What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-05-09 compared with 2022-11-09 · 141 added, 135 removed, 325 unchanged (46% of the section changed)

10 unchanged sentences

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

Risks Related to our

Our results of operations and our ability to operate

4 unchanged sentences

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, inflationary conditions, global geopolitical

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

we have 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.

12 unchanged sentences

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.

ethanol, and essential ingredients have in the past and could in the future 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

22 unchanged sentences

The commodity

price impact of the war in Ukraine has been a sharp and sustained rise in grain and energy prices, including corn and natural gas, two

of our primary production input commodities.

In addition, the war in Ukraine has adversely affected and may continue to adversely affect

global supply chains resulting in further commodity price inflation for our production inputs.

Lower fertilizer supplies may also impact

future growing seasons, further impacting grain supplies and prices.

price impact of the war in Ukraine has been a sharp and sustained rise in grain and energy prices, including for corn and natural gas,

our two most important production input commodities.

In addition, the war in Ukraine has adversely affected and may continue to adversely

affect global supply chains resulting in further commodity price inflation for our production inputs.

Lower fertilizer supplies may also

impact future growing seasons, further impacting grain supplies and prices.

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 on key

farmers may prefer

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

production inputs.

32 unchanged sentences

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.

Fuel-grade ethanol prices, as reported by the CBOT, ranged from $2.00 to $2.88 per gallon in 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

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.

Disruptions in our production or distribution, including

as a result of climate change and other weather effects, may adversely affect our business, results of operations and financial condition.

Our business depends on the continuing availability

7 unchanged sentences

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 rail transportation, which slowed the delivery of fuel-grade ethanol by rail, a key method by which fuel-grade ethanol from our Pekin

Campus is transported to market.

For example, in 2022, a lightning strike at the

5 unchanged sentences

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.

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

disasters such as earthquakes, floods and storms, or other weather effects, 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

3 unchanged sentences

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 resulted in businesses

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

state and foreign governments 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.

Some 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 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.

Climate change, and governmental regulations

aimed at addressing climate-related issues, may affect conditions to which our business is highly sensitive, many of which could materially

and adversely harm our business, results of operations and financial condition.

Our business is highly sensitive to commodity prices,

in particular the prices of corn and grain substitutes, and natural gas.

Inclement weather from climate change, including extreme temperatures

or drought, may adversely affect growing conditions, which may reduce available corn supplies, our primary production input, and other

grain substitutes, driving up prices and thereby increasing our production input costs.

In addition, governmental regulators may disfavor

carbon-based energy sources, such as natural gas, leading to regulations that disincentivize their use or otherwise make their production

more difficult and costly, driving up their prices.

Higher natural gas prices would likewise increase our production input costs.

Other factors that may result from climate change,

or that may result from governmental regulations aimed at addressing climate-related issues, may also adversely affect our business, including

the following:

is one of our key production inputs;

water resource limitations may result from drought and other inclement weather;

water resource limitations

may also result from rationing and other governmental regulations limiting water use;

Higher water temperatures due to increased global or regional temperatures may negatively affect production efficiencies due to water temperature production requirements given the poor cooling capacities of our older facilities;

Flooding and other inclement weather may negatively affect our river access, other transportation logistics and costs, and storage requirements;

An overall increase in energy costs will negatively impact our production costs generally and may critically impact certain high energy-intensive production technologies, such as our wet milling and multiple distillation processes for high-quality alcohol;

Regulatory and market transition away from combustion fuels and fuel-grade ethanol blending may threaten the viability of our renewable fuels business;

Costs and regulatory burdens associated with governmental regulations that limit or tax greenhouse gas emissions, such as carbon dioxide, from alcohol production and distribution, or from truck transport and packaging associated with Eagle Alcohol’s business and use of drums and totes, will negatively impact us.

New legislation in the United States to address

climate change issues, including at the federal, state and local levels, likely will continue.

This includes new or expanded cap-and-trade

programs that may layer additional costs on any business that emits greenhouse gases.

New legislation, including new or expanded cap-and-trade

programs, could materially and adversely impact our production cost structure and the market viability of our products.

Any of these factors could materially and adversely

harm our business, results of operations and financial condition.

We may engage in hedging transactions and other risk

1 unchanged sentence

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.

production input and product price volatility, 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

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

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

Risks Related to our Finances

2 unchanged sentences

us from expanding our business.

We have incurred significant losses and negative

operating cash flow in the past.

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 have incurred

significant losses and negative operating cash flow in the past.

For example, for the three months ended March 31, 2023, three

months ended March 31, 2022, three months and year ended December 31, 2022 and for the year ended December 31, 2020, we incurred

consolidated net losses of approximately $13.2 million, $2.6 million, $33.1 million, $41.6 million and $17.3 million, respectively.

For the three months ended March 31, 2023, we experienced negative operating cash flow of approximately $23.3 million.

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

13 unchanged sentences

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.

We have incurred, and anticipate incurring additional,

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.

make it more difficult to pay or refinance our indebtedness if it becomes due during adverse economic and industry conditions;

limit 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;

require 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;

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

Our ability to generate sufficient cash to make

all required principal and 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 related 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

36 unchanged sentences

Some of these matters may require us to expend significant amounts for investigation,

cleanup or other costs.

cleanup or other costs not covered by insurance.

In addition, new laws, new interpretations of existing

18 unchanged sentences

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

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.

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.

agencies support fuel-grade ethanol as a fuel additive that promotes a cleaner environment, others criticize fuel-grade ethanol production

as consuming considerably more energy and emitting more greenhouse gases than other biofuels and potentially depleting water resources.

Some studies suggest 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.

views of corn-based ethanol production gain broader 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

17 unchanged sentences

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 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 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.

The EPA has implemented the Renewable Fuel Standard,

or 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 through

After 2022, the EPA is to determine volume requirements in coordination with the Secretary of Energy and the Secretary of Agriculture.

The EPA has proposed new post-2022 mandatory volumes of 15.0 billion and 15.25 billion gallons for 2023 and 2024, respectively, 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

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

by the Energy Independence and Security Act of 2007, the EPA has limited authority to waive or reduce the mandated RFS requirements.

authority is subject to consultation with the Secretaries of Agriculture and Energy and is 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,

3 unchanged sentences

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.

levels specified in the RFS or continues to issue significant small refinery waivers.

The domestic market for fuel-grade ethanol is significantly

1 unchanged sentence

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

relative to the price of gasoline, the relative octane value of ethanol, constraints on 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

1 unchanged sentence

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.

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

Some legislative

4 unchanged sentences

Risks Related to Ownership of our Common Stock

Our stock price

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

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

1 unchanged sentence

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:

stock may continue to fluctuate in response to one or more of the following factors, or any of the other risks or uncertainties discussed

in this report, 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;

● 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;

● 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;

5 unchanged sentences

● 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

● 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

10 unchanged sentences

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

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

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.

5 unchanged sentences

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, 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.

and capital requirements, compliance with any applicable debt covenants, and other factors 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 of the amount of any such

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

1 unchanged sentence

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

Our bylaws contain an exclusive forum provision, which

Our bylaws contain an exclusive forum provision that

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

6 unchanged sentences

provision described above does not apply to any claims arising under the Securities Act of 1933, as amended, or the Securities Act, 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 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

20 unchanged sentences

The vulnerability could be caused by inadequate account security practices such

as failure to timely remove employee access when terminated.

as the failure to timely remove employee access when terminated.

To mitigate these security issues, we have implemented measures throughout

30 unchanged sentences

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