What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-03-13 · 391 added, 522 removed, 312 unchanged (75% of the section changed)

21 unchanged sentences

350 million gallons combined of our own produced alcohols as well as fuel-grade ethanol produced by third parties, and over 1.2 million

tons of essential ingredients on a dry matter basis.

tons of essential ingredients.

We also own and operate a liquid CO 2

1 unchanged sentence

and subsequent sale.

In addition, we break bulk distribute specialty

alcohols, produced by us and third parties, through our Eagle Alcohol business.

In addition, we break bulk and distribute specialty alcohols, produced by us and third parties.

We report our financial and operating performance

in three distinct segments:

production , which includes the production and sale of alcohols and essential ingredients

produced at our three production facilities located in Pekin, Illinois, which we refer to

as our Pekin Campus;

and distribution , which includes marketing and merchant trading for company-produced

alcohols and essential ingredients on an aggregated basis, and sales of fuel-grade ethanol

sourced from third parties;

production , which includes the production and sale of alcohols and other products

we refer to as “essential ingredients” described below, produced at our three

production facilities located in Pekin, Illinois, which we refer to as our Pekin Campus;

● Marketing and distribution , which includes marketing and merchant trading for company-produced alcohols and essential

ingredients on an aggregated basis, and sales of fuel-grade ethanol sourced from third parties;

production , which includes the production and sale of renewable fuels and essential

ingredients and, beginning in 2025, liquid CO 2 produced at our western production

facilities, including our liquid CO 2 plant, on an aggregated basis, none of which

are individually so significant as to be considered a separately reportable segment.

ingredients produced at our Western production facilities, including our liquid CO 2

plant, on an aggregated basis, none of which are individually so significant as to be considered

a separately reportable segment.

Our mission is to produce the highest quality,

2 unchanged sentences

and higher value specialty alcohol production and distribution infrastructure, expanding production in high-demand essential ingredients,

expanding and extending the sale of our products into new regional and international markets, building efficiencies and economies of

scale and by capturing a greater portion of the value stream.

expanding and extending the sale of our products into new regional and international markets, building efficiencies and economies of scale

and by capturing a greater portion of the value stream.

Production Segments

We produce specialty alcohols, renewable fuels

and essential ingredients, focusing on five key markets:

We produce specialty

alcohols, renewable fuels and essential ingredients, focusing on five key markets:

Health, Home & Beauty ;

Food & Beverage ;

Agriculture ;

Industry & Agriculture ;

Essential Ingredients ;

and Renewable Fuels .

Products for Health, Home & Beauty markets include

specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers, disinfectants and cleaners.

Products for Food &

Beverage markets include grain neutral spirits used in alcoholic beverages and vinegar and corn germ used for corn oils.

for Industry & Agriculture markets include alcohols and other products for paint applications and fertilizers.

Essential Ingredients markets include dried yeast, corn protein meal, corn protein feed, corn germ, distillers grains, liquid

CO 2 and liquid feed used in commercial animal feed and pet foods.

We also sell yeast and liquid CO 2 for human consumption.

Our products for the Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable

diesel and biodiesel fuels.

Products for Health,

Home & Beauty markets include specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizers,

disinfectants and cleaners.

Products for Food & Beverage markets include grain neutral spirits used in alcoholic

beverages and vinegar, as well as corn germ used for corn oils.

Products for Industry & Agriculture markets include

alcohols and other products for paint applications, inks, vehicle fluids and fertilizers.

Products for Essential Ingredients markets include dried

yeast, corn protein meal, corn protein feed, corn germ, distillers grains, gas and liquid CO 2 and liquid feed used in

commercial animal feed and pet foods.

We also sell yeast and gas and liquid CO 2 for human consumption.

Our products for

the Renewable Fuels markets include fuel-grade ethanol and distillers corn oil used as a feedstock for renewable diesel and

biodiesel fuels.

Our specialty alcohols for the Industry & Agriculture, Food & Beverage and Health, Home &

& Beauty markets represented approximately 12%, 7% and 3%, respectively, of our sales in 2024 from these three markets.

Beauty markets represented approximately 11%, 6% and 2%, respectively, of our sales in 2025 to customers in these three

We produce our alcohols and essential ingredients

6 unchanged sentences

All of our production facilities, other than our

Magic Valley plant, were operating for all of 2024, subject to scheduled and unscheduled downtimes to address facility repair and maintenance.

In January 2024, we temporarily hot-idled our Magic

Valley facility to minimize losses from negative regional crush margins and to expedite the installation of additional equipment to achieve

the intended production rate, quality and consistency from our corn oil and high protein system at the facility.

We restarted our Magic

Valley facility in July 2024 and by October 2024, the facility consistently achieved average ethanol production rates at full capacity,

the protein content yield from the plant reached 50% or greater, and we were able to expand our corn oil yields.

Increases in regional

corn basis and declining market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits

of our plant improvements.

As a consequence, we cold-idled our Magic Valley facility on December 31, 2024 to minimize financial losses.

We continue to provide terminal services at the plant and intend to resume operations at the facility when the economic environment in

the region sustainably improves.

We believe that the cold-idling of our Magic Valley facility will have a positive impact on our overall

financial results in 2025 compared to 2024.

As market conditions change, we may increase,

decrease or idle production at one or more operating facilities or resume operations at any idled facility.

Magic Valley plant, were operating for all of 2025, other than for scheduled and unscheduled downtimes to address facility repair and

In January 2024, we temporarily hot-idled our Magic Valley facility

to minimize losses from negative regional crush margins and to expedite the installation of additional equipment to achieve the intended

production rate, quality and consistency from our corn oil and high protein system at the facility.

We restarted our Magic Valley facility

in July 2024 and by October 2024, the facility consistently achieved average ethanol production rates at full capacity, the protein content

yield from the plant reached 50% or greater, and we were able to expand our corn oil yields.

Increases in regional corn basis and declining

market prices for protein and corn oil resulted in overall margin compression, outweighing the economic benefits of our plant improvements.

As a consequence, we cold-idled our Magic Valley facility for all of 2025 and through the filing of this report to minimize financial

We continue to provide ethanol terminaling services at the plant and may resume operations at the facility if the economic

environment in the region sustainably improves.

As market conditions change, we may increase, decrease

or idle production at one or more operating facilities or resume operations at any idled facility.

Marketing and Distribution Segment

We market and distribute all the alcohols and

essential ingredients we produce at our facilities.

We market and distribute all the alcohols and essential

ingredients we produce at our facilities.

We also market and distribute alcohols produced by third parties.

5 unchanged sentences

Our renewable fuels customers are located throughout

the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol

into gasoline.

the Western and Midwestern United States and consist of integrated oil companies and gasoline marketers who blend fuel-grade ethanol into

Our customers depend on us to provide a reliable supply of fuel-grade ethanol and manage the logistics and timing of delivery.

5 unchanged sentences

from a variety of sources.

We market food-grade essential ingredients to

human and pet food markets, our feed products (such as distillers grains) primarily to export markets from our Pekin Campus, and other

feed products to dairies and feedlots, in many cases located near our production facilities.

These customers use our feed products for

livestock as a substitute for corn and other sources of starch and protein.

We sell our corn oil to poultry, renewable diesel and biodiesel

We market food-grade essential ingredients to human

and pet food markets, our feed products (such as distillers grains) primarily to export markets from our Pekin Campus, and other feed

products to dairies and feedlots, in many cases located near our production facilities.

These customers use our feed products for livestock

as a substitute for corn and other sources of starch and protein.

We sell our corn oil to poultry, renewable diesel and biodiesel customers.

See “Note 5 – Segments” to our

1 unchanged sentence

Financial Review, Current Initiatives and Outlook

Our fourth quarter and full-year financial results

reflect challenging market conditions, including lower crush margins, compared to the fourth quarter of 2023 and the prior full year.

As discussed below, we took decisive action to rationalize our business which, together with over $30 million in associated asset impairments,

resulted in a material portion of the substantial non-cash, one-time expenses for the fourth quarter and full year 2024, resetting our

We also reduced our annual expense run rate by nearly $8 million.

Together with improved performance at our Pekin Campus wet mill,

our synergistic acquisition of premium liquid CO 2 processing and our entry into the European market through International

Sustainability and Carbon Certification, or ISCC, product sales, we are optimistic about 2025.

As part of our ongoing efforts to maximize shareholder

value, we have engaged an investment banking firm to explore the sale of our production facilities located in Oregon and Idaho.

with the assistance of our financial and legal advisors, we are considering a broad range of other options, including asset sales, a merger

or other strategic transactions to better align our long-term value potential.

In January, we acquired Kodiak Carbonic, a beverage-grade

liquid CO 2 processor, for $7.6 million.

This processing facility, renamed Alto Carbonic, is located adjacent to our Columbia

plant in Boardman, Oregon and has been operating profitably since 2015.

Alto Carbonic processes biogenic CO 2

gas produced as a byproduct of the fermentation process at our Columbia plant and converts it into premium liquid CO 2 .

finished product is sold into the Northwestern region of the United States for use in food and beverage processing, industrial cooling,

and other applications.

The facility produces an average of approximately 56,000 tons annually of liquid CO 2 with the capacity

to produce over 70,000 tons annually and the potential for further expansion.

Alto Carbonic currently uses only 50% of our Columbia plant’s

biogenic CO 2 gas.

Simultaneous with this acquisition, we entered

into an amended long-term sales offtake agreement with a leading North American industrial gas supplier.

The acquisition is immediately

accretive and has a compelling payback of approximately two years.

We are in the process of integrating the liquid CO 2 plant

with our Columbia facility, improving coordination between operations.

We expect to realize additional cost savings through synergies

in production and overhead.

We are also evaluating an opportunity to increase storage capacity at the site to improve logistics and take

advantage of spot market demand for premium liquid CO 2 .

The acquisition immediately stems the recent lack

of profitability at our Columbia plant, provides a stronger financial foundation to overcome competitive challenges for destination plants

and significantly increases the value of these combined assets.

We integrated Eagle Alcohol’s high quality

alcohol bulk operations and customers into our Pekin Campus and Kinergy businesses and have now turned our focus to converting Eagle Alcohol’s

break-bulk warehousing and trucking operations into a profitable service center.

We also decreased staff at other operations, reducing

overhead run-rates of both costs of goods sold and selling, general and administrative expenses.

In total, we reduced headcount by 16%

and expect to save nearly $8 million annually from these efficiencies, improving our bottom-line run rate and helping us manage our liquidity.

We expect to realize the full annualized financial benefit from these cost saving initiatives beginning in the second quarter.

As an additional cost saving initiative, we cold-idled

our Magic Valley facility at the end of 2024.

For context, starting in 2022, we saw an opportunity to take advantage of premium prices

for high quality protein and corn oil.

Consistent with our business strategy to improve yields of high margin products, we undertook

the installation and ultimate commissioning of high-quality protein and corn oil technology at our Magic Valley plant.

The installation

took much longer and cost significantly more than expected.

In addition, we underestimated the negative impact that the buildout of renewable

diesel and soy crush capacity would have on market prices for protein and corn oil in the region.

Compounded by the dramatic swing in

delivered corn prices for Western operations compared to our Midwestern facilities, it became impossible to operate our Magic Valley

facility profitably.

By cold idling the plant and reducing our variable and fixed costs as much as possible, we have stopped this drag

on the profitable areas of our business.

In the fourth quarter, we took a significant impairment charge related to the Magic Valley plant.

To partially offset remaining carry expenses, and to serve our customers in the area, we are opportunistically using the facility as

a renewable fuel terminal.

At our Pekin Campus, we continue to pursue opportunities

to optimize carbon, which historically was considered a waste stream with only marginal value.

In November, we achieved an important

milestone by finalizing our CO 2 transportation and sequestration agreement with Vault 44.01, or Vault.

This partnership is

critical to our carbon capture and storage, or CCS, project.

In December, Vault submitted the formal application to the EPA for our CCS

project to obtain the Class VI permit required to begin construction of the CCS pipeline and for long-term CO 2 storage in

deep geological formations.

CCS operations require significant development

and planning.

The EPA requires extensive site analysis, monitoring and safety measures to safeguard underground water supplies.

process is currently estimated to take at least two years.

We expect that this approval timeline will also allow the time necessary to

address Illinois’s current moratorium on new CO 2 pipelines imposed as part of its SAFE CCS Act.

The moratorium is in

effect until the earlier of July 2026 or revised federal safety standards are established.

Although progress on our CCS project has been

slow, significant changes have occurred in the political and regulatory environment, as well as the carbon market, during that time.

Our deliberate pace has been advantageous as we navigate these changes and discover effective paths forward.

The extended period required

for regulatory approvals affords us additional time to develop the necessary infrastructure plans, including compression and energy solutions.

We also intend to use the additional time to secure necessary financing.

Finally, working with Vault, we are focused on meeting with

local groups and authorities to educate the community about our CCS project, strengthen support and address concerns.

At our Pekin Campus, we are proactively modifying

our operations to deliver higher value products.

Following our biennial wet mill outage in spring 2024, we improved plant utilization,

operating the wet mill at nameplate capacity of 100 million gallons.

Pekin Campus production volume in the fourth quarter increased 3.8

million gallons over the prior year period.

This 7% increase demonstrates the effectiveness of our maintenance program.

Carrying these

improvements into 2025, we expect to produce an additional 8 million gallons for the full year, lowering our per gallon cost of production

and enabling us to produce a greater volume of specialty alcohols.

We applied for, and in late summer obtained for

our Pekin Campus, ISCC certification for our renewable fuels business to allow us to ship qualified renewable fuel to the European Union

where we typically are able to garner premium prices compared to domestic markets.

We began exporting certified renewable fuel to European

markets in the fourth quarter and anticipate expanding exports in 2025.

In our premium specialty alcohol business, we

continue to materially differentiate our products through our certifications and customer relationships.

For 2024, we sold nearly 92

million gallons of specialty alcohols.

In 2025, our goal is to balance production levels between specialty alcohols and ISCC renewable

fuels to maximize margins while addressing customer needs.

We also completed another ISO 9001 audit with no adverse findings, a testament

to our culture of quality.

For the fourth quarter, we sold 95.1 million gallons,

up from 92.5 million gallons for the same period in 2023, largely reflecting production improvements at our Pekin Campus from our planned

repairs and maintenance program.

However, our sales price per gallon averaged $1.88 in the fourth quarter compared to $2.24 for the same

period in 2023, reducing net sales by $38 million for the year over year period.

Market crush margins declined nearly 18 cents per gallon

in the fourth quarter resulting in an $8.7 million adverse impact to gross profit for the period.

In addition, returns from protein sales

were negatively impacted by expanded soy crush intended to meet renewable diesel demand, higher wet feed product mix and the inability

of a key customer to take product deliveries following Hurricane Helene.

Low carbon fuel credit prices also declined in the fourth quarter

compared to the prior year period but improved sequentially from the third quarter of 2024 and continue to recover from market lows.

Our realized derivative losses, which are included

in Adjusted EBITDA (defined below), were $3.5 million for the fourth quarter compared to $2.3 million for the prior year period.

derivative gains, which are excluded from Adjusted EBITDA, were $5.5 million for the fourth quarter compared to a loss of $8.2 million

for the prior year period, resulting in a positive $13.7 million year-over-year net difference.

Our non-cash, lower of cost or market

adjustment on physical inventories and mark-to-market on corn commitments resulted in a $3.5 million reserve in the fourth quarter compared

to $2.2 million in the prior year period.

In the fourth quarter, we recognized final acquisition-related expenses for Eagle Alcohol of

$5.7 million, of which $5.0 million was non-cash, compared to $0.7 million in the prior year period.

Asset impairments for the fourth quarter totaled

$24.8 million, consisting of $21.4 million related to the cold idling of our Magic Valley plant and $3.4 million related to the impairment

of intangibles from the integration of certain Eagle Alcohol activities, compared to a $6.0 million impairment in the prior year period

related to Eagle Alcohol’s goodwill.

fourth quarter capped a year of strong execution and was a pivotal milestone in our strategic realignment.

Entering the year, we made

tactical decisions to focus on opportunities under our control to maximize earnings.

We adjusted staffing to align with our current organizational

footprint, captured cost savings, invested in the throughput and efficiency of our plants, culled underperforming business activities

in our marketing and distribution segment, and maintained operational discipline in support of our revenue diversification efforts.

the fourth quarter, gross profit increased $16.6 million and net income improved $63.5 million while Adjusted EBITDA grew by $35.6 million

compared to the same period in 2024.

For the full year, gross profit increased $25.2 million and net income improved $72.4 million while

Adjusted EBITDA grew by $53.2 million compared to the full year 2024.

These robust improvements were driven by multiple key factors,

primarily, increased crush margins, qualified Section 45Z tax credits, strong renewable fuel export sales and our receipt of excess insurance

the fourth quarter, crush margins were $0.23 per gallon compared to $0.08 in the same period in 2024.

An increase in renewable fuel export

sales at premiums to domestic sales contributed $5 million from both higher volumes and a higher average sales price per gallon.

realized $2.6 million less in compensation costs for the quarter due to staff reductions implemented earlier in the year, including the

impact of idling our Magic Valley plant and a gain on our annual pension valuation adjustment.

In addition, the sale of Oregon carbon

credits contributed an additional $2.9 million due to improved market pricing.

continued to benefit in the fourth quarter from our Alto Carbonic acquisition, which contributed $1.4 million in gross profit to our

Western Production segment.

With the idling of our Magic Valley facility, our Western Production segment achieved positive gross

profit for the quarter and for the full year.

With high-value liquid CO 2 now in our product mix, our essential

ingredients return at our Western Production segment improved to 48% in the fourth quarter from 30% for the same period in 2024 and

contributed to an increase in our overall 2025 consolidated return of 52% compared to 43% for the full-year 2024.

offsetting these improvements was net negative $4.2 million in combined realized and unrealized changes in derivatives at period

made significant progress in determining the amount of Section 45Z transferable tax credits for 2025 and associated incremental earnings.

We expect to qualify approximately 90 million gallons of combined production on an annual basis for Section 45Z credits at our Columbia

and Pekin dry mill facilities.

In the fourth quarter, we recorded $7.5 million, or $0.10 per gallon, net of monetization costs, in Section

45Z credit earnings for the full year.

For 2026, with the removal of the indirect land use change (iLUC) from the GREET model, we expect

to qualify for $0.20 per gallon at our Columbia and Pekin dry mill facilities and to generate approximately $15 million in total net

We continue to pursue opportunities to further lower our carbon scores.

Our Pekin wet mill and our ICP plant do not currently

qualify for these tax credits, but those facilities are advantaged to serve a variety of domestic and export markets with alcohol supplies

predominantly sold at a premium to renewable fuel.

respect to our efforts to optimize and monetize our Western assets, as previously disclosed, current market conditions, including operational

improvements, together with the positive impact of our Alto Carbonic acquisition, have materially changed our calculus for simply selling

the facilities.

Given our Columbia plant’s improved profitability, we are no longer actively marketing this asset.

to evaluate all options for our Magic Valley facility, including selling the plant as well as restarting and capturing Section 45Z credits

and monetizing the valuable CO 2 the facility would produce.

2026, we plan to boost our capital expenditures to approximately $25 million while maintaining strong cost discipline and prioritizing

projects with the highest return on investment.

Approximately 45% of our capital expenditures budget is earmarked for maintenance projects

while the remaining 55% is allocated to optimization projects, including to implement higher production capacity at our Pekin dry mill.

Included in the $25 million budget are the costs to complete repairs of our existing damaged Pekin Campus dock and to add a second alcohol

loadout dock.

We are building the second dock to mitigate future business interruption and enhance our logistical capabilities by expanding

throughput and creating redundancy.

We expect to begin repairing the original dock and installing the second dock this spring, and we

anticipate completing both projects by the end of 2026.

entered 2026 with a leaner cost structure and a better mix of premium exports and carbon utilization, as well as expanded CO₂ opportunities

and potential upside from Section 45Z tax credits.

We addressed losses at underperforming assets, removed structural costs and repositioned

our portfolio toward higher value and more consistent revenue streams, and we are moving forward with plans to improve our return on

Improving our operations should strengthen our ability to capitalize on favorable margin environments, stabilize our business

when margins are compressed and ensure that our assets are producing positive returns.

In 2026, we intend to focus on factors within

our control, driving improved profitability and executing on multiple opportunities to grow earnings.

first quarter is a seasonally challenging period, and in January 2026, extreme cold weather disrupted river logistics and curtailed production

at our Pekin Campus.

We took advantage of the downtime to accelerate some of our planned repairs scheduled for the second quarter during

our biennial wet mill outage.

This has allowed us to defer the remaining work until the spring of 2027 and to recoup January’s

lost production volumes in the second quarter.

As to additional outages planned for 2026, we expect normal second quarter outages at

our Columbia and ICP facilities, consistent with planned outages in 2025.

In the second half of 2026, our Pekin dry mill is scheduled

for a longer outage to implement a capacity project to increase production at the facility by approximately 8%, further improving the

plant’s profitability.

utilization remains a compelling opportunity as demand for liquid CO 2 continues to rise.

In 2026, we intend to capitalize

further on demand growth in the Pacific Northwest and on our liquid CO 2 processing capabilities by increasing our throughput

volume and storage capacity.

We are also assessing large scale CO 2 utilization and sequestration opportunities at our Pekin

Campus and we are developing plans to capture more value for our CO 2 as rapidly as possible.

We have contracted to sell a

significant volume of renewable fuel exports for the first half of 2026 and we see more opportunities to expand volumes and premiums

in this market.

In addition, we are on track for 2026 to match our high-quality alcohol volumes in 2025.

on the regulatory front, we continue to view E15 as a meaningful long-term demand tailwind for the farming and renewable fuel industries.

While permanent nationwide adoption is not yet finalized, the EPA has consistently supported summer E15 sales through waivers, and entering

2026, political momentum has strengthened with renewed Administration and bipartisan Congressional support.

Taken together, we believe

the trajectory for E15 remains clearly positive and supportive of incremental ethanol demand over time.

Use of Non-GAAP Financial Measures

1 unchanged sentence

certain financial measures not in accordance with generally accepted accounting principles, or GAAP, are useful measures of operations.

Management provides EBITDA and Adjusted EBITDA as non-GAAP financial measures so that investors will have the same financial information

Management provides Adjusted EBITDA as a non-GAAP financial measure so that investors will have the same financial information

that management uses, which may assist investors in properly assessing our performance on a period-over-period basis.

We define EBITDA as unaudited

consolidated net income (loss) before interest expense, interest income, provision for income taxes and depreciation and amortization

We define Adjusted EBITDA as unaudited consolidated net income (loss) before interest expense, interest income, unrealized derivative

gains and losses, acquisition-related expense, provision for income taxes, asset impairments, and depreciation and amortization expense.

A table is provided below

to reconcile Adjusted EBITDA to its most directly comparable GAAP measure, consolidated net income (loss).

EBITDA and Adjusted EBITDA

are not measures of financial performance under GAAP and should not be considered as alternatives to consolidated net income (loss) or

any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash

flows or as a measure of liquidity.

EBITDA and Adjusted EBITDA have limitations as analytical tools and you should not consider these

measures in isolation or as a substitute for analysis of our results as reported under GAAP.

gains and losses, excess insurance proceeds, acquisition-related expense (recoveries), provision or benefit for income taxes, asset impairments,

and depreciation and amortization expense.

table is provided below to reconcile Adjusted EBITDA to its most directly comparable GAAP measure, consolidated net income (loss).

Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as an alternative to consolidated

net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities

as an indicator of cash flows or as a measure of liquidity.

Adjusted EBITDA has limitations as an analytical tool and you should

not consider this measure in isolation or as a substitute for analysis of our results as reported under GAAP.

Information reconciling

forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income (loss) would require a forward-looking statement

forward-looking Adjusted EBITDA to forward-looking consolidated net income (loss) would require a forward-looking statement

of consolidated net income (loss) prepared in accordance with GAAP, which is unavailable to us without unreasonable effort.

able to provide a quantitative reconciliation of forward-looking EBITDA or Adjusted EBITDA to forward-looking consolidated net income

able to provide a quantitative reconciliation of forward-looking Adjusted EBITDA to forward-looking consolidated net income

(loss) because certain items required for reconciliation are uncertain, outside of our control and/or cannot reasonably be predicted,

1 unchanged sentence

which we view as the most material components of consolidated net income (loss) that are not presently estimable.

Reconciliation of

Adjusted EBITDA to Consolidated Net Loss

Reconciliation of Adjusted

EBITDA to Consolidated Net Income (Loss)

Three Months Ended

(in thousands) (unaudited)

Consolidated net loss

Consolidated net income (loss)

Interest expense, net

1 unchanged sentence

Unrealized derivative (gains) losses

Acquisition-related expense

Excess insurance proceeds

Acquisition-related expense (recoveries)

Asset impairments

Provision for income taxes

Provision (benefit) for income taxes

Depreciation and amortization expense

2 unchanged sentences

2025 Financial Performance Summary

Our consolidated net sales declined by $0.3 billion

Our consolidated net sales declined by $47.3 million

to $0.9 billion for 2025 from $1.0 billion for 2024.

Our net loss attributable to common stockholders increased by $31.0 million to a

net loss of $60.3 million for 2024 from a net loss of $29.3 million for 2023.

Our net income (loss) attributable to common stockholders increased by $72.4 million

to $12.1 million for 2025 from a net loss of $60.3 million for 2024.

Factors that contributed to these results of operations

for 2025 include:

Our net sales decline of $0.3 billion was due to a decline in our average sales

price per gallon and fewer tons of essential ingredients sold, partially offset by an increase

in total alcohol gallons sold.

o Our average

sales price per gallon declined by $0.52, or 21%, to $1.95 for 2024 from $2.47 for 2023.

The decline was primarily driven by lower renewable fuel prices in 2024 largely due to lower

oil and gasoline prices.

of essential ingredients sold declined by 0.1 million tons, or 7%, to 1.4 million tons for

2024 from 1.5 million tons for 2023 primarily due to lower alcohol production volumes during

Our average sales price for our essential ingredients also declined primarily due to

lower corn prices.

gallons sold increased by 3.5 million gallons, or 1%, to 386.0 million gallons for 2024 from

382.5 million gallons for 2023.

◾ Our specialty alcohol

production sales volume increased by 14.8 million gallons, or 19%, to 91.5 million gallons

for 2024 from 76.7 million gallons for 2023 primarily due to increased customer demand for

specialty alcohols during the year.

◾ Our third-party sales

volume increased by 5.7 million gallons, or 6%, to 108.3 million gallons for 2024 from 102.6

million gallons for 2023.

This increase resulted from our fulfillment of customer contracts

for renewable fuels using third party volumes while our Magic Valley and Pekin Campus plants

were offline in 2024.

◾ Our renewable fuel

production sales volume declined by 17.0 million gallons, or 8%, to 186.2 million gallons

for 2024 from 203.2 million gallons for 2023, primarily due to reduced production in 2024

as our Magic Valley facility was hot-idled for most of the first half of 2024 coupled with

scheduled production downtime at our Pekin Campus for repairs and maintenance.

Our gross profit declined by $5.9 million to a gross profit of $9.7 million for

2024 from $15.7 million for 2023 partially due to weakened commodity crush margins from lower

ethanol sales prices as well as lower corn prices which reduced profits from our essential

Our gross profit and margins were further impacted by production challenges

at our Magic Valley plant as we continued to incur costs to implement our high-protein and

corn oil system at the facility coupled with higher repairs and maintenance costs due to

our scheduled downtime at our Pekin Campus.

● Net sales .

Our net sales decline of $47.3 million was due to a decline in total gallons of

alcohol sold and fewer tons of essential ingredients sold, partially offset by an increase in our average sales price per gallon.

○ Our average sales price per gallon increased by $0.07, or 4%, to $2.02 for 2025 from $1.95 for 2024.

The improvement was primarily

driven by higher renewable fuel prices in 2025 largely due to higher gasoline prices.

○ Our volume of essential ingredients sold declined by 0.2 million tons, or 14%, to 1.2 million tons for 2025 from 1.4 million tons

for 2024 primarily due to lower alcohol production volumes during 2025, as our Magic Valley facility was cold-idled for all of 2025.

○ Our total gallons of alcohol sold decreased by 35.9 million gallons, or 9%, to 350.1 million gallons for 2025 from 386.0 million gallons

renewable fuel production sales volume declined by 31.0 million gallons, or 17%, to 155.2

million gallons for 2025 from 186.2 million gallons for 2024, primarily due to the cold idling

of our Magic Valley facility for all of 2025 resulting in no production from the facility.

third-party sales volume decreased by 1.4 million gallons, or 1%, to 106.9 million gallons

for 2025 from 108.3 million gallons for 2024 primarily due to less volume sold in the market

around our Magic Valley facility.

specialty alcohol production sales volume decreased by 3.5 million gallons, or 4%, to 88.0

million gallons for 2025 from 91.5 million gallons for 2024 primarily due to decreased customer

demand for specialty alcohols during the year.

● Gross Profit .

Our gross profit increased $25.2 million to a gross profit of $34.9 million for 2025 from $9.7 million for 2024

due to stronger commodity crush margins from higher ethanol sales prices as well as lower corn costs.

Our gross profit and margins were

further positively impacted by our acquisition of Kodiak Carbonic and the cold-idling of our Magic Valley facility.

Sales and Margins

We generate sales by marketing all of the

alcohols produced by our three production facilities in Illinois, all of the fuel-grade ethanol produced by our production

facilities in Oregon and Idaho, and fuel-grade ethanol purchased from third-party suppliers throughout the United States.

market essential ingredients produced by our production facilities, including dried yeast, corn protein meal, corn protein feed,

corn germ, and distillers grains and liquid feed used in commercial animal feed and pet foods.

We also sell yeast and liquid

CO 2 for human consumption.

We generate sales by marketing all of the alcohols

produced by our three production facilities in Illinois, all of the fuel-grade ethanol produced by our production facilities in Oregon

and Idaho, and fuel-grade ethanol purchased from third-party suppliers throughout the United States.

We also market essential ingredients

produced by our production facilities, including dried yeast, corn protein meal, corn protein feed, corn germ, distillers corn oil and

distillers grains and liquid feed used in commercial animal feed and pet foods.

We also sell yeast and gas and liquid CO 2 for

human consumption.

Our profitability is highly dependent on various

commodity prices, including the market prices of corn, natural gas and fuel-grade ethanol.

Our consolidated average alcohol sales price declined

by 21% to $1.95 per gallon for 2024 compared to $2.47 per gallon for 2023.

The average price of fuel-grade ethanol as reported by the

Chicago Mercantile Exchange, or CME, declined by 24% to $1.69 per gallon for 2024 compared to $2.22 per gallon for 2023.

cost of corn declined by 28% to $4.72 per bushel for 2024 from $6.58 per bushel for 2023.

The average price of corn as reported by the

CME declined by 25% to $4.24 per bushel for 2024 from $5.64 per bushel for 2023.

Our consolidated average

alcohol sales price improved by 4% to $2.02 per gallon for 2025 compared to $1.95 per gallon for 2024.

The average price of

fuel-grade ethanol as reported by the Chicago Mercantile Exchange, or CME, also improved by 4% to $1.76 per gallon for 2025 compared

to $1.69 per gallon for 2024.

Our consolidated average cost of corn declined by 1% to $4.68 per bushel for 2025 from $4.72 per

bushel for 2024.

The average price of corn as reported by the CME increased 4% to $4.39 per bushel for 2025 from $4.24 per bushel

We believe that our gross profit margins depend

primarily on the following key factors:

prices of our specialty alcohols and the market price of fuel-grade ethanol, the latter of

which is impacted by the price of gasoline and related petroleum products, and government

regulation, including government ethanol mandates;

market prices of key production input commodities, such as corn (including corn basis) and

market prices of our essential ingredients;

variable costs (other than production input commodities), such as production and other personnel

ability to anticipate trends in the market and contracted prices of our alcohols, essential

ingredients, and costs of key input commodities, and our ability to implement appropriate

risk management through hedging and other means, and opportunistic pricing strategies, as

well as the financial results of those hedging activities;

proportion of our sales of specialty alcohols to our sales of fuel-grade ethanol produced

at our facilities relative to their respective market and contracted prices;

proportion of our sales of fuel-grade ethanol produced at our facilities to our sales of

fuel-grade ethanol produced by unrelated third-parties relative to the market price of fuel-grade

ethanol and marketing and distribution fees payable for third-party sales.

● the prices of our specialty alcohols and the market price of fuel-grade ethanol, the latter of which is impacted by the price of gasoline

and related petroleum products, and government regulations, including government ethanol mandates;

● the market prices of key production input commodities, such as corn (including corn basis) and natural gas;

● the market prices of our essential ingredients;

● key variable costs (other than production input commodities), such as production and other personnel staffing;

● our ability to anticipate trends in the market and contracted prices of our alcohols, essential ingredients, and costs of key input

commodities, and our ability to implement appropriate risk management through hedging and other means, and opportunistic pricing strategies,

as well as the financial results of those hedging activities;

● the proportion of our sales of specialty alcohols to our sales of fuel-grade ethanol produced at our facilities relative to their

respective market and contracted prices;

● the proportion of our sales of fuel-grade ethanol produced at our facilities to our sales of fuel-grade ethanol produced by unrelated

third-parties relative to the market price of fuel-grade ethanol and marketing and distribution fees payable for third-party sales.

We seek to optimize our gross profit margins by

12 unchanged sentences

factors, we are unable to estimate our future sales or gross profit margins.

of Operations

Financial Information

The following selected

financial information should be read in conjunction with our consolidated financial statements and notes to our consolidated financial

statements included elsewhere in this report, and the other sections of “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” contained in this report.

Certain performance

metrics that we believe are important indicators of our results of operations include:

Certain performance

metrics that we believe are important indicators of our results of operations include the following:

Results of Operations

Selected Financial Information

The following selected financial information should

be read in conjunction with our consolidated financial statements and notes to our consolidated financial statements included elsewhere

in this report, and the other sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

contained in this report.

Certain performance metrics that we believe are

important indicators of our results of operations include the following:

Percentage Change

34 unchanged sentences

Consolidated Total Return

(1) Assumes corn conversion of 2.80 gallons of alcohol per bushel

(2) Essential ingredients revenues as a percentage of total corn

costs consumed.

Year Ended December 31, 2024 Compared to the Year Ended

December 31, 2023

(1) Assumes corn conversion of 2.80 gallons of alcohol per bushel of corn.

(2) Essential ingredients revenues as a percentage of total corn costs consumed.

Year Ended December 31, 2025 Compared

to the Year Ended December 31, 2024

Results as a Percentage

3 unchanged sentences

Selling, general and administrative expenses

Acquisition-related expenses

Gain (loss) on sale (disposal) of assets

Acquisition-related recoveries (expenses)

Gain on sale of assets

Asset impairments

Loss from operations

Income from cash grant

Income (loss) from operations

Transferable tax credits, net

Excess insurance proceeds

Interest expense, net

Other income, net

Loss before provision for income taxes

Provision for income taxes

Consolidated net loss

Income (loss) before provision (benefit) for income taxes

Provision (benefit) for income taxes

Consolidated net income (loss)

Preferred stock dividends

Loss attributable to common stockholders

Income (loss) attributable to common stockholders

* Not meaningful.

The decline in our consolidated net sales for

2024 as compared to 2023 was due to a decrease in our average sales price per gallon for our alcohols and lower volumes of essential

ingredients sold at lower prices, partially offset by a higher volume of alcohol sold.

Our average sales price per gallon declined primarily

due to lower fuel-grade ethanol prices largely driven by lower oil and gasoline prices in 2024 compared to the prior year.

We also produced and sold fewer tons of essential

ingredients primarily due to lower alcohol production in 2024 compared to 2023.

Our average sales price for our essential ingredients

declined primarily due to lower corn prices.

Partially offsetting these declines, we sold more

total gallons for 2024 as compared to 2023 resulting primarily from an increase in our specialty alcohol gallons sold and third-party

gallons sold, partially offset by lower renewable fuel production gallons sold due to downtime at both our Magic Valley facility and

our Pekin Campus, as discussed above.

We were able to produce and sell more specialty alcohol due in part to higher production from our

Pekin Campus wet mill after our biennial maintenance outage during the year.

decline in our consolidated net sales for 2025 as compared to 2024 was due to a decrease in our volume of alcohol sold and

lower volumes of essential ingredients sold, partially offset by an increase in our average alcohol sales price per gallon.

The decreases

in our volumes of alcohol and essential ingredients sold were primarily due to the cold-idling of our Magic Valley facility for

all of 2025 and a higher volume of product in transit at the end of the year.

Pekin Campus Production Segment

Net sales of alcohol from our Pekin Campus production

segment declined by $86.5 million, or 17%, to $415.7 million for 2024 as compared to $502.2 million for 2023.

Our total volume of production

gallons sold, however, increased by 4.7 million gallons, or 2%, to 213.6 million gallons for 2024 as compared to 208.9 million gallons

for 2023, due to production benefits realized in second half of the year from our biennial maintenance performed in Spring 2024 resulting

in higher production rates.

segment increased by less than $0.1 million, or 0%, to $415.8 million for 2025 as compared to $415.7 million for 2024.

Our total volume

of production gallons sold, decreased by 5.2 million gallons, or 2%, to 208.4 million gallons for 2025 as compared to 213.6 million gallons

for 2024, due to the timing of shipments at year-end.

At the segment’s average sales price per

gallon of $1.95 for 2024, we generated $9.1 million in additional net sales from the 4.7 million additional gallons of alcohol sold in

2024 as compared to 2023.

However, a decrease of $0.45, or 19%, in the segment’s average sales price per gallon in 2024 as compared

to 2023 resulted in a $95.6 million decline in net sales as compared to 2023.

Net sales of essential ingredients declined by

gallon of $2.00 for 2025, we generated $10.4 million less in net sales from the 5.2 million fewer gallons of alcohol sold in 2025 as compared

However, an increase of $0.05, or 3%, in the segment’s average sales price per gallon in 2025 as compared to 2024 resulted

in a $10.4 million increase in net sales in 2025 as compared to 2024.

Net sales of essential ingredients increased by

$5.3 million, or 3%, to $174.6 million for 2025 as compared to $169.3 million for 2024.

2 unchanged sentences

Sales volumes of essential ingredients from our

Pekin Campus were higher in 2024 due to higher production rates for the year.

Pekin Campus were higher in 2025 due to timing of shipments.

An increase of $3.05, or 2%, in our average sales price per ton in 2025 as

compared to 2024 resulted in a $2.8 million increase in net sales as compared to 2024.

At our average sales price per ton of $189.86 for

we generated $5.2 million in additional net sales from the 27,900 additional tons of essential ingredients sold in 2024 as compared to

A decrease of $61.03, or 25%, in our average sales price per ton in 2024 as compared to 2023 resulted in a $53.6 million decline

in net sales as compared to 2023.

2025, we generated $2.5 million in additional net sales from the 13,300 additional tons of essential ingredients sold in 2025 as compared

Marketing and Distribution Segment

Net sales of renewable fuel from our marketing

and distribution segment, excluding intersegment sales, decreased by $46.5 million, or 18%, to $216.5 million for 2024 as compared to

and distribution segment, excluding intersegment sales, increased by $4.8 million, or 2%, to $221.3 million for 2025 as compared to $216.5

million for 2024.

Our volume of third-party renewable fuel sold

reported gross by the segment increased by 5.7 million gallons, or 6%, to 108.3 million gallons for 2024 as compared to 102.6 million

gallons for 2023.

This increase resulted from a shift in the source of renewable fuel from our Magic Valley facility to third-party suppliers.

At the segment’s average sales price per gallon of $2.00 for 2024, net sales were $11.4 million higher as a result of the 5.7 million

additional gallons sold in 2024 as compared to 2023.

This increase was partially offset by the $0.56 decrease in our average sales price

per gallon for 2024.

The decrease of $0.56, or 22%, in our average sales price per gallon in 2024 as compared to 2023 resulted in a $57.9

million decline in net sales from our third-party renewable fuel sold by the segment compared to 2023.

Our volume of third-party renewable fuel sold reported

gross by the segment decreased by 1.4 million gallons, or 1%, to 106.9 million gallons for 2025 as compared to 108.3 million gallons for

The increase of $0.07, or 4%, in our average sales price per gallon in 2025 as compared to 2024 resulted in a $7.7 million increase

in net sales in 2025 from our third-party renewable fuel sold by the segment compared to 2024.

At the segment’s average sales price

per gallon of $2.07 for 2025, net sales were $2.9 million lower as a result of the 1.4 million fewer gallons sold in 2025 as compared

Western Production Segment

3 unchanged sentences

sold declined by 27.9 million gallons, or 46%, to 32.6 million gallons for 2025 as compared to 60.5 million gallons for 2024.

in sales volume primarily resulted from lower production from our Magic Valley facility.

At the segment’s average sales price of

$1.91 per gallon for 2024, net sales were $12.4 million lower as a result of the 6.5 million fewer gallons sold in 2024 as compared to

A decline of $0.58, or 23%, in our average sales price per gallon in 2024 as compared to 2023 resulted in a $39.2 million decrease

in net sales of alcohol from the segment compared to 2023.

in sales volume primarily resulted from the cold-idling of our Magic Valley facility for all of 2025.

At the segment’s average sales

price of $2.06 per gallon for 2025, net sales were $57.5 million lower as a result of the 27.9 million fewer gallons sold in 2025 as compared

This decrease was partially offset by an increase of $0.15, or 8%, in our average sales price per gallon in 2025 as compared

to 2024 resulting in a $9.4 million increase in net sales of alcohol from the segment compared to 2024.

Net sales of essential ingredients declined by

4 unchanged sentences

2025, net sales were $22.6 million lower as a result of the 215,000 fewer tons sold in 2025 as compared to 2024.

In addition, our sales

price declined by $17.35 per ton for 2024.

The decline of $17.35, or 19%, in our average sales price per ton in 2024 as compared to 2023

resulted in a decrease of $11.1 million in net sales of essential ingredients from the segment compared to 2023.

This decline was partially

offset by a higher sales price, which increased by $33.50 per ton for 2025.

The increase of $33.50, or 47%, in our average sales price

per ton in 2025 as compared to 2024 resulted in an increase of $17.2 million in net sales of essential ingredients from the segment compared

Corporate and Other Segment

Net sales from our Corporate and other segment,

declined by $4.4 million or 28% to $11.4 million for 2024 as compared to $15.8 million for 2023.

These results are from Eagle Alcohol’s

which is comprised of our Eagle Alcohol business, declined by $4.0 million, or 35%, to $7.4 million for 2025 as compared to $11.4 million

Cost of Goods Sold and Gross Profit

Our consolidated gross profit declined to a gross

profit of $9.7 million, representing a gross margin of 1.0% for 2024, from $15.7 million, representing a gross margin of 1.3%, for 2023.

Our consolidated gross profit declined due to lower overall commodity crush margins, particularly for renewable fuel, primarily due to

lower sales prices as well as lower margins on essential ingredients sold due to lower corn prices.

We spent a total of $34.6 million

for repairs and maintenance, in-line with our 2024 estimate.

Our consolidated gross profit improved to $34.9

million, representing a gross margin of 3.8% for 2025, from $9.7 million, representing a gross margin of 1.0%, for 2024.

Our consolidated

gross profit improved due to higher overall commodity crush margins, increased export sales at premium prices to domestic renewable fuel

and overall cost savings.

In 2025, we spent a total of $30.1 million for repairs and maintenance, in line with our annual estimate.

Pekin Campus Production Segment

Our Pekin Campus production segment’s gross

profit improved by $12.7 million to a gross profit of $25.9 million from $13.3 million.

Of this increase, $12.1 million is attributable

to higher commodity crush margins and $0.6 million is attributable to increased sales volumes in 2024 as compared to 2023.

profit declined by $3.8 million to a gross profit of $22.1 million from $25.9 million.

Of this decrease, $3.2 million is attributable

to lower commodity crush margins and $0.6 million is attributable to decreased sales volumes in 2025 as compared to 2024.

Marketing and Distribution Segment

Our marketing and distribution segment’s

gross profit declined by $0.2 million to a gross profit of $4.0 million for 2024 from $4.2 million for 2023.

Of this decrease, $0.4 million

is attributable to lower margins from sales of third-party renewable fuel, partially offset by an increase of $0.2 million attributable

to higher marketing volumes of third-party renewable fuel sold reported gross in 2024 as compared to 2023.

gross profit improved by $5.1 million to a gross profit of $9.1 million for 2025 from $4.0 million for 2024.

Of this increase, $5.2 million

is attributable to higher margins from sales of third-party renewable fuel, partially offset by a decrease of $0.1 million attributable

to lower marketing volumes of third-party renewable fuel sold reported gross in 2025 as compared to 2024.

Western Production Segment

Our Western production segment’s gross loss

worsened by $13.8 million to a gross loss of $19.3 million for 2024 as compared to a gross loss of $5.5 million for 2023.

Of this decline,

$15.8 million is attributable to significantly lower margins for renewable fuel, partially offset by $2.0 million attributable to lower

Our Western production segment’s gross profit

improved by $22.3 million to a gross profit of $3.0 million for 2025 as compared to a gross loss of $19.3 million for 2024.

Of this improvement,

$24.9 million is attributable to significantly higher margins for renewable fuel, partially offset by $2.6 million attributable to lower

sales volumes at negative margins in 2025 as compared to 2024.

Corporate and Other Segment

Gross profit and loss from our Corporate and other

segment was a gross loss of $0.9 million for 2024 and a gross profit of $3.7 million for 2023, primarily from Eagle Alcohol’s business.

Our Corporate and other segment reported a gross

profit of $0.7 million for 2025 and a gross loss of $0.9 million for 2024, primarily from Eagle Alcohol’s business.

Selling, General and Administrative Expenses

2 unchanged sentences

SG&A expenses decreased primarily

due to lower professional fees.

due to lower operating costs, including reduced staff levels, and professional fees.

Acquisition-related Expenses

Our acquisition-related expenses increased by

$4.9 million to $7.7 million for 2024 as compared to $2.8 million for 2023.

These expenses relate to the acceleration of stock

payments to the former owners of Eagle Alcohol.

Our acquisition-related expenses decreased by $8.2

million to a recovery of $0.5 million for 2025 as compared to $7.7 million for 2024.

In 2024, we accelerated and accrued all remaining

amounts payable in 2025 for our acquisition of Eagle Alcohol.

We paid out a final amount in 2025 that was $0.5 million less than the amount

we accrued in 2024.

We have no further payment obligations for our acquisition of Eagle Alcohol.

Asset Impairments

We recorded asset impairment charges of $24.8

million for 2024 as compared $6.5 million for 2023.

The 2024 impairments reflect $21.4 million for our Magic Valley asset group, as we

cold-idled the plant at the end of the year, and $3.4 million for intangible assets of Eagle Alcohol.

The 2023 impairments relate to

the goodwill associated with our acquisition of Eagle Alcohol.

We recorded asset impairment charges of $0.8 million

for 2025 as compared to $24.8 million for 2024.

The 2025 impairments relate to certain abandoned projects.

The 2024 impairments reflect

$21.4 million for our Magic Valley asset group, as we cold-idled the plant at the end of the year, and $3.4 million for intangible assets

of Eagle Alcohol.

Transferable Tax Credits, net

Transferable tax credits, net, for the year ended

December 31, 2025, reflect the recognition of $7.5 million of federal tax credits related to Section 45Z clean fuel production.

Excess Insurance Proceeds

April 2025, our Pekin Campus loading dock was damaged.

We filed a claim with our insurer and received gross proceeds of $10.0 million.

A portion of the proceeds related to extra costs incurred due to logistical challenges as we made temporary repairs to the dock.

The extra costs reimbursed amounted to $3.3 million, with the remaining $6.7 million in proceeds recorded as a gain of excess insurance

We will use these funds to complete the necessary permanent dock repairs and construct a secondary alcohol loadout dock in

Interest Expense, net

2 unchanged sentences

The increase in interest expense, net, is primarily due to higher debt balances,

as well as higher interest rates under Kinergy’s line of credit.

Year Ended December 31, 2023, Compared

to the Year Ended December 31, 2022

as well as higher interest rates under Kinergy’s line of credit and our term debt.

Year Ended December 31, 2024, Compared to

the Year Ended December 31, 2023

An analysis of our financial results comparing

4 unchanged sentences

During the year ended December 31, 2025, we funded

our operations primarily from cash on hand and proceeds from Kinergy’s operating line of credit.

In addition to funding our operations,

we used our capital resources to continue our capital improvement projects, make an annual cash payment related to our acquisition of

Eagle Alcohol and pay preferred stock dividends.

As of December 31, 2024, we had $35.5 million

in cash and cash equivalents and $23.1 million available for borrowing under Kinergy’s operating line of credit.

In addition, we

have up to an additional $65.0 million that may be available for capital improvement projects under our Orion term loan discussed below,

subject to certain conditions.

We believe we have sufficient sources of liquidity to meet our anticipated working capital, debt service,

capital expenditure and other liquidity needs for at least the next twelve months from the date of this report.

our operations primarily from cash on hand, cash generated from our operating activities, and proceeds from Kinergy’s operating

line of credit.

In addition to funding our operations, we used our capital resources to continue our capital improvement projects, purchase

Kodiak Carbonic, make our final cash payment related to our acquisition of Eagle Alcohol and pay preferred stock dividends.

As of December 31, 2025, we had $23.4 million in

cash and cash equivalents and $37.4 million available for borrowing under Kinergy’s operating line of credit.

In addition, we have

up to an additional $65.0 million that may be available for capital improvement projects under our Orion term loan discussed below, subject

to certain conditions.

We believe we have sufficient sources of liquidity to meet our anticipated working capital, debt service, capital

expenditure and other liquidity needs for at least the next twelve months from the date of this report.

Quantitative Year-End Liquidity Status

We believe that the following amounts provide

insight into our liquidity and capital resources.

The following selected financial information should be read in conjunction with our

consolidated financial statements and notes to consolidated financial statements included elsewhere in this report, and the other sections

of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report

(dollars in thousands).

We believe that the following amounts provide insight

into our liquidity and capital resources.

The following selected financial information should be read in conjunction with our consolidated

financial statements and notes to consolidated financial statements included elsewhere in this report, and the other sections of “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” contained in this report (dollars in thousands).

December 31, 2025

December 31, 2024

Cash, cash equivalents and restricted cash

11 unchanged sentences

Changes in Working Capital and Cash Flows

Working capital declined to $95.3 million at December

31, 2024 from $103.5 million at December 31, 2023 as a result of a $15.7 million decrease in current assets, partially offset by a $7.5

million decrease in current liabilities.

Current assets declined primarily due to decreases

in restricted cash, inventories and other current assets.

Our current liabilities declined primarily due to decreases in derivative instruments

and accrued liabilities.

Working capital increased to $96.8 million at December

31, 2025 from $95.3 million at December 31, 2024 as a result of a $2.8 million increase in current assets, partially offset by a $1.3 million increase

in current liabilities.

Current assets increased

due to increases in inventories, transferable tax credits, net, and restricted cash, partially offset by decreases in cash and cash

equivalents and accounts receivable.

Our current liabilities increased due to an increase in the current portion of our long-term

debt, partially offset by decreases in accounts payable and accrued liabilities.

Our cash, cash equivalents and restricted cash

declined by $9.3 million due to $3.5 million of cash used in our operating activities and $13.5 million of cash used in our investing

activities primarily for our capital improvement projects, partially offset by $7.7 million in cash provided by our financing activities,

primarily due to proceeds from our operating line of credit.

Cash used in our Operating Activities

We used $3.5 million in cash in our operating

activities during 2024, as compared to $22.0 million in cash generated from our operating activities in 2023.

declined by $10.5 million due to cash used in our financing activities of $16.4 million for payments on Kinergy’s line of credit

to reduce interest expense, a principal payment on our term debt and preferred stock dividends, and cash used in our investing activities

of $7.4 million for our capital improvement projects, the purchase of Kodiak Carbonic and our final payment to the owners of Eagle Alcohol,

partially offset by cash provided by our operating activities of $13.2 million.

Cash provided by (used in) our Operating Activities

We generated $13.2 million in cash from our operating

activities during 2025, as compared to using $3.5 million in cash from our operating activities in 2024.

Specific factors that contributed

significantly to the change in cash generated by our operating activities include:

increase of $31.0 million in net loss primarily due to lower commodity crush margins and

increased asset impairments;

decrease of $19.1 million related to changes in the fair value of our derivative instruments

due to changes in commodity prices at period-end 2024 as compared to 2023;

decrease of $8.9 million related to accounts receivable balances primarily due to the timing

of sales and collections;

decrease of $7.3 million in inventories due to lower period-end commodity prices.

● an increase of $72.3 million in net income primarily due to higher commodity crush margins;

● an increase of $3.0 million related to changes in the fair value of our derivative instruments due to changes in commodity prices

at December 31, 2025 as compared to December 31, 2024;

● an increase of $2.8 million related to accounts receivable balances primarily due to the timing of sales and collections.

These amounts were partially offset by:

● an increase of $22.5 million related to accounts payable and

accrued expenses due to the timing of payments;

● an increase of $18.2 million in asset impairments primarily

related to the cold-idling of our Magic Valley facility.

● a decrease of $24.0 million in asset impairments primarily related to an asset impairment in 2024 due to the cold-idling of our Magic

Valley facility;

● a decrease of $17.1 million related to inventories due to the timing of sales;

● a decrease of $12.8 million related to accounts payable and accrued expenses due to the timing of payments;

● a decrease of $7.5 million related to accrued transferable tax credits, net, due to their occurrence in 2025 and none recorded for

Cash used in our Investing Activities

We used $13.5 million of cash in our investing

activities for 2024, of which $11.1 million was for additions to property and equipment resulting from our capital improvement projects

and $2.8 million is attributable to cash paid for our acquisition of Eagle Alcohol.

Cash provided by our Financing Activities

Cash provided by our financing activities was $7.7

million for 2024, of which $9.0 million is attributable to net proceeds from Kinergy’s line of credit, partially offset by $1.3

million of preferred stock dividends.

We used $7.4 million of cash in our investing activities

for 2025, of which $4.6 million was for additions to property and equipment resulting from our capital improvement projects, $7.3 million

was for our acquisition of Kodiak Carbonic and $2.2 million was for our final payment with respect to our acquisition of Eagle Alcohol,

partially offset by $6.7 million of excess insurance proceeds.

Cash used in our Financing Activities

Cash used in our financing activities was $16.4

million for 2025, of which we used $10.1 million to pay down Kinergy’s line of credit, $5.0 million to make a principal payment

on our term debt and $1.3 million to pay preferred stock dividends.

Kinergy’s Operating Line of Credit

5 unchanged sentences

The credit facility’s monthly unused line fee is 0.25% to 0.375% of the amount by which the maximum credit under the facility

exceeds the average daily principal balance during the immediately preceding month.

Payments that may be made by Kinergy to Alto Ingredients,

exceeds the average daily principal balance during the preceding month.

Payments that may be made by Kinergy to Alto Ingredients, Inc.

as reimbursement for management and other services provided by Alto Ingredients, Inc.

to Kinergy are limited under the terms of the

credit facility to $1.5 million per fiscal quarter.

The credit facility also includes the accounts receivable of our indirect wholly-owned

subsidiary, Alto Nutrients, LLC, or Alto Nutrients, as additional collateral.

Payments that may be made by Alto Nutrients to Alto Ingredients,

to Kinergy are limited under the terms of the credit

facility to $1.5 million per fiscal quarter.

The credit facility also includes the accounts receivable of our indirect wholly-owned subsidiary,

Alto Nutrients, LLC, or Alto Nutrients, as additional collateral.

Payments that may be made by Alto Nutrients to Alto Ingredients, Inc.

as reimbursement for management and other services provided by Alto Ingredients, Inc.

to Alto Nutrients are limited under the terms

of the credit facility to $0.5 million per fiscal quarter.

to Alto Nutrients are limited under the terms of

the credit facility to $0.5 million per fiscal quarter.

Alto Nutrients markets our essential ingredients and also provides raw material

34 unchanged sentences

mandatory prepayment amount will equal 25% of our excess cash flow.

As of December 31, 2024 and 2023, the principal

amount outstanding under the Term Loan was $60.0 million.

As of December 31, 2025

and 2024, the principal amount outstanding under the Term Loan was $55.0 million and $60.0 million, respectively.

In addition, we

estimate our excess cash flow payment for the six months ended December 31, 2025 due in March 2026 will be $16.6 million, of which

$10.0 million was paid in February 2026.

Other Cash Obligations

2 unchanged sentences

These commitments are scheduled to be satisfied through 2026.

In connection with our acquisition of Eagle Alcohol,

we are committed to pay contingent payments of up to $2.7 million in the first half of 2025.

Critical Accounting Policies and Estimates

Critical Accounting Estimates

Our discussion and analysis of our financial condition

5 unchanged sentences

The following represents a summary of our critical accounting

policies and related estimates, defined as those policies that we believe are the most important to the portrayal of our financial condition

and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the

need to make estimates about the effects of matters that are inherently uncertain.

Accounting for Business Combinations

Determining the fair value of assets acquired and

liabilities assumed in a business combination is considered a critical accounting estimate because the allocation of the purchase price

to assets acquired and liabilities assumed based upon fair values requires significant management judgment and the use of subjective measurements.

Variability in industry conditions and changes in assumptions or subjective measurements used to allocate fair value are reasonably possible

and may have a material impact on our financial position, liquidity or results of operations.

Revenue Recognition

We recognize revenue primarily from sales of alcohols

and essential ingredients.

We have five alcohol production facilities from

which we produce and sell alcohols to our customers through our subsidiary, Kinergy.

Kinergy enters into sales contracts with customers

under exclusive intercompany sales agreements with each of our five production facilities.

Kinergy also acts as a principal when it purchases

third party fuel-grade ethanol which it resells to its customers.

Finally, in 2022, Kinergy had exclusive sales agreements with two third-party

owned fuel-grade ethanol plants under which it sold the plants’ fuel-grade ethanol production for a fee plus the costs to deliver

the ethanol to Kinergy’s customers.

Kinergy has since terminated these contracts.

These sales are referred to as third-party agent

Revenue from these third-party agent sales is recorded on a net basis, with Kinergy recognizing its predetermined fees and any

associated delivery costs.

We have five production facilities from which we

produce and sell essential ingredients to our customers through our subsidiary, Alto Nutrients.

Alto Nutrients enters into sales contracts

with essential ingredient customers under exclusive intercompany sales agreements with each of our five production facilities.

We recognize revenue from sales of alcohols and

essential ingredients at the point in time when the customer obtains control of the products, which typically occurs upon delivery depending

on the terms of the underlying contracts.

In some instances, we enter into contracts with customers that contain multiple performance

obligations to deliver volumes of alcohols or essential ingredients over a contractual period of less than 12 months.

We allocate the

transaction price to each performance obligation identified in the contract based on relative standalone selling prices and recognize

the related revenue as control of each individual product is transferred to the customer in satisfaction of the corresponding performance

When we are the agent, the supplier controls the

products before they are transferred to the customer because the supplier is primarily responsible for fulfilling the promise to provide

the product, has inventory risk before the product has been transferred to a customer and has discretion in establishing the price for

When we are the principal, we control the products before they are transferred to the customer because we are primarily responsible

for fulfilling the promise to provide the products, we have inventory risk before the product has been transferred to a customer and we

have discretion in establishing the price for the product.

See “Note 4 – Segments” of the

Notes to Consolidated Financial Statements for our revenue breakdown by type of contract.

estimates, defined as those estimates that we believe are the most important to the portrayal of our financial condition and results of

operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make

estimates about the effects of matters that are inherently uncertain.

Impairment of Long-Lived Assets

13 unchanged sentences

by future changes in market conditions, the economic environment, including inflation, and the purchasing decisions of our customers.

As a result, we recorded asset impairments of $21.4 million and $0.6 million with respect to our Magic Valley facility and right of use

assets associated with our operating leases for the years ended December 31, 2024 and 2023, respectively.

As a result, we recorded asset impairments of $0.8 million, $21.4 million and $0.6 million with respect to various abandoned projects,

the cold-idling of our Magic Valley facility and our right of use assets associated with our operating leases for the years ended December

31, 2025, 2024 and 2023, respectively.

We review our intangible assets, including goodwill,

4 unchanged sentences

We performed our annual

review of impairment and recognized asset impairments of $3.4 million and $6.0 million against our intangible assets and goodwill for

the years ended December 31, 2024 and 2023, respectively.

We did not recognize any asset impairments for the year ended December 31, 2022.

review of impairment and did not recognize any asset impairments for the year ended December 31, 2025.

We performed our annual review

of impairment and recognized asset impairments of $3.4 million and $6.0 million against our intangible assets and goodwill for the years

ended December 31, 2024 and 2023, respectively.

Valuation Allowance for Deferred Taxes

14 unchanged sentences

net loss in the period when such determinations are made.

We had pre-tax consolidated net losses of $58.8

million, $27.9 million and $39.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Based on our current and

prior results, we do not have sufficient evidence to support a conclusion that we will more likely than not be able to benefit from our

remaining deferred tax assets.

We had pre-tax consolidated net income of $12.7

million, and net losses of $58.8 million and $27.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

our current and prior results, we do not have sufficient evidence to support a conclusion that we will more likely than not be able to

benefit from our remaining deferred tax assets.

As such, we have recorded a valuation allowance against our net deferred tax assets.

Derivative Instruments

We evaluate our contracts to determine whether

the contracts are derivative instruments.

Management may elect to exempt certain forward contracts that meet the definition of a derivative

from derivative accounting as normal purchases or normal sales.

Normal purchases and normal sales are contracts that provide for the purchase

or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used

or sold over a reasonable period in the normal course of business.

Contracts that meet the requirements of normal purchases or sales are

documented as normal and exempted from the fair value accounting and reporting requirements of derivative accounting.

We enter into short-term cash, option and futures

contracts as a means of securing purchases of corn, natural gas and sales of fuel-grade ethanol and managing exposure to changes in commodity

All of our exchange-traded derivatives are designated as non-hedge derivatives for accounting purposes, with changes in fair value

recognized in net income.

Although the contracts are economic hedges of specified risks, they are not designated or accounted for as hedging

Realized and unrealized gains and losses related

to exchange-traded derivative contracts are included as a component of cost of goods sold in the accompanying financial statements.

fair values of contracts entered through commodity exchanges are presented on the accompanying balance sheet as derivative assets or liabilities.

The selection of normal purchase or sales contracts, and use of hedge accounting, are accounting policies that can change the timing of

recognition of gains and losses in the statement 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-K

Item 7. Management’s Discussion and Analysis