Document and Entity Information
Document and Entity Information | 9 Months Ended |
Jun. 30, 2020shares | |
Entity Registrant Name | LINCOLNWAY ENERGY, LLC |
Entity Central Index Key | 0001350420 |
Current Fiscal Year End Date | --09-30 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Address, Address Line Two | 59511 W. Lincoln Highway |
Entity Address, City or Town | Nevada |
Entity Address, State or Province | IA |
Entity Address, Postal Zip Code | 50201 |
City Area Code | 515 |
Local Phone Number | 232-1010 |
Entity Tax Identification Number | 20-1118105 |
Entity File Number | 000-51764 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Incorporation, State or Country Code | IA |
Document Quarterly Report | true |
Document Transition Report | false |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Common Stock, Shares, Outstanding | 105,122 |
Balance Sheets Statement
Balance Sheets Statement - USD ($) | Jun. 30, 2020 | Sep. 30, 2019 |
CURRENT ASSETS | ||
Cash | $ 4,772,643 | $ 260,858 |
Derivative financial instruments (Note 9 and 10) | 56,402 | 188,694 |
Trade and other accounts receivable (Note 8) | 3,472,836 | 3,259,768 |
Inventories (Note 3) | 7,313,399 | 6,440,716 |
Prepaid expenses and other | 695,693 | 308,184 |
Total current assets | 16,310,973 | 10,458,220 |
PROPERTY AND EQUIPMENT | ||
Land and land improvements | 7,156,465 | 7,156,465 |
Buildings and improvements | 7,558,860 | 7,548,308 |
Plant and process equipment | 86,513,186 | 86,110,958 |
Office furniture and equipment | 447,130 | 455,129 |
Construction in progress | 6,796,507 | 6,806,549 |
Property, plant and equipment, gross | 108,472,148 | 108,077,409 |
Accumulated depreciation | (69,291,129) | (65,685,719) |
Property, plant and equipment, net | 39,181,019 | 42,391,690 |
OTHER ASSETS | ||
Operating Lease, Right-of-Use Asset | 5,711,404 | 0 |
Other assets, noncurrent | 1,102,769 | 864,082 |
Other Assets | 6,814,173 | 864,082 |
Assets | 62,306,165 | 53,713,992 |
CURRENT LIABILITIES | ||
Accounts payable | 1,216,572 | 1,794,431 |
Accounts payable, related party (Note 7) | 629,033 | 375,394 |
Accrued Loss on Purchase Commitments | 0 | 67,591 |
Accrued expenses | 917,969 | 776,385 |
Long-term Debt, Current Maturities | 505,700 | 25,000,000 |
Revolving Term Loan, Outstanding Balance | 0 | 300,000 |
Operating Lease, Liability, Current | 1,811,934 | 0 |
Total current liabilities | 5,081,208 | 28,313,801 |
NONCURRENT LIABILITIES | ||
Long-term Debt, Excluding Current Maturities | 23,200,000 | 0 |
Operating Lease, Liability, Noncurrent | 3,899,470 | 0 |
Other | 725,763 | 649,799 |
Total noncurrent liabilities | 27,825,233 | 649,799 |
Commitments and Contingencies | 0 | 0 |
MEMBERS' EQUITY | ||
Member contributions, 105,122 and 42,049 units issued and outstanding as of June 30, 2020 and September 30, 2019, respectively | 46,490,105 | 38,990,105 |
Retained (deficit) | (17,090,381) | (14,239,713) |
Members' Equity | 29,399,724 | 24,750,392 |
Liabilities and Equity | $ 62,306,165 | $ 53,713,992 |
Balance Sheets Parenthetical St
Balance Sheets Parenthetical Statement - shares | Jun. 30, 2020 | Sep. 30, 2019 |
MEMBER'S EQUITY | ||
Common Stock, Shares, Outstanding | 105,122 | 42,049 |
Statements of Operations Statem
Statements of Operations Statement - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues (Notes 2 and 8) | $ 20,136,749 | $ 26,488,313 | $ 73,516,378 | $ 71,193,326 |
Cost of goods sold (Note 7 and 8) | 18,816,144 | 28,137,492 | 73,173,710 | 77,337,800 |
Gross profit (loss) | 1,320,605 | (1,649,179) | 342,668 | (6,144,474) |
General and administrative expenses | 766,079 | 1,028,108 | 2,531,239 | 2,773,045 |
Bad Debt Expense | 0 | 4,385,009 | 0 | 4,385,009 |
Operating income (loss) | 554,526 | (7,062,296) | (2,188,571) | (13,302,528) |
Other income (expense): | ||||
Interest income | 2,959 | (30,990) | 9,180 | 7,701 |
Interest expense | (254,237) | (342,335) | (897,949) | (446,723) |
Other Income | 0 | 40,779 | 226,672 | 3,079,940 |
Other income (expense) | (251,278) | (332,546) | (662,097) | 2,640,918 |
Net income (loss) | $ 303,248 | $ (7,394,842) | $ (2,850,668) | $ (10,661,610) |
Weighted average units outstanding | 91,953 | 42,049 | 58,776 | 42,049 |
Net income (loss) per unit - basic and diluted | $ 3.30 | $ (175.87) | $ (48.50) | $ (253.55) |
Statement of Members' Equity St
Statement of Members' Equity Statement - USD ($) | Total | Member Contributions [Member] | Retained Earnings [Member] |
Stockholders' Equity Attributable to Parent | $ 37,999,198 | $ 38,990,105 | $ (990,907) |
Net Income (Loss) Attributable to Parent | (1,836,126) | 0 | (1,836,126) |
Proceeds from Issuance of Common Stock | 0 | ||
Net Income (Loss) Attributable to Parent | (10,661,610) | ||
Stockholders' Equity Attributable to Parent | 36,163,072 | 38,990,105 | (2,827,033) |
Net Income (Loss) Attributable to Parent | (1,430,642) | 0 | (1,430,642) |
Stockholders' Equity Attributable to Parent | 34,732,430 | 38,990,105 | (4,257,675) |
Net Income (Loss) Attributable to Parent | (7,394,842) | 0 | (7,394,842) |
Stockholders' Equity Attributable to Parent | 27,337,588 | 38,990,105 | (11,652,517) |
Stockholders' Equity Attributable to Parent | 24,750,392 | 38,990,105 | (14,239,713) |
Net Income (Loss) Attributable to Parent | (24,218) | 0 | (24,218) |
Proceeds from Issuance of Common Stock | 7,500,000 | ||
Net Income (Loss) Attributable to Parent | (2,850,668) | ||
Stockholders' Equity Attributable to Parent | 24,726,174 | 38,990,105 | (14,263,931) |
Proceeds from Issuance of Common Stock | 5,000,000 | 5,000,000 | 0 |
Net Income (Loss) Attributable to Parent | (3,129,698) | 0 | (3,129,698) |
Stockholders' Equity Attributable to Parent | 26,596,476 | 43,990,105 | (17,393,629) |
Proceeds from Issuance of Common Stock | 2,500,000 | 2,500,000 | 0 |
Net Income (Loss) Attributable to Parent | 303,248 | 0 | 303,248 |
Stockholders' Equity Attributable to Parent | $ 29,399,724 | $ 46,490,105 | $ (17,090,381) |
Statement of Cash Flows Stateme
Statement of Cash Flows Statement - USD ($) | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Interest Paid, Capitalized, Investing Activities | $ 0 | $ 304,947 |
Net Cash Provided by (Used in) Operating Activities [Abstract] | ||
Net (loss) | (2,850,668) | (10,661,610) |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Depreciation and amortization | 3,614,282 | 4,105,400 |
Gain (Loss) on Disposition of Property Plant Equipment | 0 | 228,475 |
Loss (gain) in purchase commitments | (67,591) | 181,078 |
Increase (Decrease) in Bad Debt | 0 | 4,385,009 |
Changes in working capital components: | ||
Trade and other accounts receivable | (213,068) | (341,979) |
Inventories | (872,683) | (958,478) |
Prepaid expenses and other | (550,232) | (24,956) |
Accounts payable | (540,251) | (489,825) |
Accounts payable, related party | 253,639 | (491,985) |
Accrued expenses | 141,584 | (352,436) |
Derivative financial instruments | (132,292) | 545,062 |
Net cash (used in) operating activities | (952,696) | (4,966,369) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (441,219) | (2,930,185) |
Increase (Decrease) in Notes Receivable, Current | 0 | 15,000 |
Net Cash Provided by (Used in) Investing Activities | (441,219) | (2,915,185) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from Lines of Credit | 10,467,500 | 0 |
Repayments of Lines of Credit | (10,767,500) | 0 |
Proceeds from Issuance of Long-term Debt | 27,505,700 | 50,050,000 |
Payments on long-term borrowings | 28,800,000 | 42,650,000 |
Proceeds from Issuance of Common Stock | 7,500,000 | 0 |
Net cash provided by financing activities | 5,905,700 | 7,400,000 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Excluding Exchange Rate Effect | 4,511,785 | (481,554) |
CASH AND CASH EQUIVALENTS | ||
Beginning | 260,858 | 668,456 |
Ending | 4,772,643 | 186,902 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW | ||
INFORMATION, cash paid for interest, including capitalized interest for 2020 of $0 and 2019 of $304,947 | 979,929 | 839,649 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Construction in Progress Expenditures Incurred but Not yet Paid | 23,365 | 26,907 |
Construction in Progress Converted to Note Receivable | 0 | 4,080,000 |
Increase (Decrease) Operating Lease Liabilities | $ 6,691,675 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Notes) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Unusual or Infrequent Items, or Both, Disclosure [Text Block] | Risks and Uncertainties: The COVID-19 pandemic is currently impacting countries, communities, supply chains and commodities markets, in addition to the global financial markets. This pandemic has resulted in social distancing, travel bans, governmental stay-at-home orders, and quarantines, and these may limit access to our facilities, customers, suppliers, management, support staff and professional advisors. At this time it is not possible to fully assess the impact of the COVID-19 pandemic on the Company’s operations and capital requirements, but the aforementioned factors, among other things, may impact our operations, financial condition and demand for our products, as well as our overall ability to react timely and mitigate the impact of this event. Depending on its severity and longevity, the COVID-19 pandemic may have a material adverse effect on our business, customers, and members. |
Property, Plant and Equipment Disclosure [Text Block] | Property and equipment: Property and equipment is stated at cost. Construction in progress is comprised of costs related to the projects that are not completed. Depreciation is computed using the straight-line method over the estimated useful lives. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. When circumstances or events arise that questions an asset's usefulness, the asset is evaluated for future use and appropriate carrying value. The Company evaluates the carrying value of long-lived tangible assets when events or changes in circumstances indicate that the carrying value may not be recoverable. Such events and circumstances include, but are not limited to, significant decreases in the market value of the asset, adverse changes in the extent or manner in which the asset is being used, significant changes in the business climate, or current or projected cash flow losses associated with the use of the assets. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such assets are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. For long-lived assets to be held for use in future operations and for fixed (tangible) assets, fair value is determined primarily using either the projected cash flows discounted at a rate commensurate with the risk involved or an appraisal. For long-lived assets to be disposed of by sale or other than sale, fair value is determined in a similar manner, except that fair values are reduced for disposal costs. |
Revenue
Revenue | 9 Months Ended |
Jun. 30, 2020 | |
Revenue by product [Abstract] | |
Revenue | Revenues Components of revenues are as follows: Three Months Ended Nine Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Ethanol, net of hedging gain (loss) $ 14,025,039 $ 21,006,222 $ 55,182,772 $ 54,649,341 Distillers Grains 4,360,153 3,761,379 13,715,936 11,253,448 Other 1,751,557 1,720,712 4,617,670 5,290,537 Total $ 20,136,749 $ 26,488,313 $ 73,516,378 $ 71,193,326 |
Inventories
Inventories | 9 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: June 30, 2020 September 30, 2019 Raw materials, including corn, chemicals, parts and supplies $ 4,051,295 $ 4,902,526 Work in process 743,619 900,459 Ethanol and distillers grains 2,518,485 637,731 Total $ 7,313,399 $ 6,440,716 |
Revolving Credit Loan (Notes)
Revolving Credit Loan (Notes) | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Revolving Line of Credit. [Text Block] | Revolving Credit Loan The Company has a revolving credit loan with a bank which provides for loans not to exceed $4,000,000 outstanding at any time. The loan originally matured on January 1, 2020 but the Company received an extension on December 24, 2019 extending the maturity date to June 1, 2020. Effective as of May 29, 2020, the Company and the bank amended the revolving credit loan to extend the maturity date of the revolving credit loan until January 1, 2021. Interest accrues at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.75% ( 3.93% as of June 30, 2020). The Company also pays a commitment fee on the average daily unused portion of the loan at the rate of 0.25% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master credit agreement. There was an outstanding balance of $0 and $300,000 on the revolving credit loan as of June 30, 2020 and September 30, 2019, respectively. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The Company has a revolving term loan, with a bank, available for up to $25,000,000 . Effective May 29, 2020, the Company and the bank amended the revolving term loan to modify the step-down reduction of available borrowing capacity to defer the initial step-down reduction of $5,000,000 originally scheduled for October 20, 2020 to October 20, 2021. As amended, the Company’s borrowing capacity under the revolving term loan will reduce by $5,000,000 every year starting October 20, 2021 until October 1, 2024 when the loan expires. The Company pays interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.75% ( 3.93% as of June 30, 2020). The Company also pays a commitment fee on the average daily unused portion of the loan at the rate of 0.50% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master agreement. At June 30, 2020 and September 30, 2019, the outstanding balance on the revolving term loan was $23,200,000 and $25,000,000 , respectively. As noted above, the Company and the bank amended the revolving term loan to defer the initial step-down reduction of available borrowing capacity so that the new maximum commitment amount reduction schedule is as follows: Maximum Commitment Amount From Up to and Including $20,000,000 October 20, 2021 October 19, 2022 $15,000,000 October 20, 2022 October 19, 2023 $10,000,000 October 20, 2023 October 1, 2024 In connection with the revolving term loan, the Company entered into an Amended and Restated Letter of Credit Promissory Note. The maximum letter of credit commitment of $1,307,525 . As of June 30, 2020, the outstanding amount payable by the Company under the letter of credit was $1,307,525 . On April 13, 2020, the Company received a loan in the amount of $505,700 under the new Paycheck Protection Program (the “PPP Loan”) legislation administered by the U.S. Small Business Administration. The PPP Loan may be forgiven based upon various factors, including, without limitation, our payroll cost and certain other approved expenses over an eight to twenty-four week period starting upon our receipt of the funds. Expenses for payroll costs, lease payments on agreements before February 15, 2020, utility payments under agreements before February 1, 2020 and certain other specified costs can be utilized from these funds and eligible for payment forgiveness by the federal government. At least 60% of the proceeds must be used for approved payroll costs, and no more than 40% on non-payroll expenses. Management believes our use of our PPP Loan proceeds for the approved expense categories will generally be fully forgiven if we satisfy certain employee headcount and compensation conditions. The PPP loan has a maturity date April 13, 2022 and management currently believes this loan will be forgiven before maturity. The stated interest rate on this loan is 1% if not forgiven. |
Substantial Doubt about Going C
Substantial Doubt about Going Concern (Notes) | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Substantial Doubt about Going Concern [Text Block] | Liquidity and Management Plans The Company’s financial statements for the fiscal year ended September 30, 2019 were prepared assuming that the Company would continue as a going concern. However, the Company has experienced an extended period of depressed margins which has resulted in a significant decrease in working capital and cash over those periods and resulted in the Company’s failure to satisfy its financial covenants under its master credit agreement. As detailed in the Company’s Form 10-K for the fiscal year September 30, 2019 (the “2019 Form 10-K”), the Company was not in compliance with certain financial covenants under its master credit agreement as of September 30, 2019. As a result, the Report of Independent Registered Public Accounting Firm included in the Company’s 2019 Form 10-K included an explanatory paragraph regarding the Company’s ability to continue as a going concern. Management also disclosed a going concern uncertainty in the Company’s financial statements included in the Company’s Form 10-Q for the fiscal quarter ended December 31, 2019 filed with the SEC on February 14, 2020 (the “Q1 2020 Form 10-Q”). During the fiscal second quarter and thereafter, management determined that the previous going concern uncertainty has now been mitigated based on the following: • On March 31, 2020, the Company received $5,000,000 million in cash in connection with the issuance of 42,049 new Class A Units. • On April 13, 2020, the Company received $505,700 cash proceeds under the Paycheck Protection Program administered by the U.S. Small Business Administration which is discussed further in Note 5. • On May 28, 2020, the Company received an additional $2.5 million in cash in connection with the issuance of an additional 14,037 Class A Units and 6,987 new Class B Units. • Effective May 29, 2020, the Company and the bank entered into certain amendments to the master credit agreement and loan documents governing the revolving credit loan and the revolving term loan to (i) extend the maturity of the revolving credit loan until January 1, 2021; (ii) defer the initial $5,000,000 step-down reduction in borrowing capacity under the revolving term loan until October 20, 2021 instead of October 20, 2020, (iii) eliminate the application of the debt service coverage ratio financial covenant for the fiscal year ending September 30, 2020, (iv) reduce the minimum net worth required in the financial covenants from $25,000,000 to $24,000,000 and increase the minimum working capital required in the financial covenants from $7,500,000 to $10,000,000 . • The bank provided the Company with a letter waiving past violations resulting from non-compliance with the working capital, net worth and debt service coverage ratio financial covenants from June 30, 2019 through April 30, 2020. Based upon the completion of the transactions described above together with the continued effects of our recent capital issuances and our improved liquidity, management believes the previously reported going concern uncertainty has been mitigated. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Purchase Commitment, Excluding Long-term Commitment [Table Text Block] | Corn Commitment: June 30, 2020 Corn Forward Purchase Commitment Basis Corn Commitment (Bushels) Commitment Through Amount Due Related Parties $ 1,548,363 300,000 January 2021 $ 629,033 |
Schedule of Related Party Transactions [Table Text Block] | Corn Purchased: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Nine Months Ended June 30, 2020 Nine Months Ended June 30, 2019 Related Parties $12,512,644 $ 8,781,404 $41,335,537 $30,992,085 |
Related-Party Transactions | Related-Party Transactions The Company had the following related-party activity with members during the nine months ended June 30, 2020 and 2019: Corn Commitment: June 30, 2020 Corn Forward Purchase Commitment Basis Corn Commitment (Bushels) Commitment Through Amount Due Related Parties $ 1,548,363 300,000 January 2021 $ 629,033 Corn Purchased: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Nine Months Ended June 30, 2020 Nine Months Ended June 30, 2019 Related Parties $12,512,644 $ 8,781,404 $41,335,537 $30,992,085 On January 15, 2020, the Company entered into a Management Services Agreement with Husker Ag, LLC (“Husker Ag”) for management services pertaining to the Company’s ethanol facility. Effective April 1, 2020, the Company entered into an Amended and Restated Management Services Agreement (the “Management Agreement”) with HALE, LLC, an affiliate of Husker Ag (“HALE”), which replaced and superseded the original Management Services Agreement between the Company and Husker Ag. Pursuant to the terms of the Management Agreement, HALE now provides management services to the Company’s ethanol facility, including providing the Company with individuals to (a) serve as General Manager, Environmental and Safety Manager, Commodity Risk Manager, and to fill such other positions as may be necessary from time to time; and (b) perform the respective management services for each such position. For three month and nine month period ended June 30, 2020, Lincolnway Energy incurred expenses $242,096 and $389,849 due to Husker Ag LLC for services and out-of-pocket travel expenses. At June 30, 2020 $60,900 was included in accrued expenses on the balance sheet. Effective March 31, 2020, the Company and HALE entered into a Preferred Membership Unit Purchase Agreement (the “MUPA”) pursuant to which HALE purchased 42,049 new Class A Units of the Company for an aggregate price of $5,000,000 . Effective on May 28, 2020, in accordance with the terms of the MUPA, HALE purchased an additional 14,037 Class A Units for an aggregate price of $1,669,176 . As a result, HALE holds a total of 56,086 new Class A Units. In connection with the investment by HALE in the Company and pursuant to the terms of the MUPA and the Company’s current operating agreement, HALE has the right to appoint four of the Company’s seven directors (the “Class A Directors”). The Class A Directors serve until they resign or HALE removes them. The remaining three directors are elected by the members holding Common Units and Class B Units. |
Risk Management
Risk Management | 9 Months Ended |
Jun. 30, 2020 | |
Risk Management [Abstract] | |
Risk Management | Risk Management The Company's activities expose it to a variety of market risks, including the effects of changes in commodity prices. These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program. The Company's risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations. The Company's specific goal is to protect the Company from large moves in the commodity costs. To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchase and sale contracts. Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives. The Company treats all contracts with the same counterparty on a net basis on the balance sheet. Derivatives not designated as hedging instruments are as follows: June 30, 2020 September 30, 2019 Derivative assets - corn contracts $ 43,300 $ 531,875 Derivative liabilities - corn contracts (121,687 ) (93,650 ) Cash due from (due to) broker 134,789 (249,531 ) Total $ 56,402 $ 188,694 The effects on operating income from derivative activities are as follows: Three Months Ended Nine Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Gains in revenues due to derivatives related to ethanol sales: Realized gain $ — $ — $ — $ 21,525 Total effect on revenues — — — 21,525 Gains (losses) in cost of goods sold due to derivatives related to corn costs: Realized gain (loss) 601,750 (444,267 ) 1,635,018 327,033 Unrealized (loss) (430,088 ) (561,425 ) (713,738 ) (971,738 ) Total effect on corn cost 171,662 (1,005,692 ) 921,280 (644,705 ) Gains in cost of goods sold due to derivatives related to natural gas costs: Realized gain — — — 13,660 Unrealized gain — — — 3,460 Total effect on natural gas cost — — — 17,120 Total effect on cost of goods sold 171,662 (1,005,692 ) 921,280 (627,585 ) Total gain due to derivative activities $ 171,662 $ (1,005,692 ) $ 921,280 $ (606,060 ) Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company's financial statements but are subject to a lower of cost or net realizable value assessment. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. Level 3 - Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all the Company's financial assets and financial liabilities carried at fair value. Derivative financial instruments : Commodity futures and exchange-traded commodity options contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CME and NYMEX markets. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and September 30, 2019 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: June 30, 2020 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 43,300 $ 43,300 $ — $ — Liabilities, derivative financial instruments $ 121,687 $ 121,687 — — September 30, 2019 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 531,875 $ 531,875 $ — $ — Liabilities, derivative financial instruments $ 93,650 $ 93,650 $ — $ — |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Principal Business Activity [Policy Text Block] | Principal business activity : Lincolnway Energy, LLC (the "Company"), located in Nevada, Iowa, was formed in May 2004 to build and operate a 50 million gallon annual production dry mill corn-based ethanol plant. The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006. The Company is directly influenced by commodity markets and the agricultural and energy industries and, accordingly, its results of operations and financial condition may be significantly affected by cyclical market trends and the regulatory, political and economic conditions in these industries. |
Significant Accounting Policies [Text Block] | Nature of Business and Significant Accounting Policies Principal business activity : Lincolnway Energy, LLC (the "Company"), located in Nevada, Iowa, was formed in May 2004 to build and operate a 50 million gallon annual production dry mill corn-based ethanol plant. The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006. The Company is directly influenced by commodity markets and the agricultural and energy industries and, accordingly, its results of operations and financial condition may be significantly affected by cyclical market trends and the regulatory, political and economic conditions in these industries. Basis of presentation and other information : The balance sheet as of September 30, 2019 was derived from the Company's audited balance sheet as of that date. The accompanying financial statements as of June 30, 2020 and for the nine months ended June 30, 2020 and 2019 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2019 contained in the Company's Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. Use of estimates : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Risks and Uncertainties: The COVID-19 pandemic is currently impacting countries, communities, supply chains and commodities markets, in addition to the global financial markets. This pandemic has resulted in social distancing, travel bans, governmental stay-at-home orders, and quarantines, and these may limit access to our facilities, customers, suppliers, management, support staff and professional advisors. At this time it is not possible to fully assess the impact of the COVID-19 pandemic on the Company’s operations and capital requirements, but the aforementioned factors, among other things, may impact our operations, financial condition and demand for our products, as well as our overall ability to react timely and mitigate the impact of this event. Depending on its severity and longevity, the COVID-19 pandemic may have a material adverse effect on our business, customers, and members. Cash and cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Trade accounts receivable : Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received. A receivable is considered past due if any portion of the receivable is outstanding more than 90 days. There was no allowance for doubtful accounts balance as of June 30, 2020 and September 30, 2019 . Inventories: Inventories are stated at the lower of net realizable value or actual cost using the first-in, first-out method. In the valuation of inventories and purchase commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonable predictable costs of completion, disposal and transportation. As of June 30, 2020 and September 30, 2019, the Company recognized a reserve and resulting loss of approximately $0 and $76,000 respectively, for a lower of net realizable value or cost inventory adjustment due to low market prices for ethanol. Property and equipment: Property and equipment is stated at cost. Construction in progress is comprised of costs related to the projects that are not completed. Depreciation is computed using the straight-line method over the estimated useful lives. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. When circumstances or events arise that questions an asset's usefulness, the asset is evaluated for future use and appropriate carrying value. The Company evaluates the carrying value of long-lived tangible assets when events or changes in circumstances indicate that the carrying value may not be recoverable. Such events and circumstances include, but are not limited to, significant decreases in the market value of the asset, adverse changes in the extent or manner in which the asset is being used, significant changes in the business climate, or current or projected cash flow losses associated with the use of the assets. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such assets are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. For long-lived assets to be held for use in future operations and for fixed (tangible) assets, fair value is determined primarily using either the projected cash flows discounted at a rate commensurate with the risk involved or an appraisal. For long-lived assets to be disposed of by sale or other than sale, fair value is determined in a similar manner, except that fair values are reduced for disposal costs. Derivative financial instruments: The Company periodically enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales. The Company does not typically enter into derivative instruments other than for hedging purposes. All the derivative contracts are recognized on the balance sheet at their fair market value. Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes. Accordingly, any realized or unrealized gain or loss related to corn and natural gas derivatives is recorded in the statement of operations as a component of cost of goods sold. Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet. Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements. Forward contracts with delivery dates within 30 days that can be reasonably estimated are subject to a lower of cost or net realizable value assessment. The Company recognized a reserve and resulting accrued loss on purchase commitments of approximately $0 and $68,000 as of June 30, 2020 and September 30, 2019, respectively. Revenue recognition: The Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), in the first quarter of fiscal year 2019, using the modified retrospective method. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The implementation of the new standard did not result in any changes to the measurement or recognition of revenue for prior periods, however additional disclosures have been added in accordance with the ASU. The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. • sales of ethanol • sales of distillers grains • sales of corn oil Shipping costs incurred by the Company in the sale of ethanol, distiller grains and corn oil are not specifically identifiable and as a result, are recorded based on the net selling price. Railcar lease costs incurred by the Company in the sale of its products are included in the cost of goods sold. Revenue from the sale of the Company's ethanol and distillers grains is recognized at the time title, control and all risks of ownership transfer to the marketing company. This generally occurs upon the loading of the product. For ethanol, title and control passes at the time the product crosses the loading flange in either a railcar or truck. For distillers grain, title and control passes upon the loading into trucks or railcars. Corn oil is marketed internally. Revenue is recognized when title and control of ownership transfers, upon loading. Shipping and handling costs incurred by the Company for the sale of distillers grain are included in costs of goods sold. Ethanol revenue is reported free on board (FOB) and all shipping and handling costs are incurred by the ethanol marketer. Commissions for the marketing and sale of ethanol and distiller grains are included in costs of goods sold. Income taxes : The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Management has evaluated the Company's material tax positions and determined there were no uncertain tax positions that require adjustment to the financial statements. The Company does not currently anticipate significant changes in its uncertain tax positions over the next twelve months. Earnings per unit : Basic and diluted net income (loss) per unit have been computed on the basis of the weighted average number of units outstanding during each period presented. On March 31, 2020, 42,049 new Class A Units were issued which Class A Units are a separate class of unit than the units issued to existing members which have been renamed “Common Units”. On May 28, 2020, the Company issued an additional 14,037 Class A Units and 6,987 new Class B Units. The combined issuance of Class A Units is 56,086 units and the total issuance of Class B Units is 6,987 units. There are also 42,049 Common Units outstanding for an aggregate number of 105,122 units outstanding comprised of Class A Units, Class B Units and Common Units. The weighted average number of units is based on days outstanding for the reporting period. The Class A Units and Class B Units have a liquidation preference which provides that in the event of a liquidation or deemed liquidation, the Class A and Class B members will receive the return of their capital contributions, reduced by the amount of distributions received, prior to the holders of Common Units receiving any proceeds. Recently Issued Accounting Pronouncements : In February 2016, Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02 "Leases" (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous Generally Accepted Accounting Principles ("GAAP"). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. Under the new guidance, lessees are required to recognize the following for all leases (with the exception of short-term leases): (1) a lease liability, which is a lessee's obligation to make lease payments arising from the lease, measured on a discounted cash flow basis; and (2) a "right of use" asset, which is an asset that represents the lessee's right to use the specified asset for the lease term. The Company adopted this accounting standard effective October 1, 2019. Upon adoption, the Company elected a practical expedient which allows existing leases to retain their classification as operating leases. Additionally, the Company has elected to account for lease and related non-lease components as a single lease component. The Company elected the option to apply the transition provisions at adoption date instead of the earliest comparative period presented in the financial statements. Due to this election, the Company is not required to retrospectively apply the standard to the previous periods presented. See additional disclosure in Note 8. |
Basis of Accounting, Policy [Policy Text Block] | Basis of presentation and other information : The balance sheet as of September 30, 2019 was derived from the Company's audited balance sheet as of that date. The accompanying financial statements as of June 30, 2020 and for the nine months ended June 30, 2020 and 2019 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2019 contained in the Company's Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. |
Use of Estimates, Policy [Policy Text Block] | Use of estimates : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents. |
Accounts Receivable [Policy Text Block] | Trade accounts receivable : Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received. A receivable is considered past due if any portion of the receivable is outstanding more than 90 days. There was no allowance for doubtful accounts balance as of June 30, 2020 and September 30, 2019 . |
Inventory, Policy [Policy Text Block] | Inventories: Inventories are stated at the lower of net realizable value or actual cost using the first-in, first-out method. In the valuation of inventories and purchase commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonable predictable costs of completion, disposal and transportation. As of June 30, 2020 and September 30, 2019, the Company recognized a reserve and resulting loss of approximately $0 and $76,000 respectively, for a lower of net realizable value or cost inventory adjustment due to low market prices for ethanol. |
Financial Instruments Disclosure [Text Block] | Derivative financial instruments: The Company periodically enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales. The Company does not typically enter into derivative instruments other than for hedging purposes. All the derivative contracts are recognized on the balance sheet at their fair market value. Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes. Accordingly, any realized or unrealized gain or loss related to corn and natural gas derivatives is recorded in the statement of operations as a component of cost of goods sold. Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet. Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements. Forward contracts with delivery dates within 30 days that can be reasonably estimated are subject to a lower of cost or net realizable value assessment. The Company recognized a reserve and resulting accrued loss on purchase commitments of approximately $0 and $68,000 as of June 30, 2020 and September 30, 2019, respectively. |
Revenue [Policy Text Block] | Revenue recognition: The Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), in the first quarter of fiscal year 2019, using the modified retrospective method. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The implementation of the new standard did not result in any changes to the measurement or recognition of revenue for prior periods, however additional disclosures have been added in accordance with the ASU. The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. • sales of ethanol • sales of distillers grains • sales of corn oil Shipping costs incurred by the Company in the sale of ethanol, distiller grains and corn oil are not specifically identifiable and as a result, are recorded based on the net selling price. Railcar lease costs incurred by the Company in the sale of its products are included in the cost of goods sold. |
Income Tax, Policy [Policy Text Block] | Income taxes : The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Management has evaluated the Company's material tax positions and determined there were no uncertain tax positions that require adjustment to the financial statements. The Company does not currently anticipate significant changes in its uncertain tax positions over the next twelve months. |
Earnings Per Share, Policy [Policy Text Block] | Earnings per unit : Basic and diluted net income (loss) per unit have been computed on the basis of the weighted average number of units outstanding during each period presented. On March 31, 2020, 42,049 new Class A Units were issued which Class A Units are a separate class of unit than the units issued to existing members which have been renamed “Common Units”. On May 28, 2020, the Company issued an additional 14,037 Class A Units and 6,987 new Class B Units. The combined issuance of Class A Units is 56,086 units and the total issuance of Class B Units is 6,987 units. There are also 42,049 Common Units outstanding for an aggregate number of 105,122 units outstanding comprised of Class A Units, Class B Units and Common Units. The weighted average number of units is based on days outstanding for the reporting period. The Class A Units and Class B Units have a liquidation preference which provides that in the event of a liquidation or deemed liquidation, the Class A and Class B members will receive the return of their capital contributions, reduced by the amount of distributions received, prior to the holders of Common Units receiving any proceeds. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Pronouncements : In February 2016, Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02 "Leases" (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous Generally Accepted Accounting Principles ("GAAP"). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. Under the new guidance, lessees are required to recognize the following for all leases (with the exception of short-term leases): (1) a lease liability, which is a lessee's obligation to make lease payments arising from the lease, measured on a discounted cash flow basis; and (2) a "right of use" asset, which is an asset that represents the lessee's right to use the specified asset for the lease term. The Company adopted this accounting standard effective October 1, 2019. Upon adoption, the Company elected a practical expedient which allows existing leases to retain their classification as operating leases. Additionally, the Company has elected to account for lease and related non-lease components as a single lease component. The Company elected the option to apply the transition provisions at adoption date instead of the earliest comparative period presented in the financial statements. Due to this election, the Company is not required to retrospectively apply the standard to the previous periods presented. See additional disclosure in Note 8. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Revenue by product [Abstract] | |
Revenue from External Customers by Products and Services | Components of revenues are as follows: Three Months Ended Nine Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Ethanol, net of hedging gain (loss) $ 14,025,039 $ 21,006,222 $ 55,182,772 $ 54,649,341 Distillers Grains 4,360,153 3,761,379 13,715,936 11,253,448 Other 1,751,557 1,720,712 4,617,670 5,290,537 Total $ 20,136,749 $ 26,488,313 $ 73,516,378 $ 71,193,326 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consist of the following: June 30, 2020 September 30, 2019 Raw materials, including corn, chemicals, parts and supplies $ 4,051,295 $ 4,902,526 Work in process 743,619 900,459 Ethanol and distillers grains 2,518,485 637,731 Total $ 7,313,399 $ 6,440,716 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Debt Instrument [Line Items] | |
Schedule of Long-term Debt Instruments [Table Text Block] | so that the new maximum commitment amount reduction schedule is as follows: Maximum Commitment Amount From Up to and Including $20,000,000 October 20, 2021 October 19, 2022 $15,000,000 October 20, 2022 October 19, 2023 $10,000,000 October 20, 2023 October 1, 2024 |
Commitments and Major Customer
Commitments and Major Customer Commitments (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Other Commitments [Line Items] | |
Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block] | At June 30, 2020, the Company had the following approximate future minimum rental commitments through September 30 of each year: 2020 $ 466,125 2021 1,853,440 2022 1,581,044 2023 1,286,169 2024 982,275 Thereafter 513,450 Total $6,682,503 |
Commitments and Major Customer | Commitments, Major Customers and Lease Obligations The Company has an agreement with an unrelated entity for marketing, selling and distributing all of the ethanol produced by the Company. Revenues from this entity were $14,025,039 and $55,182,772 , respectively, for the three and nine months ended June 30, 2020. Revenues with this entity were $21,006,221 and $54,627,815 , respectively for the three and nine months ended June 30, 2019. Trade accounts receivable of $2,400,244 were due from this entity as of June 30, 2020 . As of June 30, 2020 , the Company had ethanol unpriced sales commitments with this entity of approximately 14.1 million gallons through September 2020. The Company has an agreement with an unrelated entity for marketing, selling and distributing all the distillers grains produced by the Company. Revenues from this entity including both distillers grains and corn oil were $4,473,741 and $14,226,207 , respectively, for the three and nine months ended June 30, 2020. The revenues from this entity were $3,761,379 and $11,253,448 , respectively, for the three and nine months ended June 30, 2019. The Company sells corn oil to this entity as a third-party broker independent of its agreement with the entity relating to distillers grain sales. Trade accounts receivable of $758,047 were due from this entity as of June 30, 2020 . The Company had distillers grain sales commitments with this entity of approximately 25,430 tons, for a total sales commitment of approximately $3.1 million. As of June 30, 2020 , the Company had purchase commitments for corn forward contracts with various unrelated parties, totaling approximately $397,592 . These contracts matured on July 2020. The Company had no basis contract commitments with unrelated parties to purchase corn. The Company has an agreement with an unrelated party for the transportation of natural gas to the Company's ethanol plant. Under the agreement, the Company is committed to future monthly usage fees totaling approximately $3.6 million over the 10-year term which commenced in November 2014. The Company assigned an irrevocable standby letter of credit to the counter-party to stand as security for the Company's obligation under the agreement maturing May 2021. The letter of credit is reduced over time as the Company makes payments under the agreement. At June 30, 2020, the remaining commitment was approximately $1.3 million . As of June 30, 2020, the Company had purchase commitments for natural gas basis contracts with an unrelated party totaling 395,313 MMBtu's maturing at various dates through October 2020. Effective October 1, 2019, the Company adopted ASU 2016-02 regarding Leases. The Company elected the short-term lease exception provided for in the standard and therefore only recognized right-of-use assets and lease liabilities for leases with a term greater than one year. A lease exists when a contract conveys to a party the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company recognized a lease liability equal to the present value of future lease payments based on an estimated interest rate commensurate with the rate the Company would pay to borrow equivalent funds. A lease asset was recognized based on the lease liability value and adjusted for any prepaid lease payments or lease incentives. The lease term at the commencement date includes any renewal options or termination options when it is reasonably certain that the Company will exercise or not exercise those options, respectively. The Company leases railcars and is obligated to pay costs of insurance, taxes, repairs and maintenance pursuant to the terms of the leases. Rent expense for the operating leases during the three months ended June 30, 2020 and 2019 was approximately $470,000 and $497,000 , respectively. Rent expense for the operating leased during the nine months ended June 30, 2020 and 2019 was approximately $1,489,000 and $1,540,000 , respectively. The lease agreements have maturity dates ranging from June 2021 to September 2025. The discount rate used in determining the lease liability ranged from 3.68% to 6.23% and was determined by incremental borrowing rates at the time the lease commenced. The right of use asset and liability at June 30, 2020 is $5,711,404 . At June 30, 2020, the Company had the following approximate future minimum rental commitments through September 30 of each year: 2020 $ 466,125 2021 1,853,440 2022 1,581,044 2023 1,286,169 2024 982,275 Thereafter 513,450 Total $6,682,503 A reconciliation of the undiscounted future payments in the schedule above and the lease liability recognized in the balance sheet as of June 30, 2020 is shown below: Undiscounted future payments $ 6,682,503 Discount effect 1,045,542 $ 5,636,961 |
Lessee, Operating Lease, Disclosure [Table Text Block] | A reconciliation of the undiscounted future payments in the schedule above and the lease liability recognized in the balance sheet as of June 30, 2020 is shown below: Undiscounted future payments $ 6,682,503 Discount effect 1,045,542 $ 5,636,961 |
Risk Management (Tables)
Risk Management (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Risk Management [Abstract] | |
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Derivatives not designated as hedging instruments are as follows: June 30, 2020 September 30, 2019 Derivative assets - corn contracts $ 43,300 $ 531,875 Derivative liabilities - corn contracts (121,687 ) (93,650 ) Cash due from (due to) broker 134,789 (249,531 ) Total $ 56,402 $ 188,694 |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The effects on operating income from derivative activities are as follows: Three Months Ended Nine Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Gains in revenues due to derivatives related to ethanol sales: Realized gain $ — $ — $ — $ 21,525 Total effect on revenues — — — 21,525 Gains (losses) in cost of goods sold due to derivatives related to corn costs: Realized gain (loss) 601,750 (444,267 ) 1,635,018 327,033 Unrealized (loss) (430,088 ) (561,425 ) (713,738 ) (971,738 ) Total effect on corn cost 171,662 (1,005,692 ) 921,280 (644,705 ) Gains in cost of goods sold due to derivatives related to natural gas costs: Realized gain — — — 13,660 Unrealized gain — — — 3,460 Total effect on natural gas cost — — — 17,120 Total effect on cost of goods sold 171,662 (1,005,692 ) 921,280 (627,585 ) Total gain due to derivative activities $ 171,662 $ (1,005,692 ) $ 921,280 $ (606,060 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and September 30, 2019 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: June 30, 2020 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 43,300 $ 43,300 $ — $ — Liabilities, derivative financial instruments $ 121,687 $ 121,687 — — September 30, 2019 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 531,875 $ 531,875 $ — $ — Liabilities, derivative financial instruments $ 93,650 $ 93,650 $ — $ — |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) gal in Millions | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($)sharesgal | Sep. 30, 2019USD ($)shares | Mar. 31, 2020shares | |
Annual ethanol production | gal | 50 | ||
Accounts Receivable, Allowance for Credit Loss | $ | $ 0 | $ 0 | |
Inventory Valuation Reserves | $ | 0 | 76,000 | |
Inventory, Firm Purchase Commitment, Loss | $ | $ 0 | $ 68,000 | |
Common Stock, Shares, Outstanding | 42,049 | ||
Common Stock, Shares, Outstanding | 105,122 | 42,049 | |
Number of days outstanding for a past due trade receivables | 90 days | ||
Common Class A [Member] | |||
Common Stock, Shares, Outstanding | 42,049 | ||
Common Stock, Shares, Outstanding | 56,086 | ||
Common Class B [Member] | |||
Common Stock, Shares, Outstanding | 6,987 | ||
Common Stock [Member] | |||
Common Stock, Shares, Outstanding | 42,049 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 8) | $ 20,136,749 | $ 26,488,313 | $ 73,516,378 | $ 71,193,326 |
Ethanol [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 8) | 14,025,039 | 21,006,222 | 55,182,772 | 54,649,341 |
Distillers' Grains [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 8) | 4,360,153 | 3,761,379 | 13,715,936 | 11,253,448 |
Other Products [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenues (Notes 2 and 8) | $ 1,751,557 | $ 1,720,712 | $ 4,617,670 | $ 5,290,537 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2020 | Sep. 30, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials, including corn, chemicals, parts and supplies | $ 4,051,295 | $ 4,902,526 |
Work in process | 743,619 | 900,459 |
Ethanol and distillers grains | 2,518,485 | 637,731 |
Total | $ 7,313,399 | $ 6,440,716 |
Revolving Credit Loan (Details)
Revolving Credit Loan (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2020 | Sep. 30, 2019 | |
Debt Disclosure [Abstract] | ||
Revolving Term Loan, Maximum Borrowing Capacity | $ 4,000,000 | |
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt Instrument, Basis Spread on Variable Rate | 3.75% | |
Debt Instrument, Interest Rate During Period | 3.93% | |
Line of Credit Facility, Commitment Fee Percentage | 0.25% | |
Revolving Term Loan, Outstanding Balance | $ 0 | $ 300,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 9 Months Ended | ||
Jun. 30, 2020 | Apr. 13, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | |||
Debt Instrument, Description of Variable Rate Basis | LIBOR | ||
Debt instrument, basis spread on variable rate | 3.75% | ||
Revolving Term Loan, Maximum Borrowing Capacity | $ 4,000,000 | ||
Letter of Credit, Maximum Amount | 1,307,525 | ||
Letters of Credit Outstanding, Amount | 1,307,525 | ||
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 25,000,000 | ||
Line of Credit Facility, Maximum Borrowing Capacity Annual Reduction | $ 5,000,000 | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | ||
Debt instrument, basis spread on variable rate | 3.75% | ||
Debt Instrument, Interest Rate, Effective Percentage | 3.93% | ||
Line of credit facility, unused capacity, commitment fee percentage | 0.50% | ||
Line of Credit Facility, Fair Value of Amount Outstanding | $ 23,200,000 | $ 25,000,000 | |
Paycheck Protection Program [Member] | |||
Debt Instrument [Line Items] | |||
Paycheck Protection Program | $ 505,700 | ||
Proceeds to be Used for Payroll, Minimum | 60.00% | ||
Proceeds to be Used for Non-Payroll, Maximum | 40.00% | ||
debt instrument, interest rate, if not forgiven | 1.00% | ||
Debt Instrument, Redemption, Period Two [Member] | |||
Debt Instrument [Line Items] | |||
Revolving Term Loan, Maximum Borrowing Capacity | $ 20,000,000 | ||
Debt Instrument, Redemption, Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Revolving Term Loan, Maximum Borrowing Capacity | 15,000,000 | ||
Debt Instrument, Redemption, Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Revolving Term Loan, Maximum Borrowing Capacity | $ 10,000,000 |
Substantial Doubt about Going_2
Substantial Doubt about Going Concern (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | May 28, 2020 | Apr. 13, 2020 |
Proceeds from Issuance of Common Stock | $ 5,000,000 | $ 2,500,000 | $ 5,000,000 | $ 7,500,000 | $ 0 | ||
Common Stock, Shares, Issued | 42,049 | 42,049 | |||||
Paycheck Protection Program | $ 505,700 | ||||||
Common Unit, Issuance Value | $ 2,500,000 | ||||||
initial debt reduction deferred | $ 5,000,000 | ||||||
Net Worth Covenant, Minumum Amount, Original Agreement | 25,000,000 | 25,000,000 | |||||
Net Worth Covenant, Minimum Amount, Revised | 24,000,000 | 24,000,000 | |||||
Working Capital, Minimum Amount, Original | 7,500,000 | 7,500,000 | |||||
Working Capital, Minimum Amount, Revised | $ 10,000,000 | $ 10,000,000 | |||||
Common Class A [Member] | |||||||
Common Stock, Shares, Issued | 42,049 | 42,049 |
Related-Party Transactions (Det
Related-Party Transactions (Details) | May 28, 2020USD ($)shares | Jun. 30, 2020USD ($)bu | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)sharesbu | Jun. 30, 2019USD ($) |
Related Party Transaction [Line Items] | |||||
Management Fee Expense | $ 242,096 | $ 389,849 | |||
Accrued management Fee Expenses | 60,900 | 60,900 | |||
Corn [Member] | Other Members [Member] | |||||
Related Party Transaction [Line Items] | |||||
Purchase Commitment, Minimum Amount Committed, Forward Contracts | $ 1,548,363 | $ 1,548,363 | |||
Supply Commitment, quantity, unpriced contracts | bu | 300,000 | 300,000 | |||
Purchase Commitment, Remaining Minimum Amount Committed | $ 629,033 | $ 629,033 | |||
Supplies Purchased, Materials for Production | $ 12,512,644 | $ 8,781,404 | $ 41,335,537 | $ 30,992,085 | |
Common Class A [Member] | |||||
Related Party Transaction [Line Items] | |||||
Proceeds from Issuance or Sale of Equity | $ 1,669,176 | ||||
Common Class A [Member] | HALE, Related Party [Member] | |||||
Related Party Transaction [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | shares | 14,037 | 42,049 | |||
Proceeds from Issuance or Sale of Equity | $ 5,000,000 | ||||
Common Stock, Other Shares, Outstanding | shares | 56,086 |
Commitments and Major Custome_2
Commitments and Major Customer (Details) gal in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020USD ($)Tgal | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Tgal | Jun. 30, 2019USD ($) | |
Revenue, Major Customer [Line Items] | ||||
Operating Leases, Rent Expense | $ 470,000 | $ 497,000 | $ 1,489,000 | $ 1,540,000 |
Ethanol [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Entity-wide, major customer, unrelated party, amount | 14,025,039 | 21,006,221 | 55,182,772 | 54,627,815 |
Ethanol receivable | $ 2,400,244 | $ 2,400,244 | ||
Supply Commitment, quantity, unpriced contracts | gal | 14.1 | 14.1 | ||
Distillers' Grains [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Entity-wide, major customer, unrelated party, amount | $ 4,473,741 | $ 3,761,379 | $ 14,226,207 | $ 11,253,448 |
Distillers grains receivable | $ 758,047 | $ 758,047 | ||
Supply Commitment, quantity, Priced Contracts | T | 25,430 | 25,430 | ||
Supply Commitment, Remaining Minimum Amount Committed | $ 3,100,000 | $ 3,100,000 | ||
Corn [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Long-term Purchase Commitment, Amount | $ 397,592 |
Commitments and Major Custome_3
Commitments and Major Customer Purchase committments (Details) gal in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2020USD ($)MMBTUTRategal | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Tgal | Jun. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Long-term Purchase Commitment [Line Items] | |||||
Operating Leases, Rent Expense | $ 470,000 | $ 497,000 | $ 1,489,000 | $ 1,540,000 | |
Operating Lease Interest Rate, Minimum | Rate | 3.68% | ||||
Operating Lease Interest Rate, Maximum | Rate | 6.23% | ||||
Operating Lease, Right-of-Use Asset | $ 5,711,404 | 5,711,404 | $ 0 | ||
Lessee, Operating Lease, Liability, to be Paid, Year One | 466,125 | 466,125 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Two | 1,853,440 | 1,853,440 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Three | 1,581,044 | 1,581,044 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Four | 1,286,169 | 1,286,169 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Five | 982,275 | 982,275 | |||
Lessee, Operating Lease, Liability, to be Paid, after Year Five | 513,450 | 513,450 | |||
Operating Lease, Payments | 6,682,503 | ||||
Discounted Operating Lease Effect | 1,045,542 | 1,045,542 | |||
Operating Lease, Payments, Discounted | 5,636,961 | ||||
Corn [Member] | |||||
Long-term Purchase Commitment [Line Items] | |||||
Long-term Purchase Commitment, Amount | 397,592 | ||||
Natural Gas [Member] | |||||
Long-term Purchase Commitment [Line Items] | |||||
Purchase Commitment, Transportation Fees | 3,600,000 | ||||
Purchase Commitment, Remaining Minimum Amount Committed | $ 1,300,000 | $ 1,300,000 | |||
Long-term Purchase Commitment, Minimum Energy Volume Required | MMBTU | 395,313 | ||||
Long-term Purchase Commitment, Period | 10 years | ||||
Ethanol [Member] | |||||
Long-term Purchase Commitment [Line Items] | |||||
Ethanol receivable | $ 2,400,244 | $ 2,400,244 | |||
Supply Commitment, quantity, unpriced contracts | gal | 14.1 | 14.1 | |||
Distillers Grains [Member] | |||||
Long-term Purchase Commitment [Line Items] | |||||
Supply Commitment, quantity, Priced Contracts | T | 25,430 | 25,430 |
Risk Management (Details)
Risk Management (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 | |
Trading Activity, Gains and Losses, Net [Line Items] | |||||
Cash due from (due to) broker | $ (134,789) | $ (134,789) | $ (249,531) | ||
Derivative Liability, Current | 56,402 | 56,402 | 188,694 | ||
Trading Activity, Gains and Losses, Net | 171,662 | $ (1,005,692) | 921,280 | $ (606,060) | |
Cost of Goods and Service Benchmark [Member] | |||||
Trading Activity, Gains and Losses, Net [Line Items] | |||||
Trading Activity, Gains and Losses, Net | 171,662 | (1,005,692) | 921,280 | (627,585) | |
Ethanol [Member] | Sales [Member] | |||||
Trading Activity, Gains and Losses, Net [Line Items] | |||||
Gain (Loss) on Sale of Derivatives | 0 | 0 | 0 | 21,525 | |
Trading Activity, Gains and Losses, Net | 0 | 0 | 0 | 21,525 | |
Corn [Member] | |||||
Trading Activity, Gains and Losses, Net [Line Items] | |||||
Derivative assets - corn contracts | 43,300 | 43,300 | 531,875 | ||
Derivative liabilities - corn contracts | (121,687) | (121,687) | $ (93,650) | ||
Corn [Member] | Cost of Goods and Service Benchmark [Member] | |||||
Trading Activity, Gains and Losses, Net [Line Items] | |||||
Gain (Loss) on Sale of Derivatives | 601,750 | (444,267) | 1,635,018 | 327,033 | |
Unrealized Gain (Loss) on Derivatives | (430,088) | (561,425) | (713,738) | (971,738) | |
Trading Activity, Gains and Losses, Net | 171,662 | (1,005,692) | 921,280 | (644,705) | |
Natural Gas [Member] | Cost of Goods and Service Benchmark [Member] | |||||
Trading Activity, Gains and Losses, Net [Line Items] | |||||
Gain (Loss) on Sale of Derivatives | 0 | 0 | 0 | 13,660 | |
Unrealized Gain (Loss) on Derivatives | 0 | 0 | 0 | 3,460 | |
Trading Activity, Gains and Losses, Net | $ 0 | $ 0 | $ 0 | $ 17,120 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Recurring [Member] - USD ($) | Jun. 30, 2020 | Sep. 30, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | $ 43,300 | $ 531,875 |
Assets, derivative financial instruments | (121,687) | (93,650) |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | 43,300 | 531,875 |
Assets, derivative financial instruments | (121,687) | (93,650) |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | 0 | 0 |
Assets, derivative financial instruments | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, derivative financial instruments | 0 | 0 |
Assets, derivative financial instruments | $ 0 | $ 0 |