Three Months Ended
December 31, 2017 December 31, 2016
Revenue: (unaudited) (unaudited)
Ethanol production $ 50,718,988
$ 58,054,764
Grain trading $ 5,136,501
$ —
Total Revenue $ 55,855,489
$ 58,054,764

Three Months Ended
December 31, 2017 December 31, 2016
Gross Profit: (unaudited) (unaudited)
Ethanol production $ 3,051,662
$ 8,604,588
Grain trading $ 349,690
$ —
Total Gross Profit $ 3,401,352
$ 8,604,588

Three Months Ended
December 31, 2017 December 31, 2016
Operating Income: (unaudited) (unaudited)
Ethanol production $ 1,597,479
$ 7,417,831
Grain trading $ 165,125
$ —
Total Operating Income $ 1,762,604
$ 7,417,831

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

~~December 31, 2017~~

June 30, 2023

The Company's policy related to investments in both common stock and in-substance common stock that give the Company the ability to exercise significant influence over the operating and financial polices of an entity in which it invests even though the Company holds 50% or less of the common stock or in-substance common stock (or both common and in-substance common stock) is to account for such investment under the equity method. The Company considers its financial position and results of operations in evaluating the extent of disclosures of the financial position and results of operations of an entity in which the Company invests.

As the Company owns a fifty percent interest in the limited partnership, an investment in affiliate of approximately $2,996,000 was reflected on the balance sheet as of June 30, 2023 and approximately $396,000 was reflected on the balance sheet as of September 30, 2022. Losses on equity method investment of approximately $24,000 and $351,000 were reflected on the statement of operations for the three months and nine months ended June 30, 2023, respectively.

December 31, 2017 September 30, 2017
Grain Inventories: (unaudited)
Ethanol production $ 6,093,969
$ 5,754,084
Grain trading $ 12,807,912
$ 2,140,305
Total Grain Inventories $ 18,901,881
$ 7,894,389

December 31, 2017 September 30, 2017
Total Assets: (unaudited)
Ethanol production $ 143,224,342
$ 156,548,789
Grain trading $ 21,979,091
$ 2,623,207
Total Assets $ 165,203,433
$ 159,171,996

Table of Contents

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

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the ~~three~~nine month period ended ~~December 31, 2017~~,June 30, 2023, compared to the same period of the prior fiscal year. This discussion should be read in conjunction with the consolidated condensed financial statements (the "financial statements") and notes and the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~.2022.

Forward Looking Statements

This report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "will," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to those listed below and those business risks and factors described elsewhere in this report and our other Securities and Exchange Commission filings.

•Reduction, delay, or elimination of the Renewable Fuel Standard;

•Changes in the availability and price of corn, natural gas and ~~natural gas;~~other grains;

•Our inability to secure credit or obtain additional equity financing we may require in the future to continue our operations;

•Decreases in the price we receive for our ethanol, distiller grains, corn oil and ~~corn oil;~~other grains;

•Our ability to satisfy the financial covenants contained in our credit agreements with our senior lender;

•Our ability to profitably operate the ethanol plant and maintain a positive spread between the selling price of our products and our raw material costs;

•Negative impacts that our hedging activities may have on our operations;

•Ethanol and distiller grains supply exceeding demand and corresponding price reductions;

•Our ability to generate free cash flow to invest in our business and service our debt;

•Changes in the environmental regulations that apply to our plant operations;

•Changes in our business strategy, capital improvements or development plans;

•Changes in plant production capacity or technical difficulties in operating the plant;

•Changes in general economic conditions or the occurrence of certain events causing an economic impact in the agriculture, oil or automobile industries;

•Lack of transport, storage and blending infrastructure preventing our products from reaching high demand markets;

•Changes in federal and/or state laws;

•Changes and advances in ethanol production technology;

•Competition from alternative fuel additives;

•Changes in interest rates or the lack of credit availability;

•Changes in legislation benefiting renewable fuels;

•Competition from the increased use of electric vehicles;

•Our ability to retain key employees and maintain labor relations;

•Volatile commodity and financial markets;

•Limitations and restrictions contained in the instruments and agreements governing our indebtedness; ~~and~~

•Decreases in export demand due to the imposition of tariffs by foreign governments on ethanol, ~~and~~ distillers grains and soybeans produced in the United ~~States.~~States;

•Use by the EPA of small refinery exemptions;

•A slowdown in global and regional economic activity, demand for our products and the potential for labor shortages and shipping disruptions resulting from COVID-19; and

•Global economic uncertainty, inflation, market disruptions and increased volatility in commodity prices caused in part by the Russian invasion of Ukraine and resulting sanctions by the United States and other countries.

Table of Contents

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements even though our situation may change in the future. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements with these cautionary statements.

Overview

Cardinal Ethanol, LLC is an Indiana limited liability company operating an ethanol plant in east central Indiana near Union City, Indiana. We began producing ethanol, distillers grains and corn oil at the plant in November 2008. In addition, we ~~recently added a facility to allow us to~~ procure, transport and sell grain commodities through our ~~new~~ grain trading business which began operations ~~(the "Trading Division").~~at the end of our fourth fiscal quarter of 2017.

~~Table of Contents~~

On ~~November 21, 2017,~~January 20, 2022, we entered into an Equipment Purchase and Installation Agreement (the "EPC Agreement") with ICM, Inc. pursuant to which ICM has agreed to engineer, procure, construct, and install its high protein feed system and license to us its proprietary, patent-protected technology to use, operate and maintain the system. Pursuant to the EPC Agreement and subsequent adjustments due to change orders executed by the parties, we expect to pay approximately $50,000,000, including recent change orders, which is payable in installments. This price is subject to further adjustment in the event additional change orders are executed. We will also pay license fees of $10 per ton of PROTOMAX™ produced by the system for a period of 10 years. We expect to fund the project from operations and from our current credit facilities as amended. We began installation of the system during the fourth quarter of our fiscal year 2022. This project is expected to be completed by Fall of 2023.

We have engaged with an unrelated third party to pursue the possible joint development of integrated carbon dioxide facilities, transportation infrastructure and a carbon sequestration site for the carbon dioxide emissions produced by our plant (the "CCS Project"). On January 16, 2023, Cardinal One Carbon Holdings, LLC, a wholly owned subsidiary of Cardinal Ethanol, LLC, entered into a Partnership Agreement (the "LPA") with Vault CCS Holdings LP pursuant to which Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP formed a joint venture operating under the name of One Carbon Partnership Holdings LP (the "Limited Partnership") to pursue the CCS Project. The LPA governs the rights, duties and responsibilities of the parties in connection with the ownership of the Limited Partnership. In addition, on the same date, Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP entered into an Amended and Restated Limited Liability Company Agreement of One Carbon Partnership GP LLC (the "GP"). The purpose of the GP is to serve as the general partner of the Limited Partnership. The CCS Project is still in its early stages and is subject to many variables that could have a material effect on its feasibility and the parties' ability to complete the CCS Project. Please refer to Item 1 - Financial Statements - Note 12 - Equity Method Investments for more information.

On May 16, 2023, our board of directors declared a cash ~~distribution. The dates~~distribution of $1,250 per membership unit to the holders of units of record at the close of business on May 16, 2023 for a total distribution of $18,257,500. We paid the distribution on May 23, 2023.

We record Indiana passthrough entity tax in accordance with ASC 740 and ~~amounts are listed in~~have elected to account for the ~~table below:~~payments as an equity transaction through member distributions. At June 30, 2023, accrued distributions for passthrough entity tax was $1,100,000.

Date Declared Distribution Declared Per Unit Total Distribution Amount Month Distribution Paid
November 21, 2017 $ 400
$ 5,842,400
December 2017

We expect to fund our operations during the next 12 months using cash flow from our continuing operations and our current credit facilities as amended. ~~However, should~~If market conditions worsen affecting our ability to profitably operate the plant or if we ~~experience unfavorable operating conditions,~~are unable to transport ethanol, we may ~~need~~be forced to ~~seek additional funding.~~further reduce our ethanol production rate or even temporarily shut down ethanol production altogether.

~~Reportable~~

Table of Contents

Results of Operations for the Three Months Ended June 30, 2023 and 2022

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our statement of operations for the three months ended June 30, 2023 and 2022:


	2023			2022
Statement of Operations Data	Amount		%	Amount		%
Revenue	$	119,046,572	100.0	$	133,261,052	100.0
Cost of Goods Sold	103,128,982		86.6	104,607,396		78.5
Gross Profit	15,917,590		13.4	28,653,656		21.5
Operating Expenses	2,494,927		2.1	1,920,790		1.4
Operating Income	13,422,663		11.3	26,732,866		20.1
Other Income	868,047		0.7	7,440,861		5.6
Net Income	$	14,290,710	12.0	$	34,173,727	25.7

Revenue

Operating Segments

Operating segments are defined as components of an enterprise for which separate financial information is available that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the nature of the products, services and operations and the expected financial results, we review our operations within the ~~following~~ two ~~separate~~ operating segments: (1) ethanol production through our Ethanol Division; and (2) trading of agricultural grains through our Trading Division. We currently do not have or anticipate we will have any other lines of business or other significant sources of revenue other than the sale of ethanol, distillers’ grains, corn oil and and the trading of agricultural grains. Refer to Note 10, “Business Segments”, of the notes to the condensed unaudited financial statements for financial information about our financial reporting segments.

~~Ethanol Division~~

In August 2010, we obtained a new Title V air permit allowing us to increase our annual ethanol production to 140 million gallons compared to 110 million gallons under our previous permit. Our annual ethanol production for the fiscal year ended September 30, 2017 increased to approximately 125 million gallons. We expect ethanol production for the fiscal year ended September 30, 2018 to increase to approximately 135 million gallons due to the completion of certain projects which added storage capacity, improved process efficiencies, and added an additional cooling tower cell and a beer-degasser.

Our revenues are primarily derived from the sale of our ethanol, distillers grains and corn oil. We market and sell ethanol and its co-products (distillers grains and corn oil) primarily in the continental United States using third party marketers. Murex, LLC markets all of our ethanol. Our distillers grains are marketed by CHS, Inc. We market and distribute all of the corn oil we produce directly to end users and third party brokers.

~~Trading Division~~

We procure, transport and sell grain commodities through our grain operations. We expect that we will buy primarily soybeans and corn from producers relying principally on forward purchase contracts to ensure an adequate supply of grain. However, we may also purchase grain the day of delivery. Grain prices will typically be comprised of futures prices on the Chicago Mercantile Exchange ("CME") and local basis adjustments. We intend to manage the futures price risk of changing commodity prices by entering into exchange traded futures contracts with the CME. Grain shipments will be made by rail and truck. We anticipate that sales will be made to grain processors and export markets in the southeastern United States and will generally be made by contract for delivery in a future period. Income is expected to be earned on grain bought and sold, the appreciation or depreciation in the basis value of the grain held and the appreciation or depreciation between the futures contract months. The Trading Division began operations at the end of our fourth fiscal quarter of 2017.

To provide funding for the construction of the grain loadout facility, we executed a Tenth Amendment of First Amended and Restated Construction Loan Agreement with our primary lender, First National Bank of Omaha, effective as of February 28, 2017, which amends the First Amended and Restated Construction Loan Agreement dated June 10, 2013 (the "Construction Loan Agreement"). On November 29, 2017, we executed an Eleventh Amendment of First Amended and Restated Construction Loan Agreement to be effective as of October 31, 2017, to extend the date for completion of construction of the grainloading facility and the draw period for the construction loan from October 1, 2017 to December 31, 2017. On January 25, 2018, we executed a Twelfth Amendment of First Amended and Restated Construction Loan Agreement to be effective as of December 31, 2017 (the "Twelfth Amendment"), which further amends the Construction Loan Agreement in order to convert the construction loan to term debt amortized over approximately seven years with a final maturity date of February 28, 2023 (the "Grain Loadout Facility Loan"). In connection with the Twelfth Amendment, we executed a Grain Loadout Facility Note. The principal balance on the construction

~~Table of Contents~~

~~loan of $10,000,000 was converted to term debt effective December 31, 2017. Please refer to~~ ~~Item 1- Financial Statements, Note 6 - Bank Financing~~ ~~for additional details.~~

~~Results of Operations for the Three Months Ended December 31, 2017 and 2016~~

2017 2016
Statement of Operations Data Amount % Amount %
Revenue $ 55,855,489
100.0 $ 58,054,764
100.0
Cost of Goods Sold 52,454,137
93.9 49,450,176
85.2
Gross Profit 3,401,352
6.1 8,604,588
14.8
Operating Expenses 1,638,748
2.9 1,186,757
2.0
Operating Income 1,762,604
3.2 7,417,831
12.8
Other Expense, Net (158,096 ) — (119,794 ) —
Net Income $ 1,604,508
2.90 $ 7,298,037
12.6

~~Revenues~~

~~We have two reportable segments---the~~segments-the Ethanol Division and the Trading Division. Our revenues from operations from our Ethanol Division come from three primary sources: sales of fuel ethanol, distillers grains and corn oil. Revenues from operations of our Trading Division are derived from procuring, transporting and selling grain commodities. ~~Revenues~~

Our current lines of business and sources of revenue are the sale of ethanol, distillers grains, corn oil and and the trading of agricultural grains. We expect that PROTOMAX™, a high protein feed product, will become a significant new source of revenue once the installation of a system to manufacture high protein feed is complete and the system is operating. Please refer to Item 1 - Financial Statements - Note 11 - Business Segmentsfor more financial information about our financial reporting segments. Ethanol revenues in ~~each~~the ethanol division also include net gains or losses from derivatives. Net derivative gains or losses for corn, natural gas, and corn oil are included in cost of goods sold in the ethanol division and soybean gains or losses from derivatives ~~related to products sold.~~are included in cost of goods sold in the trading division.

The following table shows the sources of our total revenue from the two segments and the approximate percentage of revenues to total revenues in our ~~unaudited condensed consolidated~~ statements of operations for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016.~~2022:


	2023				2022
Revenue:	Amount		% of Total Revenues		Amount		% of Total Revenues
Ethanol division	$	102,845,138	86.4	%	$	110,898,770	83.2	%
Trading division	16,201,434		13.6	%	22,362,282		16.8	%
Total Revenue	$	119,046,572	100.0	%	$	133,261,052	100.0	%

2017 2016
Revenue: Amount % of Total Revenues Amount % of Total Revenues
Ethanol production $ 50,718,988
90.80 $ 58,054,764
100.00
Grain trading $ 5,136,501
9.20 $ —
—
Total Revenue $ 55,855,489
100.00 $ 58,054,764
100.00

Table of Contents

Ethanol Division

The following table shows the sources of our revenues from our Ethanol Division for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~2022:


	2023				2022
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol	$	79,970,647	77.8	%	$	84,706,603	76.4	%
Distillers Grains	16,818,758		16.4		18,261,386		16.5
Corn Oil	5,971,069		5.8		7,796,800		7.0
Carbon Dioxide	84,664		—		120,531		0.1
Other Revenue	—		—		13,450		—
Total Revenues	$	102,845,138	100.0	%	$	110,898,770	100.0	%

2017 2016
Revenue Source Amount % of Revenues Amount % of Revenues
Ethanol Sales $ 39,849,570
78.57 % $ 48,279,729
83.16 %
Distillers Grains Sales 8,495,025
16.75
7,517,913
12.95
Corn Oil Sales 2,251,340
4.44
2,106,737
3.63
Carbon Dioxide Sales 123,375
0.24
111,773
0.19
Other Revenue (322 ) —
38,612
0.07
Total Revenues $ 50,718,988
100.00 % $ 58,054,764
100.00 %

Ethanol

Our revenues from ethanol decreased in the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the the same period in 2022. This decrease in revenues is primarily the result of a decrease in the price per gallon of ethanol sold for the three months ended June 30, 2023 as compared to the same period in ~~2016.~~2022. Revenue also includes the net gains or losses from derivatives related to the commodities purchased.

~~Table of Contents~~

The average price per gallon of ethanol sold for the three months ended ~~December 31, 2017~~June 30, 2023 was approximately ~~16.1%~~14% lower than ~~our~~the average price per gallon of ethanol sold for the same period in ~~2016. This~~2022. Ethanol market prices were lower, particularly towards the end of the current period, due to a decrease in ~~average market~~corn prices resulting from reports predicting a larger fall corn crop than was previously forecasted. Ethanol prices are typically directionally consistent with the price ~~for the three months ended December 31, 2017 as compared~~of corn meaning that lower corn prices can lead to ~~the three months ended December 31, 2016 is due to increased industry-wide production which was in excess of demand.~~volatility and have a significant negative effect on ethanol prices.

Management ~~anticipates~~believes that ethanol prices will continue to ~~change in relation to changes in~~be influenced by corn and energy ~~prices.~~prices, inventory levels, global economics and inflationary factors. If corn ~~crude oil and gasoline~~ prices further decrease that could have a significant negative impact on the market price of ethanol and our profitability, particularly should ethanol stocks remain high due to increased production in the industry. A decline in ethanol exports due to the tariff imposed by Brazil on ethanol produced in the United States or other factors would ~~also~~ likely contribute to ~~higher~~lower ethanol ~~stocks unless additional demand~~prices and our profitability. Industry over-production due to a period of positive operating margins could ~~be created domestically through the used of higher blends. Finally, an increase in imports by the United States from Brazil would~~also continue to have a negative effect on ethanol prices. However, foreign demand could increase if other countries move to higher blends of ethanol which may contribute to higher ethanol prices.

We experienced ~~a decrease~~an increase in ethanol gallons sold of approximately ~~1.1%~~10% for the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016~~2022 resulting primarily from ~~timing of shipments.~~increased ethanol production rates for the period due to increased efficiencies. We are currently operating at a rate of approximately ~~30% above~~143 million gallons annually. However, we expect this will likely be offset by temporary shutdowns of our ~~nameplate capacity. Management anticipates that~~plant from time to time during our 2023 fiscal year in connection with the installation of our high protein feed system which could result in an overall reduction in gallons of ethanol ~~sold by~~produced. In addition, management continues to monitor economic conditions carefully. If market conditions worsen affecting our ability to profitably operate the plant, ~~will increase for the fiscal year ended September 30, 2018 due~~we may be forced to ~~completion of various projects which are expected to increase~~reduce our ethanol production ~~capacity to approximately 135 million gallons.~~rate or even temporarily shut down ethanol production altogether.

Distillers Grains

Our revenues from distillers grains ~~increased~~decreased in the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016.~~2022. This ~~increased~~decrease in revenues is primarily the result of an ~~increase~~decrease in the average ~~market~~ price per ton ~~of distillers grains sold and tons~~ of distillers grains sold for the period ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016.~~2022.

The average price per ton of distillers grains sold for the three months ended ~~December 31, 2017~~June 30, 2023 was approximately ~~7.9% higher~~12% lower than the average price per ton of distillers grains sold for the same period in ~~2016.~~2022. This ~~increase~~decrease in the market price of

Table of Contents

distillers grains is primarily due to ~~higher export demand during~~lower corn and soybean meal prices for the ~~three months ended December 31, 2017~~current period as ~~compared~~well as a seasonal decrease in the ration of distillers grains in livestock feed. However, vomitoxin levels in some distillers grains produced by some plants in our region have reduced supply and allowed us to receive a premium on our distillers grains, offsetting the ~~same period in 2016, which has resulted in an increase in~~effects of the decreased price. Distillers grains ground from corn contaminated with vomitoxin can sicken livestock.

Management anticipates that distillers grains prices will continue to be affected by the price of corn and soybean meal. Persisting vomitoxin levels in distillers grains as a percentage of corn values. Vietnam recently resumed imports of distillers grains from the United States after a nine-month ban and demand from other foreign markets improved for the three months ended December 31, 2017.

~~China has been a significant consumer of exported distillers grains particularly since December of 2014 following the resolution of a dispute related~~will likely continue to ~~China's objection to the presence of~~have an unapproved genetically modified organism in some U.S. shipments. However, an anti-dumping investigation beginning in January of 2016 into distillers grains produced in the United States led to the imposition by China of preliminary anti-dumping and anti-subsidy dutieseffect on imports of ethanol produced in the United States in the fall of 2016 and a final ruling imposing even higher duties in January 2017. The investigation and imposition of these duties have resulted in a decline in demand from China and distillers grains prices ~~could decrease~~until a new corn crop is harvested. As the seasons become warmer and dryer, we experience some decline in prices as cattle feeders turn more to grazing their herds. Trade disputes with foreign countries, such as China, will continue to have a negative effect on distillers grains prices unless additional demand can be sustained from domestic or other foreign markets. Domestic demand for distillers grains could also decrease due to expansion of production capacity in the ethanol industry or if lower corn prices result in end-users switching to lower priced alternatives. In addition, growing conditions in a particular season’s harvest may cause corn crop to be of poor quality resulting in lower distillers grains prices.

We sold approximately ~~4.8%~~5% more tons of distillers grains in the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016 due~~2022 resulting primarily tofrom increased ethanol production levels and a slightly higher ~~production. Management anticipates that the gallons of ethanol sold by our plant will increase~~yield for the ~~fiscal year ended September 30, 2018 due to completion of various projects~~period which ~~are expected to~~resulted in increased distillers grains production. An increase ~~our~~or decrease in ethanol production ~~capacity to approximately 135 million gallons which~~rates in the future would ~~also increase our~~result in a corresponding change in distillers grains production.

Corn Oil

Our revenues from corn oil sales ~~increased~~decreased in the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016~~2022 which was mainly the result of ~~higher corn oil production. We sold approximately 6.9% more tons of corn oil~~a decrease in the ~~three months ended December 31, 2017 as compared to the same period in 2016 due to increased yield~~average price per ~~bushel and higher production rates correlating to higher ethanol production rates.~~pound for corn oil. The average price per pound of corn oil was ~~consistent~~approximately 28% lower for the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016.~~2022. Decreased soybean oil prices along with decreased biodiesel production had a negative effect on corn oil prices for the period. Soybean oil is the primary competitor with distillers corn oil. However, the supply of used cooking oil has also become more prevalent and may compete with distillers corn oil in the market.

Management ~~expects~~anticipates that corn oil prices will ~~remain relatively steady~~continue to follow soybean oil prices. Corn oil prices are also affected by industry changes in ~~the near term. However,~~ corn oil ~~prices may be negatively affected if the renewable volume obligations for biodiesel are reduced by the EPA or if~~supply due to operating conditions. The extension of the biodiesel tax credit ~~that expired~~by Congress is likely to continue to have a positive impact on ~~December 31, 2016 is outstanding in Congress. Corn oil prices may also decrease if~~demand from biodiesel ~~plants switch to lower~~

~~Table of Contents~~

~~priced alternatives such as soybean oil. Management expects~~producers and corn oil prices. However, an increase in the supply of used cooking oil could have a negative effect on corn oil prices.

We also sold approximately 5% more pounds of corn oil in the three months ended June 30, 2023 as compared to the same period in 2022 resulting primarily from higher ethanol production ~~will increase~~and an increased yield for the ~~fiscal year ended September 30, 2018 due to completion of various projects~~period which ~~are expected to~~resulted in higher corn oil production. An increase ~~our~~or decrease in ethanol production ~~capacity to approximately 135 million gallons which~~rates in the future would ~~also increase our~~result in a corresponding change in corn oil production.

Trading Division

The following table shows the sources of our revenues from our Trading Division for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~2022:


	2023				2022
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Soybean Sales	$	16,201,434	100.0	%	$	22,346,382	99.9	%
Other Revenue	—		—		15,900		0.1
Total Revenues	$	16,201,434	100.0	%	$	22,362,282	100.0	%

2017 2016
Revenue Source Amount % of Revenues Amount % of Revenues
Soybean Sales $ 5,136,501
100.00 % $ —
— %
Total Revenues $ 5,136,501
100.00 % $ —
— %

Soybeans

~~We began operating the Trading Division in late September 2017.~~ During the three months ended ~~December 31, 2017~~June 30, 2023 revenues from our ~~revenues~~Trading Division were derived ~~solely~~ from transporting and selling soybeans. Our revenues from soybeans sales decreased in the three months ended June 30, 2023 as compared to the same period in 2022. This decrease in revenues is the result of a decrease in the bushels of soybeans sold of approximately

Table of Contents

17% for the three months ended June 30, 2023 as compared to the same period in 2022. The reduction was due to delayed timing of soybean sales in order to capture a more conducive selling market. The average price per bushel of soybeans sold for the three months ended June 30, 2023 decreased by approximately 13% compared to the same period in 2022. Management anticipates that soybean sales over the remainder of the fiscal year will be consistent with recent fiscal years.

Cost of Goods Sold

Ethanol Division

Our cost of goods sold for this division as a percentage of its total revenues was approximately ~~93.9%~~85% for the three months ended ~~December 31, 2017~~June 30, 2023 as compared to approximately ~~85.2%~~75% for the same period in ~~2016~~.2022. This increase in cost of goods sold as a percentage of revenues was the result of volatility in the ~~narrowing~~prices of ~~the margin between~~ ethanol ~~prices relative to the cost of~~and corn for the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016~~.2022. Our two largest costs of production are corn and natural gas. Cost of goods sold also includes net gains or losses from derivatives related to our ~~commodities purchases.~~commodity purchases as well as our additional expense for our estimate of our rail car rehabilitation expense described below.

Corn

Our largest cost associated with the production of ethanol, distillers grains and corn oil is corn cost. During the three months ended ~~December 31, 2017,~~June 30, 2023, we used approximately ~~3.6%~~5% more bushels of corn to produce our ethanol, distillers ~~grain~~grains and corn oil as compared to the same period in ~~2016 because of~~2022 due to higher ~~production.~~ethanol production levels for the period. During the three months ended ~~December 31, 2017,~~June 30, 2023, our average price paid per bushel of corn was approximately ~~6.2%~~7% lower as compared to the same period in ~~2016. Corn prices have trended lower~~2022 due primarily to reports towards the ~~plentiful 2017 harvest. Corn supplies have been sufficient locally and we have had no difficulty sourcing~~end of the period predicting a larger fall corn ~~during our first fiscal quarter.~~crop than was previously forecasted.

Weather, world supply and demand, current and anticipated stocks, agricultural policy and other factors can contribute to volatility in corn prices. IfHigher corn prices ~~rise, it will~~and increased volatility would have a negative effect on our operating margins unless the price of ethanol and distillers grains out paces rising corn prices. Volatility in the price of corn could significantly impact our cost of goods sold.

Natural Gas

Our natural gas cost after hedging was ~~higher~~lower during the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the ~~three months ended December 31, 2016.~~same period in 2022. This ~~increase~~decrease in cost of natural gas for the three months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016~~2022 was primarily the result of ~~a increase of approximately 2.3% in~~decreased prices for the period. Our average price per MMBTU of natural gas, excluding hedging activity, was approximately 58% lower during the three months ended June 30, 2023 due to ~~increased natural gas stocks. We also used approximately 2.5% more~~a mild winter, a decrease in the price of crude oil and less volatility in prices. The use of natural gas for the three months ended ~~December 31, 2017~~June 30, 2023 was approximately 4% more as compared to the same period in ~~2016 because of higher~~2022 due to increased ethanol production.

~~Natural gas prices are expected to increase in the future due to producers shutting down wells resulting in lower~~ Management expects that natural ~~gas production and to the conversion of power plants across the U.S. from coal to natural gas. Natural~~ gas prices will ~~also~~ be dependent upon ~~the severity of the coming winter weather.~~government policy and seasonal weather conditions. If the nation were to experience a recession this could also influence natural gas prices. In addition, natural gas supply shortages due to a catastrophic weather event ~~causing problems related to the supply of natural gas, this~~ could ~~result in higher~~have a negative effect on natural gas prices.

Rail Car Rehabilitation Costs

We lease 180 hopper rail cars under a multi-year agreement which ends in November 2023. Under the agreement, we are required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of each car at the termination of the lease. We have evaluated the condition of the cars and believe that it is probable that we may be assessed for damages incurred. During the three months ended June 30, 2023, we have recorded an expense in cost of goods sold of approximately $90,000. We accrue the estimated cost per railcar damages of $30,060 per month over the term of the lease. The accrued liability for these rehabilitation costs is approximately $2,275,000 at June 30, 2023.

Table of Contents

Trading Division

The following table shows the costs incurred to procure various agricultural commodities for our Trading Division for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~2022:


	2023				2022
	Amount		% of Revenues		Amount		% of Revenues
Soybeans	$	15,942,257	98.4	%	$	21,675,334	96.9	%
Total Cost of Goods Sold	$	15,942,257	98.4	%	$	21,675,334	96.9	%

2017 2016
Amount % of Revenues Amount % of Revenues
Soybeans $ 4,786,811
100.00 % $ —
— %
Total Cost of Goods Sold $ 4,786,811
100.00 % $ —
— %

Soybeans

~~We began operating the Trading Division in late September 2017.~~

During the three months ended ~~December 31, 2017~~June 30, 2023, our ~~sole~~ cost was primarily the procurement of soybeans sold. During the three months ended June 30, 2023, our average price paid per bushel of soybeans was approximately 12% lower as compared to the same period in 2022 due to decreased concerns over the carryout of soybean inventory from the 2022 harvest and acres planted for ~~sale.~~2023. We also purchased approximately 29% less bushels of soybeans in the three months ended June 30, 2023 compared to 2022 due mostly to a cash price that was not conducive to producer selling.

Derivatives

We enter into hedging instruments to minimize price fluctuations in the prices of our finished products and inputs. As the current market price of our hedge positions changes, the realized or unrealized gains and losses are immediately recognized in our revenues and our cost of goods sold. These commodity-based derivatives are not designated as effective hedges for accounting purposes. Please refer to Item 3 - Quantitative and Qualitative Disclosures About Market ~~Risk-Commodity~~Risk - Commodity Price Risk for information on our derivatives.

Operating Expense

Our operating expenses as a percentage of revenues ~~were~~was approximately ~~2.9%~~2% and 1% for the three months ended ~~December 31, 2017 as compared to operating expenses of approximately 2.0% of revenues for the same period in~~ ~~2016~~.June 30, 2023 and 2022, respectively. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees, depreciation of trading division fixed assets, property taxes and other general administrative costs. ~~Our efforts to optimize efficiencies and maximize production may result in a decrease in our operating~~Operating expenses on a per gallon ~~basis. However, because these expenses generally do not vary with~~basis increased somewhat for the ~~level~~three months ended June 30, 2023 compared to the same period in 2022. We have seen rises in the cost of ~~production at~~salaries due to shortages in the ~~plant, we expect our operating expenses to remain steady into~~local labor market and ~~throughout our 2018 fiscal year.~~increases in insurance rates for property and casualty.

Operating Income

Our income from operations for the three months ended ~~December 31, 2017~~June 30, 2023 was approximately ~~3.2%~~11% of ~~our~~ revenues as compared to ~~operating income of approximately 12.8%~~20% of revenues for the same period in ~~2016~~.2022. The decrease ~~in operating income~~ for the three months ended ~~December 31, 2017~~June 30, 2023 was primarily the result of ~~decreased~~weakened ethanol ~~prices relative~~ to ~~the price of corn.~~corn margins and volatile commodity prices.

Other ~~Expense~~Income (Expense)

Our other ~~expense~~income was approximately 1% and 6% of revenues for the three months ended ~~December 31, 2017~~June 30, 2023 and 2022, respectively. Our other income consisted primarily of the interest income received during the three months ended June 30, 2023 and the receipt of an award from the USDA Biofuel Producer Program during the three months ended June 30, 2022.

Table of Contents

Results of Operations for the Nine Months Ended June 30, 2023 and 2022


	2023			2022
Statement of Operations Data	Amount		%	Amount		%
Revenue	$	384,766,147	100.0	$	417,490,683	100.0
Cost of Goods Sold	335,472,745		87.2	343,766,849		82.3
Gross Profit	49,293,402		12.8	73,723,834		17.7
Operating Expenses	7,122,298		1.8	6,104,500		1.5
Operating Income	42,171,104		11.0	67,619,334		16.2
Other Income (Expense)	1,499,957		0.4	7,378,771		1.8
Net Income	$	43,671,061	11.4	$	74,998,105	18.0

Revenue

Operating Segments

Operating segments are defined as components of an enterprise for which separate financial information is available that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the nature of the products, services and operations and the expected financial results, we review our operations within the two operating segments-the Ethanol Division and the Trading Division. Our revenues from operations from our Ethanol Division come from three primary sources: sales of fuel ethanol, distillers grains and corn oil. Revenues from operations of our Trading Division are derived from procuring, transporting and selling grain commodities.

Our current lines of business and sources of revenue are the sale of ethanol, distillers grains, corn oil and and the trading of agricultural grains. We expect that PROTOMAX™, a high protein feed product, will become a significant new source of revenue once the installation of a system to manufacture high protein feed is complete and the system is operating. Please refer to Item 1 - Financial Statements - Note 11 - Business Segmentsfor more financial information about our financial reporting segments. Ethanol revenues in the ethanol division also include net gains or losses from derivatives. Net derivative gains or losses for corn, natural gas, and corn oil are included in cost of goods sold in the ethanol division and soybean gains or losses from derivatives are included in cost of goods sold in the trading division.

The following table shows the sources of our total revenue from the two segments and the approximate percentage of revenues to total revenues in our statements of operations for the nine months ended June 30, 2023 and 2022:


	2023				2022
Revenue:	Amount		% of Total Revenues		Amount		% of Total Revenues
Ethanol division	$	318,564,231	82.8	%	$	340,575,754	81.6	%
Trading division	66,201,916		17.2		76,914,929		18.4
Total Revenue	$	384,766,147	100.0	%	$	417,490,683	100.0	%

Table of Contents

Ethanol Division

The following table shows the sources of our revenues from our Ethanol Division for the nine months ended June 30, 2023 and 2022:


	2023				2022
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol	$	245,830,363	77.2	%	$	272,527,573	80.0	%
Distillers Grains	50,403,931		15.8		47,450,158		13.9
Corn Oil	21,737,346		6.8		20,177,097		5.9
Carbon Dioxide	319,399		0.1		347,126		0.1
Other Revenue	273,192		0.1		73,800		0.1
Total Revenues	$	318,564,231	100.0	%	$	340,575,754	100.0	%

Ethanol

Our revenues from ethanol decreased in the nine months ended June 30, 2023 as compared to the the same period in 2022. This decrease in revenues is primarily the result of a decrease in the price per gallon of ethanol sold for the nine months ended June 30, 2023 as compared to the same period in 2022. Revenue also includes the net gains or losses from derivatives related to the commodities purchased.

The average price per gallon of ethanol sold for the nine months ended June 30, 2023 was approximately ~~0.28%~~10% lower than the average price per gallon of ethanol sold for the same period in 2022. Ethanol market prices have overall been lower due to a decrease in energy prices, including crude oil and gasoline prices, for the current period compared to the same period in 2022. In addition, industry-wide production in excess of demand and decreasing corn prices towards the end of the period have had a negative effect on ethanol prices. Ethanol prices are typically directionally consistent with the price of corn meaning that lower corn prices can lead to volatility and have a significant negative effect on ethanol prices.

Management believes that ethanol prices will continue to be influenced by corn and energy prices, inventory levels, global economics and inflationary factors. If corn prices further decrease that would likely contribute to lower ethanol prices and our profitability. Industry over-production due to a period of positive operating margins could also continue to have a negative effect on ethanol prices. However, foreign demand could increase if other countries move to higher blends of ethanol which may contribute to higher ethanol prices.

Our ethanol gallons sold remained consistent for the nine months ended June 30, 2023 as compared to the same period in 2022. We are currently operating at a rate of approximately 143 million gallons annually. We have installed an ethanol recovery system which we expect will result in an increase in efficiencies allowing us to achieve higher ethanol production rates going forward. However, we expect this will likely be offset by temporary shutdowns of our plant from time to time during our 2023 fiscal year in connection with the installation of our high protein feed system which could result in an overall reduction in gallons of ethanol produced. In addition, management continues to monitor economic conditions carefully. If market conditions worsen affecting our ability to profitably operate the plant, we may be forced to reduce our ethanol production rate or even temporarily shut down ethanol production altogether.

Distillers Grains

Our revenues from distillers grains increased in the nine months ended June 30, 2023 as compared to the same period in 2022. This increase in revenues is primarily the result of an increase in the average price per ton of distillers grains sold for the period ended June 30, 2023 as compared to the same period in 2022.

Table of Contents

The average price per ton of distillers grains sold for the nine months ended June 30, 2023 was approximately 6% higher than the average price per ton of distillers grains sold for the same period in 2022. This increase in the market price of distillers grains is primarily due to higher overall corn and soybean meal prices for the current period which resulted in end users seeking out distillers grains as the lower cost alternative. In addition, vomitoxin levels in some distillers grains produced by some plants in our region have reduced supply and allowed us to receive a premium on our distillers grains. Distillers grains ground from corn contaminated with vomitoxin can sicken livestock. However, the market price of distillers grains was lower towards the end of the period due primarily to lower corn and soybean meal prices as well as a seasonal decrease in the ration of distillers grains in livestock feed.

Management anticipates that distillers grains prices will continue to be affected by the price of corn and soybean meal. Persisting vomitoxin levels in distillers grains will likely continue to have an effect on distillers grains prices until a new corn crop is harvested. As the seasons become warmer and dryer, we experience some decline in prices as cattle feeders turn more to grazing their herds. Trade disputes with foreign countries, such as China, will continue to have a negative effect on distillers grains prices unless additional demand can be sustained from domestic or other foreign markets.

Our sales of distillers grains were consistent for the nine months ended June 30, 2023 as compared to the same period in 2022. An increase or decrease in ethanol production rates in the future would result in a corresponding change in distillers grains production.

Corn Oil

Our revenues from corn oil sales increased in the nine months ended June 30, 2023 as compared to the same period in 2022 which was mainly the result of an increase in the average price per pound for corn oil. The average price per pound of corn oil was approximately 3% higher for the nine months ended June 30, 2023 as compared to the same period in 2022. Overall, higher soybean oil prices along with increased biodiesel production had a positive effect on corn oil prices for the period. However, corn oil prices were lower towards the end of the period due to decreased soybean oil prices. Soybean oil is the primary competitor with distillers corn oil. However, the supply of used cooking oil has also become more prevalent and may compete with distillers corn oil in the market.

Management anticipates that corn oil prices will continue to follow soybean oil prices. Corn oil prices are also affected by industry changes in corn oil supply due to operating conditions. The extension of the biodiesel tax credit by Congress is likely to continue to have a positive impact on demand from biodiesel producers and corn oil prices. However, an increase in the supply of used cooking oil could have a negative effect on corn oil prices.

We also sold approximately 4% more pounds of corn oil in the nine months ended June 30, 2023 as compared to the same period in 2022 resulting primarily from an increased yield resulting in higher corn oil production for the period. An increase or decrease in ethanol production rates in the future would result in a corresponding change in corn oil production.

Trading Division

The following table shows the sources of our revenues from our Trading Division for the nine months ended June 30, 2023 and 2022:


	2023				2022
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Soybean Sales	$	66,201,916	100.0	%	$	76,832,373	99.9	%
Other Revenue	—		—		82,556		0.1
Total Revenues	$	66,201,916	100.0	%	$	76,914,929	100.0	%

Table of Contents

Soybeans

During the nine months ended June 30, 2023 revenues from our Trading Division were derived from transporting and selling soybeans. Our revenues from soybeans sales decreased in the nine months ended June 30, 2023 as compared to the same period in 2022. This decrease in revenues is the result of a decrease in the bushels of soybeans sold of approximately 15% for the nine months ended June 30, 2023 as compared to the same period in 2022. The reduction was due to delayed timing of soybean sales in order to capture a more conducive market. The lower quantity sold was offset by a 2% increase in the average price per bushel of soybeans sold for the nine months ended June 30, 2023 as compared to the same period in 2022. Management anticipates that soybean sales over the remainder of the fiscal year will be consistent with recent fiscal years.

Cost of Goods Sold

Ethanol Division

Our cost of goods sold for this division as a percentage of its total revenues was approximately 85% for the nine months ended June 30, 2023 as compared to approximately 79% for the same period in 2022. This increase in cost of goods sold as a percentage of revenues was the result of a weakened relationship between the prices of ethanol and corn and volatile prices for the nine months ended June 30, 2023 as compared to the same period in 2022. Our two largest costs of production are corn and natural gas. Cost of goods sold also includes net gains or losses from derivatives related to our commodity purchases as well as our additional expense for our estimate of our rail car rehabilitation expense described below.

Corn

Our largest cost associated with the production of ethanol, distillers grains and corn oil is corn cost. During the nine months ended June 30, 2023, we used approximately 1% more bushels of corn to produce our ethanol, distillers grains and corn oil as compared to the same period in 2022 due to relatively consistent ethanol production levels for the period. During the nine months ended June 30, 2023, our average price paid per bushel of corn was approximately 1% lower as compared to the same period in 2022 due primarily to a smaller crop carryout in some areas from the 2022 harvest due to droughts and a weakened basis in the Eastern Corn Belt. In addition, global economic uncertainty, market disruptions and increased volatility in commodity prices due to the Russian invasion of Ukraine have contributed to higher corn prices during the period. However, corn prices were lower towards the end of the period due primarily to reports predicting a larger fall corn crop than was previously forecasted.

Weather, world supply and demand, current and anticipated stocks, agricultural policy and other factors can contribute to volatility in corn prices. Higher corn prices and increased volatility would have a negative effect on our operating margins unless the price of ethanol and distillers grains out paces rising corn prices. Volatility in the price of corn could significantly impact our cost of goods sold.

Natural Gas

Our natural gas cost after hedging was lower during the nine months ended June 30, 2023 as compared to the same period in 2022. This decrease in cost of natural gas for the nine months ended June 30, 2023 as compared to the same period in 2022 was primarily the result of lower prices during the period. The average price per MMBTU of natural gas was approximately 23% lower during the nine months ended June 30, 2023 due to a mild winter, a decrease in the price of crude oil and less volatility in prices. We used approximately 1% less natural gas for the nine months ended June 30, 2023 as compared to the same period in 2022 due to relatively consistent ethanol production and efficiencies during the period.

Management expects that natural gas prices will be dependent upon government policy and seasonal weather conditions. If the nation were to experience a recession this could also influence natural gas prices. In addition, natural gas supply shortages due to a catastrophic weather event could have a negative effect on natural gas prices.

Table of Contents

Rail Car Rehabilitation Costs

We lease 180 hopper rail cars under a multi-year agreement which ends in November 2023. Under the agreement, we are required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of each car at the termination of the lease. We have evaluated the condition of the cars and believe that it is probable that we may be assessed for damages incurred. During the nine months ended June 30, 2023, we have recorded an expense in cost of goods sold of approximately $270,000. We accrue the estimated cost per railcar damages of $30,060 per month over the term of the lease. The accrued liability for these rehabilitation costs is approximately $2,275,000 at June 30, 2023.

Trading Division

The following table shows the costs incurred to procure various agricultural commodities for our Trading Division for the nine months ended June 30, 2023 and 2022:


	2023				2022
	Amount		% of Revenues		Amount		% of Revenues
Soybeans	$	64,518,707	97.5	%	$	73,818,382	96.0	%
Total Cost of Goods Sold	$	64,518,707	97.5	%	$	73,818,382	96.0	%

Soybeans

During the nine months ended June 30, 2023, our cost was primarily the procurement of soybeans sold. During the nine months ended June 30, 2023, our average price paid per bushel of soybeans was approximately 4% higher as compared to the same period in 2022 due to concerns over a smaller carryout of soybean inventory from the 2022 harvest and an increase in exports towards the end of the current period. We also purchased approximately 30% less bushels of soybeans in the nine months ended June 30, 2023 compared to 2022 due mostly to a cash price that was not conducive to producer selling.

Derivatives

We enter into hedging instruments to minimize price fluctuations in the prices of our finished products and inputs. As the current market price of our hedge positions changes, the realized or unrealized gains and losses are immediately recognized in our revenues and our cost of goods sold. These commodity-based derivatives are not designated as effective hedges for accounting purposes. Please refer to Item 3 - Quantitative and Qualitative Disclosures About Market Risk - Commodity Price Risk for information on our derivatives.

Operating Expense

Our operating expenses as a percentage of revenues was approximately 2% and 1% for the nine months ended June 30, 2023 and 2022, respectively. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees, depreciation of trading division fixed assets, property taxes and other general administrative costs. Operating expenses on a per gallon basis increased somewhat for the nine months ended June 30, 2023 compared to the same period in 2022. We have seen rises in the cost of salaries due to shortages in the local labor market and increases in insurance rates for property and casualty.

Operating Income

Our income from operations for the nine months ended June 30, 2023 was approximately 11% of revenues as compared to ~~other expense of approximately 0.21%~~16% of revenues for the same period in ~~2016~~.2022. The decrease for the nine months ended June 30, 2023 was primarily the result of weakened ethanol to corn margins and volatile commodity prices.

Table of Contents

Other Income

Our other ~~expense~~income was approximately 0.4% of revenues for the ~~three~~nine months ended ~~December 31, 2017~~ ~~and December 31, 2016~~June 30, 2023 as compared to approximately 2% of revenues for the nine months ended June 30, 2022. Our other income consisted primarily of the interest ~~expense.~~income received during the nine months ended June 30, 2023 and the receipt of an award from the USDA Biofuel Producer Program during the nine months ended June 30, 2022.

Changes in Financial Condition for the ~~Three~~Nine Months Ended ~~December 31, 2017~~June 30, 2023

The following table highlights the changes in our financial condition:


	June 30, 2023 (Unaudited)		September 30, 2022
Current Assets	$	119,264,762	$	102,033,729
Long Term Assets	$	96,141,764	$	86,922,099
Current Liabilities	$	31,914,764	$	27,431,166
Long-Term Liabilities	$	28,806,619	$	14,254,170
Members' Equity	$	154,685,143	$	147,270,492

December 31, 2017
(Unaudited)
September 30, 2017
Current Assets $ 58,713,156
$ 50,139,370
Current Liabilities $ 25,904,211
$ 18,007,407
Long-Term Liabilities $ 16,954,283
$ 14,581,758
Member's Equity $ 122,344,939
$ 126,582,831

We experienced an increase in our current assets at ~~December 31, 2017~~June 30, 2023 as compared to September 30, ~~2017.~~2022. This increase was primarily driven by an increase in ~~our grain inventories~~investments, inventory, and receivables at ~~December 31, 2017~~June 30, 2023 as compared to September 30, ~~2017 because we have begun operations of our new Trading Division~~2022. Increased profit margins during fiscal year 2022 and ~~were holding soybeans~~into the nine months ended June 30, 2023 improved cash balances which in turn allowed us to invest in securities available for ~~sale.~~sale and held-to-maturity.

We ~~also~~ experienced an increase in

~~Table of Contents~~

our ~~commodity derivative instruments due to the volume of corn and soybean purchases that were hedged. These increases were partially offset by a decrease in our trade accounts receivable~~long term assets at ~~December 31, 2017~~June 30, 2023 as compared to September 30, ~~2017 due~~2022. The increase is attributed to additional capital projects and an increase in investments, offset by a reduction in the ~~normal ebbs and flows~~operating lease right of ~~our operating cycle and a decrease in our restricted cash at December 31, 2017 compared to September 30, 2017 due primarily to fluctuations in commodities prices affecting margins on our hedges.~~use asset.

We experienced an increase in our total current liabilities at ~~December 31, 2017~~June 30, 2023 as compared to September 30, ~~2017.~~2022. This increase was primarily due to an increase in ~~grain accounts payable due~~our hedging in securities available for sale and held-to-maturity positions at June 30, 2023 compared to ~~our soybean purchases using producer credit and a customer advance. These increases were partially~~September 30, 2022, offset by a decrease in our ~~trade~~ accounts payable ~~at December 31, 2017 compared to September 30, 2017 due to decreased liabilities to construction contractors for the completed grain loadout facility.~~and accrued expenses.

We experienced an increase in our long-term liabilities as of ~~December 31, 2017~~June 30, 2023 as compared to September 30, ~~2017. At December 31, 2017, we had $16,954,283~~2022 primarily as a result of ~~outstanding borrowings due in greater than one year from the balance sheet date as compared to $14,581,758 at September 30, 2017 because of the additional debt incurred~~increased borrowing for ~~construction of the grain receiving and loading facility for our Trading Division.~~capital expenditures.

Liquidity and Capital Resources

We have engaged ICM, Inc. to install a system to produce high protein feed which is currently expected to cost approximately $50,000,000, including recent change orders. The agreement calls for a down payment and scheduled payments at key points during the construction and installation process, which began during the fourth quarter of fiscal 2022.

The prices of ethanol, corn, natural gas and soybeans have been volatile over the last several months. We believe that we have sufficient cash and credit facilities to provide liquidity over the next twelve months. However, if the volatility in commodity prices continues, we may explore options with our primary lender to expand the funding of our working capital.

Based on financial forecasts performed by our management, we anticipate that we will have sufficient cash from our ~~current~~ credit facilities and cash from our operations to continue to operate the ethanol plant for the next 12 months. ~~We do not anticipate seeking additional equity financing during our 2018 fiscal year.~~ However, should ~~we experience unfavorable~~ operating conditions in the ethanol industry ~~that prevent us from profitably operating the ethanol plant,~~deteriorate or continue for a prolonged period, we could have difficulty maintaining our liquidity and may need to rely on our revolving lines of credit or seek to increase our limits for operations.

Table of Contents

The following table shows cash flows for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~2022:


	2023		2022
Net cash provided by operating activities	$	44,640,398	$	55,444,151
Net cash used for investing activities	(41,503,146)		(9,728,816)
Net cash used for financing activities	(15,417,783)		(41,261,950)
Net increase (decrease) in Cash, Cash Equivalents, and Restricted Cash	(12,280,531)		4,453,385
Cash, Cash Equivalents, and Restricted Cash, beginning of period	63,239,614		33,895,947
Cash, Cash Equivalents, and Restricted Cash, end of period	$	50,959,083	$	38,349,332

2017 2016
Net cash provided by operating activities $ 4,218,153
$ 11,598,673
Net cash used for investing activities $ (1,660,249 ) $ (2,422,943 )
Net cash used for financing activities $ (3,107,459 ) $ (9,477,497 )
Net decrease in Cash and Restricted cash $ (549,555 ) $ (301,767 )
Cash and Restricted cash, beginning of period $ 19,397,161
$ 24,462,911
Cash and Restricted cash, end of period $ 18,847,606
$ 24,161,144

Cash Flow ~~from Operations~~provided by Operating Activities

We experienced a decrease in our cash flow from ~~operations~~operating activities for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016.~~2022. This decrease was primarily ~~the result of decreased net income as a result of decreased ethanol prices relative~~due to ~~the cost of corn and the impact these prices had~~weakened margins on ~~inventory and other working capital components~~our primary products for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 as compared ~~with~~to the same period in ~~2016.~~2022.

Cash Flow used for Investing Activities

We used ~~less~~more cash in investing activities for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016. Cash used~~2022. This increase was primarily the result of an increase in ~~investing activities was used for payments for construction in progress and capital expenditures due to our~~ capital projects ~~which were substantially completed~~ and ~~paid by December 31, 2017.~~purchase of investments in securities available for sale and held-to-maturity during the nine months ended June 30, 2023 as compared with the same period in 2022.

Cash Flow used for Financing Activities

We used less cash infor financing activities for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 as compared to the same period in ~~2016~~.2022. This decrease was primarily the result of ~~receiving~~more proceeds ~~on our long term~~received from long-term debt ~~less cash paid~~ for ~~distributions,~~capital projects during the nine months ended June 30, 2023 that remained outstanding. The decrease was partially offset by ~~making~~ payments ~~on long term debt~~in the form of distributions to our investors during the ~~three~~nine months ended ~~December 31, 2017 compared with the same period in 2016.~~June 30, 2023.

Our liquidity, results of operations and financial performance will be impacted by many variables, including the market price for commodities such as, but not limited to, corn, ethanol, soybeans and other energy commodities, as well as the market price for any co-products generated by the facility and the cost of labor and other operating costs. ~~Assuming future relative price levels for corn, ethanol and distillers grains remain consistent with the relative price levels as of~~ ~~December 31, 2017, we~~We expect operations to generate adequate cash flows to maintain operations.

~~Table of Contents~~

Short and Long Term Debt Sources

We have a loan agreement consisting of ~~four~~two loans, ~~the Term Loan,~~ the Declining Revolving Loan ("Declining Loan"), and the Revolving Credit ~~Loan and a Grain Loadout Facility Loan (formerly the Construction Loan).~~Loan. In exchange for these loans, we granted liens on all property (real and personal, tangible and intangible) which include, among other things, a mortgage on the property, a security interest on commodity trading accounts, and assignment of material contracts. On March 23, 2017, we executed a Tenth Amendment of First Amended and Restated Construction Loan Agreement to be effective as of February 28, 2017, which amends the First Amended and Restated Construction Loan Agreement dated June 10, 2013 to provide an additional $10,000,000 in financing to fund construction of the grain receiving and loading facility for our Trading Division. On November 29, 2017, we executed an Eleventh Amendment of First Amended and Restated Construction Loan Agreement to be effective as of October 31, 2017, which further amends the Construction Loan Agreement to extend the date for completion of construction of the grain receiving and train loading facility and the draw period for the construction loan from October 1, 2017 to December 31, 2017. On January 29, 2018, we executed a Twelfth Amendment of First Amended and Restated Construction Loan Agreement to be effective as of December 31, 2017 (the "Twelfth Amendment"), which further amends the Construction Loan Agreement in order to convert the Construction Loan to term debt amortized over approximately seven years with a final maturity date of February 28, 2023. In connection with the Twelfth Amendment, the Company executed a Grain Loadout Facility Note. The principal balance on the Construction Loan of $10,000,000 was converted to term debt effective December 31, 2017. Please refer toItem 1 - Financial Statements, Note 67 - Bank Financing for additional details.

~~Term Loan~~

The interest rate on the Term Loan is based on the 3-month London Interbank Offered Rate ("LIBOR") plus two hundred ninety basis points. The interest rate at December 31, 2017 was 4.24%. The Term Loan requires monthly installment payments of approximately $282,700 commencing on September 1, 2016, with a final maturity date of February 28, 2021. There was approximately $11,066,525 outstanding on the Term Loan at December 31, 2017 and approximately $11,856,000 outstanding on the Term Loan at September 30, 2017.

Declining Loan

The maximum availability of the Declining Loan iswas formerly $5,000,000 ~~with~~and such amount was to be available for working capital purposes. However, the maximum availability of the Declining Loan was increased from $5,000,000 to $39,000,000 in order to provide financing to fund the construction and installation of a new high protein feed system at the plant. The interest rate on the Declining Loan is currently based on the ~~3-month LIBOR plus two hundred ninety~~prime rate minus five basis ~~points.~~points (.05%) subject to a floor of 2.85%. The interest rate was 8.20% and 6.20% at ~~December 31, 2017~~June 30, 2023 and September 30, 2022, respectively. We will be

Table of Contents

required to make monthly interest payments on the Declining Loan during the draw period. The principal balance of the Declining Loan was ~~4.24%.~~expected to be converted to term debt on or before May 1, 2024, to be repaid in 60 equal monthly installments based on a ten year amortization period. In addition, we will be required to make mandatory annual prepayments on the term debt within 120 days following the end of each fiscal year beginning with the fiscal year ended September 30, 2024. The annual prepayment will be in the amount of the lesser of 40% of excess cash flow or $7,200,000, up to an aggregate amount paid of $18,000,000. There ~~was no balance~~were borrowings outstanding of approximately $25,775,000 and $9,000,000 on the Declining Loan at ~~December 31, 2017 or~~June 30, 2023 and September 30, ~~2017.~~2022, respectively.

Revolving Credit Loan

The Revolving Credit Loan has a limit of ~~$15,000,000~~$20,000,000 supported by a borrowing base made up of our corn, ethanol, dried distillers grain, ~~and~~ corn oil and soybean inventories reduced by accounts payable associated with those inventories having a priority. It is also supported by the eligible accounts receivable and commodity trading account excess margin funds. The interest rate on the Revolving Credit Loan is ~~based on~~ the ~~1-month LIBOR plus two hundred ninety~~prime rate minus twenty-five basis ~~points.~~points (.25%) and is subject to a floor of 2.75%. The interest rate was 8.00% and 6.00% at ~~December 31, 2017 was 4.27%.~~June 30, 2023 and September 30, 2022, respectively. There were no borrowings outstanding ~~on the~~at June 30, 2023 and September 30, 2022. The Revolving Credit ~~Note at December 31, 2017 or September 30, 2017.~~

~~Grain Loadout Facility Loan~~

~~The Grain Loadout Facility Loan (formerly construction loan) has a limit of $10,000,000. The interest rate on the Grain Loadout Facility~~ Loan is based on the 3-month LIBOR plus two hundred ninety basis points and at December 31, 2017 was 4.39%. There were borrowings in the amount of approximately $10,000,000 outstanding on the Grain Loadout Facility Loan at December 31, 2017. There were borrowings of $6,476,000 on the Grain Loadout Facility Loan at September 30, 2017. The principal balance on the Construction Loan of $10,000,000 was convertedset to term debt effective December 31, 2017. The Grain Loadout Facility Loan requires monthly installment payments of principal of approximately $119,048 plus interest accrued in arrears from the date of the last payment, such payments to commencemature on February ~~1, 2018, with a final maturity date of February~~ 28, ~~2023.~~2024.

Covenants

During the term of the loans, we will be subject to certain financial covenants. Our minimum working capital is $15,000,000, which is calculated as our current assets plus the amount available for drawing under our long term revolving note, less current liabilities. Our minimum fixed charge coverage ratio is no less than 1.15:1.0 measured on a rolling four quarter average

~~Table of Contents~~

basis. However, for any reporting period, if our working capital is equal to or more than ~~$25,000,000,~~$23,000,000, we will be subject to maintaining a debt service charge coverage ratio of no less than 1.25:1.0 in lieu of the fixed charge coverage ratio.

Our loan agreement also requires us to obtain prior approval from our lender before making, or committing to make, capital expenditures exceeding an aggregate amount of ~~$5,000,000.~~$6,000,000. The cost of the high protein feed system is excluded from the capital expenditures calculation until the principal balance of the Declining Loan converts to term debt.

We are ~~meeting our liquidity needs and~~ complying with our financial covenants and the other terms of our loan agreements at ~~December 31, 2017.~~June 30, 2023. Based on current management projections, we anticipate that future operations will be sufficient to generate enough cash flow to maintain operations, service any new debt and comply with our financial covenants and other terms of our loan agreements ~~through December 31, 2018.~~for the next twelve months. Should market conditions deteriorate in the future, circumstances may develop which could result in us violating the financial covenants or other terms of our loan agreements. Should we violate the terms or covenants of our loan or fail to obtain a waiver of any such term or covenant, our primary lender could deem us in default of our loans and require us to immediately repay a significant portion or possibly the entire outstanding balance of our loans if we have a balance outstanding. In that event, our lender could also elect to proceed with a foreclosure action on our plant.

Capital Improvements

We are planning various capital projects scheduled for the 2023 fiscal year in order to make certain improvements to the ethanol plant and maintain the facility. These improvements include updates to the 190 condenser, rail siding, sieve vaporizer, cyber security, grain scales, spare parts storage, and other small miscellaneous projects which are expected to cost approximately $5,000,000 and be funded from operations and our current credit facilities as amended.

We have also engaged ICM, Inc. to install a system to produce high protein feed which is currently expected to cost approximately $50,000,000, including recent change orders, and be funded from operations and our current credit facilities as amended. We will also license from ICM technology to use, operate and maintain the system and expect to pay license fees of $10 per ton of PROTOMAX™ produced for a period of 10 years. Installation of the system commenced during the fourth quarter of our 2022 fiscal year. This project is expected to be completed during the Fall of 2023.

Table of Contents

CCS Project

We engaged with an unrelated third party to pursue the possible joint development of integrated carbon dioxide facilities, transportation infrastructure and a carbon sequestration site for the carbon dioxide emissions produced by our plant (the "CCS Project"). We performed an initial study and assessment of the technical and economic feasibility of the CCS Project and optimal commercial structure.

On January 16, 2023, Cardinal One Carbon Holdings, LLC, our wholly owned subsidiary, entered into a Partnership Agreement (the "LPA") with Vault CCS Holdings LP pursuant to which Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP formed a joint venture operating under the name of One Carbon Partnership Holdings LP (the "Limited Partnership") to pursue the CCS Project. Cardinal One Carbon Holdings, LLC owns a 50% limited partnership interest in the Limited Partnership. The LPA contemplates that Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP will make capital contributions to fund the Project and receive distributions in accordance with their respective ownership interests. As of June 30, 2023, Cardinal One Carbon Holdings, LLC has invested $3,350,000 into the CCS project. It is currently expected that the CCS Project will require Cardinal One Carbon Holdings, LLC to invest up to $18,000,000 to reach commercial operations.

In addition, Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP have formed One Carbon Partnership GP LLC (the "GP") to serve as the general partner of the Limited Partnership. Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP each own 50% of the GP and each has the right to appoint three directors to the board of directors of the GP. Such directors may only be removed or replaced by the member that appointed them. Actions taken by the board of directors must be approved by a majority of the directors. Vault CCS Holdings LP or its affiliate will be responsible for management of construction of the Project and day-to-day operations. Certain material actions require approval by the board of directors of the GP.

We have taken certain steps towards implementing the CCS Project including filing the application for the necessary permitting and acquiring rights from landowners that will be needed in order to complete the CCS Project. In addition, we have granted rights to the joint venture including a surface easement and a lease of pore space below the surface of our property for use in sequestration if the CCS Project is successful. We have also ordered some of the equipment that will be needed for the Project. However, the CCS Project is still in its early stages and is subject to many variables that could have a material effect on its feasibility and the parties' ability to complete the CCS Project. Please refer to Item 1 - Financial Statements - Note 12 - Equity Method Investments for more information.

Passthrough Entity Tax

We record Indiana passthrough entity tax in accordance with ASC 740 and have elected to account for the payments as an equity transaction through member distributions. At June 30, 2023, accrued distributions for passthrough entity tax was $1,100,000. In April 2023, the Company paid approximately $2,279,000 for 2022 taxes.

Development Agreement

In September 2007, ~~the Company~~we entered into a development agreement with Randolph County Redevelopment Commission (“the Commission”) to promote economic development in the area. Under the terms of this agreement, beginning in January 2008 through December 2028, the money ~~the Company pays~~we pay toward property tax expense is allocated to an expense and an acquisition account. The funds in the acquisition account can be used by the Commission to purchase equipment, at ~~the Company's~~our direction, for the plant. ~~The Company does~~We do not have title to or control over the funds in the acquisition account.

On February 14, 2023, the Company received $2,950,000 from the Commission. The Company has elected to account ~~no amounts have been~~for this transaction under the International Accounting Standard (IAS) No. 20 Accounting for Government Grants and Disclosure of Government Assistance as the U.S. Accounting Standards Codification (U.S. GAAP) does not contain explicit guidance. The Company recorded this transaction in the consolidated statement of cash flows as proceeds from the economic development fund, and in the consolidated condensed balance sheet ~~relating to this account.~~as a reduction of payments for construction in progress.

~~Tax Abatement~~

Table of Contents

In October 2006, the real estate that our plant was constructed on was determined to be an economic revitalization area, which qualified us for tax abatement. The abatement period is for a ten year term, with an effective date beginning calendar year end 2009 for the property taxes payable in calendar year 2010. The program allows for 100% abatement of property taxes beginning in year 1, and then decreases on a ratable scale so that in year 11 the full amount of property taxes are due and payable. We must apply annually and meet specified criteria to qualify for the abatement program.

Critical Accounting Estimates

Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Our most critical accounting estimates, which require the greatest use of judgment by management, are designated as critical accounting estimates and include policies related to the useful lives of fixed assets; allowance for doubtful accounts; the valuation of basis and delay price contracts on corn purchases; derivatives; ~~inventory; patronage dividends,~~inventories; long-lived assets, railcar rehabilitation costs and inventory purchase commitments. The Ethanol Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, inventories, patronage dividends, long lived assets, railcar rehabilitation costs, and inventory purchase commitments. The Trading Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, the valuation of inventory purchase and sale commitments derivatives and inventory at market. An in-depth description of these can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2022. Management has not changed the method of calculating and using estimates and assumptions in preparing our condensed financial statements in accordance with generally accepted accounting principles. There have been no changes in the policies for our accounting estimates for the ~~three~~nine months ended ~~December 31, 2017.~~June 30, 2023.

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements.~~

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to the impact of market fluctuations associated with interest rates and commodity prices as discussed below. We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars. We use derivative financial instruments as part of an overall strategy to manage market risk. We use cash, futures and option contracts to hedge changes to the commodity prices of corn and natural gas. We do not enter into these derivative financial instruments for trading or speculative purposes, nor do we designate these contracts as hedges for accounting purposes.

~~Table of Contents~~

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from our ~~Term~~Declining Loan ~~Declining Loan,~~and Revolving Credit Loan ~~and Grain Loadout Facility Loan (formerly Construction Loan)~~ which bear variable interest rates. ~~The interest rate for the Term Loan is the 3-month LIBOR rate plus 290 basis points with no minimum.~~ There were borrowings in the amount of approximately $11,067,000 outstanding on the Term Loan and the applicable interest rate was 4.24% at December 31, 2017. The interest rate on the Declining Loan is the 3-month LIBOR plus 290 basis points with no minimum. There were no borrowings$25,775,000 outstanding on the Declining Loan and the applicable interest rate was ~~4.24%~~8.20% at ~~December 31, 2017. The interest rate for the Revolving Credit Note is the 1-month LIBOR rate plus 290 basis points with no minimum.~~June 30, 2023. There were no borrowings outstanding ~~balances~~ on the Revolving Credit ~~Note~~Loan at December 31, 2017 and the applicable interest rate was 4.27%. The interest rate on the Grain Loadout Facility Loan is the 3-month LIBOR plus 290 basis points with no minimum. There were borrowings in the amount of approximately $10,000,000 outstanding on the Grain Loadout Facility Loan and the applicable interest rate was 4.39% at December 31, 2017.June 30, 2023. The specifics of the ~~Term Loan,~~ Declining Loan ~~the~~and Revolving Credit ~~Loan and the Grain Loadout Facility~~ Loan are discussed in greater detail above. If we were to experience a 10% adverse change in ~~LIBOR,~~the applicable interest rate, the annual effect of such change would have on our statement of operations, based on the amount we had outstanding on our variable interest rate loans at ~~December 31, 2017,~~June 30, 2023, would be approximately ~~$90,000.~~$211,000.

Commodity Price Risk

We expect to be exposed to market risk from changes in commodity prices. Exposure to commodity price risk results from our dependence on corn in the ethanol production process and the sale of ethanol.

We seek to minimize the risks from fluctuations in the prices of raw material inputs, such as corn and natural gas, and finished products, such as ethanol and ~~distiller's~~distillers grains, through the use of hedging instruments. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. Although we believe our hedge positions accomplish an economic hedge against our future purchases and sales, management has chosen not to use hedge accounting, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. We are using fair value accounting for our hedge positions, which means as the current market price of our hedge positions changes, the realized or unrealized gains and losses are immediately recognized in our cost of goods sold or as an offset to revenues. The immediate recognition of hedging gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged.

We enter into forward contracts for our commodity purchases and sales on a regular basis. It is our intent that, as we enter in to these contracts, we will use various hedging instruments to maintain a near even market position. For example, if we

Table of Contents

have 1 million bushels of corn under fixed price contracts we would generally expect to enter into a short hedge position to offset our price risk relative to those bushels we have under fixed price contracts. Because our ethanol marketing company is selling substantially all of the gallons it markets on a spot basis we also include the corn bushel equivalent of the ethanol we have produced that is inventory but not yet priced as bushels that need to be hedged.

At December 31, 2017, we had a net long (buying) position of 210,000 gallons of ethanol under derivative contracts used to hedge our future ethanol sales for various delivery periods through March 2018, a net short (selling) position of 210,000 bushels of corn under derivative contracts used to hedge our forward corn contracts, corn inventory and ethanol sales for various delivery periods through May 2019. Also at December 31, 2017, the Company also had a net short (selling) position of 1,300,000 bushels of soybeans under derivative contracts used to hedge its forward soybean contract purchases forecasted to settle for various delivery periods through November 2018. These derivatives have not been designated as an effective hedge for accounting purposes. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding as disclosed above. The following table provides details regarding the gains and (losses) from our derivative instruments in the statements of operations, none of which are designated as hedging instruments, for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~2022:


	Three Months Ended June 30, 2023		Nine Months Ended June 30, 2023		Three Months Ended June 30, 2022		Nine Months Ended June 30, 2022
Corn Derivative Contracts	$	3,531,387	$	10,972,820	$	13,126,371	$	(3,762,026)
Ethanol Derivative Contracts	(3,798,934)		1,360,523		2,410,473		(7,500,787)
Natural Gas Derivative Contracts	44,849		(2,248,339)		—		(39,039)
Soybean Oil Derivative Contracts	34,880		(42,906)		47,541		131,871
Soybean Derivative Contracts	(103,110)		(1,256,613)		(866,771)		(4,871,604)
Soybean Forward Purchase and Sales Contracts	(12,577)		274,386		(349,129)		1,044,353
Totals	$	(303,505)	$	9,059,871	$	14,368,485	$	(14,997,232)

~~Table of Contents~~

Three Months Ended Three Months Ended
December 31, 2017 December 31, 2016
Corn Futures and Options Contracts $ 256,335
$ 393,872
Ethanol Futures and Options Contracts (72,784 ) (38,210 )
Natural Gas Futures and Options Contracts 120,429
70,985
Soybean Futures and Options Contracts 350,214
—
Soybean Forward Contracts (176,827 ) —
Totals $ 477,367
$ 426,647

At December 31, 2017, we had forward corn purchase contracts at various fixed prices for various delivery periods through July 2019 for approximately 1.9% of our expected production needs for the next 19 months, forward dried distiller grains sales contracts at various fixed prices for various delivery periods through March 2018 for approximately 36.9% of expected production for the next 3 month and forward corn oil contracts at various prices for various delivery periods through December 2017 for approximately a portion of expected production for the current month.

Also, at December 31, 2017, we had forward natural gas contracts for approximately 48.4% of expected purchases for the next 22 months at various prices for various delivery periods through October 2019. As contracts are delivered, any gains or losses realized will be recognized in our gross margin. Additionally, at December 31, 2017, we had forward soybean purchase contracts for various period for delivery through July 2018. These soybean forward purchase contracts will be marked to market as the contract periods expire. This means that any gains or losses realized will be recognized in our gross margin at each month end until they are delivered upon. Due to the volatility and risk involved in the commodities market, we cannot be certain that these gains or losses will be realized.

As corn prices move in reaction to market trends and information, our income statement will be affected depending on the impact such market movements have on the value of our derivative instruments. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects, but are expected to produce long-term positive growth for us.

A sensitivity analysis has been prepared to estimate our exposure to ethanol, distillers grains, corn oil, corn, ~~and~~ natural gas and soybeans price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10% adverse change in the average cost of our corn and natural gas and average ethanol, distillers grains, ~~and~~ corn oil and soybeans prices as of ~~December 31, 2017~~June 30, 2023 net of the forward and future contracts used to hedge our market risk. The volumes are based on our expected use, purchase and sale of these commodities for a one year period from ~~December 31, 2017.~~June 30, 2023. The results of this analysis, which may differ from actual results, are approximately as follows:


	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price as of June 30, 2023	Approximate Adverse Change to Income
Natural Gas	1,773,000	MMBTU	10%	$	496,000
Ethanol	138,000,000	Gallons	10%	$	31,671,000
Corn	41,838,000	Bushels	10%	$	23,053,000
DDGs	306,000	Tons	10%	$	5,504,000
Corn Oil	39,724,000	Pounds	10%	$	2,383,000
Soybeans - Sale	4,708,000	Bushels	10%	$	6,931,000
Soybeans - Purchase	4,650,000	Bushels	10%	$	6,705,000

Estimated Volume Requirements for the next 12 months (net of forward and futures contracts) Unit of Measure
Hypothetical Adverse Change in Price as of
December 31, 2017
Approximate Adverse Change to Income
Natural Gas 3,240,000
MMBTU 10 %
$ 108,770
Ethanol 128,203,880
Gallons 10 %
$ 16,922,912
Corn 41,864,379
Bushels 10 %
$ 14,987,448
DDGs 294,502
Tons 10 %
$ 4,123,028
Corn Oil 25,487,360
Pounds 10 %
$ 624,440
Soybeans 8,592,847
Bushels 10 %
$ 8,242,688

Table of Contents

Liability Risk

We participate in a captive reinsurance company (the “Captive”). The Captive re-insures losses related to worker's compensation, commercial property and general liability. Premiums are accrued by a charge to income for the period to which the premium relates and is remitted by our insurer to the captive re-insurer. The Captive re-insures catastrophic losses in excess of a predetermined amount. Our premiums are structured such that we have made a prepaid collateral deposit estimated for losses related to the above coverage. The Captive insurer has estimated and collected an amount in excess of the estimated losses but less than the catastrophic loss limit insured by the Captive. We cannot be assessed in excess of the amount in the collateral fund.

~~Table of Contents~~

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.

Our management, including our Chief Executive Officer (the principal executive officer), ~~Jeff~~Jeffrey Painter, along with our Chief Financial Officer (the principal financial officer), William Dartt, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of ~~December 31, 2017~~.June 30, 2023. Based on this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our ~~first~~third quarter ended of our ~~2018~~2023 fiscal year that have materially affected, or are likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Patent Infringement~~None.

On June 27, 2008, we entered into a Tricanter Purchase and Installation Agreement with ICM, Inc. for the construction and installation of a Tricanter Oil Separation System. On February 12, 2010, GS CleanTech Corporation ("GS CleanTech") filed a lawsuit in the United States District Court for the Southern District of Indiana, claiming that the Company's operation of the oil recovery system manufactured and installed by ICM, Inc. infringes a patent claimed by GS CleanTech. GS CleanTech sought royalties and damages associated with the alleged infringement, as well as attorney's fees from the Company. GS CleanTech subsequently filed actions against at least fourteen other ethanol producing companies for infringement of its patent rights, adding several additional patents. GS CleanTech successfully petitioned for the cases to be joined in a multi-district litigation ("MDL") which was assigned to the United States District Court for the Southern District of Indiana (Case No. 1:10-ml-02181). We subsequently answered and counterclaimed that the patent claims at issue are invalid and that the Company is not infringing.

Motions for summary judgment were filed by the defendants, including the Company, and GS CleanTech. Meanwhile, GS CleanTech filed suit against another group of defendants which were joined with the MDL. On October 23, 2014, the United States District Court granted summary judgment finding that all of the patents claimed by GS CleanTech were invalid and that the Company had not infringed. In addition, on September 15, 2016, the United States District Court granted summary judgment finding that the patents were invalid due to inequitable conduct before the US Patent and Trademark Office by the inventors and their attorneys. GS CleanTech has asked the United States District Court to reconsider its decision regarding inequitable conduct. In addition, GS CleanTech and its attorneys filed a Notice of Appeal. The defendants have since settled with the attorneys for GS CleanTech.

On February 16, 2010, ICM, Inc. agreed to indemnify the Company from and against all claims, demands, liabilities, actions, litigations, losses, damages, costs and expenses, including reasonable attorney's fees arising out of any claim of infringement of patents, copyrights or other intellectual property rights by reason of our purchase and use of the oil recovery system and agrees to defend the Company. Several of the other defendants also use equipment and processes provided by ICM, Inc. ICM, Inc. has, and we expect it will continue, to vigorously defend itself and the Company in this lawsuit and in any appeal filed by GS CleanTech. If GS CleanTech were to be successful in any appeal filed and allowed to continue to pursue its claims, we estimate that damages, if awarded, would be based on a reasonable royalty to, or lost profits of, GS CleanTech. Because of its rulings, it seems unlikely

~~Table of Contents~~

that the District Court would deem the case exceptional. However, in the event it would be deemed to be exceptional, attorney's fees may be awarded and are likely to be $1,000,000 or more. ICM, Inc. has also agreed to indemnify us. However, in the event that damages were to be awarded, if ICM, Inc. does not fully indemnify us for any reason, we could be liable and could also be required to cease use of our oil separation process and seek out a replacement or cease oil production altogether.

Item 1A. Risk Factors

The following risk factors are provided due to material changes from the risk factors previously disclosed in our annual report on Form 10-K. The risk factors set forth below should be read in conjunction with the risk factors section and the Management's Discussion and Analysis section for the fiscal year ended September 30, 2017, included in our annual report on Form 10-K. None.

~~The price we pay for agricultural commodities may increase as a result of the Tax Cuts and Jobs Act which gives a benefit to agricultural producers to sell their products through cooperatives.~~ Congress recently passed the Tax Cuts and Jobs Act of 2017 which includes a provision that gives a benefit to producers of agricultural products to sell their products through cooperatives. Currently sales to non-cooperative grain buyers like Cardinal do not qualify for the same benefit. This may put us at a significant disadvantage when competing with cooperatives to purchase agricultural commodities for our Ethanol Division and Trading Division. Any increase in the price we must pay for the corn we need to produce our products or for the grains we buy and sell through our Trading Division would result in lower profit margins and negatively affect our financial performance. There is no assurance that Congress will enact changes that will resolve this issue or that if such changes are approved that they will be retroactively applied. As a result, the value of our units may be reduced.

Our Trading Division business is affected by the supply and demand of commodities, and is sensitive to factors outside of our control. Adverse price movements could negatively affect our profitability and results of operations. Our Trading Division buys, sells and holds inventories of agricultural commodities, some of which are readily traded on commodity futures exchanges. Unfavorable weather conditions, both local and worldwide, as well as other factors beyond our control, can affect the supply and demand of these commodities and expose us to liquidity pressures to finance hedges in the grain business in rapidly rising markets. Increased costs of inventory and prices of raw material would decrease our profit margins and adversely affect our results of operations. While we attempt to manage the risk associated with commodity price changes for our grain inventory positions with derivative instruments, including purchase and sale contracts, we are unable to offset 100% of the price risk of each transaction due to timing, availability of futures and options contracts and third-party credit risk. Furthermore, there is a risk that the derivatives we employ will not be effective in offsetting all of the risks that we are trying to manage. This can happen when the derivative and the underlying value of grain inventories and purchase and sale contracts are not perfectly matched. Our grain derivatives, for example, do not perfectly correlate with the basis component of our grain inventory and contracts. (Basis is defined as the difference between the local cash price of a commodity and the corresponding exchange-traded futures price.) Differences can reflect time periods, locations or product forms. Although the basis component is smaller and generally less volatile than the futures component of our grain market price, basis moves on a large grain position can significantly impact the profitability of the Trading Division. Our futures, options and over-the-counter contracts are subject to margin calls. If there are large movements in the commodities market, we could be required to post significant levels of margin, which would impact our liquidity. There is no assurance that the efforts we have taken to mitigate the impact of the volatility of the prices of commodities upon which we rely will be successful and any sudden change in the price of these commodities could have an adverse effect on our business and results of operations.

~~We face intense competition in our Trading Division.~~ We face significant competition in our Trading Division and we have numerous competitors, some of which are larger and have greater financial resources than we have. Competition could cause us to lose market share and talented employees, exit certain lines of business, increase marketing or other expenditures or reduce pricing, each of which could have an adverse effect on our business and profitability.

~~Government policies and regulations, particularly those affecting the agricultural sector and related industries, could adversely affect our operations and profitability.~~ Agricultural commodity production and trade flows are significantly affected by government policies and regulations. Governmental policies affecting the agricultural industry, such as taxes, tariffs, duties, subsidies, import and export restrictions on agricultural commodities and commodity products can influence industry profitability, the planting of certain crops versus other uses of agricultural resources, the location and size of crop production, whether unprocessed or processed commodity products are traded and the volume and types of imports and exports. In addition, international trade disputes can adversely affect agricultural commodity trade flows by limiting or disrupting trade between countries or regions. Future governmental policies, regulations or actions affecting our industry may adversely affect the supply of, demand for and prices of our products, restrict our ability to do business and cause our financial results to suffer.

~~Table of Contents~~

Our Trading Division uses derivative contracts to reduce volatility in the commodity markets. Non-performance by the counter-parties to those contracts could adversely affect our future results of operations and financial position. A significant amount of our commodity purchases and sales are done through forward contracting. In addition, we use exchange traded and to a lesser degree over-the-counter contracts to reduce volatility in changing commodity prices. A significant adverse change in commodity prices could cause a counter-party to one or more of our derivative contracts to not perform on their obligation.

~~If a substantial portion of our inventory becomes damaged or obsolete, its value would decrease and our profit margins would suffer.~~ We may carry significant amounts of inventory in our Trading Division. The value of our inventories could decrease due to deterioration in the quality of our grain inventory due to damage, moisture, insects, disease or foreign material. If the quality of our grain were to deteriorate below an acceptable level, the value of our inventory could decrease significantly.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Table of Contents

Item 3. Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

Item 6. Exhibits.

(a)The following exhibits are filed as part of this report.


~~(a)~~	~~The following exhibits are filed as part of this report.~~



Exhibit No.		Exhibit
31.1			Certificate Pursuant to 17 CFR 240.13a-14(a).*
31.2			Certificate Pursuant to 17 CFR 240.13a-14(a).*
32.1			Certificate Pursuant to 18 U.S.C. Section 1350.*
32.2			Certificate Pursuant to 18 U.S.C. Section 1350.*
~~101~~101.INS		Inline XBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	~~The following financial information from Cardinal Ethanol, LLC's Quarterly Report on Form 10-Q for~~	Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE		Inline XBRL Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in the ~~quarter ended December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets~~Interactive Data Files submitted as of December 31, 2017 and September 30, 2017, (ii) Condensed Statements of Operations for the three months ended December 31, 2017 and 2016, (iii) Condensed Statements of Cash Flows for the three months ended December 31, 2017 and 2016, and (iv) the Notes to Condensed Unaudited Financial Statements.**Exhibit 101).

* Filed herewith.

** Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~Table of Contents~~


			CARDINAL ETHANOL, LLC

Date:		August 4, 2023	~~CARDINAL ETHANOL, LLC~~

~~Date:~~	~~February 6, 2018~~	/s/ Jeffrey Painter
			Jeffrey Painter
			President and Chief Executive Officer
			(Principal Executive Officer)

Date:		~~February 6, 2018~~August 4, 2023	/s/ William Dartt
			William Dartt
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

3246



x☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

			For the quarterly period ended ~~December 31, 2017.~~June 30, 2023

			OR

o☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to .

COMMISSION FILE NUMBER 000-53036


Large Accelerated Filer		☐	Accelerated Filer	☐
Non-Accelerated Filer		x	Smaller Reporting Company	☐

~~Large Accelerated Filer~~ o		~~Accelerated Filer~~ o
~~Non-Accelerated Filer~~ x	~~Smaller Reporting Company~~ o
	Emerging Growth Companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o ☐



	Page Number
PART I. FINANCIAL INFORMATION		3
Item 1. Consolidated Financial Statements		3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		1826
Item 3. Quantitative and Qualitative Disclosures about Market Risk		2642
Item 4. Controls and Procedures		2944
PART II. OTHER INFORMATION		2944
Item 1. Legal Proceedings		2944
Item 1A. Risk Factors		3044
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3144
Item 3. Defaults Upon Senior Securities		3144
Item 4. Mine Safety Disclosures		3145
Item 5. Other Information		3145
Item 6. Exhibits		3145
SIGNATURES		3146



ASSETS	December 31, 2017		September 30, 2017
	(Unaudited)
Current Assets
Cash	$	18,675,293	$	18,995,755
Restricted cash	172,313		401,406
Trade accounts receivable	11,238,806		15,006,093
Miscellaneous receivables	222,730		384,508
Inventories	27,103,305		14,604,975
Prepaid and other current assets	531,683		253,791
Commodity derivative instruments	769,026		492,842
Total current assets	58,713,156		50,139,370

Property, plant, and equipment, net	105,394,040		107,936,389

Other Assets
Investment	1,096,237		1,096,237
Total other assets	1,096,237		1,096,237

Total Assets	$	165,203,433	$	159,171,996



LIABILITIES AND MEMBERS' EQUITY

Current Liabilities
Advances From Customers	$	1,500,000	$	—
Accounts payable	2,553,196		3,983,923
Accounts payable-grain	16,484,742		8,378,095
Accrued expenses	1,070,376		1,381,734
Commodity derivative instruments	183,655		513,829
Current maturities of long-term debt	4,112,242		3,749,826
Total current liabilities	25,904,211		18,007,407

Long-Term Debt, net of current maturities	16,954,283		14,581,758

Commitments and Contingencies

Members’ Equity
Members' contributions, net of cost of raising capital, 14,606 units authorized, issued and outstanding	70,912,213		70,912,213
Retained earnings	51,432,726		55,670,618
Total members' equity	122,344,939		126,582,831

Total Liabilities and Members’ Equity	$	165,203,433	$	159,171,996


Title of each class	Trading Symbol(s)	Name of each exchange on which registered


	Three Months Ended				Nine Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Revenues	$	119,046,572	$	133,261,052	$	384,766,147	$	417,490,683

Cost of Goods Sold	103,128,982		104,607,396		335,472,745		343,766,849

Gross Profit	15,917,590		28,653,656		49,293,402		73,723,834

Operating Expenses	2,494,927		1,920,790		7,122,298		6,104,500

Operating Income	13,422,663		26,732,866		42,171,104		67,619,334

Other Income (Expense)
Interest income (expense)	904,327		(3,893)		1,777,225		(3,993)
Miscellaneous income (expense)	(12,692)		7,444,754		73,304		7,382,764


Loss on equity method investment	(23,588)		—		(350,572)		—
Total	868,047		7,440,861		1,499,957		7,378,771

Net Income	$	14,290,710	$	34,173,727	$	43,671,061	$	74,998,105

Weighted Average Units Outstanding - basic and diluted	14,606		14,606		14,606		14,606

Net Income Per Unit - basic and diluted	$	978	$	2,340	$	2,990	$	5,135

Distributions Per Unit	$	1,250	$	675	$	2,250	$	2,825

Unrealized loss on available-for-sale debt securities	(14,113)		—		(14,015)		—
Total comprehensive loss	(14,113)		—		(14,015)		—
Net Comprehensive Income	$	14,276,597	$	34,173,727	$	43,657,046	$	74,998,105



	Three Months Ended
	December 31, 2017			December 31, 2016
	(Unaudited)			(Unaudited)
Revenues	$	55,855,489		$	58,054,764

Cost of Goods Sold	52,454,137			49,450,176

Gross Profit	3,401,352			8,604,588

Operating Expenses	1,638,748			1,186,757

Operating Income	1,762,604			7,417,831

Other Income (Expense)
Interest income	—			—
Interest expense	(188,867		)	(136,040		)
Miscellaneous income	30,771			16,246
Total	(158,096		)	(119,794		)

Net Income	$	1,604,508		$	7,298,037

Weight Average Units Outstanding - basic and diluted	14,606			14,606

Net Income Per Unit - basic and diluted	$	110		$	500

Distributions Per Unit	$	400		$	600
























	Member Contributions		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total

Balance September 30, 2021	$	70,912,213	$	53,825,365	$	—	$	124,737,578

Net Income	—		32,395,164		—		32,395,164

Member Distributions	—		(9,493,900)		—		(9,493,900)

Balance December 31, 2021	$	70,912,213	$	76,726,629	$	—	$	147,638,842

Net Income	—		8,429,214				8,429,214

Member Distributions			(21,909,000)		—		(21,909,000)

Balance March 31, 2022	$	70,912,213	$	63,246,843	$	—	$	134,159,056

Net Income	—		34,173,727		$	—	34,173,727

Member Distributions	—		(9,859,050)		—		(9,859,050)

Balance June 30, 2022	$	70,912,213	$	87,561,520	$	—	$	158,473,733

	Member Contributions		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total

Balance September 30, 2022	$	70,912,213	$	76,358,279	$	—	$	147,270,492

Net Income	—		15,905,665		—		15,905,665

Member Distributions	—		(7,303,000)		—		(7,303,000)

Unrealized loss on available-for-sale debt securities	—		—		(7,706)		(7,706)

Balance December 31, 2022	$	70,912,213	$	84,960,944	$	(7,706)	$	155,865,451

Net Income	—		13,474,686		—		13,474,686

Member Distributions	—		(10,053,000)		—		(10,053,000)

Unrealized gain on available-for-sale debt securities	—		—		7,804		7,804

Balance March 31, 2023	$	70,912,213	$	88,382,630	$	98	$	159,294,941

Net Income	—		14,290,710		—		14,290,710

Member Distributions	—		(18,886,395)		—		(18,886,395)

Unrealized loss on available-for-sale debt securities	—		—		(14,113)		(14,113)

Balance June 30, 2023	$	70,912,213	$	83,786,945	$	(14,015)	$	154,685,143



Nine Months Ended June 30, 2023 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	245,830,363	$	—	$	245,830,363
Distillers Grains	50,403,931		—		50,403,931
Corn Oil	21,737,346		—		21,737,346
Carbon Dioxide	319,399		—		319,399
Other Revenue	273,192		—		273,192
Total revenues from contracts with customers	318,564,231		—		318,564,231

Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and Other Grains	—		66,201,916		66,201,916
Total revenues from contracts accounted for as derivatives	—		66,201,916		66,201,916
Total Revenues	$	318,564,231	$	66,201,916	$	384,766,147


	June 30, 2023 (Unaudited)		September 30, 2022
Ethanol Division:
Raw materials	$	13,557,910	$	7,206,914
Work in progress	2,306,420		2,442,453
Finished goods	3,477,384		7,513,988
Spare parts	4,744,318		4,178,807
Ethanol Division Subtotal	$	24,086,032	$	21,342,162
Trading Division:
Grain inventory	$	3,081,250	$	2,028,605
Trading Division Subtotal	3,081,250		2,028,605
Total Inventories	$	27,167,282	$	23,370,767



	December 31, 2017 (Unaudited)		September 30, 2017
Ethanol Division:
Raw materials	$	6,093,969	$	5,754,084
Work in progress	1,484,641		1,354,346
Finished goods	4,114,812		2,722,869
Spare parts	2,601,971		2,633,371
Ethanol Division Subtotal	$	14,295,393	$	12,464,670
Trading Division:
Grain inventory	$	12,807,912	$	2,140,305
Trading Division Subtotal	$	12,807,912	$	2,140,305
Total Inventories	$	27,103,305	$	14,604,975



Instrument	Balance Sheet Location	Assets		Liabilities
Ethanol futures and options contracts	Commodity Derivative Instruments - Current	$	—	$	37,590
Corn futures and options contracts	Commodity Derivative Instruments - Current	$	289,569	$	—
Soybean futures and options contracts	Commodity Derivative Instruments - Current	$	425,562	$	—
Soybean forward purchase contracts	Commodity Derivative Instruments - Current	$	53,895	$	146,065
Totals	Commodity Derivative Instruments - Current	$	769,026	$	183,655


Instrument	Statement of Operations Location	Three Months Ended June 30, 2023		Nine Months Ended June 30, 2023		Three Months Ended June 30, 2022		Nine Months Ended June 30, 2022
Corn Futures and Options Contracts	Cost of Goods Sold	$	3,531,387	$	10,972,820	$	13,126,371	$	(3,762,026)
Ethanol Futures and Options Contracts	Revenues	(3,798,934)		1,360,523		2,410,473		(7,500,787)
Natural Gas Futures and Options Contracts	Cost of Goods Sold	44,849		(2,248,339)		—		(39,039)
Soybean Oil Futures and Options Contracts	Cost of Goods Sold	34,880		(42,906)		47,541		131,871
Soybean Futures and Options Contracts	Cost of Goods Sold	(103,110)		(1,256,613)		(866,771)		(4,871,604)
Soybean Forward Purchase and Sales Contracts	Cost of Goods Sold	(12,577)		274,386		(349,129)		1,044,353
Totals		$	(303,505)	$	9,059,871	$	14,368,485	$	(14,997,232)


Instruments	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Corn Futures and Options Contracts	$	1,912,116	$	1,912,116	$	2,201,050	$	(288,934)	$	—
Ethanol Futures and Options Contracts	$	(6,320,859)	$	(6,320,859)	$	(6,320,859)	$	—	$	—
Soybean Oil Futures and Options Contracts	$	59,932	$	59,932	$	59,932	$	—	$	—
Natural Gas Futures and Options Contracts	$	(77,026)	$	(77,026)	34,900		$	(111,926)	$	—
Soybean Futures and Options Contracts	$	481	$	481	$	481	$	—	$	—
Soybean Forward Purchase Contracts	$	9,235	$	9,235	$	—	$	9,235	$	—
Soybean Inventory	$	3,081,250	$	3,081,250	$	—	$	3,081,250	$	—
Accounts Payable	$	5,742,307	$	5,742,307	$	—	$	5,742,307	$	—
Treasury Bills (classified as investments in available-for-sale debt securities)	$	17,199,082	$	17,199,082	$	17,199,082	$	—	$	—


For the Fiscal Year Ending September 30,
2024	$	3,000,130
2025	1,044,950


Totals	4,045,080
Amount representing interest	(141,966)
Lease liabilities	$	3,903,114


	Amortized Cost, as Adjusted		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Estimated Fair Value
U.S. Treasury Note	$	593,097	$	—	$	—	$	593,097
Total	$	593,097	$	—	$	—	$	593,097



Term note	$	11,066,525
Grain Loadout facility loan	10,000,000
Less amounts due within one year	4,112,242
Net long-term debt	$	16,954,283


July 1, 2023 - June 30, 2024	$	277,624
July 1, 2024 - June 30, 2025	2,892,799
July 1, 2025 - June 30, 2026	3,142,680
July 1, 2026 - June 30, 2027	3,414,150
July 1, 2027 - June 30, 2028	3,705,899
Thereafter	12,341,460
Total long-term debt	$	25,774,612



January 1, 2018 to December 31, 2018	$	4,112,242
January 1, 2019 to December 31, 2019	4,399,213
January 1, 2020 to December 31, 2020	4,592,680
January 1, 2021 to December 31, 2021	3,158,364
January 1, 2022 to December 31, 2022	1,478,013
Thereafter	3,326,013
Total long-term debt	$	21,066,525



	Total
January 1, 2018 to December 31, 2018	$	1,149,529
January 1, 2019 to December 31, 2019	918,000
January 1, 2020 to December 31, 2020	918,000
January 1, 2021 to December 31, 2021	841,500
Total minimum lease commitments	$	3,827,029


	June 30, 2023		September 30, 2022
Grain Inventories:	(unaudited)
Ethanol division	$	13,557,910	$	7,206,914
Trading division	3,081,250		2,028,605
Total Grain Inventories	$	16,639,160	$	9,235,519

	June 30, 2023		September 30, 2022
Total Assets:	(unaudited)
Ethanol division	$	214,946,649	$	188,055,176
Trading division	459,877		900,652
Total Assets	$	215,406,526	$	188,955,828



Date Declared	Distribution Declared Per Unit		Total Distribution Amount		Month Distribution Paid
November 21, 2017	$	400	$	5,842,400	December 2017



	2017				2016
Statement of Operations Data	Amount			%	Amount			%
Revenue	$	55,855,489		100.0	$	58,054,764		100.0
Cost of Goods Sold	52,454,137			93.9	49,450,176			85.2
Gross Profit	3,401,352			6.1	8,604,588			14.8
Operating Expenses	1,638,748			2.9	1,186,757			2.0
Operating Income	1,762,604			3.2	7,417,831			12.8
Other Expense, Net	(158,096		)	—	(119,794		)	—
Net Income	$	1,604,508		2.90	$	7,298,037		12.6



	December 31, 2017 (Unaudited)		September 30, 2017
Current Assets	$	58,713,156	$	50,139,370
Current Liabilities	$	25,904,211	$	18,007,407
Long-Term Liabilities	$	16,954,283	$	14,581,758
Member's Equity	$	122,344,939	$	126,582,831