What changed in this filing

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Item 1A. Risk Factors

2022-11-09 compared with 2022-08-09 · 129 added, 89 removed, 331 unchanged (40% of the section changed)

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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.

no control, such as weather, domestic and global demand, supply shortages, export prices, inflationary conditions, global geopolitical

tensions and various governmental policies in the United States and throughout the world.

Price volatility of corn, natural gas and other

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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 condition.

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

A sustained negative

or 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 condition.

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.

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

we procure much of our fuel-grade ethanol inventory outside of third-party marketing and distribution 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

we procure much of our fuel-grade ethanol inventory outside of contracted third-party marketing and distribution 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.

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farmers may prefer to

lock in prices and export additional volumes, reducing domestic grain supplies and resulting in further inflationary pressures.

lock in prices and export additional volumes, reducing domestic grain supplies and resulting in further inflationary pressures on key

production inputs.

Even if inflation stabilizes or abates, the prices

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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 $2.00 to $2.88 per gallon in the six months ended June 30, 2022, from $1.48 to $3.75 per

gallon in 2021 and from $0.81 to $1.62 per gallon in 2020.

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.

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

and influenced by a wide variety of geopolitical and global economic conditions, including decisions concerning petroleum output by the

Organization of Petroleum Exporting Countries (OPEC) and their allies, an intergovernmental organization that seeks to manage the price

and supply of oil on the global energy market.

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 $2.00 to $2.88 per gallon in the nine months ended

September 30, 2022, from $1.48 to $3.75 per gallon in 2021 and from $0.81 to $1.62 per gallon in 2020.

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.

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our facilities located in the Midwest is transported to market.

In 2022, a lightning strike at the utility

servicing our Pekin Campus disrupted our operations, cutting power to our facilities and materially affecting our production,

resulting in unexpected repair and maintenance costs, lost production and degradation in the quality of work-in-progress

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.

For example, in 2022, a lightning strike at the

utility servicing our Pekin Campus disrupted our operations, cutting power to our facilities and materially affecting our production,

resulting in unexpected repair and maintenance costs, lost production and degradation in the quality of work-in-progress inventories.

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

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price declines and reduced demand.

A renewed downturn in global economic activity, or recessionary conditions in general, would likely

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

affecting our business, results of operations and liquidity.

A renewed downturn in global economic activity, including travel, or recessionary conditions in general,

would likely lead to poor demand for, and negatively affect the prices of, our products, materially and adversely affecting our business,

results of operations and liquidity.

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 our production input and product prices, in particular, corn and natural gas costs and fuel-grade ethanol prices,

we may enter into contracts to purchase a portion of our corn or natural gas requirements on a forward basis or fix the price of a

portion of our alcohol production.

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 our counterparty 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.

In an attempt to partially offset the effects of

volatility of our production input and product prices, in particular, corn and natural gas costs and fuel-grade ethanol prices, we may

enter into contracts to purchase a portion of our corn or natural gas requirements on a forward basis or fix the sale price of portions

of our alcohol production.

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 our counterparty 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

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operating cash flow in the past.

For example, for the year ended December 31, 2020, we incurred consolidated net losses of approximately

$17.3 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.

For example, for the three and nine months ended September 30, 2022 and for the year ended December 31,

2020, we incurred consolidated net losses of approximately $28.0 million, $8.5 million and $17.3 million, respectively.

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.

We incur significant expenses to maintain and upgrade

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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.

The machines and equipment we use to produce our alcohols and 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 indebtedness may expose us to risks that could

negatively impact our business, prospects, liquidity, cash flows and results of operations.

We anticipate incurring substantial indebtedness

to engage in capital improvement projects.

We expect that these projects, when completed, will generate financial returns sufficient to

service and ultimately repay or refinance our indebtedness.

However, the timing, cost and results of our capital improvement projects

may not meet our projections.

In addition, our indebtedness could:

it more difficult to pay or refinance our indebtedness as it becomes due during adverse economic

and industry conditions;

our flexibility to pursue strategic opportunities or react to changes in our business and

the industries 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 for debt service payments, thereby

reducing the availability of our cash flows to fund working capital, additional capital expenditures,

acquisitions, dividend payments and for other general corporate purposes;

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

to gene rate sufficient cash to make all interest payments when due depends on our performance, which is subject to a variety of

factors beyond our control, including the cost of key production inputs, the supply of and demand for specialty alcohols and essential

ingredients, and many other factors incident to the industries in which we operate.

We cannot provide any assurance that we will be able

to timely service or satisfy our debt obligations.

Our failure to timely service or satisfy our debt obligations would have a material

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

Our ability to utilize net operating loss carryforwards

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to the environment.

A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages,

A violation of these laws and regulations or permit conditions may result in substantial fines, natural resource damages,

criminal sanctions, permit revocations and/or production facility shutdowns.

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ethanol by volume) are important secondary markets.

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

the price of gasoline.

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

to the price of gasoline.

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

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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.

consumed in the United States through 2022.

After 2022, the EPA is to determine volume requirements in coordination with the Secretary

of Energy and the Secretary of Agriculture.

The EPA has stated its intention to propose post-2022 mandatory volumes by mid-November 2022

for finalization by mid-June 2023 in compliance with a consent decree by the United States District Court for the District of Columbia.

Under the provisions of the Clean Air Act, as amended

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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.

In particular, the EPA may issue small refinery waivers, in full or in part, to reduce or eliminate

annual renewable fuel volume requirements for small refineries that process fewer than 75,000 barrels of petroleum daily.

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 or issues significant small refinery waivers.

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 the EPA’s established volumes from time to time, small refinery waivers, and other applicable environmental

requirements.

Various bills in Congress introduced from time

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● 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 responses to the pandemic;

● 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

responses to the pandemic;

● competitive pricing pressures;

● anticipated trends in our financial condition and results of operations;

● anticipated trends in our financial condition and results

of operations;

● changes in market valuations of companies similar to us;

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● 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 timing, cost and results of our capital improvement projects;

● our financing activities and future sales of our common stock

or other securities;

● our ability to maintain contracts that are critical to our

The price at which you purchase

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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.

Unless our board of directors

determines to pay dividends, our stockholders will be required to look solely to appreciation in the value of our common stock to realize

any gain on their investment.

and capital requirements, compliance with any applicable debt covenants, 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.

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

in the value of our common stock to realize any gain on their investment.

There can be no assurance that any such appreciation will occur.

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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 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

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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