NYSE: REX

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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.

The form and structure of our ethanol investments
are tailored to the specific needs and goals of each project and the local farmer group or investor with whom we partner. We generally
participate in the oversight of our projects through our membership on the board of managers of the limited liability companies that own
the plants. We provide management oversight and direction with respect to most aspects of plant operations for our consolidated ethanol
companies. We have equity investments in three entities engaged in the production of ethanol as of January 31, 2026. 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.

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 ethanol 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.

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See “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” for details on the Company’s ongoing carbon sequestration
and plant expansion projects. These projects are part of the Company’s efforts to maximize the benefits of the federal 45Z tax credits
and, subsequent to the expiration of the 45Z tax credits, federal 45Q tax credits, and are subject to ongoing regulatory changes.

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. We have a stock buyback program with an
authorization level of an additional 2,357,186 shares at January 31, 2026 through open market transactions, privately negotiated transactions,
or transactions by other means in accordance with applicable securities laws. We typically repurchase our common stock when our stock
price is trading at prices we deem to be a discount to the underlying value of our net assets.

Ethanol Industry

Ethanol is a renewable fuel produced by processing
corn and other biomass through a fermentation process that creates combustible alcohol that can be used as a fuel additive to reduce vehicle
emissions from gasoline, as an octane enhancer to improve the octane rating of gasoline with which it is blended and, to a lesser extent,
as a gasoline substitute. The majority of ethanol produced in the United States is made from corn because of its wide availability and
ease of convertibility from large amounts of carbohydrates into glucose, the key ingredient in the fermentation process that is used in
producing alcohol. Ethanol production can also use feedstocks such as grain sorghum, switchgrass, wheat, barley, potatoes and sugarcane
as carbohydrate sources. Most domestic ethanol plants have been located near large corn production areas, such as Illinois, Indiana, Iowa,
Minnesota, Nebraska, Ohio and South Dakota. Railway access and interstate access are vital for ethanol facilities due to the large amount
of raw materials and finished goods required to be shipped to and from the facilities. An adequate supply of natural gas is key to maintaining
optimal operating levels.

According to the RFA, the United States ethanol
industry produced an estimated 16.4 billion gallons of ethanol in 2025, compared to 16.1 billion gallons in 2024, and approximately 2.2
billion gallons were estimated to have been exported from the United States in 2025. According to the RFA, the United States ethanol industry
consists of 198 plants in 24 states with an annual capacity of approximately 18.5 billion gallons of ethanol production.

Domestic demand for ethanol is highly dependent
upon federal and state legislation and regulations. On December 19, 2007, the Energy Independence and Security Act of 2007 (the “Energy
Act of 2007”) was enacted. The Energy Act of 2007 established new levels of renewable fuel mandates, including two different categories
of renewable fuels: conventional biofuels and advanced biofuels. The federal government mandates the use of renewable fuels under RFS
II, established in October 2010. Corn-based ethanol is considered a conventional biofuel. There were mandated volumes established as part
of the RFS II for conventional and advanced biofuels through the year 2022. After 2022, RFS volumes are to be determined by the EPA in
coordination with the Secretaries of Energy and Agriculture. The mandated volumes for conventional biofuel were to reach 15.0 billion
gallons in 2015 and maintain that level until 2022.

The EPA has set conventional
renewable fuel volumes of 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 RVOs for 2026 and 2027 of 15.0 billion gallons of
conventional ethanol for each year.

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.

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Ethanol Production

The plants in
which we have invested are designed to use the dry milling method of producing ethanol. In the dry milling process, the entire corn kernel
is first ground into flour, which is referred to as “meal,” and processed without separating out the various component parts
of the grain. The meal is processed with enzymes, chemicals and water, and then placed in a high-temperature cooker. It is then transferred
to fermenters where yeast is added and the conversion of sugar to ethanol begins. After fermentation, the resulting liquid is transferred
to distillation columns where the ethanol is separated from the remaining “stillage” for fuel uses. The anhydrous ethanol
is then blended with a denaturant, such as natural gasoline, to render it undrinkable and thus not subject to beverage alcohol tax. With
the starch elements of the corn consumed in the above-described process, the principal by-product produced by the dry milling process
is dry distillers grains with solubles, or DDGS. DDGS is sold as a protein used in animal feed, which utilizes a portion of the corn value
not absorbed in ethanol production. Depending on market and operating conditions, we may also sell modified distillers grains, or wet
distillers grains, by removing less liquid content compared to DDGS. We also generate revenues from the sale of distillers corn oil produced
at our facilities. Distillers corn oil is sold to the animal feed market, as well as biodiesel and other chemical markets.

The Primary Uses of Ethanol

Blend component. Today,
much of the ethanol blending in the U.S. is done to meet the RFS. Most regular gasoline is produced using blendstock with an octane
rating of 84, which is then increased to 87 (the minimum octane rating required in most states) by adding 10% ethanol according to
the RFA. The industry is attempting to expand ethanol blending above the current 10% for most vehicles in use. The EPA has approved
the use of E-15, which has an octane rating of 88, in gasoline for cars, SUV’s and light duty trucks made in 2001 and later.
Previously, the EPA had not granted E-15 the same Reid vapor pressure waiver as E-10 so it could only be sold from September 16
through May 31 for those vehicles in most markets. The EPA issued emergency waivers to allow the sale of E-15 for the summer months
in the years 2022 through 2026. Eight Midwest states (Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and
Wisconsin) petitioned the EPA to allow year-round sales of E-15 in their states. The EPA approved this request beginning in 2025 but
will consider requests from individual states to delay implementation by one year. Ohio
and South Dakota previously requested a one-year delay, which the EPA has approved. Ohio has since opted out of the agreement.

Clean air additive. Ethanol
is employed by the refining industry as a fuel oxygenate, which when blended with gasoline, allows engines to combust fuel more completely
than gasoline that has not been oxygenated and thus reduce emissions from motor vehicles. Ethanol contains 35% oxygen, which results in
more complete combustion of the fuel in the engine cylinder. Oxygenated gasoline is used to help meet certain federal and air emission
standards.

Octane enhancer. Ethanol
increases the octane rating of gasoline with which it is blended. Octane is a measure of fuel performance. Ethanol is used by gasoline
suppliers as an octane enhancer both for producing regular grade gasoline from lower octane blending stocks and for upgrading regular
gasoline to premium grades.

Legislation

The United States ethanol industry is highly dependent
upon federal and state legislation. See