REX AMERICAN RESOURCES Corp (REX)

CIK: 0000744187. SIC: 2860 Industrial Organic Chemicals. Latest 10-K as of: 2026-03-30.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2860 Industrial Organic Chemicals

SEC company page: https://www.sec.gov/edgar/browse/?CIK=744187. Latest filing source: 0000930413-26-000937.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-30. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000744187.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-06-02. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000744187.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0000930413-26-001786.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-06-02. Report date: 2026-04-30.

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

Ethanol and By-Products

At April 30, 2026, we had investments in three
ethanol limited liability companies, in two of which we have a majority ownership interest. The following table is a summary of ethanol
entity ownership interests at April 30, 2026:

Entity

Location

REX’s
Current

Ownership Interest

One
Earth Energy, LLC

Gibson City,
IL

76.1%

NuGen
Energy, LLC

Marion, SD

99.7%

Big
River Resources, LLC:

Big
River Resources W Burlington, LLC

W. Burlington,
IA

10.3%

Big
River Resources Galva, LLC

Galva, IL

10.3%

Big
River United Energy, LLC

Dyersville,
IA

5.7%

Big
River Resources Boyceville, LLC

Boyceville,
WI

10.3%

Our ethanol operations are highly dependent on commodity
prices, especially prices for corn, ethanol, distillers grains, distillers corn oil and natural gas, and availability of corn. As a result
of price volatility for these commodities, our operating results can fluctuate substantially. The price and availability of corn is subject
to significant fluctuations depending upon several factors that affect commodity prices in general, including crop conditions, the amount
of corn stored on farms, weather, federal policy, foreign trade, tariffs, and international disruptions caused by wars or conflicts. Because
the market prices of ethanol and distillers grains are not always directly related to corn prices (for example, demand for crude and other
energy and related prices, the export market demand for ethanol and distillers grains, soybean meal prices, and the results of federal
policy decisions and trade negotiations can impact ethanol and distillers grains prices), at times ethanol and distillers grains prices
may not follow movements in corn prices and, in an environment of higher corn prices or lower ethanol or distillers grains prices, reduce
the overall margin structure at the plants. As a result, at times, we may operate our plants at negative or minimally positive operating
margins.

We expect our ethanol plants to produce approximately
2.9 gallons of denatured ethanol for each bushel of corn processed in the production cycle. We refer to the actual gallons of denatured
ethanol produced per bushel of corn processed as the realized yield. We refer to the difference between the price per gallon of ethanol
and the price per bushel of corn (divided by the realized yield) as the “crush spread”. Should the crush spread decline, it
is possible that our ethanol plants will generate operating results that do not provide adequate cash flows for sustained periods of time.
In such cases, production at the ethanol plants may be reduced or stopped altogether in order to minimize variable costs at individual
plants.

We attempt to manage the risk related to the volatility
of commodity prices by utilizing forward corn and natural gas purchase contracts, forward ethanol, distillers grains and distillers corn
oil sale contracts, and commodity futures agreements, as management deems appropriate. We attempt to match quantities of these sales contracts
with an appropriate quantity of corn purchase contracts over a given period of time when we can obtain an adequate gross margin resulting
from the crush spread inherent in the contracts we have executed. However, the market for future ethanol sales contracts generally lags
the spot

 28

market with respect to ethanol prices. Consequently, we generally execute fixed price contracts for no more than four months
into the future at any given time and we may lock in our corn or ethanol price without having a corresponding locked in ethanol or corn
price for short durations of time. As a result of the relatively short period of time our fixed price contracts cover, we generally cannot
predict the future movements in our realized crush spread for more than four months; thus, we are unable to predict the likelihood or
amounts of future income or loss from the operations of our ethanol facilities.

One Earth Energy, LLC Carbon Sequestration and Plant Expansion

One Earth Sequestration, LLC, a wholly owned subsidiary
of One Earth, is in the developmental stage of a carbon sequestration project near the One Earth ethanol plant. In October 2022, we applied
to the EPA for a Class VI injection well permit for three wells, and we continue to provide information to the EPA upon request during
the technical review of our application. We currently expect the EPA to prepare a draft permit by July 2026 and make a final permit decision
by November 2026, according to the EPA’s Class VI Permit Tracker Dashboard on their website. We also must obtain certain state and county
permits for the sequestration site and connector pipeline. We have completed the construction of the capture and compression facility
to capture, dehydrate, and compress carbon dioxide from the One Earth ethanol plant to a state suitable for sequestration. Testing has
not yet been completed and we cannot begin construction of the CO2 connector pipeline between the One Earth compression facility
and the sequestration well until further permits and approvals are received.

Although we have made meaningful progress and significant
investments in the carbon sequestration project at One Earth, we continue to work with the various government agencies involved to obtain
all required permits and approvals, with no assurance of the ultimate success or timing of the project. Also see the discussion under
“Trends and Uncertainties” relating to the impact of certain recently adopted legislation and certain recently proposed legislation
that, if enacted, could affect our carbon sequestration project.

We are also expanding the One Earth ethanol plant.
We received a construction permit from the EPA to increase production from 150 million gallons of ethanol per year to 175 million gallons
of ethanol per year. Once we achieve that level of production, we intend to apply for another permit to increase production to 200 million
gallons per year. We continue to work to identify ways to further reduce our CI score at the One Earth plant with the intention of maximizing
tax credits available under the IRA and OBBBA.

We currently budget capital expenditures for both
the expansion and sequestration projects at One Earth to be approximately $220 million to $230 million, subject to further refinement
as we move forward, including impacts from inflation. We plan to pay for all expenditures from available cash. As of April 30, 2026, we
had spent $58.7 million since inception toward the carbon sequestration project and were contractually obligated to spend an additional
$0.2 million. If the carbon sequestration project is successful, we believe we will qualify for tax credits under section 45Q, based on
tons of carbon sequestered, and section 45Z, based on gallons of ethanol produced, as outlined in the IRA and OBBBA. Companies may elect
either the 45Q credit or the 45Z credit in periods in which both tax credits are available. As of April 30, 2026, we had spent $117.7
million since inception and were contractually committed to spend an additional $9.2 million toward plant capacity expansion at One Earth.

 29

The IRA created a new Clean Fuel Production Credit,
available for calendar years 2025 – 2027 which, based on proposed rulemaking by the U.S. Department of Treasury, established a tax
credit that utilizes a sliding scale where credits can be earned incrementally between $0.02 and $0.20 ($0.10 and $1.00 if prevailing
wage and apprenticeship requirements are met) per gallon of non-SAF fuels based on an ethanol plant’s GHG reduction below a 50 CI score
threshold, with the first two or ten cents credit earned upon achieving a CI score below 47.5, to incentivize further increases in plant
efficiencies within the industry. The OBBBA extended the time period during which 45Z credits can be claimed by two years, through December
31, 2029. The. U.S. Department of the Treasury issued proposed rules on February 3, 2026 on qualification for 45Z tax credits. Based on
proposed regulations, we recognized approximately $31.7 million and $7.5 million in 45Z tax credits through our consolidated subsidiaries
for fiscal year 2025 and the first quarter of fiscal year 2026, respectively. Public hearings were held on
the proposed rules in 2026.

In May 2023, NuGen, our majority owned ethanol plant
in Marion, South Dakota, signed an agreement to be part of Summit Carbon Solutions’ carbon capture and storage pipeline. Should Summit
Carbon Solutions be able to obtain all necessary permits and approvals, the agreement would allow NuGen to share in the economic benefits
of tax credits through the sale of the CO2 output of its ethanol production facility for sequestration, as well as to reduce
its net carbon emissions. In March 2025, South Dakota enacted a law that bans the use of eminent domain in connection with CO2
pipelines. In addition, in March 2026, a North Dakota Court voided the permits issued to Summit Carbon Solutions for underground storage
of carbon dioxide as the Court has deemed the law under which the permits were issued to be unconstitutional. Summit Carbon Solutions
is analyzing the decision and is contemplating next steps. These actions have delayed and could make the sequestration project for the
NuGen facility more difficult for Summit Carbon Solutions to complete.

We plan to seek and evaluate various investment
opportunities, including ethanol and/or energy related, carbon sequestration, agricultural or other ventures we believe fit our investment
criteria. We can make no assurances that we will be successful in our efforts to find such opportunities.

Refined Coal

On August 10, 2017, we purchased, through a 95.35%
owned subsidiary, the entire ownership interest of an entity that owned a refined coal facility. We began operating the refined coal facility
immediately after the acquisition. Using licensed technology, our plant applied two separate chemicals to convert feedstock coal into
refined coal, which was sold to the end user of the refined coal. The refined coal operating results were subsidized by federal production
tax credits through November 18, 2021, subject to meeting qualified emissions reductions as governed by Section 45 of the IRC. We ceased
operating the facility on November 18, 2021 and subsequently sold the facility. The approximately $58.2 million in federal production
tax credits received through the ownership of this facility remain under IRS audit. That audit is in the process of being finalized, with
the Company expecting to retain all federal production credits claimed for this project.

 30

Critical Accounting Policies and Estimates

During the three months ended April 30, 2026, we
did not change any of our critical accounting policies as disclosed in our 2025 Annual Report on Form 10-K as filed with the Securities
and Exchange Commission on March 30, 2026.

Fiscal Year

All references in this report to a particular fiscal
year are to REX’s fiscal year ended January 31. The Company refers to its fiscal year by reference to the year immediately preceding the
January 31 fiscal year end date. For example, “fiscal year 2026” means the period February 1, 2026 to January 31, 2027. The
Company includes the results of operations of One Earth in its Consolidated Statements of Operations on a delayed basis of one month as
One Earth has a fiscal year end of December 31.

Results of Operations

Trends and Uncertainties

Renewable Fuel Standard II, established in October
2010, has been an important factor in the growth of ethanol usage in the United States. There has been much uncertainty in the enforcement
of RFS II. When it was originally established, RFS II required the volume of “conventional” or corn derived ethanol to be blended
with gasoline to increase each year until it reached 15.0 billion gallons in 2015 and required that it remain at that level through 2022.
There

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-03-30. Report date: 2026-01-31.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We have been an investor in ethanol production
facilities beginning in 2006. We currently have equity investments in three ethanol production entities, two of which are majority ownership
interests. We may make additional alternative energy investments in the future and are currently working on a carbon sequestration project
near our One Earth Energy location.

Our ethanol operations are highly dependent on
commodity prices, especially prices for corn, ethanol, distillers grains, distillers corn oil and natural gas, and availability of corn.
As a result of price volatility for these commodities, our operating results can fluctuate substantially. The price and availability of
corn is subject to significant fluctuations depending upon several factors that affect commodity prices in general, including crop conditions,
the amount of corn stored on farms, weather, federal policy, foreign trade, tariffs, and international disruptions caused by wars or conflicts.
Because the market prices of ethanol and distillers grains are not always directly related to corn prices (for
example, demand for crude and other energy and related prices, the export market demand for ethanol and distillers grains, soybean meal
prices, and the results of federal policy decisions, trade negotiations, and tariffs can impact ethanol and distillers grains prices),
at times ethanol and distillers grains prices may not follow movements in corn prices and, in an environment of higher corn prices or
lower ethanol or distillers grains prices, reduce the overall margin structure at the plants. As a result, at times, we may operate our
plants at negative or minimally positive operating margins.

We expect our ethanol plants to produce approximately
2.9 gallons of denatured ethanol for each bushel of corn processed in the production cycle. We refer to the actual gallons of denatured
ethanol produced per bushel of corn processed as the realized yield. We refer to the difference between the price per gallon of ethanol
and the price per bushel of corn (divided by the realized yield) as the “crush spread.” Should the crush spread decline, it
is possible that our ethanol plants will generate operating results that do not provide adequate cash flows for sustained periods of time.
In such cases, production at the ethanol plants may be reduced or stopped altogether in order to minimize variable costs at individual
plants.

We attempt to manage the risk related to the volatility
of commodity prices by utilizing forward corn and natural gas purchase contracts, forward ethanol, distillers grains and distillers corn
oil sale contracts, and commodity futures agreements, as management deems appropriate. We attempt to match quantities of these sales contracts
with an appropriate quantity of corn purchase contracts over a given period of time when we can obtain an adequate gross margin resulting
from the crush spread inherent in the contracts we have executed. However, the market for future ethanol sales contracts generally lags
the spot market with respect to ethanol prices. Consequently, we generally execute fixed price contracts for no more than four months
into the future at any given time and we may lock in our corn or ethanol price without having a corresponding locked in ethanol or corn
price for short durations of time. As a result of the relatively short period of time our fixed price contracts cover, we generally cannot
predict the future movements in our realized crush spread for more than four months; thus, we are unable to predict the likelihood or
amounts of future income or loss from the operations of our ethanol facilities.

We reported net income attributable to REX common
shareholders of approximately $83.0 million in fiscal 2025 compared to approximately $58.2 million in fiscal 2024. The current year has
benefitted from reductions in our effective tax rate resulting from the impact of 45Z tax credits earned associated with our ethanol production.
Gross profit in fiscal year 2025 was higher than fiscal year 2024, primarily a result of higher crush spreads. The two largest drivers
of ethanol profitability are corn and ethanol pricing, both of which experienced significant volatility within the year. Chicago Board
of Trade corn prices per bushel ranged from a low of $3.72 in August 2025 to a high of $5.02 in February 2025. S&P Global Platts ethanol
pricing per gallon ranged from a low of $1.50 in January 2026 to a high of $2.09 in September 2025.

One
Earth Sequestration, LLC, a wholly owned subsidiary of One Earth Energy, LLC, is in the developmental stage of a carbon sequestration
project near the One Earth Energy ethanol plant. In October 2022, we applied to the EPA for a Class VI injection well permit for three
wells, and we continue to provide information to the EPA during the technical review of our application. We currently expect the EPA to
prepare a draft permit by May 2026 and make a final permit decision during the third quarter of 2026, according to the EPA’s Class
VI Permit Tracker Dashboard on their website. We also must obtain certain state and county permits for the sequestration site and connector
pipeline. We have completed the construction of the capture and compression facility to capture, dehydrate, and compress carbon dioxide
from the One

23

Earth ethanol plant to a state suitable for sequestration.
Testing has not yet been completed and we cannot begin construction of the CO2 connector pipeline between the One Earth
ethanol plant and the sequestration site or a sequestration well until further permits and approvals are received.

Although we have made meaningful progress and
significant investments in the carbon sequestration project at One Earth Energy, we continue to work with the various government agencies
involved to obtain all required permits and approvals, with no assurance of the ultimate success or timing of the project. Also see the
discussion under “Trends and Uncertainties” on pages 25 and 26 of certain recently proposed legislation that, if enacted,
could impact our carbon sequestration project.

We are also expanding the One Earth ethanol plant.
We received a construction permit from the EPA to increase production from 150 million gallons of ethanol per year to 175 million gallons
of ethanol per year. Once we achieve that level of production, we intend to apply for another permit to 200 million gallons per year.
We continue to work to identify ways to reduce our CI score at the One Earth plant with the intention of maximizing tax credits available
under the IRA.

The IRA created a new Clean
Fuel Production Credit, available for calendar years 2025 – 2027 which, based on proposed rulemaking by the United
States Department of Treasury, established a tax credit that utilizes a sliding scale where credits can be earned
incrementally between $0.02 and $0.20, or $0.10 and $1.00 if prevailing wage and apprenticeship requirements are met, per
gallon of non-SAF fuels based on an ethanol plant’s GHG reduction below a 50 CI score threshold, with the first two or
ten cents earned upon achieving a CI score below 47.5, to incentivize further increases in plant efficiencies within the
industry. In July 2025, Congress passed the OBBBA, which was subsequently signed into law by the President. The law extended
the time period which 45Z credits can be claimed by two years, through December 31, 2029. The U.S. Department of the Treasury
issued proposed rules on February 3, 2026 on qualification for 45Z tax credits. Based on these proposed regulations, we
recognized approximately $28.1 million in 45Z tax credits through our consolidated subsidiaries for fiscal 2025.

We currently budget capital
expenditures for both the expansion and sequestration projects at One Earth to be approximately $220 million to $230 million,
subject to further refinement as we move forward. We plan to pay for all expenditures from available cash. As of January 31,
2026, we had spent $58.4 million since inception toward the carbon sequestration project and were contractually committed to
spend an additional $0.6 million. If the carbon sequestration project is successful, we believe we will qualify for tax
credits under section 45Q, based on tons of carbon sequestered, and section 45Z, based on gallons of ethanol produced, as
provided in the IRA and OBBBA. Companies may elect either the 45Q credit or the 45Z credit in periods in which both tax
credits are available. As of January 31, 2026, we had spent $107.6 million since inception and were contractually committed
to spend an additional $15.5 million toward plant capacity expansion and ongoing efforts to reduce our CI scoring at One
Earth.

In May 2023, NuGen, our
majority owned ethanol plant in Marion, South Dakota, signed an agreement to be part of Summit Carbon Solutions’ carbon
capture and storage pipeline. Should Summit Carbon Solutions be able to obtain all necessary permits and approvals, the
agreement would allow NuGen to share in the economic benefits of tax credits through the sale of the
CO2 output of its ethanol production facility for sequestration, as well as to reduce its net carbon
emissions. In March 2025, South Dakota enacted a law that bans the use of eminent domain in connection with
CO2 pipelines. In addition, in March 2026, a North Dakota Court voided the permits issued to Summit Carbon
Solutions for underground storage of carbon dioxide as the Court has deemed the law the permits were issued under to be
unconstitutional. Summit Carbon Solutions is analyzing the decision and is contemplating next steps. These actions could make
the sequestration project for the NuGen facility more difficult for Summit Carbon Solutions to complete.

We plan to seek and evaluate various investment
opportunities including energy related, carbon sequestration, agricultural and other ventures we believe fit our investment criteria.
We can make no assurances that we will be successful in our efforts to find such opportunities.

Ethanol Investments

In fiscal year 2006, we entered the ethanol industry
by investing in several entities organized to construct and subsequently operate ethanol producing plants. We are invested in three entities
as of January 31, 2026, utilizing equity investments.

24

The following table is a summary of our ethanol
entity ownership interests at January 31, 2026:

Entity

Location

REX’s
Current

Ownership Interest

One Earth Energy, LLC

Gibson City, IL

76.1%

NuGen Energy, LLC

Marion, SD

99.7%

Big River Resources, LLC:

Big River Resources W Burlington, LLC

Big River Resources Galva, LLC

Big River United Energy, LLC

Big River Resources Boyceville, LLC

W. Burlington, IA

Galva, IL

Dyersville, IA

Boyceville, WI

10.3%

10.3%

5.7%

10.3%

The three entities own a total of six ethanol
production facilities, which in aggregate shipped approximately 722 million gallons of ethanol over the twelve-month period ended January
31, 2026. REX’s effective ownership of ethanol gallons shipped for the twelve-month period ended January 31, 2026, was approximately
294 million gallons.

Trends and Uncertainties

Renewable Fuel Standard II, established in October
2010, has been an important factor in the growth of ethanol usage in the United States. There has been much uncertainty in the enforcement
of RFS II. When it was originally established, RFS II required the volume of “conventional” or corn derived ethanol to be
blended with gasoline to increase each year until it reached 15.0 billion gallons in 2015 and required that it remain at that level through
2022. There are no established congressional target volumes beginning in 2023. The EPA has the authority to waive the biofuel mandate,
in whole or in part, if there is inadequate domestic renewable fuel supply or the requirement severely harms the domestic economy or environment.
In addition, under RFS II, a small refiner that processes fewer than 75,000 barrels of oil per day can petition the EPA for a waiver of
their requirement to submit RINs. The EPA, through consultation with the United States Department of Energy and the USDA, can grant the
refiner a full or partial waiver, or deny the waiver. The EPA has the authority to waive the biofuel mandate, in whole or in part, if
there is inadequate domestic renewable fuel supply or the requirement severely harms the domestic economy or environment. In addition,
under RFS II, a small refiner that processes fewer than 75,000 barrels of oil per day can petition the EPA for a waiver of their requirement
to submit RINs. The EPA, through consultation with the United States Department of Energy and the USDA, can grant the refiner a full or
partial waiver, or deny the waiver. The waiving of a refiner’s obligation effectively lowers the amount of renewable fuels required
to be blended, and by extension the amount of RINs that need to be retired, which can impact their values and ultimately blending levels
of renewable fuels. There are multiple ongoing legal challenges to how the EPA has handled SREs and RFS rulemaking. On August 22, 2025,
the EPA ruled on much of the backlog of SREs, issuing 63 full exemptions, 77 partial exemptions of 50%, 28 denials and 7 ruled as ineligible.
On November 7, 2025, the EPA issued two 100% waivers, twelve 50% waivers and two denials. As of March 19, 2026, there were 37 SRE petitions
pending from compliance years 2023-2025.

The EPA has issued RVOs for calendar
years 2023-2025. The volumes from conventional biofuels (which includes corn-based ethanol) were 15.0 billion gallons for
2023 through 2025. Additionally, in 2023, the EPA restored 250 million gallons previously waived. On March 27, 2026, the EPA
issued total RVOs for 2026 and 2027 of 15.0 billion gallons of conventional ethanol for each year.

The EPA recently issued
emergency waivers allowing the sale of E-15 gasoline for the 2026 summer months. 2026 will represent the fifth consecutive
year for these emergency waivers. The EPA has not granted E-15 the same Reid vapor pressure waiver as E-10, so absent the
emergency waivers, E-15 may not be sold in most states from June 1 to September 15.

The IRA, signed into law on
August 16, 2022, created a new Clean Fuel Production Credit, section 45Z, originally available for years 2025 to 2027. Based
on proposed rulemaking by the United States Department of Treasury, the Clean Fuel Production Credit will be
established utilizing a sliding scale where tax credits may be earned incrementally between $0.02 and $0.20, or $0.10 and
$1.00 if prevailing wage and apprenticeship requirements are met, per gallon of non-SAF fuels based on a plant’s GHG
reduction below a 50 CI score threshold, with the first two or ten cents earned upon achieving a CI score

25

below 47.5. The IRA also raises the carbon capture
tax credit from $50 per metric ton to $85 per metric ton, under section 45Q. Companies may elect either the 45Q credit or the 45Z credit
in periods in which both tax credits are available.

The OBBBA introduced major revisions to clean
energy tax credits. Key provisions include extending the 45Z credit through 2029, removing the indirect land-use change penalty for crop-based
feedstocks, limiting eligibility to feedstocks under the USMCA, imposing FEOC restrictions, and prohibiting negative emissions rates except
from animal manure. It also modified the language for 45Q tax credits for facilities placed in service after the bill enactment but maintained
the $85 per ton tax credit if the prevailing wage and apprenticeship requirements are met. 45Q credits are available for 12 years from
the time CO2 injection begins.

We have secured land easements from all necessary
landowners to allow the construction of the CO2 connector pipeline on their land from the ethanol plant to the first two
injection wells for our carbon sequestration project near the One Earth Energy ethanol facility. We also have landowner subsurface easements
for the first injection well with capacity sufficient to allow for carbon sequestration for our One Earth plant for an estimated 15 years.
The Illinois General Assembly passed the Safety and Aid for the Environment in Carbon Capture and Sequestration Act (SB 1289), which was
signed by the Governor in July 2024. The legislation imposes additional safety, environmental and other requirements on obtaining permits
and approvals for carbon capture and sequestration facilities in Illinois, including CO2 pipelines. Further, the legislation
imposes a moratorium on the issuance of new certificates of authority for the construction of CO2 pipelines until the
earlier of the date new federal CO2 pipeline safety standards are finalized by the federal PHMSA or, subject to certain
other conditions, July 1, 2026.

Illinois Senate Bill 1723 was signed into law
by the Governor on August 1, 2025. SB 1723 prohibits carbon sequestration activities over, under, or through an aquifer as defined by
the EPA. The proposed injection wells for our carbon sequestration project are located outside of these areas.

Although we have made meaningful progress and
significant investments in the carbon sequestration project at One Earth, we continue to work with the various government agencies involved
to obtain all required permits and approvals, with no assurance of the ultimate success or timing of the project. 

The United States exported an estimated 2.2 billion
gallons of ethanol in 2025, up from approximately 1.9 and 1.4 billion gallons in 2024 and 2023, respectively. In 2025 and 2024, an estimated
11.6 and 12.1 million metric tons, respectively, of distillers grains were exported from the United States, which represented approximately
36% and 37% in 2025 and 2024, respectively, of U.S production. There has been much discussion around proposed and recently enacted tariffs
by the United States and counter-tariffs and other trade restriction involving countries which have been large purchasers from our industry
in the United States.

Should these trends and uncertainties continue,
our future operating results could be impacted.

Results of Operations

The following table summarizes our results from operations (amounts
in thousands):

Fiscal Year

2025

2024

Net sales and revenue

$ 

650,487

$ 

642,491

Cost of sales

556,781

551,014

Gross profit

$

93,706

$

91,477

Income before income taxes

$

88,572

$

92,872

Benefit (provision) for income taxes

$

6,502

$

(21,386)

Net income attributable to REX common shareholders

$

82,951

$

58,167

26

The following table summarizes net sales and revenue by product group
(amounts in thousands):

Fiscal Year

2025

2024

Ethanol

$

504,416

$

496,411

Dried distillers grains

88,156

101,432

Distillers corn oil

52,382

38,999

Modified distillers grains

5,388

4,896

Derivative financial instruments (losses) gains

(254)

424

Other

399

329

Total

$

650,487

$

642,491

The following table summarizes selected operating data:

Fiscal Year

2025

2024

Average selling price per gallon of ethanol (net of hedging)

$

1.74

$

1.71

Gallons of ethanol sold (in millions)

290.0

289.7

Average selling price per ton of dried distillers grains

$

144.06

$

160.37

Tons of dried distillers grains sold

611,929

632,469

Average selling price per pound of distillers corn oil

$

0.54

$

0.44

Pounds of distillers corn oil sold (in millions)

97.0

88.1

Average selling price per ton of modified distillers grains

$

65.82

$

69.93

Tons of modified distillers grains sold

81,861

70,013

Comparison of Fiscal Years 2025 and 2024 (Consolidated
Results)

Net Sales and Revenue – Net
sales and revenue in the year ended January 31, 2026 increased approximately 1%, or $8.0 million, compared to the year ended January 31,
2025.

Ethanol sales increased in fiscal year 2025 compared
to fiscal year 2024 as the average price per gallon increased 2%, along with gallons sold remaining steady compared to the prior period.
Ethanol pricing is affected by many factors, including overall market supply and demand, as well as corn and gasoline pricing.

Dried distillers grains sales decreased in fiscal
year 2025 compared to fiscal year 2024, decreasing 13% year-over-year, as the average price per ton sold decreased 10%, as well as a decrease
in tons sold of 3%. The decrease in the dried distillers grains selling price is consistent
with recent quarters and reflects an extended period of lower corn pricing as dried distillers grains prices often correlate with corn
pricing. The decrease in tons sold was impacted by increased production levels of other ethanol by-products.

Distillers corn oil sales increased 34% in fiscal
year 2025 compared to fiscal year 2024 as the average selling price per pound increased approximately 23% and the amount of pounds sold
increased 10%. The corn oil yield per bushel ground improved at our consolidated ethanol
plants in fiscal 2025 relative to the comparable period in fiscal 2024. The increase in the distillers corn oil selling price resulted
primarily from fluctuations in demand in the renewable biodiesel market.

Modified distillers grains sales increased 10%
in fiscal year 2025 compared to fiscal year 2024 as the amount of tons sold increased 17%, offset partially by a 6% decrease in the average
selling price per ton sold. The decrease in the modified distillers grains selling price resulted primarily from an extended period of
lower corn prices, as prices tend to move in the same direction but are also impacted by changes in local market demand. Our consolidated
plants’ decisions to sell modified or dried distillers grains fluctuate from time to time based upon market conditions.

Losses on derivative financial instruments were
$0.3 million in fiscal year 2025, compared to gains of $0.4 million in fiscal year 2024. Gains
and losses are related to our risk management activities and were impacted by the price movements and types of contracts entered into
at our consolidated ethanol plants.

27

Cost of Sales – Cost of sales
for fiscal year 2025 increased approximately $5.8 million, or 1%, over fiscal year 2024. Corn accounted for approximately 74% ($411.5
million) of our cost of sales during fiscal year 2025 compared to approximately 76% ($416.4 million) during fiscal year 2024. The cost
of corn decreased due to lower corn prices, while the amount of bushels used remained stable year over year. Natural gas accounted for
approximately 5% ($29.0 million) of our cost of sales during fiscal year 2025 compared to approximately 4% ($22.6 million) during fiscal
year 2024.

Gross Profit – As a result
of the foregoing, gross profit for fiscal year 2025 increased approximately $2.2 million, or 2%, from fiscal year 2024. Gross profit in
fiscal year 2025 was approximately 14.4% of net sales and revenue, versus approximately 14.2% of net sales and revenue in fiscal year
2024.

We attempt to match quantities of ethanol, distillers
grains and distillers corn oil sale contracts with an appropriate quantity of grain purchase contracts over a given period of time when
we can obtain an adequate margin resulting from the crush spread inherent in the contracts we have executed. However, the market for future
ethanol sales contracts generally lags the spot market with respect to ethanol price. Consequently, we generally execute fixed price contracts
for no more than four months into the future at any given time and we may lock in our corn or ethanol price without having a corresponding
locked in ethanol or corn price for short durations of time. As a result of the relatively short period of time our fixed price contracts
cover, we generally cannot predict the future movements in our realized crush spread for more than four months. We utilize derivative
financial instruments, primarily exchange traded commodity future contracts and swaps, in conjunction with our grain procurement and commodity
marketing activities.

Selling, General and Administrative (“SG&A”)
Expenses – SG&A expenses for fiscal year 2025 were approximately $32.6 million (5.0% of net sales and revenue), an increase
of approximately $5.5 million or 20% from approximately $27.1 million (4.2% of net sales and revenue) for fiscal year 2024. The dollar
increase compared to the prior year is primarily related to a $2.0 million increase in performance bonuses due to the increase in net
income and recording unpaid stock bonuses at fair value. Additionally, there was a $1.4 million increase related to the lease of railcars.
Approximately $1.1 million was accrued in fiscal 2025 for costs associated with 45Z tax credits, including the planned purchase of EACs.

Equity in Income of Unconsolidated Ethanol
Affiliates – During fiscal years 2025 and 2024, we recognized income of approximately $12.5 million and $9.4 million, respectively,
from our equity investment in Big River Resources, LLC (“Big River”). Our investment in Big River, which has interests in
four ethanol production plants, represents an effective ownership of approximately 38.6 million gallons of ethanol shipped in the trailing
twelve months ended January 31, 2026.

We expect the operating experience of Big River
to be generally consistent with the trends in crush spread margins described in the “Overview” section as Big River’s
results are dependent on the same industry dynamics as our other ethanol investments (ethanol, corn, dried distillers grains and natural
gas pricing).

Interest and Other Income –
Interest and other income for fiscal year 2025 was approximately $15.0 million compared to approximately $19.2 million for fiscal year
2024. The decrease is primarily related to decreased interest income of $4.6 million in fiscal year 2025 based upon lower average
balances and yields on our excess cash and short-term investments in fiscal year 2025, compared to 2024. One of our consolidated ethanol
plants recognized $0.5 million less in patronage income from an investment in a cooperative in fiscal 2025 ($0.7 million) compared to
fiscal 2024 ($1.2 million). We do not expect patronage income from this investment in a cooperative to be significant in future periods.
These decreases in interest and other income were partially offset by $1.2 million in interest income recorded in fiscal 2025, owed from
the IRS as part of the finalization of the IRS audit over refined coal and research and experimentation tax credits.

Income Before Income Taxes –
As a result of the foregoing, income before income taxes was approximately $88.6 million for fiscal year 2025 versus approximately $92.9
million for fiscal year 2024.

Provision for Income Taxes –
Our effective tax rate was a benefit of 7.3% and a provision of 23.0% for fiscal years 2025 and 2024, respectively. Our effective rate
is impacted by the noncontrolling interests of the companies we consolidate, as we recognize 100% of their income or loss before income
taxes and noncontrolling interests and only provide an income tax provision or benefit for our portion of the subsidiaries’ income or
loss. During fiscal 2025, our effective tax rate decreased by 31.8% (approximately $28.1 million) as a result of 45Z tax credits earned
by our ethanol facilities as a result of their qualified ethanol production after the purchase of EACs. During both fiscal years 2025
and 2024, our effective tax rate increased 2.7% and 2.2%, respectively (approximately $2.4 million and $2.1 million, respectively), as
a result of section 162M compensation limitations. The impact of the effective settlement of the IRS audits during fiscal 2025 related

28

to the refined coal tax credits and the research
and experimentation credits resulted in an increase to our effective tax rate of 1.3% (approximately $1.2 million).

Net Income – As a result of
the foregoing, net income was approximately $95.1 million for fiscal year 2025 versus approximately $71.5 million for fiscal year 2024.

Net Income Attributable to Noncontrolling
Interests – Income attributable to noncontrolling interests was approximately $12.1 million and $13.3 million during fiscal
years 2025 and 2024, respectively, and represents the other owners’ share of the income of NuGen and One Earth.

Net Income Attributable to REX Common Shareholders
– As a result of the foregoing, net income attributable to REX common shareholders was approximately $83.0 million for fiscal year
2025 compared to $58.2 million for fiscal year 2024.

Comparison of Fiscal Years 2024 and 2023

See “Item 7 Management’s discussion
and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31,
2025.

Liquidity and Capital Resources

Our primary sources of cash have been income from
operations. Our primary uses of cash have been capital expenditures at our ethanol plants and carbon sequestration project, stock repurchases,
and payments to noncontrolling interests holders.

Summary of Cash Flows and Working Capital (amounts in thousands):

Year Ended

January 31,

2026

2025

Net cash provided by operating activities

$

117,829

$

64,192

Net cash used in investing activities

$

(87,691)

$

(72,860)

Net cash used in financing activities

$

(37,659)

$

(18,474)

January 31,

2026

January 31,

2025

Working capital

$

372,451

$

385,376

Current ratio

5.9x

8.6x

Capital Resources

At January 31, 2026, working capital was $372.5
million with a current ratio of 5.9x. Our cash and short-term investments balance of approximately $375.8 million at January 31, 2026
included approximately $336.5 million held by One Earth and NuGen. We expect that One Earth and NuGen will use a majority of their cash
for working capital needs, capital expenditures, general corporate purposes and dividend payments. We expect our equity method investee
to limit the payment of dividends based upon their working capital and capital expenditure needs, as well as restricting dividends pursuant
to the terms of various loan agreements. None of our consolidated subsidiaries or the parent company have restricted net assets related
to loan agreements at January 31, 2026.

We are investigating various uses of our excess
cash We expect total capital expenditures related to the construction at the One Earth facilities to approximate $220 million to $230
million, inclusive of the carbon sequestration project and

29

plant capacity expansion and ongoing efforts to
reduce CI scoring, which we currently plan to pay from our available cash. This estimate is subject to further refinement as the projects
progress. As of January 31, 2026, we had spent $58.4 million since inception and were contractually committed to spend an additional $0.6
million toward the carbon sequestration project. As of January 31, 2026, we had spent $107.6 million since inception and were contractually
committed to spend an additional $15.5 million toward plant capacity expansion and CI scoring reduction efforts. For all projects, we
plan to spend $70 million to $80 million during fiscal year 2026.

We have a stock buyback program in place. On March
25, 2025, the Board of Directors authorized the repurchase from time to time of up
to an additional 3,000,000 shares through open market transactions, privately negotiated transactions, or transactions by other
means in accordance with applicable securities laws. During fiscal year 2025, we purchased 1,651,252 shares for $32.9 million. After these
repurchases, a total of 2,357,186 shares remained available to purchase under existing board authorization at January 31, 2026. Repurchases
are generally made when management deems the shares are trading at a discount to intrinsic value.

We plan to seek and evaluate various investment
opportunities including ethanol and/or energy related, carbon sequestration related, agricultural or other ventures we believe fit our
investment criteria.

Operating Activities

Net cash provided by operating activities was
$117.8 million for fiscal 2025, compared to $64.2 million for the prior year period.

Operating cash flows for the year ended January
31, 2026 reflected net income of $95.1 million and non-cash adjustments of $6.8 million, consisting of depreciation, noncash operating
lease expense, amortization of finance right-of-use asset, income from equity method investments, interest income from short-term investments,
the deferred income tax provision, stock-based compensation expense, and loss on disposal of property and equipment. Additionally, Big
River paid dividends of approximately $10.5 million during fiscal year 2025. In addition, changes to working capital of $5.5 million increased
cash during fiscal 2025, most significantly including:

●

Cash provided of $8.4 million due to a increase in accounts payable, primarily related to the timing of
inventory receipts and vendor payments

●

Cash provided of $6.8 million from the decrease in accounts receivable as a result of the timing of products
shipping and the receipt of customer payments at our consolidated ethanol plants

●

Cash provided of approximately $3.3 million from the decrease of inventory balances during the period

●

Use of cash of approximately $10.3 million from both the increase in income tax refundable and the decrease
in long-term taxes payable as a result of the timing of estimated tax payments, payments made through dividend payment withholdings from
our ethanol subsidiaries and the impact of the effective settlement of the uncertain tax positions related to the research and experimentation
credits audited by the IRS

●

Use of cash of approximately $2.5 million from the decrease in accrued expenses and other liabilities
as a result a reduction in the lease liabilities from payments made during the year of approximately $6.1 million , offset partially by
the accrual of expenses for prevailing wages and EACs of approximately $1.8 million as part of the recognition of 45Z tax credits, an
increase in the accrual of the 2025 incentive bonuses to be paid in 2026 of approximately $1.5 million, and an increase in accrued utilities
of approximately $0.8 million

In fiscal 2024, operating cash flow reflected
net income of $71.5 million and non-cash adjustments of $20.2 million. Additionally, Big River paid dividends of approximately $8.5 million
during fiscal year 2024. These inflows were partially offset by various changes to working capital of approximately $36.1 million, most
significantly caused by:

●

Use of cash of approximately $14.9 million due to the increase in the balance of prepaid expenses and
other assets primarily related to prepayments on certain executed lease agreements, offset by a decrease in property taxes refundable
due to the timing of payments, and decreases in spare parts inventory

●

Use of cash of approximately $14.7 million due to a decrease in accounts payable, primarily related to
the timing of inventory receipts and vendor payments

30

●

Use of cash of approximately $7.0 million from the decrease in accrued expense and other liabilities as
a result of operating lease payments of approximately $5.5 million, a decrease in accrued payroll and related items of $0.4 million, and
other decreases of approximately $1.1 million

●

Use of cash of approximately $4.7 million from the increase of inventory balances during the period

●

Cash provided of approximately $4.3 million to reflect the increase in long-term taxes payable by the
amount the recorded uncertain tax positions exceeded the remaining unused credits

Investing Activities

Net cash used by investing activities was $87.7
million in fiscal 2025 versus $72.9 million in fiscal 2024. In fiscal 2025, capital expenditures totaled $68.4 million, primarily at One
Earth, which includes plant expansion and CI reduction projects ($43.7 million) and carbon sequestration ($3.0 million). Our two consolidated
ethanol plants had a combined $21.7 million in capital expenditures during fiscal 2025 that were not included in the plant expansion,
CI reduction, or carbon sequestration projects. Treasury activity used net cash, as purchases of $296.4 million exceeded $277.0 million
of maturities.

During fiscal 2024, capital expenditures were
$71.3 million, primarily at One Earth, which includes plant expansion and CI reduction projects ($34.9 million) and carbon sequestration
($26.6 million). Treasury activity used net cash, as purchases of $372.3 million were partially offset by $370.4 million of maturities.

Financing Activities

Net cash used in financing activities was approximately
$37.7 million during fiscal year 2025 compared to approximately $18.5 million for fiscal year 2024. During fiscal year 2025, we purchased
approximately 1,651,000 shares of our common stock for approximately $32.9 million in open market transactions. During fiscal year 2025,
we also used cash of approximately $4.1 million to purchase shares from and pay dividends to noncontrolling members of the consolidated
entities and approximately $0.2 million for finance lease payments.

Net cash used in financing activities was approximately
$18.5 million during fiscal year 2024, which was used to purchase approximately 745,000 shares of our common stock for approximately $15.5
million in open market transactions, of which $0.8 million was paid subsequent to January 31, 2025. During fiscal year 2024, we used cash
of approximately $3.7 million to purchases shares from and pay dividends to noncontrolling members of the consolidated entities.

Based on our forecasts, which are primarily based
on estimates of plant production, prices of ethanol, corn, distillers grains, distillers corn oil and natural gas as well as other assumptions,
management believes that cash flow from operating activities together with working capital will be sufficient to meet One Earth’s
and NuGen’s respective liquidity needs. However, if a material adverse change in the financial position of One Earth or NuGen should
occur, or if actual sales or expenses are substantially different than what has been forecasted, One Earth’s and NuGen’s liquidity,
and ability to fund future operating and capital requirements could be negatively impacted.

Approximately 2.4% of our net assets are restricted
pursuant to the terms of various loan agreements of Big River, our equity method investee, as of January 31, 2026. None of our consolidated
subsidiaries or the parent company have restricted net assets related to loan agreements at January 31, 2026.

Contractual Obligations and Commitments

In the ordinary course of business, we enter into
agreements under which we are legally obligated to make future cash payments. These agreements include obligations related to purchasing
inventory and natural gas and leasing rail cars. Aggregate minimum lease payments under the operating lease agreements for future fiscal
years as of January 31, 2026 totaled $20.0 million, with $7.7 million payable in the next twelve months. Aggregate minimum lease payments
under the finance lease agreements for future fiscal years as of January 31, 2026 totaled $4.3 million, with $0.5 million payable in the
next twelve months. Refer to Note 7 – Leases included in the notes to consolidated financial statements for more information. As
of January 31, 2026, we had contracted future payments for purchases of corn and natural gas, a natural gas pipeline lease, and other
contracts for capital expenditures at our ethanol plants valued at approximately $123.0 million, with $108.3 million payable in the next
twelve months. Refer to Note 11 – Commitments included in the notes to consolidated financial statements for more information.

31

Seasonality and Quarterly Fluctuations

Our business is directly affected by the supply
and demand for ethanol. The demand for ethanol typically increases during the spring and summer months and during holiday travel.

Critical Accounting Policies

We believe the application of the following accounting
policies, which are important to our financial position and results of operations, require significant assumptions, judgments and estimates
on the part of management. We base our assumptions, judgments, and estimates on historical experience, current trends and other factors
that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management
reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented in accordance
with generally accepted accounting principles (GAAP). However, because future events and their effects cannot be determined with certainty,
actual results could differ from our assumptions and estimates, and such differences could be material. Further, if different assumptions,
judgments and estimates had been used, the results could have been different and such differences could be material. For a summary of
all of our accounting policies, including the accounting policies discussed below, see Note 1 to the Consolidated Financial Statements.

Management believes that the following accounting
policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s
most difficult, subjective, or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently
uncertain.

Revenue Recognition – We recognize
sales of ethanol, distillers grains and distillers corn oil when obligations under the terms of the respective contracts with customers
are satisfied; this occurs with the transfer of control of products, generally upon shipment from the ethanol plant or upon loading of
the rail car used to transport the products.

Impairment of Long-Lived Assets –
We review our long-lived assets, consisting of property and equipment, equity method investments and operating lease right-of-use assets,
for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. We assess
long-lived assets for impairment by first determining the forecasted, undiscounted cash flows the asset group is expected to generate.
If this total is less than the carrying value of the asset, we will then determine the fair value of the asset group. An impairment loss
would be recognized in the amount by which the carrying amount of the asset exceeded the fair value of the asset. Significant management
judgement is required to determine the fair value of long-lived assets, which includes discounted cash flows. Such estimates could be
significantly affected by future changes in market conditions. We recorded no impairment charges in fiscal year 2025, 2024, and 2023.

Income Taxes – Income taxes
are recorded based on the current year amounts payable or refundable, as well as the consequences of events that give rise to deferred
tax assets and liabilities based on differences in how those events are treated for tax purposes, net of valuation allowances. We base
our estimate of deferred tax assets and liabilities on current tax laws and rates and other expectations about future outcomes. Changes
in existing regulatory tax laws and rates and future business results may affect the amount of deferred tax liabilities or the valuation
of deferred tax assets over time. We have established valuation allowances for certain state net operating loss carryforwards. We assessed
all available positive and negative evidence to determine whether we expect sufficient future taxable income will be generated to allow
for the realization of existing federal deferred tax assets. We believe there is sufficient objectively verifiable income for management
to conclude that it is more likely than not that the Company will utilize available federal deferred tax assets prior to their expiration.
However, realization of these deferred tax assets is not certain. Changes in our current estimates for factors such as unanticipated market
conditions and legislative developments could have a material effect on our ability to utilize deferred tax assets.

New Accounting Pronouncements 

For information related
to recent accounting pronouncements, see Note 1 of the Notes to the Consolidated Financial Statements.

32