Lincolnway Energy 10-Q 16 May 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2016	May. 01, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Lincolnway Energy, LLC
Entity Central Index Key	1,350,420
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		42,049

Balance Sheets Statement

Balance Sheets Statement - USD ($)	Mar. 31, 2016	Sep. 30, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 13,966	$ 1,502,498
Cash	13,966	250
Restricted Cash and Cash Equivalents, Noncurrent	0	1,502,248
Cash Equivalents, at Carrying Value	1,100,000	1,500,000
Derivative financial instruments (Note 8 and 9)	612,452	746,178
Trade and other accounts receivable (Note 7)	3,531,591	3,977,264
Inventories (Note 3)	4,194,390	3,957,973
Prepaid expenses and other	313,873	404,180
Total current assets	8,666,272	10,588,093
PROPERTY AND EQUIPMENT
Land and land improvements	6,982,287	6,982,287
Buildings and improvements	3,019,955	2,978,918
Plant and process equipment	100,821,780	93,371,048
Office furniture and equipment	457,211	455,736
Construction in progress	1,790,220	7,604,320
Property, plant and equipment, gross	113,071,453	111,392,309
Accumulated depreciation	(77,157,871)	(73,753,905)
Property, plant and equipment, net	35,913,582	37,638,404
OTHER ASSETS
Financing costs, net of amortization of $428,125 and $410,590	43,836	61,371
Other	815,065	777,478
Other assets, noncurrent	858,901	838,849
Assets	45,438,755	49,065,346
CURRENT LIABILITIES
Bank Overdrafts	110,930	1,656,923
Accounts payable	1,778,924	3,096,317
Accounts payable, related party (Note 6)	443,915	750,768
Current maturities of long-term debt (Note 5)	54,853	54,280
Accrued loss on firm purchase commitment	120,995	0
Derivative Liability, Current	612,452
Accrued expenses	1,126,154	1,262,355
Total current liabilities	3,635,771	6,820,643
NONCURRENT LIABILITIES
Long-term debt, less current maturities (Note 5)	3,750,000	27,571
Deferred revenue	666,667	740,741
Other	450,000	450,000
Total noncurrent liabilities	4,866,667	1,218,312
MEMBERS' EQUITY
Member contributions, 42,049 units issued and outstanding	38,990,105	38,990,105
Retained earnings (deficit)	(2,053,788)	2,036,286
Members' Equity	36,936,317	41,026,391
Liabilities and Equity	$ 45,438,755	$ 49,065,346

Balance Sheets Parenthetical St

Balance Sheets Parenthetical Statement - USD ($)	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Sep. 30, 2015
OTHER ASSETS
Financing costs, net of amortization of	$ 428,125		$ 410,590
MEMBER'S EQUITY
Units issued and outstanding	42,049	42,049

Statements of Operations Statem

Statements of Operations Statement - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Revenues (Notes 2 and 7)	$ 22,463,582	$ 30,168,024	$ 46,864,241	$ 60,188,987
Cost of goods sold (Note 7)	24,502,618	29,667,066	49,453,901	57,099,539
Gross profit (loss)	(2,039,036)	500,958	(2,589,660)	3,089,448
General and administrative expenses	669,318	748,136	1,475,654	1,610,935
Operating income (loss)	(2,708,354)	(247,178)	(4,065,314)	1,478,513
Other income (expense):
Interest income	1,006	4,065	2,313	15,234
Interest expense	(18,020)	(12,743)	(27,073)	(25,704)
Other income (expense)	(17,014)	(8,678)	(24,760)	(10,470)
Net income (loss)	$ (2,725,368)	$ (255,856)	$ (4,090,074)	$ 1,468,043
Weighted average units outstanding	42,049	42,049	42,049	42,049
Net income (loss) per unit - basic and diluted	$ (64.81)	$ (6.08)	$ (97.27)	$ 34.91

Statement of Cash Flows Stateme

Statement of Cash Flows Statement	6 Months Ended
	Mar. 31, 2016USD ($)	Mar. 31, 2015USD ($)
Statement of Cash Flows [Abstract]
Proceeds from Issuance of Long-term Debt	$ 3,750,000	$ 0
Cash Equivalents, at Carrying Value	1,100,000
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Construction in progress included in accrued expenses	84,793	32,508
Construction in progress included in accounts payable	46,123	746,799
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION, cash paid for interest	10,815	1,425
CASH AND CASH EQUIVALENTS
Beginning	1,502,498	22,978,388
Ending	13,966	4,722,569
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Short-term Debt	0	(13,665,925)
Payments on long-term borrowings	(26,998)	(26,437)
Increase (Decrease) in Book Overdrafts	(1,545,993)	0
Net cash provided by (used in) financing activities	2,177,009	(13,692,362)
Net decrease in cash and cash equivalents	(1,488,532)	(18,255,819)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(2,770,416)	(7,695,022)
Net cash (used in) investing activities	(2,770,416)	(7,695,022)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	3,422,509	4,049,490
Changes in working capital components:
Derivative financial instruments	133,726	(139,676)
Trade and other accounts receivable	445,673	(2,687,315)
Inventories	(236,417)	898,913
Prepaid expenses and other	52,720	(117,167)
Accounts payable	(145,426)	335,773
Accounts payable, related party	(306,853)	(73,952)
Increase (decrease) in accrued loss on firm purchases	120,995	0
Accrued expenses and deferred revenue	(291,978)	(602,544)
Net cash provided by (used in) operating activities	(895,125)	3,131,565
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (4,090,074)	$ 1,468,043

Summary of Significant Accounti

Summary of Significant Accounting Policies (Notes) gal in Millions	6 Months Ended
	Mar. 31, 2016USD ($)gal	Sep. 30, 2015USD ($)
Accounting Policies [Abstract]
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, 2015 was derived from the Company's audited balance sheet as of that date. The accompanying financial statements as of March 31, 2016 and for the three and six months ended March 31, 2016 and 2015 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, 2015 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. 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. The Company periodically invests excess cash in a bank overnight reverse repurchase account, which totaled approximately $1.1 million and $1.5 million at March 31, 2016 and September 30, 2015 , respectively. In accordance with the terms of the repurchase agreements, the Company does not take possession of the related securities. The agreements also contain provisions to ensure that the market value of the underlying assets remain sufficient to protect the Company in the event of default by the bank by requiring that the underlying securities have a total market value of at least 100% of the bank's total obligations under the agreements. 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 the customer's 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 account balance as of March 31, 2016 and September 30, 2015 . Inventories: Inventories are stated at the lower of cost or market using the first-in, first-out method. In the valuation of inventories and purchase commitments, market is based on net realizable values. For the six months ended March 31, 2016, the Company recognized a loss of approximately $95,449 for a lower of costs or market inventory adjustment. No adjustments to inventory were made for the six months ended March 31, 2015. 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, but are subject to a lower of cost or market assessment. Revenue recognition: Revenue from the sale of the Company’s ethanol and distillers grains is recognized at the time title and all risks of ownership transfer to the customers. This generally occurs upon the loading of the product. For ethanol, title passes at the time the product crosses the loading flange in either a railcar or truck. For distillers grain, title passes upon the loading into trucks or railcars. 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. Deferred revenue: Deferred revenue represents fees received under a service agreement in advance of services being performed. The related revenue is deferred and recognized as the services are performed over the term of the agreement. 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. 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.
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.
Basis of Accounting, Policy [Policy Text Block]	Basis of presentation and other information : The balance sheet as of September 30, 2015 was derived from the Company's audited balance sheet as of that date. The accompanying financial statements as of March 31, 2016 and for the three and six months ended March 31, 2016 and 2015 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, 2015 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. The Company periodically invests excess cash in a bank overnight reverse repurchase account, which totaled approximately $1.1 million and $1.5 million at March 31, 2016 and September 30, 2015 , respectively. In accordance with the terms of the repurchase agreements, the Company does not take possession of the related securities. The agreements also contain provisions to ensure that the market value of the underlying assets remain sufficient to protect the Company in the event of default by the bank by requiring that the underlying securities have a total market value of at least 100% of the bank's total obligations under the agreements.
Trade and Other Accounts Receivable, Policy [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 the customer's 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 account balance as of March 31, 2016 and September 30, 2015 .
Inventory, Policy [Policy Text Block]	Inventories: Inventories are stated at the lower of cost or market using the first-in, first-out method. In the valuation of inventories and purchase commitments, market is based on net realizable values. For the six months ended March 31, 2016,
Deferred Revenue [Policy Text Block]	Deferred revenue: Deferred revenue represents fees received under a service agreement in advance of services being performed. The related revenue is deferred and recognized as the services are performed over the term of the agreement.
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.
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.
Allowance for Doubtful Accounts Receivable | $	$ 0	$ 0
Annual ethanol production | gal	50
Number of days outstanding for a past due trade receivables	90 days

Revenue

Revenue	6 Months Ended
	Mar. 31, 2016
Revenue by product [Abstract]
Revenue	Revenues Components of revenues are as follows: Three Months Ended Six Months Ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Ethanol, net of hedging gain (loss) $ 17,075,811 $ 22,767,894 36,294,463 48,134,120 Distillers Grains 4,190,517 6,501,539 8,191,091 10,502,583 Other 1,197,254 898,591 2,378,687 1,552,284 Total $ 22,463,582 $ 30,168,024 $ 46,864,241 $ 60,188,987

Inventories

Inventories	6 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories consist of the following: March 31, September 30, Raw materials, including corn, chemicals and supplies $ 2,802,623 $ 3,017,637 Work in process 740,493 662,769 Ethanol and distillers grains 651,274 277,567 Total $ 4,194,390 $ 3,957,973

Long-Term Debt

Long-Term Debt	6 Months Ended
	Mar. 31, 2016
Long-term Debt, Unclassified [Abstract]
Long-Term Debt	Long-Term Debt The Company has a revolving term loan, with a bank, available for up to $11,000,000 . The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.15% . The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .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 loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on November 1, 2020. There was $3,750,000 and $0 outstanding borrowings on the revolving term loan at March 31, 2016 and September 30, 2015 .

Related-Party Transactions

Related-Party Transactions	6 Months Ended
	Mar. 31, 2016
Related Party Transactions [Abstract]
Purchase Commitment, Excluding Long-term Commitment [Table Text Block]	Corn Commitment: March 31, 2016 Corn Forward Purchase Commitment Basis Corn Commitment (Bushels) Commitment Through Amount Due Related Parties $ 1,367,812 2,210,000 October 2016 $ 443,915
Schedule of Related Party Transactions [Table Text Block]	Corn Purchased: Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Six Months Ended March 31, 2016 Six Months Ended March 31, 2015 Related Parties $ 10,482,669 $ 12,720,392 $ 23,202,185 $ 23,933,453
Related-Party Transactions	Related-Party Transactions The Company had the following related-party activity with members as of March 31, 2016 and during the three and six months ended March 31, 2016 and 2015: Corn Commitment: March 31, 2016 Corn Forward Purchase Commitment Basis Corn Commitment (Bushels) Commitment Through Amount Due Related Parties $ 1,367,812 2,210,000 October 2016 $ 443,915 Corn Purchased: Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Six Months Ended March 31, 2016 Six Months Ended March 31, 2015 Related Parties $ 10,482,669 $ 12,720,392 $ 23,202,185 $ 23,933,453

Commitments and Major Customer

Commitments and Major Customer	6 Months Ended
	Mar. 31, 2016
Commitments and Major Customer [Abstract]
Commitments and Major Customer	Commitments and Major Customers On January 1, 2013, the Company entered into an agreement with an unrelated entity for marketing, selling and distributing all of the ethanol produced by the Company. Revenues with this entity were $17,057,595 and $36,221,353 , respectively, for the three and six months ended March 31, 2016. Revenues with this entity were $22,029,408 and $47,789,489 , respectively, for the three and six months ended March 31, 2015. Trade accounts receivable of $2,592,495 were due from this entity as of March 31, 2016 . As of March 31, 2016 , the Company had ethanol unpriced sales commitments with this entity of approximately 15.0 million gallons through December 2016. The Company entered into an agreement on January 1, 2014 with an unrelated entity for marketing, selling and distributing all of the distillers grains produced by the Company. Revenues with this entity were $4,324,175 and $8,696,218 , respectively, for the three and six months ended March 31, 2016. Revenues with this entity were $6,501,539 and $10,502,583 , respectively, for the three and six months ended March 31, 2015. Trade accounts receivable of $455,493 were due from this entity as of March 31, 2016 . The Company had distillers grain sales commitments with this entity of approximately 1,878 tons, for a total sales commitment of approximately $.2 million through April 2016. As of March 31, 2016 , the Company had purchased commitments for corn forward contracts with various unrelated parties, at a corn commitment total of approximately $1.2 million. These contracts mature at various dates through January 2017. At March 31, 2016, the Company recorded a reserve and a resulting loss of $120,995 for the losses on forward purchase commitments. In fiscal 2013, the Company entered into 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. At March 31, 2016 the remaining commitment was approximately $2.7 million. The Company also assigned a $2.7 million irrevocable standby letter of credit to the counter-party to stand as security for the Company's obligation under the agreement. The letter of credit will be reduced over time as the Company makes payment under the agreement. As of March 31, 2016, the Company had purchased commitments for natural gas forward contracts with an unrelated party for a total commitment of $383,589 . These contracts mature at various dates through December 2016. On August 19, 2015, the Company entered into an agreement with an unrelated party for the construction of a grain bin. The purchase price is approximately $1 million. Approximately $.8 million has been paid. The remaining balance of approximately $.2 million will be paid as invoiced over the course of the completion of the project in fiscal year 2016.

Risk Management

Risk Management	6 Months Ended
	Mar. 31, 2016
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 its 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: March 31, 2016 September 30, 2015 Derivative assets - corn contracts $ 292,706 $ 435,525 Derivative liabilities - corn contracts (160,725 ) (76,075 ) Derivative liabilities - ethanol contracts (107,483 ) (110,250 ) Derivative liabilities - natural gas contracts — (1,880 ) Cash held by broker 587,954 498,858 Total $ 612,452 $ 746,178 The effects on operating income from derivative activities is as follows: Three Months Ended Six Months Ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Gains (losses) in revenues due to derivatives related to ethanol sales: Realized gain (loss) $ 22,575 $ (464,772 ) $ 70,343 $ (760,673 ) Unrealized gain (loss) (4,359 ) 70,917 2,767 (15,057 ) Total effect on revenues 18,216 (393,855 ) 73,110 (775,730 ) Gains (losses) in cost of goods sold due to derivatives related to corn costs: Realized gain 481,813 1,082,369 1,033,444 158,376 Unrealized gain (loss) (367,032 ) (484,881 ) (178,719 ) 907,550 Total effect on corn cost 114,781 597,488 854,725 1,065,926 Gains (losses) in cost of goods sold due to derivatives related to natural gas costs: Realized gain 97,390 — 124,800 — Total effect on natural gas cost 97,390 — 124,800 — Total effect on cost of goods sold $ 212,171 $ 597,488 $ 979,525 $ 1,065,926 Total gain due to derivative activities $ 230,387 $ 203,633 $ 1,052,635 $ 290,196 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 market assessment.

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Mar. 31, 2016
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 of 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 March 31, 2016 and September 30, 2015 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: March 31, 2016 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 292,706 $ 292,706 $ — $ — Liabilities, derivative financial instruments $ (268,208 ) $ (268,208 ) $ — $ — September 30, 2015 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 435,525 $ 435,525 $ — $ — Liabilities, derivative financial instruments $ (188,205 ) $ (188,205 ) $ — $ —

Revenue (Tables)

Revenue (Tables)	6 Months Ended
	Mar. 31, 2016
Revenue by product [Abstract]
Revenue from External Customers by Products and Services	Components of revenues are as follows: Three Months Ended Six Months Ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Ethanol, net of hedging gain (loss) $ 17,075,811 $ 22,767,894 36,294,463 48,134,120 Distillers Grains 4,190,517 6,501,539 8,191,091 10,502,583 Other 1,197,254 898,591 2,378,687 1,552,284 Total $ 22,463,582 $ 30,168,024 $ 46,864,241 $ 60,188,987

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Schedule of Inventory, Current	Inventories consist of the following: March 31, September 30, Raw materials, including corn, chemicals and supplies $ 2,802,623 $ 3,017,637 Work in process 740,493 662,769 Ethanol and distillers grains 651,274 277,567 Total $ 4,194,390 $ 3,957,973

Risk Management (Tables)

Risk Management (Tables)	6 Months Ended
	Mar. 31, 2016
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: March 31, 2016 September 30, 2015 Derivative assets - corn contracts $ 292,706 $ 435,525 Derivative liabilities - corn contracts (160,725 ) (76,075 ) Derivative liabilities - ethanol contracts (107,483 ) (110,250 ) Derivative liabilities - natural gas contracts — (1,880 ) Cash held by broker 587,954 498,858 Total $ 612,452 $ 746,178
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance	The effects on operating income from derivative activities is as follows: Three Months Ended Six Months Ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Gains (losses) in revenues due to derivatives related to ethanol sales: Realized gain (loss) $ 22,575 $ (464,772 ) $ 70,343 $ (760,673 ) Unrealized gain (loss) (4,359 ) 70,917 2,767 (15,057 ) Total effect on revenues 18,216 (393,855 ) 73,110 (775,730 ) Gains (losses) in cost of goods sold due to derivatives related to corn costs: Realized gain 481,813 1,082,369 1,033,444 158,376 Unrealized gain (loss) (367,032 ) (484,881 ) (178,719 ) 907,550 Total effect on corn cost 114,781 597,488 854,725 1,065,926 Gains (losses) in cost of goods sold due to derivatives related to natural gas costs: Realized gain 97,390 — 124,800 — Total effect on natural gas cost 97,390 — 124,800 — Total effect on cost of goods sold $ 212,171 $ 597,488 $ 979,525 $ 1,065,926 Total gain due to derivative activities $ 230,387 $ 203,633 $ 1,052,635 $ 290,196

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Mar. 31, 2016
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 March 31, 2016 and September 30, 2015 , segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: March 31, 2016 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 292,706 $ 292,706 $ — $ — Liabilities, derivative financial instruments $ (268,208 ) $ (268,208 ) $ — $ — September 30, 2015 Total Level 1 Level 2 Level 3 Assets, derivative financial instruments $ 435,525 $ 435,525 $ — $ — Liabilities, derivative financial instruments $ (188,205 ) $ (188,205 ) $ — $ —

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Details) - USD ($)	6 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Inventory Adjustments	$ 95,449
Allowance for Doubtful Accounts Receivable	0	$ 0
Cash Equivalents, at Carrying Value	$ 1,100,000	$ 1,500,000
Guarantor Obligations, Liquidation Proceeds, Percentage	100.00%

Revenue (Details)

Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Revenue from External Customer [Line Items]
Revenues (Notes 2 and 7)	$ 22,463,582	$ 30,168,024	$ 46,864,241	$ 60,188,987
Ethanol [Member]
Revenue from External Customer [Line Items]
Revenues (Notes 2 and 7)	17,075,811	22,767,894	36,294,463	48,134,120
Distillers' Grains [Member]
Revenue from External Customer [Line Items]
Revenues (Notes 2 and 7)	4,190,517	6,501,539	8,191,091	10,502,583
Other [Member]
Revenue from External Customer [Line Items]
Revenues (Notes 2 and 7)	$ 1,197,254	$ 898,591	$ 2,378,687	$ 1,552,284

Inventories (Details)

Inventories (Details) - USD ($)	Mar. 31, 2016	Sep. 30, 2015
Inventory Disclosure [Abstract]
Raw materials, including corn, chemicals and supplies	$ 2,802,623	$ 3,017,637
Work in process	740,493	662,769
Ethanol and distillers grains	651,274	277,567
Total	$ 4,194,390	$ 3,957,973

Revolving Credit Loan (Details)

Revolving Credit Loan (Details) - USD ($)	6 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
Line of Credit Facility [Line Items]
Revolving Credit Loan	Revolving Credit Loan The Company has a monitored revolving credit loan, with a bank, for up to $8,500,000 . The Company will pay interest monthly on the unpaid balance at a variable rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 2.9% . The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .20% per annum, payable monthly. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the loan on July 1, 2016. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. There was no outstanding balance on the revolving credit loan as of March 31, 2016 and September 30, 2015 .
Line of Credit Facility, Fair Value of Amount Outstanding		$ 0
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Debt instrument, description of variable rate basis	LIBOR
Debt instrument, basis spread on variable rate	2.90%
Line of credit facility, unused capacity, commitment fee percentage	0.20%
Revolving credit loan	$ 8,500,000	$ 0
Line of Credit Facility, Fair Value of Amount Outstanding	$ 0

Long-Term Debt (Details)

Long-Term Debt (Details) - USD ($)	6 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
Debt Instrument [Line Items]
Less current maturities	$ (54,853)	$ (54,280)
Line of Credit Facility, Fair Value of Amount Outstanding		0
Long-term Debt [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 11,000,000
Debt Instrument, Description of Variable Rate Basis	LIBOR
Debt instrument, basis spread on variable rate	3.15%
Line of credit facility, unused capacity, commitment fee percentage	0.50%
Line of Credit Facility, Fair Value of Amount Outstanding	$ 3,750,000	$ 0

Related-Party Transactions (Det

Related-Party Transactions (Details)	3 Months Ended		6 Months Ended
	Mar. 31, 2016USD ($)bu	Mar. 31, 2015USD ($)	Mar. 31, 2016USD ($)bu	Mar. 31, 2015USD ($)
Related Party Transaction [Line Items]
Supply Commitment, quantity, unpriced contracts | bu	15,000,000		15,000,000
Purchase Commitment, Remaining Minimum Amount Committed	$ 0		$ 0
Interest paid			10,815	$ 1,425
Corn [Member] | Key Coop [Member]
Related Party Transaction [Line Items]
Supplies Purchased, Materials for Production	10,482,669	$ 12,720,392	23,202,185	$ 23,933,453
Purchase Commitment, Minimum Amount Committed, Forward Contracts	$ 1,367,812		$ 1,367,812
Supply Commitment, quantity, unpriced contracts | bu	2,210,000		2,210,000
Purchase Commitment, Remaining Minimum Amount Committed	$ 443,915		$ 443,915

Commitments and Major Customer

Commitments and Major Customer (Details) bu in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2016USD ($)Tbu	Mar. 31, 2015USD ($)	Mar. 31, 2016USD ($)Tbu	Mar. 31, 2015USD ($)	Dec. 31, 2015USD ($)
Revenue, Major Customer [Line Items]
Revenues (Notes 2 and 7)	$ 22,463,582	$ 30,168,024	$ 46,864,241	$ 60,188,987
Supply Commitment, quantity, unpriced contracts | bu	15		15
Ethanol [Member]
Revenue, Major Customer [Line Items]
Ethanol receivable	$ 2,592,495		$ 2,592,495
Entity-wide, major customer, unrelated party, amount	17,057,595	36,221,353	22,029,408	47,789,489
Distillers' Grains [Member]
Revenue, Major Customer [Line Items]
Supply Commitment, Remaining Minimum Amount Committed	0		0
Entity-wide, major customer, unrelated party, amount	$ 4,324,175	$ 8,696,218	$ 6,501,539	$ 10,502,583
Distillers grains receivable					$ 455,493
Supply Commitment, quantity, Priced Contracts | T	1,878		1,878
Corn [Member]
Revenue, Major Customer [Line Items]
Long-term Purchase Commitment, Amount			$ 0
Financial Standby Letter of Credit [Member]
Revenue, Major Customer [Line Items]
Guarantor Obligations, Current Carrying Value	$ 2,700,000		$ 2,700,000

Commitments and Major Custome25

Commitments and Major Customer Purchase committments (Details)	6 Months Ended
	Mar. 31, 2016USD ($)
Long-term Purchase Commitment [Line Items]
Purchase Commitment, Transportation Fees	$ 3,600,000
Long-term Purchase Commitment, Period	10 years
Purchase Commitment, Remaining Minimum Amount Committed	$ 0
Corn [Member]
Long-term Purchase Commitment [Line Items]
Long-term Purchase Commitment, Amount	0
Increase (decrease) in accrued loss on firm commitments	120,995
Natural Gas [Member]
Long-term Purchase Commitment [Line Items]
Long-term Purchase Commitment, Amount	383,589
Grain Bins [Member]
Long-term Purchase Commitment [Line Items]
Property, Plant and Equipment, Additions	1,000,000
Property, Plant, and Equipment. Additions, New Construction, Principal Paid	800,000
Property, Plant, and Equipment, Additions, New Construction, Remaining Principal Balance	200,000
Financial Standby Letter of Credit [Member]
Long-term Purchase Commitment [Line Items]
Guarantor Obligations, Current Carrying Value	$ 2,700,000

Risk Management (Details)

Risk Management (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015	Sep. 30, 2015
Trading Activity, Gains and Losses, Net [Line Items]
Cash held by broker	$ 587,954		$ 587,954		$ 498,858
Trading Activity, Gains and Losses, Net	230,387	$ 203,633	1,052,635	$ 290,196
Derivative Liability, Current	612,452		612,452
Cost of Goods, Total [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	212,171	597,488	979,525	1,065,926
Corn [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Derivative assets - corn contracts	292,706		292,706		435,525
Derivative liabilities - corn contracts	(160,725)		(160,725)		(76,075)
Corn [Member] | Cost of Goods, Total [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) on Sale of Derivatives	481,813	1,082,369	1,033,444	158,376
Unrealized Gain (Loss) on Derivatives	(367,032)	(484,881)	(178,719)	907,550
Trading Activity, Gains and Losses, Net	114,781	597,488	854,725	1,065,926
Ethanol [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Derivative liabilities - corn contracts	(107,483)		(107,483)		(110,250)
Ethanol [Member] | Sales [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) on Sale of Derivatives	22,575	(464,772)	70,343	(760,673)
Unrealized Gain (Loss) on Derivatives	(4,359)	70,917	2,767	(15,057)
Trading Activity, Gains and Losses, Net	18,216	(393,855)	73,110	(775,730)
Natural Gas [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Derivative liabilities - corn contracts	0		0		$ (1,880)
Natural Gas [Member] | Cost of Goods, Total [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Gain (Loss) on Sale of Derivatives	97,390	0	124,800	0
Trading Activity, Gains and Losses, Net	$ 97,390	$ 0	$ 124,800	$ 0

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - USD ($)	Mar. 31, 2016	Sep. 30, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, derivative financial instruments	$ 292,706	$ 435,525
Assets, derivative financial instruments	268,208	188,205
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, derivative financial instruments	292,706	435,525
Assets, derivative financial instruments	268,208	188,205
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