Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations of FutureFuel Corp. ("FutureFuel", "the Company", "we", or "our") should be read together with our consolidated financial statements, including the notes thereto, set forth herein and in our 2024 Annual Report on Form 10-K. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements. See "Forward-Looking Information" below for additional discussion regarding risks associated with forward-looking statements.

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.

Overview

Our Company is managed and reported in two reportable segments: chemicals and biofuels. Within the chemical segment are two product groupings: custom chemicals and performance chemicals. The custom product group is composed of specialty chemicals manufactured for a single customer whereas the performance product group is composed of chemicals manufactured for multiple customers. The biofuel segment is composed of one product group. Management believes that the diversity of each segment strengthens the company in the ability to utilize resources and is committed to growing each segment.

Within the United States Environmental Protection Agency ("EPA") Renewable Fuel Standard ("RFS"), we generate 1.5 Renewable Identification Numbers ("RINs") for each gallon of biodiesel sold in the United States with a classification of a D4 or D6 RIN. RINs are used to monitor the level of renewable fuel traded in a given year in accordance with RFS within the EPA moderated transaction system. We do not assign cost of goods sold to the generation of RINs as the physical fuel generates the full cost. 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. Key changes in the proposal include a potential increase in RINs in biomass-based diesel from 5.36 billion in 2025 to 7.12 billion in 2026 and 2027 and a reduction in the RINs generated for imported or foreign-feedstock-based renewable fuel and the removal of renewable electricity from the program. Starting in 2026, imported renewable fuel or fuel produced domestically using foreign feedstocks would generate 50% fewer RINs compared to purely domestic renewable fuel. In addition, the proposed rule would reduce the RIN equivalency factor for renewable diesel from 1.7 to 1.6. The final rule could materially affect the Company's operations and financial results. 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. The Budget Reconciliation Act is expected to help level the competitive environment for biodiesel by: (i) reducing the tax credit for sustainable aviation fuel ("SAF") from $1.75 per gallon to $1.00 per gallon effective January 1, 2026; (ii) requiring that all feedstock for SAF be sourced from North America, as required for biomass based diesel; and (iii) extending the clean fuel production credit ("CFPC") for an additional two years through December 31, 2029.

Summary of Financial Results

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

		Three Months Ended September 30,
										Dollar				%
		2025				2024				Change				Change
Revenue		$	22,689			$	51,140			$	(28,451	)			(56	)%
Loss from operations		$	(9,735	)		$	(2,888	)		$	(6,847	)			(237	)%
Net loss		$	(9,327	)		$	(1,195	)		$	(8,132	)			(681	)%
Loss per common share:
Basic		$	(0.21	)		$	(0.03	)		$	(0.18	)			(600	)%
Diluted		$	(0.21	)		$	(0.03	)		$	(0.18	)			(600	)%
Adjusted EBITDA		$	(6,835	)		$	(973	)		$	(5,862	)			(602	)%

		Nine Months Ended September 30,
										Dollar				%
		2025				2024				Change				Change
Revenue		$	75,900			$	181,830			$	(105,930	)		(58		)%
(Loss) income from operations		$	(40,501	)		$	4,761			$	(45,262	)		NA
Net (loss) income		$	(37,386	)		$	12,706			$	(50,092	)		NA
(Loss) earnings per common share:
Basic		$	(0.85	)		$	0.29			$	(1.14	)		NA
Diluted		$	(0.85	)		$	0.29			$	(1.14	)		NA
Adjusted EBITDA		$	(32,715	)		$	13,042			$	(45,757	)		NA

We use adjusted EBITDA as a key operating metric to measure both performance and liquidity. Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities (each as determined in accordance with GAAP) as a measure of performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP. We define adjusted EBITDA as net (loss) income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash stock-based compensation expenses, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, losses on disposal of property and equipment, non-cash gains or losses on derivative instruments, and other non-operating income or expenses. Information relating to adjusted EBITDA is provided so that investors have the same data that we employ in assessing the overall operation and liquidity of our business. Our calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of our calculation are not necessarily comparable to the results of other companies.

Adjusted EBITDA allows our chief operating decision maker to assess the performance and liquidity of our business on a consolidated basis to assess the ability of our operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures, and to pay dividends. In particular, our management believes that adjusted EBITDA permits a comparative assessment of our operating performance and liquidity, relative to performance and liquidity based on GAAP results. This measure isolates the effects of certain items, including depreciation and amortization (which may vary among our operating segments without any correlation to their underlying operating performance), non-cash stock-based compensation expense (which is a non-cash expense that varies widely among similar companies), and non-cash gains and losses on derivative instruments (which can cause net income to appear volatile from period to period relative to the sale of the underlying physical product).

We utilize commodity derivative instruments primarily to attempt to mitigate the effect of commodity price volatility and to provide greater certainty of cash flows associated with sales of our commodities. We utilize mark-to-market accounting to account for these instruments. Thus, our results in any given period can be impacted, sometimes significantly, by changes in market prices relative to our contract price along with the timing of the valuation change in the derivative instruments relative to the sale of biofuel. We include the mark-to-market or non-cash portion of this item as an adjustment to adjusted EBITDA as we believe it provides a relevant indicator of the underlying performance of our business in a given period.

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Net (loss) income		$	(9,327	)		$	(1,195	)		$	(37,386	)		$	12,706
Depreciation			2,404				2,163				7,143				6,923
Non-cash stock-based compensation			226				91				688				113
Interest income, net			(824	)			(1,830	)			(3,129	)			(6,151	)
Non-cash interest expense and amortization of deferred financing costs			29				34				91				103
Loss (gain) on disposal of property and equipment			-				24				(34	)			24
Unrealized (gain) loss on derivative instruments			(123	)			(257	)			(404	)			1,439
Other expense (income)			807				-				302				(2,750	)
Income tax (benefit) provision			(27	)			(3	)			14				635
Adjusted EBITDA		$	(6,835	)		$	(973	)		$	(32,715	)		$	13,042

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

		Nine Months Ended September 30,
		2025				2024
Net cash (used in) provided by operating activities		$	(1,299	)		$	41,415
Deferred income taxes, net			6				(618	)
Interest income, net			(3,129	)			(6,151	)
Income tax provision			14				635
Change in operating assets and liabilities, net			(28,609	)			(19,489	)
Other expense (income)			302				(2,750	)
Adjusted EBITDA		$	(32,715	)		$	13,042

Results of Operations

Consolidated

		Three Months Ended September 30,																Nine Months Ended September 30,
										Change																Change
		2025				2024				Amount						%		2025				2024				Amount						%
Revenues		$	22,689			$	51,140			$	(28,451	)			(56	)%		$	75,900			$	181,830			$	(105,930	)			(58	)%
Volume/product mix effect											(31,004	)			(61	)%										$	(100,058	)			(55	)%
Price effect											2,553				5	%										$	(5,872	)			(3	)%
Gross (loss) profit			(6,831	)			383				(7,214	)		NA				$	(30,161	)		$	14,047			$	(44,208	)		NA
Operating expenses			(2,904	)			(3,271	)			367				11	%			(10,340	)			(9,286	)			(1,054	)			(11	)%
Other income, net			381				1,690				(1,309	)			(77	)%			3,129				8,580				(5,451	)			(64	)%
Income tax (benefit) provision			(27	)			(3	)			(24	)			(800	)%			14				635				(621	)			(98	)%
Net (loss) income		$	(9,327	)		$	(1,195	)		$	(8,132	)			(680.5	)%		$	(37,386	)		$	12,706			$	(50,092	)			NA

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 ninemonths 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 expenses

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 $1,054 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 $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 (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. Since March 31, 2024, the Company's deferred tax assets have been reduced to zero and an additional net liability has been recognized.

Chemical Segment

		Three Months Ended September 30,																Nine Months Ended September 30,
										Change																Change
		2025				2024				Amount						%		2025				2024				Amount						%
Revenues		$	15,578			$	17,928			$	(2,350	)			(13	)%		$	41,562			$	55,223			$	(13,661	)		(25		)%
Volume/product mix effect											(2,913	)			(16	)%										$	(12,849	)			(24	)%
Price effect											563				3	%										$	(812	)			(1	)%
Gross (loss) profit		$	(4,412	)		$	3,407			$	(7,819	)			NA			$	(8,475	)		$	12,105			$	(20,580	)			NA

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, 2024from 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 ninemonths 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 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 September 30,																Nine Months Ended September 30,
										Change																Change
		2025				2024				Amount						%		2025				2024				Amount						%
Revenues		$	7,111			$	33,212			$	(26,101	)		(79		)%		$	34,338			$	126,607			$	(92,269	)		(73		)%
Volume/product mix effect											(28,091	)			(85	)%										$	(87,209	)			(69	)%
Price effect											1,990				6	%										$	(5,060	)			(4	)%
Gross (loss) profit		$	(2,419	)		$	(3,024	)		$	605			20.0		%		$	(21,686	)		$	1,942			$	(23,628	)		NA

Biofuels revenue in the three months ended September 30, 2025, decreased $26,101as 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 ninemonths ended September 30, 2025, decreased $92,269as 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 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. 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 because: (i) we believe that we could readily sell our biodiesel to other customers on equivalent terms as potential demand from other customers for biodiesel exceeds our production capacity; (ii) 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 (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 $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 ninemonths 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 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 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 ("ASC 815"). None of the derivative instruments are designated and accounted for as hedges.

The volumes and carrying values of our derivative instruments included in other current assets were as follows:

		Asset (Liability)
		September 30, 2025								December 31, 2024
		Contract Quantity				Fair Value				Contract Quantity				Fair Value
Regulated fixed price future commitments (in thousand barrels)			324			$	169				100			$	(235	)

*All derivative instruments are entered into with the standard contract terms and conditions in accordance with major trading authorities of the New York Mercantile Exchange.

Critical Accounting Estimates

Revenue Recognition

The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers. Certain long-term contracts had upfront non-cancellable payments considered material rights. The Company applied the renewal option approach in allocating the transaction price to the material rights. For each of these contracts, the Company estimated the expected contractual volumes to be sold at the most likely expected sales price as a basis for allocating the transaction price to the material right. Estimated amortization is updated quarterly on a prospective basis. These custom chemical contracts have payment terms of 30 days. See Note 3 to our consolidated financial statements for additional information.

For most product sales, revenue is recognized when product is shipped from our facilities and risk of loss and title have passed to the customer, which is in accordance with our customer contracts and the stated shipping terms. Nearly all custom manufactured products are manufactured under written master service agreements. Performance chemicals and biodiesel are generally sold pursuant to the terms of written purchase orders. In general, customers do not have any rights of return, except for quality disputes. All of our products are tested for quality before shipment, and historically returns have been inconsequential and we typically do not offer rebates.

Biodiesel selling prices can at times fluctuate based on the timing of unsold, internally generated RINs. From time to time, sales of biodiesel are on a "RINs-free" basis. Such method of selling results in applicable RINs being held. The value of the RINs is not reflected in revenue until such time as the RIN sale has been completed.

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 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. The product was custom manufactured and stored at the customer's request and could not be sold to another buyer. Credit and payment terms for bill-and-hold customers are similar to other custom chemicals customers. Revenues under bill-and-hold arrangements were $10,650and $25,085for the 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 nine months ended September 30, 2025 and 2024 is set forth in the following table.

		Nine Months Ended September 30,
		2025				2024
Net cash (used in) provided by operating activities		$	(1,299	)		$	41,415
Net cash used in investing activities			(14,426	)			(10,176	)
Net cash used in financing activities			(8,256	)			(117,285	)

We believe that existing cash balances and cash flow to be generated from operating activities and borrowing capacity under the amended and restated credit agreement will be sufficient to fund operations, product development, cash dividends, and capital requirements for the foreseeable future.

Operating Activities

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'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 $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 $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. The facility terminates on February 21, 2030. See Note 7 to our consolidated financial statements for additional information regarding our credit agreement.

We intend to fund future capital requirements for our businesses from cash flow as well as from existing cash, cash investments, and, if the need should arise, borrowings under our credit facility. We do not believe there will be a need to issue any securities to fund such capital requirements.

Dividends

Regular cash dividends of $0.06 per share were paid on our common stock in each quarter of 2025 and 2024. The regular cash dividend amounted to $2,628 and $2,626 in 2025 and 2024, respectively. The declaration of these regular quarterly cash dividends was made in the three months ended December 31, 2024, and December 31, 2023, respectively. In addition, on April 9, 2024, we paid a special dividend of $2.50 per share on our common stock which amounted to $109,408. The declaration of this special dividend was made in the first quarter of 2024.

Capital Management

As a result of our initial equity offering, our subsequent positive operating results, the exercise of warrants, and the issuance of shares in our at-the-market offering, we accumulated excess working capital. Some of this excess working capital has been paid out as special and regular cash dividends. Third parties have not placed significant restrictions on our working capital management decisions.

A significant portion of these funds were held in cash or cash equivalents at multiple financial institutions such as depositary accounts, money market accounts, and other similar accounts at selected financial institutions.

Off- Balance Sheet Arrangements

We engage in two types of transactions to mitigate the impacts of changes in prices for both commodity sales and purchases. 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 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: basis and price. Basis covers any refining or processing required as well as transportation. Price covers the purchases of the actual agricultural commodity. Both basis and price fluctuate over time. A supply agreement with a vendor constitutes a hedge when we have committed to a certain volume of feedstock in a future period and have fixed the basis for that volume.