What changed in this filing

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Item 1A. Risk Factors

2022-03-15 compared with 2021-03-26 · 409 added, 473 removed, 29 unchanged (97% of the section changed)

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

other information contained in this Report and in our other filings with the Securities and Exchange Commission, including subsequent

reports on Forms 10-Q and 8-K.

Risk Factors.

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

information contained in this Report and in our other filings with the Securities and Exchange Commission, including subsequent reports

on Forms 10-Q and 8-K.

The risks and uncertainties described below are not the only ones we face.

Additional risks and

uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

If any of these known

or unknown risks or uncertainties actually occurs with material adverse effects on Alto Ingredients, our business, financial condition,

results of operations and/or liquidity could be seriously harmed.

In that event, the market price for our common stock will likely

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

Additional risks and uncertainties

not presently known to us or that we currently deem immaterial may also affect our business.

If any of these known or unknown risks or

uncertainties actually occurs with material adverse effects on Alto Ingredients, our business, financial condition, results of operations

and/or liquidity could be seriously harmed.

In that event, the market price for our common stock will likely decline, and you may lose

all or part of your investment.

Risks Related to our Business

The effects of the coronavirus pandemic, or its abatement,

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

The coronavirus pandemic has resulted in

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

Federal, state and foreign governments have implemented measures to contain the virus, including social distancing requirements,

travel restrictions, border closures, limitations on public gatherings, work-from-home orders, and closure of non-essential businesses.

Many of these measures remain or have been curtailed only partially.

Transportation fuels in particular, including fuel-grade

ethanol, experienced significant price declines and reduced demand.

A further or extended ongoing downturn in global economic

activity, or recessionary conditions in general, would likely lead to poor demand for, and negatively affect the prices of, fuel-grade

ethanol, materially and adversely affecting our business, results of operations and liquidity.

Furthermore, to protect the health and

well-being of our employees and customers, we have implemented work-from-home requirements, made substantial modifications to

employee travel policies, and cancelled or shifted marketing and other corporate events to virtual-only formats for the foreseeable

While we continue to monitor our circumstances and may adjust our current policies as more information and public health

guidance become available, these precautionary measures could negatively affect our sales and marketing efforts, delay and lengthen

our sales cycles, or create operational or other challenges, any of which could harm our business and results of operations.

In addition, if one or more of our employees

or customers becomes ill from coronavirus and attributes their infection to us, including through exposure at one of our offices

or production facilities, we could be subject to allegations of failure to adequately mitigate the risk of exposure.

Such allegations

could harm our reputation and expose us to the risks of litigation and liability.

Our specialty alcohols business has benefitted

significantly from the coronavirus pandemic due to a substantial increase in demand for alcohol-based sanitizers and disinfectants.

As the coronavirus pandemic abates, demand for alcohol-based sanitizers and disinfectants may decline, ultimately exerting downward

pressure on prices for our specialty alcohols used in those products.

In addition, higher industry production levels in response

to the coronavirus pandemic and any resulting oversupply of specialty alcohols for sanitizers and disinfectants would also exert

downward pressure on prices.

Reduced demand and prices for our specialty alcohols used in sanitizers and disinfectants, or industry

oversupply of those specialty alcohols, may materially and adversely affect our business, results of operations and liquidity.

Our results of operations and our ability to operate

at a profit are largely dependent on our ability to manage the costs of corn, natural gas and other production inputs, with the

prices of our alcohols and essential ingredients, all of which are subject to volatility and uncertainty.

at a profit are largely dependent on our ability to manage the costs of corn, natural gas and other production inputs, with the prices

of our alcohols and essential ingredients, all of which are subject to volatility and uncertainty.

Our results of operations are highly impacted

by commodity prices, including the cost of corn, natural gas and other production inputs that we must purchase, and the prices

of alcohols and essential ingredients 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 throughout the world.

Price volatility of corn, natural gas and

other production inputs, and alcohols and essential ingredients, may cause our results of operations to fluctuate substantially.

We may fail to generate expected levels of net sales and profits even under fixed-price and other contracts for the sale of specialty

alcohols used in consumer products.

Our customers may not pay us timely or at all, even under longer-term, fixed-price contracts

for our specialty alcohols, and may seek to renegotiate prices under those contracts during periods of falling prices or high

price volatility.

Over the past several years, for example,

the spread between corn and fuel-grade ethanol prices has fluctuated significantly.

by commodity prices, including the cost of corn, natural gas and other production inputs that we must purchase, and the prices of alcohols

and essential ingredients 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 throughout the world.

Price volatility of corn, natural gas and other

production inputs, and alcohols and essential ingredients, may cause our results of operations to fluctuate substantially.

to generate expected levels of net sales and profits even under fixed-price and other contracts for the sale of specialty alcohols used

in consumer products.

Our customers may not pay us timely or at all, even under longer-term, fixed-price contracts for our specialty

alcohols, and may seek to renegotiate prices under those contracts during periods of falling prices or high price volatility.

Over the past several years, for example, the

spread between corn and fuel-grade ethanol 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 alcohol

or essential ingredient prices, would adversely affect our results of operations and financial position.

Revenues from sales of

alcohols, particularly fuel-grade ethanol, and essential ingredients could decline below the marginal cost of production, which

may force us to further suspend production, particularly fuel-grade ethanol production, at some or all of our facilities.

In addition, some of our fuel-grade ethanol

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 fuel-grade ethanol inventory for subsequent resale.

Moreover, we procure much of our fuel-grade ethanol inventory outside of third-party marketing arrangements and therefore must

buy fuel-grade ethanol at a price established at the time of purchase and sell fuel-grade ethanol at an index price established

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

As a result, our

margins for fuel-grade ethanol sold in these transactions generally decline and may turn negative as the market price of fuel-grade

ethanol declines.

We can provide no assurance that corn,

natural gas or other production inputs can be purchased at or near current or any particular prices, or that our alcohols or essential

ingredients 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 prices of corn, natural gas and other production inputs or decreases in the prices

of our alcohols and essential ingredients.

narrow spread, whether as a result of sustained high or increased corn prices or sustained low or decreased alcohol or essential ingredient

prices, would adversely affect our results of operations and financial position.

Revenues from sales of alcohols, particularly fuel-grade

ethanol, and essential ingredients could decline below the marginal cost of production, which may force us to suspend production,

particularly fuel-grade ethanol production, at some or all of our facilities.

In addition, some of our fuel-grade ethanol 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 fuel-grade ethanol inventory for subsequent resale.

Moreover, we procure much of

our fuel-grade ethanol inventory outside of third-party marketing arrangements and therefore must buy fuel-grade ethanol at a price established

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

of movements in the market price of fuel-grade ethanol.

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

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

We can provide no assurance that corn, natural

gas or other production inputs can be purchased at or near current or any particular prices, or that our alcohols or essential ingredients

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 prices of corn, natural gas and other production inputs or decreases in the prices of our alcohols and essential

Inflation, including as a result of commodity price

inflation or supply chain constraints due to the war in Ukraine, may adversely impact our results of operations.

We have experienced inflationary impacts on key

production inputs, wages and other costs of labor, equipment, services, and other business expenses.

Commodity prices in particular have

risen significantly over the past year.

Inflation and its negative impacts could escalate in future periods.

Ukraine is the third largest exporter of grain

in the world.

Russia is one of the largest producers of natural gas and oil.

The commodity price impact of the war in Ukraine has been

a sharp rise in grain and energy prices, including corn and natural gas, two of our primary production input commodities.

the war in Ukraine has and may continue to adversely affect global supply chains resulting in further commodity price inflation for our

production inputs.

Also, given high global grain prices, U.S.

farmers may prefer to lock in prices and export additional volumes, reducing

domestic grain supplies and resulting in further inflationary pressures.

We may not be able to include these additional

costs in the prices of the products we sell.

As a result, inflation may have a material adverse effect on our results of operations and

financial condition.

Increased alcohol or essential ingredient production

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our results of operations, cash flows and financial condition.

The prices of our alcohols and essential

ingredients are impacted by competing third-party supplies of those products.

For example, we believe that the most significant

factor influencing the price of fuel-grade ethanol has been the substantial increase in production.

According to the Renewable

Fuels Association, domestic fuel-grade 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 fuel-grade ethanol production margins improve,

we anticipate that owners of production facilities operating at below capacity, or owners of idled production facilities, will

increase production levels, thereby resulting in more abundant fuel-grade ethanol supplies and inventories.

Increases in the supply

of alcohols and essential ingredients may not be commensurate with increases in demand for alcohols and essential ingredients,

thus leading to lower prices.

Moreover, higher industry production levels in response to the coronavirus pandemic and any resulting

oversupply of alcohols for sanitizers and disinfectants, and corresponding oversupply of essential ingredient co-products, may

also exert downward pressure on prices.

Any of these outcomes could have a material adverse effect on our results of operations,

cash flows and financial condition.

The prices of our products are volatile and subject to

large fluctuations, which may cause our results of operations to fluctuate significantly.

The prices of our products are volatile

and subject to large fluctuations.

For example, the market price of fuel-grade 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 itself is highly

volatile and difficult to forecast.

Our fuel-grade ethanol sales are tied to prevailing spot market prices rather than long-term,

fixed-price contracts.

Fuel-grade ethanol prices, as reported by the CBOT, ranged from $0.81 to $1.62 per gallon in 2020 and from

The prices of our alcohols and essential ingredients

are impacted by competing third-party supplies of those products.

For example, we believe that the most significant factor influencing

the price of fuel-grade ethanol has been the substantial increase in production.

According to the Renewable Fuels Association, domestic

fuel-grade 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 fuel-grade ethanol production margins improve, we anticipate that owners of production

facilities operating at below capacity, or owners of idled production facilities, will increase production levels, thereby resulting

in more abundant fuel-grade ethanol supplies and inventories.

Increases in the supply of alcohols and essential ingredients may not be

commensurate with increases in demand for alcohols and essential ingredients, thus leading to lower prices.

Moreover, higher industry

production levels in response to the coronavirus pandemic and any resulting oversupply of alcohols for sanitizers and disinfectants,

and corresponding oversupply of essential ingredient co-products, may also exert downward pressure on prices.

Any of these outcomes could

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

The prices of our products are volatile and subject

to large fluctuations, which may cause our results of operations to fluctuate significantly.

The prices of our products are volatile and subject

to large fluctuations.

For example, the market price of fuel-grade 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 itself is highly volatile and difficult to forecast.

Our fuel-grade ethanol sales are tied to prevailing spot market prices rather than long-term, fixed-price contracts.

Fuel-grade ethanol

prices, as reported by the CBOT, ranged from $1.48 to $3.75 per gallon in 2021, from $0.81 to $1.62 per gallon in 2020 and from $1.25

to $1.70 per gallon in 2019.

In addition, even under longer-term, fixed-price contracts for our specialty alcohols, our

customers may seek to renegotiate prices under those contracts during periods of falling prices or high price volatility.

in the prices of our products may cause our results of operations to fluctuate significantly.

Disruptions in our production or distribution 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

production facilities and other considerations related to production efficiencies, our facilities depend on just-in-time delivery

The production of 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 fail to reliably supply the water, electricity

and natural gas that our production facilities need or may fail to supply those resources on acceptable terms.

In the past, poor

weather has caused disruptions in rail transportation, which slowed the delivery of fuel-grade ethanol by rail, the principle

manner by which fuel-grade ethanol from our facilities located in the Midwest is transported to market.

In addition, we recently

experienced closure of the Illinois River for lock repairs which required greater use of less cost-effective modes of product

transport such as via rail and truck, which resulted in higher costs and negatively affected our results of operations.

Disruptions in production or distribution,

whether caused by labor difficulties, unscheduled downtimes and other operational hazards inherent in the alcohol production industry,

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

natural disasters such as earthquakes, floods and storms, 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 production facilities, any of which could have a material adverse effect on our business, results

of operations and financial condition.

Some of these operational hazards may also

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 fully cover the

potential hazards described above or we may be unable to renew our insurance on commercially reasonable terms or at all.

In addition, even under longer-term, fixed-price contracts for our specialty alcohols, our customers may

seek to renegotiate prices under those contracts during periods of falling prices or high price volatility.

Fluctuations in the prices

of our products may cause our results of operations to fluctuate significantly.

Disruptions in our production or distribution 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 production facilities

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

The production of

alcohols also requires a significant and uninterrupted supply of other raw materials and energy, primarily water, electricity and natural

Local water, electricity and gas utilities may fail to reliably supply the water, electricity and natural gas that our production

facilities need or may fail to supply those resources on acceptable terms.

In the past, poor weather has caused disruptions in rail transportation,

which slowed the delivery of fuel-grade ethanol by rail, the principal manner by which fuel-grade ethanol from our facilities located

in the Midwest is transported to market.

In addition, in 2020, we experienced closure of the Illinois River for lock repairs which required

greater use of less cost-effective modes of product transport such as via rail and truck, which resulted in higher costs and negatively

affected our results of operations.

Disruptions in production or distribution, whether

caused by labor difficulties, unscheduled downtimes and other operational hazards inherent in the alcohol production industry, including

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

such as earthquakes, floods and storms, 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 production

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

Some of these operational hazards may also 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 fully cover the potential hazards described

above or we may be unable to renew our insurance on commercially reasonable terms or at all.

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

The coronavirus pandemic has resulted in businesses

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

Federal, state and foreign governments have implemented measures to contain the virus, including social distancing requirements, travel

restrictions, border closures, limitations on public gatherings, work-from-home orders, and closure of non-essential businesses.

of these measures remain or have been curtailed only partially.

Transportation fuels in particular, including fuel-grade ethanol, experienced

significant price declines and reduced demand.

A further or extended ongoing downturn in global economic activity, or recessionary conditions

in general, would likely lead to poor demand for, and negatively affect the prices of, fuel-grade ethanol, materially and adversely affecting

our business, results of operations and liquidity.

We may engage in hedging transactions and other risk

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In an attempt to partially offset the effects

of volatility of our product prices, in particular fuel-grade ethanol, corn and natural gas costs, we may enter into contracts

to fix the price of a portion of our 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 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.

In addition, our open contract

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

As a result, our hedging activities

and fluctuations in the price of corn, natural gas, fuel-grade ethanol and unleaded gasoline may adversely affect our results

of operations, financial condition and liquidity.

The industries in which we operate are extremely competitive.

Many of our significant competitors have greater production and financial resources and could use their greater resources to gain

market share at our expense.

The industries in which we operate are

extremely competitive.

Many of our significant competitors have substantially greater production and financial resources than

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 facility maintenance.

We may fail to anticipate

or respond adequately to new industry developments and other competitive pressures due to our limited resources relative to many

significant competitors.

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

suppliers, particularly of fuel-grade ethanol, many of whom have cost structures substantially lower than ours.

An increase in

domestic or foreign competition could force us to reduce our prices and take other steps to compete effectively, which could adversely

affect our business, financial condition and results of operations.

We incur significant expenses to maintain and upgrade

our production facilities and operating equipment, and any interruption in our operations would harm our operating performance.

We regularly incur significant expenses

to maintain and upgrade our production facilities and operating equipment.

The machines and equipment we use to produce our alcohols

and manufacture our essential ingredients are complex, have many parts, and some operate on a continuous basis.

We must perform

routine equipment maintenance and must periodically replace a variety of parts such as motors, pumps, pipes and electrical parts.

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

These scheduled shutdowns

result in lower sales and increased costs in the periods during 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 shutdown.

of volatility of our product prices, in particular fuel-grade ethanol, corn and natural gas costs, we may enter into contracts to fix

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

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.

In addition, our open contract positions may require cash deposits to cover margin

calls, negatively impacting our liquidity.

As a result, our hedging activities and fluctuations in the price of corn, natural gas, fuel-grade

ethanol and unleaded gasoline may adversely affect our results of operations, financial condition and liquidity.

Risks Related to our Finances

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

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 years ended December 31, 2020 and 2019, we incurred consolidated net losses

of approximately $17.3 million and $101.3 million, respectively.

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

cash flow of approximately $23.4 million.

We have incurred significant losses and negative

operating cash flow in the past.

For the years ended December 31, 2020 and 2019, we incurred consolidated net losses of approximately

$17.3 million and $101.3 million, respectively.

For the year ended December 31, 2019, we incurred negative operating cash flow of approximately

$31.2 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

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

Additional losses and negative

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

Our 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.

Our production facilities 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 revolving credit facilities periodically and automatically declines through the maturity dates

of those facilities.

Our indebtedness could:

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

they become due during adverse economic and industry conditions because those conditions

could result in insufficient 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 flow from operations,

if any, to be used for debt service payments, thereby reducing our ability to fund working

capital, capital expenditures, new business ventures, 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, the violation of which could result in an acceleration of our

indebtedness.

Much of our 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.

Our 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 our alcohols and other products, product prices, the cost of key production

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

We cannot provide any assurance that

we will be able to timely satisfy such obligations.

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 our future financing activities, if any, to fund

all of the cash requirements of our business.

Additional losses and negative operating cash flow may hamper our operations and impede

us from expanding our business.

We incur significant expenses to maintain and upgrade

our production facilities and operating equipment, and any interruption in our operations would harm our operating performance.

We regularly incur significant expenses to maintain

and upgrade our production facilities and operating equipment.

The machines and equipment we use to produce our alcohols and manufacture

our essential ingredients are complex, have many parts, and some operate on a continuous basis.

We must perform routine equipment maintenance

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

In addition, our production facilities

require periodic shutdowns to perform major maintenance and upgrades.

These scheduled shutdowns result in lower sales and increased costs

in the periods during 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 shutdown.

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 our use 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 corporation entitled to use NOL or other loss carryforwards have increased their ownership

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 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.

Our ability to utilize

our NOL and other loss carryforwards may be substantially limited.

These limitations could result in increased future tax obligations,

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

Risks Related to Legal and Regulatory

Federal and state income tax laws impose restrictions

on our use 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 corporation entitled to use NOL or other loss carryforwards have increased their ownership 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 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.

Our ability to utilize our NOL and other loss carryforwards may be

substantially limited.

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

on our financial condition and results of operations.

Risks Related to Legal and Regulatory Matters

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.

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

regulations and permits 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 production 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.

We may be liable for the investigation and cleanup

of environmental contamination at each of our production facilities 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

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 will likely result in increased future investments for

environmental controls at our production facilities.

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.

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 coverages.

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.

Future demand for fuel-grade ethanol is uncertain

1 unchanged sentence

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

Although many trade groups, academics and

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

fuel-grade 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, critics of fuel-grade ethanol 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 as a fuel additive could decline, leading to reduction or

repeal of federal ethanol usage mandates, which would materially and adversely affect the demand for fuel-grade ethanol.

views could also negatively impact public perception of the fuel-grade ethanol industry and acceptance of ethanol as an alternative

There are limited markets for fuel-grade

ethanol beyond those established by federal mandates.

Discretionary blending and E85 blending (i.e., gasoline blended with up

to 85% fuel-grade ethanol by volume) are important secondary markets.

Discretionary blending is often determined by the price

of fuel-grade ethanol versus the price of gasoline.

In periods when discretionary blending is financially unattractive, the demand

for fuel-grade ethanol may decline.

Also, the demand for fuel-grade ethanol is affected by the overall demand for transportation

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

demand for fuel-grade ethanol and co-products would reduce the value of our ethanol and related products, erode our overall margins

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

In addition, we believe that consumer acceptance of E15

and E85 fuels is necessary before fuel-grade ethanol can achieve any significant growth in market share relative to other transportation

The United States fuel-grade ethanol industry

is highly dependent upon various federal and state laws and any changes in those laws could have a material adverse effect on

our results of operations, cash flows and financial condition.

The EPA has implemented the RFS under 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 fuel-grade ethanol) that must be blended into motor fuels consumed in the United States.

market for fuel-grade 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 fuel-grade ethanol will largely depend on 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.

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 in general.

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.

Various bills in Congress introduced from

time to time are also directed at altering existing renewable fuels energy legislation, but none has passed in recent years.

legislative bills are directed at halting or reversing expansion of, or even eliminating, the renewable fuel program, while other

bills are directed at bolstering the program or enacting further mandates or grants that would support the renewable fuels industry.

Our results of operations, cash flows and financial condition could be adversely impacted if any legislation is enacted that reduces

the RFS volume requirements.

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 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 production facility shutdowns.

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.

We may be liable for the investigation

and cleanup of environmental contamination at each of our production facilities 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 will likely result in increased future

investments for environmental controls at our production facilities.

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.

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 coverages.

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.

Risks Related to Ownership of our Common

Future sales of substantial amounts of our common

stock, or perceptions that those sales could occur, could adversely affect the market price of our common stock and our ability

to raise capital.

Although many trade groups, academics and governmental

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

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

Additionally, critics of fuel-grade ethanol 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 as a fuel additive could decline, leading to a reduction or repeal of federal ethanol usage mandates,

which would materially and adversely affect the demand for fuel-grade ethanol.

These views could also negatively impact public perception

of the fuel-grade ethanol industry and acceptance of ethanol as an alternative fuel.

There are limited markets for fuel-grade ethanol

beyond those established by federal mandates.

Discretionary blending and E85 blending (i.e., gasoline blended with up to 85% fuel-grade

ethanol by volume) are important secondary markets.

Discretionary blending is often determined by the price of fuel-grade ethanol versus

the price of gasoline.

In periods when discretionary blending is financially unattractive, the demand for fuel-grade ethanol may decline.

Also, the demand for fuel-grade 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 vehicle fuel economy.

Lower demand for fuel-grade ethanol and co-products would

reduce the value of our ethanol and related products, erode our overall margins and diminish our ability to generate revenue or to operate

In addition, we believe that consumer acceptance of E15 and E85 fuels is necessary before fuel-grade ethanol can achieve

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

The United States fuel-grade ethanol industry is

highly dependent upon various federal and state laws and any changes in those laws could have a material adverse effect on our results

of operations, cash flows and financial condition.

The Environmental Protection Agency, or EPA, has

implemented the Renewable Fuel Standard, or RFS, under the Energy Policy Act of 2005 and the Energy Independence and Security Act of

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

fuels consumed in the United States.

The domestic market for fuel-grade 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 fuel-grade ethanol

will largely depend on 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.

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 in general.

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.

Various bills in Congress introduced from time

to time are also directed at altering existing renewable fuels energy legislation, but none has passed in recent years.

Some legislative

bills are directed at halting or reversing expansion of, or even eliminating, the renewable fuel program, while other bills are directed

at bolstering the program or enacting further mandates or grants that would support the renewable fuels industry.

Our results of operations,

cash flows and financial condition could be adversely impacted if any legislation is enacted that reduces the RFS volume requirements.

Risks Related to Ownership of our Common Stock

of substantial amounts of our common stock, or perceptions that those sales could occur, could adversely affect the market price of our

common stock and our ability to raise capital.

Future sales of substantial

amounts of our common stock into the public market, including up to 8.9 million shares of our common stock that may be issued

upon the exercise of outstanding warrants, or perceptions that those sales could occur, could adversely affect the prevailing

market price of our common stock and our ability to raise capital.

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.

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

● fluctuations in the market prices of our products;

● fluctuations in the costs of key production input commodities

such as corn and natural gas;

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

products from major customers;

● the coronavirus pandemic, including governmental and public

response to the pandemic;

● competitive pricing pressures;

● anticipated trends in our financial condition and results

of operations;

● 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;

● our ability to obtain any necessary financing;

● our financing activities and future sales of our common

stock or other securities;

● our ability to maintain contracts that are critical to

our operations.

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.

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.

amounts of our common stock into the public market, including up to 8.9 million shares of our common stock that may be issued upon the

exercise of outstanding warrants, or perceptions that those sales could occur, could adversely affect the prevailing market price of

our common stock and our ability to raise capital.

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

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:

● fluctuations

in the market prices of our products;

● fluctuations

in the costs of key production input commodities such as corn and natural gas;

volume and timing of the receipt of orders for our products from major customers;

coronavirus pandemic, including governmental and public responses to the pandemic;

● competitive

pricing pressures;

● anticipated

trends in our financial condition and results of operations;

in market valuations of companies similar to us;

market price and volume fluctuations generally;

developments or increased enforcement;

● fluctuations

in our quarterly or annual operating results;

or departures of key personnel;

ability to obtain any necessary financing;

financing activities and future sales of our common stock or other securities;

ability to maintain contracts that are critical to our operations.

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

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.

Because we do not intend to pay any cash dividends

on our shares of common stock in the near future, our stockholders will not be able to receive a return on their shares unless

and until they sell them.

We intend to retain

a significant portion of any future earnings to finance the development, operation and expansion of our business.

We do not anticipate

paying any cash dividends on our common stock in the near future.

The declaration, payment, and amount of any future dividends

will be made at the discretion of our board of directors, and will depend upon, among other things, our results of operations,

cash flows, and financial condition, operating and capital requirements, and other factors as our board of directors considers

There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect

to the amount of any such dividend.

Unless our board of directors determines to pay dividends, our stockholders will be required

to look to appreciation of our common stock to realize a gain on their investment.

There can be no assurance that this appreciation

See “Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities—Dividend Policy”.

do not intend to pay any cash dividends on our shares of common stock in the near future, our stockholders will not be able to receive

a return on their shares unless and until they sell them.

We intend to retain a significant

portion of any future earnings to finance the development, operation and expansion of our business.

We do not anticipate paying any cash

dividends on our common stock in the near future.

The declaration, payment, and amount of any future dividends will be made at the discretion

of our board of directors, and will depend upon, among other things, our results of operations, cash flows, and financial condition,

operating and capital requirements, and other factors as our board of directors considers relevant.

There is no assurance that future

dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

board of directors determines to pay dividends, our stockholders will be required to look to appreciation of our common stock to realize

a gain on their investment.

There can be no assurance that this appreciation will occur.

Our 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.

Our bylaws provide that, unless we consent

in writing to the selection of an alternative forum, the Delaware 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

For 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 the Securities

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

The 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.

The 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.

respect to the provision making the Delaware Court of Chancery the sole and exclusive forum for certain types of actions, stockholders

who do bring a claim in the Delaware 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.

which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers,

employees or agents.

Our bylaws provide that, unless we consent in

writing to the selection of an alternative forum, the Delaware 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.

For 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 the Securities Act, or

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

The 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.

The 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 Delaware

Court of Chancery the sole and exclusive forum for certain types of actions, stockholders who do bring a claim in the Delaware 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.

General Risk Factors

Cyberattacks through security vulnerabilities

could lead to disruption of business, reduced revenue, increased costs, liability claims, or harm to our reputation or competitive

Security vulnerabilities may arise from

our hardware, software, employees, contractors or policies we have deployed, which may result in external parties gaining access

to our networks, data centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have

at our suppliers, vendors, and customers.

External parties may gain access to our data or our customers’

data, or attack

the networks causing denial of service or attempt to hold our data or systems in ransom.

The vulnerability could be caused

by inadequate account security practices such as failure to timely remove employee access when terminated.

To mitigate these security

issues, we have implemented measures throughout our organization, including firewalls, backups, encryption, employee information

technology policies and user account policies.

However, there can be no assurance these measures will be sufficient to avoid cyberattacks.

If any of these types of security breaches were to occur and we were unable to protect sensitive data, our relationships with

our business partners and customers could be materially damaged, our reputation could be materially harmed, and we could be exposed

to a risk of litigation and possible significant liability.

Further, if we fail to adequately maintain

our information technology infrastructure, we may have outages and data loss.

Excessive outages may affect our ability to timely

and efficiently deliver products to customers or develop new products.

Such disruptions and data loss may adversely impact our

ability to fulfill orders and interrupt other processes.

Delayed sales or lost customers resulting from these disruptions could

adversely affect our financial results, stock price and reputation.

Cyberattacks through security vulnerabilities could

lead to disruption of business, reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position.

Security vulnerabilities may arise from our hardware,

software, employees, contractors or policies we have deployed, which may result in external parties gaining access to our networks, data

centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have at our suppliers, vendors,

and customers.

External parties may gain access to our data or our customers’ data, or attack the networks causing denial of service

or attempt to hold our data or systems in ransom.

The vulnerability could be caused by inadequate account security practices such

as failure to timely remove employee access when terminated.

To mitigate these security issues, we have implemented measures throughout

our organization, including firewalls, backups, encryption, employee information technology policies and user account policies.

there can be no assurance these measures will be sufficient to avoid cyberattacks.

If any of these types of security breaches were to

occur and we were unable to protect sensitive data, our relationships with our business partners and customers could be materially damaged,

our reputation could be materially harmed, and we could be exposed to a risk of litigation and possible significant liability.

Further, if we fail to adequately maintain our

information technology infrastructure, we may have outages and data loss.

Excessive outages may affect our ability to timely and efficiently

deliver products to customers or develop new products.

Such disruptions and data loss may adversely impact our ability to fulfill orders

and interrupt other processes.

Delayed sales or lost customers resulting from these disruptions could adversely affect our financial

results, stock price and reputation.

The State of California enacted the California

Consumer Privacy Act of 2018, or CCPA, effective on January 1, 2020.

Our and our business partners’

or contractors’

failure to fully comply with the CCPA and other laws could lead to significant fines and require onerous corrective action.

addition, data security breaches experienced by us or our business partners or contractors could result in the loss of trade secrets

or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personally identifiable information

(including sensitive personal information) of our employees, customers, suppliers, contractors and others.

Unauthorized use or disclosure of, or access

to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of

our suppliers or vendors by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could

harm our business.

If any such unauthorized use or disclosure of, or access to, such personal information was to occur, our operations

could be seriously disrupted, and we could be subject to demands, claims and litigation by private parties, and investigations,

related actions, and penalties by regulatory authorities.

In addition, we could incur significant costs in notifying affected

persons and entities and otherwise complying with the multitude of foreign, federal, state and local laws and regulations relating

to the unauthorized access to, or use or disclosure of, personal information.

Finally, any perceived or actual unauthorized access

to, or use or disclosure of, such information could harm our reputation, substantially impair our ability to attract and retain

customers and have an adverse impact on our business, financial condition and results of operations.

Our and our business partners’ or contractors’ failure

to fully comply with the CCPA and other laws could lead to significant fines and require onerous corrective action.

In addition, data

security breaches experienced by us or our business partners or contractors could result in the loss of trade secrets or other intellectual

property, public disclosure of sensitive commercial data, and the exposure of personally identifiable information (including sensitive

personal information) of our employees, customers, suppliers, contractors and others.

Unauthorized use or disclosure of, or access to,

any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of our suppliers

or vendors by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could harm our business.

If any such unauthorized use or disclosure of, or access to, such personal information was to occur, our operations could be seriously

disrupted, and we could be subject to demands, claims and litigation by private parties, and investigations, related actions, and penalties

by regulatory authorities.

In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying

with the multitude of foreign, federal, state and local laws and regulations relating to the unauthorized access to, or use or disclosure

of, personal information.

Finally, any perceived or actual unauthorized access to, or use or disclosure of, such information could harm

our reputation, substantially impair our ability to attract and retain customers and have an adverse impact on our business, financial

condition and results of operations.

Unresolved Staff Comments.

We have received

no written comments regarding our periodic or current reports from the staff of the Securities and Exchange Commission that were

issued 180 days or more preceding the end of our 2020 fiscal year and that remain unresolved.

We have received no written

comments regarding our periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days

or more preceding the end of our 2021 fiscal year and that remain unresolved.

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-K

Item 1A. Risk Factors