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Item 1A. Risk Factors

2025-08-08 compared with 2025-05-09 · 335 added, 277 removed, 378 unchanged (62% of the section changed)

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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

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

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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

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.

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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.

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.

Historically, the spread between corn and fuel-grade

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In addition, some of our fuel-grade ethanol marketing

and distribution activities for third-party gallons will likely be unprofitable in a market of generally declining prices due to the nature

of our business.

and distribution activities for third-party gallons will likely be unprofitable in a market of generally declining prices due to the

nature of our business.

For example, to satisfy customer demand, we maintain certain quantities of fuel-grade ethanol inventory for subsequent

When quantities in excess of our own production are needed to meet customer demand, we procure fuel-grade ethanol from third parties

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.

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.

When quantities in excess of our own production are needed to meet customer demand, we procure fuel-grade ethanol from third

parties 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.

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 assurances that corn, natural

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and supply of oil on the global energy market.

Other important factors that impact the price of petroleum include war and threats of war,

attacks on or threats to shipping vessels as has recently occurred in the Red Sea, the consequent rerouting of supply lines to less direct

or more expensive paths, and other supply chain disruptions.

Other important factors that impact the price of petroleum include war and threats of

war, attacks on or threats to shipping vessels as has recently occurred in the Red Sea, the consequent rerouting of supply lines to less

direct or more expensive paths, and other supply chain disruptions.

Our fuel-grade ethanol sales are tied to prevailing

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ranged from $1.38 to $2.12 per gallon in 2024, from $1.58 to $2.67 per gallon in 2023 and from $2.00 to $2.88 per gallon in 2022.

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.

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.

We may engage in hedging transactions and other risk

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

To partially offset the effects of 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 to lock in the premium to fuel-grade ethanol market prices

on 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.

We have recognized losses in the past, and may suffer losses in the future, from our hedging arrangements.

For example, for the year ended December 31, 2023, we recognized net losses of $8.0 million related to the change in the fair values of

hedging contracts.

To partially offset the effects of 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 to lock in the premium to fuel-grade ethanol market

prices on 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.

We have recognized losses in the past, and may suffer losses in the future, from our hedging

arrangements.

For example, for the year ended December 31, 2023, we recognized net losses of $8.0 million related to the change in the

fair values of hedging contracts.

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.

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

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For example, in late April 2025, during a period

of rapidly rising river levels, our loadout dock at our Pekin Campus was damaged, negatively impacting production and logistics.

of rapidly rising river levels, our loadout dock at our Pekin Campus was damaged, negatively impacting production and logistics, and requiring our use of more costly third-party river transload

vendors to minimize business interruption.

in the first quarter of 2024, extreme cold weather conditions in January at our Pekin Campus restricted barge deliveries and increased

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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, 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.

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

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research to develop competing products to corn-based alcohols, and ethanol in particular, as well as new process technologies.

These research

efforts seek alternatives to corn-based ethanol and traditional process technologies aimed at improving real or perceived problems with

the fuel, such as the carbon and energy intensity of its production, its lower energy content compared to gasoline and its hydrophobic

research efforts seek alternatives to corn-based ethanol and traditional process technologies aimed at improving real or perceived problems

with the fuel, such as the carbon and energy intensity of its production, its lower energy content compared to gasoline and its hydrophobic

nature resulting in water separation in transit or at other times.

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or new process technologies are developed and attract widespread or even modest adoption, we may be forced to modify our production facilities,

including our process technologies, if possible, to transition in full or in part to these other products or process technologies to remain

Modifying our production facilities may require expertise that our personnel may not possess and would likely require significant

capital expenditures the funding for which we may not have.

An inability to remain competitive due to the introduction and adoption of

competing products or new process technologies, or significant costs associated with the adoption of new products and process technologies,

would materially and adversely affect our business, financial condition and results of operations.

including our process technologies, if possible, to transition in full or in part to these other products or process technologies to

remain competitive.

Modifying our production facilities may require expertise that our personnel may not possess and would likely require

significant capital expenditures the funding for which we may not have.

An inability to remain competitive due to the introduction and

adoption of competing products or new process technologies, or significant costs associated with the adoption of new products and process

technologies, would materially and adversely affect our business, financial condition and results of operations.

Inflation and sustained higher prices may adversely

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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 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,

Our business is highly sensitive to commodity

prices, in particular, the prices of corn 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.

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:

● water is one of our key production inputs;

water resource limitations

may result from drought and other inclement weather;

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

including the following:

● water is one of our

key production inputs;

water resource limitations may result from drought and other inclement

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 limited 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 the highest quality specialty alcohols;

● 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 CO 2 ,

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.

● higher water temperatures

due to increased global or regional temperatures may negatively affect production efficiencies

due to water temperature production requirements given the limited 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 the highest quality specialty alcohols;

● 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 CO 2 , 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

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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 and impede

us from expanding our business.

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 example, for the years ended December 31, 2024, 2023 and 2022, we incurred consolidated net losses

of approximately $59.0 million, $28.0 million and $41.6 million, respectively.

For example, for the three and six months ended June 30, 2025, we incurred consolidated net losses of

approximately $11.3 million and $23.3 million, respectively, and for the six months ended June 30, 2025, we incurred negative operating

cash flow of approximately $19.1 million.

For the years ended December 31, 2024, 2023 and 2022, we incurred consolidated net losses of

approximately $59.0 million, $28.0 million and $41.6 million, respectively.

For the year ended December 31, 2024, we incurred negative

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not eventuate.

We may therefore be unable to timely achieve, or achieve at all, the results we expect, including as to projected additional

EBITDA and Adjusted EBITDA.

We are engaged

in multiple capital improvement projects to diversify and enhance our revenue streams and to expand margins and profitability by reducing

These projects have different timelines, returns on investment and risk profiles, including regulatory risks.

In addition, we must

raise significant additional capital to complete some of our projects, including our CCS project.

Our expected financial and other results

from these projects are based on assumptions around many factors, including their costs, timing, operation and market prices prevailing

at project completion and thereafter, as well as tax and other favorable environmental attributes associated with low carbon alcohol that

may accrue to our benefit.

For example, our assumptions around the anticipated results of our CCS project rely heavily on the tax benefits

that may accrue to us under the Inflation Reduction Act of 2022 as well as other favorable environmental attributes associated with carbon

capture and storage and low carbon alcohol production.

These tax and other benefits may change, including as a result of new or repealed

laws, new administrations and the implementation or interpretation of existing laws, or the exhaustion of funds or benefits available

under a particular program.

For example, in January 2025, the new administration suspended all Inflation Reduction Act spending for 90

In addition, certain provisions of the Inflation Reduction Act lack proposed or final regulations and guidance.

Regulators could

issue new regulations or guidance that significantly narrows the application of clean energy tax incentives, and could even defer or withdraw

regulations, which could materially and adversely affect the economic outcome of our CCS project.

We can provide no assurances that any

particular benefit will be available to us upon completion of our CCS project, or thereafter, or any other capital improvement project.

Capital improvement

projects require significant outlays of capital and are often subject to material execution risks and delays.

Our CCS project in particular

requires EPA approval but the EPA’s own projected

timeline for approval has lengthened and may lengthen further.

We may have insufficient financial resources, and we may be unable to raise

sufficient capital, to complete our projects timely or at all.

Although we intend to use reputable third-party contractors with expertise

in their fields to implement our projects, adverse conditions and events as well as delays in capital projects are not uncommon.

the projects’ interaction with existing processes may result in the degradation of other plant operations.

For example, operation

of our corn oil and high protein system at our Magic Valley facility previously resulted in inconsistent product quality and degraded

other operations at the plant, including production rates.

In the past, we have extended our expected completion dates for various projects

and, as circumstances require, may have to do so again.

our CCS project may be adversely affected by the SAFE CCS Act, proposed legislation in Illinois or the United States Supreme Court’s

decision in the case of Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., or any of them, as discussed below.

and economics of our CCS project may also be adversely affected by new rules proposed by the U.S.

We may therefore be unable to timely achieve, or achieve at all, the results we expect.

We are engaged in multiple capital improvement

projects to diversify and enhance our revenue streams and to expand margins and profitability by reducing costs.

These projects have

different timelines, returns on investment and risk profiles, including regulatory risks.

In addition, we must raise significant additional

capital to complete some of our projects, including our CCS project.

Our expected financial and other results from these projects are

based on assumptions around many factors, including their costs, timing, operation and market prices prevailing at project completion

and thereafter, as well as tax and other favorable environmental attributes associated with low carbon alcohol that may accrue to our

For example, our assumptions around the anticipated results of our CCS project rely heavily on the tax benefits that may accrue

to us under the Inflation Reduction Act of 2022 as well as other favorable environmental attributes associated with carbon capture and

storage and low carbon alcohol production.

These tax and other benefits may change, including as a result of new or repealed laws, new

administrations and the implementation or interpretation of existing laws, or the exhaustion of funds or benefits available under a particular

For example, in January 2025, the new administration suspended all Inflation Reduction Act spending for 90 days.

certain provisions of the Inflation Reduction Act lack proposed or final regulations and guidance.

Regulators could issue new regulations

or guidance that significantly narrows the application of clean energy tax incentives, and could even defer or withdraw regulations,

which could materially and adversely affect the economic outcome of our CCS project.

We can provide no assurances that any particular

benefit will be available to us upon completion of our CCS project, or thereafter, or any other capital improvement project.

Capital improvement projects

require significant outlays of capital and are often subject to material execution risks and delays.

Our CCS project in particular requires

EPA approval but the EPA’s own projected timeline for approval has lengthened and may lengthen further.

our Class VI permit application with the EPA for our CCS project contemplates CO 2 sequestration directly through the

Mahomet aquifer in Illinois;

however, Illinois Senate Bill 1723, which was signed into law on August 1, 2025, prohibits CO 2

sequestration directly through that aquifer.

This legislation impacts our current CCS project plans and may necessitate a more costly,

or less profitable, carbon capture and storage solution, such as carbon transportation via barge instead of through pipelines.

addition, our CCS project may be adversely affected by the SAFE CCS Act or the United States Supreme Court’s decision in the case

of Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., or any of them.

If we continue with a pipeline solution for our CCS

project, the timing and economics of the project may also be adversely affected by new rules proposed by the U.S.

Department of Transportation’s

Pipeline and Hazardous Materials Safety Administration that impose stronger standards for CO 2 pipelines and establish new standards

for transporting CO 2 in a gaseous state via pipeline, adding additional requirements and costs to the project.

We can provide

no assurances that our projects will be completed, or if completed, will be completed timely or within budget.

We also can provide no

assurances that our project assumptions will reflect prevailing future conditions or that our projects will achieve the results we expect,

including as to projected additional EBITDA and Adjusted EBITDA.

Failure to achieve our expected results may have a material adverse effect

on our business, financial condition and results of operations.

Pipeline and Hazardous Materials Safety Administration that impose stronger standards for CO 2 pipelines and establish new

standards for transporting CO 2 in a gaseous state via pipeline, adding additional requirements and costs to the project.

We may have insufficient financial resources,

and we may be unable to raise sufficient capital, to complete our projects timely or at all.

Although we intend to use reputable third-party

contractors with expertise in their fields to implement our projects, adverse conditions and events as well as delays in capital projects

are not uncommon.

Moreover, the projects’ interaction with existing processes may result in the degradation of other plant operations.

For example, operation of our corn oil and high protein system at our Magic Valley facility previously resulted in inconsistent product

quality and degraded other operations at the plant, including production rates.

In the past, we have extended our expected completion

dates for various projects and, as circumstances require, may have to do so again.

We can provide no assurances that our projects

will be completed, or if completed, will be completed timely or within budget.

We also can provide no assurances that our project assumptions

will reflect prevailing future conditions or that our projects will achieve the results we expect.

Failure to achieve our expected results may have a material adverse effect on our business, financial condition

and results of operations.

We regularly incur significant expenses to repair,

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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, and engage in other repairs.

We must perform routine equipment maintenance and must periodically replace

a variety of parts such as motors, pumps, pipes and electrical parts, and engage in other repairs.

In addition, our production facilities

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and operational and mechanical processes made during shutdown.

We may be unable to qualify for and receive anticipated

Section 45Z tax credit benefits available to low carbon fuel producers.

Section 45Z of the Inflation Reduction Act of 2022 allows low carbon

fuel producers to apply for and receive substantial tax credits based on the carbon intensity of the fuel they produce.

We expect our

Colombia plant and our Pekin Campus dry mill to participate in applying for Section 45Z tax credits.

Our ability to qualify for and receive

these tax credits will depend on our ability to produce low carbon fuel in anticipated amounts at current and expected carbon intensities.

If we are unable to produce low carbon fuel in anticipated amounts, including as a result of plant outages or other reasons, or fail to

achieve the required, or our expected, carbon intensities, we will be unable to qualify for and receive Section 45Z tax credits in projected

amounts, which may materially and adversely harm our results of operations and financial condition.

Our indebtedness may expose us to risks that could

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In addition, our indebtedness could:

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

● result in adverse consequences due to a breach of our financial or other covenants and obligations in favor of our lenders;

● 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 operating results and sufficient

cash to make all required principal and interest payments when due, and to satisfy our financial covenants and other obligations, 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 alcohols and essential ingredients, and many other factors related to the industries in which we operate.

provide any assurance that we will be able to timely service or satisfy our debt obligations, including our financial covenants.

to timely service or satisfy our debt obligations, including to meet our financial covenants, could result in our indebtedness being immediately

due and payable, and would have a material adverse effect on our business, business prospects, liquidity, financial condition, cash flows

and results of operations.

● make it more difficult

to repay or refinance our indebtedness if it becomes due during adverse economic and industry

● result in adverse consequences

due to a breach of our financial or other covenants and obligations in favor of our lenders;

● 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 operating results and

sufficient cash to make all required principal and interest payments when due, and to satisfy our financial covenants and other obligations,

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 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, including our financial covenants.

Our failure to timely service or satisfy our debt obligations, including to meet our financial covenants, could result in our indebtedness

being immediately due and payable, and would have a material adverse effect on our business, business prospects, liquidity, financial

condition, cash flows and results of operations.

Our ability to utilize net operating loss carryforwards

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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

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

condition and results of operations.

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

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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.

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

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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.

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 not covered by insurance.

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.

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

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losses that are not fully covered by insurance could have a material adverse effect on our results of operations and financial condition.

Our CCS project may be adversely affected by the SAFE

CCS Act, Illinois Senate Bill 1723 and other Regulations.

The SAFE CCS Act was signed into law in Illinois

in July 2024.

We are pursuing at our Pekin Campus, located in Illinois, a CCS project that will require significant financial and personnel

Our CCS project is our most important ongoing capital improvement initiative.

The SAFE CCS Act establishes stringent safety,

financial and insurance requirements on CO 2 pipelines and imposes a moratorium on the construction of new CO 2 pipelines

until the U.S.

Department of Transportation’s Pipeline and Hazardous Materials Safety Administration finalizes its new safety rules

or July 1, 2026, whichever occur sooner.

The SAFE CCS Act will result in increased compliance and other requirements likely adding costs

and potentially adding time to complete our CCS project.

In January 2025, the U.S.

Our CCS project may be adversely affected by the

SAFE CCS Act, Illinois Senate Bill 1723 and other Regulations.

The SAFE CCS Act was

signed into law in Illinois in July 2024.

We are pursuing at our Pekin Campus, located in Illinois, a CCS project that will require

significant financial and personnel resources.

Our CCS project is our most important long-term capital improvement initiative.

SAFE CCS Act establishes stringent safety, financial and insurance requirements on CO 2 pipelines and imposes a moratorium

on the construction of new CO 2 pipelines until the U.S.

Department of Transportation’s Pipeline and Hazardous

Materials Safety Administration proposed new rules that impose stronger standards for CO 2 pipelines and establish new standards

for transporting CO 2 in a gaseous state via pipeline, adding additional requirements

and costs to the project.

In February 2025, new legislation in Illinois (Senate

Bill 1723), was proposed that amends the Illinois Environmental Protection Act to provide that carbon storage activity shall not be conducted

within a storage facility that overlies, underlies or passes through a sole-source aquifer.

This legislation, if passed, may have a material

and adverse impact on our current CCS project plans and may necessitate a more costly, or less profitable, carbon capture and storage

solution, such as carbon transportation via barge instead of through pipelines.

Materials Safety Administration finalizes its new safety rules or July 1, 2026, whichever occur sooner.

If we continue with a

pipeline solution, the SAFE CCS Act will result in increased compliance and other requirements likely adding costs and potentially

adding time to complete our CCS project.

In addition, in January 2025, the U.S.

Department of Transportation’s Pipeline and

Hazardous Materials Safety Administration proposed new rules that impose stronger standards for CO 2 pipelines and

establish new standards for transporting CO 2 in a gaseous state via pipeline, adding additional requirements and costs to

any CCS project using pipelines for CO 2 transportation and

On August 1, 2025, new legislation in Illinois

(Senate Bill 1723), was signed into law that amends the Illinois Environmental Protection Act to provide that carbon storage activity

shall not be conducted within a storage facility that overlies, underlies or passes through a sole-source aquifer.

This legislation impacts

our current CCS project plans and may necessitate a more costly, or less profitable, carbon capture and storage solution, such as carbon

transportation via barge instead of through pipelines.

We can provide no assurance that our CCS project

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insurance coverages.

Events that result in significant personal injury or other losses that are not fully covered by insurance could have

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

The United States fuel-grade ethanol industry is highly

dependent upon various federal and state laws and regulations and any changes in or reinterpretations of those laws or regulations could

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

The domestic market for fuel-grade ethanol is significantly

impacted by federal mandates 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 on the ability of vehicles to use higher ethanol blends, and the

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

Events that result in significant personal injury or other losses that are not fully covered by insurance could

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

The United States fuel-grade ethanol industry is

highly dependent upon various federal and state laws and regulations and any changes in or reinterpretations of those laws or regulations

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

The domestic market for fuel-grade ethanol is

significantly impacted by federal mandates for volumes of renewable fuels (such as ethanol) required to be blended with gasoline.

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 on the ability of vehicles to use higher ethanol blends,

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

The EPA has implemented the Renewable Fuel Standard

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that must be blended into motor fuels consumed in the United States.

The EPA finalized mandatory volumes of 15.0 billion gallons for each

of 2023, 2024, and 2025 of conventional renewable fuels, or corn-based fuel-grade ethanol, which could decline in future years.

The EPA finalized mandatory volumes of 15.0 billion gallons for

each of 2023, 2024, and 2025 of conventional renewable fuels, or corn-based fuel-grade ethanol, which could decline in future years.

The EPA may issue small refinery waivers, in full

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for and the price of fuel-grade ethanol.

Court of Appeals for the Fifth Circuit, in the fourth quarter of 2023, struck down the

EPA’s decision to deny numerous small refinery waivers, finding that the EPA’s denials were impermissibly retroactive, contrary

to law and counter to evidence in the litigation record.

Accordingly, small refinery waivers from the EPA may be more likely in the future

and could again materially and adversely affect overall demand for and the price of fuel-grade ethanol.

Court of Appeals for the Fifth Circuit, in the fourth quarter of 2023, struck down

the EPA’s decision to deny numerous small refinery waivers, finding that the EPA’s denials were impermissibly retroactive,

contrary to law and counter to evidence in the litigation record.

Accordingly, small refinery waivers from the EPA may be more likely

in the future and could again materially and adversely affect overall demand for and the price of fuel-grade ethanol.

Various bills in Congress introduced from time

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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

industry and acceptance of ethanol as an alternative fuel.

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

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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.

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 essential ingredients,

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significant growth in market share relative to other transportation fuels.

The United States Supreme Court’s decision in

the case of Chevron U.S.A., Inc.

The United States Supreme Court’s decision

in the case of Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc.

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condition as well as the business and financial prospects of certain capital improvement projects, such as CCS.

The United States Supreme Court, in the landmark

case of Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., recently overturned its prior doctrine of judicial deference

to administrative interpretations of laws and regulations.

This outcome could materially and adversely affect rulemaking and agencies’

interpretations favorable to the renewable fuels industry, such as the EPA’s administration of the Renewable Fuel Standard.

outcome could also materially and adversely affect the Treasury Department’s ability to promulgate favorable regulations under the

Inflation Reduction Act of 2022, including tax credits such as the section 45Q carbon capture and storage tax credits and section 45Z

low carbon fuel tax credits, as well as other industry-favorable tax credits.

Less industry-favorable rulemaking and agency interpretations

of laws and regulations could materially and adversely affect our results of operations, cash flows and financial condition as well as

the financial prospects of certain capital improvement projects, such as CCS.

The United States

Supreme Court, in the landmark case of Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc., recently overturned its

prior doctrine of judicial deference to administrative interpretations of laws and regulations.

This outcome could materially and

adversely affect rulemaking and agencies’ interpretations favorable to the renewable fuels industry, such as the EPA’s

administration of the Renewable Fuel Standard.

This outcome could also materially and adversely affect the Treasury

Department’s ability to promulgate favorable regulations under the Inflation Reduction Act of 2022, including tax credits such

as the Section 45Q carbon capture and storage tax credits and Section 45Z low carbon fuel tax credits, as well as other

industry-favorable tax credits.

Less industry-favorable rulemaking and agency interpretations of laws and regulations could

materially and adversely affect our results of operations, cash flows and financial condition as well as the financial prospects of

certain capital improvement projects, such as CCS.

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

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, or any of the other risks or uncertainties discussed

in this report, many of which are beyond our control:

● fluctuations in our quarterly or annual operating results;

● fluctuations in the market prices of our products;

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

● the timing, cost and effects of, and our ability to fund, our capital improvement projects, including our CCS initiative;

● regulatory developments or increased enforcement relating to our initiatives and projects or to our business, including our CCS initiative;

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

● our ability to obtain any necessary financing;

● the volume and timing of the receipt of orders for our products from major customers, including annual contracted sales volumes for

our specialty alcohols;

● competitive pricing pressures;

● changes in market valuations of companies similar to us;

● stock market price and volume fluctuations generally;

● additions or departures of key personnel;

● environmental, product or other liabilities we may incur;

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

● our ability to maintain contracts that are critical to our operations.

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, or any of the other risks or uncertainties

discussed in this report, many of which are beyond our control:

● fluctuations in our

quarterly or annual operating results;

● fluctuations in the

market prices of our products;

● fluctuations in the

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

● the timing, cost and

effects of, and our ability to fund, our capital improvement projects, including our CCS

● regulatory developments

or increased enforcement relating to our initiatives and projects or to our business, including

our CCS initiative;

● our ability to qualify for and receive Section 45Z tax credits under

the Inflation Reduction Act of 2022 for low carbon fuel, including in the anticipated amounts and at the expected times;

● anticipated trends

in our financial condition and results of operations;

● our ability to obtain

any necessary financing;

● the volume and timing

of the receipt of orders for our products from major customers, including annual contracted

sales volumes for our specialty alcohols;

● competitive pricing

● changes in market valuations

of companies similar to us;

● stock market price

and volume fluctuations generally;

● additions or departures

of key personnel;

● environmental, product

or other liabilities we may incur;

● 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

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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, 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

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 our board of directors considers

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 dividend.

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

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

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

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 our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer

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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.

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 these provisions 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.

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 these provisions 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

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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 or

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

or customers.

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

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and interrupt other processes.

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

stock price and reputation.

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

results, stock price and reputation.

Our and our business partners’ or contractors’

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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.

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.

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