What changed in this filing

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Item 1A. Risk Factors

2026-03-16 compared with 2025-03-31 · 54 added, 35 removed, 289 unchanged (24% of the section changed)

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and global economic conditions, including our sourcing of certain raw materials for our chemicals segment internationally.

Accordingly, adverse changes in these conditions, including supply chain disruptions and price inflation for those raw materials, can adversely impact our business.

Accordingly, adverse changes in these conditions, including supply chain disruptions and price inflation for those raw materials, which can adversely impact our business.

The impacts include, but are not limited to:

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limitations on our ability to operate our business as a result of federal, state or local regulations including taxes and tariffs;

decreases in the demand for and price of RINs and LCFS credits as a result of reduced demand for petroleum-based gasoline and diesel fuel.

decreases in the demand for and price of RINs and California's Low Carbon Fuel Standard (“LCFS”) credits as a result of reduced demand for petroleum-based gasoline and diesel fuel.

We operate within the biomass-based diesel industry, which is significantly influenced by governmental programs requiring or incentivizing the consumption of biofuels, including the BTC and CFPC.

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The petroleum industry is opposed to many of these government incentives and can be expected to continue to challenge these incentives.

Historically, the most significant tax incentive program in the biomass-based diesel industry has been the BTC.

Under the BTC, the first market participant to blend pure biomass-based diesel with petroleum-based diesel fuel receives a one dollar per gallon refundable tax credit.

Historically, the most significant tax incentive program in the biomass-based diesel industry had been the BTC.

Under the BTC, the first market participant to blend pure biomass-based diesel with petroleum-based diesel fuel received a one dollar per gallon refundable tax credit.

From time to time, the BTC has expired and been retroactively reinstated.

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However, the maximum credit would require zero GHG emissions which is unrealistic for almost every biodiesel producer, including the Company.

Guidance surrounding this credit has yet to be finalized despite the effective date of the CFPC.

Guidance surrounding this credit was proposed on February 3, 2026, and is awaiting public comment.

Given our relative position to other biodiesel producers and the importance of such incentives to our operations, a reduction or elimination of these governmental incentives could have a material adverse effect on us and on the biodiesel industry in general.

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Similarly, the USEPA could curtail or otherwise change its administration of the RFS2 program in a manner adverse to us, including by not increasing or even decreasing the required renewable fuel volumes, by waiving compliance with the required renewable fuel volumes or otherwise.

In addition, while Congress specified RFS2 renewable fuel volume requirements through 2022 (subject to adjustment in the rulemaking process), beginning in 2023 required volumes of renewable fuel will be largely at the discretion of the USEPA (in coordination with the Secretary of Energy and Secretary of Agriculture).

In addition, required volumes of renewable fuel are largely at the discretion of the USEPA (in coordination with the Secretary of Energy and Secretary of Agriculture).

We cannot predict what changes, if any, will be instituted or the impact of any changes on our business, although adverse changes could seriously harm our revenues, earnings and financial condition.

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If federal or state agency determinations, laws, and regulations relating to the application and use of alternative energy are changed, the marketability and sales of biodiesel production could be materially adversely affected.

We have historically derived a significant portion of our revenues from sales of our biofuels in the State of California primarily as a result of California ’ s Low Carbon Fuel Standard ( “ LCFS ” );

We have historically derived a significant portion of our revenues from sales of our biofuels in the State of California primarily as a result of California ’ s LCFS ;

adverse changes in this law or reductions in the value of LCFS credits would harm our revenues and profits.

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As a result of competition, we may lose market share or be unable to maintain or increase prices for our products and/or services or to acquire additional business opportunities, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Although we will employ all methods of competition that are lawful and appropriate for such purposes, no assurances can be made that they will be successful.

Although we will employ methods of competition that we deem appropriate for such purposes, no assurances can be made that they will be successful.

A key component of our competitive position, particularly given the commodity-based nature of many of our products, will be our ability to manage expenses successfully, which requires continuous management focus on reducing unit costs and improving efficiency.

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The total current U.S.

production capacity for biodiesel is in excess of the current RFS2 mandate for 2023 and 2024.

production capacity for biodiesel was in excess of the RFS2 mandate for 2024 and 2025.

Excess production capacity over the annual mandates could result in a decline in biodiesel prices and profitability, negatively impacting our ability to maintain the profitability of our biofuels segment and recover capital expenditures in this business segment.

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or external factors such as computer or equipment malfunction at third-party service providers, natural disasters, pandemic illness, changes in laws or regulations, war or other outbreak of hostilities or terrorism, cyber-incidents, or breakdown or degradation of transportation infrastructure used for delivery of supplies to the Company or for delivery of products to customers.

We have recently suffered increasingly frequent, unscheduled and extended service utility downtime as a result of supplier delays and quality issues beyond our control.

We have recently suffered increasingly frequent, unscheduled and extended service utility downtime as a result of supplier delays and quality issues beyond our control which may be exacerbated by cyber-incidents affecting those third-party providers.

Furthermore, many of our manufacturing control systems rely on legacy hardware and software that may no longer be supported by original equipment manufacturers.

This creates risks related to the availability of replacement parts, specialized repair expertise, and the inability to apply modern security patches.

Because many of these systems operate on single-processor architectures without redundancy, any maintenance or repair requires total system downtime, which may be difficult to schedule without impacting production commitments.

No assurances can be provided that any future disruptions due to these, or other, circumstances will not have a material effect on operations.

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We are reliant upon a relatively small number of customers.

Our chemical business is concentrated with four large customers covering multiple products representing greater than 84% of our chemicals segment product sales, or 28% of total revenues.

Our chemical business is concentrated with three l arge customers covering multiple products representing 81% of our chemicals segment product sales, or 50 % of total revenues.

Although this business is contracted in longer-term production agreements, the loss of any of these strategic customers could have a material adverse effect on our chemicals business.

Additionally, our biofuels segment has two large customers.

We do not believe that the loss of these customers would have a material adverse effect on our biofuels segment or on us as a whole in that:

(i) unlike our custom manufacturing products, biodiesel is a commodity with a large potential customer base; (ii) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity; (iii) our sales to these customers are not under fixed terms and the customers have no fixed obligation to purchase any minimum quantities except as stipulated by short term purchase orders; and (iv) 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.

Sales to these biodiesel customers totaled approximately 25% of total revenue (or $59,867,000) in 2024 .

Sales to biodiesel customers totaled approximately 38% of total revenue (or $36,178) in 2025 .

No biofuel customer in 2025 was greater than 10% of total revenue.

Sales in 2024 to our two largest customers represented 25% of total revenues (or $59,867).

Sales to our two largest biodiesel customers totaled 35% of total revenues in 2023 (or $127,763).

We do not have a contract with these customers but rather sell based on monthly or short-term, multi-month purchase orders placed with us by the customers at prices based upon then-prevailing market rates.

We do not have contracts with these customers, but rather sell based on monthly or short-term, multi-month purchase orders placed with us by the customers at prices based upon then-prevailing market rates.

We do not believe that the loss of these large, concentrated customers would have a material adverse effect on our biofuels segment or on us as a whole in that:

Changes in technology may render our products or services obsolete.

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If we do not manage or are not capable of managing escalating raw material prices and/or passing these increases along to our customers via increased prices for our finished products, we may incur losses.

Currently, there is a supply disruption in the renewable fuel market as proposed regulations are finalized on the CFPC.

However, under normal conditions there is excess renewable fuel production capacity and low utilization in the industry and if non-operational and underused facilities commence or increase operations, our results of operations may be negatively affected.

The transition from the BTC to the CFPC under Section 45Z redefined the competitive landscape for the 2025 fiscal year.

While this shift provides a production-based incentive, it also introduces specific operational risks related to market saturation and feedstock availability.

Historically, the renewable fuel industry has been characterized by significant excess production capacity and low utilization rates.

In 2024, many biodiesel plants were sidelined or operated at reduced levels due to regulatory uncertainty.

In early 2025, with the implementation of the CFPC, many of these non-operational or underused facilities commenced or increased operations.

This surge in active capacity poses several risks:

Supply/Demand Imbalance:

Total nameplate capacity—including existing plants and the large-scale renewable diesel refineries completed in late 2024—now substantially exceeds both historic domestic consumption and the volume mandates required under RFS2.

Downward Price Pressure:

An oversupply of renewable fuels in the merchant market may depress market prices, leading to a contraction in our biodiesel gross margins.

The reactivation of dormant capacity has intensified the competition for key feedstocks (such as soybean oil, corn oil, and tallow).

Increased Input Costs:

As more plants vie for a finite supply of raw materials, feedstock prices may rise independently of finished fuel prices.

Margin Compression:

The combination of higher feedstock costs and lower fuel prices could significantly harm our revenues and overall profitability.

We are subject to industry and economic conditions that have caused several biofuel companies throughout the United States to file for bankruptcy over the last several years.

Unfavorable worldwide economic conditions, lack of financing, and volatile biofuel prices and feedstock costs have likely contributed to the necessity of bankruptcy filings by biofuel producers.

Our business may be negatively impacted by the industry conditions that influenced the bankruptcy proceedings of other biofuel producers, or we may encounter new competition from buyers of distressed biodiesel properties who enter the industry at a lower cost than original plant investors.

If we are unable to acquire or renew permits and approvals required for our operations, we may be forced to suspend or cease operations altogether.

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Our indebtedness may limit our ability to borrow additional funds or capitalize on acquisition or other business opportunities.

We hold a $75 million revolving credit facility with a commercial bank.

We have entered into a $35 million revolving credit facility with a commercial bank.

This credit facility expires in February 2030.

Although as of the date of this report we have no outstanding borrowings under the existing facility, if and when we do borrow, the restrictions governing this type of indebtedness (such as total debt to EBITDA limitations) could reduce our ability to incur additional indebtedness, engage in certain transactions, or capitalize on acquisition or other business opportunities.

Although as of the date of this report we have no outstanding borrowings under the existing facility, if and when we do borrow, the restrictions governing this type of indebtedness (such as limitations on the ratio of our total debt to EBITDA) could reduce our ability to incur additional indebtedness, engage in certain transactions, or capitalize on acquisition or other business opportunities.

We expect to have capital expenditure requirements, and we may be unable to obtain needed financing on satisfactory terms due to inflation and increased interest rates.

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The Company has information and information processing assets, including intellectual property, trade secrets, and other sensitive, business critical information as well as on-premises and cloud-based business applications critical to conducting business.

In addition, our chemical manufacturing facilities are highly automated using modern computer systems.

Cyber-incidents affecting the Company, its supply chain or customers could compromise confidential, business critical information, cause a disruption in the Company’s operations, harm the Company's reputation, or endanger the environment if the Company, its suppliers or customers do not effectively prevent, detect and recover from these or other security breaches.

In addition, our chemical manufacturing facilities are highly automated using a mix of legacy and modern computerized Industrial Control Systems (“ICS”).

These legacy systems, while functional for production, often lack modern security features and may be more susceptible to vulnerabilities that cannot be mitigated through standard IT security protocols.

Cyber-incidents affecting the Company, its supply chain, utility providers or customers could compromise confidential, business critical information, cause a sustained disruption in the Company’s operations, harm the Company's reputation, or lead to a loss of control of physical processes that could endanger the environment if the Company, its suppliers or customers do not effectively prevent, detect and recover from these or other security breaches.

The Company, like many companies today, is the target of industrial espionage, including cyber-attacks.

The Company has determined that these cyber-attacks have resulted, and could result in the future, in unauthorized parties gaining access to certain confidential business information.

When unauthorized access is discovered, the Company reports such situations to governmental authorities for investigation, as appropriate, and takes measures to mitigate any potential impact.

Although management does not believe that the Company has experienced any material losses to date related to these cyber security incidents, there can be no assurance that such losses will not be suffered in the future.

The Company seeks to actively manage the risks within its control that could lead to business disruptions and cyber security incidents through a comprehensive cyber security program that is continuously reviewed (through internal and third-party auditing), maintained, and upgraded.

While the Company continuously monitors for unauthorized activity, these increasingly sophisticated and automated threats may result in unauthorized parties gaining access to certain confidential business information or seeking to gain lateral access to manufacturing control networks.

In instances where potential unauthorized access is identified, the Company initiates its incident response plan to investigate, mitigate, and, where appropriate, report to governmental authorities.

Although management does not believe that the Company has experienced any material losses to date related to cyber security incidents, there can be no assurance that such losses will not be suffered in the future.

The Company seeks to actively manage the risks within its control that could lead to business disruptions and cyber security incidents through a comprehensive cyber security program and structured management of change processes that are continuously reviewed (through internal and third-party auditing), maintained, and upgraded.

As these threats continue to evolve, particularly around cybersecurity, the Company may be required to expend significant resources to enhance its control environment, processes, practices, and other protective measures.

Despite these efforts, such events could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Risks Related to Emerging Technologies and Artificial Intelligence

Improper use of generative AI and LLMs could result in a material adverse effect on our operations and financial results.

Employees may engage in the horizontal use of generative AI and LLMs.

Such use, if not properly governed, carries risks of “Shadow AI'” — the use of unsanctioned tools that may lead to the unauthorized disclosure of proprietary chemical formulas, trade secrets, or personal information.

Furthermore, reliance on AI-generated output that contains “hallucinations” or technical inaccuracies could, if not verified by subject matter experts, result in process safety incidents or inaccurate regulatory reporting, which could have a material adverse effect on the Company’s business and operations, results of operations, financial condition and cash flows.

Confidentiality agreements with customers, employees, and others may not adequately prevent disclosures of confidential information, trade secrets, and other proprietary information.

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There can be no assurance that we will be able to maintain or establish additional necessary strategic relationships, in which case the opportunity to grow our business may be negatively affected.

There is disruption in supply in the renewable fuel market currently without clarity on the CFPT credit.

Many biodiesel plants in the United States are currently shutdown without clarity on the CFPT credit.

Most biodiesel plants, when running, do not operate at full capacity.

Further, a number of renewable diesel plants are under construction in the United States as of December 2024, and if completed, would add additional renewable fuel production capacity.

The annual production capacity of existing plants and plants under construction far exceeds both historic consumption of renewable fuels in the United States and required consumption under RFS2.

If this excess production capacity was used, it would increase competition for our feedstocks, increase the volume of renewable fuels on the market, and may reduce our biodiesel gross margins, harming our revenues and profitability.

Several biofuel companies throughout the United States have filed for bankruptcy over the last several years due to industry and economic conditions.

Unfavorable worldwide economic conditions, lack of financing, and volatile biofuel prices and feedstock costs have likely contributed to the necessity of bankruptcy filings by biofuel producers.

We are exposed to government credit risk and fluctuations in market values of our cash and cash equivalent portfolio.

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Our stock price may change dramatically as the result of:

(i) announcements of new products or innovations by us or our competitors; (ii) uncertainty regarding the viability of any of our product initiatives; (iii) significant customer contracts; (iv) significant litigation; (v) uncertainty with respect to changing laws and regulations that impact our business and our ability to take advantage of tax credits such as the BTC and CFPC; or (vi) unscheduled and extended downtime at our facility;

(i) announcements of new products or innovations by us or our competitors; (ii) uncertainty regarding the viability of any of our product initiatives; (iii) significant customer contracts; (iv) significant litigation; (v) uncertainty with respect to changing laws and regulations that impact our business and our ability to take advantage of tax credits such as the BTC and CFPC; (vi) unscheduled and extended downtime at our facility;

or (vii) events that would be expected to affect our business, financial condition, results of operations, and future prospects.

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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-K

Item 1A. Risk Factors