UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

		For the quarterly period ended	December 31, ~~2017~~2023

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

		For the transition period from to .

		Commission File Number:	~~COMMISSION FILE NUMBER~~ 000-52033

RED TRAIL ENERGY, LLC

(Exact name of registrant as specified in its charter)

North Dakota

76-0742311

~~North Dakota~~

~~76-0742311~~

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

~~3682 Highway 8 South, P.O. Box 11, Richardton, ND 58652~~

~~(Address of principal executive offices)~~

~~(701) 974-3308~~

~~(Registrant's telephone number, including area code)~~

3682 Highway 8 South, P.O. Box 11, Richardton, ND 58652

~~Indicate by check mark whether the registrant (1) has filed all reports required~~(Address of principal executive offices)

(701) 974-3308

(Registrant's telephone number, including area code)

Securities registered pursuant to ~~be filed by~~ Section ~~13 or 15(d)~~12(b) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Act:

x ~~Yes~~ o No


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒

Yes

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x ~~Yes~~ o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated ~~filer"~~filer," "smaller reporting company" and ~~"smaller reporting~~"emerging growth company" in Rule 12b-2 of the Exchange ~~Act:~~

Act.



Large Accelerated Filer o	o		Accelerated Filer		o
Non-Accelerated Filerx		x		Smaller Reporting Companyo		☐
				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 ☐

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.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes xNo

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of February ~~14, 2018~~,15, 2024, there were ~~41,466,340~~40,148,160 Class A Membership Units issued and outstanding.

Table of Contents

INDEX

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PART II. FINANCIAL INFORMATION

Item 1. Financial Statements

RED TRAIL ENERGY, LLC

Condensed Balance Sheets


ASSETS	December 31, 2023		September 30, 2023
	(Unaudited)
Current Assets
Cash and equivalents	$	16,563,108	$	11,617,435
Restricted cash - margin account	4,703,269		2,933,668
Accounts receivable, net, primarily related party	4,999,684		7,669,441


Inventory	16,395,696		9,099,945
Prepaid expenses	1,151,180		369,430
Total current assets	43,812,937		31,689,919

Property, Plant and Equipment
Land	1,333,681		1,333,681
Land improvements	17,662,538		17,662,538
Buildings	15,320,492		15,320,492
Plant and equipment	122,534,331		122,444,522
Construction in progress	2,345,183		1,986,776
	159,196,225		158,748,009
Less accumulated depreciation	84,799,719		83,208,524
Net property, plant and equipment	74,396,506		75,539,485

Other Assets
Right of use operating lease assets, net	2,022,812		2,122,550
Investment in RPMG	940,642		940,642
Patronage equity	6,391,988		6,457,604
Deposits	40,000		40,000
Total other assets	9,395,442		9,560,796

Total Assets	$	127,604,885	$	116,790,200

ASSETS December 31, 2017 September 30, 2017

(Unaudited)
Current Assets

Cash and equivalents $ 11,293,024
$ 3,223,342
Restricted cash - margin account 5,683,142
5,906,666
Accounts receivable, primarily related party 3,039,006
4,059,227
Other receivables 15,474
8,764
Inventory 15,879,209
16,413,742
Prepaid expenses 279,968
33,364
Total current assets 36,189,823
29,645,105

Property, Plant and Equipment

Land 1,342,381
1,342,381
Land improvements 4,266,953
4,266,953
Buildings 8,036,031
8,036,031
Plant and equipment 86,987,706
86,460,902
Construction in progress 133,995
628,454

100,767,066
100,734,721
Less accumulated depreciation 54,766,673
53,592,985
Net property, plant and equipment 46,000,393
47,141,736

Other Assets

Investment in RPMG 605,000
605,000
Patronage equity 3,270,279
3,270,279
Deposits 40,000
40,000
Total other assets 3,915,279
3,915,279

Total Assets $ 86,105,495
$ 80,702,120

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

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RED TRAIL ENERGY, LLC

Condensed Balance Sheets


LIABILITIES AND MEMBERS' EQUITY	December 31, 2023		September 30, 2023
	(Unaudited)
Current Liabilities

Accounts payable	12,355,131		6,805,187
Accrued expenses	2,368,267		1,921,880
Distribution payable	6,022,224		—
Commodities derivative instruments, at fair value (see note 3)	1,467,392		—
Accrued loss on firm purchase commitments (see notes 4 and 8)	1,394,000		—
Customer deposits	154,901		38,294
Current maturities of notes payable	2,123,035		2,341,784
Current portion of operating lease liabilities	369,278		376,021
Total current liabilities	26,254,228		11,483,166

Long-Term Liabilities
Notes payable	20,188,095		20,188,774
Long-term operating lease liabilities	1,653,534		1,746,528
Total long-term liabilities	21,841,629		21,935,302
Commitments and Contingencies (Notes 4, 5, 7 and 8)

Members’ Equity 40,148,160 Class A Membership Units issued and outstanding	79,509,028		83,371,732

Total Liabilities and Members’ Equity	$	127,604,885	$	116,790,200

LIABILITIES AND MEMBERS' EQUITY December 31, 2017 September 30, 2017

(Unaudited)
Current Liabilities

Accounts payable $ 3,585,115
$ 2,409,171
Accrued expenses 9,531,874
3,670,338
Commodities derivative instruments, at fair value (see note 2) 1,276,525
933,312
Accrued loss on firm purchase commitments (see note 7) 13,000
5,000
Current maturities of notes payable 2,622
2,617
Total current liabilities 14,409,136
7,020,438

Long-Term Liabilities

Notes payable 2,264
2,921

Members’ Equity (41,466,340 as of December 31, 2017 and September 30, 2017, respectively, of Class A Membership Units issued and outstanding) 71,694,095
73,678,761

Total Liabilities and Members’ Equity $ 86,105,495
$ 80,702,120

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

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RED TRAIL ENERGY, LLC

Condensed Statements of Operations (Unaudited)

Three Months Ended

December 31, 2017

December 31, 2016

Three Months Ended

December 31, 2023

(Unaudited)

Revenues, primarily related party

26,122,856

30,004,460

Cost of Goods Sold

Cost of goods sold

27,743,282

27,127,930

Lower of cost or market inventory adjustment

70,979

—

Cost of goods sold

Loss on firm purchase commitments

8,000

—

Total Cost of Goods Sold

27,822,261

27,127,930

Total Cost of Goods Sold

Gross Profit (Loss)

(1,699,405

)

2,876,530

Gross Profit

General and Administrative Expenses

715,911

690,934

Operating Income (Loss)

(2,415,316

)

2,185,596

General and Administrative Expenses

Operating Income

Other Income (Expense)

Interest income

23,427

18,112

Other income

407,233

568,269

Interest expense

(10

)

(15

)

Interest income

Other income (expense), net

Interest (expense)

Total other income (expense), net

430,650

586,366

Net Income (Loss)

(1,984,666

)

2,771,962

Net Income

Weighted Average Units Outstanding

Basic

41,466,340

41,406,697

Diluted

41,466,340

41,406,697

Net Income (Loss) Per Unit

Diluted

Net Income Per Unit

Basic

(0.05

)

0.07

Diluted

(0.05

)

0.07

Diluted

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

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RED TRAIL ENERGY, LLC

Condensed Statements of Cash Flows(Unaudited)


	Three Months Ended							Three Months Ended
	December 31, 2023						December 31, 2023		December 31, 2022
Cash Flows from Operating Activities
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization
Loss on disposal of fixed assets
Change in fair value of derivative instruments

Loss on firm purchase commitments
Loss on firm purchase commitments
Loss on firm purchase commitments
Noncash patronage equity

	Three Months Ended			Three Months Ended
Accounts receivable, net, primarily related party
	December 31, 2017			December 31, 2016
Cash Flows from Operating Activities
Net income (loss)	$	(1,984,666	)	$	2,771,962
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,173,688			1,170,669
Change in fair value of derivative instruments	343,213			(63,498		)
Lower of cost or market inventory adjustment	70,979			—
Loss on firm purchase commitments	8,000			—
Change in operating assets and liabilities:
Restricted cash	223,524			(247,525		)
Accounts receivable	1,020,221			125,591
Other receivables	(6,710		)	64,887

Accounts receivable, net, primarily related party

Accounts receivable, net, primarily related party

Inventory
Inventory
Inventory	455,553			(6,696,029		)
Prepaid expenses	(246,604		)	(167,756		)
Customer deposits
Accounts payable	1,175,944			1,629,501
Accrued expenses	5,861,537			12,058,830
Accrued purchase commitment losses	8,000			(54,000		)
Accrued loss on firm purchase commitments
Net cash provided by operating activities	8,102,679			10,592,632

Cash Flows from Investing Activities
Cash Flows from Investing Activities
Cash Flows from Investing Activities
Investment in RPMG
Investment in RPMG
Investment in RPMG
Proceeds from disposal of fixed assets
Capital expenditures	(32,345		)	(174,001		)
Net cash (used in) investing activities	(32,345		)	(174,001		)
Net cash used in investing activities

Cash Flows from Financing Activities
Unit repurchase	—			(564,963		)
Cash Flows from Financing Activities
Cash Flows from Financing Activities
Distribution Paid
Distribution Paid
Distribution Paid

Proceeds from notes payable

Proceeds from notes payable

Proceeds from notes payable

Debt repayments	(652		)	(648		)
Net cash (used in) financing activities	(652		)	(565,611		)
Debt repayments
Debt repayments
Net cash (used for) provided by financing activities

Net Increase in Cash and Equivalents	8,069,682			9,853,020
Cash and Equivalents - Beginning of Period	3,223,342			10,274,166
Cash and Equivalents - End of Period	$	11,293,024		$	20,127,186
Net Change in Cash, Cash Equivalents and Restricted Cash
Net Change in Cash, Cash Equivalents and Restricted Cash
Net Change in Cash, Cash Equivalents and Restricted Cash
Cash, Cash Equivalents and Restricted Cash - Beginning of Period
Cash, Cash Equivalents and Restricted Cash - End of Period

Reconciliation of Cash, Cash Equivalents and Restricted Cash
Reconciliation of Cash, Cash Equivalents and Restricted Cash
Reconciliation of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Restricted cash
Total Cash, Cash Equivalents and Restricted Cash

Supplemental Disclosure of Cash Flow Information
Supplemental Disclosure of Cash Flow Information
Supplemental Disclosure of Cash Flow Information
Interest paid	$	3,683		$	15
Units issued in exchange for property	$	—		$	3,320,000
Interest paid
Interest paid
Noncash Investing and Financing Activities

Distribution payable

Distribution payable

Distribution payable

Notes to Unaudited Condensed Financial Statements are an integral part of this Statement.

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, ~~2017~~2023

The accompanying condensed unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements for the fiscal year ended September 30, ~~2017,~~2023, contained in the Company's Annual Report on Form 10-K.

In the opinion of management, the interim condensed unaudited financial statements reflect all adjustments considered necessary for fair presentation. The adjustments made to these statements consist only of normal recurring adjustments. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, ~~2018.~~2024.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Red Trail Energy, LLC, a North Dakota limited liability company (the “Company”), owns and operates a 50 million gallon annual name-plate production ethanol plant near Richardton, North Dakota (the “Plant”).

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, inventory, and allowance for ~~doubtful accounts.~~credit losses. Actual results could differ from those estimates.

Net Income Per Unit

Net income per unit is calculated on a basic and fully diluted basis using the weighted average units outstanding during the period.

~~Recently Issued Accounting Pronouncements~~

2. REVENUE

Revenue Recognition

The Company recognizes revenue from ~~Contracts with Customers~~

~~In May 2014,~~sales of ethanol and co-products at the ~~FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”~~point in time when the performance obligations in the contract are met, which ~~supersedes~~is when the ~~guidance in “Revenue Recognition (Topic 605)”~~customer obtains control of such products and ~~requires entities to recognize revenue in a way that depicts~~typically occurs upon shipment (depending on the ~~transfer~~terms of ~~promised goods or services to customers in an~~the underlying contracts). Revenue is measured as the amount ~~that reflects the~~of consideration ~~to which the entity expects~~expected to be ~~entitled to~~received in exchange for ~~those~~transferring goods or providing services. ~~ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within~~In some instances, the Company enters into contracts with customers that ~~reporting~~contain multiple performance obligations to deliver specified volumes of co-products over a contractual period ~~and is~~of less than 12 months. In such instances, the Company allocates the transaction price to ~~be applied retrospectively, with early application not permitted. The Company has evaluated the new standard and anticipates a change~~each performance obligation identified in the ~~reporting~~contract based on relative standalone selling prices and recognizes the related revenue when control of ~~revenue as enhanced disclosures will be required. The Company does not anticipate a significant impact on our financial statements due~~each individual product is transferred to the ~~nature of our revenue streams and our revenue recognition policy.~~

~~Simplifying the Measurement of Inventory~~

In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurements of Inventory" regarding inventory that is measured using the first-in, first-out or average cost method. The guidance does not apply to inventory measured using the last-in, first-out or the retail inventory method. The guidance requires inventory within its scope to be measured at the lower of cost or net realizable value, which is the estimated selling pricecustomer in the normal course of business less reasonable predictable costs of completion, disposal and transportation. These amendments more closely align GAAP with International Financial Reporting Standards (IFRS). ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and should be applied prospectively with early adoption permitted assatisfaction of the ~~beginning of an interim or annual reporting period.~~ corresponding performance obligation.

Revenue by Source

The ~~Company has adopted~~following table disaggregates revenue by major source for the ~~new standard during the quarter~~three months ended December 31, 2023 and ~~there has been no significant impact to our financial statements.~~2022.

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, ~~2017~~2023


Revenues	For the three months ended December 31, 2023 (unaudited)		For the three months ended December 31, 2022 (unaudited)
Ethanol, E85 and Industrial Alcohol	$	32,058,346	$	31,751,619
Distillers Grains	8,001,772		9,536,527
Syrup	144,647		150,122
Corn Oil	3,179,871		3,009,481
Other	71,373		50,691
Total revenue from contracts with customers	$	43,456,009	$	44,498,440

~~Lease Accounting Standards~~Shipping and Handling Costs

~~In February 2016,~~We account for shipping and handling activities related to contracts with customers as costs to fulfill our promises to transfer the ~~FASB issued ASU No. 2016-02, "Leases (topic 842)" which requires~~associated products. Accordingly, we record customer payments associated with shipping and handling costs as a ~~lessee to recognize~~component of revenue and classify such costs as a ~~right to use asset~~component of cost of goods sold.

Customer Deposits

Customer deposits are contract liabilities for payments in excess of revenue recognized. Customer deposits are recognized when modified distillers grains customers make prepayments on their contracts. The ending and ~~a lease liability on its balance sheet~~opening balances for all leases with terms of twelve months or greater. This guidance is effective for fiscal years beginning after December 15, 2018, included interim periods within those years with early adoption permitted. The Company has evaluated the new standardaccounts receivable and ~~expects it will have a material impact on the financial statements~~customer deposits were as ~~we will have to begin capitalizing leases on the balance sheet when the new standard is implemented. See note 6 for current operating lease commitments.~~follows:

~~Statement of Cash Flows; Restricted Cash~~


	For the period ended December 31, 2023 (unaudited)		For the period ended September 30, 2023 (unaudited)		For the period beginning October 1, 2022 (unaudited)
Accounts receivable	$	4,999,684	$	7,669,441	$	4,879,011
Customer deposits	154,901		38,294		10,636

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annal periods beginning after December 15, 2017, and interim periods within those annual periods. The Company has evaluated the new standard and anticipates a change in the presentation of restricted cash on the cash flow statement once the standard is adopted.

2.3. DERIVATIVE INSTRUMENTS

Commodity Contracts

As part of its hedging strategy, the Company may enter into ethanol, soybean, soybean oil, natural gas and corn commodity-based derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices in order to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales, corn oil sales, and corn purchase commitments where the prices are set at a future date. These derivatives are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair market value is recorded through earnings in the period of change. Ethanol derivative fair market value gains or losses are included in the results of operations and are classified as revenue, and corn derivative changes in fair market value are included in cost of goods sold.


As of:	December 31, 2023 (unaudited)					September 30, 2023
Contract Type	# of Contracts	Notional Amount (Qty)		Fair Value		# of Contracts	Notional Amount (Qty)		Fair Value

Corn options	1,680	8,400,000	bushels	$	1,028,062	—	—	bushels	$	—



Natural gas futures	53	530,000	dk	$	439,330	—	—	dk	$	—

Total fair value				$	1,467,392				$	—
Amounts are combined on the balance sheet - negative numbers represent liabilities

As of: December 31, 2017 (unaudited) September 30, 2017
Contract Type # of Contracts Notional Amount (Qty) Fair Value # of Contracts Notional Amount (Qty) Fair Value
Corn futures 1,000
5,000,000
bushels $ 12,850
81
405,000
bushels $ 16,688
Corn options 1,300
6,500,000
bushels $ (1,289,375 ) 1,800
9,000,000
bushels $ (950,000 )
Total fair value $ (1,276,525 ) $ (933,312 )
Amounts are combined on the balance sheet - negative numbers represent liabilities

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, ~~2017~~2023

The following tables provide details regarding the Company's derivative financial instruments at December 31, ~~2017~~2023 and September 30, ~~2017:~~2023:


Derivatives not designated as hedging instruments:

Balance Sheet - as of December 31, 2023 (unaudited)	Asset		Liability
Commodity derivative instruments, at fair value	$	—	$	1,467,392
Total derivatives not designated as hedging instruments for accounting purposes	$	—	$	1,467,392

Balance Sheet - as of September 30, 2023	Asset		Liability
Commodity derivative instruments, at fair value	$	—	$	—
Total derivatives not designated as hedging instruments for accounting purposes	$	—	$	—


Statement of Operations Income/(Expense)	Location of gain (loss) in fair value recognized in income	Amount of gain (loss) recognized in income during the three months ended December 31, 2023 (unaudited)		Amount of gain (loss) recognized in income during the three months ended December 31, 2022 (unaudited)
Corn derivative instruments	Cost of Goods Sold	$	776,649	$	1,183,562
Ethanol derivative instruments	Revenue	—		21,429

Natural gas derivative instruments	Cost of Goods Sold	439,330		—
Total		$	1,215,979	$	1,204,991

Derivatives not designated as hedging instruments:

Balance Sheet - as of December 31, 2017 (unaudited) Asset Liability
Commodity derivative instruments, at fair value $ —
$ 1,276,525
Total derivatives not designated as hedging instruments for accounting purposes $ —
$ 1,276,525

Balance Sheet - as of September 30, 2017 Asset Liability
Commodity derivative instruments, at fair value $ —
$ 933,312
Total derivatives not designated as hedging instruments for accounting purposes $ —
$ 933,312

Statement of Operations Income/(Expense) Location of gain (loss) in fair value recognized in income Amount of gain(loss) recognized in income during the three months ended December 31, 2017 (unaudited) Amount of gain (loss) recognized in income during the three months ended December 31, 2016 (unaudited)
Corn derivative instruments Cost of Goods Sold $ (568,536 ) $ 218,357
Ethanol derivative instruments Revenue 1,800
40,950
Soybean oil derivative instruments Revenue —
12,216
Natural gas derivative instruments Cost of Goods Sold —
10,500
Total $ (566,736 ) $ 282,023

3.4. INVENTORY

Inventory is valued at the lower of cost or net realizable value. Inventory values as of December 31, ~~2017~~2023 and September 30, ~~2017~~2023 were as follows:


	December 31, 2023 (unaudited)		September 30, 2023
Raw materials, including corn, chemicals and supplies	$	11,129,113	$	4,263,403
Work in process	1,226,701		1,435,905
Finished goods, including ethanol and distillers grains	1,862,644		1,918,439
Spare parts	2,177,238		1,482,198
Total inventory	$	16,395,696	$	9,099,945

As of
December 31, 2017
(unaudited)
September 30, 2017
Raw materials, including corn, chemicals and supplies $ 12,385,830
$ 11,952,560
Work in process 784,509
773,786
Finished goods, including ethanol and distillers grains 794,415
1,577,066
Spare parts 1,914,455
2,110,330
Total inventory $ 15,879,209
$ 16,413,742

~~Table of Contents~~

~~RED TRAIL ENERGY, LLC~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~FOR THE PERIOD ENDED DECEMBER 31, 2017~~

Lower of cost or net realizable value adjustments for the three months ended December 31, ~~2017~~2023 and ~~2016~~2022 were as follows:


	For the three months ended December 31, 2023 (unaudited)		For the three months ended December 31, 2022 (unaudited)
Loss on firm purchase commitments	$	1,394,000	$	464,000
Loss on lower of cost or net realizable value adjustment for inventory on hand	$	—	$	—
Total loss on lower of cost or net realizable value adjustments	$	1,394,000	$	464,000

For the three months ended December 31, 2017 (unaudited) For the three months ended December 31, 2016 (unaudited)
Loss on firm purchase commitments $ 8,000
$ —
Loss on lower of cost or market adjustment for inventory on hand $ 70,979
$ —
Total loss on lower of cost or market adjustments $ 78,979
$ —

The Company has entered into forward corn purchase contracts under which it is required to take delivery at the contract price. At the time the contracts were created, the price of the contract approximated market price. Subsequent changes in market conditions could cause the contract prices to become higher or lower than market prices. As of December 31, ~~2017,~~2023, the average

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, 2023

price of corn purchased under certain fixed price contracts, that had not yet been delivered, was greater than the approximated market price. Based on this information, the Company has ~~an $8,000~~ estimated loss on firm purchase commitments of approximately $1,394,000 and $464,000 for the three months ended December 31, ~~2017~~2023 and ~~no estimated loss for the three months ended December 31, 2016.~~2022, respectively. The loss is recorded in “Loss on firm purchase commitments” on the statement of ~~operations.~~operations and "Accrued loss on firm purchase commitments" on the balance sheet. The amount of the potential loss was determined by applying a methodology similar to that used in the impairment valuation with respect to inventory. Given the uncertainty of future ethanol prices, ~~further~~future losses on the outstanding purchase commitments could be recorded in future periods.

4.5. BANK FINANCING

As of December 31, 2017 (unaudited) September 30, 2017
Capital lease obligations (Note 6) $ 4,886
$ 5,538
Total Long-Term Debt 4,886
5,538
Less amounts due within one year 2,622
2,617
Total Long-Term Debt Less Amounts Due Within One Year $ 2,264
$ 2,921
Ethanol Recovery Program

~~The Company had~~On July 13, 2020, we received a ~~$10~~$5.41 million ~~operating line-of-credit with First National~~loan through the Bank of ~~Omaha that matured~~North Dakota's Ethanol Recovery Program and Cornerstone Bank ("Cornerstone"). The Ethanol Recovery Program was developed by the North Dakota Ethanol Producers Association and the Bank of North Dakota to use the existing Biofuels Partnership in Assisting Community Expansion ("PACE") program and Value-added Guarantee Loan program to help ethanol production facilities weather the economic challenges caused by the COVID-19 pandemic. Ethanol producers could qualify for up to $15 million of a low interest loan of 1% based on ~~March 20, 2017.~~the amount of such producers' annual corn grind. On December 3, 2021 we received forgiveness of $2.65 million of the loan. The forgiveness was recorded as other income. The outstanding balance as of December 31, 2023 was $87,193. The maturity date of the loan is July 13, 2025. The fixed interest rate on December 31, 2023 was 3.75% with an interest rate being bought down through the Bank of North Dakota to 1%.

Revolving Loan

On ~~March 20, 2017,~~February 3, 2022 we ~~entered into a new~~renewed our $10 million revolving loan (the "Revolving Loan") with ~~U.S. Bank National Association ("U.S. Bank"). The~~Cornerstone. On February 3, 2022 the maturity date was extended to March 31, 2022. On April 8, 2022 the Revolving Loan ~~replaced~~was renewed. The new maturity date was April 7, 2023. Subsequent to year end the ~~revolving loan we had with First National Bank of Omaha. The~~Revolving Loan was renewed and now has a maturity date of ~~the Revolving Loan is May 31, 2018. Our ability to draw funds on the Revolving Loan is subject to a borrowing base calculation as set forth in the Credit Agreement.~~April 4, 2024. At December 31, ~~2017,~~2023, we had ~~$10,000,000~~$10 million available onunder the Revolving ~~Loan, taking into account the borrowing base calculation. We had $0 drawn on the Revolving Loan as of December 31, 2017.~~Loan. The variable interest rate on December 31, ~~2017~~2023 was ~~3.40%~~7.250%.

Construction Loans

On October 28, 2022, we entered into a $25 million loan to replace the First Construction Loan and Second Construction Loan. We make annual payments of approximately $3.1 million that is due in January each year. The maturity date of the Consolidated Loan is January 31, 2032. The fixed interest rate is 4.65%. OfThe outstanding balance as of December 31, 2023, was $22.2 million.

Each of the $10 million revolving line-of-credit, the Company was not allowed to draw $687,597 which is reserved as a source of funds to support a guaranteed payment the Company agreed to related to its natural gas pipeline. While the Company does not expect that it will be required to make a direct payment for the natural gas pipeline, the Company's agreement requires it to have funds available in the event the Company is required to make the guaranteed payment. See note 6 for the Company's additional future minimum lease commitments.

~~The~~ Company's loans are secured by a lien on substantially all of the assets of the Company. ~~As of December 31, 2017, the Company was in compliance with all of its debt covenants.~~


Schedule of debt maturities and finance lease liabilities for the twelve months ending December 31	Totals
2024	$	2,123,035
2025	2,133,567
2026	2,229,314
2027	2,335,215
2028	2,446,147
Thereafter	11,043,852
Total	$	22,311,130

6. FAIR VALUE MEASUREMENTS

The following table provides information on those ~~assets and~~ liabilities that are measured at fair value on a recurring basis as of December 31, ~~2017~~2023 and September 30, ~~2017,~~2023, respectively.

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, ~~2017~~2023


					Fair Value Measurement Using
	Carrying Amount as of December 31, 2023 (unaudited)		Fair Value as of December 31, 2023 (unaudited)		Level 1		Level 2		Level 3
Liabilities
Commodities derivative instruments	$	1,467,393	$	1,467,393	$	1,467,393	$	—	$	—
Total	$	1,467,393	$	1,467,393	$	1,467,393	$	—	$	—

					Fair Value Measurement Using
	Carrying Amount as of September 30, 2023		Fair Value as of September 30, 2023		Level 1		Level 2		Level 3
Liabilities
Commodities derivative instruments	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—	$	—

Fair Value Measurement Using
Carrying Amount as of December 31, 2017 (unaudited) Fair Value as of December 31, 2017 (unaudited) Level 1 Level 2 Level 3
Liabilities
Commodities derivative instruments $ 1,276,525
$ 1,276,525
$ 1,276,525
$ —
$ —
Total $ 1,276,525
$ 1,276,525
$ 1,276,525
$ —
$ —

Fair Value Measurement Using
Carrying Amount as of September 30, 2017 Fair Value as of September 30, 2017 Level 1 Level 2 Level 3
Liabilities
Commodities derivative instruments $ 933,312
$ 933,312
$ 933,312
$ —
$ —
Total $ 933,312
$ 933,312
$ 933,312
$ —
$ —

The fair value of the corn, ethanol, soybean oil and natural gas derivative instruments is based on quoted market prices in an active market.

6.7. LEASES

The Company leases ~~equipment under~~railcar and plant equipment. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate, unless an implicit rate is readily determinable, as the discount rate for each lease in determining the present value of lease payments. For the three months ended December 31, 2023, the Company's estimated weighted -average discount rate was 7.25%. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company has elected the short-term lease exemption for all leases with a term of 12 months or less for both existing and ongoing operating leases to not recognize the asset and ~~capital~~liability for those leases. Lease payments for short-term leases ~~through January 2023.~~ are recognized on straight-line basis.

The Company determines if an arrangement is a lease or contains a lease at inception. The Company's existing leases have remaining lease terms of approximately one year to seven years, which may include options to extend the leases when it is reasonably certain the Company will exercise those options. At December 31, 2023 the weighted average remaining lease term was six years. The Company does not have lease arrangements with residual value guarantees, sale leaseback terms, or material restrictive covenants. The Company does not have any sublease agreements.

The Company is generally responsible for maintenance, taxes, and utilities for leased equipment. ~~Equipment under operating lease includes a locomotive and rail cars.~~ Rent expense for operating leases was approximately ~~$154,000~~$65,500 and ~~$93,000~~$107,000 for the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. Rent expense for short-term leases was approximately $117,000 and $193,000 for the three months ended December 31, 2023 and 2022, respectively.

Equipment under ~~capital~~financing leases consists of office equipment and plant equipment.

~~Equipment under capital leases is as follows at:~~

As of
December 31, 2017
(unaudited)
September 30, 2017
Equipment $ 483,488
$ 483,488
Less accumulated amortization (125,394 ) (120,029 )
Net equipment under capital lease $ 358,094
$ 363,459

At December 31, ~~2017, the Company had the following minimum commitments, which at inception had non-cancelable terms of more than one year. Amounts shown below are for the 12 months period ending December 31:~~2023 and September 30, 2023, equipment under financing leases was as follows:


	December 31, 2023		September 30, 2023
Equipment	$	493,414	$	493,414
Less accumulated amortization	(249,138)		(243,277)
Net equipment under financing lease	$	244,276	$	250,137

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED DECEMBER 31, ~~2017~~2023

At December 31, 2023, the Company had the following minimum commitments, which at inception had non-cancellable terms of more than one year. Amounts shown below are for the 12 month periods ending December 31:


	Operating Leases		Financing Leases
2024	$	369,277	$	4,141
2025	388,124		—
2026	410,534		—
2027	406,115		—
2028	448,762		—
Total minimum lease commitments	$	2,022,812	4,141
Less amount representing interest			—
Present value of minimum lease commitments included in notes payable on the balance sheet			$	4,141

Operating Leases Capital Leases
2018 $ 375,553
$ 2,622
2019 326,608
2,264
2020 210,023
—
2021 167,111
—
2022 132,600
—
Thereafter 11,050
—
Total minimum lease commitments $ 1,222,945
4,886
Less amount representing interest —
Present value of minimum lease commitments included in current maturities of long-term debt on the balance sheet $ 4,886

7.8. COMMITMENTS AND CONTINGENCIES

Firm Purchase Commitments for Corn

To ensure an adequate supply of corn to operate the Plant, the Company enters into contracts to purchase corn from local farmers and elevators. At December 31, ~~2017,~~2023, the Company had various fixed price contracts for the purchase of approximately ~~0.7~~7.1 million bushels of corn. Using the stated contract price for the fixed price contracts, the Company had commitments of approximately ~~$2.4~~$34.1 million related to the ~~0.7~~7.1 million bushels under contract.

Water

On April 21, 2015, we entered into a ten-year contract to purchase raw water from Southwest Water Authority in order to meet the Plant's water requirements. Our contract requires us to purchase a minimum of 160 million gallons of water per year. The ~~Company also has various unpriced basis contracts~~minimum estimated obligation for the purchase of approximately 2.59 million bushels of corn that have been delivered to the Plant. The purchase price of these bushels will be set at the time of pricing the contracts at the July 2018 index price less basis. The estimated accrued payable for these bushelsthis contract is ~~$8.99 million. The deadline for pricing these 2.59 million bushels is June 29, 2018.~~$424,000 per year.

Profit and Cost Sharing Agreement

The Company ~~has~~ entered into a Profit and Cost Sharing Agreement with Bismarck Land Company, LLC, which became effective on November 1, 2016. The Profit and Cost Sharing Agreement provides that the Company will share 70% of the net revenue generated by the Company from business activities which are brought to the Company by Bismarck Land Company, LLC and conducted on the real estate purchased from the Bismarck Land Company, LLC. The real estate was initially purchased in exchange for 2 million membership units of the Company at $1.66 per unit. This obligation will terminate ten years after the real estate closing date of October 11, 2016 or after Bismarck Land Company, LLC receives $10 million in proceeds from the agreement. In addition, the Profit and Cost Sharing Agreement provides that the Company will pay Bismarck Land Company, LLC 70% of any net proceeds received by the Company from the sale of the subject real estate if a sale were to occur prior to termination of this obligation in ~~the future, subject to~~accordance with the $10 million cap ~~and~~or the ~~10 year termination~~ten-year term of this obligation. ~~No payments have been made to the~~The Company has paid Bismarck Land Company, LLC ~~at this time.~~$1,647,581 as of December 31, 2023.

9. RELATED PARTY TRANSACTIONS

The Company has balances and transactions in the normal course of business with various related parties for the purchase of corn, sale of distillers grains, and sale of ethanol. The related parties include unit holders, members of the board of governors of the Company, and RPMG, Inc. (“RPMG”). ~~During the Company's first quarter of 2018, the Company received a capital account refund from RPMG which is included in other income (expense) in the Company's Statement of Operations.~~ Significant related party activity affecting the financial statements is as follows:

December 31, 2017
(unaudited)
September 30, 2017
Balance Sheet
Accounts receivable $ 2,497,558
$ 4,027,061
Accounts Payable 12,594
1,569
Accrued Expenses 2,377,979
925,503

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~DECEMBER 31, 2017~~JUNE 30, 2023


	December 31, 2023 (unaudited)		September 30, 2023
Balance Sheet
Accounts receivable	$	3,894,997	$	6,939,350
Accounts payable	1,420,168		1,299,333


	For the three months ended December 31, 2023 (unaudited)		For the three months ended December 31, 2022 (unaudited)
Statement of Operations
Revenues	$	42,144,640	$	40,400,856

Cost of goods sold	789,359		1,011,858



Inventory Purchases	$	8,801,010	$	4,656,486

For the three months ended December 31, 2017 (unaudited) For the three months ended December 31, 2016 (unaudited)
Statement of Operations
Revenues $ 24,798,144
$ 28,998,771
Cost of goods sold 6,462
9,730
General and administrative 19,067
16,161
Other income/expense 140,539
247,307
Inventory Purchases $ 4,293,979
$ 6,078,986

9.10. UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS

~~The~~During volatile market conditions, the Company ~~has~~experiences certain risks and uncertainties, ~~that it experiences during volatile market conditions,~~ which ~~can~~could have a severe impact on operations. The Company's revenues are derived primarily from the sale and distribution of ethanol and distillers grains to customers primarily located in the United States. Corn for the production process is supplied to the Plant primarily from local agricultural producers and from purchases on the open market. The Company's operating and financial performance is largely driven by prices at which the Company sells ethanol and distillers grains and by the cost at which it is able to purchase corn for operations. The price of ethanol is influenced by factors such as ~~prices,~~ supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets, although since 2005 the prices of ethanol and gasoline began a divergence with ethanol generally selling for less than gasoline at the wholesale level. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government ~~policies~~programs, global political or economic issues, including but not limited to the war in Ukraine and ~~programs. The Company's risk management program is used~~sanctions associated therewith, or global damaging growing conditions, such as plant disease or adverse weather, including drought, increased fertilizer costs as well as global conflicts, including but not limited to ~~protect against~~unrest in the ~~price volatility of these commodities.~~Middle East.

The Company's financial performance is highly dependent on the Federal Renewable Fuels Standard ("RFS"), which requires that a certain amount of renewable fuels must be used each year in the United States. Corn based ethanol, such as the ethanol the Company produces, can be used to meet a portion of the RFS requirement. In November 2013, the EPA issued a proposed rule which would reduce the RFS for 2014, including the RFS requirement related to corn based ethanol. The EPA proposed rule was subject to a comment period which expired in January 2014. On November 30, 2015, the EPA released its final ethanol use requirements for 2014, 2015 and 2016, which were lower than the statutory requirements in the RFS. However, the final RFS for 2017 equaled the statutory requirement which was also the case for the 2018, 2019, 2020, 2021, and 2022 RFS final ~~rule.~~rules. The final RFS for 2022 was significantly larger than 2021, with a final volume requirement of 20.63 billion gallons and a supplemental standard of .25 billion gallons. The final RFS for 2023 and 2024 had a volume requirement of 20.94 billion gallons and 21.54 billion gallons, respectively.

The Company anticipates that the results of operations during the remainder of fiscal year ~~2018~~2024 will continue to be affected by volatility in the commodity markets. The volatility is due to various factors, including uncertainty with respect to the availability and supply of corn, increased demand for grain from global and national markets, speculation in the commodity markets, and demand for corn from the ethanol industry.

~~10.~~11. MEMBER'S EQUITY

~~Unregistered Units Sales by the Company~~.

~~On October 10, 2016, the Company issued two million of the Company's membership units to Bismarck Land Company, LLC as part of the consideration~~Changes in member's equity for the acquisition of 338 acres of land adjacent to the ethanol plant that the Company will use to expand its rail yard. The membership units were issued pursuant to the exemption from registration set forth in Regulation D, Rule 506(b), as Bismarck Land Company, LLC is an accredited investor.three months ended December 31, 2023 and 2022.

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RED TRAIL ENERGY, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED ~~DECEMBER 31, 2017~~JUNE 30, 2023


	Class A Member Units		Additional Paid in Capital		Accumulated Deficit/Retained Earnings		Treasury Units		Total Member Equity
Balances - September 30, 2022	$	39,044,595	$	75,541	$	46,880,539	$	(159,540)	$	85,841,135
Net income	—		—		1,865,215		—		1,865,215
Balances December 31, 2022	$	39,044,595	$	75,541	$	48,745,754	$	(159,540)	$	87,706,350

~~Unit Purchases By the Company~~.


	Class A Member Units		Additional Paid in Capital		Accumulated Deficit/Retained Earnings		Treasury Units		Total Member Equity
Balances - September 30, 2023	$	39,044,595	$	75,541	$	44,411,136	$	(159,540)	$	83,371,732
Distribution					(6,023,219)				(6,023,219)
Net income	—		—		2,160,515		—		2,160,515
Balances - December 31, 2023	$	39,044,595	$	75,541	$	40,548,432	$	(159,540)	$	79,509,028

12. SUBSEQUENT EVENTS

(a) (b) (c) (d)
Period Total Number of Units Purchased Average Price Paid per Unit Total Number of Units Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of the Units that May Yet Be Purchased Under the Plans or Programs
October 2016 None None None None
November 2016 None None None None
December 2016 564,963 $1.00 None None
January 2017 116,857 $1.00 None None
February 2017 None None None None
March 2017 None None None None
April 2017 None None None None
May 2017 None None None None
June 2017 None None None None
Total 681,820 $1.00 None None

*681,820 Units were purchased other than through a publicly announced plan or program, pursuant to a Membership Unit Repurchase Agreement, a private transaction betweenOn January 12, 2024 the Company ~~and a Member.~~paid the $0.15 distribution declared on December 20, 2023.

~~11. SUBSEQUENT EVENT~~

Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the condensed financial statements or disclosure in the notes to the condensed financial statements.

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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 month period ended December 31, ~~2017~~,2023, compared to the same period of the prior fiscal year. This discussion should be read in conjunction with the ~~condensed~~ financial statements, notes and information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~.2023. Unless otherwise stated, references in this report to particular years, quarters, months, or periods refer to our fiscal years ended in September and the associated quarters, months, or periods of those fiscal years.

Forward Looking Statements

This report contains forward-looking statements that involve future events, our future performance, and our future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "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. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the following factors:

•Reductions in the corn-based ethanol use requirement in the Federal Renewable Fuels Standard;

•Increased inflation which can have an impact on the costs of our raw materials;

•Higher natural gas prices in the United States due to increased exports of natural gas to Europe;

•Market prices and availability of corn that we require to operate the ethanol plant;

•Continued economic impacts from the COVID-19 pandemic, including reduced gasoline demand;

•Continued economic impacts of the war in Ukraine, including increased commodities prices and effect of Sanctions;

•Economic impacts from global conflicts, including impacts from the conflict in the Middle East following the attack in Israel by Hamas;

•Lower oil prices which result in lower ethanol prices;

•Negative operating margins which result from lower ethanol prices;

•Lower distillers grains prices which result from the Chinese anti-dumping and countervailing duty tariffs;

•Lower ethanol prices due to the Chinese ethanol tariff and the Brazilian ethanol tariff;

•Logistics difficulties preventing us from delivering our products to our customers;

•Fluctuations in the price and market for ethanol, distillers grains and corn oil;

•Availability and costs of products and raw materials, particularly corn and natural gas;

•Changes in the environmental regulations that apply to our plant operations and our ability to comply with such regulations;

•Ethanol supply exceeding demand and corresponding ethanol price reductions impacting our ability to operate profitably and maintain a positive spread between the selling price of our products and our raw material costs;

•Our ability to generate and maintain sufficient liquidity to fund our operations and meet ~~debt service requirements and~~our necessary capital expenditures;

•Our ability to continue to meet our loan covenants;

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

•Results of our hedging transactions and other risk management strategies;

•Changes and advances in ethanol production technology;

•Reductions in demand for fuel, including ethanol, as electric car production increases; and

•Competition from alternative fuels and alternative fuel additives.

Overview

Red Trail Energy, LLC, a North Dakota limited liability company (the "Company," "Red Trail," or "we," "our," or "us"), owns and operates a 50 million gallon annual name-plate production ethanol plant near Richardton, North Dakota. Our revenues are derived from the sale and distribution of our ethanol, distillers grains and corn oil primarily in the continental United States. Corn is our largest cost component and our profitability is highly dependent on the spread between the price of corn and the price of ethanol.

The ethanol industry is dependent on several economic incentives to produce ethanol, the most significant of which is the Federal Renewable Fuels Standard (the "RFS"). The RFS requires that in each year, a certain amount of renewable fuels must be used in the United States. The RFS statutory volume requirement increases incrementally each year until the United States is required to use 36 billion gallons of renewable fuels by 2022. The United States Environmental Protection Agency (the "EPA") has the authority to waive the RFS statutory volume requirement, in whole or in part, provided one of the following two conditions have been met: (1) there is inadequate domestic renewable fuel supply; or (2) implementation of the requirement would severely harm the economy or environment of a state, region or the United States. Annually, the EPA is supposed to pass a rule that establishes the number of gallons of different types of renewable fuels that must be used in the United States which is called the renewable volume obligations. The RFS statutory Renewable Volume Obligation (RVO) for all renewable fuels for 2017 was 24 billion gallons, of which corn-based ethanol could meet 15 billion gallons of the RVO. On November 30, 2017, the final RVO for 2018 was set at 19.29 billion gallons and the corn-based ethanol RVO was set at 15 billion gallons, lower than the statutory RVO.

In recent years, the ethanol industry in the United States has increased exports of ethanol and distillers grains. However, in 2017 China instituted tariffs on ethanol and distillers grains produced in the United States and Brazil instituted a tariff on ethanol

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produced in the United States. Both China and Brazil have been major sources of import demand for United States ethanol and distillers grains. These trade actions may result in negative operating margins for U.S. ethanol producers.

In January 2017, the Chinese issued final tariffs on U.S. distillers grains. China announced a final ruling related to its anti-dumping and countervailing duty investigation imposing anti-dumping duties from a range of 42.2% to 53.7% and anti-subsidy duties from 11.2% to 12.0%. These tariffs have had a negative impact on market ethanol and distillers grains prices in the United States.

In August 2017, Brazil instituted an import quota for ethanol produced in the United States and exported to Brazil, along with a 20% tariff on ethanol imports in excess of the quota. This tariff and quota have reduced exports of ethanol to Brazil and may continue to negatively impact ethanol exports from the United States. Any reduction in ethanol exports could negatively impact market ethanol prices in the United States.

On March 20, 2017, we entered into a new $10 million revolving loan (the "Revolving Loan") with U.S. Bank National Association ("U.S. Bank"). As part of this transaction, we signed a Credit Agreement dated March 17, 2017 (the "Credit Agreement"). The Revolving Loan replaces our credit facilities with First National Bank of Omaha. Interest accrues on any outstanding balance on the Revolving Loan at a rate of 1.77% in excess of the one-month London Interbank Offered Rate ("LIBOR"). The maturity date of the Revolving Loan is May 31, 2018. Our ability to draw funds on the Revolving Loan is subject to a borrowing base calculation as set forth in the Credit Agreement. The Revolving Loan is subject to certain financial covenants as set forth in the Credit Agreement. The most significant financial covenants require us to maintain a fixed charge coverage ratio of no less than 1.25:1.00 and a current ratio of no less than 1.50:1.00. Our fixed charge coverage ratio measures our ability to pay our fixed expenses. Our current ratio measures our liquidity and ability to pay short-term and long-term obligations.

Results of Operations for the Three Months Ended December 31, ~~2017~~2023 and ~~2016~~2022

The following table shows the results of our operations and the percentages of revenues, cost of goods sold, general and administrative expenses and other items to total revenues in our unaudited statements of operations for the three months ended December 31, ~~2017~~2023 and ~~2016~~:2022:


	Three Months Ended December 31, 2017 (Unaudited)					Three Months Ended December 31, 2016 (Unaudited)				Three Months Ended December 31, 2023 (Unaudited)		Three Months Ended December 31, 2022 (Unaudited)
Statement of Operations Data	Amount			%		Amount		%	Statement of Operations Data	Amount	%		Amount	%
Revenues	$	26,122,856		100.00		$	30,004,460	100.00
Cost of Goods Sold	27,822,261			106.51		27,127,930		90.41
Gross Profit (Loss)	(1,699,405		)	(6.51	)	2,876,530		9.59
Gross Profit
General and Administrative Expenses	715,911			2.74		690,934		2.30
Operating Income (Loss)	(2,415,316		)	(9.25	)	2,185,596		7.28
Other Income	430,650			1.65		586,366		1.95
Net Income (Loss)	$	(1,984,666	)	(7.60	)	$	2,771,962	9.24
Operating Income
Other Income (Loss), net
Net Income

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The following table shows additional data regarding production and price levels for our primary inputs and products for the three months ended December 31, ~~2017~~2023 and ~~2016~~.2022.


	Three Months ended December 31, 2017 (unaudited)			Three Months ended December 31, 2016 (unaudited)
			Three Months Ended December 31, 2023 (unaudited)			Three Months Ended December 31, 2023 (unaudited)	Three Months Ended December 31, 2022 (unaudited)
Production:
Ethanol sold (gallons)	16,627,106			16,202,835
Ethanol sold (gallons)
Ethanol sold (gallons)

Dried distillers grains sold (tons)
Dried distillers grains sold (tons)
Dried distillers grains sold (tons)	30,963			29,625
Modified distillers grains sold (tons)	27,506			25,122
Corn oil sold (pounds)	3,117,040			4,413,620
Revenues:
Ethanol average price per gallon (net of hedging)	$	1.18		$	1.50
Fuel grade ethanol average price per gallon (net of hedging)
Fuel grade ethanol average price per gallon (net of hedging)
Fuel grade ethanol average price per gallon (net of hedging)

Dried distillers grains average price per ton
Dried distillers grains average price per ton
Dried distillers grains average price per ton	122.09			104.50
Modified distillers grains average price per ton	63.63			51.99
Corn oil average price per pound	0.28			0.27
Primary Inputs:
Corn ground (bushels)	5,720,943			5,687,614
Corn ground (bushels)
Corn ground (bushels)
Natural gas (MMBtu)	431,963			415,586
Costs of Primary Inputs:
Corn average price per bushel (net of hedging)
Corn average price per bushel (net of hedging)
Corn average price per bushel (net of hedging)	$	3.26		$	3.54
Natural gas average price per MMBtu (net of hedging)	2.67			2.75
Other Costs (per gallon of ethanol sold):
Chemical and additive costs	$	0.108		$	0.094
Chemical and additive costs
Chemical and additive costs
Denaturant cost	0.036			0.032
Electricity cost	0.038			0.043
Direct labor cost	0.068			0.065

Revenue

Our total revenue was lower ~~for~~in the first quarter of our ~~2018~~2024 fiscal year compared to the ~~same period~~first quarter of our ~~2017~~2023 fiscal year primarily due to ~~a decrease in the~~decreased average ~~sales~~ prices ~~we received~~ for our ~~ethanol~~products during the first quarter of our ~~2018~~2024 fiscal year. During the first

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quarter of our ~~2018~~2024 fiscal year, approximately ~~75.0%~~73.8% of our total revenue was derived from ethanol sales, approximately ~~21.2%~~18.4% was from distillers grains sales, approximately 0.4% was from syrup sales, and approximately ~~3.3%~~7.3% was from corn oil sales. During the first quarter of our ~~2017~~2023 fiscal year, approximately ~~81.1%~~71.3% of our total revenue was derived from ethanol and industrial alcohol sales, approximately ~~14.7%~~21.4% was from distillers grains sales, approximately 0.8% was from syrup sales and approximately ~~3.9%~~6.8% was from corn oil sales.

Ethanol

The average price we received for our ethanol, without taking into account our hedge positions, was ~~approximately 21.3% less~~lower during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year. Management attributes this decrease in ~~the price we~~average ethanol prices received ~~for our ethanol~~to lower gasoline prices during the first quarter of our ~~2018~~2024 fiscal year compared to ~~lower market corn prices and increased ethanol supply in~~ the market. Management anticipates that ethanol prices may continue lower during our 2018 fiscal year due to a combination of factors, including anticipated increases in United States ethanol production along with lower export demand from Brazil and China. Many ethanol producers are expanding their production capacity, which, along with the Chinese and Brazilian ethanol tariffs, have increased the market supply of ethanol beyond demand2023 period which has ~~negatively impacted~~an impact on ethanol prices. Management anticipates that this excess ethanol supply may continue unless new export markets for ethanol are developed or domestic demand for ethanol increases. The United States ethanol industry is continuing to work to open export markets for ethanol, includingenergy prices will remain lower than the ~~Mexican market, which may positively impact domestic ethanol prices. Export markets are not as reliable as~~2023 fiscal year but higher than the ~~domestic ethanol market which can lead to ethanol price volatility.~~prices we experienced during the first quarter of our 2024 fiscal year.

We sold slightly more gallons of ethanol during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to ~~increased production~~rail disruptions from adverse weather during our ~~increased operating capacity at the plant and improved operating efficiency in the 2018 period.~~2023 fiscal year. Management anticipates ~~that our~~ ethanol production ~~and sales will~~to be consistent during the rest of our 2024 fiscal year to 2023 fiscal year levels provided market conditions allow us to continue to ~~be higher during our 2018 fiscal~~

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~~year compared~~operate the ethanol plant at capacity. We anticipate continuing to ~~our 2017 fiscal year due to~~focus on operating the ethanol plant improvements we made which increased our total production capacity. In addition, the amount of ethanol we produced per bushel of corn we ground increased for the first quarter of our 2018 fiscal year compared to the first quarter of our 2017 fiscal year, which positively impacted our profitability. We continue to workas efficiently as possible in order to maximize ~~the additional production capacity of~~ our ~~ethanol plant and improve our ethanol production efficiency.~~profitability.

From time to time we enter into forward sales contracts for our products. At December 31, ~~2017,~~2023, we had no open ethanol futures contracts. ~~Ethanol~~At December 31, 2022, we had no open ethanol futures ~~contracts resulted in a gain of approximately $1,800 during~~contracts.

Distillers Grains

During the first quarter of our ~~2018~~2024 fiscal ~~year. Ethanol futures contracts for~~year, we sold more tons of distillers grains compared to the ~~first quarter~~same period of our ~~2017~~2023 fiscal year ~~resulted in a loss of approximately $41,000.~~

~~Distillers Grains~~

~~Previously, we~~due to increased production. Production was lower during the same 2023 fiscal year period due to rail disruptions and adverse weather. We sold a majority of our ~~distillers~~distiller grains during the 2024 period in the ~~dried~~modified form due to ~~market conditions~~demand factors which favored ~~that~~the modified product. However, due to the Chinese anti-dumping and countervailing duty tariffs which have decreased export demand for distillers grains, we increased the amount of modified distillers grains we produced and sold. Modified distillers grains are used in our local market and are less impacted by world distillers grains markets. The average ~~prices~~price we received for both our dried and modified distillers grains ~~were higher~~was lower during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal ~~year. Management attributes these increases~~year due to ~~increased overall demand for~~lower market corn prices during the 2024 period. As distillers ~~grains.~~grains are a feed product which competes with corn, when corn prices are lower it has a corresponding impact on distillers grains prices. Management anticipates distillers grains prices will remain at their current levels ~~unless~~during the rest of our 2024 fiscal year but they may change at the beginning of our 2025 fiscal year depending on the amount of corn harvested in the fall of 2024. Management anticipates distillers grains production will remain at its current mix during the rest of our 2024 fiscal year.

Corn Oil

The total pounds of corn oil we ~~experience a significant increase in export demand for distillers grains.~~

~~We produced and~~ sold ~~more total tons of distillers grains~~was higher during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to increased ~~overall~~corn oil production during the 2024 period compared to the 2023 period. Management anticipates that our corn oil production will remain at current levels for the remaining quarters of our 2024 fiscal year provided market conditions allow us to continue to operate the ethanol plant at capacity and provided the market price of corn oil remains at current levels. The average price we received for our corn oil during the first quarter of our ~~2018~~2024 fiscal year ~~along with decreased corn oil production. When~~was lower than the average price we ~~produce more pounds of corn oil, it decreases the volume of distillers grains we produce. Management anticipates relatively stable distillers grains production going forward.~~

~~Corn Oil~~

~~The total pounds of corn oil we sold was less~~received during the first quarter of our ~~2018~~2023 fiscal year. Corn oil is used for biodiesel and renewable diesel production which have increased recently, benefiting market corn oil prices. However, oil supplies have also increased which have impacted the market price of corn oil.

Syrup

The total gallons of syrup we sold was lower during the first quarter of our 2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to ~~a change in the production process where less corn oil is being extracted.~~decreased overall production. Management anticipates that our ~~corn oil~~syrup production will ~~continue~~remain at the current ~~level~~levels for the remaining quarters of our ~~2018~~2024 fiscal ~~year.~~year provided that market conditions allow us to continue to operate the ethanol plant at capacity. The average price we received for our ~~corn oil was slightly higher~~syrup during the first quarter of our ~~2018~~2024 fiscal year was lower compared to the average price we received during the first quarter of our ~~2017~~2023 fiscal year primarily due ~~primarily~~ to ~~increased corn oil demand from the biodiesel industry.~~discounted pricing to ensure product moves in a timely manner.

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Cost of Goods Sold

Our cost of goods sold is primarily made up of corn and natural gas expenses. Our cost of goods sold was ~~higher~~slightly lower for the first quarter of our ~~2018~~2024 fiscal year as compared to the first quarter of our ~~2017~~2023 fiscal year due primarily to lower corn cost per bushel and lower natural gas costs per MMBtu along with increased corn ~~consumption~~ and ~~increased~~ natural gas ~~use~~consumption during the ~~first quarter of our 2018~~2024 fiscal ~~year as compared to the first quarter of our 2017 fiscal~~ year. The increase in our cost of goods sold was greater than the increase in our revenue during the first quarter of our 2018 fiscal year as compared to the first quarter of our 2017 fiscal year, which decreased our profitability.

Corn Costs

Our cost of goods sold related to corn was ~~less~~lower for the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to ~~the net effect~~a decreased average cost per bushel of corn, without taking derivative instrument positions into account, along with increased corn ~~consumption offset by decreased average corn costs per bushel, before taking into account our hedge positions.~~consumption. For the first quarter of our ~~2018~~2024 fiscal year, we used approximately ~~0.6%~~11.6% more bushels of corn compared to the first quarter of our ~~2017~~2023 fiscal ~~year.~~year due to improved corn to ethanol conversion rates during the 2024 period along with increased ethanol production. The average price we paid per bushel of corn, without taking into account our derivative instruments, was approximately ~~7.6% less~~28.7% lower for the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to lower market corn prices during the first quarter of our 2024 fiscal year. In addition, during the first quarter of our ~~2018 fiscal year, we had a realized loss of approximately $569,000 for our corn derivative instruments which increased our cost of goods sold. For the first quarter of our 2017~~2024 fiscal year, we had a realized gain of approximately ~~$218,000~~$776,649 for our corn derivative instruments, which decreased our cost of goods ~~sold.~~sold related to corn. For the first quarter of our 2023 fiscal year, we had a realized gain of approximately $1.18 million for our corn derivative instruments, which decreased our cost of goods sold related to corn during that period. Management anticipates ~~that we will consume more corn in the future due to our natural gas conversion project which allows us to produce more of our products. Management anticipates that~~ corn prices will remain ~~relatively stable~~lower during the rest of our ~~2018~~2024 fiscal year due to ~~ample~~expected favorable weather which we anticipate will result in a larger corn ~~supplies and relatively stable corn demand.~~crop to be harvested in the fall of 2024.

Natural Gas Costs

We ~~consumed~~used approximately ~~3.9%~~5.5% more MMBtu of natural gas during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to increased overall production ~~and colder weather during~~at the ~~2018 period.~~ethanol plant. Our average

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cost per MMBtu of natural gas was approximately ~~2.9% less~~30.4% lower during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to ~~ample local~~lower energy prices compared to our 2023 fiscal year. We had a realized gain on our natural gas ~~supply.~~derivative instruments of approximately $46,000 for the first quarter of our 2024 fiscal year. We had no realized gain or loss on our natural gas derivative instruments during the first quarter of our 2023 fiscal year. Management anticipates relatively stable natural gas prices during the rest of our 2024 fiscal year.

General and Administrative Expenses

Our general and administrative expenses were higher for the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to additional consulting ~~services needed during~~fees and CCS payments to pore space owners related to our ~~2018 fiscal year.~~carbon sequestration project.

Other Income/Expense

We had more interest income during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year due to ~~having greater~~more cash ~~balances~~on hand during our ~~2017~~2024 fiscal year. ~~We had less~~Our other income was higher during the first quarter of our ~~2018~~2024 fiscal year compared to the first quarter of our ~~2017~~2023 fiscal year . We had less interest expense during the first quarter of our 2024 fiscal year compared to the first quarter of our 2023 fiscal year due to a decreased ~~capital account refund we received from~~borrowing on our ~~marketer during the 2018 period.~~loans.

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

Current Assets.

We had more cash and cash equivalents at December 31, ~~2017~~2023 compared to September 30, ~~2017~~2023 primarily due to deferred corn payments we make early in January each year. We had more restricted cash in our margin account at December 31, 2023 compared to September 30, 2023 due to changing values of our derivative instrument positions. Due to the timing of shipments, the value of our accounts receivable was lower at December 31, 2023 compared to September 30, 2023. We had more inventory on hand at December 31, 2023 compared to September 30, 2023 due primarily to more raw

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material inventory on hand at December 31, 2023 compared to September 30, 2023. Our prepaid expenses were higher at December 31, 2023 compared to September 30, 2023 due to an increase in our ~~accounts payable due to deferred corn payments owed to our corn suppliers in our 2018 fiscal~~insurance premiums paid for the year. ~~We had less restricted cash at~~ ~~December 31, 2017~~ compared to September 30, 2017 related to cash we deposit in our margin account for our hedging transactions. Due to the timing of payments from our marketers, we had fewer accounts receivable at December 31, 2017 compared to September 30, 2017. We had less inventory on hand at ~~December 31, 2017~~ ~~compared to~~ ~~September 30, 2017~~ ~~due primarily to having less ethanol and finished goods inventory at December 31, 2017.~~

Property, Plant and Equipment.

The value of our property, plant and equipment was ~~lower~~less at December 31, ~~2017~~2023 compared to September 30, ~~2017~~ ~~primarily~~2023 due to ~~the~~ regular depreciation of our ~~assets.~~assets during the first three months of our 2024 fiscal year partially offset by capital projects which were completed and higher construction in progress at December 31, 2023 compared to September 30, 2023.

Other Assets

Our right of use operating lease assets at December 31, 2023 was lower compared to September 30, 2023 due to the termination of the telehandler lease.

Current Liabilities.

Our accounts payable was higher at December 31, ~~2017~~2023 compared to September 30, ~~2017~~2023 due to having more corn payables and the distribution payable at December 31, ~~2017.~~2023 compared to September 30, 2023. Our accrued expenses were higher at December 31, ~~2017~~2023 compared to September 30, ~~2017 because we~~2023 due to higher accrued corn payables. We had ~~more deferred corn payments owed to~~a higher liability associated with our corn ~~suppliers at~~ ~~December 31, 2017~~ ~~compared to~~ ~~September 30, 2017~~.

~~Long-term Liabilities. Our long-term liabilities were less~~derivative instrument positions at December 31, ~~2017~~2023 compared to September 30, ~~2017 because~~2023 due to changing market corn prices compared to our derivative instrument positions. We had a higher accrued loss on our firm corn purchase commitments due to the difference between the market value of ~~capital~~our firm corn purchases and the contract price of our corn purchases. We had a smaller current maturity associated with our notes payable due to renewals of our long-term debt as of December 31, 2023 compared to September 30, 2023. We had less current portion of operating lease ~~payments we made~~liabilities at December 31, 2023 compared to September 30, 2023 due to the termination of the telehandler lease.

Long-Term Liabilities

Our notes payable balance was negligibly lower at December 31, 2023 compared to September 30, 2023. We had slightly lower long-term liabilities for our operating leases at December 31, 2023 due additional equipment leases partially offset by amortization of our long-term leases during our ~~2018~~2023 fiscal year.

Liquidity and Capital Resources

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.~~months and beyond. Should we experience unfavorable operating conditions in the future, we may have to secure additional debt or equity sources for working capital or other purposes.

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


	December 31, 2023 (unaudited)		December 31, 2022 (unaudited)
Net cash provided by operating activities	$	7,383,912	$	7,283,740
Net cash used in investing activities	(448,214)		(1,342,619)
Net cash (used for) provided by financing activities	(220,424)		6,788,695
Net increase in cash	$	6,715,274	$	12,729,816
Cash, cash equivalents and restricted cash, end of period	$	21,266,377	$	23,881,831

December 31, 2017
(unaudited)

December 31, 2016
(unaudited)
Net cash provided by operating activities $ 8,102,679
$ 10,592,632
Net cash (used in) investing activities (32,345 ) (174,001 )
Net cash (used in) financing activities (652 ) (565,611 )
Net increase in cash $ 8,069,682
$ 9,853,020
Cash and cash equivalents, end of period $ 11,293,024
$ 20,127,186

Cash Flow from Operations

Our operations provided ~~less~~more cash during the ~~first quarter of our 2018 fiscal year~~three months ended December 31, 2023 compared to the same period of our ~~2017~~2023 fiscal year due primarily to ~~decreased profitability~~increased net income during the ~~2018 period.~~2024 period offset by non-cash adjustments to net income.

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Cash Flow From Investing Activities

We used less cash for capital expenditures during the ~~first quarter of our 2018 fiscal year~~three months ended December 31, 2023 compared to the same period of our ~~2017~~2023 fiscal year. During the ~~2018~~2024 period, our primary capital expenditures were ~~for finishing parts for~~to finalize our CCS project and restorations to the ~~hammer mill project that was started last fiscal year.~~cooling tower.

Cash Flow from Financing Activities

~~We used~~Our financing activities provided less cash ~~for financing activities~~ during the ~~first quarter of our 2018 fiscal year~~three months ended December 31, 2023 compared to the ~~first quarter~~same period of our ~~2017~~2023 fiscal year ~~because~~due to fewer proceeds we ~~did not have any unit repurchases~~received from our debt instruments during the ~~2018~~2024 fiscal year. We had debt repayments and a distribution which was paid during the our 2023 fiscal year which used cash during that period.

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 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, we expect operations to generate adequate cash flows to maintain ~~operations.~~operations for the next 12 months and beyond.

Plans for Cash in the Short Term and in the Long Term

In the next 12 months, the Company plans to reinvest its cash into current business operations and to use the cash for the finalization of the CCS project and the completion of the cooling tower restoration. In the long term, the Company plans to reinvest its cash into current business operations and may provide further distributions to its members.

Capital Expenditures

The Company had approximately ~~$134,000~~$2.3 million in construction in progress as of December 31, ~~2017~~2023 primarily relating to ~~improvements being made~~our carbon capture and storage project and completion of the cooling tower restoration. The Company plans to ~~the additional land and railroad track purchased last fiscal year.~~finance this construction in progress using cash from current business operations.

Capital Resources

Revolving Loan

On ~~March 20, 2017,~~January 22, 2020, we entered into a ~~new~~ $10 million revolving loan (the "Revolving Loan") with ~~U.S.~~Cornerstone Bank ~~National Association~~ ("~~U.S. Bank"~~Cornerstone"). ~~The Revolving Loan replaced a similar revolving loan we had with First National Bank of Omaha.~~ Interest accrues on any outstanding balance on the Revolving Loan at a rate of ~~1.77% in excess~~1.2% less than the prime rate as published by the Wall Street Journal, adjusted monthly. The Revolving Loan has a minimum interest rate of ~~the one-month London Interbank Offered Rate ("LIBOR")~~3.0%. The maturity date of the Revolving Loan ~~is May~~was January 31, ~~2018. Our ability to draw funds on~~2022. On February 3, 2022, the Revolving Loan was renewed, and the new maturity date was March 31, 2022. On April 8, 2022, the Revolving Loan maturity date was extended to April 7, 2023. On April 8, 2023 we renewed the Revolving Loan. The new maturity date is ~~subject to~~April 5, 2024. The Revolving Loan is secured by a ~~borrowing base calculation as set forth in the Credit Agreement.~~lien on substantially all of our assets. At December 31, ~~2017,~~2023, we had $10 million available on the Revolving Loan. ~~We had $0 drawn~~The variable interest rate on December 31, 2023 was 7.25%.

Construction Loans

On January 22, 2020, we entered into a new $7 million construction loan (the "First Construction Loan") with Cornerstone to finance our carbon capture and storage project. The original maturity date of the ~~Revolving~~First Construction Loan was June 1, 2021. On June 3, 2021 the maturity date was extended to February 1, 2022. On April 8, 2022, the First Construction Loan was extended to October 8, 2022. On October 28, 2022, the First Construction Loan was consolidated with the Second Construction Loan (below).

On February 1, 2021, we entered into a $28 million construction loan (the "Second Construction Loan") with Cornerstone to finance our carbon capture and storage project. The maturity date of the Second Construction Loan was January 31, 2022. On February 17, 2022, the Second Construction Loan was extended to March 15, 2022. On April 8, 2022, the Second Construction Loan was again extended to October 8, 2022. On October 28, 2022, the Second Construction loan was consolidated and replaced (below).

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On October 28, 2022, we entered into a $25 million loan to replace the First Construction Loan and Second Construction Loan (the "Consolidated Loan"). The maturity date of the Consolidated Loan is January 31, 2032. The fixed interest rate is 4.65%. The outstanding balance as of December 31, ~~2017. Interest accrued~~2023 was $22.2 million.

Ethanol Recovery Program

On July 13, 2020, we entered into a $5.41 million loan through the Bank of North Dakota's Ethanol Recovery Program and Cornerstone. The Ethanol Recovery Program was developed by the North Dakota Ethanol Producers Association and the Bank of North Dakota to use the existing Biofuels Partnership in Assisting Community Expansion ("PACE") program and Value-added Guarantee Loan program to help ethanol production facilities weather the economic challenges caused by the COVID-19 pandemic. Ethanol producers could qualify for up to $15 million of a low interest loan of 1% based on the ~~Revolving Loan~~amount of such producers' annual corn grind. The maturity date of the loan is July 13, 2025. The fixed interest rate as of December 31, ~~2017 at a~~2023 was 3.75% with an interest rate buy down through the Bank of ~~3.40%.~~

~~Restrictive Covenants~~

~~The Revolving Loan is subject~~North Dakota to ~~certain financial covenants as set forth in~~1%. We typically make monthly payments of approximately $74,000 per month. On December 3, 2021 we received forgiveness of $2.65 million of the ~~Credit Agreement. The most significant financial covenants require us to maintain a fixed charge coverage ratio of no less than 1.25:1.00~~loan, and a current ratio of no less than 1.50:1.00. Our fixed charge coverage ratio measures our ability to pay our fixed expenses. Our current ratio measures our liquidity and ability to pay short-term and long-term obligations.

~~As of~~the balance outstanding on December 31, ~~2017, we were in compliance with our loan covenants.~~2023 was approximately $87,193.

Significant Accounting Policies and Estimates

We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2023. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2023. There has been no significant change in our ~~significant accounting policies or~~ critical accounting estimates since the end of our ~~2017~~2023 fiscal year.

~~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 commodity prices and interest rates as discussed below. 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 ethanol. We do not enter into these derivative financial instruments for trading

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or speculative purposes, nor do we designate these contracts as hedges for accounting purposes pursuant to the requirements of Generally Accepted Accounting Principles ("GAAP").

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from holding loans which bear variable interest rates. As of December 31, 2023, we had no amount outstanding on our variable interest rate loans, however we could have funds outstanding under our revolving loan which has a variable interest rate in the future. If we were to experience a 10% increase in the variable portion of our loans, the annual effect such change would have on our income statement, based on the amount we had outstanding on our variable interest rate loans as of December 31, 2023, would be immaterial.

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 and natural gas in the ethanol production process and the sale of ethanol. Our exposure to commodity price risk may be heightened due to the crisis in Ukraine and the Middle East.

We enter into fixed price contracts for corn purchases on a regular basis. It is our intent that, as we enter into these contracts, we will use various hedging instruments (puts, calls and futures) to maintain a near even market position. For example, if we have 1one 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 ~~(RPMG)~~("RPMG") 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.

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Although we believe our hedge positions will accomplish an economic hedge against our future purchases, they are not designated as hedges for accounting purposes, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. We use fair value accounting for our hedge positions, which means as the current market price of our hedge positions changes, the gains and losses are immediately recognized in our cost of sales. The immediate recognition of hedging gains and losses under fair value accounting can cause net income to be volatile from quarter to quarter and year to year due to the timing of the change in value of derivative instruments relative to the cost of the commodity being hedged. However, it is likely that commodity cash prices will have the greatest impact on the derivatives instruments with delivery dates nearest the current cash price.

As of December 31, ~~2017, we had fixed corn purchase contracts for approximately 700,000 bushels of corn and~~2023 we had corn futures and option contracts for approximately ~~11.5 million~~7,124,000 bushels of corn. As of December 31, ~~2017~~2023 we had an unrealized loss of approximately ~~$569,000~~$1,394,000 related to our corn futures and ~~option~~options contracts.

It is the current position of our ethanol marketing company, RPMG, that under current market conditions, selling ethanol in the spot market will yield the best price for our ethanol. RPMG will, from time to time, contract a portion of the gallons they market with fixed price contracts. At December 31, 2023, we had no fixed ethanol sales contracts and ethanol futures and option contracts. As of December 31, 2023 we had no unrealized gain or loss related to ethanol futures and option contracts.

We estimate that our corn usage will be between 2118 million and 2320 million bushels per ~~calendar~~ year for the production of approximately 59 million to 64 million gallons of ethanol. 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.

A sensitivity analysis has been prepared to estimate our exposure to corn, natural gas and ethanol price risk. Market risk related to our corn, natural gas and ethanol prices 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 our average ethanol sales price as of December 31, ~~2017,~~2023, net of the forward and future contracts used to hedge our market risk for corn, natural gas and ethanol. The volumes are based on our expected use and sale of these commodities for a one year period from December 31, ~~2017.~~2023. The results of this analysis, which may differ from actual results, are as follows:


	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price		Approximate Adverse Change to Income
Ethanol	63,900,000	Gallons	10	%	$	(10,224,000)
Corn	22,821,429	Bushels	10	%	$	(6,749,792)
Natural gas	1,664,000	MMBtu	10	%	$	(429,040)

For comparison purposes, our sensitivity analysis for our quarter ended December 31, 2022 is set forth below:


	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price		Approximate Adverse Change to Income
Ethanol	63,900,000	Gallons	10	%	$	(14,697,000)
Corn	19,825,000	Bushels	10	%	$	(12,886,000)
Natural gas	1,334,000	MMBtu	10	%	$	(867,000)

Estimated Volume Requirements for the next 12 months (net of forward and futures contracts) Unit of Measure Hypothetical Adverse Change in Price Approximate Adverse Change to Income
Ethanol 63,900,000
Gallons 10 % $ (7,029,000 )
Corn 22,820,000
Bushels 10 % $ (3,490,000 )
Natural gas 1,664,000
MMBtu 10 % $ (466,000 )

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

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Our management, including our President and Chief Executive Officer (the principal executive officer), ~~Gerald Bachmeier,~~Jodi Johnson, along with our Chief Financial Officer, (the principal financial officer), ~~Jodi Johnson,~~Joni Entze, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of December 31, ~~2017.~~2023. Based on this review and evaluation, these officers believe that our disclosure controls and procedures ~~are~~were effective in ensuring that material information related to us is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission.

For the fiscal quarter ended December 31, ~~2017, we made the following changes~~2023, there has been no change in our internal control over financial reporting ~~which have~~that has materially affected, or is reasonably likely to materially affect, our internal control over financial ~~reporting:~~reporting.

~~A review and updating of month-end standard operating procedures.~~

~~An additional step was added for the CFO and CEO to review all unusual transactions prior to financial statement preparation.~~

We made these material changes in our internal control over financial reporting as a result of a material weakness we identified in our annual report on Form 10-K for the fiscal year ended September 30, 2017.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time in the ordinary course of business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers' compensation claims, tort claims, or contractual disputes. We are not currently involved in any material legal proceedings.

Item 1A. Risk Factors

There ~~has not~~have been ~~any~~no material ~~change~~changes to the risk factors which were previously disclosed in our annual report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2023.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures.

None.

Item 5.Other Information

None.

~~Table of Contents~~

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.

Exhibits

31.1

~~Exhibit No.~~

~~Exhibits~~

~~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

101.SCH*

Inline XBRL Schema Document

101.CAL*

Inline XBRL Calculation Document

101.LAB*

Inline XBRL Labels Linkbase Document

101.PRE*

Inline XBRL Presentation Linkbase Document

Table of Contents


101.DEF*						Inline XBRL Definition Linkbase Document
104						The ~~following financial information~~cover page from ~~Red Trail Energy, LLC's~~this Quarterly Report on Form 10-Q ~~for the quarter ended December 31, 2017,~~ formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of December 31, 2017 and September 30, 2017, (ii) Statements of Operations for the three months ended December 31, 2017 and 2016, (iii) Statements of Cash Flows for the three months ended December 31, 2017 and 2016, and (iv) the Notes to Unaudited Condensed Financial Statements.**Inline XBRL.

(*) 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.



	RED TRAIL ENERGY, LLC

Date:	February 15, 2024	/s/ Jodi Johnson
~~Date:~~	~~February 14, 2018~~	~~/s/ Gerald Bachmeier~~Jodi Johnson
		~~Gerald Bachmeier~~
	President and Chief Executive Officer
		(Principal Executive Officer)

Date:	February 15, 2024	/s/ Joni Entze
~~Date:~~	~~February 14, 2018~~	~~/s/ Jodi Johnson~~Joni Entze
		~~Jodi Johnson~~
	Chief Financial Officer
		(Principal Financial and Accounting Officer)



	Page Number
PART I. FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. Quantitative and Qualitative Disclosures about Market Risk		2021
Item 4. Controls and Procedures		2122
PART II. OTHER INFORMATION		2223
Item 1. Legal Proceedings		2223
Item 1A. Risk Factors		2223
Item 2. Unregistered Sales of Equity Securities		2223
Item 3. Defaults Upon Senior Securities		2223
Item 4. Mine Safety Disclosures		2223
Item 5. Other Information		2223
Item 6. Exhibits		2223
SIGNATURES		2325



ASSETS	December 31, 2017		September 30, 2017
	(Unaudited)
Current Assets
Cash and equivalents	$	11,293,024	$	3,223,342
Restricted cash - margin account	5,683,142		5,906,666
Accounts receivable, primarily related party	3,039,006		4,059,227
Other receivables	15,474		8,764
Inventory	15,879,209		16,413,742
Prepaid expenses	279,968		33,364
Total current assets	36,189,823		29,645,105

Property, Plant and Equipment
Land	1,342,381		1,342,381
Land improvements	4,266,953		4,266,953
Buildings	8,036,031		8,036,031
Plant and equipment	86,987,706		86,460,902
Construction in progress	133,995		628,454
	100,767,066		100,734,721
Less accumulated depreciation	54,766,673		53,592,985
Net property, plant and equipment	46,000,393		47,141,736

Other Assets
Investment in RPMG	605,000		605,000
Patronage equity	3,270,279		3,270,279
Deposits	40,000		40,000
Total other assets	3,915,279		3,915,279

Total Assets	$	86,105,495	$	80,702,120



As of:	December 31, 2017 (unaudited)						September 30, 2017
Contract Type	# of Contracts	Notional Amount (Qty)		Fair Value			# of Contracts	Notional Amount (Qty)		Fair Value
Corn futures	1,000	5,000,000	bushels	$	12,850		81	405,000	bushels	$	16,688
Corn options	1,300	6,500,000	bushels	$	(1,289,375	)	1,800	9,000,000	bushels	$	(950,000	)
Total fair value				$	(1,276,525	)				$	(933,312	)
Amounts are combined on the balance sheet - negative numbers represent liabilities



Derivatives not designated as hedging instruments:

Balance Sheet - as of December 31, 2017 (unaudited)	Asset		Liability
Commodity derivative instruments, at fair value	$	—	$	1,276,525
Total derivatives not designated as hedging instruments for accounting purposes	$	—	$	1,276,525

Balance Sheet - as of September 30, 2017	Asset		Liability
Commodity derivative instruments, at fair value	$	—	$	933,312
Total derivatives not designated as hedging instruments for accounting purposes	$	—	$	933,312



Statement of Operations Income/(Expense)	Location of gain (loss) in fair value recognized in income	Amount of gain(loss) recognized in income during the three months ended December 31, 2017 (unaudited)			Amount of gain (loss) recognized in income during the three months ended December 31, 2016 (unaudited)
Corn derivative instruments	Cost of Goods Sold	$	(568,536	)	$	218,357
Ethanol derivative instruments	Revenue	1,800			40,950
Soybean oil derivative instruments	Revenue	—			12,216
Natural gas derivative instruments	Cost of Goods Sold	—			10,500
Total		$	(566,736	)	$	282,023



As of	December 31, 2017 (unaudited)		September 30, 2017
Raw materials, including corn, chemicals and supplies	$	12,385,830	$	11,952,560
Work in process	784,509		773,786
Finished goods, including ethanol and distillers grains	794,415		1,577,066
Spare parts	1,914,455		2,110,330
Total inventory	$	15,879,209	$	16,413,742



					Fair Value Measurement Using
	Carrying Amount as of December 31, 2017 (unaudited)		Fair Value as of December 31, 2017 (unaudited)		Level 1		Level 2		Level 3
Liabilities
Commodities derivative instruments	$	1,276,525	$	1,276,525	$	1,276,525	$	—	$	—
Total	$	1,276,525	$	1,276,525	$	1,276,525	$	—	$	—

					Fair Value Measurement Using
	Carrying Amount as of September 30, 2017		Fair Value as of September 30, 2017		Level 1		Level 2		Level 3
Liabilities
Commodities derivative instruments	$	933,312	$	933,312	$	933,312	$	—	$	—
Total	$	933,312	$	933,312	$	933,312	$	—	$	—



	Operating Leases		Capital Leases
2018	$	375,553	$	2,622
2019	326,608		2,264
2020	210,023		—
2021	167,111		—
2022	132,600		—
Thereafter	11,050		—
Total minimum lease commitments	$	1,222,945	4,886
Less amount representing interest			—
Present value of minimum lease commitments included in current maturities of long-term debt on the balance sheet			$	4,886



	(a)	(b)	(c)	(d)
Period	Total Number of Units Purchased	Average Price Paid per Unit	Total Number of Units Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of the Units that May Yet Be Purchased Under the Plans or Programs
October 2016	None	None	None	None
November 2016	None	None	None	None
December 2016	564,963	$1.00	None	None
January 2017	116,857	$1.00	None	None
February 2017	None	None	None	None
March 2017	None	None	None	None
April 2017	None	None	None	None
May 2017	None	None	None	None
June 2017	None	None	None	None
Total	681,820	$1.00	None	None



	December 31, 2017 (unaudited)			December 31, 2016 (unaudited)
Net cash provided by operating activities	$	8,102,679		$	10,592,632
Net cash (used in) investing activities	(32,345		)	(174,001		)
Net cash (used in) financing activities	(652		)	(565,611		)
Net increase in cash	$	8,069,682		$	9,853,020
Cash and cash equivalents, end of period	$	11,293,024		$	20,127,186