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While foreign demand, transportation costs and infrastructure constraints may temper the market impact throughout the
United States, competition from imported ethanol may affect our ability to sell our ethanol profitably, which may have an
adverse effect on our operations, cash flows and financial position.
If significant additional foreign ethanol production capacity is created, such facilities could create excess supplies of
ethanol on world markets, which may result in lower prices of ethanol throughout the world, including the United States.
Such foreign competition is a risk to our business. Any penetration of ethanol imports into the domestic market may have a
material adverse effect on our operations, cash flows and financial position.
Our success may depend on our ability to manage our growing and changing operations.
Since our formation in 2004, our business has grown significantly in size and complexity. This growth has placed, and is
expected to continue to place, significant demands on our management, systems, internal controls and financial and physical
resources. In addition, if we acquire additional operations, we expect that we will need to further develop our financial and
managerial controls and reporting systems to accommodate future growth. This will require us to incur expenses related to
hiring additional qualified personnel, retaining professionals to assist in developing the appropriate control systems and
expanding our information technology infrastructure. Our inability to manage growth effectively could have an adverse effect
on our results of operations, financial position and cash flows.
Future acquisitions may involve the issuance of equity securities as payment or in connection with financing the business
or assets acquired and, as a result, could dilute your ownership interest. In addition, additional debt may be necessary in order
to complete these transactions, which could have a material adverse effect on our financial condition. The failure to
successfully evaluate and execute acquisitions or joint ventures or otherwise adequately address the risks associated with
acquisitions or joint ventures could have a material adverse effect on our business, results of operations and financial
We may fail to realize the anticipated benefits of our joint venture to commercialize algae production.
We have 35% ownership in a joint venture that is focused on developing technology to grow and harvest algae, which
consume carbon dioxide, in commercially viable quantities. The algae produced have the potential to be used for advanced
bio-fuel production, high quality animal feed, or as biomass for energy production, but our current primary focus is on
efficiently growing, and developing primary markets for, algae on a large scale. We believe this technology has specific
applications with facilities, including ethanol plants that emit carbon dioxide. We may fail to realize the expected benefits of
capturing carbon dioxide to grow and harvest algae as acceptable production rates, operating costs, capital requirements and
product market prices may not be achieved.
We have had a history of operating losses and may incur future operating losses.
We have had a history of operating losses from 2006 to 2008, and may incur operating losses in the future, which could
be substantial. Although we have sustained profitability from 2009 to 2011, we may not be able to continue to sustain or
increase profitability on a quarterly or annual basis, which could result in a decrease in the trading price of our common
Our ability to successfully operate is dependent on the availability of energy and water at anticipated prices.
Our plants require a significant and uninterrupted supply of natural gas, electricity and water to operate. We rely on third
parties to provide these resources. We cannot assure you that we will be able to secure an adequate supply of energy or water
to support current and expected plant operations. If there is an interruption in the supply of energy or water for any reason,
such as supply, delivery or mechanical problems, we may be required to halt production. If production is halted for an
extended period of time, it may have a material adverse effect on our operations, cash flows and financial position.
Replacement technologies are under development that might result in the obsolescence of corn-derived ethanol or our
process systems.
Ethanol is primarily an additive and oxygenate for blended gasoline. Although use of oxygenates is currently mandated,
there is always the possibility that a preferred alternative product will emerge and eclipse the current market. Critics of
ethanol blends argue that ethanol decreases fuel economy, causes corrosion of ferrous components and damages fuel pumps.
Any alternative oxygenate product would likely be a form of alcohol (like ethanol) or ether (like MTBE). Prior to federal
restrictions and ethanol mandates, MTBE was the dominant oxygenate. It is possible that other ether products could enter the