10-Q: XCF Global Faces Liquidity Crisis, Defaults on Key Loans

XCF Global, Inc. reports significant operating losses and defaults on major loans, raising substantial doubt about its ability to continue as a going concern, despite initial renewable diesel sales.

Summary

• XCF Global, Inc. reported a net income of $90,285,942 for the nine months ended September 30, 2025, primarily driven by a non-cash gain of $206,588,000 from the revaluation of warrant liabilities.
• The company incurred a loss from operations of $(48,906,680) for the nine months ended September 30, 2025, a significant increase from $(11,181,132) in the prior year period.
• Revenue for the nine months ended September 30, 2025, was $16,129,671, primarily from renewable diesel products and environmental credits, compared to no revenue in the same period of 2024.
• As of September 30, 2025, the company had cash and cash equivalents of $879,168 and total current liabilities of $265,458,645, resulting in a working capital shortage of $236,478,642.
• Management has identified substantial doubt about the company's ability to continue as a going concern due to recurring operating losses and negative operating cash flows.
• The company is in default on its $112,580,000 GNCU Loan, with approximately $26,700,000 (principal and interest) plus $2,400,000 (penalties/late charges) required to bring it current as of October 31, 2025.
• Defaults also exist on the Twain Ground Lease, with approximately $28,100,000 (lease payments, late fees, and penalties) owing as of October 31, 2025.
• The New Rise Reno production facility is operating at approximately 50% of nameplate capacity for Sustainable Aviation Fuel (SAF) and is temporarily producing renewable diesel at 2,000 barrels per day, which is 20% below nameplate capacity.
• Material weaknesses in internal controls over financial reporting persist, including issues with journal entry review, risk assessment, financial reporting processes, and IT general controls.

Sentiment

Score: 2

Explanation: Despite some revenue generation and a non-cash net income, the company faces severe liquidity issues, significant operating losses, and multiple defaults on major debt and lease obligations. The 'going concern' warning, production delays, and reliance on future financing for survival indicate a highly precarious financial position.

Positives

• Generated revenue of $16,129,671 for the nine months ended September 30, 2025, primarily from renewable diesel and environmental credits, marking a significant increase from $0 in the prior year period.
• Reported a net income of $90,285,942 for the nine months ended September 30, 2025, largely due to a non-cash gain of $206,588,000 from the change in fair value of warrant liabilities.
• Successfully completed the Business Combination on June 6, 2025, leading to the company's listing on NASDAQ under the ticker SAFX.
• Completed the acquisitions of New Rise SAF and New Rise Renewables in January and February 2025, respectively, expanding the company's renewable energy asset portfolio.
• Began initial production of SAF and renewable naphtha in February 2025, with first deliveries commencing in March 2025.
• Started selling renewable diesel under a Supply and Offtake Agreement with Phillips 66 in May 2025.
• Established an Equity Line of Credit (ELOC) with Helena Global Investment Opportunities I Ltd for up to $50,000,000.
• GNCU withdrew its August 6, 2025, notice of acceleration for the GNCU Loan, although other defaults remain in effect.
• Appointed Christopher Cooper as Chief Executive Officer and a Board member, and Wray Thorn as Interim Chairman of the Board, effective November 7, 2025.

Negatives

• Incurred significant recurring losses from operations, totaling $(48,906,680) for the nine months ended September 30, 2025.
• Reported an accumulated deficit of $(444,511) as of September 30, 2025.
• Faces a substantial working capital shortage of $236,478,642, with current assets of $28,980,003 against current liabilities of $265,458,645.
• Management has raised substantial doubt about the company's ability to continue as a going concern.
• Is in default on its $112,580,000 GNCU Loan due to failure to make required minimum monthly payments, with approximately $26,700,000 in principal and interest, plus $2,400,000 in penalties/late charges, required to cure the default as of October 31, 2025.
• Is in default on the Twain Ground Lease, with approximately $28,100,000 in lease payments, late fees, and penalties owing as of October 31, 2025.
• Has defaulted on certain unsecured loan agreements from the Southeast acquisition, with an aggregate principal balance of approximately $1,700,000 and interest payable of approximately $500,000.
• The New Rise Reno production facility is operating at approximately 50% of nameplate capacity for SAF and is temporarily producing renewable diesel at 2,000 barrels per day, which is 20% below nameplate capacity, indicating operational challenges and delays in reaching full SAF capacity.
• Renewable diesel inventory is recorded with a net realizable value of zero due to negative margins during the SAF conversion phase.
• Incurred $17,011,496 in transaction costs for the Business Combination, with $10,087,688 recorded as professional fees expense.
• Recognized significant non-cash losses, including a loss on issuance of debt to a related party of $(40,531,000), ELOC commitment fees of $(7,400,000), and an unrealized loss on a derivative asset of $(16,156,071) for the nine months ended September 30, 2025.
• A cybersecurity incident affecting outside legal counsel resulted in $950,000 of settlement payments being misdirected, for which the company remains obligated to Polaris Processing, LLC.

Risks

• The company's ability to continue as a going concern is in substantial doubt due to recurring operating losses and negative operating cash flows, requiring significant additional financing.
• Failure to obtain additional debt or equity financing on favorable terms, or at all, could force reductions in spending, extended payment terms, asset liquidation, or cessation of operations.
• Existing defaults on the GNCU Loan and Twain Ground Lease could lead to acceleration of repayment obligations, foreclosure on assets, and material disruption or cessation of operations at the New Rise Reno facility.
• The existence of defaults could make it more difficult to obtain future financing on acceptable terms.
• Delays beyond the first quarter of 2026 in resuming SAF or renewable diesel production, or in operating the Reno facility at full nameplate capacity, will adversely affect revenues and profitability.
• The company is dependent on key management personnel, and the loss of any such members could negatively impact business operations and growth strategy.
• Material weaknesses in internal controls over financial reporting, including lack of journal entry review, formal risk assessment, effective financial reporting processes, and IT general controls, could lead to material misstatements.
• The actual market environment for renewable fuels may evolve differently from expectations due to external forces such as government regulation and technological development.
• The company's election to use the extended transition period for new accounting standards may make its financial statements difficult to compare with other public companies.

Future Outlook

The company expects operating losses and negative operating cash flows to continue into the foreseeable future. It anticipates resuming SAF production as early as the first quarter of 2026, but cannot assure when it will resume or operate at full capacity. Any delays beyond this timeframe will adversely affect revenues and profitability. The company is actively evaluating financing alternatives to refinance existing loans and lease payments and to secure sufficient capital to execute its long-term business plan, as its ultimate success is dependent on obtaining additional financing and generating adequate cash flow.

Management Comments

• "We are committed to reducing the world's carbon footprint by meeting the growing demand for renewable fuels and will concentrate on the production of clean-burning, sustainable biofuels, principally SAF."
• "We intend to scale and operate clean fuel production facilities engineered to the highest levels of compliance, reliability, and quality."
• "Management has made the determination to temporarily produce and sell renewable diesel, a byproduct of SAF production, which can be achieved at approximately 2,000 barrels per day, which is approximately 20% below nameplate capacity, and without any additional modifications to the facility."
• "Management regards the production of renewable diesel as an interim derivative during the ramp-up process of the ongoing SAF conversion process."
• "We do not believe cash on hand will be adequate to satisfy obligations in the ordinary course of business over the next twelve months."
• "The Company is currently actively seeking new sources of financing, which will enable the Company to meet its obligations for the twelve-month period from the date the financial statements were available to be issued."
• "We are dependent upon the continued availability and commitment of our key management, including our Chief Executive Officer, Chris Cooper, and Simon Oxley, our Chief Financial Officer."

Industry Context

XCF Global positions itself as one of the few publicly traded renewable fuels companies in the United States primarily focused on Sustainable Aviation Fuel (SAF), distinguishing itself from peers that are predominantly legacy crude oil refiners. The company believes there is a significant market opportunity in the aviation and renewable sectors, driven by a combination of regulatory support, industry-led demand, and end-user commitment. However, the actual market environment is acknowledged to be subject to various external forces, including government regulation and technological developments, which may impact the market opportunity.

Comparison to Industry Standards

• XCF Global is one of the few publicly traded renewable fuels companies primarily focused on SAF and renewable fuels in the United States, aiming to be a majority SAF producer, which differentiates it from peers predominantly composed of legacy crude oil refiners.

Management Changes

Corporate Governance

Legal Proceedings

• Polaris Processing, LLC filed an arbitration demand against New Rise Reno related to unpaid invoices and alleged violations of a non-solicitation provision under an Operations and Maintenance Services Agreement.
• A cybersecurity incident affecting outside legal counsel resulted in approximately $950,000 of settlement payments being misdirected, for which New Rise Reno remains obligated to Polaris. Legal counsel is pursuing insurance recovery for these funds, and the matter is expected to be resolved within the next twelve months.

Related Party Transactions

• Related party receivables of $728,218 are due from Randy Soule, the majority shareholder, related to regulatory filing fees, along with immaterial advances to certain officers.
• A related party payable to Encore DEC, LLC, which is 100% owned by Randy Soule, totaled $39,968,654 as of September 30, 2025, for Engineering, Procurement and Construction (EPC) services and expenses paid on behalf of the company. This payable is non-interest bearing and due on demand.
• Loans payable to GL Part SPV I, LLC (a related party) include a $2,350,000 loan with no interest or due date (payable on demand) and a $1,404,000 loan (fair value $1,400,112) bearing interest, unsecured, and due 30 days from customer payment or an event of default.
• An additional loan payable with GL of $356,426 bears 10% interest per annum and is matured and in default.
• A promissory note with GL for a gross principal amount of $2,500,000 (bears interest of $300,000, unsecured, due upon a Qualified Financing Event or event of default) resulted in a recorded loss on issuance of debt of $40,531,000. Its fair value as of September 30, 2025, was $2,722,440.
• The company entered into a Convertible Note Purchase Agreement with EEME Energy SPV I LLC (a related party) for $6,000,000 (matures in one year, 13.3% interest), with arrangement and advisory fees paid through the issuance of 950,000 Class A common shares. Its fair value as of September 30, 2025, was $6,608,715.
• Legacy XCF issued 18,730,000 shares of common stock to Randy Soule and GL for the acquisition of New Rise SAF.
• Legacy XCF issued 87,331,951 shares of common stock to RESC and GL for the acquisition of New Rise Renewables.
• Randy Soule agreed to transfer 2,840,000 Legacy XCF common shares to Helena Global Investment Opportunities I Ltd in connection with the Helena Note, for which the company agreed to issue Replacement Shares to Soule.
• Polar Multi-Strategy Master Fund (Polar) received 1,200,000 shares of New XCF Class A common stock in connection with a subscription agreement and an additional 480,000 shares of Class A common stock for default on October 7, 2025.

Stakeholder Impact

• Shareholders face significant dilution risk from potential future equity raises and high share price volatility due to the company's financial distress and going concern issues. Potential for reduced returns due to ongoing losses and substantial debt obligations.
• Creditors, including Greater Nevada Credit Union (GNCU) and Twain GL XXVIII, LLC, face high risk of non-payment due to multiple defaults, with potential for acceleration of debt and foreclosure on company assets. Ongoing discussions for forbearance or restructuring indicate uncertainty regarding repayment.
• Employees may experience job insecurity if operational curtailments or cessation of operations become necessary. The value of stock-based compensation could be negatively impacted by share price volatility.
• Customers, such as Phillips 66, could face supply disruptions if the company's production issues or facility closures persist or worsen.
• Suppliers, including related party Encore DEC, LLC, face a risk of delayed payments due to the company's liquidity challenges.
• Regulatory authorities, including the SEC and USDA, may increase scrutiny due to the company's financial reporting weaknesses and loan defaults.

Next Steps

• Resolve defaults on the GNCU Loan and Twain Ground Lease through active discussions for potential forbearance or modified payment schedules.
• Seek and secure additional financing to meet ongoing obligations and execute the long-term business plan.
• Ramp-up SAF production at the New Rise Reno facility to nameplate capacity and achieve final project acceptance.
• Continue evaluating the strategic role of the Fort Myers, Florida, and Wilson, North Carolina facilities within the broader SAF and biofuels value chain.
• Implement Oracle NetSuite and establish a formalized governance program to remediate identified material weaknesses in internal controls.
• Hire additional experienced accounting and finance personnel and outside tax consultants to strengthen internal accounting functions and ensure proper tax provision preparation.
• File a registration statement with the SEC to register shares of common stock issuable under the Purchase Agreement with Helena Global Investment Opportunities I Ltd.

Key Dates

Recommendation

The company is in a highly distressed financial state, evidenced by a substantial working capital deficit, recurring operating losses, and explicit 'going concern' doubt. Multiple defaults on significant debt and lease obligations, coupled with ongoing production delays and material weaknesses in internal controls, present severe risks. While there's a non-cash net income due to warrant revaluation, the underlying operational and financial health is extremely poor. The reliance on future financing, which may not be available on favorable terms, further exacerbates the precarious situation. Investors face high risk of capital loss and significant dilution.

Keywords

Sustainable Aviation Fuel, Renewable Diesel, Biofuels, Renewable Energy, SEC Filing, 10-Q, Financial Results, Liquidity Crisis, Going Concern, Debt Default, NASDAQ, XCF Global, SAFX, Nevada, Phillips 66, Corporate Governance, SPAC, Business Combination