Cardinal Ethanol (CRDE) 10-Q 2024 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, 2024
	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 13, 2024, there were 14,606 membership units outstanding.

1

INDEX

	Page Number
PART I. FINANCIAL INFORMATION	3
Item 1. Consolidated Condensed Financial Statements (Unaudited)	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures about Market Risk	49
Item 4. Controls and Procedures	51
PART II. OTHER INFORMATION	52
Item 1. Legal Proceedings	52
Item 1A. Risk Factors	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	54
Item 6. Exhibits	54
SIGNATURES	55

2

PART I.        FINANCIAL INFORMATION

Item 1. Financial Statements

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

ASSETS	June 30, 2024		September 30, 2023
	(Unaudited)
Current Assets
Cash and cash equivalents	$	34,323,199	$	69,859,066
Restricted cash	10,980,151		13,425,343
Investments in available-for-sale debt securities	—		12,407,939
Trade accounts receivable	17,907,225		18,407,126
Miscellaneous receivables	1,312,661		478,069
Inventories	40,560,501		15,103,440
Prepaid and other current assets	1,489,660		298,635
Futures and options derivatives	2,283,117		352,464
Forward purchase/sales derivatives	83,680		66,825
Total current assets	108,940,194		130,398,907
Property, Plant, and Equipment, Net	134,908,965		92,323,559
Other Assets
Operating lease right-of-use asset, net	10,169,048		3,012,582
Investments	12,233,122		7,033,199
Total other assets	22,402,170		10,045,781
Total Assets	$	266,251,329	$	232,768,247
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities
Advances from customer	$	310,525	$	—
Due to broker	1,515,941		1,232,522
Accounts payable	6,517,743		3,171,886
Accounts payable - grain	10,848,245		11,005,387
Accrued expenses	3,805,603		4,695,515
Futures and options derivatives	3,496,929		3,817,921
Forward purchase/sales derivatives	221,349		356,177
Operating lease liability current	3,479,581		2,611,799
Current maturities of long-term debt	4,180,475		1,136,681
Total current liabilities	34,376,391		28,027,888
Long-Term Liabilities
Long-term debt, net of current maturities	52,965,207		29,432,277
Operating lease long-term liabilities	6,691,888		416,931
Liability for railcar rehabilitation costs	2,491,051		2,358,134
Other long-term liabilities	18,497		—
Total long-term liabilities	62,166,643		32,207,342
Commitments and Contingencies
Members’ Equity
Members' contributions, net of cost of raising capital, 14,606 units authorized, issued and outstanding	70,912,213		70,912,213
Accumulated other comprehensive loss	—		(10,671)
Retained earnings	98,796,082		101,631,475
Total members' equity	169,708,295		172,533,017
Total Liabilities and Members’ Equity	$	266,251,329	$	232,768,247

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

3

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Consolidated Condensed Statements of Operations (Unaudited)

	Three Months Ended				Nine Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Revenues	$	83,824,650	$	119,046,572	$	232,367,507	$	384,766,147
Cost of Goods Sold	74,084,025		103,128,982		216,031,104		335,472,745
Gross Profit	9,740,625		15,917,590		16,336,403		49,293,402
Operating Expenses	3,467,026		2,494,927		9,600,174		7,122,298
Operating Income	6,273,599		13,422,663		6,736,229		42,171,104
Other Income (Expense)
Interest income	538,983		904,327		2,485,082		1,777,225
Interest expense	(1,360,289)		—		(2,371,435)		—
Miscellaneous income (expense)	7,982		(12,692)		(56,912)		73,304
Loss on equity method investment	(65,711)		(23,588)		(214,757)		(350,572)
Total	(879,035)		868,047		(158,022)		1,499,957
Net Income	$	5,394,564	$	14,290,710	$	6,578,207	$	43,671,061
Weighted Average Units Outstanding - basic and diluted	14,606		14,606		14,606		14,606
Net Income Per Unit - basic and diluted	$	369	$	978	$	450	$	2,990
Distributions Per Unit	$	150	$	1,250	$	600	$	2,250
Unrealized loss on available-for-sale debt securities	—		(14,113)		—		(14,015)
Total comprehensive loss	—		(14,113)		—		(14,015)
Net Comprehensive Income	$	5,394,564	$	14,276,597	$	6,578,207	$	43,657,046

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

4

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (Unaudited)

	Nine Months Ended June 30, 2024		Nine Months Ended June 30, 2023
Cash Flows from Operating Activities
Net income	$	6,578,207	$	43,671,061
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	8,100,791		8,632,278
Loss on sale of equipment	103,832		—
Change in commodity derivative instruments	(2,403,328)		2,571,941
Non-cash dividend income	(964,680)		(122,264)
Earnings on available-for-sale debt securities	(81,390)		(318,429)
Non-cash lease expense	(13,727)		16,735
Loss from equity method investment	214,757		350,572
Amortization of deferred financing costs	21,900		—
Change in operating assets and liabilities, net of asset acquisition:
Trade accounts receivable	499,901		(7,386,496)
Miscellaneous receivables	(834,592)		407,115
Inventories	(25,457,061)		(3,796,515)
Prepaid and other current assets	(1,191,025)		(241,368)
Disbursements in excess of bank balance	—		1,809,784
Due to broker	283,419		2,636,855
Accounts payable	3,370,417		(1,110,571)
Accounts payable - grain	(157,142)		(850,043)
Accrued expenses	1,298,741		(1,868,762)
Liability for railcar rehabilitation costs	132,917		238,505
Other long-term liabilities	18,497		—
Advances from customers	310,525
Net cash provided by (used for) operating activities	(10,169,041)		44,640,398
Cash Flows from Investing Activities
Proceeds from maturities of available-for-sale debt securities	12,500,000		11,000,000
Proceeds from sale of equipment	1,200,000
Payments for construction in progress	(10,429,644)		(21,065,381)
Purchases of investments in debt securities	—		(28,487,765)
Payments for capital assets of subsidiary	(42,373,598)		—
Investment in Cardinal One Carbon Holdings, LLC	(4,450,000)		(2,950,000)
Net cash used for investing activities	(43,553,242)		(41,503,146)
Cash Flows from Financing Activities
Distributions paid	(10,813,600)		(35,142,395)
Proceeds from revolving credit loan	29,226,683		44,381,156
Payments on revolving credit loan	(29,226,683)		(44,381,156)
Payments for deferred financing costs	(280,319)		—
Proceeds from economic development fund	—		2,950,000
Proceeds from long-term debt	26,835,143		16,774,612
Net cash provided by (used for) financing activities	15,741,224		(15,417,783)

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

5

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (Unaudited)

	Nine Months Ended June 30, 2024		Nine Months Ended June 30, 2023
Net Decrease in Cash, Cash Equivalents, and Restricted Cash	(37,981,059)		(12,280,531)
Cash, Cash Equivalents, and Restricted Cash – Beginning of Period	83,284,409		63,239,614
Cash, Cash Equivalents, and Restricted Cash – End of Period	$	45,303,350	$	50,959,083
Reconciliation of Cash, Cash Equivalents, and Restricted Cash
Cash and Cash Equivalents - Balance Sheet	$	34,323,199	$	38,223,438
Restricted Cash - Balance Sheet	10,980,151		12,735,645
Cash, Cash Equivalents, and Restricted Cash	$	45,303,350	$	50,959,083
Supplemental Cash Flow Information
Interest paid	$	2,737,629	$	820,582
Supplemental Disclosure of Non-cash Investing and Financing Activities
Construction in progress included in accrued expenses and accounts payable	$	25,795	$	283,498
Construction period interest capitalized in property, plant and equipment	$	727,019	$	610,069
Accrued distributions included in accrued expenses	$	700,000	$	1,100,000

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

6

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Consolidated Condensed Statements of Changes in Members' Equity (Unaudited)

	Member Contributions		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance September 30, 2022	$	70,912,213	$	76,358,279	$	—	$	147,270,492
Net Income	—		15,905,665		—		15,905,665
Member Distributions	—		(7,303,000)		—		(7,303,000)
Unrealized Loss on Available-For-Sale Debt Securities	—		—		(7,706)		(7,706)
Balance December 31, 2022	$	70,912,213	$	84,960,944	$	(7,706)	$	155,865,451
Net Income	—		13,474,686		—		13,474,686
Member Distributions	—		(10,053,000)		—		(10,053,000)
Unrealized Gain on Available-For-Sale Debt Securities	—		—		7,804		7,804
Balance March 31, 2023	$	70,912,213	$	88,382,630	$	98	$	159,294,941
Net Income	—		14,290,710		—		14,290,710
Member Distributions	—		(18,886,395)		—		(18,886,395)
Unrealized Loss on Available-For-Sale Debt Securities	—		—		(14,113)		(14,113)
Balance June 30, 2023	$	70,912,213	$	83,786,945	$	(14,015)	$	154,685,143
	Member Contributions		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance September 30, 2023	$	70,912,213	$	101,631,475	$	(10,671)	$	172,533,017
Net Income	—		2,720,022		—		2,720,022
Member Distributions	—		(4,481,800)		—		(4,481,800)
Unrealized Gain on Available-For-Sale Debt Securities	—		—		10,671		10,671
Balance December 31, 2023	$	70,912,213	$	99,869,697	$	—	$	170,781,910
Net Loss	—		(1,536,379)		—		(1,536,379)
Member Distributions	—		(2,740,900)		—		(2,740,900)
Balance March 31, 2024	$	70,912,213	$	95,592,418	$	—	$	166,504,631
Net Income	—		5,394,564		—		5,394,564
Member Distributions	—		(2,190,900)		—		(2,190,900)
Balance June 30, 2024	$	70,912,213	$	98,796,082	$	—	$	169,708,295

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

7

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated condensed financial statements (the "consolidated 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 consolidated financial statements and notes thereto included in the Company's audited consolidated financial statements for the year ended September 30, 2023, 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 and Subsidiaries (the “Company”) is an Indiana limited liability company currently producing fuel-grade ethanol, distillers grains, corn fermented protein ("CFP"), corn oil and carbon dioxide near Union City, Indiana (the "Indiana Plant" or "Union City" or "Indiana") and sells these products throughout the continental United States. During the nine months ended June 30, 2024 and 2023, the Company produced approximately 78,596,000 and 103,276,000 gallons of ethanol, respectively. The Company also operates a plant in Colwich, Kansas (the "Kansas Plant" or "Colwich" or "Kansas") which produces and sells fuel-grade ethanol, wet distillers grains, corn fermented protein, and corn oil. The Kansas Plant began producing ethanol and related byproducts during the nine months ended June 30, 2024 and produced approximately 1,698,000 gallons of ethanol.

In addition, the Company procures, transports, and sells grain commodities through grain operations at the Indiana Plant.

The Company announced its intent to engage in a reclassification and reorganization of its membership units for the purpose of terminating the registration of its units with the Securities and Exchange Commission (the "SEC") and suspending its reporting obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This is known as a "going private transaction." The Company expects the proposed transaction to result in four classes of membership units. The proposed reclassification and associated amendments to the Company’s operating agreement will be subject to approval by the members. If the members approve the proposed reclassification and amendments to the operating agreement, the Company anticipates having fewer than 300 unit holders in its existing unit class and fewer than 500 unit holders in each additional unit class which would enable the Company to terminate its registration and suspend reporting requirements under the Exchange Act.

Basis of Accounting

The Company prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The consolidated financial statements include the operations, assets and liabilities of the Company. In the opinion of the Company's management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to fairly present the accompanying consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Cardinal Ethanol, LLC and its wholly owned subsidiaries, Cardinal Ethanol Export Sales, Inc., Cardinal One Carbon Holdings, LLC, and Cardinal Colwich, LLC ("Cardinal Colwich"), (collectively, the Company). Cardinal Ethanol Export Sales, Inc. is an Interest Charge Domestic to International Sales Company ("IC-DISC") designed to take advantage of certain tax incentives for export sales to other countries. Cardinal One Carbon Holdings, LLC was formed to hold the partnership interest for the investigation and pursuit of carbon dioxide capture and sequestration. Cardinal Colwich was formed to purchase the assets of the Kansas Plant. Subsequent to the purchase, the Kansas Plant was brought online and is now operational. All inter-company balances and transactions have been eliminated in consolidation.

8

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

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 two 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 plants, 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 Union City, Indiana 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 consolidated financial statements in accordance with U.S. GAAP. 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, valuation of inventories, the assumptions used in the analysis of the impairment of long-lived assets, allowance for credit losses, railcar rehabilitation costs, asset purchase price allocation, 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, allowance for credit losses, the valuation of inventory purchase and sale commitment derivatives and inventory at market.

Actual results may differ from previously estimated amounts, and such differences may be material to the consolidated 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.

Cash and Cash Equivalents

The Company maintains its accounts primarily at three financial institutions. At times throughout the year the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. Cash equivalents represent money market funds or short-term investments with original maturities of three months or less from the date of purchase, except for those amounts that are held in the investment portfolio for long-term investment. There were no cash equivalents at June 30, 2024. At September 30, 2023, cash equivalents were approximately $33,229,000 and consisted of investments in treasury bills.

Restricted Cash

As a part of its commodities hedging activities, the Company is required to maintain cash balances with its 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 upon request when there is a margin excess, the Company considers this restricted cash to be a current asset.

9

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

Investments in Available-for-Sale Debt Securities

The Company holds funds in short-term investments in debt securities, such as U.S. treasury bills or treasury notes. As some of the investments in debt securities have an original maturity date greater than three months, these investments are classified as available-for-sale. The Company holds these short-term investments until maturity or for sale in the event cash is needed. Unrealized gains and losses on the Company's investments classified as available-for-sale are recognized in other comprehensive income (loss) until realized.

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. The Company maintains an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable, and changes in such are included as a component of operating expenses in the consolidated statements of operations. The Company assesses collectibility by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with known disputes or collectibility issues. In determining the amount of the allowance for credit losses, the Company considers historical collectibility based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions. At June 30, 2024 and September 30, 2023, the Company determined that an allowance for credit losses 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, CFP, 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, 2024 and September 30, 2023. 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 is planning various capital projects scheduled for the 2024 fiscal year in order to make certain improvements to the ethanol plants and maintain the facilities. These improvements at the Indiana Plant include an additional cooling tower pump, drainage work, and other small miscellaneous projects. The Indiana Plant installed a high protein feed system to produce CFP, costing approximately $50,000,000, including recent change orders, during the first quarter of fiscal 2024. The project was funded from operations and from current credit facilities as amended. The system is operational and the Indiana Plant and the manufacturer are testing and modifying the installation to meet guaranteed and optimal rates. This project was placed into service in December 2023.

The Company has recently started operations at the Kansas Plant and is currently producing ethanol and wet distillers grains for sale. The Company is continuing to work to ramp up operations at the Kansas Plant.

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CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

Long-Lived Assets

The Company reviews its long-lived assets, such as property, plant and equipment, operating lease right-of-use assets, 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 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 no impairments were considered necessary for the nine months ended June 30, 2024 and 2023.

Investments

Investments consist of the capital stock and patron equities of the Company's distillers grains marketer. The investment is 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 consolidated statements of operations.

The Company has also created certain subsidiaries to achieve some of its varying business interests that are not directly related to ethanol production or trading of grain. One has been formed as a corporation, while the other has been formed as a limited liability company (LLC) to hold interests in affiliated companies for carbon capture and underground sequestration (CCS). Through its LLC, the Company owns a fifty percent interest in a joint venture which is accounted for as an equity method investment as described in detail in Note 12 - Equity Method Investments.

Passthrough Entity Tax

The Company records Indiana passthrough entity tax in accordance with ASC 740 and has elected to account for the payments as an equity transaction through member distributions. At June 30, 2024, accrued distributions for Indiana passthrough entity tax was $700,000 as compared to $2,100,000 at September 30, 2023. The Company paid approximately $2,050,000 for 2023 taxes during the nine months ended June 30, 2024 and paid approximately $2,300,000 for 2022 taxes during the nine months ended June 30, 2023.

Economic Development Fund

In September 2007, the Company 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 paid towards property tax is allocated to an expense and an acquisition account. The funds in the acquisition account can be used by the Commission to purchase equipment, at the Company's direction, for the Union City, Indiana plant (the "Indiana Plant"). The Company does not have title to or control over the funds in the acquisition account.

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

Deferred Financing Costs

Deferred financing costs are presented as a reduction to the debt and amortized as interest expense over the term of the underlying debt agreement by use of the straight-line method, which approximates the effective interest method. Unamortized deferred financing costs are fully amortized to interest expense when debt is retired before maturity.

11

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects 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, CFP, corn oil, soybeans and carbon dioxide to its 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 markets 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, freight, and insurance.

•Distillers grains. The Company engages another third-party marketing company, CHS, Inc, to market one hundred percent of the distillers grains it produces at the plants. 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.

•Corn fermented protein. The Company also engages CHS, Inc. to market one hundred percent of the CFP it produces at the plants. The process for selling the CFP is like that of dried distillers grains.

•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. These 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 at the Indiana Plant 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 Indiana Plant's stream to their plant.

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

Cost of Goods Sold

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

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CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

Operating Expenses

Operating expenses include wages, salaries and benefits of administrative employees at the plants, 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 consolidated 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 consolidated 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 the consolidated 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 Recognition

Revenue is recognized at a single point in time when the Company satisfies its performance obligation under the terms of a contract with a customer. Generally, this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected, as specified in the contract with a customer, to be received in exchange for transferring goods or providing services.

Revenue by Source

All revenues from contracts with customers under ASC Topic 606 are recognized at a point in time.

13

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

The following tables disaggregate revenue by major source for the three and nine months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	58,386,717	$	—	$	58,386,717
Distillers Grains	9,644,796		—		9,644,796
CFP	1,246,374		—		1,246,374
Corn Oil	3,525,641		—		3,525,641
Carbon Dioxide	114,024		—		114,024
Other Revenue	1,382,036		—		1,382,036
Total revenues from contracts with customers	74,299,588		—		74,299,588
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and Other Grains	—		9,525,062		9,525,062
Total revenues from contracts accounted for as derivatives	—		9,525,062		9,525,062
Total Revenues	$	74,299,588	$	9,525,062	$	83,824,650

Nine Months Ended June 30, 2024 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	144,636,427	$	—	$	144,636,427
Distillers Grains	30,190,159		—		30,190,159
CFP	1,364,983		—		1,364,983
Corn Oil	10,224,070		—		10,224,070
Carbon Dioxide	298,542		—		298,542
Other Revenue	1,382,036		—		1,382,036
Total revenues from contracts with customers	188,096,217		—		188,096,217
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and Other Grains	—		44,271,290		44,271,290
Total revenues from contracts accounted for as derivatives	—		44,271,290		44,271,290
Total Revenues	$	188,096,217	$	44,271,290	$	232,367,507

14

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

Three Months Ended June 30, 2023 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	79,970,647	$	—	$	79,970,647
Distillers Grains	16,818,758		—		16,818,758
Corn Oil	5,971,069		—		5,971,069
Carbon Dioxide	84,664		—		84,664
Other Revenue	—		—		—
Total revenues from contracts with customers	102,845,138		—		102,845,138
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and Other Grains	—		16,201,434		16,201,434
Total revenues from contracts accounted for as derivatives	—		16,201,434		16,201,434
Total Revenues	$	102,845,138	$	16,201,434	$	119,046,572

Nine Months Ended June 30, 2023 (Unaudited)

	Ethanol Division		Trading Division		Total
Revenues from contracts with customers under ASC Topic 606
Ethanol	$	245,830,363	$	—	$	245,830,363
Distillers Grains	50,403,931		—		50,403,931
Corn Oil	21,737,346		—		21,737,346
Carbon Dioxide	319,399		—		319,399
Other Revenue	273,192		—		273,192
Total revenues from contracts with customers	318,564,231		—		318,564,231
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1)
Soybeans and Other Grains	—		66,201,916		66,201,916
Total revenues from contracts accounted for as derivatives	—		66,201,916		66,201,916
Total Revenues	$	318,564,231	$	66,201,916	$	384,766,147

(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 7 - 14 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.

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CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

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. The Company recorded advances from customers for approximately $311,000 at June 30, 2024. There were no advances from customers as of September 30, 2023.

3. CONCENTRATIONS

Two major customers accounted for approximately 88% and 86% of the outstanding accounts receivable balance at June 30, 2024 and September 30, 2023, respectively. These same two customers accounted for approximately 75% and 77% of revenue for the nine months ended June 30, 2024 and June 30, 2023, respectively.

4.  INVENTORIES

Inventories consist of the following as of:

	June 30, 2024 (Unaudited)		September 30, 2023
Ethanol Division:
Raw materials	$	20,437,569	$	3,517,682
Work in progress	2,515,166		1,848,663
Finished goods	6,628,976		4,638,966
Spare parts	8,476,731		4,789,021
Ethanol Division Subtotal	$	38,058,442	$	14,794,332
Trading Division:
Grain inventory	$	2,502,059	$	309,108
Trading Division Subtotal	2,502,059		309,108
Total Inventories	$	40,560,501	$	15,103,440

The Company had a net realizable value write-down for ethanol inventory of approximately $1,369,000 and $872,000 for the nine months ended June 30, 2024 and 2023, respectively.

In the ordinary course of its ethanol 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, 2024, the Company had forward corn purchase contracts at various fixed prices for various delivery periods through December 2025 for approximately 6% of expected production needs for the next 18 months. Approximately 2% 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 the Company recognized a write-down of $608,000 and $237,000 at June 30, 2024 and 2023, respectively. The Company has

16

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

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.

At June 30, 2024, the Ethanol Division had forward dried distiller grains contracts for approximately 41% of expected production for the next 3 months at various fixed prices for delivery through September 2024. At June 30, 2024, the Company had forward CFP contracts for approximately 19% of expected production for the next 3 months at various fixed prices for delivery through Sepmteber 2024. At June 30, 2024, the Company had forward corn oil contracts for approximately 64% of expected production for the next 2 months at various fixed prices for delivery through August 2024. Additionally, at June 30, 2024, the Trading Division had forward soybean purchase contracts for approximately 8% of expected origination for various delivery periods through January 2025. Approximately 10% of the forward soybean purchases were with related parties.

5. DERIVATIVE INSTRUMENTS

The Company enters into corn, ethanol, natural gas, soybean oil and soybean derivative instruments, which are required to be recorded as either assets or liabilities at fair value in the consolidated 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, soybean oil 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, soybean oil, and soybean derivative instruments are included as a component of cost of goods sold.

At June 30, 2024, the Ethanol Division had a net long (buying) position of 835,058 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 and other markets as of June 30, 2024 and are forecasted to settle for various delivery periods through December 2025. The Ethanol Division had a net short (selling) position of 61,278,000 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 2024. The Ethanol Division had no open positions for soybean oil or natural gas. At June 30, 2024, the Trading Division had a net long (buying) position of 48,232 bushels of soybeans under derivative contracts used to hedge its forward soybean purchase contracts. These soybean derivatives are traded on the Chicago Board of Trade and are, as of June 30, 2024, forecasted to settle for various delivery periods through July 2025. These derivatives have not been designated as effective hedges for accounting purposes.

17

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

The following table provides balance sheet details regarding the Company's derivative financial instruments at June 30, 2024:

Instrument	Balance Sheet Location	Assets		Liabilities
Ethanol Futures and Options Contracts	Futures and Options Derivatives	$	2,082,767	$	—
Corn Futures and Options Contracts	Futures and Options Derivatives	$	—	$	3,496,929
Soybean Futures and Options Contracts	Futures and Options Derivatives	$	200,350	$	—
Soybean Forward Purchase and Sales Contracts	Forward Purchase/Sales Derivatives	$	83,680	$	221,349

As of June 30, 2024, the Company had approximately $10,980,000 of cash collateral (restricted cash) related to ethanol, corn, soybean oil, and soybean derivatives held by three brokers.

The following table provides balance sheet details regarding the Company's derivative financial instruments at September 30, 2023:

Instrument	Balance Sheet Location	Assets		Liabilities
Ethanol Futures and Options Contracts	Futures and Options Derivatives	$	—	$	3,513,693
Corn Futures and Options Contracts	Futures and Options Derivatives	$	—	$	29,108
Natural Gas Futures and Options Contracts	Futures and Options Derivatives	$	—	$	253,586
Soybean Oil Futures and Options Contracts	Futures and Options Derivatives	$	—	$	21,534
Soybean Futures and Options Contracts	Futures and Options Derivatives	$	352,464	$	—
Soybean Forward Purchase and Sales Contracts	Forward Purchase/Sales Derivatives	$	66,825	$	356,177

As of September 30, 2023, the Company had approximately $13,425,000 of cash collateral (restricted cash) related to ethanol, corn, soybean oil, natural gas, and soybean derivatives held by three brokers.

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CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

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, 2024		Nine Months Ended June 30, 2024		Three Months Ended June 30, 2023		Nine Months Ended June 30, 2023
Corn Futures and Options Contracts	Cost of Goods Sold	$	473,275	$	6,164,129	$	3,531,387	$	10,972,820
Ethanol Futures and Options Contracts	Revenues	4,907,794		5,269,908		(3,798,934)		1,360,523
Natural Gas Futures and Options Contracts	Cost of Goods Sold	—		(519,979)		44,849		(2,248,339)
Soybean Oil Futures and Options Contracts	Cost of Goods Sold	15,661		3,819		34,880		(42,906)
Soybean Futures and Options Contracts	Cost of Goods Sold	(298,326)		(226,524)		(103,110)		(1,256,613)
Soybean Forward Purchase and Sales Contracts	Cost of Goods Sold	(168,519)		73,121		(12,577)		274,386
Totals		$	4,929,885	$	10,764,474	$	(303,505)	$	9,059,871

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, 2024:

Instruments	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Corn Futures and Options Contracts	$	(3,496,929)	$	(3,496,929)	$	(3,539,330)	$	42,401	$	—
Ethanol Futures and Options Contracts	$	2,082,767	$	2,082,767	$	2,082,767	$	—	$	—
Soybean Futures and Options Contracts	$	200,350	$	200,350	$	183,644	$	16,706	$	—
Soybean Forward Purchase Contracts	$	(137,669)	$	(137,669)	$	—	$	(137,669)	$	—
Soybean Inventory	$	2,502,059	$	2,502,059	$	—	$	2,502,059	$	—
Accounts Payable	$	(10,025,158)	$	(10,025,158)	$	—	$	(10,025,158)	$	—

19

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

The following table provides information on those assets and liabilities measured at fair value on a recurring basis as of September 30, 2023:

Instruments	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Corn Futures and Options Contracts	$	(29,108)	$	(29,108)	$	(60,637)	$	31,529	$	—
Ethanol Futures and Options Contracts	$	(3,513,693)	$	(3,513,693)	$	(3,513,693)	$	—	$	—
Natural Gas Futures and Options Contracts	$	(253,586)	$	(253,586)	$	(39,300)	$	(214,286)	$	—
Soybean Oil Futures and Options Contracts	$	(21,534)	$	(21,534)	$	(21,534)	$	—	$	—
Soybean Futures and Options Contracts	$	352,464	$	352,464	$	352,464	$	—	$	—
Soybean Forward Purchase Contracts	$	(289,352)	$	(289,352)	$	—	$	(289,352)	$	—
Soybean Inventory	$	309,108	$	309,108	$	—	$	309,108	$	—
Accounts Payable	$	(3,908,868)	$	(3,908,868)	$	—	$	(3,908,868)	$	—
Treasury Bills (classified as cash equivalents)	$	12,407,939	$	12,407,939	$	12,407,939	$	—	$	—

The Company determines 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.

The Company determines the fair value of treasury bills utilizing Level 1 inputs by obtaining fair value measurements from an independent pricing service. The fair value measurements consider observable data based on quoted market prices in active markets.

The Company maintains some corn and soybean hedges and options in over the counter markets (OTC) which are considered Level 2 instruments. The Company determines the fair value of these Level 2 instruments by model-based techniques in which all significant inputs are observable in the markets noted above. The Company also purchases soybeans forward purchase contracts with producers. It also sells soybeans via forward sales contracts to end users such as crush plants or grain movers. These forward contracts are reported at fair value using Level 2 inputs from current contract prices that are being issued by the Company.

Soybean inventory held in the trading division is reported at fair value using Level 2 inputs which are based on purchases and sales transactions that occurred on or near June 30, 2024 and September 30, 2023.

Accounts payable is generally stated at historical amounts, with the exception of approximately $10,025,000 and $3,909,000 at June 30, 2024 and September 30, 2023, respectively, related to certain delivered inventory for which the payable fluctuates based on changes in commodity prices. These payables are hybrid financial instruments for which the Company has elected the fair value option.

The Company believes the fair value of its long-term debt to be the carrying value of approximately $57,146,000 and $30,569,000 at June 30, 2024 and September 30, 2023, respectively. The Company considers this to be a Level 2 input. The fair values and carrying values consider the terms of the related debt and exclude the impacts of discounts and derivative/hedging activity.

20

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

7.  BANK FINANCING

The Company formerly had a loan agreement consisting of two 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 interest rates on each of the loans changes daily. On January 31, 2024, the Company amended the loan agreement. The primary purpose of the amendment was to provide additional financing to Cardinal Colwich to fund a portion of the funds needed to complete the purchase of the Kansas Plant, permit the Company to use funds from the Revolving Credit Loan to support Cardinal Colwich's working capital needs and capital expenditures and to allow the Company to request an additional $10,000,000 of maximum available credit on the Revolving Credit Loan. On April 30, 2024, the Company amended the loan agreement to extend the time period for the Company to provide consents from counterparties to material contracts collaterally assigned to the lender. On July 23, 2024 (to be effective on May 1, 2024), the Company amended the loan agreement to modify the definition of "Permitted Debt" to include a $20,000,000 intercompany loan so long as such loan, and any lien securing the loan, are subordinate. On June 21, 2024 (to be effective on May 1, 2024), Cardinal Ethanol and its wholly owned subsidiary, Cardinal Colwich executed a Secured Revolving Line of Credit Note (the "Note") and Mortgage whereby Cardinal Ethanol agreed to loan Cardinal Colwich up to $20,000,000 in accordance with the terms of the Note for Cardinal Colwich to use for startup costs and operations in connection with the Kansas Plant (the "Intercompany Loan").

Declining Loan

The maximum availability of the Declining Loan was formerly $5,000,000 and such amount was to be available for working capital purposes. However, the maximum availability of the Declining Loan was increased from $5,000,000 to $39,000,000 in order to provide financing to fund the construction and installation of a high protein feed system at the Indiana Plant. The interest rate on the Declining Loan is currently based on the prime rate minus five basis points (.05%) subject to a floor of 2.85%. The interest rate was 8.45% at June 30, 2024 and September 30, 2023. The Company is required to make monthly interest payments on the Declining Loan during the draw period. The principal balance of the Declining Loan was expected to be converted to term debt on or before May 1, 2024, to be repaid in 60 equal monthly installments based on a ten year amortization period. The Company and its contractor have mutually agreed that a portion of the final payment may be withheld pending resolution of some issues surrounding the final installation. The Company is presently working with its lender to extend the conversion date until September 1, 2024 when the Company believes the final payment will complete. The lender is in agreement and the loans are presented on the basis of the September 1 conversion date and the same May 1, 2029 maturity date. In addition, the Company will be required to make mandatory annual prepayments on the term debt within 120 days following the end of each fiscal year beginning with the fiscal year ended September 30, 2024. The annual prepayment will be in the amount of the lesser of 40% of excess cash flow or $7,200,000, up to an aggregate amount paid of $18,000,000. The Company had borrowings outstanding of approximately $35,404,000 and $30,569,000 on the Declining Loan at June 30, 2024 and September 30, 2023, respectively.

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, CFP, corn oil and soybean inventories reduced by accounts payable associated with those inventories having a priority. It is also supported by the eligible accounts receivable and commodity trading account excess margin funds. The interest rate on the Revolving Credit Loan is the prime rate minus twenty-five basis points (.25%) and is subject to a floor of 2.75%. The interest rate was 8.25% at June 30, 2024 and September 30, 2023. There were no borrowings outstanding on the Revolving Credit Loan at June 30, 2024 and September 30, 2023. The Revolving Credit Loan was set to mature on February 28, 2024. The amendment provides that the Company may request a $10,000,000 increase in the maximum commitment under the Revolving Credit Loan, subject to approval of the lender, and may use funds from the Revolving Credit Loan to support Cardinal Colwich's working capital needs and capital expenditures. The borrowing base calculation used to determine the amount available under the Revolving Credit Loan has also been amended to include Cardinal Colwich's corn, ethanol, dried

21

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

distillers grain, CFP and corn oil inventories, eligible accounts receivable and commodity trading account excess margin funds. The amendment extends the termination date of the Revolving Credit Loan to February 28, 2025.

Term Loan

The amendment provides for a new $22,000,000 Term Loan to the Company with an interest rate based on the prime rate plus twenty-five basis points (.25%) subject to a floor of 3.25%. The interest rate was 8.75% at June 30, 2024. The Company incurred approximately $280,000 of costs in connection with the amendment of the Term Loan, which are recorded as deferred financing costs. The Company was required to make monthly interest payments on the Term Loan until June 1, 2024. Commencing on July 1, 2024, the Term Loan is to be repaid by the Company in fifty-nine equal monthly installments based on a seven year amortization until March 1, 2029, when the outstanding principal balance together with accrued and unpaid interest will be due. The Company had borrowings outstanding of approximately $21,742,000 on the Term Loan at June 30, 2024.

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 $6,000,000 of expenditures per year without prior approval. The cost of the high protein feed system is excluded from the capital expenditures calculation until the principal balance of the Declining Loan converts to term debt. There is also a requirement to maintain a minimum fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly. A debt service charge coverage ratio of no less than 1.25:1.0 in lieu of the fixed charge coverage ratio will apply for any reporting period that working capital is equal to or more than $23,000,000. The amendment modifies these covenants to provide for a consolidated minimum working capital requirement of $25,000,000, and a capital expenditures covenant that allows the Company $10,000,000, in the aggregate, of expenditures per year without prior approval. There is also a requirement to maintain a minimum consolidated fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly. A consolidated debt service charge coverage ratio of no less than 1.25:1.0 in lieu of the fixed charge coverage ratio will apply for any reporting period that consolidated working capital is equal to or more than $35,000,000.

The consolidated estimated maturities of long-term debt at June 30, 2024 are as follows:

	Principal		Amortization of Deferred Financing Costs		Total
July 1, 2024 - June 30, 2025	$	4,233,035	$	(52,560)	$	4,180,475
July 1, 2025 - June 30, 2026	4,821,079		(52,560)		4,768,519
July 1, 2026 - June 30, 2027	5,255,254		(52,560)		5,202,694
July 1, 2027 - June 30, 2028	5,722,294		(52,560)		5,669,734
July 1, 2028 - June 30, 2029	37,372,439		(48,179)		37,324,260
Total long-term debt	$	57,404,101	$	(258,419)	$	57,145,682

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. As of June 30, 2024, the Company’s weighted average discount rate was 8.33%. 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 5 years, which may include options to extend the lease when it is reasonably certain the Company will exercise those options. As of June 30, 2024, the weighted average remaining lease term was 3.42 years. The

22

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

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, 2024:

July 1, 2024 - June 30, 2025	$	4,145,850
July 1, 2025 - June 30, 2026	3,132,900
July 1, 2026 - June 30, 2027	1,885,500
July 1, 2027 - June 30, 2028	1,772,100
July 1, 2028 - June 30, 2029	738,375
Totals	11,674,725
Amount representing interest	(1,503,256)
Lease liabilities	$	10,171,469

For the nine months ended June 30, 2024, the Company recorded operating lease costs of approximately $3,598,000 in cost of goods sold in the Company’s consolidated statement of operations. Cash paid for the operating leases was approximately $3,634,000 for the nine months ended June 30, 2024. For the nine months ended June 30, 2023, the Company recorded operating lease costs of approximately $2,848,000 in cost of goods sold in the Company's consolidated statement of operations. Cash paid for the operating leases was approximately $2,847,000 for the nine months ended June 30, 2023.

9. COMMITMENTS AND CONTINGENCIES

Marketing Agreements

The Company entered into a Large Volume Transportation Service (LVTS) Agreement with Black Hill/Kansas Gas Utility Company, LLC d/b/a Black Hills Energy ("Black Hills") for the purpose of transporting and delivering natural gas to the Kansas Plant. The LVTS was amended by the First Amendment Large Volume Transportation Service (LVTS) Agreement to be effective on June 1, 2024. The primary term of the LVTS is from May 1, 2024 through May 31, 2029. The LVTS renews annually, thereafter, unless either party gives written notice of non-renewal at least six months prior to the expiration of the primary term or any renewal term. The LVTS can also be terminated by Black Hills upon thirty days notice if the Company fails to qualify for service. Under the LVTS, the Comapny will be billed for services on a monthly basis and may be required to install or upgrade telemetry equipment at its sole expense.

The Company entered into an agreement with an unrelated company for the purpose of marketing and selling all the distillers grains the Company is expected to produce at the Indiana Plant. The buyer agrees to remit a fixed percentage rate of the actual selling price to the Company for distillers dried grain solubles and wet distiller grains. The agreement may be terminated by either party at its unqualified option, by providing written notice of not less than 120 days to the other party.

The Company entered into an agreement with an unrelated third party for the purpose of marketing and selling all of the distillers products the Company is expected to produce at the Kansas Plant. The initial term of the agreement commences as of the effective date, to be renewed thereafter automatically for additional periods unless either party gives notice of non-renewal in accordance with the terms of the agreement. The agreement may be terminated by mutual agreement, upon the default of one of the parties as set forth in the agreement, due to the bankruptcy or insolvency of a party or due to force majeure. In addition, the marketer may terminate due to changes or events in the U.S. government or regulatory structure likely to cause conditions under which it would be unable to perform its obligations, if it is unable to secure adequate buyers having acceptable credit risk, or if the value of the distillers products significantly changes as a result of a change in government programs and the parties are unable to agree on a revised formula for determining the purchase price. The Company will receive a purchase price less certain agreed-upon amounts. The marketer may purchase on its own account upon notice and will be responsible for all transportation arrangements.

23

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

The Company entered into an agreement with an unrelated company to sell all of the ethanol the Company produces at the Indiana Plant. The Company agrees to pay a commission of a fixed percent of the net purchase price for marketing and distribution. In July 2009, the initial term of the agreement was extended to eight years and the commission increased in exchange for reducing the payment terms from 14 days to 7 days after shipment. In November 2012, the Company amended this agreement to extend the initial term of the agreement to eleven years, expiring in 2019, in exchange for capping the commissions at $1,750,000 per year. Effective November 18, 2018, the two companies amended the marketing agreement. The amendment added a renewal term to the initial agreement that extended the contract until November 30, 2022. It provided for the payment of the commission to be calculated on each net gallon of ethanol taken under the agreement. It modified how the cost of rail car shipments are charged to the Company, moving from a per gallon fee to requiring that the marketer provide a minimum 225 rail cars to the Company on a per car per month lease basis as described in Note 8. Finally, it reduced the delivery to payment period. On September 14, 2022, the Company executed an amendment to extend the term until December 31, 2024, subject to automatic renewals thereafter for one-year periods unless either party gives notice of non-renewal at least 90 days prior to the end of the current term. The agreement may also be terminated due to the insolvency or intentional misconduct of either party or upon the default of one of the parties as set forth in the agreement. In addition, the amendment added a provision that allows the Company to terminate the agreement on 90 days prior written notice upon a "Material Change in Control". Upon termination of the agreement for any reason, the Company may be obligated to continue to deliver ethanol for a period of time to cover certain contractual commitments for which the Company gave prior written approval. The amendment also provides for certain adjustments to the purchase price for sales made to the marketer for its own account or for sales of exported ethanol. If this adjusted price can not be finalized at time of payment, the parties may agree upon a provisional price which shall be trued up later. The amendment was effective on December 1, 2022. On April 26, 2024, the Company executed an amendment to extend the term of the agreement, to be renewed thereafter automatically for one-year periods unless either party gives notice of non-renewal in accordance with the terms of the amendment.

The Company entered into an agreement with an unrelated company for the purpose of marketing and distributing all of the ethanol the Company produces at the Kansas Plant. The initial term of the agreement begins on the date when ethanol produced at the Kansas Plant is available for delivery, to be renewed thereafter automatically for additional periods unless either party gives notice of non-renewal in accordance with the terms of the agreement. The agreement may be terminated due to the insolvency or intentional misconduct of either party, upon a "Material Change in Control" or upon the default of one of the parties as set forth in the agreement. The Company will be paid the purchase price invoiced to the third-party purchaser less certain agreed-upon amounts. The marketer has agreed to purchase on its own account and at market price any ethanol which it is unable to sell to a third party purchaser and to use its best efforts to obtain the best purchase price available for the ethanol. The marketer is responsible for all transportation arrangements.

Rail Car Rehabilitation Costs

The Company leased 180 hopper rail cars for use in the Indiana Plant under a multi-year agreement which ended in November 2023. The Company executed a renewal to lease 179 hopper rail cars under a multi-year agreement effective December 2023 and ending in November 2028. 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) at the termination of the lease.

Company management has estimated total costs to rehabilitate the cars at June 30, 2024, to be approximately $2,491,000. During the nine months ended June 30, 2024, the Company has recorded a corresponding expense in cost of goods sold of approximately $268,000. The Company accrues the estimated cost of railcar damages over the term of the lease.

Asset Purchase Agreement

On October 23, 2023, Cardinal Colwich, a wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement (the "APA") with Element, LLC ("Seller") by and through Creative Planning Business Alliance, LLC (the "Receiver") acting in its capacity as the court-appointed receiver. The APA provides for the purchase of substantially all of the assets of Seller used in connection with the production of ethanol, high protein distillers grains and corn oil as set forth in more detail in the APA (the "Purchased Assets") free and clear of any claims, restrictions, mortgages, security interest, demands, charges and encumbrances. The facility was constructed by ICM, Inc. with a name plate capacity to produce 70 million gallons of ethanol annually and is located in Colwich, Kansas. The cash purchase price for the Purchased Assets is $44,000,000. In addition, Cardinal Colwich will assume certain liabilities specified in the APA. On January 31, 2024, the transaction was

24

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

completed. The transaction was funded by a $22,000,000 loan from the Company's primary lender and the remaining $22,000,000 was funded by operations. Additionally, the Company paid approximately $1,025,000 in additional fees, expenditures to cure liabilities associated with contracts the Company was assuming, and to fund the purchase of necessary equipment owned by third parties. These amounts came from the Company's cash reserves.

The following table outlines the assets capitalized from the transaction:

Land	$	1,955,896
Land improvements	2,934,077
Office buildings	321,893
Plant buildings	3,359,087
Plant and equipment	32,916,181
Vehicles	9,515
Computer equipment and software	191,624
Spare parts	2,311,727
	$	44,000,000

The additional fees paid associated with the transaction were as follows:

Deferred financing costs	$	280,319
Plant and equipment from third parties	685,325
Other fees	59,088
	$	1,024,732

In connection with the APA, the Company assumed, through its wholly owned subsidiary, certain material contracts. On January 31, 2024, the Company assumed a license agreement which provides a revocable, royalty-free, non-assignable, non-exclusive license to use certain proprietary technologies and information in connection with the ownership, operation and maintenance of the Kansas Plant. The license agreement may be terminated for an unauthorized usage of the proprietary property, an unauthorized disclosure of the proprietary property or a breach of the license agreement and failure to cure as provided.

On January 31, 2024, the Company also assumed a water sharing agreement to permit it to use water for operations at the Kansas Plant from a water right owned by an unrelated party subject to certain restrictions on rates of diversion and consumption and cumulative amounts used. The Company will be required pay certain costs, expenses, fees, assessments and charges and pay an annual fee for the use of the water. The water sharing agreement as amended, provides that it can be terminated by the owner of the water right after an initial period upon written notice of a specified time before such termination goes into effect. In addition, if the owner of the water right needs the water for its operations, it can also recall the water or reduce the amounts used after an initial period upon written notice of a specified time before such recall or reduction goes into effect. The water sharing agreement may also be terminated upon the Company's breach, and failure to cure, as provided therein.

Tank Rail Car Lease

On January 31, 2024, the Company assumed a lease for 210 tank rail cars for use in the Kansas Plant under a multi-year agreement ending in June 2026, to continue thereafter on a month to month basis unless terminated upon 30 days written notice by either party. Under the agreement, the Company is required to return, at its expense, each car in good working order, ordinary wear and tear excepted, at the termination of the lease.

25

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

10. RISKS AND 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, CFP and corn oil to customers primarily located in the U.S. Corn for the production process is supplied to the plants primarily from local agricultural producers and from purchases on the open market. During the nine months ended June 30, 2024, ethanol sales averaged approximately 62% of total revenues and corn costs averaged 58% 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, CFP 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.

Economic conditions during the quarter were good, but not as robust as in the past two years. Good corn crops contributed to lower input costs. The high margin environment that pervaded in the industry leading up to the quarter provided incentive to ethanol refiners to produce at high levels, reducing ethanol prices. These contributed to somewhat lower margins in the quarter. Natural gas prices have been volatile as well during the quarter and to the date of this report. However, the military invasion of Ukraine by Russia in the second quarter of fiscal year 2022 and sanctions imposed by other countries as a result have created global economic uncertainty and contributed to increased inflation, significant market disruptions and increased volatility in commodity prices such as corn, oil and natural gas. The economic impact of this war and the potential effects on the Company's operating and financial performance is currently unknown. Additionally, there have been economic indicators that the United States could be facing a possible recession which have primarily resulted in interest rate hikes by the Federal Reserve in an attempt to reduce inflation. The Company continues to monitor economic conditions that might affect our profitability. The Company believes that 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 the Company's ability to profitably operate the plant or if the Company is unable to transport ethanol, it may be forced to further reduce the ethanol production rate or even temporarily shut down ethanol production altogether.

11. BUSINESS SEGMENTS

The Company has two 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:

26

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

	Three Months Ended				Nine Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Revenue:	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Ethanol division	$	74,299,588	$	102,845,138	$	188,096,217	$	318,564,231
Trading division	9,525,062		16,201,434		44,271,290		66,201,916
Total Revenue	$	83,824,650	$	119,046,572	$	232,367,507	$	384,766,147
	Three Months Ended				Nine Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Gross Profit:	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Ethanol division	$	10,290,879	$	15,658,412	$	15,851,977	$	47,610,193
Trading division	(550,254)		259,178		484,426		1,683,209
Total Gross Profit	$	9,740,625	$	15,917,590	$	16,336,403	$	49,293,402
	Three Months Ended				Nine Months Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Operating Income (Loss):	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Ethanol division	$	7,036,096	$	13,480,728	$	6,993,532	$	41,439,624
Trading division	(762,497)		(58,065)		(257,303)		731,480
Total Operating Income (Loss)	$	6,273,599	$	13,422,663	$	6,736,229	$	42,171,104

	June 30, 2024		September 30, 2023
Grain Inventories:	(unaudited)
Ethanol division	$	20,437,569	$	3,517,682
Trading division	2,502,059		309,108
Total Grain Inventories	$	22,939,628	$	3,826,790
	June 30, 2024		September 30, 2023
Total Assets:	(unaudited)
Ethanol division	$	259,647,525	$	234,913,852
Trading division	6,603,804		(2,145,605)
Total Assets	$	266,251,329	$	232,768,247

12. EQUITY METHOD INVESTMENTS

The Company, through its wholly owned subsidiary, Cardinal One Carbon Holdings, LLC, owns a fifty percent interest in a limited partnership. That partnership was formed as a joint venture with another unrelated investor to investigate and pursue carbon dioxide capture and underground sequestration. The Company accounts for this investment using joint venture accounting and, therefore, under the equity method. Cardinal One Carbon Holdings, LLC was formed on June 22, 2022 to hold the partnership interest in the limited partnership and began its administrative operations on September 1, 2022.

The Company's policy related to investments in both common stock and in-substance common stock that give the Company the ability to exercise significant influence over the operating and financial polices of an entity in which it invests even though the

27

CARDINAL ETHANOL, LLC AND SUBSIDIARIES

Notes to Consolidated Condensed Unaudited Financial Statements

June 30, 2024

Company holds 50% or less of the common stock or in-substance common stock (or both common and in-substance common stock) is to account for such investment under the equity method. The Company considers its financial position and results of operations in evaluating the extent of disclosures of the financial position and results of operations of an entity in which the Company invests.

As the Company owns a fifty percent interest in the limited partnership, an investment in affiliate of approximately $9,886,000 and $5,651,000 was reflected on the consolidated balance sheet as of June 30, 2024, and September 30, 2023, respectively. Losses on equity method investment of approximately $66,000 and $215,000 was reflected on the consolidated statement of operations for the three and nine months ended June 30, 2024, respectively. Losses on equity method investment of approximately $24,000 and $351,000 were reflected on the consolidated statement of operations for the three and nine months ended June 30, 2023, respectively.

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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 nine month period ended June 30, 2024, compared to the same period of the prior fiscal year. This discussion should be read in conjunction with the consolidated condensed financial statements (the "financial statements") and notes and the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023. References to “we,” “us,” “our,” “Cardinal Ethanol” and the “Company” collectively refer to Cardinal Ethanol, LLC and its wholly owned subsidiaries, Cardinal Ethanol Export Sales, Inc., Cardinal One Carbon Holdings, LLC, and Cardinal Colwich, LLC, except where otherwise noted.

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, distillers grains, high protein feed, 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 our ethanol plants 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 operations;

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

•Changes in production capacity of our plants or technical difficulties in operating our plants;

•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 hire and 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;

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

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

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•Decreases in production rates due to installation of our high protein feed system;

•Changes in our ability to secure adequate water supply to satisfy our plants’ requirements;

•Our ability to make our Kansas Plant fully operational; and

•Our ability to secure and maintain appropriate permits to operate our plants.

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

Overview

Cardinal Ethanol, LLC is an Indiana limited liability company operating an ethanol plant in east central Indiana near Union City, Indiana (the "Indiana Plant"). We began producing ethanol, distillers grains and corn oil 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.

On January 20, 2022, we entered into an Equipment Purchase and Installation Agreement (the "EPC Agreement") with ICM, Inc. pursuant to which ICM has agreed to engineer, procure, construct, and install its high protein feed system at the Indiana Plant and license to us its proprietary, patent-protected technology to use, operate and maintain the system. Pursuant to the EPC Agreement and subsequent adjustments due to change orders executed by the parties, which cost approximately $50,000,000, including change orders, which is payable in installments. We will also pay license fees of $10 per ton of PROTOMAX™, a high protein feed product, produced by the system for a period of 10 years. We funded the project from operations and from our current credit facilities as amended. We began installation of the system during the fourth quarter of our fiscal year 2023 and the system was placed into service in December 2023. We had net sales of approximately $1,365,000 of CFP during the nine months ended June 30, 2024. We experienced a shutdown of the Indiana Plant during the nine months ended June 30, 2024, in connection with the installation of our high protein feed system which resulted in a reduction in gallons of ethanol, tons of distillers grains and pounds of corn oil produced during the period. We also expect that there will be an additional period of time of approximately three months before our production rates of ethanol and corn oil production will return to historic levels. In addition, our distillers grains production is transitioning and is expected to be replaced with a high protein feed product and fiber meal once the project ramps up to expected rates. However, the overall reduction in production of our products caused by the installation of the system may be significant and could adversely impact our profitability.

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

On October 23, 2023, Cardinal Colwich, LLC ("Cardinal Colwich"), a wholly owned subsidiary of Cardinal Ethanol, LLC, entered into an Asset Purchase Agreement with Element, LLC ("Seller") by and through Creative Planning Business Alliance, LLC (the "Receiver") acting in its capacity as the court-appointed receiver to purchase substantially all of the assets of Seller used in connection with the production of ethanol, high protein distillers grains and corn oil free and clear of any claims, restrictions, mortgages, security interest, demands, charges and encumbrances. The facility was constructed by ICM, Inc. with

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a name plate capacity to produce 70 million gallons of ethanol annually and is located in Colwich, Kansas (the "Kansas Plant"). On January 31, 2024, the purchase transaction was completed. The cash purchase price was $44,000,000. In addition, Cardinal Colwich assumed certain liabilities specified in the APA. The transaction was funded by a $22,000,000 loan from the Company's primary lender and the remaining $22,000,000 was funded by operations. Additionally, the Company paid approximately $1,025,000 in additional fees, expenditures to cure liabilities associated with assumed contracts, and to fund the purchase of necessary equipment owned by third parties. These amounts came from cash reserves. The Kansas Plant had not operated since April of 2023 when it went into receivership and was purchased by us in an idled state. Following the purchase, we worked for several months through the challenges of restarting operations. In June 2024, we commenced operations at the Kansas Plant and shipped our first load of ethanol for sale. The Company is continuing to work to ramp-up operations at the Kansas Plant to increase ethanol production rates and bring it to fully operational status.

On January 31, 2024, we entered into a Second Amended and Restated Construction Loan Agreement (the "Second Amended Credit Agreement"), which amends and restates the First Amended and Restated Construction Loan Agreement dated June 10, 2013, as amended (the "First Amended Credit Agreement"), with First National Bank of Iowa ("FNBO"). The primary purpose of the Second Amended Credit Agreement was to provide additional financing to fund a portion of the funds needed to complete the acquisition of the Kansas Plant, permit the Company to use funds from the Revolving Credit Loan to support Cardinal Colwich's working capital needs and capital expenditures and to allow us to request an additional $10,000,000 of maximum available credit on the Revolving Credit Loan. On April 30, 2024, we amended the Second Amended Credit Agreement to extend the time period to provide consents from counterparties to material contracts collaterally assigned to FNBO. On July 23, 2024 (to be effective on May 1, 2024), we amended the Second Amended Credit Agreement to modify the definition of "Permitted Debt" to include the Intercompany Loan so long as such loan, and any lien securing the loan, are subordinate to the financing extended by FNBO and the amount of such loan does not exceed $20,000,000. Please refer to Item 1 - Financial Statements - Note 7 - Bank Financing for more information.

On April 12, 2024, we entered into a Co-Product Marketing Agreement with CHS Inc. ("CHS") for the purpose of marketing and distributing all of the distillers products we produce at the Kansas Plant. The initial term of the agreement commences as of the effective date, to be renewed thereafter automatically for additional periods unless either party gives notice of non-renewal in accordance with the terms of the agreement. The agreement may be terminated by mutual agreement, upon the default of one of the parties as set forth in the agreement, due to the bankruptcy or insolvency of a party or due to force majeure. In addition, CHS may terminate due to changes or events in the U.S. government or regulatory structure likely to cause conditions under which CHS would be unable to perform its obligations, if CHS is unable to secure adequate buyers having acceptable credit risk, or if the value of the distillers products significantly changes as a result of a change in government programs and the parties are unable to agree on a revised formula for determining the purchase price. CHS will market our distillers products and we will receive the purchase price less certain agreed-upon amounts. CHS may purchase on its own account upon notice to us. In addition, CHS has agreed to promptly notify us of any and all price arbitrage opportunities. Under the agreement, CHS will be responsible for all transportation arrangements.

On April 26, 2024, we entered into Amendment No. 5 to the Ethanol Purchase and Sale Agreement with Murex LLC ("Murex") for the purpose of marketing and distributing all of the ethanol we produce at the Indiana Plant. The amendment amends the Ethanol Purchase and Sale Agreement dated December 18, 2006, as amended. The amendment extends the term of the agreement, to be renewed thereafter automatically for one-year periods unless either party gives notice of non-renewal in accordance with the terms of the amendment. The amendment provides that Murex will provide and lease a minimum number of tank cars for rail transportation and manage the tank car fleet. We will pay a monthly amount to Murex on or before the first of each month for each rail car leased.

On April 26, 2024, we entered into an Ethanol Purchase and Sale Agreement with Murex for the purpose of marketing and distributing all of the ethanol we produce at the Kansas Plant. The initial term of the agreement begins on the date when ethanol produced at the Kansas Plant is available for delivery, to be renewed thereafter automatically for additional periods unless either party gives notice of non-renewal in accordance with the terms of the agreement. The agreement may be terminated due to the insolvency or intentional misconduct of either party, upon a material change in control or upon the default of one of the parties as set forth in the agreement. Under the terms of the agreement, Murex will market all of our ethanol produced at the Kansas Plant unless we choose to sell a portion at a retail fueling station owned by us or one of our affiliates. Murex will pay to us the purchase price invoiced to the third-party purchaser less certain agreed-upon amounts. Murex has agreed to purchase on its own account and at market price any ethanol which it is unable to sell to a third party purchaser. Murex has agreed to use its best efforts to obtain the best purchase price available for our ethanol. In addition, Murex has

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agreed to promptly notify us of any and all price arbitrage opportunities. Under the agreement, Murex will be responsible for all transportation arrangements.

Effective on May 1, 2024, we entered into a Large Volume Transportation Service (LVTS) Agreement with Black Hill/Kansas Gas Utility Company, LLC d/b/a Black Hills Energy ("Black Hills") for the purpose of transporting and delivering natural gas to the Kansas Plant. The LVTS was amended by the First Amendment Large Volume Transportation Service (LVTS) Agreement to be effective on June 1, 2024. The primary term of the LVTS is from May 1, 2024 through May 31, 2029. The LVTS renews annually, thereafter, unless either party gives written notice of non-renewal at least six months prior to the expiration of the primary term or any renewal term. The LVTS can also be terminated by Black Hills upon thirty days notice if we fail to qualify for service. Under the LVTS, we will be billed for services on a monthly basis and may be required to install or upgrade telemetry equipment at its sole expense.

On May 21, 2024, our board of directors declared a cash distribution of $150 per membership unit to the holders of units of record at the close of business on May 21, 2024 for a total distribution of $2,190,900. The distribution was paid on May 30, 2024.

On May 22, 2024, the board of directors announced its intent to engage in a reclassification and reorganization of our membership units for the purpose of terminating the registration of our units with the Securities and Exchange Commission (the "SEC") and suspending our reporting obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This is known as a "going private transaction." We expect the proposed transaction to result in four classes of membership units. The proposed reclassification and associated amendments to the Company’s operating agreement will be subject to approval by the members. If the members approve the proposed reclassification and amendments to the operating agreement, we anticipate that we will have fewer than 300 unit holders in its existing unit class and fewer than 500 unit holders in each additional unit class which would enable us to terminate our registration and suspend our reporting requirements under the Exchange Act.

On June 21, 2024 (to be effective on May 1, 2024), Cardinal Ethanol and its wholly owned subsidiary, Cardinal Colwich executed a Secured Revolving Line of Credit Note (the "Note") and Mortgage whereby Cardinal Ethanol agreed to loan Cardinal Colwich up to $20,000,000 in accordance with the terms of the Note for Cardinal Colwich to use for startup costs and operations in connection with the Kansas Plant (the "Intercompany Loan"). The interest rate on the Intercompany Loan is the prime rate minus twenty-five basis points (.25%) and is subject to a floor of 2.75%. Cardinal Colwich is required to make monthly interest payments on the Intercompany Loan beginning on July 1, 2024. The Intercompany Loan is set to mature on May 1, 2029 and is secured by a security interest and lien in and on all of Cardinal Colwich's real and personal property.

We record Indiana passthrough entity tax in accordance with ASC 740 and have elected to account for the payments as an equity transaction through member distributions. At June 30, 2024, accrued distributions for passthrough entity tax was $700,000 and cash payments made for distributions for passthrough entity tax was $2,050,000.

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.

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Results of Operations for the Three Months Ended June 30, 2024 and 2023

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 consolidated statement of operations for the three months ended June 30, 2024 and 2023:

	2024			2023
Statement of Operations Data	Amount		%	Amount		%
Revenue	$	83,824,650	100.0	$	119,046,572	100.0
Cost of Goods Sold	74,084,025		88.4	103,128,982		86.6
Gross Profit	9,740,625		11.6	15,917,590		13.4
Operating Expenses	3,467,026		4.1	2,494,927		2.1
Operating Income	6,273,599		7.5	13,422,663		11.3
Other Income (Expense)	(879,035)		(1.0)	868,047		0.7
Net Income	$	5,394,564	6.5	$	14,290,710	12.0

Revenue

Operating Segments

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

    Our current lines of business and sources of revenue are the sale of ethanol, distillers grains, CFP, corn oil and the trading of agricultural grains. We expect that CFP will become a significant new source of revenue now that the system is operating. The first CFP sales were recorded during the second quarter of 2024, which totaled approximately $119,000. We recorded CFP sales of approximately $1,246,000 during the three months ended June 30, 2024.  Please refer to Item 1 - Financial Statements - Note 11 - Business Segments for more financial information about our financial reporting segments. Ethanol revenues in the ethanol division also include net gains or losses from derivatives. Net derivative gains or losses for corn, natural gas, and corn oil are included in cost of goods sold in the ethanol division and soybean gains or losses from derivatives are included in cost of goods sold in the trading division.

The Kansas Plant was purchased by us on January 31, 2024 in an idled state. Following the purchase, management worked for several months through the challenges of bringing the Kansas Plant from idle status to operational status. We have faced, and will continue to face, other operational challenges including, but not limited to, operating in an unfamiliar market, securing necessary permits, and hiring and retaining the employees and putting processes in place that we will need to profitably operate the plant. In June 2024, we commenced operations at the Kansas Plant and shipped our first load of ethanol for sale. We continue to work to ramp up operations at the Kansas Plant to increase ethanol production rates and bring it to fully operational status. These challenges may cause the financial information presented to not necessarily be indicative of future operations as the Kansas Plant.

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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 consolidated statements of operations for the three months ended June 30, 2024 and 2023:

	2024				2023
Revenue:	Amount		% of Total Revenues		Amount		% of Total Revenues
Ethanol division	$	74,299,588	88.6	%	$	102,845,138	86.4	%
Trading division	9,525,062		11.4	%	16,201,434		13.6	%
Total Revenue	$	83,824,650	100.0	%	$	119,046,572	100.0	%

Ethanol Division

    The following table shows the sources of our revenues from our Ethanol Division for the three months ended June 30, 2024 and 2023:

	2024				2023
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol	$	58,386,717	78.6	%	$	79,970,647	77.8	%
Distillers Grains	9,644,796		13.0		16,818,758		16.4
CFP	1,246,374		1.7		—		—
Corn Oil	3,525,641		4.7		5,971,069		5.8
Carbon Dioxide	114,024		0.1		84,664		—
Other Revenue	1,382,036		1.9		—		—
Total Revenues	$	74,299,588	100.0	%	$	102,845,138	100.0	%

    Ethanol

    Our revenues from ethanol decreased in the three months ended June 30, 2024 as compared to the same period in 2023. This decrease in revenues is primarily the result of lower ethanol prices and a decrease in gallons of ethanol sold during the period which largely results from reduced production rates associated with the installation of the high protein feed system. Revenue also includes the net gains or losses from derivatives related to the commodities purchased.

    The average price per gallon of ethanol sold for the three months ended June 30, 2024 was approximately 17% lower than the average price per gallon of ethanol sold for the same period in 2023. Ethanol market prices were lower due to the increase in industry-wide production due to a period of positive operating margins. This greater amount of production increased supplies nationwide, as well as internationally, resulting in lower ethanol prices. In addition, corn prices were lower during the quarter as compared to the same period in 2023. Ethanol prices are typically directionally consistent with the price of corn meaning that lower corn prices can lead to volatility and have a significant negative effect on ethanol prices. However, increased ethanol export demand towards the end of the current period had a positive effect on ethanol prices.

Management believes that ethanol prices will continue to be influenced by corn and energy prices, inventory levels, global economics and inflationary factors. If corn prices further decrease that would likely contribute to lower ethanol prices and our profitability. High ethanol stocks and industry oversupply could also continue to have a negative effect on ethanol prices unless additional demand can be created in foreign markets. Foreign exports could increase if other countries move to higher blends of ethanol which may contribute to higher ethanol prices.

    We experienced a decrease in ethanol gallons sold of approximately 14% for the three months ended June 30, 2024 as compared to the same period in 2023 resulting primarily from decreased ethanol production rates for the period. We have experienced lower ethanol production rates since we completed installation of our high protein system at the Indiana Plant.

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However, ethanol production rates continue to improve as we implement and make adjustments to the system. We expect that there will be an additional period of time of approximately three months before our ethanol production rates will return to historic levels. In addition, the Kansas Plant, which has a name plate capacity to produce 70 million gallons of ethanol annually, has recently begun operations. This will increase our ethanol gallons sold going forward as we continue to ramp up ethanol production at the Kansas Plant. Management also 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 decreased in the three months ended June 30, 2024 as compared to the same period in 2023. This decrease in revenues is primarily the result of lower distillers grains prices and a decrease in distillers grains sold for the period ended June 30, 2024 as compared to the same period in 2023.

    The average price per ton of distillers grains sold for the three months ended June 30, 2024 was approximately 35% lower than the average price per ton of distillers grains sold for the same period in 2023. This decrease in the market price of distillers grains is primarily due to lower corn and soybean meal prices for the current period as well as a seasonal decrease in the ration of distillers grains in livestock feed and higher industry-wide production.

    Management anticipates that distillers grains prices will continue to be affected by the price of corn and soybean meal. We also typically experience some seasonal decline in prices during warmer months as cattle feeders turn more to grazing their herds. Trade disputes with foreign countries, such as China, will continue to have a negative effect on distillers grains prices unless additional demand can be sustained from domestic or other foreign markets.

    We sold approximately 15% less tons of distillers grains in the three months ended June 30, 2024 as compared to the same period in 2023 resulting primarily from decreased ethanol production levels related to implementation of the high protein feed system. Our distillers grains production is expected to transition with the installation of our high protein feed system and eventually be replaced with a high protein feed product and a high fiber meal product. However, we expect that there will be an additional period of time of approximately three months before we are able to ramp up production of these products at the Indiana Plant which could have an adverse effect on our profitability.

CFP

Our revenues from CFP increased in the three months ended June 30, 2024 as compared to the same period in 2023. This increase in revenues is solely due to placing the high protein feed system in service during our second fiscal quarter.

Management expects that CFP will become a significant new source of revenue now that the system is operating. The first CFP sales were recorded during the second quarter of 2024, which totaled approximately $119,000. We recorded CFP sales of approximately $1,246,000 during the three months ended June 30, 2024. In addition, the Kansas Plant has recently begun operations which will increase our sales of high protein product going forward as we ramp up production as the Kansas Plant has a similar system to that recently installed in the Indiana Plant.

Corn Oil

    Our revenues from corn oil sales decreased in the three months ended June 30, 2024 as compared to the same period in 2023 which was mainly the result of lower corn oil prices and a decrease in corn oil sales. The average price per pound of corn oil was approximately 15% lower for the three months ended June 30, 2024 as compared to the same period in 2023. Decreased soybean oil prices due to a decrease in demand from biodiesel producers along with an ample supply had a negative effect on corn oil prices for the period. Soybean oil is the primary competitor with distillers corn oil. However, the supply of used cooking oil has also become more prevalent and competes with distillers corn oil in the market.

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Management anticipates that corn oil prices will continue to follow soybean oil prices. Corn oil prices are also affected by industry changes in corn oil supply due to industry operating conditions. The results of the presidential election in the United States could also affect demand from biodiesel producers and corn oil prices. In addition, an increase in the supply of used cooking oil could have a negative effect on corn oil prices.

    We also sold approximately 31% less pounds of corn oil in the three months ended June 30, 2024 as compared to the same period in 2023 resulting primarily from decreased ethanol production levels which has a corresponding effect on corn oil supply and lower corn oil yields related to implementation of the high protein feed system at the Indiana Plant. We expect that there will be an additional period of time of approximately three months before our corn oil rates will return to historic levels. This reduction in corn oil produced could have an adverse effect on our profitability. In addition, the Kansas Plant has recently begun operations and expects to begin producing corn oil soon which will increase our pounds of corn oil sold going forward.

Trading Division

    The following table shows the sources of our revenues from our Trading Division for the three months ended June 30, 2024 and 2023:

	2024				2023
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Soybean Sales	$	9,525,062	100.0	%	$	16,201,434	100.0	%
Total Revenues	$	9,525,062	100.0	%	$	16,201,434	100.0	%

Soybeans

    During the three months ended June 30, 2024 revenues from our Trading Division were derived from transporting and selling soybeans. Our revenues from soybeans sales decreased in the three months ended June 30, 2024 as compared to the same period in 2023. This decrease in revenues is the result of a decrease in the price per bushel of soybeans for the three months ended June 30, 2024 as compared to the same period in 2023. The average price per bushel of soybeans sold for the three months ended June 30, 2024 decreased by approximately 20% compared to the same period in 2023 primarily due to an increase in national supply of soybeans and lower demand from biodiesel producers resulting in lower soybean prices. There was also a reduction in bushels sold of 26% primarily due to less conducive market conditions for selling for the three months ended June 30, 2024. There has also been reduced export demand for U.S product because South America has experienced good crops and is competing in the world market and increased local competition. 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 86% for the three months ended June 30, 2024 as compared to approximately 87% for the same period in 2023. This small decrease in cost of goods sold as a percentage of revenues was the result of reduced volatility in the prices of ethanol and corn for the three months ended June 30, 2024 as compared to the same period in 2023. Our two largest costs of production are corn and natural gas. Cost of goods sold also includes net gains or losses from derivatives related to our commodity purchases as well as our additional expense for our estimate of our rail car rehabilitation expense described below.

Corn

Our largest cost associated with the production of ethanol, distillers grains, CFP, and corn oil is corn cost. During the three months ended June 30, 2024, we used approximately 12% less bushels of corn to produce our ethanol, distillers grains, CFP and corn oil as compared to the same period in 2023 due to lower ethanol production levels for the period. During the three months ended June 30, 2024, our average price paid per bushel of corn was approximately 37% lower as compared to the

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same period in 2023 due to plentiful carryout from the fall of 2023 corn harvest and favorable crop growing conditions for the 2024 corn harvest.

Weather, world supply and demand, current and anticipated stocks, agricultural policy and other factors can contribute to volatility in corn prices. Higher corn prices and increased volatility would have a negative effect on our operating margins unless the price of ethanol and distillers grains out paces rising corn prices. Volatility in the price of corn could significantly impact our cost of goods sold. In addition, the Kansas Plant has recently begun operations which will increase our corn requirements going forward as we ramp up production. In addition, this requires us to purchase corn in a different market which has a higher basis due to local market and availability of corn and may have an negative effect on the overall average price paid for corn.

Natural Gas

    Our natural gas cost after hedging was higher during the three months ended June 30, 2024 as compared to the same period in 2023. This increase in cost of natural gas for the three months ended June 30, 2024 as compared to the same period in 2023 was primarily the result of increased prices for the period offset by decreased usage due to lower distillers grains production for the period. Our average price per MMBTU of natural gas, excluding hedging activity, was approximately 39% higher during the three months ended June 30, 2024 due to increased volatility in prices. The use of natural gas for the three months ended June 30, 2024 was approximately 14% less as compared to the same period in 2023.

    Management expects that natural gas prices will be dependent upon government policy and seasonal weather conditions. If the nation were to experience a recession this could also influence natural gas prices. In addition, natural gas supply shortages due to a catastrophic weather event could have a negative effect on natural gas prices. In addition, the Kansas Plant has recently begun operations which will result in an increase in our natural gas requirements and may effect the overall average price paid for natural gas.

Rail Car Rehabilitation Costs

We lease 179 hopper rail cars under a multi-year agreement which runs through November 2028. Under the agreement, we are required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of each car at the termination of the lease. We have evaluated the condition of the cars and believe that it is probable that we may be assessed for damages incurred. During the three months ended June 30, 2024, we have recorded an expense in cost of goods sold of approximately $89,000. We accrue the estimated cost per railcar damages of approximately $30,000 per month over the term of the lease. The accrued liability for these rehabilitation costs is approximately $2,491,000 at June 30, 2024.

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, 2024 and 2023:

	2024				2023
	Amount		% of Revenues		Amount		% of Revenues
Soybeans	$	10,075,316	105.8	%	$	15,942,257	98.4	%
Total Cost of Goods Sold	$	10,075,316	105.8	%	$	15,942,257	98.4	%

Soybeans

    During the three months ended June 30, 2024, our cost was primarily the procurement of soybeans sold. During the three months ended June 30, 2024, our average price paid per bushel of soybeans was approximately 17% lower as compared to the same period in 2023 due to excess carryout of soybean inventory from the 2023 harvest. We also purchased approximately

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39% more bushels of soybeans in the three months ended June 30, 2024 compared to 2023 due 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 change, the realized or unrealized gains and losses are immediately recognized in our revenues and our cost of goods sold. These commodity-based derivatives are not designated as effective hedges for accounting purposes. Please refer to Item 3 - Quantitative and Qualitative Disclosures About Market Risk - Commodity Price Risk for information on our derivatives.

Operating Expense

    Our operating expenses as a percentage of revenues was approximately 4% and 2% for the three months ended June 30, 2024 and 2023, respectively. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees, depreciation of trading division fixed assets, property taxes and other general administrative costs. Operating expenses on a per gallon basis increased for the three months ended June 30, 2024 compared to the same period in 2023. We have seen rises in the cost of salaries due to shortages in the local labor market and increases in insurance rates for property and casualty.

Operating Income

    Our income from operations for the three months ended June 30, 2024 was approximately 7% of revenues as compared to approximately 11% of revenues for the same period in 2023. The decrease for the three months ended June 30, 2024 was primarily the result of weakened ethanol to corn margins, volatile commodity prices, and lower ethanol, distillers grains, CFP, and corn oil production and sales for the period.

Other Income (Expense)

    Our other expense was 1.0% and other income was 0.7% of revenues for the three months ended June 30, 2024 and 2022, respectively. Our other expense consisted primarily of the interest expense paid as a result of additional borrowings to fund various projects during the three months ended June 30, 2024. Other income for the three months ended June 30, 2023 consisted primarily of the interest income generated from additional cash on hand that was invested in debt securities.

Results of Operations for the Nine Months Ended June 30, 2024 and 2023

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 consolidated statement of operations for the nine months ended June 30, 2024 and 2023:

	2024			2023
Statement of Operations Data	Amount		%	Amount		%
Revenue	$	232,367,507	100.0	$	384,766,147	100.0
Cost of Goods Sold	216,031,104		93.0	335,472,745		87.2
Gross Profit	16,336,403		7.0	49,293,402		12.8
Operating Expenses	9,600,174		4.1	7,122,298		1.9
Operating Income	6,736,229		2.9	42,171,104		11.0
Other Income (Expense)	(158,022)		(0.1)	1,499,957		0.4
Net Income	$	6,578,207	2.8	$	43,671,061	11.4

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Revenue

Operating Segments

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

    Our current lines of business and sources of revenue are the sale of ethanol, distillers grains, CFP, corn oil, CFP, and and the trading of agricultural grains. We expect that CFP will become a significant new source of revenue now that the system is operating. The first CFP sales were recorded during the second quarter of 2024. We recorded CFP sales of approximately $1,365,000 during the nine months ended June 30, 2024. Please refer to Item 1 - Financial Statements - Note 11 - Business Segments for more financial information about our financial reporting segments. Ethanol revenues in the ethanol division also include net gains or losses from derivatives. Net derivative gains or losses for corn, natural gas, and corn oil are included in cost of goods sold in the ethanol division and soybean gains or losses from derivatives are included in cost of goods sold in the trading division.

The Kansas Plant was purchased by us on January 31, 2024 in an idled state. Following the purchase, management worked for several months through the challenges of bringing the Kansas Plant from idle status to operational status. We have faced, and will continue to face, other operational challenges including, but not limited to, operating in an unfamiliar market, securing necessary permits, and hiring and retaining the employees and putting processes in place that we will need to profitably operate the plant. In June 2024, we commenced operations at the Kansas Plant and shipped our first load of ethanol for sale. We continue to work to ramp-up operations at the Kansas Plant to increase ethanol production rates and bring it to fully operational status. These challenges may cause the financial information presented to not necessarily be indicative of future operations as the Kansas Plant.

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 consolidated statements of operations for the nine months ended June 30, 2024 and 2023:

	2024				2023
Revenue:	Amount		% of Total Revenues		Amount		% of Total Revenues
Ethanol division	$	188,096,217	80.9	%	$	318,564,231	82.8	%
Trading division	44,271,290		19.1		66,201,916		17.2
Total Revenue	$	232,367,507	100.0	%	$	384,766,147	100.0	%

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Ethanol Division

    The following table shows the sources of our revenues from our Ethanol Division for the nine months ended June 30, 2024 and 2023:

	2024				2023
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol	$	144,636,427	76.9	%	$	245,830,363	77.2	%
Distillers Grains	30,190,159		16.1		50,403,931		15.8
CFP	1,364,983		0.7		—		—
Corn Oil	10,224,070		5.4		21,737,346		6.8
Carbon Dioxide	298,542		0.2		319,399		0.1
Other Revenue	1,382,036		0.7		273,192		0.1
Total Revenues	$	188,096,217	100.0	%	$	318,564,231	100.0	%

    Ethanol

    Our revenues from ethanol decreased in the nine months ended June 30, 2024 as compared to the same period in 2023. This decrease in revenues is primarily the result of lower ethanol prices and a decrease in gallons of ethanol sold during the period which largely results from the shutdown during our first fiscal quarter and reduced production rates for the period associated with the installation of the high protein feed system. Revenue also includes the net gains or losses from derivatives related to the commodities purchased.

    The average price per gallon of ethanol sold for the nine months ended June 30, 2024 was approximately 22% lower than the average price per gallon of ethanol sold for the same period in 2023. Ethanol market prices were lower due to the increase in industry-wide production due to a period of positive operating margins. This greater amount of production increased supplies nationwide, as well as internationally, resulting in lower ethanol prices. In addition, corn prices were lower during the nine months ended June 30, 2024 as compared to the same period in 2023. Ethanol prices are typically directionally consistent with the price of corn meaning that lower corn prices can lead to volatility and have a significant negative effect on ethanol prices. However, increased ethanol export demand towards the end of the current period had a positive effect on ethanol prices.

Management believes that ethanol prices will continue to be influenced by corn and energy prices, inventory levels, global economics and inflationary factors. If corn prices further decrease that would likely contribute to lower ethanol prices and our profitability. High ethanol stocks and industry oversupply could also continue to have a negative effect on ethanol prices unless additional demand can be created in foreign markets. Foreign exports could increase if other countries move to higher blends of ethanol which may contribute to higher ethanol prices.

    We experienced a decrease in ethanol gallons sold of approximately 25% for the nine months ended June 30, 2024 as compared to the same period in 2023 resulting primarily from decreased ethanol production rates for the period. The Indiana Plant was shutdown for approximately four weeks during our first fiscal quarter in connection with the installation of our high protein feed system which resulted in a reduction in production and sales of ethanol during the period. In addition, we have experienced lower ethanol production rates since we completed installation of our high protein system at the Indiana Plant. However, ethanol production rates continue to improve as we implement and make adjustments to the system. We expect that there will be an additional period of time of approximately three months before our ethanol production rates will return to historic levels. In addition, the Kansas Plant, which has a name plate capacity to produce 70 million gallons of ethanol annually, has recently begun operations. This will increase our ethanol gallons sold going forward as we continue to ramp up ethanol production at the Kansas Plant. Management also continues to monitor economic conditions carefully. If market

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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 decreased in the nine months ended June 30, 2024 as compared to the same period in 2023. This decrease in revenues is primarily the result of lower distillers grains prices and a decrease in distillers grains sold for the period ended June 30, 2024 as compared to the same period in 2023.

    The average price per ton of distillers grains sold for the nine months ended June 30, 2024 was approximately 25% lower than the average price per ton of distillers grains sold for the same period in 2023. This decrease in the market price of distillers grains is primarily due to lower corn and soybean meal prices for the current period as well as a seasonal decrease in the ration of distillers grains in livestock feed and higher industry-wide production.

    Management anticipates that distillers grains prices will continue to be affected by the price of corn and soybean meal. We also typically experience some seasonal decline in prices during warmer months as cattle feeders turn more to grazing their herds. Trade disputes with foreign countries, such as China, will continue to have a negative effect on distillers grains prices unless additional demand can be sustained from domestic or other foreign markets.

    We sold approximately 21% less tons of distillers grains in the nine months ended June 30, 2024 as compared to the same period in 2023 resulting primarily from decreased ethanol production levels due to the shut down of our Indiana Plant during our first fiscal quarter and subsequent implementation of the high protein feed system. Our distillers grains production is expected to transition with the installation of our high protein feed system and eventually be replaced with a high protein feed product and a high fiber meal product. However, we expect that there will be an additional period of time of approximately three months before we are able to ramp up production of these products at the Indiana Plant which could have an adverse effect on our profitability.

CFP

Our revenues from CFP increased in the nine months ended June 30, 2024 as compared to the same period in 2023. This increase in revenues is solely due to placing the high protein feed system in service during our second fiscal quarter.

Management expects that CFP will become a significant new source of revenue now that the system is operating. The first CFP sales were recorded during the second quarter of 2024. We recorded CFP sales of approximately $1,365,000 during the nine months ended June 30, 2024. In addition, the Kansas Plant has recently begun operations which will increase our sales of high protein product going forward as we ramp up production as the Kansas Plant has installed a similar system to that recently installed in the Indiana Plant.

Corn Oil

    Our revenues from corn oil sales decreased in the nine months ended June 30, 2024 as compared to the same period in 2023 which was mainly the result of lower corn oil prices and a decrease in corn oil sales. The average price per pound of corn oil was approximately 20% lower for the nine months ended June 30, 2024 as compared to the same period in 2023. Decreased soybean oil prices due to a decrease in demand from biodiesel producers along with an ample supply had a negative effect on corn oil prices for the period. Soybean oil is the primary competitor with distillers corn oil. However, the supply of used cooking oil has also become more prevalent and competes with distillers corn oil in the market.

Management anticipates that corn oil prices will continue to follow soybean oil prices. Corn oil prices are also affected by industry changes in corn oil supply due to industry operating conditions. The results of the presidential election in the United States could also affect demand from biodiesel producers and corn oil prices. In addition, an increase in the supply of used cooking oil could have a negative effect on corn oil prices.

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    We also sold approximately 42% less pounds of corn oil in the nine months ended June 30, 2024 as compared to the same period in 2023 resulting primarily from decreased ethanol production levels which has a corresponding effect on corn oil supply and lower corn oil yields related to installation and implementation of the high protein feed system at the Indiana Plant. We expect that there will be an additional period of time of approximately three months before our corn oil rates will return to historic levels. This reduction in corn oil produced could have an adverse effect on our profitability. In addition, the Kansas Plant has recently begun operations and expects to begin producing corn oil soon which will increase our pounds of corn oil sold going forward.

Trading Division

    The following table shows the sources of our revenues from our Trading Division for the nine months ended June 30, 2024 and 2023:

	2024				2023
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Soybean Sales	$	44,271,290	100.0	%	$	66,201,916	100.0	%
Total Revenues	$	44,271,290	100.0	%	$	66,201,916	100.0	%

Soybeans

    During the nine months ended June 30, 2024 revenues from our Trading Division were derived from transporting and selling soybeans. Our revenues from soybeans sales decreased in the nine months ended June 30, 2024 as compared to the same period in 2023. This decrease in revenues is the result of a decrease in the bushels of soybeans sold of approximately 20% for the nine months ended June 30, 2024 as compared to the same period in 2023. The reduction was primarily due to less conducive market conditions for selling for the nine months ended June 30, 2024. There has also been reduced export demand for U.S product because South America has experienced good crops and is competing in the world market and increased local competition. The average price per bushel of soybeans sold for the nine months ended June 30, 2024 decreased by approximately 16% compared to the same period in 2023 primarily due to an increase in national supply of soybeans and lower demand from biodiesel producers resulting in lower soybean prices. Management anticipates that soybean sales over the remainder of the fiscal year will be consistent with recent fiscal years.

Cost of Goods Sold

Ethanol Division

Our cost of goods sold for this division as a percentage of its total revenues was approximately 93% for the nine months ended June 30, 2024 as compared to approximately 87% for the same period in 2023. This increase in cost of goods sold as a percentage of revenues was the result of volatility in the prices of ethanol and corn for the nine months ended June 30, 2024 as compared to the same period in 2023. Our two largest costs of production are corn and natural gas. Cost of goods sold also includes net gains or losses from derivatives related to our commodity purchases as well as our additional expense for our estimate of our rail car rehabilitation expense described below.

Corn

Our largest cost associated with the production of ethanol, distillers grains, CFP, and corn oil is corn cost. During the nine months ended June 30, 2024, we used approximately 23% less bushels of corn to produce our ethanol, distillers grains and corn oil as compared to the same period in 2023 due to lower ethanol production levels for the period. During the nine months ended June 30, 2024, our average price paid per bushel of corn was approximately 32% lower as compared to the same period in 2023 due to plentiful carryout from the 2023 corn harvest and favorable crop growing conditions for the corn crop for fall of 2024. In addition, prices decreased due to lower foreign demand because South America has had good crops, increasing supply worldwide.

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Weather, world supply and demand, current and anticipated stocks, agricultural policy and other factors can contribute to volatility in corn prices. Higher corn prices and increased volatility would have a negative effect on our operating margins unless the price of ethanol and distillers grains out paces rising corn prices. Volatility in the price of corn could significantly impact our cost of goods sold. In addition, the Kansas Plant has recently begun operations which will increase our corn requirements going forward as we ramp up production. In addition, this requires us to purchase corn in a different market which has a higher basis due to local market and availability of corn and may have an negative effect on the overall average price paid for corn.

Natural Gas

    Our natural gas cost after hedging was lower during the nine months ended June 30, 2024 as compared to the same period in 2023. This decrease in cost of natural gas for the nine month ended June 30, 2024 as compared to the same period in 2023 was primarily the result of decreased prices for the period coupled with decreased usage due to lower distillers grains production. Our average price per MMBTU of natural gas, excluding hedging activity, was approximately 11% lower during the nine months ended June 30, 2024 due to a mild winter, a decrease in the price of crude oil and less volatility in prices. However, natural gas prices were higher towards the end of the period due to increased volatility. The use of natural gas for the nine months ended June 30, 2024 was approximately 23% less as compared to the same period in 2023.

    Management expects that natural gas prices will be dependent upon government policy and seasonal weather conditions. If the nation were to experience a recession this could also influence natural gas prices. In addition, natural gas supply shortages due to a catastrophic weather event could have a negative effect on natural gas prices. In addition, the Kansas Plant has recently begun operations which will result in an increase in our natural gas requirements and may effect the overall average price paid for natural gas.

Rail Car Rehabilitation Costs

We lease 179 hopper rail cars under a multi-year agreement which runs through November 2028. Under the agreement, we are required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of each car at the termination of the lease. We have evaluated the condition of the cars and believe that it is probable that we may be assessed for damages incurred. During the nine months ended June 30, 2024, we have recorded an expense in cost of goods sold of approximately $268,000. We accrue the estimated cost per railcar damages of approximately $30,000 per month over the term of the lease. The accrued liability for these rehabilitation costs is approximately $2,491,000 at June 30, 2024.

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, 2024 and 2023:

	2024				2023
	Amount		% of Revenues		Amount		% of Revenues
Soybeans	$	43,786,864	98.9	%	$	64,518,707	97.5	%
Total Cost of Goods Sold	$	43,786,864	98.9	%	$	64,518,707	97.5	%

Soybeans

    During the nine months ended June 30, 2024, our cost was primarily the procurement of soybeans sold. During the nine months ended June 30, 2024, our average price paid per bushel of soybeans was approximately 25% lower as compared to the same period in 2023 due to excess carryout of soybean inventory from the 2023 harvest. We also purchased approximately 9% less bushels of soybeans in the nine months ended June 30, 2024 compared to 2023 due to a cash price that was not conducive to producer selling and because of our four week shutdown during the period in connection with the installation of our high protein feed project.

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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 change, the realized or unrealized gains and losses are immediately recognized in our revenues and our cost of goods sold. These commodity-based derivatives are not designated as effective hedges for accounting purposes. Please refer to Item 3 - Quantitative and Qualitative Disclosures About Market Risk - Commodity Price Risk for information on our derivatives.

Operating Expense

    Our operating expenses as a percentage of revenues was approximately 4% and 2% for the nine months ended June 30, 2024 and 2023, respectively. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees, depreciation of trading division fixed assets, property taxes and other general administrative costs. Operating expenses on a per gallon basis increased for the nine months ended June 30, 2024 compared to the same period in 2023. We have seen rises in the cost of salaries due to shortages in the local labor market and increases in insurance rates for property and casualty.

Operating Income

    Our income from operations for the nine months ended June 30, 2024 was 3% of revenues as compared to 11% of revenues for the same period in 2023. The decrease for the nine months ended June 30, 2024 was primarily the result of weakened ethanol to corn margins, volatile commodity prices, and lower ethanol, distillers grains, CFP, and corn oil production and sales for the period.

Other Income (Expense)

    Our other expense was 0.1% of revenues and our other income was 0.4% of revenues for the nine months ended June 30, 2024 and 2023, respectively. Our other expense consisted primarily of the interest expense paid as a result of additional borrowings to fund various projects during the nine months ended June 30, 2024. Our other income consisted primarily of the interest income generated from additional cash on hand invested in debt securities during the nine months ended June 30, 2023.

Changes in Financial Condition for the Nine Months Ended June 30, 2024

    The following table highlights the changes in our financial condition:

	June 30, 2024 (Unaudited)		September 30, 2023
Current Assets	$	108,940,194	$	130,398,907
Long-Term Assets	$	157,311,135	$	102,369,340
Current Liabilities	$	34,376,391	$	28,027,888
Long-Term Liabilities	$	62,166,643	$	32,207,342
Members' Equity	$	169,708,295	$	172,533,017

    We experienced a decrease in our current assets at June 30, 2024 as compared to September 30, 2023. This decrease was primarily driven by a decrease in cash and investments at June 30, 2024 as compared to September 30, 2023 coupled with increased grain inventories from reduced ethanol production during the period.

    We experienced an increase in our long-term assets at June 30, 2024 as compared to September 30, 2023. The increase is attributed to placing the high protein feed project into service, netted with the decommissioned assets it replaced. This was coupled with an increase in the operating lease right-of-use asset resulting from the renewal of our lease of one hundred

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seventy-nine hopper rail cars that we use for moving distillers grains, corn and soybeans. This increase can also be attributed to the purchase of assets for the Kansas Plant.

    We experienced an increase in our total current liabilities at June 30, 2024 as compared to September 30, 2023. This increase was primarily due to an increase in accounts payable during the period ended June 30, 2024 as well as an increase in the current portion of long-term debt due to the addition of the Term Loan at June 30, 2024 as compared to September 30, 2023.

    We experienced an increase in our long-term liabilities as of June 30, 2024 as compared to September 30, 2023 primarily attributed to the addition of the Term Loan for the period ended June 30, 2024 as compared to September 30, 2023. The increase is coupled with operating lease liabilities due to the renewal of the hopper car lease in December 2023 that is scheduled to mature in November 2028.

Liquidity and Capital Resources

We engaged ICM, Inc. to install a system in the Indiana Plant to produce high protein feed which cost approximately $50,000,000, including change orders. The agreement called for a down payment and scheduled payments at key points during the construction and installation process, which began during the fourth quarter of fiscal 2022. This project was installed and placed into service in December 2023.

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

Based on financial forecasts performed by our management, we anticipate that we will have sufficient cash from our credit facilities and cash from our operations to continue to operate the ethanol plant for the next 12 months. However, should operating conditions in the ethanol industry deteriorate or continue for a prolonged period, we could have difficulty maintaining our liquidity and may need to rely on our revolving lines of credit or seek to increase our limits for operations.

The following table shows cash flows for the nine months ended June 30, 2024 and 2023:

	2024		2023
Net cash (used for) provided by operating activities	$	(10,169,041)	$	44,640,398
Net cash used for investing activities	(43,553,242)		(41,503,146)
Net cash provided by (used for) financing activities	15,741,224		(15,417,783)
Net decrease in Cash, Cash Equivalents, and Restricted Cash	(37,981,059)		(12,280,531)
Cash, Cash Equivalents, and Restricted Cash, beginning of period	83,284,409		63,239,614
Cash, Cash Equivalents, and Restricted Cash, end of period	$	45,303,350	$	50,959,083

Cash Flow provided by Operating Activities

We experienced a decrease in our cash flow from operating activities for the nine months ended June 30, 2024 as compared to the same period in 2023. This decrease was primarily due to the shutdown of the Indiana Plant to install the high protein feed project resulting in lower ethanol, distillers grains, CFP, and corn oil production and sales, coupled with weakened margins on our primary products due to volatile commodity prices for the nine months ended June 30, 2024 as compared to the same period in 2023.

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Cash Flow used for Investing Activities

We used more cash in investing activities for the nine months ended June 30, 2024 as compared to the same period in 2023. This increase was primarily the result of placing our advanced high protein process into service, our investment in the CCS Project, and the purchase of the assets for the Kansas Plant during the nine months ended June 30, 2024.

Cash Flow provided by (used for) Financing Activities

We experienced an increase in our cash flow from financing activities for the nine months ended June 30, 2024 as compared to the same period in 2023. This increase was primarily because we borrowed on our loan facility for the high protein project and added the Term Loan for the asset purchase related to the Kansas Plant during the nine months ended June 30, 2024 as compared to the same period in 2023. The increase was partially offset by distributions paid to investors during the nine months ended June 30, 2024.

    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 formerly had 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. On January 31, 2024, we amended the loan agreement. The primary purpose of the amendment was to provide additional financing to Cardinal Colwich to fund a portion of the funds needed to complete the purchase of an ethanol plant in Colwich, Kansas, permit Cardinal Ethanol to use funds from the Revolving Credit Loan to support Cardinal Colwich's working capital needs and capital expenditures and to allow the Company to request an additional $10,000,000 of maximum available credit on the Revolving Credit Loan. On April 30, 2024, we amended the loan agreement to extend the time period for the Company to provide consents from counterparties to material contracts collaterally assigned to the lender. On July 23, 2024 (to be effective on May 1, 2024), we amended the loan agreement to modify the definition of "Permitted Debt" to include the Intercompany Loan so long as such loan, and any lien securing the loan, are subordinate and the amount of such loan does not exceed $20,000,000. Please refer to Item 1 - Financial Statements, Note 7 - Bank Financing for additional details.

Declining Loan

    The maximum availability of the Declining Loan was formerly $5,000,000 and such amount was to be available for working capital purposes. However, the maximum availability of the Declining Loan was increased from $5,000,000 to $39,000,000 in order to provide financing to fund the construction and installation of a new high protein feed system at the plant. The interest rate on the Declining Loan is currently based on the prime rate minus five basis points (.05%) subject to a floor of 2.85%. The interest rate was 8.45% at June 30, 2024 and September 30, 2023. We will be required to make monthly interest payments on the Declining Loan during the draw period. The principal balance of the Declining Loan was expected to be converted to term debt on or before May 1, 2024, to be repaid in 60 equal monthly installments based on a ten year amortization period. The Company and its contractor have mutually agreed that a portion of the final payment may be withheld pending resolution of some issues surrounding the final installation. The Company is presently working with its lender to extend the conversion date until September 1, 2024 when the Company believes the final payment will complete. The lender is in agreement and the loans are presented on the basis of the September 1 conversion date and the same May 1, 2029 maturity date. In addition, we will be required to make mandatory annual prepayments on the term debt within 120 days following the end of each fiscal year beginning with the fiscal year ended September 30, 2024. The annual prepayment will be in the amount of the lesser of 40% of excess cash flow or $7,200,000, up to an aggregate amount paid of $18,000,000. There were

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borrowings outstanding of approximately $35,404,000 and $30,569,000 on the Declining Loan at June 30, 2024 and September 30, 2023, respectively.

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, CFP, corn oil and soybean inventories reduced by accounts payable associated with those inventories having a priority. It is also supported by the eligible accounts receivable and commodity trading account excess margin funds. The interest rate on the Revolving Credit Loan is the prime rate minus twenty-five basis points (.25%) and is subject to a floor of 2.75%. The interest rate was 8.25% at June 30, 2024 and September 30, 2023. There were no borrowings outstanding at June 30, 2024 and September 30, 2023. The Revolving Credit Loan is currently set to mature on February 28, 2025. We may request a $10,000,000 increase in the maximum commitment under the Revolving Credit Loan, subject to approval of the lender, and may use funds from the Revolving Credit Loan to support Cardinal Colwich's working capital needs and capital expenditures. The borrowing base calculation used to determine the amount available under the Revolving Credit Loan has also been amended to include Cardinal Colwich's corn, ethanol, dried distillers grain, CFP,corn oil and soybean inventories, eligible accounts receivable and commodity trading account excess margin funds.

Term Loan

The amendment to our loan agreement provides for a new $22,000,000 Term Loan to the Company with an interest rate based on the prime rate plus twenty-five basis points (.25%) subject to a floor of 3.25%. The interest rate was 8.75% at June 30, 2024. The Company was required to make monthly interest payments on the Term Loan until June 1, 2024. Commencing on July 1, 2024, the Term Loan is to be repaid by the Company in fifty-nine equal monthly installments based on a seven year amortization until March 1, 2029, when the outstanding principal balance together with accrued and unpaid interest will be due. There were borrowings outstanding of approximately $21,742,000 on the Term Loan at June 30, 2024.

Covenants

    During the term of the loans, we will be subject to certain financial covenants. Our minimum working capital is $15,000,000, which is calculated as our current assets plus the amount available for drawing under our long-term revolving note, less current liabilities. Our minimum fixed charge coverage ratio is no less than 1.15:1.0 measured on a rolling four quarter average 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 $6,000,000. The cost of the high protein feed system is excluded from the capital expenditures calculation until the principal balance of the Declining Loan converts to term debt.

The amendment modifies these covenants to provide for a consolidated minimum working capital requirement of $25,000,000, and a capital expenditures covenant that allows the Company $10,000,000, in the aggregate, of expenditures per year without prior approval. There is also a requirement to maintain a minimum consolidated fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly. A consolidated debt service charge coverage ratio of no less than 1.25:1.0 in lieu of the fixed charge coverage ratio will apply for any reporting period that consolidated working capital is equal to or more than $35,000,000.

We are complying with our financial covenants and the other terms of our loan agreements at June 30, 2024. 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 for the next twelve months. Should market conditions deteriorate in the future, circumstances may develop which could result in us violating the financial covenants or other terms of our loan agreements. Should we violate the terms or covenants of our loan or fail to obtain a waiver of any such term or covenant, our primary lender could deem us in default of our loans and require us to immediately repay a significant portion or possibly the entire outstanding balance of our loans if we have a balance outstanding. In that event, our lender could also elect to proceed with a foreclosure action on our plant.

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Capital Improvements

    We are planning various capital projects scheduled for the 2024 fiscal year in order to make certain improvements to the Indiana Plant and maintain the facility. These improvements include updates to the grain probe and scale system, an additional cooling tower pump, drainage work, and other small miscellaneous projects which are expected to cost approximately $3,500,000 and be funded from operations and our current credit facilities.

We also engaged ICM, Inc. to install a system at the Indiana Plant to produce high protein feed which cost approximately $50,000,000, including change orders, and be funded from operations and our current credit facilities as amended. We will also license from ICM technology to use, operate and maintain the system and expect to pay license fees of $10 per ton of PROTOMAX™ produced for a period of 10 years. Installation of the system commenced during the fourth quarter of our 2023 fiscal year. This project was placed into service during December 2023. We are currently making adjustments to the equipment to optimize production to meet guarantees and specifications within the contract.

CCS Project

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

On January 16, 2023, Cardinal One Carbon Holdings, LLC, our wholly owned subsidiary, entered into a Partnership Agreement (the "LPA") with Vault CCS Holdings LP pursuant to which Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP formed a joint venture operating under the name of One Carbon Partnership Holdings LP (the "Limited Partnership") to pursue the CCS Project. Cardinal One Carbon Holdings, LLC owns a 50% limited partnership interest in the Limited Partnership. The LPA contemplates that Cardinal One Carbon Holdings, LLC and Vault CCS Holdings LP will make capital contributions to fund the Project and receive distributions in accordance with their respective ownership interests. As of June 30, 2024, Cardinal One Carbon Holdings, LLC has invested approximately $10,525,000 into the CCS project. It is currently expected that the CCS Project will require Cardinal One Carbon Holdings, LLC to invest up to $24,500,000 to reach commercial operations.

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

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

Asset Purchase Agreement

On October 23, 2023, Cardinal Colwich entered into an Asset Purchase Agreement with Element, LLC ("Seller") by and through Creative Planning Business Alliance, LLC (the "Receiver") acting in its capacity as the court-appointed receiver (the "APA"). The APA provided for the purchase of substantially all of the assets of Seller used in connection with the production of ethanol, high protein distillers grains and corn oil as set forth in more detail in the APA (the "Purchased Assets")

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free and clear of any claims, restrictions, mortgages, security interest, demands, charges and encumbrances. The facility was constructed by ICM, Inc. with a name plate capacity to produce 70 million gallons of ethanol annually and is located in Colwich, Kansas. On January 31, 2024, the purchase transaction was completed. The cash purchase price for the Purchased Assets was $44,000,000. In addition, Cardinal Colwich assumed certain liabilities specified in the APA. The transaction was funded by a $22,000,000 loan from our primary lender and the remaining $22,000,000 was funded by operations. Additionally, Cardinal Colwich paid approximately $1,025,000 in additional fees, expenditures to cure liabilities associated with assumed contracts, and to fund the purchase of necessary equipment owned by third parties. These amounts came from cash reserves. The Kansas Plant had not operated since April of 2023 when it went into receivership and was purchased by us in an idled state. Following the purchase, we worked for several months through the challenges of restarting operations. In June 2024, we commenced operations at the Kansas Plant and shipped our first load of ethanol for sale. The Company is continuing to work to ramp-up operations at the Kansas Plant to increase ethanol production rates and bring it to fully operational status.

Passthrough Entity Tax

We record Indiana passthrough entity tax in accordance with ASC 740 and have elected to account for the payments as an equity transaction through member distributions. At June 30, 2024, accrued distributions for passthrough entity tax was $700,000 and estimated distributions paid was $2,050,000 the nine months ended June 30, 2024.

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 surrounding the Indiana Plant. 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.

Critical Accounting Estimates

Management uses various estimates and assumptions in preparing our consolidated 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 credit losses; the valuation of basis and delay price contracts on corn purchases; derivatives; inventories; long-lived assets, railcar rehabilitation costs and inventory purchase commitments.  The Ethanol Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, inventories, patronage dividends, long lived assets, railcar rehabilitation costs, and inventory purchase commitments. The Trading Division uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, the valuation of inventory purchase and sale commitments derivatives and inventory at market. An in-depth description of these can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.  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, 2024.

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, Revolving Credit Loan and Term Loan which bear variable interest rates. There were borrowings in the amount of approximately $35,404,000 outstanding on the Declining Loan and the applicable interest rate was 8.45% at June 30, 2024. There were no borrowings outstanding on the Revolving Credit Loan at June 30, 2024. There were borrowings in the amount of approximately $21,742,000 outstanding on the Term Loan and the applicable interest rate was 8.75% at June 30, 2024. The specifics of the Declining Loan, Revolving Credit Loan and Term Loan are discussed in greater detail above. If we were to experience a 10% adverse change in the applicable interest rates, the annual effect of such changes would have on our statement of operations, based on the amount we had outstanding on our variable interest rate loans at June 30, 2024, would be approximately $500,000.

Commodity Price Risk

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

We seek to minimize the risks from fluctuations in the prices of raw material inputs, such as corn and natural gas, and finished products, such as ethanol and 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 consolidated statements of operations, none of which are designated as hedging instruments, for the three and nine months ended June 30, 2024 and 2023:

	Three Months Ended June 30, 2024		Nine Months Ended June 30, 2024		Three Months Ended June 30, 2023		Nine Months Ended June 30, 2023
Corn Derivative Contracts	$	473,275	$	6,164,129	$	3,531,387	$	10,972,820
Ethanol Derivative Contracts	4,907,794		5,269,908		(3,798,934)		1,360,523
Natural Gas Derivative Contracts	—		(519,979)		44,849		(2,248,339)
Soybean Oil Derivative Contracts	15,661		3,819		34,880		(42,906)
Soybean Derivative Contracts	(298,326)		(226,524)		(103,110)		(1,256,613)
Soybean Forward Purchase and Sales Contracts	(168,519)		73,121		(12,577)		274,386
Totals	$	4,929,885	$	10,764,474	$	(303,505)	$	9,059,871

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

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

A sensitivity analysis has been prepared to estimate our exposure to ethanol, distillers grains, corn oil, corn, 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, 2024 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, 2024 at the Indiana Plant.

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, 2024	Approximate Adverse Change to Income
Natural Gas	3,300,000	MMBTU	10%	$	570,000
Ethanol	138,000,000	Gallons	10%	$	12,331,000
Corn	46,800,000	Bushels	10%	$	27,562,000
DDGs	252,000	Tons	10%	$	3,160,000
Corn Oil	43,980,000	Pounds	10%	$	1,728,000
Soybeans - Sale	5,000,000	Bushels	10%	$	5,455,000
Soybeans - Purchase	5,000,000	Bushels	10%	$	5,456,000
CFP	65,000	Tons	10%	$	1,756,000

The recent start up of operations at the Kansas Plant will result in an increase in these estimated requirements and sales and may adversely affect our market risk.

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

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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, 2024.  Based on this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

    There were no changes in our internal control over financial reporting during our third quarter ended of our 2024 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

None.

Item 1A.    Risk Factors

On January 31, 2024, we purchased through our wholly owned subsidiary, Cardinal Colwich, LLC, an idled ethanol plant in Colwich, Kansas. We have faced and may continue to face challenges in getting the plant to fully operational status.

Our acquisition of the Kansas Plant and restarting operations entails risks and uncertainties that could adversely affect our business, financial condition, and results of operations. Ethanol production is a complex process involving various technical, logistical, and regulatory considerations. We have encountered and could encounter in the future operational challenges such as equipment malfunctions, process inefficiencies, supply chain disruptions, or compliance issues that could delay production ramp-up and increase operating costs. Further, ethanol production is subject to stringent environmental, safety, and regulatory requirements at the federal, state, and local levels. Restarting operations at the Kansas Plant has required us to obtain or renew permits, licenses, and approvals from regulatory authorities, which has been time-consuming, costly, and subject to regulatory scrutiny. The inability to successfully bring the Kansas Plant to fully operational status may negatively impact the value of our units.

We depend on our management and key employees for the successful operation of our plants. Management’s inexperience with the Kansas ethanol market could negatively impact the Kansas Plant operating profitability.

Restarting operations at our Kansas Plant has required us to enter into a new market, which poses risks due to our management’s lack of both experience and expertise in navigating the Kansas market. The success of our entry into this new market depends on various factors, including understanding local regulations, obtaining required permits, access to water and competitive landscapes. Further, we will need to establish distribution networks and build local partnerships. Failure to understand and comply with local regulations or understandings may result in delays, cost overruns, operational inefficiencies and ultimately financial losses which may decrease the value of our units.

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We may have difficulty in recruiting and retaining an adequate work force for the Kansas Plant.

The success of the Kansas Plant is subject to risks associated with the recruitment and retention of a skilled and qualified workforce. The success and efficiency of the Kansas Plant depends heavily on the availability of a sufficient number of competent employees with relevant expertise in ethanol production, plant maintenance, regulatory compliance, and other critical functions. However, labor force dynamics in the Kansas region, specialized skills and training requirements, remote location and commuting issues have posed and may continue to pose challenges to our ability to retain the necessary workforce. Despite our efforts to address these challenges, there can be no assurance that we will be able to recruit and retain a sufficient workforce to support the Kansas Plant. Any shortages or inadequacies in staffing levels could disrupt production schedules, increase labor costs, or compromise safety and regulatory compliance which could affect the Kansas Plant, our financial condition, results of operations and the value of our units. Investors should carefully consider these risks before making investment decisions.

Access to corn may be more difficult to obtain in Kansas than it currently is in Indiana which may adversely affect the market price we pay for corn.

The success of the Kansas Plant will depend on our access to corn supply. Corn is the primary raw material used in ethanol production. Our management has experience in the Indiana corn market and Indiana has traditionally been one of the leading corn-producing states in the United States, with favorable agro-climatic conditions and a long history of corn cultivation. In contrast, Kansas may have lower corn production volumes or face challenges related to water availability, soil quality, or climatic variability, which could impact the local supply of corn. Further, transportation costs play a significant role in the competitiveness of corn sourcing, particularly for ethanol plants. Kansas’ landlocked geography and potentially greater distances to major corn-producing regions or transportation hubs may result in higher freight costs, longer transit times, and logistical complexities compared to Indiana. As discussed further in this Form 10-Q, the price of corn is subject to fluctuations based on factors such as crop yields, global demand, commodity market trends, and government policies. While Kansas may have access to corn markets, it may face greater competition from other regions or industries competing for the same supply, potentially leading to higher prices or supply constraints compared to Indiana. However, despite our efforts to manage these risks, there can be no assurance that we will be able to secure a reliable and cost-effective supply of corn in Kansas. Any disruptions, shortages, or cost increases in corn procurement could materially and adversely affect our business operations, financial performance, and competitive position and may ultimately affect the value of our units.

Rights to water access in Kansas are highly regulated and significantly different from rights to water in Indiana.

Our operations are dependent on access to water resources in the state of Kansas. The allocation and regulation of water rights in Kansas are subject to a complex legal and regulatory framework that presents inherent risks and uncertainties to our business. Kansas faces ongoing challenges related to water scarcity, particularly in areas with increased demand from urbanization, agriculture or industrial development and this may intensify in the future. We have assumed the Water Sharing Agreement dated February 28, 2018 between Element, LLC and Kansas Gas & Electric Company, now Evergy Kansas South, Inc. ("Evergy"), as amended on January 31, 2024 (collectively, the "Water Sharing Agreement") which provides us the right to use water. However Evergy can terminate this with prior written notice to us or it can recall the water rights for their own operations, subject to certain contingencies. If we are unable to obtain enough water through the Water Sharing Agreement for our operations or to obtain water through another method, this may result in production slow-down, if not stoppage, at the Kansas Plant and financial losses which may decrease the value of our units.

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.

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Item 5. Other Information

On February 22, 2024, Robert Baker, our director, executed a contract for purchase of three of our membership units. The purchase was effective as of April 1, 2024, and was intended to satisfy the affirmative defense conditions of a non-rule 10b5-1 trading arrangement.

On February 26, 2024, Mr. Baker executed a contract for purchase of seven of our membership units. The purchase was effective as of April 1, 2024 and was intended to satisfy the affirmative defense conditions of a non-rule 10b5-1 trading arrangement.

On March 18, 2024, Mr. Baker executed a contract for purchase of four of our membership units. The purchase was effective as of April 1, 2024, and was intended to satisfy the affirmative defense conditions of a non-rule 10b5-1 trading arrangement. On March 18, 2024, Mr. Baker executed a second contract for purchase of an additional twenty of our membership units. The purchase was also effective as of April 1, 2024, and was intended to satisfy the affirmative defense conditions of a non-rule 10b5-1 trading arrangement.

Item 6. Exhibits.

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

Exhibit No.	Exhibit
31.1	Certificate Pursuant to 17 CFR 240.13a-14(a).*
31.2	Certificate Pursuant to 17 CFR 240.13a-14(a).*
32.1	Certificate Pursuant to 18 U.S.C. Section 1350.*
32.2	Certificate Pursuant to 18 U.S.C. Section 1350.*
101.INS	Inline XBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	Inline XBRL Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101).

*    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 13, 2024	/s/ Jeffrey Painter
		Jeffrey Painter
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	August 13, 2024	/s/ William Dartt
		William Dartt
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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