Cardinal Ethanol (CRDE) 10-Q 2021 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the quarterly period ended June 30, 2021.
	OR
☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from               to               .
COMMISSION FILE NUMBER 000-53036

CARDINAL ETHANOL, LLC

(Exact name of registrant as specified in its charter)

Indiana	20-2327916
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1554 N. County Road 600 E., Union City, IN 47390

(Address of principal executive offices)

(765) 964-3137

(Registrant's telephone number, including area code)

Securities registered pursuant to 12(b) of the Act: None.

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

Securities registered pursuant to Section 12(g) of the Act: Membership Units.

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

x Yes     o No

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

x Yes     o No

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

☐ Yes     x No

As of August 4, 2021, there were 14,606 membership units outstanding.

1

INDEX

	Page Number
PART I. FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures about Market Risk	39
Item 4. Controls and Procedures	41
PART II. OTHER INFORMATION	42
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3. Defaults Upon Senior Securities	42
Item 4. Mine Safety Disclosures	42
Item 5. Other Information	42
Item 6. Exhibits	42
SIGNATURES	44

2

PART I.        FINANCIAL INFORMATION

Item 1. Financial Statements

CARDINAL ETHANOL, LLC

Condensed Balance Sheets

ASSETS	June 30, 2021		September 30, 2020
	(Unaudited)
Current Assets
Cash	$	7,695,998	$	12,950,558
Restricted cash	11,535,807		3,963,424
Trade accounts receivable	19,275,222		9,174,937
Miscellaneous receivables	720,359		813,060
Inventories	23,427,872		17,318,700
Prepaid and other current assets	471,865		186,761
Futures & options derivatives	144,594		0
Forward purchase/sales derivatives	2,738,873		1,115,299
Total current assets	66,010,590		45,522,739
Property, Plant, and Equipment, Net	72,062,475		78,003,177
Other Assets
Operating lease right of use asset, net	3,129,075		4,951,592
Investment	1,259,770		1,259,770
Total other assets	4,388,845		6,211,362
Total Assets	$	142,461,910	$	129,737,278
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities
Contract liability	$	0	$	15,000
Accounts payable	3,629,950		4,154,598
Accounts payable - grain	6,854,281		5,673,785
Accrued expenses	1,368,557		1,407,746
Futures & options derivatives	8,577,179		2,051,928
Forward purchase/sales derivatives	73,716		225,909
Operating lease liability current	2,296,351		2,638,003
Current maturities of long-term debt	0		275,840
Total current liabilities	22,800,034		16,442,809
Long-Term Liabilities
Long-term debt, net of current maturities	1,222,417		580,825
Operating lease long-term liabilities	833,312		2,313,694
Liability for railcar rehabilitation costs	1,676,160		1,452,600
Total long-term liabilities	3,731,889		4,347,119
Commitments and Contingencies	0		0
Members’ Equity
Members' contributions, net of cost of raising capital, 14,606 units authorized, issued and outstanding	70,912,213		70,912,213
Retained earnings	45,017,774		38,035,137
Total members' equity	115,929,987		108,947,350
Total Liabilities and Members’ Equity	$	142,461,910	$	129,737,278

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

3

CARDINAL ETHANOL, LLC

Condensed Statements of Operations (Unaudited)

	Three Months Ended				Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenues	$	117,272,974	$	51,252,061	$	308,424,904	$	182,267,602
Cost of Goods Sold	107,665,033		49,594,125		289,525,280		181,843,166
Gross Profit	9,607,941		1,657,936		18,899,624		424,436
Operating Expenses	1,758,914		1,590,121		5,408,684		5,211,222
Operating Income (Loss)	7,849,027		67,815		13,490,940		(4,786,786)
Other Income (Expense)
Interest expense	(61,884)		(36,797)		(137,959)		(170,789)
Miscellaneous income	(41,393)		4,078		202,356		431,249
Total	(103,277)		(32,719)		64,397		260,460
Net Income (Loss)	$	7,745,750	$	35,096	$	13,555,337	$	(4,526,326)
Weight Average Units Outstanding - basic and diluted	14,606		14,606		14,606		14,606
Net Income (Loss) Per Unit - basic and diluted	$	530	$	2	$	928	$	(310)
Distributions Per Unit	$	200	$	0	$	450	$	150

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

4

CARDINAL ETHANOL, LLC

Condensed Statements of Cash Flows (Unaudited)

	Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020
Cash Flows from Operating Activities
Net income (loss)	$	13,555,337	$	(4,526,326)
Adjustments to reconcile net income (loss) to net cash used in operations:
Depreciation and amortization	8,436,814		8,405,952
Change in fair value of commodity derivative instruments	4,604,890		879,251
Loss on sale of equipment	906,785		0
Forgiveness of Paycheck Protection Program loan	(856,665)		0
Trade accounts receivable	(10,100,285)		(528,801)
Miscellaneous receivables	92,701		913,912
Inventories	(6,109,172)		(5,854,518)
Prepaid and other current assets	(285,104)		(395,679)
Contract liability	(15,000)		0
Accounts payable	(287,924)		1,649,227
Accounts payable - grain	1,180,496		(4,115,645)
Accrued expenses	(194,925)		869,822
Liability for railcar rehabilitation costs	223,560		223,560
Due to broker	0		(1,589,324)
Net cash provided by (used for) operating activities	11,151,508		(4,068,569)
Cash Flows from Investing Activities
Capital expenditures	0		(14,372)
Payments for construction in progress	(3,483,402)		(2,145,782)
Net cash used for investing activities	(3,483,402)		(2,160,154)
Cash Flows from Financing Activities
Distributions paid	(6,572,700)		(2,190,900)
Proceeds from revolving credit loan	106,024,134		0
Payments on revolving credit loan	(106,024,134)		0
Proceeds from long-term debt	1,222,417		856,665
Payments on long-term debt	0		(1,513,288)
Net cash used for financing activities	(5,350,283)		(2,847,523)
Net Increase (Decrease) in Cash and Restricted Cash	2,317,823		(9,076,246)
Cash and Restricted Cash – Beginning of Period	16,913,982		22,034,120
Cash and Restricted Cash – End of Period	$	19,231,805	$	12,957,874

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

5

CARDINAL ETHANOL, LLC

Condensed Statements of Cash Flows (Unaudited)

	Nine Months Ended		Nine Months Ended
	June 30, 2021		June 30, 2020
Reconciliation of Cash and Restricted Cash
Cash - Balance Sheet	$	7,695,998	$	7,859,170
Restricted Cash - Balance Sheet	11,535,807		5,098,704
Cash and Restricted Cash	$	19,231,805	$	12,957,874
Supplemental Cash Flow Information
Interest paid	$	126,365	$	221,507
Supplemental Disclosure of Non-cash Investing and Financing Activities
Construction in process included in accrued expenses and accounts payable	$	220,736	$	35,996

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

6

CARDINAL ETHANOL, LLC

Condensed Statements of Changes in Members' Equity (Unaudited)

	Member Contributions		Retained Earnings
Balance September 30, 2019	$	70,912,213	$	41,366,470
Net Income	0		1,638,760
Balance December 31, 2019	$	70,912,213	$	43,005,230
Member Distributions	0		(2,190,900)
Net Loss	0		(6,200,182)
Balance March 31, 2020	$	70,912,213	$	34,614,148
Net Income	0		35,096
Balance June 30, 2020	$	70,912,213	$	34,649,244
	Member Contributions		Retained Earnings
Balance September 30, 2020	$	70,912,213	$	38,035,137
Member Distributions	0		(1,460,600)
Net Loss	0		(1,055,854)
Balance December 31, 2020	$	70,912,213	$	35,518,683
Member Distributions	0		(2,190,900)
Net Income	0		6,865,441
Balance March 31, 2021	$	70,912,213	$	40,193,224
Member Distributions	0		(2,921,200)
Net Income	0		7,745,750
Balance June 30, 2021	$	70,912,213	$	45,017,774

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

7

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements for the year ended September 30, 2020, contained in the Company's annual report on Form 10-K.

In the opinion of management, the interim condensed financial statements reflect all adjustments considered necessary for fair presentation.

Nature of Business

Cardinal Ethanol, LLC, (the “Company”) is an Indiana limited liability company currently producing fuel-grade ethanol, distillers grains, corn oil and carbon dioxide near Union City, Indiana and sells these products throughout the continental United States. During the nine months ended June 30, 2021 and 2020, the Company produced approximately 100,050,000 and 96,403,000 gallons of ethanol, respectively.

In addition, the Company procures, transports, and sells grain commodities through grain operations (the "Trading Division").

Reportable Segments

Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.   Based on the related business nature and expected financial results criteria set forth in ASC 280, the Company has 2 reportable operating segments for financial reporting purposes.

•Ethanol Division. Based on the nature of the products and production process and the expected financial results, the Company’s operations at its ethanol plant, including the production and sale of ethanol and its co-products, are aggregated into one financial reporting segment.

•Trading Division. The Company has a grain loading facility within the Company's single site to buy, hold and sell inventories of agricultural grains, primarily soybeans. The Company performs no additional processing of these grains, unlike the corn inventory the Company holds and uses in ethanol production. The activities of buying, selling and holding of grains other than for ethanol and co-product production comprise this financial reporting segment.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Ethanol Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, inventory, the assumptions used in the analysis of the impairment of long lived assets, railcar rehabilitation costs, and inventory purchase commitments.

The Trading Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, the valuation of inventory purchase and sale commitments derivatives and inventory at market. Actual results may differ from previously estimated amounts, and such differences may be material to the financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ materially from those estimates.

8

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

Cash

The Company maintains its accounts primarily at two financial institutions. At times throughout the year the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation.

Restricted Cash

As a part of its commodities hedging activities, the Company is required to maintain cash balances with our commodities trading companies for initial and maintenance margins on a per futures contract basis. Changes in the market value of contracts may increase these requirements. As the futures contracts expire, the margin requirements also expire. Accordingly, the Company records the cash maintained with the traders in the margin accounts as restricted cash. Since this cash is immediately available to us upon request when there is a margin excess, the Company considers this restricted cash to be a current asset.

Trade Accounts Receivable

Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company's credit terms. Amounts considered uncollectible are written off. The Company's estimate of the allowance for doubtful accounts is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any. At June 30, 2021 and September 30, 2020, the Company determined that an allowance for doubtful accounts was not necessary.

Inventories

Ethanol Division (see Reportable Segments) inventories consist of raw materials, work in process, finished goods and spare parts. Corn is the primary raw material. Finished goods consist of ethanol, dried distiller grains and corn oil. Inventories are stated at the lower of weighted average cost or net realizable value. Net realizable value is the estimated selling prices in the normal course of business, less reasonably predictable selling costs.

Trading Division (see Reportable Segments) inventories consist of grain. Soybeans were the only grains held and traded at June 30, 2021 and September 30, 2020. These inventories are stated at market value less estimated selling costs, which may include reductions for quality.

Property, Plant and Equipment

Property, plant, and equipment are stated at cost. Depreciation is provided over estimated useful lives by use of the straight line depreciation method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service.

The Company has various capital projects scheduled for the 2021 fiscal year in order to make certain improvements to the ethanol plant and maintain the facility. These improvements include updates to the heat exchangers, boilers, grain probe, and other small miscellaneous projects as well as the purchase of a new payloader for the dried distillers grains loadout system. The Company also invested in an ethanol recovery system which is expected to cost approximately $2,400,000 and be funded with funds from operations and existing debt facilities. The Company was nearing completion of the project during the third quarter subject to final testing which is anticipated to be finished during the late summer of 2021.

Long-Lived Assets

The Company reviews its long-lived assets, such as property, plant and equipment and financing costs, subject to depreciation and amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first

9

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Management evaluated and determined 0 impairment write-downs were considered necessary for the three and nine months ended June 30, 2021 and 2020.

Investment

Investments consist of the capital stock and patron equities of the Company's distillers grains marketer. The investments are stated at the lower of cost or fair value and adjusted for non cash patronage equities and cash equity redemptions received. Non cash patronage dividends are recognized when received and included within revenue in the condensed statements of operations.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. The Company's contracts primarily consist of agreements with marketing companies and other customers as described below. The Company's performance obligations consist of the delivery of ethanol, distillers' grains, corn oil, soybeans and carbon dioxide to our customers. The consideration the Company receives for these products is fixed based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. The Company's contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. The Company sells each of the products via different marketing channels as described below.

•Ethanol. The Company sells its ethanol via a marketing agreement with Murex, LLC. Murex sells one hundred percent of the Company's ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Murex and the Company. Murex then provides a schedule of deliveries required and an order for each rail car or tankers needed to fulfill their commitment with the end user. These are individual performance obligations of the Company. The marketing agreement calls for control and title to pass when the delivery vehicle is filled. Revenue is recognized then at the price in the agreement with the end user, net of commissions, rail car lease, freight, and insurance.

•Distillers grains. The Company engages another third-party marketing company, CHS, Inc, to sell one hundred percent of the distillers grains it produces at the plant. The process for selling the distillers grains is like that of ethanol, except that CHS takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon among the three parties and CHS provides schedules and orders representing performance obligations. Revenue is recognized net of commissions, freight and fees.

•Distillers corn oil (corn oil). The Company sells its production of corn oil directly to commercial customers. The customer is provided with a delivery schedule and pick up orders representing performance obligations are fulfilled when the customer’s driver picks up the scheduled load. The price is agreed upon at the time each contract is made, and the Company recognizes revenue at the time of delivery at that price.

•Carbon dioxide. The Company sells a portion of the carbon dioxide it produces to a customer that maintains a plant on-site for a set price per ton. Delivery is defined as transference of the gas from the Company's stream to their plant.

•Soybeans and other grains. The Company sells soybeans exclusively to commercial mills, processors or grain traders. Contracts are negotiated directly with the parties at prices based on negotiated prices.

10

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

Cost of Goods Sold

Cost of goods sold include corn, trading division grains, natural gas and other components which includes processing ingredients, electricity, railcar maintenance, depreciation of ethanol production fixed assets and wages, salaries of benefits of production personnel.

Operating Expense

Operating expenses include wages, salaries and benefits of administrative employees at the plant, insurance, professional fees, depreciation of trading division fixed assets, property taxes and similar costs.

Derivative Instruments

From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheet at fair value.

In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in the statement of operations, depending on the item being hedged.

Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our financial statements.

The Company has elected for its Ethanol Division to apply the normal purchase normal sale exemption to all forward commodity contracts. For the Trading Division, the Company has elected not to apply the normal purchase normal sale exemption to its forward purchase and sales contracts and therefore, marks these derivative instruments to market.

Net Income (Loss) per Unit

Basic net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members' units outstanding during the period. Diluted net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members' units and members' unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the periods presented; accordingly, the Company's basic and diluted net income (loss) per unit are the same.

2.  REVENUE

Revenue by Source

All revenues from contracts with customers under ASC Topic 606 are recognized at a point in time. The following tables disaggregate revenue by major source for the three and nine months ended June 30, 2021 and 2020:

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

Three Months Ended June 30, 2021 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	79,943,407	$	0	$	79,943,407
Distillers' grains	14,701,286		0		14,701,286
Corn Oil	4,977,755		0		4,977,755
Carbon Dioxide	121,288		0		121,288
Other Revenue	14,650		14,875		29,525
Total revenues from contracts with customers	99,758,386		14,875		99,773,261
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and other grains	0		17,499,713		17,499,713
Total revenues from contracts accounted for as derivatives	0		17,499,713		17,499,713
Total Revenues	$	99,758,386	$	17,514,588	$	117,272,974

Nine Months Ended June 30, 2021 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	182,551,687	$	0	$	182,551,687
Distillers' grains	43,552,750		0		43,552,750
Corn Oil	12,030,379		0		12,030,379
Carbon Dioxide	368,038		0		368,038
Other Revenue	41,425		119,850		161,275
Total revenues from contracts with customers	238,544,279		119,850		238,664,129
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and other grains	0		69,760,775		69,760,775
Total revenues from contracts accounted for as derivatives	0		69,760,775		69,760,775
Total Revenues	$	238,544,279	$	69,880,625	$	308,424,904

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

Three Months Ended June 30, 2020 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	31,322,704	$	0	$	31,322,704
Distillers' grains	9,770,811		0		9,770,811
Corn Oil	2,225,717		0		2,225,717
Carbon Dioxide	123,375		0		123,375
Other	1,795,251		22,625		1,817,876
Total revenues from contracts with customers	45,237,858		22,625		45,260,483
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and other grains	0		5,991,578		5,991,578
Total revenues from contracts accounted for as derivatives	0		5,991,578		5,991,578
Total Revenues	$	45,237,858	$	6,014,203	$	51,252,061

Nine Months Ended June 30, 2020 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	116,998,260	$	0	$	116,998,260
Distillers' grains	31,952,429		0		31,952,429
Corn Oil	7,233,285		0		7,233,285
Carbon Dioxide	370,125		0		370,125
Other	2,038,327		76,075		2,114,402
Total revenues from contracts with customers	158,592,426		76,075		158,668,501
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and other grains	0		23,599,101		23,599,101
Total revenues from contracts accounted for as derivatives	0		23,599,101		23,599,101
Total Revenues	$	158,592,426	$	23,675,176	$	182,267,602

(1) Revenues from contracts accounted for as derivatives represent physically settled derivative sales that are outside the scope of ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), where the company recognizes revenue when control of the inventory is transferred within the meaning of ASC Topic 606 as required by ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets.

Payment Terms

The Company has contractual payment terms with each respective marketer that sells ethanol and distillers grains. These terms are generally 10 - 20 days after the week of the transfer of control.

The Company has standard payment terms of net 10 days for its sale for corn oil.

The Company has standard payments terms due upon delivery for its sale of soybeans.

13

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

The contractual terms with the carbon dioxide customer calls for an annual settlement.

Shipping and Handling Costs

Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of goods sold. Accordingly, amounts billed to customers for such costs are included as a component of revenue.

Contract Liabilities

The Company records unearned revenue when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of its contracts with customers.

3. CONCENTRATIONS

Two major customers accounted for approximately 90% and 91% of the outstanding accounts receivable balance at June 30, 2021 and September 30, 2020, respectively. These same two customers accounted for approximately 73% of revenue for the nine months ended June 30, 2021 and 80% of revenue for the nine months ended June 30, 2020.

4.  INVENTORIES

Inventories consist of the following as of:

	June 30, 2021 (Unaudited)		September 30, 2020
Ethanol Division:
Raw materials	$	13,156,118	$	2,465,782
Work in progress	2,763,273		1,508,084
Finished goods	2,010,227		3,833,939
Spare parts	3,706,859		3,523,781
Ethanol Division Subtotal	$	21,636,477	$	11,331,586
Trading Division:
Grain inventory	$	1,791,395	$	5,987,114
Trading Division Subtotal	1,791,395		5,987,114
Total Inventories	$	23,427,872	$	17,318,700

The Company had a net realizable value write-down of ethanol inventory of approximately $57,000 and $72,000 for the three months ended June 30, 2021, and 2020, respectively and $129,000 and $1,697,000 for the nine months ended June 30, 2021 and 2020, respectively.

In the ordinary course of business, the Company enters into forward purchase contracts for its commodity purchases and sales. Certain contracts for the ethanol division that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. At June 30, 2021, the Company had forward corn purchase contracts at various fixed prices for various delivery periods through December 2023 for approximately 10% of expected production needs for the next 30 months. Approximately 13% of the forward corn purchases were with related parties. Given the uncertainty of future commodity prices, the Company could incur a loss on the outstanding purchase contracts in future periods. Management has evaluated these forward contracts using the lower of cost or net realizable value evaluation, and has determined that no impairment loss existed at June 30, 2021 and September 30, 2020. The Company has elected not to apply the normal purchase and sale exemption to its forward soybean contracts of the trading division and therefore, treats them as derivative instruments.

14

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

At June 30, 2021, the Ethanol Division had forward dried distiller grains sales contracts for approximately 18% of expected production for the next 2 months at various fixed prices for delivery periods through August 2021. At June 30, 2021, the Company had forward corn oil contracts for approximately 50% of expected production for the next 6 months at various fixed prices for delivery through December 2021. Additionally, at June 30, 2021, the Trading Division had forward soybean purchase contracts for approximately 12% of expected origination for various delivery periods through October 2023. Approximately 10% of the forward soybean purchases were with related parties.

5. DERIVATIVE INSTRUMENTS

The Company enters into corn, ethanol, natural gas and soybean derivative instruments, which are required to be recorded as either assets or liabilities at fair value in the balance sheet. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. The Company must designate the hedging instruments based upon the exposure being hedged as a fair value hedge, a cash flow hedge or a hedge against foreign currency exposure.

Commodity Contracts

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

At June 30, 2021, the Ethanol Division had a net short (selling) position of 14,869,000 bushels of corn under derivative contracts used to hedge its forward corn purchase contracts, corn inventory and ethanol sales. These corn derivatives are traded on the Chicago Board of Trade as of June 30, 2021 and are forecasted to settle for various delivery periods through December 2022. The Ethanol Division had a net short (selling) position of 6,090,000 gallons of ethanol under derivative contracts used to hedge its future ethanol sales. These ethanol derivatives are traded on the New York Mercantile Exchange and are forecasted to settle for various delivery periods through December 2021. At June 30, 2021, the Trading Division also had a net short (selling) position of 1,473,000 bushels of soybeans under derivative contracts used to hedge its forward soybean contract purchases. These soybean derivatives are traded on the Chicago Board of Trade and are, as of June 30, 2021, forecasted to settle for various delivery periods through December 2023. At June 30, 2021, the Ethanol Division also had a net long (buying) position of 6,000,000 pounds of soybean oil under derivative contracts used to hedge its forward corn oil contract sales. These soybean oil derivatives are traded on the Chicago Board of Trade and are, as of June 30, 2021, forecasted to settle for various delivery periods through December 2021. These derivatives have not been designated as effective hedges for accounting purposes.

The following table provides balance sheet details regarding the Company's derivative financial instruments at June 30, 2021:

15

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

Instrument	Balance Sheet Location	Assets		Liabilities
Ethanol Futures and Options Contracts	Futures & Options Derivatives	$	0	$	43,638
Corn Futures and Options Contracts	Futures & Options Derivatives	$	0	$	6,654,449
Soybean Oil Derivative Contracts	Futures & Options Derivatives	$	144,594	$	0
Soybean Futures and Options Contracts	Futures & Options Derivatives	$	0	$	1,879,092
Soybean Forward Purchase and Sales Contracts	Forward Purchase/Sales Derivatives	$	2,738,873	$	73,716

As of June 30, 2021, the Company had approximately $11,536,000 cash collateral (restricted cash) related to ethanol, corn, and soybean derivatives held by 4 brokers.

The following table provides balance sheet details regarding the Company's derivative financial instruments at September 30, 2020:

Instrument	Balance Sheet Location	Assets		Liabilities
Ethanol Futures and Options Contracts	Futures & Options Derivatives	$	0	$	666,571
Corn Futures and Options Contracts	Futures & Options Derivatives	$	0	$	740,993
Soybean Futures and Options Contracts	Futures & Options Derivatives	$	0	$	644,364
Soybean Forward Purchase and Sales Contracts	Forward Purchase/Sales Derivatives	$	1,115,299	$	225,909

As of September 30, 2020, the Company had approximately $4,000,000 of cash collateral (restricted cash) related to ethanol, corn and soybean derivatives held by 2 brokers.

The following table provides details regarding the gains and (losses) from the Company's derivative instruments in the statements of operations, none of which are designated as hedging instruments:

Instrument	Statement of Operations Location	Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020		Three Months Ended June 30, 2021		Nine Months Ended June 30, 2021
Corn Futures and Options Contracts	Cost of Goods Sold	$	901,144	$	3,299,787	$	(11,254,118)	$	(23,361,960)
Ethanol Futures and Options Contracts	Revenues	(1,189,256)		(3,753,455)		493,042		647,795
Natural Gas Futures and Options Contracts	Cost of Goods Sold	0		0		0		(836)
Soybean Futures and Options Contracts	Cost of Goods Sold	159,073		810,450		(2,625,108)		(8,513,405)
Soybean Forward Purchase and Sales Contracts	Cost of Goods Sold	190,883		54,719		(166,197)		1,376,887
Totals		$	61,844	$	411,501	$	(13,552,381)	$	(29,851,519)

16

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

6. FAIR VALUE MEASUREMENTS

The following table provides information on those assets and liabilities measured at fair value on a recurring basis as of June 30, 2021:

Instruments	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Corn Futures and Options Contracts	$	6,654,449	$	6,654,449	$	5,346,344	$	1,308,105	$	0
Ethanol Futures and Options Contracts	$	43,638	$	43,638	$	43,638	$	0	$	0
Soybean Oil Futures and Options Contracts	$	144,594	$	144,594	$	144,594	$	0	$	0
Soybean Futures and Options Contracts	$	1,879,092	$	1,879,092	1,268,375		$	610,717	$	0
Soybean Forward Purchase Contracts	$	2,665,157	$	2,665,157	$	0	$	2,665,157	$	0
Soybean Inventory	$	1,791,395	1,791,395		$	0	$	1,791,395	$	0

The following table provides information on those assets and liabilities measured at fair value on a recurring basis as of September 30, 2020:

Instruments	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Corn Futures and Options Contracts	$	(740,993)	$	(740,993)	$	(718,333)	$	(22,660)	$	0
Ethanol Futures and Options Contracts	$	(666,571)	$	(666,571)	$	(666,571)	$	0	$	0
Soybean Futures and Options Contracts	$	(644,364)	$	(644,364)	$	(525,753)	$	(118,611)	$	0
Soybean Forward Purchase Contracts	$	889,390	$	889,390	$	0	$	889,390	$	0
Soybean Inventory	$	5,987,114	$	5,987,114	$	0	$	5,987,114	$	0

We determine the fair value of commodity futures derivative instruments utilizing Level 1 inputs by obtaining 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 Chicago Board of Trade market and New York Mercantile Exchange. Corn and soybean futures and options and soybean forward purchase contracts are reported at fair value utilizing Level 2 inputs from current contract prices that are being issued by the Company. Estimated fair values for inventories carried at market are based on exchange-quoted prices, adjusted for differences in local markets and quality.

7.  BANK FINANCING

The Company has a loan agreement consisting of 2 loans, the Declining Revolving Loan (Declining Loan) and the Revolving Credit Loan in exchange for liens on all property (real and personal, tangible and intangible) which include, among other things, a mortgage on the property, a security interest on commodity trading accounts and assignment of material contracts. The loan agreement assigns an interest rate based upon the U.S. Prime Rate published in the Wall Street Journal to each of the individual loans. The Revolving Credit Loan is assigned the Prime Rate minus .25%. The Declining Loan has interest charged based on the Prime Rate minus .15%. The interest rate is for each loan changes daily with the prime rate. Also, each loan has a floor rate associated with it. The Revolving Line of Credit has a minimum rate of 2.75% and the Declining Revolving Note has a minimum interest rate of 2.85%. The loan agreement provides for a minimum fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly on a rolling four quarter average basis if the company's working capital is less than $23,000,000 for

17

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

any reporting period and a debt service charge coverage ratio of no less than 1.25:1.0 measured quarterly on a rolling four quarter average basis, in lieu of the fixed charge coverage ratio, if working capital is equal to or more than $23,000,000. Effective January 26, 2021, the Company amended its loan agreement in order to increase the limit under the Revolving Credit Loan to $20,000,000.

On April 30, 2021, the loan agreement was amended to extend the termination date of the Declining Loan to February 28, 2023 and the Revolving Credit Loan to February 28, 2022 and modify the applicable interest rates for both loans. The amendment assigns an interest rate of the U.S. Prime Rate as published in The Wall Street Journal minus 15 basis points (.15%) to the Declining Loan and the U.S. Prime Rate as published in The Wall Street Journal minus 25 basis points (.25%) to the Revolving Credit Loan. The interest rates may change each day that Prime Rate may change, but not more than once per day. The amendment also establishes a minimum interest rate for each loan. The minimum interest rate for the Declining Loan is 2.85% and for the Revolving Credit Loan is 2.75%.

Declining Loan

The maximum availability of the Declining Loan is $5,000,000 and such amount is to be available for working capital purposes. The interest rate on the Declining Loan was 3.40% at June 30, 2021 and 3.13% at September 30, 2020. There were approximately $1,222,000 in borrowings outstanding on the Declining Loan at June 30, 2021 and 0 borrowings outstanding at September 30, 2020. The Declining Loan was due to mature on April 30, 2021, but has since been renewed until February 28, 2023 at essentially the same terms.

Revolving Credit Loan

The Revolving Credit Loan has a limit of $20,000,000 supported by a borrowing base made up of the Company's corn, ethanol, dried distillers grain, corn oil and soybean inventories reduced by accounts payable associated with those inventories having a priority. It is also supported by the eligible accounts receivable and commodity trading account excess margin funds. The interest rate was 3.00% at June 30, 2021 and 3.06% at September 30, 2020. There were 0 borrowings outstanding on the Revolving Credit Loan at June 30, 2021 and September 30, 2020. The Revolving Credit Loan was due to mature on April 30, 2021, but has since been renewed until February 28, 2022 at essentially the same terms.

These loans are subject to protective covenants, which require the Company to maintain various financial ratios. The covenants include a working capital requirement of $15,000,000, and a capital expenditures covenant that allows the Company $5,000,000 of expenditures per year without prior approval. There is also a requirement to maintain a minimum fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly on a rolling four quarter basis.

Paycheck Protection Program Loan

On April 20, 2020, the Company received a loan in the approximate amount of $856,000 through the Paycheck Protection Program. The entire loan was used for payroll, utilities and interest on Company loans; therefore, the loan was eligible for complete forgiveness. The Company had applied for forgiveness; the entire loan was forgiven on April 19, 2021 and was recorded as a component of other income. As of June 30, 2021, the Company recognized forgiveness of the loan.

18

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

Long-term debt, as discussed above, consists of the following at June 30, 2021:

Declining Loan	$	1,222,417
Less amounts due within one year	0
Net long-term debt	$	1,222,417

The estimated maturities of long-term debt at June 30, 2021 are as follows:

July 1, 2021 to June 30, 2022	$	1,222,417
Total long-term debt	$	1,222,417

8. LEASES

The Company leases rail cars for its facility to transport ethanol and dried distillers grains to its end customers. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate, unless an implicit rate is readily determinable, as the discount rate for each lease in determining the present value of lease payments. For the three and nine months ended June 30, 2021, the Company’s weighted average discount rate was 4.71%. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of approximately 1 year to 2.5 years, which may include options to extend the lease when it is reasonably certain the Company will exercise those options. For the three and nine months ended June 30, 2021, the weighted average remaining lease term was 1.28 years. The Company does not have lease arrangements with residual value guarantees, sale leaseback terms or material restrictive covenants. The Company does not have any material finance lease obligations nor sublease agreements.

The following table summarizes the remaining maturities of the Company’s operating lease liabilities as of June 30, 2021:

For the Fiscal Year Ending September 30,
2021	$	729,344
2022	2,159,922
2023	338,851
Totals	3,228,117
Amount representing interest	(98,454)
Lease liabilities	$	3,129,663

For the three months ended June 30, 2021, the Company recorded operating lease costs of approximately $710,000 against ethanol revenue and $229,000 in cost of goods sold in the Company’s statement of operations. For the nine months ended June 30, 2021, the Company recorded operating lease costs of approximately $1,826,000 against ethanol revenue and $688,000 in costs of goods sold in the Company's statement of operations.

19

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

9. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In February 2010, a lawsuit against the Company was filed by an unrelated party claiming the Company's operation of the oil separation system in a patent infringement. In connection with the lawsuit, in February 2010, the agreement for the construction and installation of the tricanter oil separation system was amended. In this amendment the manufacturer and installer of the tricanter oil separation system indemnifies the Company against all claims of infringement of patents, copyrights or other intellectual property rights from the Company's purchase and use of the tricanter oil system and agrees to defend the Company in the lawsuit filed at no expense to the Company. On October 23, 2014, the court granted summary judgment finding that all of the patents claimed were invalid and that the Company had not infringed. In addition, on September 15, 2016, the United States District Court granted summary judgment finding that the patents were invalid due to inequitable conduct before the US Patent and Trademark Office by the inventors and their attorneys. The rulings have since been affirmed on appeal and on February 22, 2021 the U.S. Supreme Court declined to review the decision. The court has yet to rule on the final attorney fees to be awarded to the defendants.

Rail Car Rehabilitation Costs

The Company leases 180 hopper rail cars under a multi-year agreement which ends in November 2021. Under the agreement, the Company is required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of the car(s).

Company management has estimated total costs to rehabilitate the cars at June 30, 2021, to be approximately $1,676,000. During the nine months ended June 30, 2021, the Company has recorded a corresponding expense in cost of goods sold of approximately $224,000.

Boiler Replacement

The Company entered into a fixed commitment to replace one of its boilers. The boiler was installed during April 2021 and is operating as expected. The cost of the replacement was approximately $918,000.

10. UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS

The Company has certain risks and uncertainties that it experiences during volatile market conditions, which can have a severe impact on operations. The Company's revenues are primarily derived from the sale and distribution of ethanol, distillers grains and corn oil to customers primarily located in the U.S. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. During the nine months ended June 30, 2021 ethanol sales average approximately 59% of total revenues and corn costs average 65% of total cost of goods sold.

The Company's operating and financial performance is largely driven by prices at which the Company sells ethanol, distillers grains and corn oil, and the related cost of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and the unleaded gasoline and petroleum markets, although, since 2005, the prices of ethanol and gasoline began a divergence with ethanol selling for less than gasoline at the wholesale level. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

The Company, and the ethanol industry as a whole, experienced adverse conditions throughout 2020 and 2021, as a result of industry-wide record low ethanol prices due to reduced demand and high industry inventory levels. These factors, which are compounded by the recent impact of COVID-19, resulted in negative operating margins, lower cash flow from operations and net operating losses. In response to the low margin environment, the Company reduced its ethanol production rate by approximately 20% in March 2020. As margins improved in May of 2020, the Company began increasing its ethanol

20

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

production rate to approximately 140 million gallons annually. The Company continues to monitor COVID-19 developments in order to determine whether future adjustments to production are warranted. During the nine months ended June 30, 2021 and thereafter, the market price of corn and soybeans increased significantly. As a result the Company has increased its limit on its Revolving Credit Loan by $5,000,000 in order to provide additional working capital. The Company believes that with this increase, its cash on hand and available debt from its lender will provide sufficient liquidity to meets its anticipated working capital, debt service and other liquidity needs through the next twelve months. If market conditions worsen affecting our ability to profitably operate the plant or if we are unable to transport ethanol, we may be forced to further reduce our ethanol production rate or even temporarily shut down ethanol production altogether.

11. BUSINESS SEGMENTS

The Company has 2 reportable operating segments. Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The accounting policies for each segment are the same as those described in the summary of significant accounting policies. Segment income or loss does not include any allocation of shared-service costs.  Segment assets are those that are directly used in or identified with segment operations. Inter-segment balances and transactions have been eliminated.

The following tables summarize financial information by segment and provide a reconciliation of segment revenue, gross profit, grain inventories, operating income, and total assets:

	Three Months Ended				Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenue:	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Ethanol division	$	99,758,386	$	45,237,858	$	238,544,279	$	158,592,426
Trading division	17,514,588		6,014,203		69,880,625		23,675,176
Total Revenue	$	117,272,974	$	51,252,061	$	308,424,904	$	182,267,602
	Three Months Ended				Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Gross Profit (Loss):	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Ethanol division	$	9,783,375	$	1,141,810	$	16,594,643	$	(1,055,956)
Trading division	(175,434)		516,126		2,304,981		1,480,392
Total Gross Profit	$	9,607,941	$	1,657,936	$	18,899,624	$	424,436
	Three Months Ended				Nine Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Operating Income (Loss):	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Ethanol division	$	8,341,704	$	(131,068)	$	12,137,688	$	(5,315,449)
Trading division	(492,677)		198,883		1,353,252		528,663
Total Operating Income (Loss)	$	7,849,027	$	67,815	$	13,490,940	$	(4,786,786)

21

CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

June 30, 2021

	June 30, 2021		September 30, 2020
Raw Material Inventories:	(unaudited)
Ethanol division	$	13,156,118	$	2,465,782
Trading division	1,791,395		5,987,114
Total Raw Material Inventories	$	14,947,513	$	8,452,896
	June 30, 2021		September 30, 2020
Total Assets:	(unaudited)
Ethanol division	$	134,244,470	$	111,774,989
Trading division	8,217,440		17,962,289
Total Assets	$	142,461,910	$	129,737,278

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

    We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and nine month period ended June 30, 2021, compared to the same period of the prior fiscal year. This discussion should be read in conjunction with the condensed financial statements and notes and the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

Forward Looking Statements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

•Changes in federal and/or state laws;

•Changes and advances in ethanol production technology;

•Competition from alternative fuel additives;

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

•Changes in legislation benefiting renewable fuels;

•Competition from the increased use of electric vehicles;

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

•Volatile commodity and financial markets;

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

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

•Use by the EPA of small refinery exemptions; and

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

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements even though our situation may change in the future.  We cannot guarantee future

23

results, levels of activity, performance or achievements.  We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report.  You should read this report and the documents that we reference in this report and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we currently expect.  We qualify all of our forward-looking statements with these cautionary statements.

Overview

Cardinal Ethanol, LLC is an Indiana limited liability company operating an ethanol plant in east central Indiana near Union City, Indiana. We began producing ethanol, distillers grains and corn oil at the plant in November 2008. In addition, we procure, transport and sell grain commodities through our grain trading business which began operations at the end of our fourth fiscal quarter of 2017.

    The ethanol industry experienced industry-wide record low ethanol prices throughout most of 2018 and 2019 due to reduced demand and high industry inventory levels. This continued into 2020 and the situation was compounded by the impact of the COVID-19 pandemic. In response to these unfavorable operating conditions and a slowdown in global and regional economic activity resulting from COVID-19, we reduced our ethanol production rate by approximately 20% in March of 2020. However, beginning in May of 2020, we returned to full production and are currently operating at an ethanol production rate of approximately 140 million gallons annually which is approximately 40% above the nameplate capacity for the plant. 

    On April 30, 2021, we executed a Seventeenth Amendment of First Amended and Restated Construction Loan Agreement which amends the First Amended and Restated Construction Loan Agreement dated June 10, 2013 (the "Seventeenth Amendment") with First National Bank of Omaha ("FNBO"). The primary purposes of the Seventeenth Amendment were to extend the termination dates of the Declining Loan to February 28, 2023 and the Revolving Credit Loan to February 28, 2022 and modify the applicable interest rates for both loans. The interest rates for these two loans are based on the U.S. Prime Rate published in the Wall Street Journal. The interest rate on the Declining Loan is the prime rate minus .15 percent and the interest rate on the Revolving Credit Loan is the prime rate minus .25 percent.

Effective June 1, 2021, we entered into a Third Amendment to Carbon Dioxide Purchase and Sale Agreement (the "Amendment") which amends the Carbon Dioxide Purchase and Sale Agreement dated March 8, 2010, as amended on November 22, 2011 and April 30, 2020 (the "Agreement") with Air Products and Chemicals, Inc. ("Air Products"). The Amendment extended the initial term of the Agreement to May 31, 2026 with automatic one-year renewal periods thereafter unless terminated by either party by providing at least six months written notice prior to the expiration of the term. The Amendment amended the price paid for carbon dioxide subject to a price adjustment in the event of a take or pay shortfall. The Amendment also provided that we may do anything we wish with excess carbon dioxide gas produced provided that if the excess is sold to competitors of Air Products then Air Products' annual take or pay obligation will be reduced accordingly and Air Products has the option to terminate the Agreement upon 90 days written notice. In addition, the Amendment provides that, after the three year anniversary of the Effective Date, Cardinal may, after providing the required notice, terminate the Agreement upon the occurrence of a Change of Control Event as defined in the Amendment or if Cardinal decides to sequester its carbon dioxide.

On June 15, 2021, our Board of Directors declared a cash distribution of $200 per membership unit to the holders of units of record at the close of business on June 15, 2021 for a total distribution of $2,921,200. The distribution was paid in June 2021.

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

24

Results of Operations for the Three Months Ended June 30, 2021 and 2020

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our statement of operations for the three month ended June 30, 2021 and 2020:

	2021			2020
Statement of Operations Data	Amount		%	Amount		%
Revenue	$	117,272,974	100.0	$	51,252,061	100.0
Cost of Goods Sold	107,665,033		91.8	49,594,125		96.8
Gross Profit	9,607,941		8.2	1,657,936		3.2
Operating Expenses	1,758,914		1.5	1,590,121		3.1
Operating Income	7,849,027		6.7	67,815		0.1
Other Expense, Net	(103,277)		(0.1)	(32,719)		(0.1)
Net Income	$	7,745,750	6.6	$	35,096	—

Revenue

Operating Segments

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

    We currently do not have or anticipate we will have any other lines of business or other significant sources of revenue other than the sale of ethanol, distillers grains, corn oil and and the trading of agricultural grains.  Refer to Note 11, “Business Segments”, of the notes to the unaudited condensed financial statements for financial information about our financial reporting segments. Revenues in each division also include net gains or losses from derivatives related to products sold.

    The following table shows the sources of our total revenue from the two segments and the approximate percentage of revenues to total revenues in our unaudited condensed statements of operations for the three months ended June 30, 2021 and 2020:

	2021				2020
Revenue:	Amount		% of Total Revenues		Amount		% of Total Revenues
Ethanol division	$	99,758,386	85.1	%	$	45,237,858	88.3	%
Trading division	17,514,588		14.9	%	6,014,203		11.7	%
Total Revenue	$	117,272,974	100.0	%	$	51,252,061	100.0	%

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Ethanol Division

    The following table shows the sources of our revenues from our Ethanol Division for the three months ended June 30, 2021 and 2020:

	2021				2020
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol	$	79,943,407	80.1	%	$	31,322,704	69.2	%
Distillers Grains	14,701,286		14.7		9,770,811		21.6
Corn Oil	4,977,755		5.0		2,225,717		4.9
Carbon Dioxide	121,288		0.1		123,375		0.3
Other Revenue	14,650		—		1,795,251		4.0
Total Revenues	$	99,758,386	99.9	%	$	45,237,858	100.0	%

    Ethanol

    Our revenues from ethanol increased in the three months ended June 30, 2021 as compared the to the same period in 2020. This increase in revenues is primarily the result of an increase in the price per gallon of ethanol sold for the three months ended June 30, 2021 as compared to the same period in 2020.

    The average price per gallon of ethanol sold for the three months ended June 30, 2021 was approximately 122% higher than the average price per gallon of ethanol sold for the same period in 2020. Ethanol market prices have been higher for the current period due to the seasonal increase in domestic fuel demand due to summer driving. Higher oil and corn prices for the period have also contributed to higher ethanol prices. In addition, ethanol prices for the three months ended June 30, 2020 were negatively impacted by industry-wide production in excess of demand due to a variety of factors including the granting by the EPA of small refinery waivers, trade barriers resulting from disputes with foreign governments and a collapse in both domestic and foreign demand as a result of restrictions put in place in response to the COVID-19 pandemic.

Management anticipates that ethanol prices may remain strong in the near term as a result of higher domestic fuel demand due to summer driving. In addition, if corn prices remain high that would likely contribute to higher ethanol prices. However, as certain ethanol plants have returned to higher production levels as operating conditions improve, industry over-production could have a negative effect on prices and potentially negative operating margins. Declines in ethanol exports and continued trade disputes with foreign governments such as China would also likely contribute to lower ethanol prices. In addition, the U.S. Supreme Court's recent decision regarding small refinery waivers could result in the EPA granting additional waivers to oil refineries seeking relief from ethanol use requirements. If that were to occur, ethanol prices could be negatively affected. A recent decision by a federal appeals court that the EPA rule change allowing year-round sale of E15 could also have a negative effect on domestic demand and ethanol prices.

    We experienced an increase in ethanol gallons sold of approximately 16% for the three months ended June 30, 2021 as compared to the same period in 2020 resulting primarily from increased ethanol production rates for the period. We are currently operating at a rate of approximately 140 million gallons annually.  In addition, we have installed an ethanol recovery system which we expect will be fully operational during the late summer of 2021 and which we anticipate will result in an increase in efficiencies allowing us to achieve higher ethanol production rates. However, management continues to monitor economic conditions carefully. If market conditions worsen affecting our ability to profitably operate the plant, we may be forced to reduce our ethanol production rate or even temporarily shut down ethanol production altogether.

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Distillers Grains

    Our revenues from distillers grains increased in the three months ended June 30, 2021 as compared to the same period in 2020. This increase in revenues is primarily the result of an increase in the average price per ton of distillers grains sold for the period ended June 30, 2021 as compared to the same period in 2020.

    The average price per ton of distillers grains sold for the three months ended June 30, 2021 was approximately 41% higher than the average price per ton of distillers grains sold for the same period in 2020. This increase in the market price of distillers grains is primarily due to higher corn and soybean meal prices towards the beginning of the current period which resulted in end users seeking out distillers grains as the lower cost alternative. However, towards the end of the current period, soybean meal production began to outpace demand driving prices of soybean meal and distillers grains lower.

    Management anticipates that distillers grains prices will continue to be affected by the price of corn and soybean meal. If there continues to be an oversupply of soybean meal, that could have a negative effect on the price of distillers grains. In addition, trade barriers with foreign countries have had a negative effect on export demand in the past. If trade disputes with foreign countries such as China are not favorably resolved, this could have a negative effect on distillers grains prices unless additional demand can be sustained from domestic or other foreign markets.

    We sold approximately 5% more tons of distillers grains in the three months ended June 30, 2021 as compared to the same period in 2020 resulting primarily from higher ethanol production levels for the period which resulted in increased distillers grains production. We are currently operating at an ethanol production rate of approximately 140 million gallons annually which is approximately 40% above the nameplate capacity for the plant.  However, if we were to reduce ethanol production that would result in a corresponding decrease in distillers grains production.

    Corn Oil

    Our revenues from corn oil sales increased in the three months ended June 30, 2021 as compared to the same period in 2020 which was mainly the result of an increase in the average price per pound for corn oil. We also sold approximately 27% more tons of corn oil in the three months ended June 30, 2021 as compared to the same period in 2020 due to higher ethanol production, resulting in higher corn oil production.

The average price per pound of corn oil was approximately 74% higher for the three months ended June 30, 2021 as compared to the same period in 2020. Higher soybean oil prices along with increased biodiesel production had a positive effect on corn oil prices for the period particularly towards the beginning of the current period. Soybean oil is the primary competitor with corn oil.

    Management anticipates that corn oil prices will continue to follow soybean oil prices. Corn oil prices are also likely to be negatively affected by an increase in corn oil supply as operating conditions improve and ethanol plants increase production levels. However, the extension of the biodiesel tax credit by Congress is likely to continue to have a positive impact on demand from biodiesel producers and corn oil prices.

    We are currently operating at an ethanol production rate of approximately 140 million gallons annually which is approximately 40% above the nameplate capacity for the plant.  However, if we were to reduce ethanol production that would result in a corresponding decrease in corn oil production.

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Trading Division

    The following table shows the sources of our revenues from our Trading Division for the three months ended June 30, 2021 and 2020:

	2021				2020
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Soybean Sales	$	17,499,713	99.9	%	$	5,991,578	99.6	%
Other Revenue	14,875		0.1		22,625		0.4
Total Revenues	$	17,514,588	100.0	%	$	6,014,203	100.0	%

Soybeans

    During the three months ended June 30, 2021 revenues from our Trading Division were derived primarily from transporting and selling soybeans. Our revenues from soybeans sales increased in the three months ended June 30, 2021 as compared the to the same period in 2020. This increase in revenues is the result of an increase in bushels of soybeans sold of approximately 59% for the three months ended June 30, 2021 as compared to the same period in 2020 resulting primarily from more conducive market conditions for selling for the three months ending June 30, 2021.

    We also experienced an increase in the average price per bushel of soybeans sold for the three months ended June 30, 2021 that was approximately 86% higher than our average price per bushel of soybeans sold for the same period in 2020 due to higher futures prices. The average price per bushel of soybeans sold was $16.38 based on sales of approximately 1,081,000 bushels for the three months ended June 30, 2021. Management anticipates that soybean sales over the remainder of the fiscal year will be consistent with recent fiscal years.

Cost of Goods Sold

Ethanol Division

    Our cost of goods sold for this division as a percentage of its total revenues was approximately 92% for the three months ended June 30, 2021 as compared to approximately 97% for the same period in 2020. This decrease in cost of goods sold as a percentage of revenues was the result of increased profit margins in the marketplace for the three months ended June 30, 2021 as compared to the same period in 2020. Our two largest costs of production are corn and natural gas. Cost of goods sold also includes net gains or losses from derivatives related to our commodities purchases as well as our additional expense for our estimate of our rail car rehabilitation expense described below.

Corn

Our largest cost associated with the production of ethanol, distillers grains and corn oil is corn cost. During the three months ended June 30, 2021, we used approximately 7% more bushels of corn to produce our ethanol, distillers grains and corn oil as compared to the same period in 2020 due to higher ethanol production levels for the period. During the three months ended June 30, 2021, our average price paid per bushel of corn was approximately 96% higher as compared to the same period in 2020 due primarily to a smaller crop carryout from 2020's harvest and concerns that the anticipated planting acres for 2021 will be insufficient due to a drought in the upper Midwest and increased export demand from China.

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

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Natural Gas

    Our natural gas cost after hedging was higher during the three months ended June 30, 2021 as compared to the same period in 2020. This increase in cost of natural gas for the three months ended June 30, 2021 as compared to the same period in 2020 was primarily the result of mechanical repairs resulting in decreased natural gas efficiencies resulting in the use of approximately 7% more natural gas for the three months ended June 30, 2021 as compared to the same period in 2020. Our average price per MMBTU of natural gas was also approximately 4% higher during the three months ended June 30, 2021 as compared to the same period in 2020 primarily due to colder weather effects lingering into spring months, resulting in an increase in demand.

    If the nation were to experience a catastrophic weather event causing problems related to the supply of natural gas, this could result in higher natural gas prices.

Trading Division

    The following table shows the costs incurred to procure various agricultural commodities for our Trading Division for the three months ended June 30, 2021 and 2020:

	2021				2020
	Amount		% of Revenues		Amount		% of Revenues
Soybeans	$	17,690,022	101.0	%	$	5,498,077	91.4	%
Total Cost of Goods Sold	$	17,690,022	101.0	%	$	5,498,077	91.4	%

    Soybeans

    During the three months ended June 30, 2021, our cost was primarily the procurement of soybeans sold. During the three months ended June 30, 2021, our average price paid per bushel of soybeans was approximately 66% higher as compared to the same period in 2020 due to concerns over a smaller crop for 2020, smaller carryout of soybean inventory from the 2020 harvest and increased demand from China. We also purchased approximately 22% less bushels of soybeans in the three months ended June 30, 2021 compared to 2020 due mostly to a cash price that was not conducive to producer selling.

Derivatives

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

Operating Expense

    Our operating expenses as a percentage of revenues were approximately 1% for the three months ended June 30, 2021 as compared to operating expenses of approximately 3% of revenues for the same period in 2020. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees, depreciation of trading division fixed assets, property taxes and other general administrative costs. Operating expenses on a per gallon basis decreased for the three months ended June 30, 2021 primarily due to increased efficiencies and an increase in ethanol production compared to the same period in 2020.

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Operating Income (Loss)

    Our income from operations for the three months ended June 30, 2021 was approximately 7% of revenues as compared to operating loss of approximately (0.1%) of revenues for the same period in 2020. The increase in operating income for the three months ended June 30, 2021 was primarily the result of increased ethanol to corn margins.

Other Expense

    Our other expense was approximately (0.1)% of revenues for the three months ended June 30, 2021 and 2020.

Results of Operations for the Nine Months Ended June 30, 2021 and 2020

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our statement of operations for the nine months ended June 30, 2021 and 2020:

	2021				2020
Statement of Operations Data	Amount		%		Amount		%
Revenue	$	308,424,904	100.0	%	$	182,267,602	100.0	%
Cost of Goods Sold	289,525,280		93.9		181,843,166		99.8
Gross Profit	18,899,624		6.1		424,436		0.2
Operating Expenses	5,408,684		1.8		5,211,222		2.9
Operating Income (Loss)	13,490,940		4.3		(4,786,786)		(2.6)
Other Income, Net	64,397		—		260,460		0.1
Net Income (Loss)	$	13,555,337	4.3	%	$	(4,526,326)	(2.5)	%

Revenue

Operating Segments

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

    We currently do not have or anticipate we will have any other lines of business or other significant sources of revenue other than the sale of ethanol, distillers grains, corn oil and and the trading of agricultural grains.  Refer to Note 11, “Business Segments”, of the notes to the unaudited condensed financial statements for financial information about our financial reporting segments. Revenues in each division also include net gains or losses from derivatives related to products sold.

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The following table shows the sources of our total revenue from the two segments and the approximate percentage of revenues to total revenues in our unaudited condensed statements of operations for the nine months ended June 30, 2021 and 2020:

	2021				2020
Revenue:	Amount		% of Total Revenues		Amount		% of Total Revenues
Ethanol division	$	238,544,279	77.3	%	$	158,592,426	87.0	%
Trading division	69,880,625		22.7		23,675,176		13.0
Total Revenue	$	308,424,904	100.0	%	$	182,267,602	100.0	%

Ethanol Division

    The following table shows the sources of our revenues from our Ethanol Division for the nine months ended June 30, 2021 and 2020:

	2021				2020
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol	$	182,551,687	76.5	%	$	116,998,260	73.8	%
Distillers Grains	43,552,750		18.3		31,952,429		20.1
Corn Oil	12,030,379		5.0		7,233,285		4.6
Carbon Dioxide	368,038		0.2		370,125		0.2
Other Revenue	41,425		—		2,038,327		1.3
Total Revenues	$	238,544,279	100.0	%	$	158,592,426	100.0	%

Ethanol

    Our revenues from ethanol increased in the nine months ended June 30, 2021 as compared the to the same period in 2020. This increase in revenues is primarily the result of an increase in the price per gallon of ethanol sold for the nine months ended June 30, 2021 as compared to the same period in 2020.

    The average price per gallon of ethanol sold for the nine months ended June 30, 2021 was approximately 46% higher than the average price per gallon of ethanol sold for the same period in 2020. Ethanol market prices have been higher for the current period as a result of increased export demand and higher corn and oil prices. In addition, lower ethanol production towards the beginning of the current period had a positive effect on ethanol prices due to some plants curtailing production in response to poor operating conditions. The seasonal increase in domestic fuel demand due to summer driving towards the end of the current period also contributed to higher ethanol prices. In addition, ethanol prices for the nine months ended June 30, 2020 were negatively impacted by industry-wide production in excess of demand due to a variety of factors including the granting by the EPA of small refinery waivers, trade barriers resulting from disputes with foreign governments and a collapse in both domestic and foreign demand as a result of restrictions put in place in response to the COVID-19 pandemic near the end of the period. A recent decision by a federal appeals court that the EPA rule change allowing year-round sale of E15 could also have a negative effect on domestic demand and ethanol prices.

Management anticipates that ethanol prices may remain strong in the near term as a result of higher domestic fuel demand due to summer driving. In addition, if corn prices remain high that would likely contribute to higher ethanol prices. However, as certain ethanol plants have returned to higher production levels as operating conditions improve, industry over-production could have a negative effect on prices and potentially negative operating margins. Declines in ethanol exports and continued trade disputes with foreign governments such as China would also likely contribute to lower ethanol prices. In addition, the U.S. Supreme Court's recent decision regarding small refinery waivers could result in the EPA granting additional waivers to oil refineries seeking relief from ethanol use requirements. If that were to occur, ethanol prices could be negatively affected.

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We experienced an increase in ethanol gallons sold of approximately 7% for the nine months ended June 30, 2021 as compared to the same period in 2020 resulting primarily from increased ethanol production rates for the period. We are currently operating at a rate of approximately 140 million gallons annually.  In addition, we have installed an ethanol recovery system which we expect will be fully operational during the summer of 2021 and which we anticipate will result in an increase in efficiencies allowing us to achieve higher ethanol production rates. However, management continues to monitor economic conditions carefully. If market conditions worsen affecting our ability to profitably operate the plant, we may be forced to reduce our ethanol production rate or even temporarily shut down ethanol production altogether.

    Distillers Grains

    Our revenues from distillers grains increased in the nine months ended June 30, 2021 as compared to the same period in 2020. This increase in revenues is primarily the result of an increase in the average price per ton of distillers grains sold for the period ended June 30, 2021 as compared to the same period in 2020.

    The average price per ton of distillers grains sold for the nine months ended June 30, 2021 was approximately 35% higher than the average price per ton of distillers grains sold for the same period in 2020. This increase in the market price of distillers grains is primarily due to higher corn and soybean meal prices. However, towards the end of the current period, soybean meal production began to outpace demand driving prices of soybean meal and distillers grains lower. In addition, a decrease in distillers grains supply towards the beginning of the current period due to lower production resulting from some plants curtailing production in response to poor market conditions had a positive effect on distillers grains prices

    Management anticipates that distillers grains prices will continue to be affected by the price of corn and soybean meal. If there is an oversupply of soybean meal, that could have a negative effect on the price of distillers grains. In addition, trade barriers with foreign countries have had a negative effect on export demand in the past. If trade disputes with foreign countries such as China are not favorably resolved, this could have a negative effect on distillers grains prices unless additional demand can be sustained from domestic or other foreign markets.

    We sold approximately 1% less tons of distillers grains in the nine months ended June 30, 2021 as compared to the same period in 2020 resulting primarily from logistical constraints. We are currently operating at an ethanol production rate of approximately 140 million gallons annually which is approximately 40% above the nameplate capacity for the plant.  However, if we were to reduce ethanol production that would result in a corresponding decrease in distillers grains production.

    Corn Oil

    Our revenues from corn oil sales increased in the nine months ended June 30, 2021 as compared to the same period in 2020 which was mainly the result of increased volume of sales and an increase in the average price per pound for corn oil. We sold approximately 13% more tons of corn oil in the nine months ended June 30, 2021 as compared to the same period in 2020 due to higher corn oil yield on average resulting in higher corn oil production.

The average price per pound of corn oil was approximately 46% higher for the nine months ended June 30, 2021 as compared to the same period in 2020. Higher soybean oil prices along with increased biodiesel production had a positive effect on corn oil prices for the period. Soybean oil is the primary competitor with corn oil.

    Management anticipates that corn oil prices will continue to follow soybean oil prices. Corn oil prices are also likely to be negatively affected by an increase in corn oil supply as operating conditions improve and ethanol plants increase production levels. However, the extension of the biodiesel tax credit by Congress is likely to continue to have a positive impact on demand from biodiesel producers and corn oil prices.

    We are currently operating at an ethanol production rate of approximately 140 million gallons annually which is approximately 40% above the nameplate capacity for the plant.  However, if we were to reduce ethanol production that would result in a corresponding decrease in corn oil production.

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Trading Division

    The following table shows the sources of our revenues from our Trading Division for the nine months ended June 30, 2021 and 2020:

	2021				2020
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Soybean Sales	$	69,760,775	99.8	%	$	23,599,101	99.7	%
Other Revenue	119,850		0.2		76,075		0.3
Total Revenues	$	69,880,625	100.0	%	$	23,675,176	100.0	%

Soybeans

    During the nine months ended June 30, 2021 revenues from our Trading Division were derived primarily from transporting and selling soybeans. Our revenues from soybeans sales increased in the nine months ended June 30, 2021 as compared the to the same period in 2020. This increase in revenues is the result of an increase in bushels of soybeans sold of approximately 111% for the nine months ended June 30, 2021 as compared to the same period in 2020 resulting primarily from more conducive market conditions for selling for the nine months ending June 30, 2021.

    We also experienced an increase in the average price per bushel of soybeans sold for the nine months ended June 30, 2021 that was approximately 40% higher than our average price per bushel of soybeans sold for the same period in 2020 due to higher futures prices. The average price per bushel of soybeans sold was $12.85 based on sales of approximately 5,431,000 bushels for the nine months ended June 30, 2021. Management anticipates that soybean sales over the remainder of the fiscal year will be consistent with recent fiscal years.

Cost of Goods Sold

Ethanol Division

    Our cost of goods sold for this division as a percentage of its total revenues was approximately 94% for the nine months ended June 30, 2021 as compared to approximately 100% for the same period in 2020. This decrease in cost of goods sold as a percentage of revenues was the result of increased profit margins in the marketplace for the nine months ended June 30, 2021 as compared to the same period in 2020. Our two largest costs of production are corn and natural gas. Cost of goods sold also includes net gains or losses from derivatives related to our commodities purchases as well as our additional expense for our estimate of our rail car rehabilitation expense described below.

Corn

Our largest cost associated with the production of ethanol, distillers grains and corn oil is corn cost. During the nine months ended June 30, 2021, we used approximately 3% more bushels of corn to produce our ethanol, distillers grains and corn oil as compared to the same period in 2020 due to higher ethanol production levels for the period. During the nine months ended June 30, 2021, our average price paid per bushel of corn was approximately 38% higher as compared to the same period in 2020 due primarily to a smaller crop carryout from 2020's harvest and concerns that the anticipated planting acres for 2021 will be insufficient to compensate for the smaller 2020 crop. These concerns were exacerbated by the drought in the upper Midwest towards the end of the current period.

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

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Natural Gas

    Our natural gas cost after hedging was higher during the nine months ended June 30, 2021 as compared to the same period in 2020. This increase in cost of natural gas for the nine months ended June 30, 2021 as compared to the same period in 2020 was primarily the result of increased ethanol production resulting in the use of approximately 4% more natural gas for the nine months ended June 30, 2021 as compared to the same period in 2020. Our average price per MMBTU of natural gas was also 3% higher during the nine months ended June 30, 2021 as compared to the same period in 2020 primarily due to colder weather towards the beginning of the current period resulting in an increase in demand.

    If the nation were to experience a catastrophic weather event causing problems related to the supply of natural gas, this could result in higher natural gas prices.

Trading Division

    The following table shows the costs incurred to procure various agricultural commodities for our Trading Division for the nine months ended June 30, 2021 and 2020:

	2021				2020
	Amount		% of Revenues		Amount		% of Revenues
Soybeans	$	67,575,644	96.7	%	$	22,194,784	100.0	%
Total Cost of Goods Sold	$	67,575,644	96.7	%	$	22,194,784	100.0	%

Soybeans

    During the nine months ended June 30, 2021, our cost was primarily the procurement of soybeans sold. During the nine months ended June 30, 2021, our average price paid per bushel of soybeans was approximately 40% higher as compared to the same period in 2020 due to concerns over a smaller crop for 2020, smaller carryout of soybean inventory from the 2020 harvest and increased demand from China. We also purchased approximately 46% more bushels of soybeans in the nine months ended June 30, 2021 compared to 2020 due mostly to a cash price that was conducive to producer selling.

Derivatives

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

Operating Expense

    Our operating expenses as a percentage of revenues were approximately 2% for the nine months ended June 30, 2021 as compared to operating expenses of approximately 3% of revenues for the same period in 2020. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees, depreciation of trading division fixed assets, property taxes and other general administrative costs. Operating expenses on a per gallon basis decreased for the nine months ended June 30, 2021 primarily due to optimizing efficiencies and increasing production compared to the same period in 2020.

Operating Income (Loss)

    Our income from operations for the nine months ended June 30, 2021 was approximately 4% of revenues as compared to operating loss of approximately (3)% of revenues for the same period in 2020. The increase in operating income for the nine months ended June 30, 2021 was primarily the result of increased ethanol to corn margins.

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Other Income

    We had other income of approximately 0% of revenues for the nine months ended June 30, 2021 compared to other income of 0.1% of revenues for the same period in 2020. This decrease in other income for nine months ended June 30, 2021, was primarily a result of the receipt of insurance proceeds recognized in the period ended June 30, 2020.

Changes in Financial Condition for the Nine Months Ended June 30, 2021

    The following table highlights the changes in our financial condition:

	June 30, 2021 (Unaudited)		September 30, 2020
Current Assets	$	66,010,590	$	45,522,739
Long Term Assets	$	76,451,320	$	84,214,539
Current Liabilities	$	22,800,034	$	16,442,809
Long-Term Liabilities	$	3,731,889	$	4,347,119
Members' Equity	$	115,929,987	$	108,947,350

    We experienced an increase in our current assets at June 30, 2021 as compared to September 30, 2020. This increase was primarily driven by an increase in inventory and accounts receivable at June 30, 2021 due primarily to commodity prices conducive to producer selling and timing of shipments at June 30, 2021 as compared to September 30, 2020.

    We experienced a decrease in our long term assets in the quarter ended June 30, 2021 as compared to September 30, 2020 due primarily to routine depreciation on long-term assets.

    We experienced an increase in our total current liabilities at June 30, 2021 as compared to September 30, 2020. This increase was primarily due to an increase in our grain forward purchases and contracts.

    We experienced a decrease in our long-term liabilities as of June 30, 2021 as compared to September 30, 2020 as a result of the declining life on leases due to the implementation of ASC 842 partially offset by an increase in long-term debt, net of current maturities.

Liquidity and Capital Resources

    We, and the ethanol industry as a whole, experienced adverse conditions throughout most of 2019 and 2020, as a result of industry-wide record low ethanol prices due to reduced demand and high industry inventory levels. These factors, which are compounded by the recent impact of COVID-19, resulted in negative operating margins, lower cash flow from operations and net operating losses. In response to the low margin environment, we reduced our ethanol production rate by approximately 20% in March 2020.  However, as margins improved in May of 2020, we returned to full production and are currently operating at approximately 140 million gallons annually which is approximately 40% above the nameplate capacity for the plant.  We continue to monitor COVID-19 developments and the effect on demand for our products in order to determine whether future adjustments to production are warranted.

    The market price of corn and soybeans has recently increased significantly. As a result, we increased our limit on our Revolving Credit Loan by $5,000,000 in order to protect our risk management strategy. Based on financial forecasts performed by our management, we anticipate that with this increase in our credit, we will have sufficient cash from our credit facilities and cash from our operations to continue to operate the ethanol plant for the next 12 months. We do not anticipate seeking any additional financing during our 2021 fiscal year other than described above. However, should the current unfavorable operating conditions in the ethanol industry worsen or continue for a prolonged period, we could have difficulty maintaining our liquidity and may need to rely on our revolving lines of credit or seek to increase our limits for operations.

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The following table shows cash flows for the nine months ended June 30, 2021 and 2020:

	2021		2020
Net cash provided by (used for) operating activities	$	11,151,508	$	(4,068,569)
Net cash used for investing activities	(3,483,402)		(2,160,154)
Net cash used for financing activities	(5,350,283)		(2,847,523)
Net increase (decrease) in Cash and Restricted Cash	2,317,823		(9,076,246)
Cash and Restricted Cash, beginning of period	16,913,982		22,034,120
Cash and Restricted Cash, end of period	$	19,231,805	$	12,957,874

Cash Flow provided by (used for) Operations

We experienced an increase in our cash flow from operations for the nine months ended June 30, 2021 as compared to the same period in 2020. This increase was primarily the result of an increase in net income during the nine months ended June 30, 2021 as compared to the same period in 2020.

Cash Flow used for Investing Activities

We used more cash in investing activities for the nine months ended June 30, 2021 as compared to the same period in 2020. This increase was primarily the result of increased amounts paid for construction in progress during the period ended June 30, 2021 compared with the same period in 2020.

Cash Flow used for Financing Activities

We used more cash for financing activities for the nine months ended June 30, 2021 as compared to the same period in 2020. This increase was primarily the results of payments to our investors in the form of distributions during the nine months ended June 30, 2021.

    Our liquidity, results of operations and financial performance will be impacted by many variables, including the market price for commodities such as, but not limited to, corn, ethanol, soybeans and other energy commodities, as well as the market price for any co-products generated by the facility and the cost of labor and other operating costs.  We expect operations to generate adequate cash flows to maintain operations.

Short and Long Term Debt Sources

We have a loan agreement consisting of two loans, the Declining Revolving Loan ("Declining Loan") and the Revolving Credit Loan. In exchange for these loans, we granted liens on all property (real and personal, tangible and intangible) which include, among other things, a mortgage on the property, a security interest on commodity trading accounts, and assignment of material contracts. Please refer to Item 1 - Financial Statements, Note 7 - Bank Financing for additional details. Effective January 26, 2021, we amended the loan agreement in order to extend the termination dates of the Declining Loan and Revolving Credit Loan to April 30, 2021, and increase the limit under the Revolving Credit Loan to $20,000,000.

On April 30, 2021, we executed a Seventeenth Amendment of First Amended and Restated Construction Loan Agreement which amends the First Amended and Restated Construction Loan Agreement dated June 10, 2013 (the "Seventeenth Amendment") with FNBO. The primary purposes of the Seventeenth Amendment were to extend the termination dates of the Declining Loan to February 28, 2023 and the Revolving Credit Loan to February 28, 2022 and modify the applicable interest rates for both loans. The Seventeenth Amendment assigns an interest rate of the U.S. Prime Rate as published in The Wall Street Journal minus 15 basis points (.15%) to the Declining Loan and the U.S. Prime Rate as published in The Wall Street Journal minus 25 basis points (.25%) to the Revolving Credit Loan. The Seventeenth Amendment also establishes a minimum interest rate for the Declining Loan of 2.85% and for the Revolving Credit Loan of 2.75%.

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Declining Loan

    The maximum availability of the Declining Loan is $5,000,000 with such amount to be available for working capital purposes. The interest rate on the Declining Loan at June 30, 2021 was 3.40%. There were approximately $1,222,000 in borrowings outstanding on the Declining Loan at June 30, 2021 and no borrowings outstanding at September 30, 2020. The Declining Loan was due to mature on April 30, 2021 but has since been renewed until February 28, 2023 at essentially the same terms.

Revolving Credit Loan

    The Revolving Credit Loan has a limit of $20,000,000 supported by a borrowing base made up of our corn, ethanol, dried distillers grain, corn oil and soybean inventories reduced by accounts payable associated with those inventories having a priority. It is also supported by the eligible accounts receivable and commodity trading account excess margin funds. The interest rate on the Revolving Credit Loan at June 30, 2021 was 3.00%. There were no borrowings outstanding at June 30, 2021 and September 30, 2020. The Revolving Credit Loan was due to mature on April 30, 2021 but has since been renewed until February 28, 2022 at essentially the same terms.

Covenants

    During the term of the loans, we will be subject to certain financial covenants. Our minimum working capital is $15,000,000, which is calculated as our current assets plus the amount available for drawing under our long term revolving note, less current liabilities. Our minimum fixed charge coverage ratio is no less than 1.15:1.0 measured on a rolling four quarter average basis. However, for any reporting period, if our working capital is equal to or more than $23,000,000, we will be subject to maintaining a debt service charge coverage ratio of no less than 1.25:1.0 in lieu of the fixed charge coverage ratio.

    Our loan agreement also requires us to obtain prior approval from our lender before making, or committing to make, capital expenditures exceeding an aggregate amount of $5,000,000.

We are complying with our financial covenants and the other terms of our loan agreements at June 30, 2021. Based on current management projections, we anticipate that future operations will be sufficient to generate enough cash flow to maintain operations, service any new debt and comply with our financial covenants and other terms of our loan agreements through December 31, 2021. Should market conditions deteriorate in the future, circumstances may develop which could result in us violating the financial covenants or other terms of our loan agreements. Should we violate the terms or covenants of our loan or fail to obtain a waiver of any such term or covenant, our primary lender could deem us in default of our loans and require us to immediately repay a significant portion or possibly the entire outstanding balance of our loans if we have a balance outstanding. In that event, our lender could also elect to proceed with a foreclosure action on our plant.

Paycheck Protection Program Loan

    In March 2020, Congress passed the Paycheck Protection Program, authorizing loans to small business for use in paying employees that continue to work throughout the COVID-19 pandemic and for rent, utilities and interest on mortgages. Loans obtained through the Paycheck Protection Program are eligible to be forgiven as long as the proceeds are used for qualifying purposes and other conditions are met. On April 20, 2020, we received a loan in the approximate amount of $856,000 through the Paycheck Protection Program. The entire loan was used for payroll, utilities and interest on our loans; therefore management anticipates that the loan will be substantially forgiven.  In April 2021, we received and recognized the forgiveness of the Paycheck Protection Program Loan.

Capital Improvements

    The board of directors approved various capital projects in order to make certain improvements to our ethanol plant to allow us to increase our annual ethanol production rate and maintain our facility. These improvements include updates to our heat exchangers, boilers, grain probe, and other small miscellaneous projects as well as the purchase of a new payloader for our

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dried distillers grains loadout system. We have also invested in an ethanol recovery system which is expected to cost approximately $2,400,000 and be funded with funds from operations and our existing debt facilities. We were nearing completion of the project during the third quarter subject to final testing which is anticipated to be finished during the late summer of 2021.

Development Agreement

    In September 2007, we entered into a development agreement with Randolph County Redevelopment Commission (“the Commission”) to promote economic development in the area. Under the terms of this agreement, beginning in January 2008 through December 2028, the money we pay toward property tax expense is allocated to an expense and an acquisition account. The funds in the acquisition account can be used by the Commission to purchase equipment, at our direction, for the plant. We do not have title to or control over the funds in the acquisition account, no amounts have been recorded in the balance sheet relating to this account.

Critical Accounting Estimates

Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Our most critical accounting estimates, which require the greatest use of judgment by management, are designated as critical accounting estimates and include policies related to the useful lives of fixed assets; allowance for doubtful accounts; the valuation of basis and delay price contracts on corn purchases; derivatives; inventory; long-lived assets, railcar rehabilitation costs and inventory purchase commitments.  The Ethanol Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, inventory, patronage dividends, long lived assets, railcar rehabilitation costs, and inventory purchase commitments. The Trading Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, the valuation of inventory purchase and sale commitments derivatives and inventory at market. An in-depth description of these can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.  Management has not changed the method of calculating and using estimates and assumptions in preparing our condensed financial statements in accordance with generally accepted accounting principles.  There have been no changes in the policies for our accounting estimates for the nine months ended June 30, 2021.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

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

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Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from our Declining Loan and Revolving Credit Loan which bear variable interest rates. There were borrowings in the amount of approximately $1,222,000 outstanding on the Declining Loan and the applicable interest rate was 3.40% at June 30, 2021. There were no borrowings on the Revolving Credit Loan at June 30, 2021 and the applicable interest rate was 3.00%. The specifics of the Declining Loan and the Revolving Credit Loan are discussed in greater detail above. If we were to experience a 10% adverse change in the U.S. Prime Rate, the annual effect such change would have on our statement of operations, based on the amount we had outstanding on our variable interest rate loans at June 30, 2021, would be approximately $4,200.

Commodity Price Risk

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

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

We enter into forward contracts for our commodity purchases and sales on a regular basis.  It is our intent that, as we enter in to these contracts, we will use various hedging instruments to maintain a near even market position.  For example, if we have 1 million bushels of corn under fixed price contracts we would generally expect to enter into a short hedge position to offset our price risk relative to those bushels we have under fixed price contracts.  Because our ethanol marketing company is selling substantially all of the gallons it markets on a spot basis we also include the corn bushel equivalent of the ethanol we have produced that is inventory but not yet priced as bushels that need to be hedged.

    The following table provides details regarding the gains and (losses) from our derivative instruments in the statements of operations, none of which are designated as hedging instruments, for the three and nine months ended June 30, 2021 and 2020:

	Three Months Ended June 30, 2021		Nine Months Ended June 30, 2021		Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020
Corn Derivative Contracts	$	(11,254,118)	$	(23,361,960)	$	901,144	$	3,299,787
Ethanol Derivative Contracts	493,042		647,795		(1,189,256)		$	(3,753,455)
Natural Gas Derivative Contracts	—		(836)		—		—
Soybean Derivative Contracts	(2,625,108)		(8,513,405)		159,073		810,450
Soybean Forward Purchase and Sales Contracts	(166,197)		1,376,887		190,883		54,719
Totals	$	(13,552,381)	$	(29,851,519)	$	61,844	$	411,501

These soybean forward purchase contracts will be marked to market as the contract periods expire. This means that any gains or losses realized will be recognized in our gross margin at each month end until they are delivered upon.  Due to the volatility and risk involved in the commodities market, we cannot be certain that these gains or losses will be realized. 

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

A sensitivity analysis has been prepared to estimate our exposure to ethanol, distillers grains, corn oil, corn, natural gas and soybeans price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10% adverse change in the average cost of our corn and natural gas and average ethanol, distillers grains, corn oil and soybeans prices as of June 30, 2021 net of the forward and future contracts used to hedge our market risk. The volumes are based on our expected use, purchase and sale of these commodities for a one year period from June 30, 2021. The results of this analysis, which may differ from actual results, are approximately as follows:

	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price as of June 30, 2021	Approximate Adverse Change to Income
Natural Gas	3,300,000	MMBTU	10%	$	—
Ethanol	138,000,000	Gallons	10%	$	34,086,000
Corn	46,800,000	Bushels	10%	$	27,000,000
DDGs	324,000	Tons	10%	$	5,341,000
Corn Oil	43,980,000	Pounds	10%	$	1,813,000
Soybeans	5,000,000	Bushels	10%	$	7,493,000

Liability Risk

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

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

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

Our management, including our Chief Executive Officer (the principal executive officer), Jeffrey Painter, along with our Chief Financial Officer (the principal financial officer), William Dartt, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of June 30, 2021.  Based on this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or

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submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

    There were no changes in our internal control over financial reporting during our third quarter of our 2021 fiscal year that have materially affected, or are likely to materially affect, our internal control over financial reporting.

PART II.     OTHER INFORMATION

Item 1. Legal Proceedings

Patent Infringement

On June 27, 2008, we entered into a Tricanter Purchase and Installation Agreement with ICM, Inc. for the construction and installation of a Tricanter Oil Separation System. On February 12, 2010, GS CleanTech Corporation ("GS CleanTech") filed a lawsuit in the United States District Court for the Southern District of Indiana, claiming that Cardinal's operation of the oil recovery system manufactured and installed by ICM, Inc. infringes a patent claimed by GS CleanTech. GS CleanTech subsequently filed actions against others for infringement of its patent rights, adding several additional patents and successfully petitioned for the cases to be joined in a multi-district litigation. ICM, Inc. agreed to indemnify Cardinal and defend the lawsuit at no expense to Cardinal. On October 23, 2014, the United States District Court (the "Court") granted summary judgment finding that all of the patents claimed by GS CleanTech were invalid and that Cardinal had not infringed. In addition, on September 15, 2016, the Court granted summary judgment finding that the patents were invalid due to inequitable conduct before the US Patent and Trademark Office by the inventors and their attorneys. These rulings were subsequently affirmed on appeal and on February 22, 2021, the U.S. Supreme Court declined to review the decision. The Court has yet to rule on the final attorney fees to be awarded to the defendants.

Item 1A.    Risk Factors

    None.

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

None.

Item 3. Defaults Upon Senior Securities

    None.

Item 4. Mine Safety Disclosures

    None.

Item 5. Other Information

None.

Item 6. Exhibits.

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

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Exhibit No.	Exhibit
31.1	Certificate Pursuant to 17 CFR 240.13a-14(a).*
31.2	Certificate Pursuant to 17 CFR 240.13a-14(a).*
32.1	Certificate Pursuant to 18 U.S.C. Section 1350.*
32.2	Certificate Pursuant to 18 U.S.C. Section 1350.*
101	The following financial information from Cardinal Ethanol, LLC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of June 30, 2021 and September 30, 2020, (ii) Condensed Statements of Operations for the three and nine months ended June 30, 2021 and 2020, (iv) Condensed Statements of Changes in Members' Equity for the three and nine months ended June 30, 2021 and 2020, and (v) the Notes to Condensed Unaudited Financial Statements.**

*    Filed herewith.

**    Furnished herewith.

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SIGNATURES

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

		CARDINAL ETHANOL, LLC
Date:	August 4, 2021	/s/ Jeffrey Painter
		Jeffrey Painter
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	August 4, 2021	/s/ William Dartt
		William Dartt
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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