Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Market Information
Our common stock is traded under the symbol "AMTX" on the NASDAQ Global Stock Market.
Number of Stockholders
As of March 1, 2026, our common stock was held by 163 holders of record and by approximately 22 thousand stockholders who hold shares in street name.
Securities authorized for issuance under equity compensation plans
See Note 10. Stock-Based Compensation of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Sales of Unregistered Equity Securities
In November 2025, we issued 28,902 shares of Aemetis, Inc. common stock to a vendor as compensation under a services agreement at an effective value of $1.73 per share, which was the closing price on the Nasdaq market on the date prior to such issuance. The issuance of the shares was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as issuances of securities not involving any public offering.
In December 2025 we issued warrants to two lenders in connection with extensions of their debt. The warrants provided the right for the lenders to purchase 113 thousand shares of Aemetis, Inc. common stock for a period of two years at an exercise price of $0.01 per share. We then issued 113 thousand shares of common stock to the lenders in connection with their exercise of the warrants during the first quarter of 2026. The issuance of the warrants and the issuance of the common stock upon exercise of the warrants were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as issuances of securities not involving any public offering.
Stock Repurchases
None .
Item 6. [Reserved].
Not applicable.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.
Our Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
●
Overview. Discussion of our business and overall analysis of financial and other highlights affecting us to provide context for the remainder of MD&A.
●
Key Performance Indicators. Discussion of our key performance indicators to provide context for company operations.
●
Results of Operations. An analysis of our financial results comparing the twelve months ended December 31, 2025 and 2024.
●
Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition.
●
Critical Accounting Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K, particularly under “ Part I, Item 1A. Risk Factors, ” and in other reports we file with the SEC. All references to years relate to the calendar year ended December 31 of the particular year.
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Overview
Founded in 2006 and headquartered in Cupertino, California, we are an international renewable natural gas ("RNG"), and renewable fuels company focused on the operation, acquisition, development and commercialization of innovative low and negative carbon intensity ("CI") products and technologies that replace traditional fossil fuel products. We operate in three reportable segments consisting of “California Ethanol,” “California Dairy Renewable Natural Gas,” and “India Biodiesel.” We have other operating segments determined not to be separately reportable that are collectively represented by the “All Other” category. Our mission is to generate sustainable and innovative renewable fuel solutions that benefit communities and restore our environment. We do this by building a local circular bioeconomy using agricultural products and wastes as feedstocks to produce renewable fuels.
Our California Ethanol segment consists of a 65 million gallon per year capacity ethanol production facility located in Keyes, California (the “Keyes Plant”). In addition to low carbon renewable fuel ethanol, the Keyes Plant produces Wet Distillers Grains (“WDG”), Distillers Corn Oil (“DCO”), and Condensed Distillers Solubles (“CDS”), and alcohol for beverage producers. WDG, DCO, and CSS are sold as animal feed to more than 80 local dairies and feedlots. We also capture the carbon dioxide (“CO 2 ”) that would be emitted from our fermenters and sell it to an industrial gas company to produce liquid CO₂ that it sells to food, beverage, and industrial customers. We have implemented several energy efficiency projects in recent years and are currently in the process of procuring and construction a Mechanical Vapor Recompression ("MVR") system to produce steam using low carbon electricity instead of natural gas. These changes will lower the carbon intensity (CI) of the ethanol we produce and improve the Keyes Plant cash flow from operations.
Our California Dairy Renewable Natural Gas segment, Aemetis Biogas LLC (“ABGL”), owns and operates anaerobic digesters at local dairies near the Keyes Plant to produce biogas from dairy waste. The biogas is transported by pipeline to an RNG production facility located at the Keyes Plan and converted to Renewable Natural Gas (“RNG”) that is delivered to customers through the regional natural gas pipeline. We currently have twelve operating digesters that receive dairy waste from fifteen dairies in Stanislaus and Merced Counties, California, and we are actively growing with additional digesters under construction. We have constructed 36 miles of biogas collection pipeline and have received environmental approval to construct an additional 24 miles of pipeline. We currently have agreements with over 50 dairies and are seeking to sign additional agreements with dairies.
Our India Biodiesel segment, Universal Biofuels Private Limited ("UBPL"), includes a biodiesel production plant in Kakinada, India (“Kakinada Plant”) with a production capacity of about 80 million gallons per year. The plant produces high quality biodiesel and refined glycerin for customers in India. We believe the Kakinada Plant is one of the highest capacity biodiesel production facilities in India. The Kakinada Plant is capable of processing a variety of vegetable and animal oil waste feedstocks into biodiesel that meets applicable product standards. Our Kakinada Plant also distills crude glycerin byproduct from the biodiesel refining process into refined glycerin, which is sold to the pharmaceutical, personal care, paint, adhesive, and other industries.
Our "All Other" segment consists of our projects that are under development, including our planned Carbon Capture and Underground Sequestration ("CCUS") and sustainable aviation fuel and renewable diesel projects in Riverbank, California, our operations of the current Riverbank Industrial Complex, and the Goodland Energy Center that is held for future development.
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Key Performance Indicators (KPI):
We measure performance based on the utilization of our plants, production of products, and associated pricing and margins. For the California Ethanol segment, the key products are ethanol and WDG, measured in gallons sold and tons sold, respectively. Since our Keyes Ethanol Plant currently uses corn as the sole feedstock, the delivered quantity and cost of corn is also a key performance indicator as it indicates high-level operating margin of the plant. Utilization is measured as the production of transportation fuel produced as a percentage of the nameplate capacity based on the engineering specification of the plant. For the California RNG segment, the product is Renewable Natural Gas ("RNG" or "Gas") and revenues include the associated D3 RINs, LCFS credits. The RNG quantity is measured by the heat content expressed in MMBtu (HHV), and the quantity of D3 RINs and LCFS credits are based on the quantity of each that is sold during the reporting period. Management uses these metrics to assess cash generated or used by each facility on a regular basis. For both the Keyes Ethanol and California RNG segments, earnings also include Section 45Z Production Tax Credits ("PTCs"). For India Biodiesel, the products are biodiesel and refined glycerin, both measured in metric tons sold.
The following table summarizes our KPIs:
Production and Price Performance
(Unaudited)
Years ended December 31,
2025 vs 2024 %
2025
2024
Change
California Ethanol
Ethanol
Gallons Sold (in millions)
57
61
-6.6
%
Average Sales Price/Gallon
$
2.03
$
1.96
3.6
%
Percent of nameplate capacity
104
%
110
%
-5.9
%
WDG
Tons Sold (in thousands)
374
411
-9.0
%
Average Sales Price/Ton
$
80.1
$
88.2
-9.2
%
Delivered Cost of Corn
Bushels ground (in millions)
19
21
-9.5
%
Average delivered cost / bushel
$
6.22
$
6.21
0.2
%
California Dairy Renewable Natural Gas
Gas
Gas sold (in thousand MMBtu)
399
302
32.1
%
Average price per MMBtu
$
3.34
$
3.01
11.0
%
RINs
RINs sold (in thousands)
3,459
3,030
14.2
%
Average price per RIN
$
2.50
$
3.04
-17.8
%
LCFS
LCFS credits sold (in thousands)
83
52
59.6
%
Average price per LCFS credit
$
57.1
$
56.7
0.7
%
India Biodiesel
Biodiesel
Metric tons sold (in thousands)
21
74
-71.6
%
Average Sales Price/Metric ton
$
1,117
$
1,168
-4.4
%
Percent of Nameplate Capacity
14
%
50
%
-72.0
%
Refined Glycerin
Metric tons sold (in thousands)
1.0
6.5
-84.6
%
Average Sales Price/Metric ton
$
1,093
$
645
69.5
%
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Results of Operations
Year Ended December 31, 2025, Compared to Year Ended December 31, 2024
Revenue
In our California Ethanol segment, we sell all ethanol, WDG, DCO, and CDS produced to J.D. Heiskell, which resells it to customers designated by us. Our finished ethanol tank is leased by J.D. Heiskell and legal title to the product is transferred when we put our ethanol into the tank. We have designated Murex LLC to purchase all of the ethanol and A.L. Gilbert to purchase the WDG. Each company resells to third-party customers. We sell the CO 2 that we capture from our fermenters to an industrial gas company that produces commercial grade CO 2 for distribution.
Most of the California Dairy Renewable Natural Gas segment revenues during the year ended
December 31, 2025, were from sales of D3 RINs, LCFS credits generated from sales of RNG for transportation use.
Substantially all of our India segment revenues during the years ended December 31, 2025 and 2024, were from sales of biodiesel to OMCs and refined glycerin to other external customers.
Fiscal Year Ended December 31 (in thousands)
2025 vs 2024
2025
2024
Inc/(dec)
% change
California Ethanol
$
153,234
$
161,756
$
(8,522
)
-5
%
California Dairy Renewable Natural Gas
14,730
13,037
1,693
13
%
India Biodiesel
29,662
92,847
(63,185
)
-68
%
Total
$
197,626
$
267,640
$
(70,014
)
-26
%
California Ethanol . For the year ended December 31, 2025, the segment generated 75% of revenue from sales of ethanol, 20% from sales of WDG, and 5% from sales of corn oil, CDS, CO₂, and other sales. During the year ended December 31, 2025, plant production average d 104% of the 55 million gallon per year na meplate capacity. During the year ended December 31, 2024, the segment generated 74% of revenue from sales of ethanol, 22% from sales of WDG, and 4% from sales of corn oil, CDS, CO₂, and other sales, with average of 110% nameplate capacity. Overall revenue decreased by 5% primarily because of a decrease in WDG sales volume at lower prices.
California Dairy Renewable Natural Gas. We continued to commission new digesters during 2025 and 2024 to increase RNG production and associated revenue. During the years ended December 31, 2025 and 2024, we produced and sold 399 thousand and 302 thousand MMBtu ("million British thermal units") of Renewable Natural Gas ("RNG") at an average price of $ 3.34 and $ 3.01 per MMBtu, respectively. During the years ended December 31, 2025 and 2024, we sold 3 million and 3 million D3 RINs at an average price of $2.50 and $3.04 per D3 RIN respectively. During the years ended December 31, 2025 and 2024, we sold 83 thousand and 52 thousand LCFS credits at an average price of $57.10 and $56.74 per credit, respectively.
India Biodiesel. For the year ended December 31, 2025, the India Biodiesel segment generated 79% of revenue from sales of biodiesel and 21% from other sales, compared to 93% of sales from biodiesel and 7% from other sales during the year ended December 31, 2024. The decrease in revenues for the year ended December 31, 2025, compared to the year ended December 31, 2024, was due to a decrease in the sales volume of biodiesel by 53 thousand metric tons from 74 thousand metric tons in 2024, to 21 thousand metric tons in 2025. The decrease in revenues was primarily attributable to the delays in the India-government OMCs issuing new tenders and executing new purchase contracts. Indian OMCs slowed or paused new biodiesel contract execution in mid‑to‑late 2025 primarily due to administrative tender cancellations, very low supplier participation in early 2025 tenders, and broader structural challenges in India’s biodiesel program. Additionally, supplier participation decreased because of the change in pricing structure from cost-plus to fixed price.
Production Tax Credits
In 2025, the Company became eligible for earning and transferring Production Tax Credits ("PTCs") generated by the production and sale of RNG and fuel ethanol. We account for transferable PTCs by analogy to the grant model within International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance. 45Z PTC operating income is based on production and dispensing of RNG and production and sale of ethanol. The following table represents each segment's PTC earnings during the year ended December 31, 2025, having demonstrated the eligibility and transferability metrics required, including prevailing wage considerations:
Fiscal Year Ended December 31 (in thousands)
2025 vs 2024
2025
2024
Inc/(dec)
% change
California Ethanol
$
5,112
$
-
$
5,112
100
%
California Dairy Renewable Natural Gas
5,243
-
5,243
100
%
Total
$
10,355
$
-
$
10,355
100
%
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Cost of Goods Sold
Cost of goods sold consists primarily of feedstock, energy, chemicals, direct costs (principally labor and labor-related costs) and overhead. Depending on the costs of these inputs in comparison to the sales price of our end products, our gross margins at any given time can vary from positive to negative. Overhead includes direct and indirect costs associated with plant operations, including the cost of repairs and maintenance, consumables, maintenance, on-site security, insurance, and depreciation.
Our corn feedstock for California Ethanol is provided by J.D. Heiskell. Title to the corn passes to us when the corn is deposited into our weigh bin and enters the production process. Our cost of feedstock is established by J.D Heiskell based on Iowa Group 3 pricing and includes rail transportation, local basis costs, and a handling fee paid to J.D. Heiskell. The credit term for the corn purchased from J.D. Heiskell is one day, netted from our product sales. Cost of goods sold also includes the cost of electricity and natural gas, chemicals, maintenance, direct labor, depreciation, and freight.
The feedstock for producing Renewable Natural Gas is supplied by dairy operators who lease us land and supply our digesters with their cow manure in liquid form. Our cost of feedstock is established by manure supply agreements based on the value of the environmental attributes and the number of cows at each dairy.
We procure several different feedstocks for the Kakinada Plant, including stearin, a non-edible feedstock, from neighboring natural oil processing plants. Raw material is received by truck and title passes when the goods are loaded at our vendors’ facilities. Credit terms vary by vendor. However, we generally receive 15 days of credit on the purchases. We purchased crude glycerin in the international market on letters of credit or advance payment terms.
The following table shows Cost of Goods Sold:
Fiscal Year Ended December 31 (in thousands)
2025 vs 2024
2025
2024
Inc/(dec)
% change
California Ethanol
$
168,004
$
175,548
$
(7,544
)
-4
%
California Dairy Renewable Natural Gas
10,347
7,642
2,705
35
%
India Biodiesel
30,398
85,030
(54,632
)
-64
%
Total
$
208,749
$
268,220
$
(59,471
)
-22
%
California Ethanol. We ground 19 million bushels of corn at an average price of $ 6.22 per bushel during the year ended December 31, 2025, compared to 21 million bushels of corn at an average price of $ 6.21 per bushel during the year ended December 31, 2024. The slight decrease in cost of goods sold for the year ended December 31, 2025, is mainly due to the decrease in quantity of corn ground.
California Dairy Renewable Natural Gas . Cost of Goods Sold expenses relate to dairy manure payments, maintenance, and depreciation, which are increasing each year as more dairies are placed into production.
India Biodiesel . The decrease in cost of goods sold during the year ended December 31, 2025, compared to December 31, 2024, was attributable to a decrease in the quantity of biodiesel feedstock used by 69%, from 75 thousand metric tons to 23 thousand metric tons, offset by a 35% increase in average feedstock cost.
Gross Profit (loss)
Fiscal Year Ended December 31 (in thousands)
2025 vs 2024
2025
2024
Inc/(dec)
% change
California Ethanol
$
(9,658
)
$
(13,792
)
$
4,134
30
%
California Dairy Renewable Natural Gas
9,626
5,395
4,231
78
%
India Biodiesel
(736
)
7,817
(8,553
)
-109
%
Total
$
(768
)
$
(580
)
$
(188
)
32
%
California Ethanol. Gross loss decreased during the year ended December 31, 2025, primarily due to recognition of Production Tax Credit operating income, offset by lower WDG sales quantity and prices compared to the same period ending December 31, 2024.
California Dairy Renewable Natural Ga s. Gross profit increased as we continued to ramp up RNG production by operating more dairies and earning 13% more revenues, while cost of goods sold increased by only 35%.
India Biodiesel. The gross loss in 2025 compared to gross profit in 2024 primarily reflects the decrease in biodiesel and glycerin sales during the year ended December 31, 2025.
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Operating (income)/expense and non-operating (income)/expense
SG&A expenses consist primarily of salaries and related expenses for employees, marketing expenses related to sales of ethanol and WDG in California Ethanol and biodiesel and other products in India Biodiesel, as well as professional fees, insurance, other corporate expenses, and related facilities expenses, offset by sublease income. SG&A expenses as a percentage of revenue were 18% in the year ended December 31, 2025, compared to 15% in the year ended December 31, 2024. The increase in SG&A percentage was due to lower revenues during the year ended December 31, 2025. The decrease in SG&A expenses in the year ended December 31, 2025, was primarily due to a $5.6 million decrease in asset disposal loss, compensation, consulting, and administrative costs; $0.5 million increase in sublease income; offset by $2.8 million increase in insurance, penalties, supplies, and services.
2025 vs 2024
2025
2024
Inc/(dec)
% change
Selling, general and administrative expenses
$
36,450
$
39,836
$
(3,386
)
-8
%
Other expense (income):
Interest expense
Interest rate expense
46,205
40,158
$
6,047
15
%
Debt related fees and amortization expense
6,707
6,463
244
4
%
Accretion and other expenses of Series A preferred units
8,226
12,698
(4,472
)
-35
%
Other income
(2,608
)
(1,366
)
(1,242
)
91
%
Other income and expense consists primarily of interest and amortization expense attributable to our debt, accretion of biogas Series A preferred units, and $1.0 million extinguishment of expired liabilities that were originally recorded as estimates outside of our reportable segments.
The cost of debt includes fees and issuance of warrants as renewal fees. The fair value of stock and warrants issued as debt issuance costs are amortized as expenses, except when the extinguishment accounting method is applied, in which case refinanced debt costs are recorded as extinguishment expense. Interest expense and debt related fees and amortization increased in the year ended
December 31, 2025, due to higher debt balances. The decrease in accretion and other expenses of the Series A Preferred Units was due to amendments obtained at a lower effective interest rate, and payments applied to the Series A preferred units in 2025.
Liquidity and Capital Resources
Cash and Cash Equivalents
Cash and cash equivalents were $4.9 million at December 31, 2025, of which $4.1 million was held in our North American entities and $0.8 million was held in our India entity. Our current ratio was 0.07 and 0.31, respectively, at December 31, 2025 and 2024.
Liquidity
Cash and cash equivalents, current assets, current liabilities, and debt at the end of each period were as follows (in thousands):
As of
December 31, 2025
December 31, 2024
Cash and cash equivalents
$
4,894
$
898
Current assets (including cash, cash equivalents, and deposits)
26,872
44,696
Current and long term liabilities (excluding all debt)
184,908
185,169
Current & long term debt
381,764
338,061
Our principal sources of liquidity have been cash provided by the sale of equity, operations, sale of tax credits, and borrowings under various debt arrangements, and we expect future available cash to come from similar sources.
We operate in a volatile market in which we have limited control over major components of input costs and product revenues. We are making investments in future facilities and facility upgrades that improve overall margins while lessening the impact of volatile markets. As such, we expect cash provided by operating activities to fluctuate in future periods primarily because of changes in the prices for corn, ethanol, WDG, DCO, CDS, biodiesel, waste fats and oils, glycerin, non-refined palm oil, natural gas, LCFS credits, and D3 RINs. To the extent that we experience periods in which the spread between ethanol prices and corn and energy costs narrow or the value of environmental attributes is reduced, we require additional working capital to fund operations.
The India Biodiesel segment utilized its receivables financing facility during the quarter to support short-term liquidity needs. The facility was fully repaid by year-end and remains available for future use. We believe this arrangement provides flexibility in managing cash flows while maintaining prudent risk oversight.
We are implementing several strategies to improve our cash flow from operations, as described in more detail in Note 18. Liquidity of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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As of December 31, 2025 , the outstanding balance of principal, interest and fees, net of discounts, on all Third Eye Capital Notes equaled $247.2 million, currently all due on demand.
Third Eye Capital has provided a series of accommodating amendments to our debt facilities as described in further detail in Note 5. Debt, of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. However, future amendments or accommodations will continue to be at the discretion of the lender. In the event our senior lender demands the debt within the next twelve months, we would likely not have sufficient cash to pay the debt unless we are able to obtain alternative financing.
Change in Working Capital and Cash Flows
The following table describes changes in current and long-term debt (in thousands) during the year ended December 31, 2025:
Increases to debt:
Accrued interest
$
46,389
Maturity date extension fee and other fees
2,439
Subordinated debt extension fees
1,020
Change in debt issuance costs, net of amortization
1,313
Construction loan draw
1,228
Secured loans and working capital loan draw
24,308
TEC short term promissory notes
5,300
Construction loan short term borrowings
17,248
Equipment financing
51
Total Increases to debt
$
99,296
Decreases to debt:
Principal, fees, and interest payments to senior lender
$
(17,501
)
Principal and interest payments to EB-5 promissory note
(90
)
Payment and reclassification of EB-5 Promissory Note
(270
)
Term loan payments
(15
)
Construction and term loan payments
(5,256
)
Secured loans and working capital loans payments
(29,768
)
Payments on term loans for capital expenditures
(362
)
Reclass to accounts payable for future payment
(2,331
)
Total Decreases to debt
$
(55,593
)
Change in total debt
$
43,703
Working capital changes reflect (i) a $13.8 million decrease in inventories primarily in raw materials and finished goods in India, (ii) a $1.3 million decrease in accounts receivable, primarily in India, (iii) a $0.3 million decrease in prepaid expenses, primarily in the ethanol segment, (iv) $12.3 million decrease in receivable from tax credit sales based on receipt of the amount due, (v) a $5.9 million increase in other current assets (vi) a $4.1 million increase in cash resulted from our North A merica and India segments operational and capital expenditure activities.
Cash provided by operating activities was $3.3 million, derived from a net loss of $77.0 million, non-cash changes of $29.9 million, and changes in operating assets and liabilities of $50.3 million. The non-cash changes primarily consisted of: (i) $6.7 million in amortization of debt issuance costs and other intangible assets plus an impairment o n an intangible asset, (ii) $9.6 million in depreciation expenses, (iii) $6.0 million in stock-based compensation expense and stock issued for services, (iv) $8.2 million in preferred unit accretion and other expenses of Series A preferred units, and (v) $1.0 million on extinguishment of liabilities. Cash from operating assets and liabilities consisted primarily of a decrease in (i) accounts receivable of $1.3 million, (ii) inventories of $13.1 million, (iii) tax credit receivable of $12.3 million, (iv) an increase in other assets of $4.5 million, (v) an increase in accrued interest and fees of $30.8 million, and (vi) an increase in other liabilities of $4.6 million. This was partially offset by a decrease in accounts payable of $7.5 million.
Cash used by investing activities was $25.6 million, of which $15.0 million was used for capital projects in the Keyes Plant, $8.9 million was used for capital projects associated with production of Renewable Natural Gas, $0.7 million for capital projects at the Kakinada Plant, and $1.4 million related to all other capital projects. This was partially offset by grant proceeds of $0.4 million.
Cash provided by financing activities was $26.4 million, consisting primarily of $44.9 million proceeds from borrowings, $0.3 million from stock option exercises, and $28.1 million from issuance of common stock, offset by repayments of borrowings of $37.1 million, debt renewal and waiver fee payments of $1.3 million, and payments on finance leases of $0.2 million.
During 2025, we continued our at-the-market stock sales program, which allows us to sell newly issued shares of our common stock into the publicly traded markets. During the year ended December 31, 2025, we issued 14.0 million shares of common stock under the at-the-market stock sales program for net proceeds of $28.1 million net of commissions and offering related expenses.
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Off-Balance Sheet Arrangements
We had no outstanding off-balance sheet arrangements as of December 31, 2025.
Critical Accounting Estimates
Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. We believe that our most significant accounting estimate, defined as the estimate that we believe is the most important to the portrayal of our financial condition and results of operations and that requires 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 is liquidity, which considers our ability to secure financing to complete our projects in progress such as Biogas digesters and increase in pipeline, sustainable aviation fuel, and carbon sequestration.
Liquidity
Our assessment of liquidity requires management to use significant judgment in developing estimates and gather assumptions about cash needed to pay for all current liabilities over the next twelve months. Management estimates may include projected operational revenues and expenses, credit availability, credit sales, and grant income. Projected revenue and expenses are estimated based on knowledge of our businesses, including various industry indexes, industry trends, political shifts, and past performance.
Debt covenant forecast
Each period we assess our compliance with our senior lender's debt covenants for the given period by projecting debt and accrued interest balances for the following twelve months. For compliance with senior lender debt covenants, we rely on market value appraisals for which fair value is determined through various valuation techniques including discounted cash flow models, comparable market sales, and estimated replacement costs, often with a final value that reconciles one or more of these techniques. We also use significant judgment to determine whether future operation profits and transactions will be available to use towards debt payments; whether we will have the ability to generate and sell credits to third parties; and whether we will receive anticipated grant income in a timing which will support debt payments.
Recoverability of Our Long-Lived Assets
Our long-lived assets consist of property, plant, and equipment. We review long-lived asset groups for impairment triggers annually and whenever events or changes in circumstances indicate that the carrying amount of long-lived asset groups may not be recoverable. If we identify any event or circumstance that triggers an impairment assessment, we measure recoverability of assets to be held and used by comparing the carrying amount of an asset group to the estimated undiscounted future cash flows generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, we assess if the situation is more than temporary, and in the event the future cash flows are more than temporary we would record an impairment charge in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.
Assessing each long-lived asset group for impairment triggers requires us to make estimates regarding amount and timing of projected cash flows to be generated by each segment over an extended period of time. Management judgment used to identify impairment triggers is based on numerous potential factors including, but not limited to, a decrease in the market price, an adverse change in the extent or manner in which the asset is used or in its physical condition, an adverse change in legal or business climate, excess of accumulated costs over initial expectations, significant decline in actual or expected operating results, or the expectation that the asset group will be sold or otherwise disposed prior to its previously expected life. Significant management judgment is required in determining the fair value appraisals of each segment, including projections of operational future cash flows, discounted cash flow models, comparable market sales and estimated replacement costs, often with a final value that reconciles one or more of these techniques. Significant declines in estimates of fair value trigger an undiscounted future cash flow calculation to determine the extent to which a write-down of an asset may be required.
Long-term assets are analyzed at the lowest level where the asset groups are expected to generate cash flow. We consider the lowest level asset group as one where the value of the asset becomes independent from the other assets and has the ability to operate on an independent basis, and results in a functional unit. We therefore group entities into the following functional reporting units: California ethanol segment, India biodiesel segment, California Renewable Natural Gas segment, California Sustainable Aviation Fuel plant under development, Goodland Energy Center LLC which consists of a partially completed dry-mill held for future use, and the Carbon Capture and Underground Sequestration asset group under development. For the years ended December 31, 2025 and 2024, no asset groups showed indicators of impairment, therefore no impairment test was performed for our Company’s long-lived assets.
Recently Issued Accounting Pronouncements
Refer to Note 1 of the Financial Statements for a description of new accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
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