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Item 1A. Risk Factors

2020-08-13 compared with 2020-05-14 · 499 added, 608 removed, 18 unchanged (98% of the section changed)

RISK FACTORS.

deciding to purchase, hold or sell our common stock, you should carefully consider the risks described below in addition to the

9 unchanged sentences

decline, and you may lose all or part of your investment.

Risks Related to our Business

There is substantial doubt as to our ability

to continue as a going concern.

As a result of ethanol industry conditions

that have negatively affected our business, we do not expect to have sufficient liquidity to meet our anticipated working capital,

debt service and other liquidity needs unless we successfully restructure our debt, sell additional assets, experience a significant

improvement in margins and/or obtain other sources of liquidity.

As a result, our 2019 financial statements include an explanatory

paragraph by our independent registered public accounting firm describing the substantial doubt as to our ability to continue

as a going concern.

Although we are actively pursuing a number

of initiatives, including seeking to sell additional assets, there can be no assurance that we will be successful.

sell additional assets and obtain sufficient liquidity in the near term, we may need to seek protection under the U.S.

If we are unable to timely implement

our strategic initiatives and raise sufficient capital on suitable terms, we will likely have insufficient liquidity to operate

our business through the next twelve months, or earlier, resulting in a material adverse effect on our business, prospects, financial

condition and results of operations, which could result in a need to seek protection under the U.S.

Related to our Business

effects of the coronavirus pandemic may further materially and adversely affect our business, results of operations and liquidity.

The coronavirus pandemic has resulted in businesses

suspending or substantially curtailing global operations and travel, quarantines, and an overall substantial slowdown of economic

Transportation fuels in particular, including ethanol, have experienced significant price declines and reduced demand.

A further or extended ongoing downturn in global economic growth, or recessionary conditions in major geographic regions, will

lead to poor demand for ethanol and negatively affect the market prices of our products, further materially and adversely affecting

our business, results of operations and liquidity.

plant indebtedness exposes us to many risks that could negatively impact our business, our business prospects, our liquidity and

our cash flows and results of operations.

plants located in the Midwest have significant indebtedness.

In addition, we have significant indebtedness under our senior secured

notes issued at the parent-company level.

The terms of our loans require amortizing payments of principal over the lives of the

loans and our borrowing availability under our plant revolving credit facilities periodically and automatically declines through

the maturity dates of those facilities.

Our indebtedness could:

it more difficult to pay or refinance our debts as they become due during adverse economic and industry conditions because

any decrease in revenues could cause us to not have sufficient cash flows from operations to make our scheduled debt payments;

our flexibility to pursue strategic opportunities or react to changes in our business and the industry in which we operate

and, consequently, place us at a competitive disadvantage to our competitors who have less debt;

a substantial portion of our cash flows from operations to be used for debt service payments, thereby reducing the availability

of our cash flows to fund working capital, capital expenditures, acquisitions, dividend payments and other general corporate

our ability to procure additional financing for working capital or other purposes.

term loans and credit facilities also require compliance with numerous financial and other covenants.

are not in compliance with our obligation to obtain lender approval of a comprehensive plan to restructure our assets and liabilities,

which could result in their acceleration of our debt.

We do not have sufficient liquidity or capital resources to immediately

repay our debt if accelerated.

addition, our plant indebtedness bears interest at variable rates.

An increase in prevailing

interest rates would likewise increase our debt service obligations and could materially

and adversely affect our cash flows and results of operations.

ability to generate sufficient cash to make all principal and interest payments when due depends on our business performance,

which is subject to a variety of factors beyond our control, including the supply of and demand for ethanol and co-products, ethanol

and co-product prices, the cost of key production inputs, and many other factors incident to the ethanol production and marketing

We cannot provide any assurance that we will be able to timely satisfy such obligations.

Our failure to timely satisfy

our debt obligations could have a material adverse effect on our business, business prospects, liquidity, cash flows and results

of operations, and could force us to seek protection under the U.S.

Bankruptcy Code.

We are engaged in strategic initiatives

to reduce our debt levels and provide additional liquidity to operate our business.

These initiatives will likely require the

prompt sale of certain additional production assets as well as other capital raising activities.

Financing, whether through a

sale of additional production assets or other capital raising activities, may not be available on a timely basis, in sufficient

amounts, on terms acceptable to us, or at all.

In addition, any equity financing may cause significant dilution to existing stockholders

and any debt financing or other financing of securities senior to our common stock will likely include financial and other covenants

that will restrict our flexibility, including our ability to pay dividends on our common stock.

If we are unable to timely sell additional

production assets or raise additional capital, or both, in sufficient amounts and on suitable terms, or if we do not experience

a sustained margin improvement, we will likely have insufficient liquidity to operate our business.

A failure to timely implement

our strategic initiatives to reduce our debt levels on suitable terms or our inability to satisfy our payment obligations under

our various credit facilities will have a material adverse effect on our business, prospects, financial condition and results

of operations and could result in a need to idle production at one or more operating facilities and/or seek protection under the

Bankruptcy Code for all or some portion of our production assets and other subsidiaries, at the parent company level, or

The effects of the novel coronavirus may further

materially and adversely affect our business, results of operations and liquidity.

Last year’s novel strain of coronavirus

(COVID-19), has resulted in businesses suspending or substantially curtailing global operations and travel, quarantines, and an

overall substantial slowdown of economic activity.

Transportation fuels in particular, including ethanol, have experienced significant

price declines and reduced demand.

A further downturn in global economic growth, or recessionary conditions in major geographic

regions, will lead to reduced demand for ethanol and negatively affect the market prices of our products, further materially and

adversely affecting our business, results of operations and liquidity.

Our plant indebtedness exposes us to

many risks that could negatively impact our business, our business prospects, our liquidity and our cash flows and results of

Our plants located in the Midwest have

significant indebtedness.

The terms of our plant loans require amortizing payments of principal over the lives of the loans and

our borrowing availability under our plant credit facilities periodically and automatically declines through the maturity dates

of those facilities.

Our plant indebtedness could:

● make it more difficult to pay or refinance our debts as

they become due during adverse economic and industry conditions because any decrease

in revenues could cause us to not have sufficient cash flows from operations to make

our scheduled debt payments;

● limit our flexibility to pursue strategic opportunities

or react to changes in our business and the industry in which we operate and, consequently,

place us at a competitive disadvantage to our competitors who have less debt;

● require a substantial portion of our cash flows from operations

to be used for debt service payments, thereby reducing the availability of our cash flows

to fund working capital, capital expenditures, acquisitions, dividend payments and other

general corporate purposes;

● limit our ability to procure additional financing for

working capital or other purposes.

Our term loans and credit facilities also

require compliance with numerous financial and other covenants.

In addition, our plant indebtedness bears interest at variable

An increase in prevailing interest rates would likewise increase our debt service obligations and could materially and

adversely affect our cash flows and results of operations.

Our ability to generate sufficient cash

to make all principal and interest payments when due, including a $25.5 million remaining balance of a payment due on September

30, 2020 under our PE Pekin and ICP credit facilities, depends on our business performance, which is subject to a variety of factors

beyond our control, including the supply of and demand for ethanol and co-products, ethanol and co-product prices, the cost of

key production inputs, and many other factors incident to the ethanol production and marketing industry.

We cannot provide any

assurance that we will be able to timely satisfy such obligations.

Our failure to timely satisfy our debt obligations could have

a material adverse effect on our business, business prospects, liquidity, cash flows and results of operations.

We have incurred significant losses and negative

operating cash flow in the past and we may incur losses and negative operating cash flow in the future, which may hamper our operations

and impede us from expanding our business.

We have incurred significant losses and

negative operating cash flow in the past.

For the three months ended March 31, 2020 and 2019, we incurred consolidated net losses

of $27.2 million and $14.2 million, respectively.

For the years ended December 31, 2019 and 2018, we incurred consolidated net

losses of approximately $101.3 million and $68.0 million, respectively.

For the year ended December 31, 2019, we incurred negative

operating cash flow of approximately $23.4 million.

We may incur losses and negative operating cash flow in the future.

to rely on cash on hand, cash, if any, generated from our operations, borrowing availability under our lines of credit and proceeds

from future financing activities, if any, to fund all of the cash requirements of our business.

Continued losses and negative

operating cash flow may hamper our operations and impede us from expanding our business.

Our results of operations and our ability

to operate at a profit is largely dependent on managing the costs of corn and natural gas and the prices of ethanol, distillers

grains and other ethanol co-products, all of which are subject to significant volatility and uncertainty.

have incurred significant losses and negative operating cash flow in the past and we may incur losses and negative operating cash

flow in the future, which may hamper our operations and impede us from expanding our business.

have incurred significant losses and negative operating cash flow in the past.

For the six months ended June 30, 2020 and

2019, we incurred consolidated net losses of $12.3 million and $22.5 million, respectively.

For the years ended December 31,

2019 and 2018, we incurred consolidated net losses of approximately $101.3 million and $68.0 million, respectively.

ended December 31, 2019, we incurred negative operating cash flow of approximately $23.4 million.

We may incur losses and

negative operating cash flow in the future.

We expect to rely on cash on hand, cash, if any, generated from our operations, borrowing

availability under our lines of credit and proceeds from future financing activities, if any, to fund all of the cash requirements

of our business.

Continued losses and negative operating cash flow may hamper our operations and impede us from expanding our

results of operations and our ability to operate at a profit is largely dependent on managing the costs of corn and natural gas

and the prices of high quality alcohol, ethanol, distillers grains and other co-products, all of which are subject to significant

volatility and uncertainty.

Our results of operations are highly impacted

by commodity prices, including the cost of corn and natural gas that we must purchase, and the prices of ethanol, distillers grains

and other ethanol co-products that we sell.

Prices and supplies are subject to and determined by market and other forces over

which we have no control, such as weather, domestic and global demand, supply shortages, export prices and various governmental

policies in the United States and around the world.

by commodity prices, including the cost of corn and natural gas that we must purchase, and the prices of high quality alcohol,

ethanol, distillers grains and other co-products that we sell.

Prices and supplies are subject to and determined by market and

other forces over which we have no control, such as weather, domestic and global demand, supply shortages, export prices and various

governmental policies in the United States and around the world.

As a result of price volatility of corn,

natural gas, ethanol, distillers grains and other ethanol co-products, our results of operations may fluctuate substantially.

In addition, increases in corn or natural gas prices or decreases in ethanol, distillers grains or other ethanol co-product prices

may make it unprofitable to operate.

In fact, some of our marketing activities will likely be unprofitable in a market of generally

declining ethanol prices due to the nature of our business.

For example, to satisfy customer demands, we maintain certain quantities

of ethanol inventory for subsequent resale.

Moreover, we procure much of our inventory outside the context of a marketing arrangement

and therefore must buy ethanol at a price established at the time of purchase and sell ethanol at an index price established later

at the time of sale that is generally reflective of movements in the market price of ethanol.

As a result, our margins for ethanol

sold in these transactions generally decline and may turn negative as the market price of ethanol declines.

No assurance can be given that corn or

natural gas can be purchased at, or near, current or any particular prices or that ethanol, distillers grains or other ethanol

co-products will sell at, or near, current or any particular prices.

Consequently, our results of operations and financial position

may be adversely affected by increases in the price of corn or natural gas or decreases in the price of ethanol, distillers grains

or other ethanol co-products.

Over the past several years, the spread

between ethanol and corn prices has fluctuated significantly.

natural gas, high quality alcohol, ethanol, distillers grains and other co-products, our results of operations may fluctuate substantially.

In addition, increases in corn or natural gas prices or decreases in high quality alcohol, ethanol, distillers grains or other

co-product prices may make it unprofitable to operate.

In fact, some of our marketing activities will likely be unprofitable in

a market of generally declining prices due to the nature of our business.

For example, to satisfy customer demands, we maintain

certain quantities of ethanol inventory for subsequent resale.

Moreover, we procure much of our inventory outside the context of

a marketing arrangement and therefore must buy ethanol at a price established at the time of purchase and sell ethanol at an index

price established later at the time of sale that is generally reflective of movements in the market price of ethanol.

our margins for ethanol sold in these transactions generally decline and may turn negative as the market price of ethanol declines.

No assurance can be given that corn or natural

gas can be purchased at, or near, current or any particular prices or that high quality alcohol, ethanol, distillers grains or

other co-products will sell at, or near, current or any particular prices.

Consequently, our results of operations and financial

position may be adversely affected by increases in the price of corn or natural gas or decreases in the price of high quality alcohol,

ethanol, distillers grains or other co-products.

Over the past several years, the spread between

ethanol and corn prices has fluctuated significantly.

Fluctuations are likely to continue to occur.

A sustained narrow

spread, whether as a result of sustained high or increased corn prices or sustained low or decreased ethanol prices, would adversely

affect our results of operations and financial position.

Further, combined revenues from sales of ethanol, distillers grains and

other ethanol co-products could decline below the marginal cost of production, which may force us to suspend production of ethanol,

distillers grains and other ethanol co-products at some or all of our plants.

Increased ethanol production or higher inventory

levels may cause a decline in ethanol prices or prevent ethanol prices from rising, and may have other negative effects, adversely

impacting our results of operations, cash flows and financial condition.

We believe that the most significant factor

influencing the price of ethanol has been the substantial increase in ethanol production.

According to the Renewable Fuels Association,

domestic ethanol production capacity increased from an annualized rate of 1.5 billion gallons per year in January 1999 to a record

16.1 billion gallons in 2018.

In addition, if ethanol production margins improve, we anticipate that owners of ethanol production

facilities will increase production levels, thereby resulting in more abundant ethanol supplies and inventories.

in the supply of ethanol may not be commensurate with increases in the demand for ethanol, thus leading to lower ethanol prices.

Also, demand for ethanol could be impaired due to a number of factors, including regulatory developments and reduced United States

gasoline consumption.

Reduced gasoline consumption has occurred in the past and could occur in the future as a result of increased

gasoline or oil prices or other factors such as increased automobile fuel efficiency.

Any of these outcomes could have a material

adverse effect on our results of operations, cash flows and financial condition.

The market price of ethanol is volatile

and subject to large fluctuations, which may cause our profitability or losses to fluctuate significantly.

The market price of ethanol is volatile

and subject to large fluctuations.

The market price of ethanol is dependent upon many factors, including the supply of ethanol

and the price of gasoline, which is in turn dependent upon the price of petroleum which is highly volatile and difficult to forecast.

For example, ethanol prices, as reported by the CBOT, ranged from $0.86 to $1.37 per gallon for the three months ended March 31,

2020, from $1.25 to $1.70 per gallon in 2019 and from $1.20 to $1.53 per gallon during 2018.

Fluctuations in the market price

of ethanol may cause our profitability or losses to fluctuate significantly.

Some of our marketing activities will likely

be unprofitable in a market of generally declining ethanol prices due to the nature of our business.

Some of our marketing activities will likely

be unprofitable in a market of generally declining ethanol prices due to the nature of our business.

For example, to satisfy customer

demands, we maintain certain quantities of ethanol inventory for subsequent resale.

Moreover, we procure much of our inventory

outside the context of a marketing arrangement and therefore must buy ethanol at a price established at the time of purchase and

sell ethanol at an index price established later at the time of sale that is generally reflective of movements in the market price

As a result, our margins for ethanol sold in these transactions generally decline and may turn negative as the market

price of ethanol declines.

Disruptions in production or distribution

infrastructure may adversely affect our business, results of operations and financial condition.

Our business depends on the continuing

availability of rail, road, port, storage and distribution infrastructure.

In particular, due to limited storage capacity at our

plants and other considerations related to production efficiencies, our plants depend on just-in-time delivery of corn.

The production

of ethanol and specialty alcohols also requires a significant and uninterrupted supply of other raw materials and energy, primarily

water, electricity and natural gas.

Local water, electricity and gas utilities may not be able to reliably supply the water, electricity

and natural gas that our plants need or may not be able to supply those resources on acceptable terms.

In the past, poor weather

has caused disruptions in rail transportation, which slowed the delivery of ethanol by rail, the principle manner by which ethanol

from our plants located in the Midwest is transported to market.

Disruptions in production or distribution infrastructure, whether

caused by labor difficulties, earthquakes, storms, other natural disasters or human error or malfeasance or other reasons, could

prevent timely deliveries of corn or other raw materials and energy, and could delay transport of our products to market, and

may require us to halt production at one or more plants, any of which could have a material adverse effect on our business, results

of operations and financial condition.

We may engage in hedging transactions and

other risk mitigation strategies that could harm our results of operations and financial condition.

In an attempt to partially offset the effects

of volatility of ethanol prices and corn and natural gas costs, we may enter into contracts to fix the price of a portion of our

ethanol production or purchase a portion of our corn or natural gas requirements on a forward basis.

In addition, we may engage

in other hedging transactions involving exchange-traded futures contracts for corn, natural gas and unleaded gasoline from time

The financial statement impact of these activities is dependent upon, among other things, the prices involved and our

ability to sell sufficient products to use all of the corn and natural gas for which forward commitments have been made.

arrangements also expose us to the risk of financial loss in situations where the other party to the hedging contract defaults

on its contract or, in the case of exchange-traded contracts, where there is a change in the expected differential between the

underlying price in the hedging agreement and the actual prices paid or received by us.

In addition, our open contract positions

may require cash deposits to cover margin calls, negatively impacting our liquidity.

As a result, our results of operations and

financial condition may be adversely affected by our hedging activities and fluctuations in the price of corn, natural gas, ethanol

and unleaded gasoline.

Operational difficulties at our plants could

negatively impact sales volumes and could cause us to incur substantial losses.

Operations at our plants are subject to

labor disruptions, unscheduled downtimes and other operational hazards inherent in the ethanol production industry, including

equipment failures, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation accidents and natural disasters.

Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction of property and equipment

or environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties.

Our insurance

may not be adequate to fully cover the potential operational hazards described above or we may not be able to renew this insurance

on commercially reasonable terms or at all.

Moreover, our plants may not operate as

planned or expected.

All of these facilities are designed to operate at or above a specified production capacity.

The operation

of these facilities is and will be, however, subject to various uncertainties.

As a result, these facilities may not produce ethanol,

specialty alcohols and co-products at expected levels.

In the event any of these facilities do not run at their expected capacity

levels, our business, results of operations and financial condition may be materially and adversely affected.

Future demand for ethanol is uncertain and

may be affected by changes to federal mandates, public perception, consumer acceptance and overall consumer demand for transportation

fuel, any of which could negatively affect demand for ethanol and our results of operations.

Although many trade groups, academics and

governmental agencies have supported ethanol as a fuel additive that promotes a cleaner environment, others have criticized ethanol

production as consuming considerably more energy and emitting more greenhouse gases than other biofuels and potentially depleting

water resources.

Some studies have suggested that corn-based ethanol is less efficient than ethanol produced from other feedstock

and that it negatively impacts consumers by causing increased prices for dairy, meat and other food generated from livestock that

consume corn.

Additionally, ethanol critics contend that corn supplies are redirected from international food markets to domestic

fuel markets.

If negative views of corn-based ethanol production gain acceptance, support for existing measures promoting use

and domestic production of corn-based ethanol could decline, leading to reduction or repeal of federal mandates, which could adversely

affect the demand for ethanol.

These views could also negatively impact public perception of the ethanol industry and acceptance

of ethanol as an alternative fuel.

There are limited markets for ethanol beyond

those established by federal mandates.

Discretionary blending and E85 blending are important secondary markets.

Discretionary

blending is often determined by the price of ethanol versus the price of gasoline.

In periods when discretionary blending is financially

unattractive, the demand for ethanol may be reduced.

Also, the demand for ethanol is affected by the overall demand for transportation

Demand for transportation fuel is affected by the number of miles traveled by consumers and the fuel economy of vehicles.

Market acceptance of E15 may partially offset the effects of decreases in transportation fuel demand.

A reduction in the demand

for ethanol and ethanol co-products may depress the value of our products, erode our margins and reduce our ability to generate

revenue or to operate profitably.

Consumer acceptance of E15 and E85 fuels is needed before ethanol can achieve any significant

growth in market share relative to other transportation fuels.

The United States ethanol industry is highly

dependent upon certain federal and state legislation and regulation and any changes in legislation or regulation could have a

material adverse effect on our results of operations, cash flows and financial condition.

The EPA has implemented the RFS pursuant

to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.

The RFS program sets annual quotas for

the quantity of renewable fuels (such as ethanol) that must be blended into motor fuels consumed in the United States.

market for ethanol is significantly impacted by federal mandates under the RFS program for volumes of renewable fuels (such as

ethanol) required to be blended with gasoline.

Future demand for ethanol will be largely dependent upon incentives to blend ethanol

into motor fuels, including the price of ethanol relative to the price of gasoline, the relative octane value of ethanol, constraints

in the ability of vehicles to use higher ethanol blends, the RFS, and other applicable environmental requirements.

Any significant

increase in production capacity above the RFS minimum requirements may have an adverse impact on ethanol prices.

Legislation aimed at reducing or limiting

the renewable fuel use required by the RFS has been introduced in the United States Congress.

On January 3, 2019, a bill (H.R.

104) was introduced into the House of Representatives aiming to repeal certain amendments to the Clean Air Act relating to the

expansion of the renewable fuel program, and for other purposes.

This bill revises the renewable fuel program, including the RFS.

Under current law, the RFS specifies the minimum volume of renewable fuel, such as ethanol, that must be contained in gasoline

sold in the United States, except in noncontiguous states or territories.

The RFS annually increases until 2022 when a minimum

of 36 billion gallons of renewable fuel must be blended into gasoline.

This bill decreases the volume of renewable fuel that must

be contained in gasoline to 7.5 billion gallons each year.

The bill also revises the RFS to eliminate separate volume requirements

for the following renewable fuel categories:

advanced biofuels, cellulosic biofuel, and biomass-based diesel.

The bill was referred

to a congressional subcommittee where it awaits further consideration.

On May 7, 2019, the Food and Fuel Consumer Protection Act

of 2019 (H.R.

A sustained narrow spread,

whether as a result of sustained high or increased corn prices or sustained low or decreased ethanol or high quality alcohol prices,

would adversely affect our results of operations and financial position.

Further, combined revenues from sales of ethanol, distillers

grains and other co-products could decline below the marginal cost of production, which may force us to suspend production of

ethanol, distillers grains and other co-products at some or all of our plants.

ethanol production or higher inventory levels may cause a decline in ethanol prices or prevent ethanol prices from rising, and

may have other negative effects, adversely impacting our results of operations, cash flows and financial condition.

believe that the most significant factor influencing the price of ethanol has been the substantial increase in ethanol production.

According to the Renewable Fuels Association, domestic ethanol production capacity increased from an annualized rate of 1.5 billion

gallons per year in January 1999 to a record 16.1 billion gallons in 2018.

In addition, if ethanol production margins improve,

we anticipate that owners of ethanol production facilities will increase production levels, thereby resulting in more abundant

ethanol supplies and inventories.

Any increase in the supply of ethanol may not be commensurate with increases in the demand for

ethanol, thus leading to lower ethanol prices.

Also, demand for ethanol could be impaired due to a number of factors, including

regulatory developments and reduced United States gasoline consumption.

Reduced gasoline consumption has occurred in the past

and could occur in the future as a result of increased gasoline or oil prices or other factors such as increased automobile fuel

Any of these outcomes could have a material adverse effect on our results of operations, cash flows and financial

market price of ethanol is volatile and subject to large fluctuations, which may cause our profitability or losses to fluctuate

significantly.

market price of ethanol is volatile and subject to large fluctuations.

The market price of ethanol is dependent upon many

factors, including the supply of ethanol and the price of gasoline, which is in turn dependent upon the price of petroleum

which is highly volatile and difficult to forecast.

For example, ethanol prices, as reported by the CBOT, ranged from

$0.81 to $1.37 per gallon for the six months ended June 30, 2020, from $1.25 to $1.70 per gallon in 2019 and from $1.20

to $1.53 per gallon during 2018.

Fluctuations in the market price of ethanol may cause our profitability or losses to

fluctuate significantly.

of our marketing activities will likely be unprofitable in a market of generally declining ethanol prices due to the nature of

our business.

of our marketing activities will likely be unprofitable in a market of generally declining ethanol prices due to the nature of

our business.

For example, to satisfy customer demands, we maintain certain quantities of ethanol inventory for subsequent resale.

Moreover, we procure much of our inventory outside the context of a marketing arrangement and therefore must buy ethanol at a

price established at the time of purchase and sell ethanol at an index price established later at the time of sale that is generally

reflective of movements in the market price of ethanol.

As a result, our margins for ethanol sold in these transactions generally

decline and may turn negative as the market price of ethanol declines.

in production or distribution infrastructure may adversely affect our business, results of operations and financial condition.

business depends on the continuing availability of rail, road, port, storage and distribution infrastructure.

In particular, due

to limited storage capacity at our plants and other considerations related to production efficiencies, our plants depend on just-in-time

delivery of corn.

The production of ethanol and high quality alcohols also requires a significant and uninterrupted supply of

other raw materials and energy, primarily water, electricity and natural gas.

Local water, electricity and gas utilities may not

be able to reliably supply the water, electricity and natural gas that our plants need or may not be able to supply those resources

on acceptable terms.

In the past, poor weather has caused disruptions in rail transportation, which slowed the delivery of ethanol

by rail, the principle manner by which ethanol from our plants located in the Midwest is transported to market.

Disruptions in

production or distribution infrastructure, whether caused by labor difficulties, earthquakes, storms, other natural disasters

or human error or malfeasance or other reasons, could prevent timely deliveries of corn or other raw materials and energy, and

could delay transport of our products to market, and may require us to halt production at one or more plants, any of which could

have a material adverse effect on our business, results of operations and financial condition.

may engage in hedging transactions and other risk mitigation strategies that could harm our results of operations and financial

an attempt to partially offset the effects of volatility of ethanol prices and corn and natural gas costs, we may enter into contracts

to fix the price of a portion of our ethanol production or purchase a portion of our corn or natural gas requirements on a forward

In addition, we may engage in other hedging transactions involving exchange-traded futures contracts for corn, natural

gas and unleaded gasoline from time to time.

The financial statement impact of these activities is dependent upon, among other

things, the prices involved and our ability to sell sufficient products to use all of the corn and natural gas for which forward

commitments have been made.

Hedging arrangements also expose us to the risk of financial loss in situations where the other party

to the hedging contract defaults on its contract or, in the case of exchange-traded contracts, where there is a change in the

expected differential between the underlying price in the hedging agreement and the actual prices paid or received by us.

our open contract positions may require cash deposits to cover margin calls, negatively impacting our liquidity.

our results of operations and financial condition may be adversely affected by our hedging activities and fluctuations in the

price of corn, natural gas, ethanol and unleaded gasoline.

difficulties at our plants could negatively impact sales volumes and could cause us to incur substantial losses.

at our plants are subject to labor disruptions, unscheduled downtimes and other operational hazards inherent in the ethanol production

industry, including equipment failures, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation accidents

and natural disasters.

Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction

of property and equipment or environmental damage, and may result in suspension of operations and the imposition of civil or criminal

Our insurance may not be adequate to fully cover the potential operational hazards described above or we may not be

able to renew this insurance on commercially reasonable terms or at all.

our plants may not operate as planned or expected.

All of these facilities are designed to operate at or above a specified production

The operation of these facilities is and will be, however, subject to various uncertainties.

As a result, these facilities

may not produce ethanol, high quality alcohol and co-products at expected levels.

In the event any of these facilities do not

run at their expected capacity levels, our business, results of operations and financial condition may be materially and adversely

demand for ethanol is uncertain and may be affected by changes to federal mandates, public perception, consumer acceptance and

overall consumer demand for transportation fuel, any of which could negatively affect demand for ethanol and our results of operations.

many trade groups, academics and governmental agencies have supported ethanol as a fuel additive that promotes a cleaner environment,

others have criticized ethanol production as consuming considerably more energy and emitting more greenhouse gases than other

biofuels and potentially depleting water resources.

Some studies have suggested that corn-based ethanol is less efficient than

ethanol produced from other feedstock and that it negatively impacts consumers by causing increased prices for dairy, meat and

other food generated from livestock that consume corn.

Additionally, ethanol critics contend that corn supplies are redirected

from international food markets to domestic fuel markets.

If negative views of corn-based ethanol production gain acceptance,

support for existing measures promoting use and domestic production of corn-based ethanol could decline, leading to reduction

or repeal of federal mandates, which could adversely affect the demand for ethanol.

These views could also negatively impact public

perception of the ethanol industry and acceptance of ethanol as an alternative fuel.

are limited markets for ethanol beyond those established by federal mandates.

Discretionary blending and E85 blending are important

secondary markets.

Discretionary blending is often determined by the price of ethanol versus the price of gasoline.

when discretionary blending is financially unattractive, the demand for ethanol may be reduced.

Also, the demand for ethanol is

affected by the overall demand for transportation fuel.

Demand for transportation fuel is affected by the number of miles traveled

by consumers and the fuel economy of vehicles.

Market acceptance of E15 may partially offset the effects of decreases in transportation

A reduction in the demand for ethanol and ethanol co-products may depress the value of our products, erode our margins

and reduce our ability to generate revenue or to operate profitably.

Consumer acceptance of E15 and E85 fuels is needed before

ethanol can achieve any significant growth in market share relative to other transportation fuels.

United States ethanol industry is highly dependent upon certain federal and state legislation and regulation and any changes in

legislation or regulation could have a material adverse effect on our results of operations, cash flows and financial condition.

EPA has implemented the RFS pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.

RFS program sets annual quotas for the quantity of renewable fuels (such as ethanol) that must be blended into motor fuels consumed

in the United States.

The domestic market for ethanol is significantly impacted by federal mandates under the RFS program for

volumes of renewable fuels (such as ethanol) required to be blended with gasoline.

Future demand for ethanol will be largely dependent

upon incentives to blend ethanol into motor fuels, including the price of ethanol relative to the price of gasoline, the relative

octane value of ethanol, constraints in the ability of vehicles to use higher ethanol blends, the RFS, and other applicable environmental

requirements.

Any significant increase in production capacity above the RFS minimum requirements may have an adverse impact on

ethanol prices.

aimed at reducing or limiting the renewable fuel use required by the RFS has been introduced in the United States Congress.

January 3, 2019, a bill (H.R.

104) was introduced into the House of Representatives aiming to repeal certain amendments to the

Clean Air Act relating to the expansion of the renewable fuel program, and for other purposes.

This bill revises the renewable

fuel program, including the RFS.

Under current law, the RFS specifies the minimum volume of renewable fuel, such as ethanol, that

must be contained in gasoline sold in the United States, except in noncontiguous states or territories.

The RFS annually increases

until 2022 when a minimum of 36 billion gallons of renewable fuel must be blended into gasoline.

This bill decreases the volume

of renewable fuel that must be contained in gasoline to 7.5 billion gallons each year.

The bill also revises the RFS to eliminate

separate volume requirements for the following renewable fuel categories:

advanced biofuels, cellulosic biofuel, and biomass-based

The bill was referred to a congressional subcommittee where it awaits further consideration.

On May 7, 2019, the Food

and Fuel Consumer Protection Act of 2019 (H.R.

2540), was introduced in the House of Representatives.

The bill aims to prevent RFS blending obligations from requiring

ethanol to make up more than 9.7 percent of the total volume of gasoline projected to be sold or introduced into commerce in the

United States for a given calendar year.

The bill was referred to a congressional committee, which will consider it before possibly

sending the bill to the House of Representatives as a whole.

The bill aims to prevent

RFS blending obligations from requiring ethanol to make up more than 9.7 percent of the total volume of gasoline projected to

be sold or introduced into commerce in the United States for a given calendar year.

The bill was referred to a congressional committee,

which will consider it before possibly sending the bill to the House of Representatives as a whole.

On June 21, 2019, a bill (H.R.

3427) was introduced in the House

of Representatives aiming to repeal the EPA’s Renewable Fuel Standard program, which requires transportation fuel to contain

a minimum volume of renewable fuel.

The bill was referred to a congressional committee, which will consider it before possibly

sending the bill to the House of Representatives as a whole.

On July 25, 2019, a bill (S.2298) was introduced in the United States

Senate, to amend the Clean Air Act to eliminate the corn ethanol mandate for renewable fuel.

The bill was read twice and referred

to the Committee on Environment and Public Works.

Our results of operations, cash flows and financial condition could be adversely

impacted if any legislation is enacted that reduces or limits the RFS volume requirements.

Under the provisions of the Clean Air Act,

as amended by the Energy Independence and Security Act of 2007, the EPA has limited authority to waive or reduce the mandated

RFS requirements, which authority is subject to consultation with the Secretaries of Agriculture and Energy, and based on a determination

that there is inadequate domestic renewable fuel supply or implementation of the applicable requirements would severely harm the

economy or environment of a state, region or the United States.

Our results of operations, cash flows and financial condition

could be adversely impacted if the EPA reduces the RFS requirements from the statutory levels specified in the RFS.

The ethanol production and marketing industry

is extremely competitive.

Many of our significant competitors have greater production and financial resources and one or more

of these competitors could use their greater resources to gain market share at our expense.

The ethanol production and marketing industry

is extremely competitive.

Many of our significant competitors in the ethanol production and marketing industry, including Archer-Daniels-Midland

Company, POET, LLC, Green Plains, Inc.

and Valero Renewable Fuels Company, LLC, have substantially greater production and/or financial

As a result, our competitors may be able to compete more aggressively and sustain that competition over a longer period

Successful competition will require a continued high level of investment in marketing and customer service and support.

Our limited resources relative to many significant competitors may cause us to fail to anticipate or respond adequately to new

developments and other competitive pressures.

This failure could reduce our competitiveness and cause a decline in market share,

sales and profitability.

Even if sufficient funds are available, we may not be able to make the modifications and improvements

necessary to compete successfully.

We also face competition from international

Currently, international suppliers produce ethanol primarily from sugar cane and have cost structures that are generally

substantially lower than our cost structures.

Any increase in domestic or foreign competition could cause us to reduce our prices

and take other steps to compete effectively, which could adversely affect our business, financial condition and results of operations.

Our ability to utilize net operating loss

carryforwards and certain other tax attributes may be limited.

Federal and state income tax laws impose

restrictions on the utilization of net operating loss, or NOL, and tax credit carryforwards in the event that an “ownership

change”

occurs for tax purposes, as defined by Section 382 of the Internal Revenue Code, or Code.

In general, an ownership

change occurs when stockholders owning 5% or more of a “loss corporation”

(a corporation entitled to use NOL or other

loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage points during any three-year

The annual base limitation under Section 382 of the Code is calculated by multiplying the loss corporation’s value

at the time of the ownership change by the greater of the long-term tax-exempt rate determined by the Internal Revenue Service

in the month of the ownership change or the two preceding months.

As of December 31, 2019, of our $228.8

million of federal NOLs, we had $82.1 million of federal NOLs that are limited in their annual use under Section 382 of the Code

Accordingly, our ability to utilize these NOL carryforwards may be substantially limited.

These limitations could

in turn result in increased future tax obligations, which could have a material adverse effect on our business, financial condition

and results of operations.

Our business is not diversified.

concentration of our sales within the ethanol production and marketing industry could result in a significant reduction in sales

and negatively affect our profitability if demand for ethanol declines .

Our business is not diversified.

are highly concentrated within the ethanol production and marketing industry.

We expect to be substantially focused on the production

and marketing of ethanol and its co-products for the foreseeable future.

An industry shift away from ethanol, or the emergence

of new competing products, may significantly reduce the demand for ethanol.

However, we may be unable to timely alter our business

focus away from the production and marketing of ethanol to other renewable fuels or competing products.

A downturn in the demand

3427) was introduced in the House of Representatives aiming to repeal the EPA’s Renewable Fuel Standard program, which requires

transportation fuel to contain a minimum volume of renewable fuel.

The bill was referred to a congressional committee, which will

consider it before possibly sending the bill to the House of Representatives as a whole.

On July 25, 2019, a bill (S.2298) was

introduced in the United States Senate, to amend the Clean Air Act to eliminate the corn ethanol mandate for renewable fuel.

bill was read twice and referred to the Committee on Environment and Public Works.

Our results of operations, cash flows and financial

condition could be adversely impacted if any legislation is enacted that reduces or limits the RFS volume requirements.

the provisions of the Clean Air Act, as amended by the Energy Independence and Security Act of 2007, the EPA has limited authority

to waive or reduce the mandated RFS requirements, which authority is subject to consultation with the Secretaries of Agriculture

and Energy, and based on a determination that there is inadequate domestic renewable fuel supply or implementation of the applicable

requirements would severely harm the economy or environment of a state, region or the United States.

Our results of operations,

cash flows and financial condition could be adversely impacted if the EPA reduces the RFS requirements from the statutory levels

specified in the RFS.

ethanol production and marketing industry is extremely competitive.

Many of our significant competitors have greater production

and financial resources and one or more of these competitors could use their greater resources to gain market share at our expense.

ethanol production and marketing industry is extremely competitive.

Many of our significant competitors in the ethanol production

and marketing industry, including Archer-Daniels-Midland Company, POET, LLC, Green Plains, Inc.

and Valero Renewable Fuels Company,

LLC, have substantially greater production and/or financial resources.

As a result, our competitors may be able to compete more

aggressively and sustain that competition over a longer period of time.

Successful competition will require a continued high level

of investment in marketing and customer service and support.

Our limited resources relative to many significant competitors may

cause us to fail to anticipate or respond adequately to new developments and other competitive pressures.

This failure could reduce

our competitiveness and cause a decline in market share, sales and profitability.

Even if sufficient funds are available, we may

not be able to make the modifications and improvements necessary to compete successfully.

also face competition from international suppliers.

Currently, international suppliers produce ethanol primarily from sugar cane

and have cost structures that are generally substantially lower than our cost structures.

Any increase in domestic or foreign

competition could cause us to reduce our prices and take other steps to compete effectively, which could adversely affect our

business, financial condition and results of operations.

Our independent registered public accounting

firm’s report for the year ended December 31, 2019 includes an explanatory note describing a substantial doubt as to our

ability to continue as a going concern.

As a result of ethanol industry conditions

that negatively affected our business, our independent registered public accounting firm included in its report on our audited

consolidated financial statements as of and for the year ended December 31, 2019 an explanatory note describing a substantial

doubt as to our ability to continue as a going concern.

A “going concern”

opinion indicates that the financial statements

have been prepared assuming we will continue as a going concern, and do not include any adjustments to reflect the possible future

effects on the recoverability and classification of assets, or the amounts and classification of liabilities, that may result

if we do not continue as a going concern.

The presence of a going concern note to our financial statements may have an adverse

impact on our business relationships with third parties, and could make it more difficult for us to raise additional financing,

all of which could have a material adverse impact on our business and prospects.

ability to utilize net operating loss carryforwards and certain other tax attributes may be limited.

and state income tax laws impose restrictions on the utilization of net operating loss, or NOL, and tax credit carryforwards in

the event that an “ownership change”

occurs for tax purposes, as defined by Section 382 of the Internal Revenue Code,

In general, an ownership change occurs when stockholders owning 5% or more of a “loss corporation”

(a corporation

entitled to use NOL or other loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage

points during any three-year period.

The annual base limitation under Section 382 of the Code is calculated by multiplying the

loss corporation’s value at the time of the ownership change by the greater of the long-term tax-exempt rate determined

by the Internal Revenue Service in the month of the ownership change or the two preceding months.

of December 31, 2019, of our $228.8 million of federal NOLs, we had $82.1 million of federal NOLs that are limited in their

annual use under Section 382 of the Code beyond 2019.

Accordingly, our ability to utilize these NOL carryforwards may be substantially

These limitations could in turn result in increased future tax obligations, which could have a material adverse effect

on our business, financial condition and results of operations.

high concentration of our sales within the ethanol production and marketing industry could result in a significant reduction in

sales and negatively affect our profitability if demand for ethanol further declines.

sales are highly concentrated within the ethanol production and marketing industry.

An industry shift away from ethanol, or the

emergence of new competing products, may significantly reduce the demand for ethanol.

An ongoing or further downturn in the demand

for ethanol would likely materially and adversely affect our sales and profitability.

We may be adversely affected by environmental,

health and safety laws, regulations and liabilities .

We are subject to various federal, state

and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground,

the generation, storage, handling, use, transportation and disposal of hazardous materials and wastes, and the health and safety

of our employees.

In addition, some of these laws and regulations require us to operate under permits that are subject to renewal

or modification.

These laws, regulations and permits can often require expensive pollution control equipment or operational changes

to limit actual or potential impacts to the environment.

A violation of these laws and regulations or permit conditions can result

in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns.

we have made, and expect to make, significant capital expenditures on an ongoing basis to comply with increasingly stringent environmental

laws, regulations and permits.

We may be liable for the investigation

and cleanup of environmental contamination at each of our plants and at off-site locations where we arrange for the disposal of

hazardous substances or wastes.

If these substances or wastes have been or are disposed of or released at sites that undergo investigation

and/or remediation by regulatory agencies, we may be responsible under the Comprehensive Environmental Response, Compensation

and Liability Act of 1980, or other environmental laws for all or part of the costs of investigation and/or remediation, and for

damages to natural resources.

We may also be subject to related claims by private parties alleging property damage and personal

injury due to exposure to hazardous or other materials at or from those properties.

Some of these matters may require us to expend

significant amounts for investigation, cleanup or other costs.

In addition, new laws, new interpretations

of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make significant

additional expenditures.

Continued government and public emphasis on environmental issues can be expected to result in increased

future investments for environmental controls at our plants.

Present and future environmental laws and regulations, and interpretations

of those laws and regulations, applicable to our operations, more vigorous enforcement policies and discovery of currently unknown

conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial

The hazards and risks associated with producing

and transporting our products (including fires, natural disasters, explosions and abnormal pressures and blowouts) may also result

in personal injury claims or damage to property and third parties.

As protection against operating hazards, we maintain insurance

coverage against some, but not all, potential losses.

However, we could sustain losses for uninsurable or uninsured risks, or

in amounts in excess of existing insurance coverage.

Events that result in significant personal injury or damage to our property

or third parties or other losses that are not fully covered by insurance could have a material adverse effect on our results of

operations and financial condition.

If we are unable to attract or retain key

personnel, our ability to operate effectively may be impaired, which could have a material adverse effect on our business, financial

condition and results of operations.

Our ability to operate our business and

implement strategies depends, in part, on the efforts of our executive officers and other key personnel.

Our future success will

depend on, among other factors, our ability to retain our current key personnel and attract and retain qualified future key personnel,

particularly executive management.

If we are unable to attract or retain key personnel, our ability to operate effectively may

be impaired, which could have a material adverse effect on our business, financial condition and results of operations.

We depend on a small number of customers for

the majority of our sales.

A reduction in business from any of these customers could cause a significant decline in our overall

sales and profitability.

The majority of our sales are generated

from a small number of customers.

During 2019 and 2018, two customers accounted for an aggregate of approximately $336 million

and $367 million in net sales, representing 24% and 25% of our net sales, respectively, for those periods.

We expect that we will

continue to depend for the foreseeable future upon a small number of customers for a significant portion of our sales.

Our agreements

with these customers generally do not require them to purchase any specified volume or dollar value of ethanol or co-products,

or to make any purchases whatsoever.

Therefore, in any future period, our sales generated from these customers, individually or

in the aggregate, may not equal or exceed historical levels.

If sales to any of these customers cease or decline, we may be unable

to replace these sales with sales to either existing or new customers in a timely manner, or at all.

A cessation or reduction

of sales to one or more of these customers could cause a significant decline in our overall sales and profitability.

We incur significant expenses to maintain

and upgrade our operating equipment and plants, and any interruption in the operation of our facilities may harm our operating

We regularly incur significant expenses

to maintain and upgrade our equipment and facilities.

The machines and equipment we use to produce our products are complex, have

many parts and some are run on a continuous basis.

We must perform routine maintenance on our equipment and will have to periodically

replace a variety of parts such as motors, pumps, pipes and electrical parts.

In addition, our facilities require periodic shutdowns

to perform major maintenance and upgrades.

These scheduled facility shutdowns result in decreased sales and increased costs in

the periods in which a shutdown occurs and could result in unexpected operational issues in future periods as a result of changes

to equipment and operational and mechanical processes made during the shutdown period.

Our lack of long-term ethanol orders and commitments

by our customers could lead to a rapid decline in our sales and profitability.

We cannot rely on long-term ethanol orders

or commitments by our customers for protection from the negative financial effects of a decline in the demand for ethanol or a

decline in the demand for our marketing services.

The limited certainty of ethanol orders can make it difficult for us to forecast

our sales and allocate our resources in a manner consistent with our actual sales.

Moreover, our expense levels are based in part

on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce

costs in a timely manner to adjust for sales shortfalls.

Furthermore, because we depend on a small number of customers for a significant

portion of our sales, the ramifications of these risks are greater in magnitude than if our sales were less concentrated.

result of our lack of long-term ethanol orders and commitments, we may experience a rapid decline in our sales and profitability.

There are limitations on our ability to receive

distributions from our subsidiaries.

We conduct most of our operations through

subsidiaries and are dependent upon dividends or other intercompany transfers of funds from our subsidiaries to generate free

Moreover, some of our subsidiaries are limited in their ability to pay dividends or make distributions, loans or advances

to us by the terms of their financing arrangements.

At March 31, 2020, we had approximately $174.9 million of net assets at our

subsidiaries that were not available to be distributed in the form of dividends, distributions, loans or advances due to restrictions

contained in their financing arrangements.

Our future ability to raise

capital may be limited by applicable laws and regulations.

Our capital raising activities have benefited

from using a “shelf”

registration on Form S-3, which typically enables an issuer to raise additional capital on a

more timely and cost effective basis than through other means, such as registration of a securities offering under a Form S-1

registration statement.

Our current and future ability to raise additional capital through the sale and issuance of our equity

securities may be limited by, among other things, current Securities and Exchange Commission, or the SEC, rules and regulations.

Under current SEC rules and regulations, to be eligible to use a Form S-3 registration statement for primary offerings without

restriction as to the amount of securities to be sold and issued, the aggregate market value of our common equity held by non-affiliates

(i.e., our “public float”) must be at least $75.0 million at the time we file the Form S-3 (calculated pursuant to

the General Instructions to Form S-3).

Furthermore, with respect to our effective Form S-3 registration statement, the SEC’s

rules and regulations require that we periodically re-evaluate the value of our public float (typically when we file our Annual

Report on Form 10-K) to determine whether we continue to satisfy the foregoing public float requirement.

As of the date of this

report, we do not satisfy the $75.0 million public float requirement.

As a result, the amount we can raise through primary offerings

of our securities in any 12-month period using a Form S-3 registration statement is limited to an aggregate of one-third of our

public float.

Moreover, the market value of all securities sold by us under our Form S-3 registration statements during the 12-month

period prior to any intended sale will be subtracted from that amount to determine the amount we can then raise under our Form

S-3 registration statements.

If our public float increases to $75.0 million or more, this limitation would cease to apply until

we conduct our next re-evaluation.

Risks Related to Ownership of our Common

We have received a delisting notice from The

NASDAQ Stock Market.

Our common stock may be involuntarily delisted from trading on The NASDAQ Capital Market if we fail to regain

compliance with the minimum closing bid price requirement of $1.00 per share.

A delisting of our common stock is likely to reduce

the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing and may also materially

and adversely impact our credit terms with our vendors.

The quantitative listing standards of

The NASDAQ Stock Market, or NASDAQ, require, among other things, that listed companies maintain a minimum closing bid price of

$1.00 per share.

We failed to satisfy this threshold for 30 consecutive trading days and on July 17, 2019, we received a letter

from NASDAQ indicating that we had an initial period of 180 calendar days, or until January 13, 2020, in which to regain compliance.

On January 15, 2020, we received a letter from NASDAQ granting us a 180-day extension period, or until July 13, 2020, in which

to regain compliance.

On April 17, 2020, we received a third letter from NASDAQ stating that NASDAQ filed an immediately effective

rule change with the Securities and Exchange Commission on April 16, 2020.

Under the rule change, NASDAQ tolled the compliance

periods for bid price and market value of publicly held shares requirements, or the Price-based Requirements, through June 30,

As a result, companies presently in compliance periods for any Price-based Requirements will remain at that same stage of

the process and will not be subject to delisting for failure to satisfy these requirements.

Starting on July 1, 2020, companies

will receive the balance of any pending compliance period in effect at the start of the tolling period to regain compliance.

since we had 88 calendar days remaining in our compliance period as of April 16, 2020, we will, upon reinstatement of the Price-based

Requirements, still have 88 calendar days from July 1, 2020, or until September 28, 2020, to regain compliance.

We can regain compliance either during

the suspension or during the compliance period resuming after the suspension, by meeting the minimum closing bid price of $1.00

per share for ten consecutive business days.

If we do not regain compliance by September 28, 2020, the NASDAQ staff will provide

written notice that our common stock is subject to delisting.

Given the increased market volatility and the effects of the Coronavirus,

including an acute negative margin environment in the biofuels industry, and our lack of liquidity, we may be unable to regain

compliance with the closing bid price requirement by September 28, 2020.

A delisting of our common stock is likely to reduce the

liquidity of our common stock and may inhibit or preclude our ability to raise additional financing and may also materially and

adversely impact our credit terms with our vendors.

The conversion of convertible securities

and the exercise of outstanding options and warrants to purchase our common stock could substantially dilute your investment,

impede our ability to obtain additional financing and cause us to incur additional expenses.

Our Series B Preferred

Stock, which are convertible into our common stock, and outstanding options to acquire our common stock issued to employees, directors

and others, and the Warrants to purchase our common stock, allow the holders of these securities an opportunity to profit from

a rise in the market price of our common stock such that conversion or exercise of the securities will result in dilution of the

equity interests of our common stockholders.

The terms on which we may obtain additional financing may be adversely affected by

the existence and potentially dilutive impact of our Series B Preferred Stock, options and Warrants.

In addition, holders of our

Series B Preferred Stock and Warrants have registration rights with respect to the common stock underlying those Series B Preferred

Stock and Warrants, the registration of which involves substantial expense.

The market price of our common stock

and the value of your investment could substantially decline if shares of our Series B Preferred Stock are converted into shares

of our common stock and if our options and Warrants are exercised for shares of our common stock and all of these shares of common

stock are resold into the market, or if a perception exists that a substantial number of shares of common stock will be issued

upon conversion of our Series B Preferred Stock or upon exercise of our Warrants or options and then resold into the market.

Sales of a substantial

number of shares of common stock issued upon conversion of our Series B Preferred Stock and upon exercise of our Warrants and

options, or even the perception that these sales could occur, could adversely affect the market price of our common stock.

a result, you could experience a substantial decline in the value of your investment as a result of both the actual and potential

conversion of our outstanding shares of Series B Preferred Stock and exercise of our outstanding Warrants or options.

Our stock price is highly volatile,

which could result in substantial losses for investors purchasing shares of our common stock and in litigation against us.

The market price of our common stock has

fluctuated significantly in the past and may continue to fluctuate significantly in the future.

The market price of our common

stock may continue to fluctuate in response to one or more of the following factors, many of which are beyond our control:

● our ability to continue as a going concern;

● fluctuations in the market prices of ethanol and its co-products;

● the cost of key inputs to the production of ethanol, including

corn and natural gas;

● the volume and timing of the receipt of orders for ethanol

from major customers;

● competitive pricing pressures;

● our ability to timely and cost-effectively produce, sell

and deliver ethanol;

● the announcement, introduction and market acceptance of

one or more alternatives to ethanol;

● changes in market valuations of companies similar to us;

● stock market price and volume fluctuations generally;

● regulatory developments or increased enforcement;

● fluctuations in our quarterly or annual operating results;

● additions or departures of key personnel;

● the timing and results of our strategic initiatives;

● our inability to obtain financing;

● our financing activities and future sales of our common

stock or other securities, as well as stockholder dilution;

● our ability to maintain contracts that are critical to

our operations.

Demand for ethanol could also be adversely

affected by a slow-down in overall demand for oxygenate and gasoline additive products.

The levels of our ethanol production and

purchases for resale will be based upon forecasted demand.

Accordingly, any inaccuracy in forecasting anticipated revenues and

expenses could adversely affect our business.

The failure to receive anticipated orders or to complete delivery in any quarterly

period could adversely affect our results of operations for that period.

Quarterly and annual results are not necessarily indicative

of future performance for any particular period, and we may not experience revenue growth or profitability on a quarterly or an

annual basis.

The price at which you purchase shares

of our common stock may not be indicative of the price that will prevail in the trading market.

You may be unable to sell your

shares of common stock at or above your purchase price, which may result in substantial losses to you and which may include the

complete loss of your investment.

In the past, securities class action litigation has often been brought against a company following

periods of high stock price volatility.

We may be the target of similar litigation in the future.

Securities litigation could

result in substantial costs and divert management’s attention and our resources away from our business.

Any of the risks described above could

have a material adverse effect on our results of operations, the price of our common stock, or both.

may be adversely affected by environmental, health and safety laws, regulations and liabilities .

are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge

of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous

materials and wastes, and the health and safety of our employees.

In addition, some of these laws and regulations require us to

operate under permits that are subject to renewal or modification.

These laws, regulations and permits can often require expensive

pollution control equipment or operational changes to limit actual or potential impacts to the environment.

A violation of these

laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit

revocations and/or facility shutdowns.

In addition, we have made, and expect to make, significant capital expenditures on an ongoing

basis to comply with increasingly stringent environmental laws, regulations and permits.

may be liable for the investigation and cleanup of environmental contamination at each of our plants and at off-site locations

where we arrange for the disposal of hazardous substances or wastes.

If these substances or wastes have been or are disposed of

or released at sites that undergo investigation and/or remediation by regulatory agencies, we may be responsible under the Comprehensive

Environmental Response, Compensation and Liability Act of 1980, or other environmental laws for all or part of the costs of investigation

and/or remediation, and for damages to natural resources.

We may also be subject to related claims by private parties alleging

property damage and personal injury due to exposure to hazardous or other materials at or from those properties.

Some of these

matters may require us to expend significant amounts for investigation, cleanup or other costs.

addition, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments

could require us to make significant additional expenditures.

Continued government and public emphasis on environmental issues

can be expected to result in increased future investments for environmental controls at our plants.

Present and future environmental

laws and regulations, and interpretations of those laws and regulations, applicable to our operations, more vigorous enforcement

policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse

effect on our results of operations and financial condition.

hazards and risks associated with producing and transporting our products (including fires, natural disasters, explosions and

abnormal pressures and blowouts) may also result in personal injury claims or damage to property and third parties.

As protection

against operating hazards, we maintain insurance coverage against some, but not all, potential losses.

However, we could sustain

losses for uninsurable or uninsured risks, or in amounts in excess of existing insurance coverage.

Events that result in significant

personal injury or damage to our property or third parties or other losses that are not fully covered by insurance could have

a material adverse effect on our results of operations and financial condition.

we are unable to attract or retain key personnel, our ability to operate effectively may be impaired, which could have a material

adverse effect on our business, financial condition and results of operations.

ability to operate our business and implement strategies depends, in part, on the efforts of our executive officers and other

key personnel.

Our future success will depend on, among other factors, our ability to retain our current key personnel and attract

and retain qualified future key personnel, particularly executive management.

If we are unable to attract or retain key personnel,

our ability to operate effectively may be impaired, which could have a material adverse effect on our business, financial condition

and results of operations.

depend on a small number of customers for the majority of our sales.

A reduction in business from any of these customers could

cause a significant decline in our overall sales and profitability.

The majority of our sales are generated from

a small number of customers.

During 2019 and 2018, two customers accounted for an aggregate of approximately $336 million and

$367 million in net sales, representing 24% and 25% of our net sales, respectively, for those periods.

Our agreements with these

customers generally do not require them to purchase any specified volume or dollar value of ethanol or co-products, or to make

any purchases whatsoever.

Therefore, in any future period, our sales generated from these customers, individually or in the aggregate,

may not equal or exceed historical levels.

If sales to any of these customers cease or decline, we may be unable to replace these

sales with sales to either existing or new customers in a timely manner, or at all.

A cessation or reduction of sales to one or

more of these customers could cause a significant decline in our overall sales and profitability.

incur significant expenses to maintain and upgrade our operating equipment and plants, and any interruption in the operation of

our facilities may harm our operating performance.

regularly incur significant expenses to maintain and upgrade our equipment and facilities.

The machines and equipment we use to

produce our products are complex, have many parts and some are run on a continuous basis.

We must perform routine maintenance

on our equipment and will have to periodically replace a variety of parts such as motors, pumps, pipes and electrical parts.

addition, our facilities require periodic shutdowns to perform major maintenance and upgrades.

These scheduled facility shutdowns

result in decreased sales and increased costs in the periods in which a shutdown occurs and could result in unexpected operational

issues in future periods as a result of changes to equipment and operational and mechanical processes made during the shutdown

lack of long-term ethanol orders and commitments by our customers could lead to a rapid decline in our sales and profitability.

cannot rely on long-term ethanol orders or commitments by our customers for protection from the negative financial effects of

a decline in the demand for ethanol or a decline in the demand for our marketing services.

The limited certainty of ethanol orders

can make it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales.

our expense levels are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate,

we may be unable to reduce costs in a timely manner to adjust for sales shortfalls.

Furthermore, because we depend on a small

number of customers for a significant portion of our sales, the ramifications of these risks are greater in magnitude than if

our sales were less concentrated.

As a result of our lack of long-term ethanol orders and commitments, we may experience a rapid

decline in our sales and profitability.

are limitations on our ability to receive distributions from our subsidiaries.

conduct most of our operations through subsidiaries and are dependent upon dividends or other intercompany transfers of funds

from our subsidiaries to generate free cash flow.

Moreover, some of our subsidiaries are limited in their ability to pay dividends

or make distributions, loans or advances to us by the terms of their financing arrangements.

At June 30, 2020, we had approximately

$204.4 million of net assets at our subsidiaries that were not available to be distributed in the form of dividends, distributions,

loans or advances due to restrictions contained in their financing arrangements.

Related to Ownership of our Common Stock

conversion of convertible securities and the exercise of outstanding options and warrants to purchase our common stock could substantially

dilute your investment, impede our ability to obtain additional financing and cause us to incur additional expenses.

Our Series B Preferred Stock,

which are convertible into our common stock, and outstanding options to acquire our common stock issued to employees, directors

and others, and warrants to purchase our common stock, allow the holders of these securities an opportunity to profit from a rise

in the market price of our common stock such that conversion or exercise of the securities will result in dilution of the equity

interests of our common stockholders.

The terms on which we may obtain additional financing may be adversely affected by the existence

and potentially dilutive impact of our Series B Preferred Stock, options and warrants.

In addition, holders of our Series B Preferred

Stock and warrants have registration rights with respect to the common stock underlying those Series B Preferred Stock and warrants,

the registration of which may involve substantial expense.

market price of our common stock and the value of your investment could substantially decline if shares of our Series B Preferred

Stock are converted into shares of our common stock and if our options and warrants are exercised for shares of our common stock

and all of these shares of common stock are resold into the market, or if a perception exists that a substantial number of shares

of common stock will be issued upon conversion of our Series B Preferred Stock or upon exercise of our warrants or options and

then resold into the market.

Sales of a substantial number

of shares of common stock issued upon conversion of our Series B Preferred Stock and upon exercise of our options and warrants,

or even the perception that these sales could occur, could adversely affect the market price of our common stock.

you could experience a substantial decline in the value of your investment as a result of both the actual and potential conversion

of our outstanding shares of Series B Preferred Stock and exercise of our outstanding options or warrants.

stock price is highly volatile, which could result in substantial losses for investors purchasing shares of our common stock and

in litigation against us.

market price of our common stock has fluctuated significantly in the past and may continue to fluctuate significantly in the future.

The market price of our common stock may continue to fluctuate in response to one or more of the following factors, many of which

are beyond our control:

ability to continue as a going concern;

● actions taken by our lenders;

in the market prices of our products;

cost of key production inputs, including corn and natural gas;

volume and timing of the receipt of orders from major customers;

pricing pressures;

ability to timely and cost-effectively produce, sell and deliver our products;

announcement, introduction and market acceptance of alternatives to our products;

in market valuations of companies similar to us;

market price and volume fluctuations generally;

developments or increased enforcement;

in our quarterly or annual operating results;

or departures of key personnel;

timing and results of our strategic initiatives;

inability to obtain financing;

financing activities and future sales of our common stock or other securities, as well as stockholder dilution;

ability to maintain contracts that are critical to our operations.

for ethanol could also be adversely affected by a slow-down in overall demand for oxygenate and gasoline additive products.

levels of our ethanol production and purchases for resale will be based upon forecasted demand.

Accordingly, any inaccuracy in

forecasting anticipated revenues and expenses could adversely affect our business.

The failure to receive anticipated orders or

to complete delivery in any quarterly period could adversely affect our results of operations for that period.

Quarterly and annual

results are not necessarily indicative of future performance for any particular period, and we may not experience revenue growth

or profitability on a quarterly or an annual basis.

price at which you purchase shares of our common stock may not be indicative of the price that will prevail in the trading market.

You may be unable to sell your shares of common stock at or above your purchase price, which may result in substantial losses

to you and which may include the complete loss of your investment.

In the past, securities class action litigation has often been

brought against a company following periods of high stock price volatility.

We may be the target of similar litigation in the

Securities litigation could result in substantial costs and divert management’s attention and our resources away

from our business.

of the risks described above could have a material adverse effect on our results of operations, the price of our common stock,

bylaws contain an exclusive forum provision, which could limit our stockholders’

ability to obtain a favorable judicial

forum for disputes with us or our directors, officers, employees or agents.

bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery shall be the

sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of us, (b) any action asserting a claim

of breach of a fiduciary duty owed by any director, officer or other employee of us to us or our stockholders, (c) any action

asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (d) any action asserting a claim

governed by the internal affairs doctrine.

the avoidance of doubt, the exclusive forum provision described above does not apply to any claims arising under the Securities

Act of 1933, as amended, or Securities Act, or the Securities Exchange Act of 1934, as amended, or Exchange Act.

Section 27 of

the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the

Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for

federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and

regulations thereunder.

choice of forum provision in our bylaws may limit our stockholders’

ability to bring a claim in a judicial forum that they

find favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against

us and our directors, officers, employees and agents even though an action, if successful, might benefit our stockholders.

applicable courts may also reach different judgments or results than would other courts, including courts where a stockholder

considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more

favorable to us than to our stockholders.

With respect to the provision making the Court of Chancery the sole and exclusive forum

for certain types of actions, stockholders who do bring a claim in the Court of Chancery could face additional litigation costs

in pursuing any such claim, particularly if they do not reside in or near Delaware.

Finally, if a court were to find this provision

of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we

may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse

effect on us.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors