What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-11 · 89 added, 90 removed, 156 unchanged (53% of the section changed)

6 unchanged sentences

Unless otherwise stated, all dollar amounts are in thousands.

The designation “NA” (Not Applicable) in the tables below appears when a percentage change is calculated between a negative and a positive number (or positive and negative), rendering the result meaningless.

Our Company is managed and reported in two reportable segments:

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We do not assign cost of goods sold to the generation of RINs as the physical fuel generates the full cost.

As of June 30, 2025, we held 0.5 million D4 RINs with a fair market value of $604.

Comparatively, as of June 30, 2024, we held 2.1 million RINs with a fair market value of $1,055.

As of September 30, 2025, we held 0.4 million D4 RINs with a fair market value of $361.

Comparatively, as of September 30, 2024, we held 5.0 million RINs with a fair market value of $2,556.

On June 13, 2025, the EPA proposed a rule to establish RFS volume requirements and percentage standards for 2026 and 2027.

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The final rule could materially affect the Company's operations and financial results.

The Company is currently evaluating the potential impact of this rule and participating in the public comment period.

The EPA's final rule is still pending.

On July 4, 2025, the Budget Reconciliation Act of 2025 was signed into law which made modifications to the CFPC.

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Set forth below is a summary of certain consolidated financial information for the periods indicated.

Three Months Ended June 30,

(Loss) income from operations

Net (loss) income

(Loss) earnings per common share:

Three Months Ended September 30,

Loss from operations

Loss per common share:

Adjusted EBITDA

Six Months Ended June 30,

Nine Months Ended September 30,

(Loss) income from operations

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The following table reconciles net (loss) income, the most directly comparable GAAP performance financial measure, with adjusted EBITDA.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Non-cash stock-based compensation

Interest and dividend income

Interest income, net

Non-cash interest expense and amortization of deferred financing costs

Gain on disposal of property and equipment

Loss (gain) on disposal of property and equipment

Unrealized (gain) loss on derivative instruments

Income tax provision

Other expense (income)

Income tax (benefit) provision

Adjusted EBITDA

The following table reconciles cash flows from operations, the most directly comparable GAAP liquidity financial measure, with adjusted EBITDA.

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by operating activities

Deferred income taxes, net

Interest and dividend income

Interest income, net

Income tax provision

Change in operating assets and liabilities, net

Other expense (income)

Adjusted EBITDA

Results of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Volume/product mix effect

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Other income, net

Income tax provision

Income tax (benefit) provision

Net (loss) income

Consolidated revenue in the three and six months ended June 30, 2025, decreased $36,736 and $77,479, compared to the three and six months ended June 30, 2024, respectively.

This decrease was primarily attributed to uncertainty surrounding the CFPC, which negatively and materially impacted the biofuel segment.

In the first three months of the year, we initiated an extended plant turnaround as a measure to improve plant reliability and product quality.

This extended turnaround negatively impacted both segments.

We resumed biodiesel production in April to fulfill existing sales obligations.

The weak market conditions continued into the current three-month period and led the Company to idle its biodiesel production.

As a result of these market conditions, the Company implemented a reduction in force in July.

The Company retained employees with expertise to facilitate the restart of biodiesel production upon the return of more favorable market conditions.

Gross profit in the three months ended June 30, 2025 , decreased $17,424 as compared to the same period of 2024 , due primarily to reduced throughput from the market conditions noted above.

Also reducing gross profit in the current three-month period was the change in the adjustment in the carrying value of our inventory as determined utilizing the last-in, first-out, (“LIFO”) method of inventory accounting.

This adjustment increased gross profit $1,232 in the current three-month period as compared to an increase of $1,313 in the same period of the prior year.

Partially offsetting the decrease in gross profit was the effect of liquidation of biofuel inventory of $2,394.

Gross profit in the six months ended June 30, 2025 , decreased $36,994 as compared to the same period of 2024 , primarily from the reduced throughput given the issues noted above along with increased spend on parts and contract labor for the turnaround.

Also reducing gross profit in the current six-month period was a benefit from the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

This adjustment increased gross profit $1,857 in the current six-month period as compared to an increase of $4,341 in the prior six-month period.

Partially offsetting these decreases in gross profit in the current six-month period was the effect of liquidation of biofuel inventory of $2,394.

Consolidated revenue in the three and nine months ended September 30, 2025, decreased $28,451 and $105,930, compared to the three and nine months ended September 30, 2024, respectively.

This decrease was primarily attributed to continued uncertainty surrounding the CFPC, which negatively and materially impacted the biofuel segment.

In the three months ended September 30, 2025, due to continued weak market conditions, we idled our biodiesel production line and implemented a reduction in force.

We retained employees with expertise to facilitate the restart of biodiesel production upon the return of more favorable market conditions.

Gross profit in the three months ended September 30, 2025 , decreased $7,214 as compared to the same period of 2024 , due primarily to reduced throughput from the market conditions noted above.

We proactively took cost reduction measures with the idling of the biodiesel plant inclusive of the reduction in force as previously noted.

Partially offsetting the decrease in gross profit in the current three-month period was the change in the adjustment in the carrying value of our inventory as determined utilizing the last-in, first-out, (“LIFO”) method of inventory accounting.

This adjustment decreased gross profit $358 in the current three-month period as compared to a decrease of $1,456 in the same period of the prior year.

Gross profit in the nine months ended September 30, 2025 , decreased $44,208 as compared to the same period of 2024 , primarily from the reduced throughput given the issues noted above along with increased spend on parts and contract labor for the turnaround and for other plant support assets.

Also reducing gross profit in the current nine-month period was the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

This adjustment decreased gross profit $1,190 in the current nine-month period as compared to an increase of $2,441 in the prior nine-month period.

These negative impacts were partially offset by a LIFO inventory liquidation effect of $5,083 in the current period as compared to $444 in the prior year period.

In both nine-month periods, this liquidation was primarily attributed to biofuel inventory.

Operating e xpenses

Operating expenses decreased $45 in the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Operating expenses decreased $367 in the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The net decrease was from reduced legal and board fees partially offset by increased compensation expense.

Operating expenses increased $1,421 in the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

Operating expenses increased $1,054 in the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The increase was from separation compensation (unrelated to any reduction in force) expense in the current period, equity compensation for grants issued in September 2024, increased board fees, and higher research and development expenses.

Other income, net

Other income decreased a net $2,579 in the three months ended June 30, 2025, as compared to the same period of 2024 from the receipt of a legal settlement of $2,750 in the prior period.

In addition, in the current three-month period interest income was $1,068 as compared to $1,521 in the prior period.

Other income decreased a net $4,142 in the six months ended June 30, 2025, as compared to the same period of 2024 from the same reasons previously mentioned with interest income being $2,016 lower.

Other income decreased a net $1,309 in the three months ended September 30, 2025, as compared to the same period of 2024 from the reduction of interest income.

In the current three-month period interest income was $1,012 as compared to $1,830 in the prior period.

Other income decreased a net $5,451 in the nine months ended September 30, 2025, as compared to the same period of 2024 primarily from the receipt of a legal settlement in the prior period of $2,750 and interest income being $2,834 lower.

Income tax provision

The Company’s income tax provision for the three and six months ended June 30, 2025, is comprised of an increase in its net deferred tax liability plus immaterial state taxes and miscellaneous items.

The provision for the three months ended June 30, 2024, consists of immaterial state taxes and miscellaneous items.

The provision for the six months ended June 30, 2024 includes immaterial state taxes and, primarily, the initial establishment of the net deferred tax liability reflecting the Company’s determination that its future reversing net deferred tax liabilities would not support full realization of its existing deferred tax assets.

The Company’s income tax (benefit) provision for the three and nine months ended September 30, 2025, is comprised of a decrease in its net deferred tax liability plus immaterial state taxes and miscellaneous items.

The provision for the three months ended September 30, 2024, consists of immaterial state taxes and miscellaneous items.

The provision for the nine months ended September 30, 2024 includes immaterial state taxes and, primarily, the initial establishment of the net deferred tax liability reflecting the Company’s determination that its future reversing net deferred tax liabilities would not support full realization of its existing deferred tax assets.

The Company evaluates its deferred tax assets quarterly and records a valuation allowance to reduce these assets to the amount that is more likely than not to be realized.

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Chemical Segment

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Volume/product mix effect

Gross profit (loss)

Chemical revenue in the three months ended June 30, 2025, decreased 14% or $2,617 compared to the three months ended June 30, 2024.

Revenue from custom chemicals for the three months ended June 30, 2025 totaled $14,250, a net decrease of $1,333 from the same period in 2024, resulting from lower sales volumes of products sold in the energy markets of $1,998 and lower price effect of $727 from less amortization of revenue.

Partially offsetting the decrease was a rise in sales volumes of products sold in the polymer coatings market of $1,101.

Performance chemicals revenue was $2,369, a decrease of $1,284 from the three months ended June 30, 2024 from lower volumes of $1,306.

This decrease was driven by reduced volumes of glycerin, a chemically refined by-product of biodiesel, due to the plant turnaround and polymer modifier chemicals.

Chemical revenue in the six months ended June 30, 2025, decreased 30% or $11,311 compared to the six months ended June 30, 2024.

This decline was due to weather related issues that extended the downtime of the plant turnaround and slower production rates as we restarted the plant.

Revenue from custom chemicals for the six months ended June 30, 2025 totaled $22,659, a net decrease of $8,351 from the same period in 2024, resulting from lower sales volumes of $5,972 primarily from products sold in the energy markets, and lower price effect of $1,572 from less amortization of deferred revenue.

Performance chemicals revenue was $3,325, a decrease of $2,960 from the six months ended June 30, 2024 .

This decrease was mostly from lower sales volumes of glycerin, due to reduced production resulting from the plant turnaround, and polymer modifier chemicals.

Gross profit (loss) for the chemical segment was $1,667 and ($4,062) for the three and six months ended June 30, 2025, a decrease of $3,010 and $12,760, respectively, compared to the same periods of 2024.

These decreases were primarily from reduced throughput in the first three months of fiscal year 2025 and reduced amortization of deferred revenue as described above for the six-month period.

Gross (loss) profit

Chemical revenue in the three months ended September 30, 2025, decreased 13% or $2,350 compared to the three months ended September 30, 2024.

Revenue from custom chemicals for the three months ended September 30, 2025 totaled $14,457, a net decrease of $866 from the same period in 2024, resulting from lower sales volumes of products sold in the polymer coatings markets of $1,603 and other custom products of $1,060.

Partially offsetting the decrease was a rise in sales volumes of products sold in the energy market of $1,071.

Performance chemicals revenue was $1,121, a decrease of $1,484 from the three months ended September 30, 2024 from lower volumes.

This decrease was driven by reduced volumes of glycerin, a chemically refined by-product of biodiesel, due to the temporary plant shutdown.

Chemical revenue in the nine months ended September 30, 2025, decreased 25% or $13,661 compared to the nine months ended September 30, 2024.

This decline was due to weather related issues that extended the downtime of the plant turnaround, slower production rates as we restarted the plant, and lower sales volumes of products sold into the energy markets.

Revenue from custom chemicals for the nine months ended September 30, 2025 totaled $37,116, a net decrease of $9,217 from the same period in 2024, resulting from lower sales volumes of $9,735 primarily from products sold in the energy markets, and lower price effect of $2,368 from less amortization of deferred revenue.

Performance chemicals revenue was $4,446, a decrease of $4,444 from the nine months ended September 30, 2024 .

This decrease was mostly due to lower sales volumes of glycerin, from reduced production resulting from the plant turnaround and temporary biodiesel plant shutdown.

Gross loss for the chemical segment was $4,412 and $8,475 for the three and nine months ended September 30, 2025.

The gross loss was worsened by $7,819 and $20,580, respectively, compared to the same periods of 2024, primarily driven by higher share of infrastructure fixed costs due to the idled biodiesel plant of $8,344 in the current periods as compared to $2,229 in the comparative prior year periods.

The nine-month loss was further impacted by, (i) reduced throughput during the first quarter of fiscal year 2025, (ii) lower amortization of deferred revenue, and (iii) decreased sales volumes of products sold into energy markets.

Partially offsetting this decrease in the three-month period was a benefit from the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

This adjustment increased gross profit $553 in the current three-month period, as compared to an increase of $289 in the same period of the prior year.

In the six-month period, this adjustment contributed to the decrease in gross profit with an increase of $839 in the current six-month period as compared to an increase of $1,041 in the prior year period.

This adjustment decreased gross profit $358 in the current three-month period, as compared to a decrease of $418 in the same period of the prior year.

In the nine-month period, this adjustment contributed to the decrease in gross profit with an increase of $481 in the current nine-month period as compared to an increase of $623 in the prior year period.

Biofuel Segment

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Volume/product mix effect

Gross (loss) profit

Biofuels revenue in the three months ended June 30, 2025 , decreased $34,119 as compared to the same period of 2024 .

Biofuels revenue in the three months ended September 30, 2025 , decreased $26,101 as compared to the same period of 2024 .

This decrease resulted from the temporary idling of biodiesel production due to continued renewable fuel market uncertainty resulting from the lack of clarity regarding the CFPC and other market conditions.

Biofuels revenue in the six months ended June 30, 2025 , decreased $66,168 as compared to the same period of 2024 .

Biofuels revenue in the nine months ended September 30, 2025 , decreased $92,269 as compared to the same period of 2024 .

This decrease resulted from the extended plant turnaround to improve plant reliability and the subsequent temporary idling of production for the reasons stated above and other market conditions.

A significant portion of our biodiesel sold was to three and two major customers in the three and six months ended June 30, 2025, respectively, as compared to three major customers in both the three and six months ended June 30, 2024.

A significant portion of our biodiesel sold was to three and two major customers in the three and nine months ended September 30, 2025, respectively, as compared to two and three major customers in the three and nine months ended September 30, 2024.

No assurances can be given that we will continue to sell to such major refiners, or, if we do sell, the volume we will sell or the profit margin we will realize.

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and (iii) the prices we receive from these customers are based upon then-market rates, as would be the case with sales of this commodity to other customers.

Biofuel gross loss was $10,434 in the three months ended June 30, 2025 , a decrease in gross profit of $14,414 from the comparative period in 2024 .

This decrease primarily resulted from reduced sales volumes, stemming from the temporary idling as stated above.

Also reducing gross profit was the change in the activity of derivative instruments with a realized gain of $77 and an unrealized gain of $540 in the current three-month period as compared to a realized gain of $835 and an unrealized gain of $578 in the same period of the prior year.

Further impacting gross profit was the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

This adjustment increased gross profit $679 in the current three-month period as compared to an increase in gross profit of $1,024 in the same period of the prior year.

Benefiting gross profit in the current period was the effect of liquidation of biofuel inventory of $2,394.

Biofuel gross loss was $19,268 in the six months ended June 30, 2025 , a decrease in gross profit of $24,234 from the comparative period in 2024 .

Biofuel gross loss was $2,419 in the three months ended September 30, 2025 , a decrease in gross loss of $605 from the comparative period in 2024 .

Reducing gross profit in the current three-month period was the change in the activity of derivative instruments with a realized gain of $48 and an unrealized gain of $123 in the current three-month period as compared to a realized gain of $1,691 and an unrealized gain of $256 in the same period of the prior year.

In addition, gross profit in the current three-month period was not impacted by the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

This adjustment decreased gross profit $1,038 in the same period of the prior year.

Biofuel gross loss was $21,686 in the nine months ended September 30, 2025 , a decrease in gross profit of $23,628 from the comparative period in 2024 .

This decrease primarily resulted from reduced sales volumes, stemming from the extended plant turnaround and temporary idling described above.

Partially offsetting these decreases was the change in the activity of derivative instruments with a realized gain of $169 and an unrealized gain of $281 in the current six-month period as compared to a realized loss of $354 and an unrealized loss of $1,696 in the same period of the prior year.

Partially offsetting these decreases was the net change in the activity of derivative instruments with a realized gain of $217 and an unrealized gain of $404 in the current nine-month period as compared to a realized gain of $1,337 and an unrealized loss of $1,439 in the same period of the prior year.

Further impacting gross profit was the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

This adjustment increased gross profit $1,018 in the current six-month period as compared to an increase in gross profit of $3,300 in the same period of the prior year.

Lastly, benefiting gross profit was the effect of liquidation of biofuel inventory of $2,394.

This adjustment decreased gross profit $1,671 in the current nine-month period as compared to an increase in gross profit of $1,818 in the same period of the prior year.

Lastly, benefiting gross profit was the effect of liquidation of biofuel inventory of $5,083 in the current nine-month period as compared to $444 in the prior year period.

For our derivative activity, we recognize all derivative instruments as either assets or liabilities at fair value in our consolidated balance sheets.

The realized and unrealized derivative gains and losses are recorded as cost of goods sold.

Our derivative instruments do not qualify for hedge accounting under the specific guidelines of ASC Topic 815, Derivatives and Hedging.

Our derivative instruments do not qualify for hedge accounting under the specific guidelines of ASC Topic 815, Derivatives and Hedging (“ASC 815”).

None of the derivative instruments are designated and accounted for as hedges.

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Asset (Liability)

June 30, 2025

September 30, 2025

December 31, 2024

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Revenue from bill-and-hold transactions in which a performance obligation exists is recognized when the total performance obligation has been met and control of the product has transferred.

Bill-and-hold transactions for the three and six months ended June 30, 2025 and 2024 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use by the customer.

Bill-and-hold transactions for the three and nine months ended September 30, 2025 and 2024 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use by the customer.

These sales were subject to written monthly purchase orders.

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Credit and payment terms for bill-and-hold customers are similar to other custom chemicals customers.

Revenues under bill-and-hold arrangement s were $9,845 and $14,435 for t he three and six months ended June 30, 2025, respectively.

As of June 30, 2025 and December 31, 2024, $6,309 and $7,301 of bill-and-hold revenue had not shipped, respectively.

Revenues under bill-and-hold arrangement s were $10,650 and $25,085 for t he three and nine months ended September 30, 2025, respectively.

As of September 30, 2025 and December 31, 2024, $5,902 and $7,301 of bill-and-hold revenue had not shipped, respectively.

Liquidity and Capital Resources

Our net cash from operating activities, investing activities, and financing activities for the six months ended June 30, 2025 and 2024 is set forth in the following table.

Six Months Ended June 30,

Our net cash from operating activities, investing activities, and financing activities for the nine months ended September 30, 2025 and 2024 is set forth in the following table.

Nine Months Ended September 30,

Net cash (used in) provided by operating activities

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Operating Activities

Cash used in operating activities was $183 in the six months ended June 30, 2025, as compared to cash provided by operating activities of $15,588 in the same period of 2024.

Cash used in operating activities was $1,299 in the nine months ended September 30, 2025, as compared to cash provided by operating activities of $41,415 in the same period of 2024.

This increase in cash used was primarily attributable to the change in net (loss) income resulting in a cash outflow of $50,092.

Also contributing to the current period increase in cash used was the change in other assets of $3,156, and the change in accrued expenses of $2,924.

Partially offsetting these cash outflows was the change in accounts receivable, including accounts receivable - related parties, resulting in a cash inflow of $15,937, the change in accounts payable, including accounts payable - related parties, of $9,186, the change in inventory of $7,221, and the change in deferred revenue of $1,617.

Also contributing to the current period's increase in cash used was the change in other assets of $4,058, and the change in accrued expenses of $3,309.

Partially offsetting these cash outflows was the change in accounts payable, including accounts payable - related parties, resulting in a cash inflow of $8,454, the change in inventory of $5,848, the change in deferred revenue of $2,492, and the change in accounts receivable, including accounts receivable - related parties, of $1,582.

Investing Activities

Cash used in investing activities was $8,585 in the six months ended June 30, 2025, as compared to $5,312 in the six months ended June 30, 2024.

This $3,273 increase in cash used was primarily due to an increase in capital expenditure of $4,208 partially offset by the change in the collateralization of derivative instruments of $901.

Cash used in investing activities was $14,426 in the nine months ended September 30, 2025, as compared to $10,176 in the nine months ended September 30, 2024.

This $4,250 increase in cash used was primarily due to an increase in capital expenditure of $4,215.

Financing Activities

Cash used in financing activities was $5,621 and $114,660 in the six months ended June 30, 2025 and 2024, respectively, primarily for payments of dividends on our common stock inclusive of a special dividend of $109,408 paid in the prior six-month period.

Cash used in financing activities was $8,256 and $117,285 in the nine months ended September 30, 2025 and 2024, respectively, primarily for payments of dividends on our common stock inclusive of a special dividend of $109,408 paid in the prior nine-month period.

Credit Facility

We have a credit agreement, as amended and restated on February 21, 2025, with a syndicated group of commercial banks for $75,000.

The credit agreement was further amended on July 25, 2025, effective as of June 30, 2025, when the Company entered into an amendment to the credit agreement that provided for non-cash interest expense to be excluded from the Consolidated Interest Coverage Ratio.

The loan is a revolving facility, the proceeds of which may be used for our working capital, capital expenditures, and general corporate purposes.

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First, for our biofuel sales, we enter into the purchase and sale of futures contracts and options on futures contracts of energy commodities.

This activity was captured in our consolidated balance sheets at June 30, 2025, and December 31, 2024 as derivative instruments recorded in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”).

Second, for our biofuel feedstocks, we execute purchase contracts and supply agreements with certain vendors that may meet the normal purchase and normal sales exception of ASC 815.

These transactions are recognized in earnings and were not recorded in our consolidated balance sheets at June 30, 2025, or December 31, 2024 to the extent that we are able to apply the normal purchase and normal sales exception of ASC 815.

This activity was captured in our consolidated balance sheets at September 30, 2025, and December 31, 2024 as derivative instruments recorded in accordance with ASC 815.

Second, for our biofuel feedstocks, we execute purchase contracts and supply agreements with certain vendors that meet the normal purchase and normal sales exception of ASC 815.

These transactions are recognized in earnings and were not recorded in our consolidated balance sheets at September 30, 2025, or December 31, 2024 to the extent that we are able to apply the normal purchase and normal sales exception of ASC 815.

The purchase of biofuels feedstock generally involves two risk components:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis