16. Liquidity and Going Concern

The accompanying financial statements have been prepared contemplating the realization of assets and satisfaction of liabilities in the normal course of business. This approach to presentation is qualified by the following additional descriptions of our financial position.

Debt

We have substantial accumulated debt and our senior lender has a security interest in substantially all of the Company's assets. We have been reliant on our senior secured lender to provide extensions to the maturity dates of its debt facilities and have been required to remit substantially all excess cash from tax credit sales as payments of that debt, in addition to other periodic payments. In order to meet our obligations during the next twelve months, we will need to refinance debt with our senior lender for amounts becoming due in the next twelve months or receive its continued cooperation.

Operational Cash Flows

We do not currently generate positive cash flow from our consolidated operations. We are pursuing the following strategies to improve liquidity:

California Ethanol

Optimize Operations. We plan to continue to operate the Keyes Plant and to optimize operating parameters based on market conditions. For example, we recently improved ethanol yields and operating margins by scaling back throughput by about 15%.

Reduce Natural Gas Use and Reduce Ethanol Carbon Intensity. We are constructing a Mechanical Vapor Recompression ("MVR") system that will reduce the Keyes Plant's natural gas consumption by about 80% and lower the carbon intensity of the ethanol produced at the Plant. This will reduce overall fuel costs and volatility and will increase income from LCFS credits and Section 45Z tax credits. The MVR project is expected to become operational in the first half of 2026.

Monetize New Section 45Z Tax Credits. The Keyes Plant started earning Section 45Z tax credits effective January 1, 2025, and we are in the process of monetizing the credits that have been earned so far. The recent federal tax and budget legislation referred to as the "One Big Beautiful Bill" that was enacted in July 2025 contains provisions that are expected to increase our future income from Section 45Z tax credits for ethanol production, including an increase in the credit amount earned for each gallon of ethanol we produce and an extension of the term of the credits to a total of five years.

Evaluate New Technologies.  We continue to evaluate other opportunities to improve the Keyes Plant's financial performance by adopting new technologies or process changes that allow for further improvement to energy efficiency, use of lower cost feedstocks, and other margin enhancements.

California Renewable Natural Gas

Operate Eleven Digesters.  We completed construction of four new digesters in 2024 so will generate full cash flow from continuing to operate our eleven existing digesters for a full year in 2025 to produce and sell Renewable Natural Gas and the associated environmental attributes.

Construct New Digesters.  We plan to continue to build new dairy digesters that increase cash flow as allowed by capital availability. We have agreements with a total of fifty dairies and expect the next set of digesters to begin producing biogas in the third quarter of 2025. We are seeking debt from a variety of sources to facilitate additional digester construction.

Increase LCFS Credit Revenue.  In the second quarter of 2025, the California Air Resource Board approved provisional pathways for seven dairy locations, which is expected to increase our LCFS credit revenue from biogas we produce from those dairies by about 100% starting in the third quarter of 2025, compared to the temporary pathways that previously applied. We still generate LCFS credits under temporary pathways at four operating digesters and expect LCFS revenue to increase further as we obtain more provisional LCFS pathways for those dairies. In addition, CARB's recently approved amendments to the LCFS regulation became effective July 1, 2025, which are expected to reduce the oversupply of LCFS credits and lead to higher credit prices in the future.

Monetize New Section 45Z Tax Credits.  Our RNG production started earning Section 45Z production tax credits effective January 1, 2025, and we are in the process of monetizing the credits earned so far. The recent federal tax and budget legislation referred to as the "One Big Beautiful Bill" that was enacted in July 2025 contains provisions that are expected to increase our future income from Section 45Z tax credits for RNG production, including an increase in the credit amount earned for each MMBtu of RNG we produce and an extension of the term of the credits to a total of five years.

India Biodiesel

Continue Sales to OMCs. We plan to continue to operate the Kakinada Plant to produce biodiesel and glycerin and to sell the biodiesel to government-owned Oil Marketing Companies ("OMCs") to help them achieve government mandates to increase the percentage of biodiesel used in India as a percentage of total diesel uses.

Expand Operations and Plan for IPO. We have hired a new executive team in India to help develop plans for additional growth of our India business and to execute on a potential public stock offering of our India subsidiary.

Maintain Self-Sustaining Cash Flow. Notably, our India business has been self-sustaining from a cash and liquidity perspective for several years, and we expect this to continue.

Financing

While we are implementing our plans to improve liquidity, we have been raising cash for operations by selling equity through our at-the-market stock registration, and we expect to continue to do so. We also plan to seek additional funding for existing and new business opportunities through a combination of working with our senior lender, restructuring or refinancing existing loan agreements, entering into additional debt agreements for specific projects, and obtaining project specific equity and debt for development projects, and obtaining additional debt from the current EB-5 Phase II offering.

Summary

As discussed above, there have been several events in the last six months that are expected to improve our ability to execute on the strategies for improving liquidity, including, for example, recent approval of biogas LCFS pathways, effectiveness of the new LCFS rule amendments, availability of Section 45Z tax credits for both ethanol and RNG production, and hiring of a new CFO in India to help manage an expected IPO.

Notwithstanding our plans to improve liquidity and these favorable recent events, the extent of our debt and reliance on our senior secured lender, along with expected near-term shortfalls in cash flow from operations, require us to continue to carry forward the conclusion that there is substantial doubt about our ability to continue as a going concern over the next twelve months.