receive Liquidation Distributions

In the event of our liquidation, dissolution, or winding up, after the payment of all of our debts and other liabilities and the satisfaction of the liquidation preferences granted to the holders of Preferred Stock, the holders of Common Stock and the holders of Preferred Stock (calculated on an as-converted to Common Stock basis) will be entitled to share ratably in the net assets legally available for distribution to shareholders.

Additional Rights and Preferences

Holders of Common Stock have no preemptive, conversion, anti-dilution or other rights, and there are no redemptive or sinking fund provisions applicable to Common Stock.

Preferred Stock

We have authorized the issuance of two series of Preferred Stock, designated Series A Preferred Stock and Series A-1 Preferred Stock. The Series A Preferred Stock and Series A-1 Preferred Stock enjoy substantially similar rights, preferences, and privileges.

Dividend Rights

Holders of Preferred Stock are entitled to receive dividends, as may be declared from time to time by the board of directors out of legally available funds. Such dividends are non-cumulative and based on an annual rate of 8% of the original issue price of such series of Preferred Stock (adjusted for recapitalization events). Such dividends must be paid prior to the payment of any dividends to the holders of Common Stock. After payment of the preferential dividends to the holders of Preferred Stock, the holders of Preferred Stock are entitled to share proportionally (calculated on an as-converted to Common Stock basis) in any dividends paid to the holders of Common Stock. We have never declared or paid cash dividends on any of our capital stock and currently do not anticipate paying any cash dividends after this offering or in the foreseeable future.

Voting Rights

Each holder of Preferred Stock is entitled to one vote for each share of Common Stock, issuable upon conversion of the Preferred Stock at the then-effective conversion rate. Fractional votes are not permitted and if the conversion results in a fractional share, it will be rounded to the closest whole number. Holders of Preferred Stock are entitled to vote on all matters submitted to a vote of the shareholders, including the election of directors, as a single class with the holders of Common Stock. Specific matters submitted to a vote of the shareholders require the approval of a majority of the holders of Preferred Stock voting as if their shares had been converted into Common Stock. These matters include any vote to:

Under the Voting Rights Agreement, Rajiv Shah can designate one board member and the founders can designate two board members. The parties to the voting agreement agree to vote for the designated members.

Right to Receive Liquidation Distributions

In the event of our liquidation, dissolution, or winding up, holders of Preferred Stock are entitled to liquidation preference superior to holders of Common Stock. Holders of Preferred Stock will receive an amount for each share equal to the greater of (A) the sum of (i) the original price paid ($0.29453 per share for Series A Preferred Stock and $0.6656 per share for Series A-1 Preferred Stock, both adjusted for any stock split, stock dividend, recapitalization, or other recapitalization event) plus (ii) the product of (x) the original issue price (as adjusted for recapitalization events) multiplied by (y) 0.00625 multiplied by (z) the number of thirty day periods that have elapsed since the original issue date for such series of Preferred Stock plus (iii) all declared or accrued but unpaid dividends and (B) the amount which would have been received if all shares of Preferred Stock had been converted to Common Stock immediately prior to the liquidation event. If, upon such liquidation, dissolution or winding up, the assets and funds that are distributable to the holders of all Preferred Stock are insufficient to permit the payment to such holders of the full amount of their respective liquidation preference, then all of such assets and funds will be distributed ratably among the holders of the Preferred Stock in proportion to the full preferential amounts to which they would otherwise be entitled to receive.

Conversion Rights

Preferred Stock is convertible into Common Stock voluntarily and automatically. Each share of Preferred Stock is convertible at the option of the holder of the share at any time prior to the closing of a liquidation event. Each share of Preferred Stock is currently convertible into one share of Common Stock, but such conversion rate may be adjusted pursuant to the anti-dilution rights of the Preferred Stock set forth in Section 4.4.5 of the Amended and Restated Articles of Incorporation.

Additionally, each share of the Series A Preferred Stock will automatically convert into Common Stock immediately prior to the closing of a firm commitment underwritten public offering, registered under the Securities Act of 1933 using an S-1 registration statement where the per share offering price is at least three times the original issue price for Series A Preferred Stock (as adjusted for recapitalization events) and our aggregate proceeds are greater than or equal to $25,000,000 or by a vote on by the majority of Series A preferred stock holders. Series A Preferred Stock converts into the same number of shares of Common Stock regardless of whether converted automatically or voluntarily.

Each share of the Series A-1 Preferred Stock will automatically convert into Common Stock immediately prior to the closing of a firm commitment underwritten public offering, registered under the Securities Act of 1933 using an S-1 registration statement where the per share offering price is at least three times the original issue price for Series A-1 Preferred Stock (as adjusted for recapitalization events) and our aggregate proceeds are greater than or equal to $25,000,000 or by a vote on by the majority of Series A-1 preferred stock holders. Series A -1 Preferred Stock converts into the same number of shares of Common Stock regardless of whether converted automatically or voluntarily.

Anti-Dilution Rights

Subject to certain exceptions, if we issue additional shares of Common Stock for less than the original issue price of a series of Preferred Stock (as adjusted for recapitalization events), the conversion rate of such series of Preferred Stock shall be automatically adjusted to increase the number of shares of Common Stock issuable upon conversion of such series of Preferred Stock. The formula for the conversion ratio is set forth in Section 4.4.5 of the Amended and Restated Articles of Incorporation and is commonly referred to as a broad-based, weighted average formula. Holders of Common Stock do not enjoy anti-dilution rights.

Rights of First Refusal and Co-Sale

Holders of at least 1,000,000 shares of Preferred Stock (as adjusted for recapitalization events) at the time of the event are entitled to a right of first refusal if we propose to issue new shares of capital stock (subject to certain exceptions) and a right of co-sale if James Stephens or the other founder propose to sell any of their respective holdings. Holders of Common Stock and holders of fewer than 1,000,000 shares of Preferred Stock do not enjoy such rights.

Registration Rights

Blue Marble and the holders of Preferred Stock are parties to an amended and restated investors’ rights agreement, dated July 7, 2014, or the Rights Agreement. Under the Rights Agreement, the holders of Preferred Stock have the right to require us to register the offer and sale of their shares, commonly referred to as registration rights. The holders of at least a majority of the Preferred Stock have the right to demand that we use our best efforts to file a registration statement for the registration of the offer and sale of shares of Common Stock, subject to specified conditions and limitations. In addition, if we propose to register the offer and sale of any securities under the Securities Act of 1933 either for our own account or for the account of other shareholders, holders of Preferred Stock will have the right, subject to certain exceptions, to include their shares of Common Stock in the registration statement. These registration rights are subject to specified conditions and limitations, including the right of the underwriters to limit the number of shares included in any such registration statement under certain circumstances. We are obligated to pay all expenses relating to any such demand registrations and piggyback registrations, other than underwriting discounts and selling commissions. The registration rights terminate upon the earliest of (1) the date that is five years after the closing of our first firm commitment public offering, (2) the consummation of a liquidation event, and (3) as to a given holder of registration rights, when such holder may sell all of his or her shares under Rule 144 of the Securities Act of 1933 during any ninety day period.

PLAN OF DISTRIBUTION AND SELLING SECURITYHOLDERS

The Offering

Blue Marble Energy Corporation is offering a maximum of 14,400,000 shares of Common Stock on a “best efforts” basis.

The cash price per share of Common Stock is $1.25.

The minimum investment is $300.

We intend to market the shares in this offering both through online and offline means. Online marketing may take the form of contacting potential investors through electronic media and posting our Offering Circular or “testing the waters” materials on an online investment platform.

The offering will terminate at the earliest of: (1) the date at which the maximum offering amount has been sold, (2) the date which is one year from this offering being qualified by the Commission, and (3) the date at which the offering is earlier terminated by Blue Marble in our sole discretion. We may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to us. After the initial closing of this offering, we expect to hold closings on at least a monthly basis.

Placement Agent and Placement Agent Compensation

We have engaged Primary Capital LLC as our exclusive placement agent with respect to this offering.

The placement agent has agreed to use its best efforts to procure potential purchasers for the shares of our common stock being offered. This offering is being undertaken on a best efforts basis only. Neither the placement agent nor any future selling group member that may be engaged is required to take or pay for any specific number or dollar amount of our common stock. The placement agent will have the right, subject to our approval, to engage such other FINRA member firms as they determine to assist in this offering.

We entered into an engagement agreement with the placement agent on December 12, 2016. Pursuant to the engagement agreement we agreed to retain the placement agent as our exclusive placement agent for this offering.

We agreed to pay to the placement agent a $60,000 retainer fee of which (a) $10,000 became due and was paid to the placement agent upon execution of the engagement agreement, (b) $5,000 will become due on December 30, 2016, (c) $5,000 will become due and payable on January 30, 2016, and $40,000 will become due and payable once our company receives $100,000 in aggregate gross proceeds from this offering or any other capital raising activities from any investor investing in this or such other capital raising activities. The retainer fee will not be applied to offset any other fees payable under the engagement agreement. The placement agent is required to return the retainer fee (less the placement agent’s out of pocket expenses) if the offering is terminated prior to the public sale of the securities being offered.

We are also required to pay the placement agent a placement fee. At the closing of each and any sale in the offering placement fees are calculated as follows:

In all cases the placement agent warrants will have an exercise price equal to 120% of the price at which our common stock is being sold in this offering. The placement agent warrant will include, among other things, full ratchet anti-dilution provisions and standard cashless exercise provisions.

We must also reimburse the placement agent for its reasonable expenses incurred in the performance of its services hereunder which exceed $20,000, including without limitation, expenses related to the placement agent’s travel, due diligence, legal fees and other professional fees with respect to the offerings. All expenses, other than legal fees, which shall be capped at $10,000 unless otherwise agreed to by us, will be reimbursed and must be pre-approved us.

If we sell the maximum amount of shares, we estimate the fee due to the placement agent as $850,000 in the “Use of Proceeds to Issuer” above.

No Minimum Offering Amount

The shares being offered will be issued in one or more closings. No minimum amount of shares must be sold before a closing can occur; however, investors may only purchase shares in minimum increments of $300 and minimum additional increments of $200. Potential investors should be aware that there can be no assurance that any other funds will be invested in this offering other than their own funds.

No Selling Shareholders

No securities are being sold for the account of security holders; all net proceeds of this offering will go to Blue Marble.

The Online Platform

We will pay FundAthena, Inc., doing business as Manhattan Street Capital (“Manhattan Street Capital”) for its services in hosting the offering of the shares on its online platform. This compensation consists of: (i) $50  per investor in cash paid when such investor deposits funds into escrow; (ii) a warrant to purchase that number of shares of Common Stock determined by multiplying $50 by the total number of investors in this offering and dividing by the price at which our common stock is being sold in this offering, The warrants will have an exercise price equal to the price at which our common stock is being sold in this offering price paid by the investors in this offering. Manhattan Street Capital does not directly solicit or communicate with investors with respect to offerings posted on its site, although it does advertise the existence of its platform, which may include identifying a broad selection of issuers listed on the platform. If we sell the maximum amount of shares, we estimate the fee due to Manhattan Street Capital as $240,000 in the “Use of Proceeds to Issuer” above.

Our Offering Circular will be furnished to prospective investors in this offering via download 24 hours a day, 7 days a week on the www.manhattanstreetcapital.com website.

Investors’ Tender of Funds

After the Offering Statement has been qualified by the Securities and Exchange Commission, we will accept tenders of funds to purchase the shares. We may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date). The funds tendered by potential investors will be held by our escrow agent, JumpStart Securities, LLC, and will be transferred to us upon closing. A closing will occur each time we accept funds (after the first closing, directly from the investors). Upon closing, funds tendered by investors will be made available to us for our use. After the initial closing of this offering, we expect to hold closings on at least a monthly basis.

Process of Subscribing

You will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence).

We have agreed to pay our escrow agent, JumpStart Securities, LLC, the following fees for its services. We will pay (i) $500 for escrow  account set up fee, (ii) $25 per month escrow account fees for so long as the offering is being conducted, but in no event longer than two years, (iii) an  accounting fee of $5 per transaction (up to a maximum amount of $25,000), (iv) $ 5 per AML exception review (optional), and (v) any applicable fees for fund transfers (ACH $.50, check $10, wire $15). We have agreed to pay FundAmerica, a technology service provider, the following fees for its services. We will pay (i) $500 a month technology licensing fee, (ii) $2 per domestic investor for anti-money laundering check (up to $60 for international investors) for investors that invest without the direct assistance of the placement agent, (iii) $2.50 per investor for usage of the API and (iv) $5 for each subscription agreement executed via electronic signature (for transactions over $500). FundAmerica Stock Transfer, LLC will serve as transfer agent to maintain shareholder information on a book-entry basis; there are no set up costs for this service, fees for this service will be limited to secondary market activity. If we sell the maximum amount of shares, we estimate the aggregate fee due to JumpStart Securities, LLC, FundAmerica and FundAmerica Stock Transfer, LLC as $142,000 in the “Use of Proceeds to Issuer” above. 

FINANCIAL STATEMENTS

Audited Consolidated Financial Statements as of and for the years ended December 31, 2015 and 2014

Unaudited Consolidated Financial Statements as of June 30, 2016 and for the six months ended June 30, 2016 and 2015

Consolidated Financial Statements (Restated)

for

Blue Marble Energy Corporation

dba Blue Marble Biomaterials

December 31, 2015 and 2014

Table of Contents

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders

Blue Marble Energy Corporation dba Blue Marble Biomaterials

Report on Financial Statements

We have audited the accompanying consolidated financial statements of Blue Marble Energy Corporation dba Blue Marble Biomaterials, which comprise the consolidated balance sheets as of December 31, 2015 and 2014, and the related consolidated statements of operations, changes in convertible preferred stock and stockholders’ deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Blue Marble Energy Corporation dba Blue Marble Biomaterials as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As described in Note 2, the consolidated financial statements have been restated to correct the classification of the Company’s convertible preferred stock. Our opinion is not modified with respect to this matter.

/s/ Moss Adams LLP

Seattle, Washington

November 7, 2016 except for the restatement

as described in Note 2 which is as of January 5, 2017

See accompanying notes. 

See accompanying notes.

BLUE MARBLE ENERGY CORPORATION

dba BLUE MARBLE BIOMATERIALS

See accompanying notes.

BLUE MARBLE ENERGY CORPORATION

dba BLUE MARBLE BIOMATERIALS

See accompanying notes.

Note 1 – Description of Operations and Summary of Significant Accounting Policies

Operations – Blue Marble Energy Corporation, dba Blue Marble Biomaterials, (the Company) is a developer and manufacturer of natural and sustainable specialty ingredients from biomass for the global flavor, fragrance and cosmetic industries. The Company has developed patented technologies to utilize nature-based bacteria and novel extraction techniques to produce U.S. and E.U. natural, drop in replacement chemicals traditionally manufactured from petroleum. The Company was founded in 2007 and is incorporated in the state of Washington. Headquarters are in Seattle, Washington and operations are in Missoula, Montana.

Liquidity and Uncertainty –The Company’s activities since inception have consisted primarily of research and development. The Company continues to be subject to the risks and challenges associated with other companies at a similar stage of development, including dependence on key personnel, successful development and marketing of its products and services, successful collaborations with partners, and the ability to secure adequate financing to support future growth. As shown in the accompanying financial statements, the Company has incurred aggregate losses from operations and has a retained deficit of $7,532,236 at December 31, 2015.

Subsequent to December 31, 2015, the Company has received proceeds of $384,827 from exercise of outstanding warrants. With these proceeds and the cash on hand, the Company believes that it has the cash to fund operations for twelve months after the balance sheet date. The Company will require additional capital to sustain current operations through 2017 and beyond. There can be no assurance that such funds will be available on reasonable terms, or at all, or that revisions to the current business plan will be sufficient to ensure long-term viability. If adequate funds are not available to satisfy future capital requirements, the Company may be required to limit its operations substantially.

Principles of Consolidation – The consolidated financial statements include the accounts of Blue Marble Energy Corporation dba Blue Marble Biomaterials, and its fully owned subsidiary, Blue Marble Biomaterials Expressway LLC. Blue Marble Biomaterials Expressway LLC owns the facility and land utilized by the Company, and has no operations separate from the Company. Intercompany transactions and balances have been eliminated from the consolidated financial statements.

Use of Estimates – The preparation of financial statements, in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the consolidated financial statements and during the reporting period. Significant estimates include revenue recognition, collectability of accounts receivable, useful lives of property and equipment, valuation of deferred tax assets, valuation of convertible preferred stock warrant liabilities, and the valuation of stock-based awards and instruments. The amounts ultimately realized from the assets or ultimately recognized as liabilities will depend on, among other factors, general business conditions, and could differ materially in the near-term from the carrying amounts reflected in these consolidated financial statements.

Cash and Cash Equivalents – The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

Concentration of Credit Risk and Revenue – Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable. The Company maintains its cash accounts with financial institutions where, at times, deposits exceed federal insurance limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company also has credit risk regarding trade accounts receivable. The Company performs initial and ongoing evaluations of its customers’ financial position, and extends credit on account without collateral. The Company determines the need for an allowance for doubtful accounts based upon its historical experience and the expected collectability of accounts receivable. There was no allowance for doubtful accounts as of December 31, 2015 or 2014.

At December 31, 2015, the balance of outstanding accounts receivable was from four customers, one of which represented 50% of the outstanding balance. At December 31, 2014, the balance of outstanding accounts receivable were from two customers, one of which represented 58% of the outstanding balance. One customer represented 92% and 95% of consolidated revenue for the years ended December 31, 2015 and 2014, respectively (see Note 3).

Property and Equipment – Property and equipment are recorded at cost and depreciated over their estimated economic useful lives using the straight-line method and the following estimated useful lives:

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation is removed from the accounts and any resulting gain or loss is reflected in the statement of operations. Repair and maintenance costs are expensed as incurred.

Long-Lived Asset Impairment – The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the periods ended December 31, 2015 and 2014.

Income Taxes – The Company follows the asset and liability method of accounting for income taxes. This method requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recorded.

The Company recognizes the tax benefit from uncertain tax positions only if it more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to income tax matters in income tax expense if incurred (see Note 12).

Gain/(Loss) from Debt Extinguishment – The Company accounts for the extinguishment of debt by recording the difference between the reacquisition price and the net carrying amount of the debt being extinguished as gain or loss when the debt is extinguished. The gain or loss from debt extinguishment is recorded in the consolidated statements of operations under "other income (expense)" as "gain on extinguishment of debt".

Convertible Preferred Stock Warrants – Outstanding convertible preferred stock warrants are classified as liabilities on the consolidated balance sheets as the warrants are exercisable into contingently redeemable preferred shares. The preferred shares are contingently redeemable due to voting provisions surrounding a liquidation event. The estimated fair value of the warrants is adjusted for changes in fair value at each reporting period and at the exercise date, and the corresponding non-cash gain or loss is recorded in other income (expense).

Revenue Recognition – The Company recognizes revenue from the delivery of research and development services and from sale of chemical ingredients. Revenue is recognized when all of the following conditions are satisfied: (i) there is persuasive evidence that an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the fee is fixed or determinable; and (iv) collectability is reasonably assured. If sales arrangements contain multiple elements, the Company evaluates whether the components of each arrangement represent separate units of accounting.

Research Services

Revenue from collaborative research services is recognized as the services are performed consistent with the performance requirements of the contract. In cases where upfront fees are collected for research services not yet performed the Company records the payments as deferred revenue and recognizes revenue as the services are performed.

Product Sales

Products sold by the Company to-date have been manufactured on a pilot scale. Revenue from sales of these products has been recognized upon shipment of the product and when passage of title and risk of loss has been transferred to the customer. Cost of product sold has been included in research and development, as the products sold have been manufactured at pilot scale as part of product development.

Research and Development Expenses – Research and development costs are expensed as incurred and include costs associated with research performed pursuant to collaborative agreements and grants, including internal research. Research and development costs consist of direct and indirect internal costs related to specific projects. Certain facilities and other costs have been allocated to research and development based on headcount.

Grant Recognition - The Company receives grants from governmental and regulatory agencies which are used to reimburse salary expense. The Company recognizes grants received from these agencies as a reduction of costs. During 2015 and 2014, the Company received $38,651 and $3,069, respectively, in grant proceeds which were offset against the related expense.

Sales and Marketing Expenses – Sales and marketing expenses include costs associated with advertising, promotions, tradeshows, seminars, and other marketing-related programs.

Gain from Insurance Claim – In December 2013, a water pipe in the Company’s facility burst and flooded part of the building and surrounding area. Significant damage was caused to the facility and certain equipment. The Company submitted a claim for damages and lost business to its commercial property insurance carrier, and received payments from the insurance company of $439,263 and $760,729 in 2015 and 2014, respectively, in full settlement of all claims with the insurance company. The Company has recorded the insurance proceeds net of cleanup and repair costs as operating expense. The net gain from insurance proceeds related to the flood loss was $416,826 and $472,551 in 2015 and 2014, respectively.

Stock-Based Compensation – The Company recognizes compensation expense on stock options granted to employees and to nonemployees based on the grant date fair value of the stock options estimated using the Black-Scholes option pricing model. Stock-based compensation expense recognized in the statement of operations is based on stock options ultimately expected to vest. The Company applies the straight-line method of allocating compensation cost over the requisite service period of the related awards. The Black-Scholes option pricing model uses various inputs to measure fair value, the more significant of which are expected term, estimated volatility, and fair value of the underlying stock. The Company calculates the expected term based on management’s estimate of future employee behavior. The Company estimates expected volatility based on the volatility of similar entities whose share prices are publicly available.

Subsequent Events   – Subsequent events are events or transactions that occur after the balance sheet date but before the consolidated financial statements are issued. The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing the consolidated financial statements. The Company’s consolidated financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before consolidated financial statements are available to be issued. The Company has evaluated subsequent events through November 7, 2016, which is the date the consolidated financial statements were issued (see Note 14). The Company evaluated subsequent events regarding the corrections to previous reported consolidated financial statements described in Note 2, through January 5, 2017.

Net Loss Attributable to Stockholders and Net Loss Per Common Share – Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Basic and diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period. Potentially dilutive securities are excluded from the computation of the diluted net earnings or loss per share if their inclusion would be anti-dilutive, and consist of the following:

As all potentially dilutive securities are anti-dilutive for the years ended December 31, 2015 and 2014, diluted net loss per share is the same as basic net loss per share.

Recently Issued Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU will be effective for the Company beginning with the year ended December 31, 2017 and for interim periods in the year ended December 31, 2017. The Company has not yet determined the effect that ASU 2014-15 will have on its financial statement disclosures.

In November 2015, the FASB issued ASU 2015-17, "Income Taxes - Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires companies to present deferred tax assets and deferred tax liabilities as noncurrent in the statement of financial position. ASU 2015-17 is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted at the beginning of an interim or annual reporting period. The Company has not yet determined the effect that ASU 2015-17 will have on its statement of financial position or financial statement disclosures.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”, seeking to eliminate diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under FASB Accounting Standards Codification (FASB ASC) 230, “Statement of Cash Flows”. The amendments in ASU 2016-15 are effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has not yet determined the effect that ASU 2016-15 will have on its results of operations, statement of financial position or financial statement disclosures.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. ASU 2016-09 simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. ASU 2016-09 is effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company has not yet determined the effect that ASU 2016-09 will have on its results of operations, statement of financial position or financial statement disclosures.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. ASU 2016-02 is effective for the Company for fiscal years beginning after December 15, 2018 and interim periods therein. The Company has not yet determined the effect that ASU 2016-02 will have on its results of operations, statement of financial position or financial statement disclosures.

In June 2014, FASB issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in ASU 2014-12 apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.

Entities may apply the amendments in ASU 2014-12 (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying ASU 2014-12 as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. The Company is currently reviewing the provisions of ASU 2014-12 to determine if there will be any impact on its results of operations, cash flows or financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which provides comprehensive guidance for revenue recognition, and in May 2016 the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” which is intended to clarify certain provisions in ASU 2014-09. ASU 2014-09 and ASU 2016-12 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The core principle of the guidance provides that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 and ASU 2016-12 are effective for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2017, using either a full retrospective or modified retrospective method of adoption. The Company is currently evaluating the transition method it will adopt and the impact of the adoption of ASU 2014-09 and ASU 2016-12 on its consolidated financial statements.

Note 2 – Corrections to Previously Reported Financial Statements

Subsequent to the issuance of the Company’s financial statements for the fiscal years December 31, 2015, and 2014 errors were identified. These errors were identified as part of the Securities and Exchange Commission’s review of the Company’s Form 1-A Offering Circular. The errors identified relate to the classification of the Convertible Preferred Stock within Stockholders’ Equity, resulting in the overstatement of Stockholders’ Equity amounting to $11,581,276 and $6,705,373 at December 31, 2015 and 2014, respectively. The conditional redemption features of the Convertible Preferred stock require they be presented in temporary equity. As a result, the Consolidated Balance Sheets and Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Deficit have been corrected for the reclassification of the Convertible Preferred Stock into temporary equity. There was no impact to the Consolidated Statements of Operations or Cash Flows for the years ended December 31, 2015 or 2014. The Company has also expanded the disclosures in Note 9 clarifying the classification of the Convertible Preferred Stock within temporary equity.

Note 3 – Collaboration and Development Project Agreements

On June 13, 2014, the Company entered into a master collaboration agreement (Master Collaboration Agreement) with a multinational food and beverage manufacturer (the Partner). Under this agreement, the Company will work with the Partner on various activities pursuant to individual project agreements (Development Project Agreements). Projects include product development, ingredient development, product manufacturing/line testing and/or technology research and development by the Company, specifically related to conversion of the by-products of the Partner’s manufacturing processes into ingredients, flavorings, colors and fragrances for use in the Partner’s production processes or for sale to outside markets. Project Agreements are individual contracts for specific development, and have specified project definitions terms, and timeframes.

In May 2014 the Company entered into a Development Project Agreement with the Partner to utilize the Company’s technology to convert certain by-products arising from the Partner’s manufacturing process into ingredients, flavorings, colors and/or fragrances for further application and viable use in food products. Phase 1 of this project was an analysis of the efficiency of the Company’s technology and processes for environmental, nutritional and initial product evaluations. Payments were divided into milestones, with 60% due at the inception of the agreement, 30% upon review of yield data, and the final 10% upon completion of the project evaluation. The project was completed in 2014, and the Company recognized revenue of $600,000 in 2014 under this project.

In September 2014, as continuation of the Development Project Agreement, the Company and the Partner entered into an additional project agreement identified as Phase II, broken out into two parts, II(A) and II(B). Phase II(A) included additional efficiency analysis and modeling of target products for scale development. Payments were divided into milestones, with 50% due at the inception of the agreement, 40% due within one month of inception, and the remainder at the completion of the project. The Company completed this Phase of the project agreement in 2014 and recognized revenue of $600,000 in 2014. Phase II(B) of the project was initiated immediately upon completion of Phase II(A), and continued the evaluation and development process. Revenue of $245,000 from Phase II(B) was recognized in 2015, with 50% paid upon the inception of the project phase and the remainder paid when completed.

In March 2015 the Company and the Partner entered into another project agreement to advance proof of concept work on specific organisms targeting a selected product category for optimization of commercial opportunities. The project was divided into two phases. Phase I was completed in 2015 and the Company recognized $183,516 of revenue from this agreement. Phase II of the project has not yet commenced.

In 2015 the Company and the Partner also entered into two additional project development agreements for evaluation of the Company’s technology for different product applications. Both of these projects were completed in 2015, and the Company recognized a total of $73,680 from these additional projects.

Note 4 – Property and Equipment

A summary of property and equipment is as follows as of December 31: