Cardinal Ethanol LLC - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Cardinal Ethanol LLC	Financial_Report.xls
EX-32.2 - CERTIFICATION - Cardinal Ethanol LLC	a322certification33115.htm
EX-31.2 - CERTIFICATION - Cardinal Ethanol LLC	a312certification33115.htm
EX-32.1 - CERTIFICATION - Cardinal Ethanol LLC	a321certification33115.htm
EX-31.1 - CERTIFICATION - Cardinal Ethanol LLC	a311certification33115.htm
EX-10.1 - EXHIBIT 10.1 THIRD AMENDMENT - Cardinal Ethanol LLC	a101thirdamendmentoffirsta.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

	For the quarterly period ended March 31, 2015.

	OR

o	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)

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

x Yes o No

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



Large Accelerated Filer o	Accelerated Filer o
Non-Accelerated Filer x	Smaller Reporting Company o

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

o Yes x No

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

As of May 5, 2015, there were 14,606 membership units outstanding.

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INDEX



	Page Number
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	25
Item 4. Controls and Procedures	27
PART II. OTHER INFORMATION	27
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3. Defaults Upon Senior Securities	28
Item 4. Mine Safety Disclosures	28
Item 5. Other Information	28
Item 6. Exhibits	29
SIGNATURES	30

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CARDINAL ETHANOL, LLC

Balance Sheets



ASSETS	March 31, 2015			September 30, 2014
	(Unaudited)
Current Assets
Cash	$	17,287,788		$	27,731,976
Restricted cash	693,989			885,100
Trade accounts receivable	13,675,823			21,766,301
Miscellaneous receivables	95,519			5,968
Inventories	15,556,275			7,425,399
Prepaid and other current assets	732,260			529,461
Commodity derivative instruments	921,721			1,690,531
Total current assets	48,963,375			60,034,736

Property, Plant, and Equipment
Land and land improvements	21,124,597			21,124,597
Plant and equipment	127,314,871			126,234,680
Building	7,018,061			7,018,061
Office equipment	579,019			579,019
Vehicles	31,928			31,928
Construction in process	1,781,067			1,015,044
	157,849,543			156,003,329
Less accumulated depreciation	(54,816,878		)	(50,370,553		)
Net property, plant, and equipment	103,032,665			105,632,776

Other Assets
Investment	823,495			718,553
Total other assets	823,495			718,553

Total Assets	$	152,819,535		$	166,386,065

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

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CARDINAL ETHANOL, LLC

Balance Sheets



LIABILITIES AND MEMBERS' EQUITY	March 31, 2015		September 30, 2014
	(Unaudited)
Current Liabilities
Accounts payable	$	3,525,073	$	3,143,834
Accounts payable-corn	8,350,302		6,058,527
Accrued expenses	3,026,741		2,891,129
Commodity derivative instruments	156,536		1,287,147
Total current liabilities	15,058,652		13,380,637

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
Retained earnings	66,848,670		82,093,215
Total members' equity	137,760,883		153,005,428

Total Liabilities and Members’ Equity	$	152,819,535	$	166,386,065

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

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CARDINAL ETHANOL, LLC

Condensed Statements of Operations and Comprehensive Income (Unaudited)



	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	March 31, 2015		March 31, 2014		March 31, 2015		March 31, 2014

Revenues	$	59,944,217	$	73,065,869	$	125,802,808	$	156,638,634

Cost of Goods Sold	54,593,946		54,829,756		99,135,806		114,746,972

Gross Profit	5,350,271		18,236,113		26,667,002		41,891,662

Operating Expenses	1,148,022		1,085,336		2,502,027		2,306,201

Operating Income	4,202,249		17,150,777		24,164,975		39,585,461

Other Income (Expense)
Interest income	—		—		—		9,188
Interest expense	—		—		—		(726,737		)
Miscellaneous income	3,224		1,432		26,682		22,096
Total	3,224		1,432		26,682		(695,453		)

Net Income	$	4,205,473	$	17,152,209	$	24,191,657	$	38,890,008

Weight Average Units Outstanding - basic and diluted	14,606		14,606		14,606		14,606

Net Income Per Unit - basic and diluted	$	287.93	$	1,174.33	$	1,656.28	$	2,662.61

Distributions Per Unit	$	1,000	$	1,072	$	2,700	$	1,547

Comprehensive Income:
Net income	$	4,205,473	$	17,152,209	$	24,191,657	$	38,890,008
Interest rate swap fair value change and reclassification, net	—		—		—		681,233
Comprehensive Income	$	4,205,473	$	17,152,209	$	24,191,657	$	39,571,241

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

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CARDINAL ETHANOL, LLC

Condensed Statements of Cash Flows (Unaudited)



	Six Months Ended			Six Months Ended
	March 31, 2015			March 31, 2014

Cash Flows from Operating Activities
Net income	$	24,191,657		$	38,890,008
Adjustments to reconcile net income to net cash from operations:
Depreciation	4,457,912			4,319,993
Change in fair value of commodity derivative instruments	(284,690		)	279,510
Gain on sale of equipment	(11,827		)	—
Non-cash dividend income	(104,942		)	(243,716		)
Change in operating assets and liabilities:
Restricted cash	191,111			(4,805,972		)
Trade accounts receivables	8,090,478			3,272,538
Miscellaneous receivable	(89,551		)	51,612
Inventories	(8,130,876		)	(6,341,691		)
Prepaid and other current assets	(202,798		)	(222,722		)
Deposits	—			80,000
Commodity derivative instruments	(77,111		)	3,063,574
Accounts payable	381,239			435,254
Accounts payable-corn	2,291,775			2,466,174
Accrued expenses	(274,681		)	(351,302		)
Net cash provided by operating activities	30,427,696			40,893,260

Cash Flows from Investing Activities
Capital expenditures	(27,683		)	(2,650,741		)
Payments for construction in progress	(1,442,999		)	(170,443		)
Proceeds from sale of equipment	35,000			—
Net cash used for investing activities	(1,435,682		)	(2,821,184		)

Cash Flows from Financing Activities
Distributions paid	(39,436,202		)	(22,595,484		)
Payments on long-term debt	—			(27,943,975		)
Net cash used for financing activities	(39,436,202		)	(50,539,459		)

Net Decrease in Cash	(10,444,188		)	(12,467,383		)

Cash – Beginning of Period	27,731,976			24,216,700

Cash – End of Period	$	17,287,788		$	11,749,317

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

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CARDINAL ETHANOL, LLC

Condensed Statements of Cash Flows (Unaudited)



	Six Months Ended		Six Months Ended
	March 31, 2015		March 31, 2014

Supplemental Cash Flow Information
Interest paid	$	—	$	1,255,531

Supplemental Disclosure of Noncash Investing and Financing Activities
Capital expenditures included in accounts payable	$	—	$	212,865
Construction in process included in accrued expenses	$	410,292	$	191,838

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

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements for the year ended September 30, 2014, contained in the Company's annual report on Form 10-K.

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

Nature of Business

Cardinal Ethanol, LLC, (the “Company”) is an Indiana limited liability company currently producing fuel-grade ethanol, distillers grains, corn oil and carbon dioxide near Union City, Indiana and sells these products throughout the continental United States. The Company's plant has an approximate annual production capacity between 100 and 120 million gallons.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others; the useful lives of fixed assets, allowance for doubtful accounts, the valuation of basis and delay price contracts on corn purchases, derivatives, inventory, patronage dividends, long-lived assets and inventory purchase commitments. Actual results may differ from previously estimated amounts, and such differences may be material to the financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made.

Restricted Cash

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

Inventories

Inventories consist of raw materials, work in process, finished goods and parts. Corn is the primary raw material. Finished goods consist of ethanol, dried distiller grains and corn oil. Inventories are stated at the lower of weighted average cost or market. Market is based on current replacement values except that it does not exceed net realizable values and it is not less than net realizable values reduced by allowances from normal profit margins.

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. Depreciation expense totaled approximately $2,236,000 and $4,458,000 for the three and six month periods ended March 31, 2015. Depreciation for the same periods in 2014 was approximately $2,172,000 and $4,320,000, respectively.

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015

Long-Lived Assets

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

Investments

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

Revenue Recognition

The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. The Company believes that there are no ethanol sales, during any given month, which should be considered contingent and recorded as deferred revenue. The Company's products are sold Free on Board (FOB) shipping point.

In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees, commissions and freight due to the marketers are deducted from the gross sales price at the time incurred. Revenue is recorded net of these commissions and freight as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products.

Net Income per Unit

Basic net income per unit is computed by dividing net income by the weighted average number of members' units outstanding during the period. Diluted net income per unit is computed by dividing net income 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 per unit are the same.

2. CONCENTRATIONS

Two major customers accounted for approximately 98% of the outstanding accounts receivable balance at March 31, 2015 and September 30, 2014. These same two customers accounted for approximately 96% of revenue for both the three and six month periods ended March 31, 2015. Revenue percentages for the same customer for both the three and six month periods ended March 31, 2014 were 96%.

3. INVENTORIES

Inventories consist of the following as of:

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015



	March 31, 2015 (Unaudited)		September 30, 2014
Raw materials	$	8,667,012	$	2,860,060
Work in progress	1,247,339		1,316,664
Finished goods	3,475,452		1,316,482
Spare parts	2,166,472		1,932,193
Total	$	15,556,275	$	7,425,399

In the ordinary course of business, the Company enters into forward purchase contracts for its commodity purchases and sales. At March 31, 2015, the Company had forward corn purchase contracts at various fixed prices for various delivery periods through May 2016 for approximately 10.2% of expected production needs for the next twelve months. Approximately 8.3% of the forward corn purchases were with related parties. Given the uncertainty of future ethanol and corn prices, the Company could incur a loss on the outstanding corn purchase contracts in future periods. Management has evaluated these forward contracts using a methodology similar to that used in the lower of cost or market evaluation with respect to inventory valuation, and has determined that no impairment existed at March 31, 2015 or September 30, 2014. At March 31, 2015, the Company had forward dried distiller grains sales contracts for approximately 26.2% of expected production for the next twelve months at various fixed prices for various delivery periods through September 2015. Also, at March 31, 2015, we had forward corn oil contracts for approximately 7.3% of expected production for the next twelve months at various prices for various delivery periods through April 2015.

4. DERIVATIVE INSTRUMENTS

The Company enters into corn, ethanol and natural gas derivative instruments, which are required to be recorded as either assets or liabilities at fair value in the balance sheet. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. The Company must designate the hedging instruments based upon the exposure being hedged as a fair value hedge, a cash flow hedge or a hedge against foreign currency exposure. The Company formally documents, designates, and assesses the effectiveness of transactions that receive hedge accounting initially and on an on-going basis.

Commodity Contracts

The Company enters into commodity-based derivatives, for corn, ethanol and natural gas in order to protect cash flows from fluctuations caused by volatility in commodity prices. This is also done 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 and natural gas derivative instruments are included as a component of cost of goods sold.

At March 31, 2015, the Company had a net short (selling) position of 775,000 bushels of corn under derivative contracts used to hedge its forward corn contracts, corn inventory and ethanol sales. The Company had a net long (buying) position of 2,765,000 bushels of corn under derivative contracts as of September 30, 2014. These corn derivatives are traded on the Chicago Board of Trade and are forecasted to settle for various delivery periods through July 2016, as of March 31, 2015. At March 31, 2015, the Company had a net short (selling) position of 17,850,000 gallons of ethanol under derivative contracts used to hedge its forward ethanol sales. The Company had a net short (selling) position of 18,690,000 gallons of ethanol under derivative contracts as of September 30, 2014. These ethanol derivatives are traded on the New York Mercantile Exchange and are forecasted to settle for various delivery periods through July 2015, as of March 31, 2015. Also, at March 31, 2015, the Company had a net long (buying) position of 200,000 MMBTUs of natural gas under derivative contracts used to hedge its forward natural gas purchases. The Company had a net short (selling) position of 150,000 MMBTUs of natural gas under derivative contracts as of September 30, 2014. These natural gas derivatives are traded on the New York Mercantile Exchange and are forecasted to settle for various delivery periods through July 2015, as of March 31, 2015. These derivatives have not been designated as an effective hedge for accounting purposes.

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015

Interest Rate Contract

The Company previously managed part of its floating rate debt using an interest rate swap associated with the "Fixed Rate Note" as defined in our loan agreement. The Company entered into a fixed rate swap to alter its exposure to the impact of changing interest rates on its results of operations and future cash outflows for interest. Fixed rate swaps are used to reduce the Company's risk of the possibility of increased interest costs. Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision.

On October 8, 2013, the Company terminated the interest rate swap and therefore at March 31, 2015, the Company had no amount outstanding in the swap agreement.

The following table provides balance sheet details regarding the Company's derivative financial instruments at March 31, 2015:



Instrument	Balance Sheet Location	Assets		Liabilities

Ethanol derivative contracts	Commodity Derivative Instruments - Current	$	804,071	$	—
Corn derivative contracts	Commodity Derivative Instruments - Current	$	—	$	156,536
Natural gas derivative contracts	Commodity Derivative Instruments - Current	$	117,650	$	—

As of March 31, 2015 the Company had approximately $694,000 of cash collateral (restricted cash) related to ethanol, corn and natural gas derivatives held by three brokers. The Company currently utilized three brokerage accounts, and subsequent to the fiscal quarter ended March 31, 2015, the Company had a margin call of $270,000 in order to maintain their minimum maintenance requirements.

The following table provides balance sheet details regarding the Company's derivative financial instruments at September 30, 2014:



Instrument	Balance Sheet Location	Assets		Liabilities

Ethanol derivative contracts	Commodity Derivative Instruments - Current	$	1,690,531	$	—
Corn derivative contracts	Commodity Derivative Instruments - Current	$	—	$	1,277,147
Natural gas derivative contracts	Commodity Derivative Instruments - Current	$	—	$	10,000

As of September 30, 2014 the Company had approximately $885,000 of cash collateral (restricted cash) related to ethanol and corn derivatives held by two brokers.

The following table provides details regarding the gains and (losses) from the Company's derivative instruments in the statements of operations, none of which are designated as hedging instruments for the three months ended March 31, 2015:



Instrument	Statement of Operations Location	Amount
Corn Derivative Contracts	Cost of Goods Sold	$	80,628
Ethanol Derivative Contracts	Revenues	1,787,794
Natural Gas Derivative Contracts	Cost of Goods Sold	(94,009		)
Totals		$	1,774,413

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015



Instrument	Statement of Operations Location	Amount
Corn Derivative Contracts	Cost of Goods Sold	$	3,214,731
Ethanol Derivative Contracts	Revenues	(4,435,605		)
Natural Gas Derivative Contracts	Cost of Goods Sold	(12,969		)
Totals		$	(1,233,843	)



Instrument	Statement of Operations Location	Amount
Corn Derivative Contracts	Cost of Goods Sold	$	(38,694	)
Ethanol Derivative Contracts	Revenues	$	233,409
Natural Gas Derivative Contracts	Cost of Goods Sold	89,975
Totals		$	284,690



Instrument	Statement of Operations Location	Amount
Corn Derivative Contracts	Cost of Goods Sold	$	1,509,930
Ethanol Derivative Contracts	Revenues	$	(1,774,955	)
Natural Gas Derivative Contracts	Cost of Goods Sold	(14,485		)
Totals		$	(279,510	)

5. FAIR VALUE MEASUREMENTS

The following table provides information on those assets and liabilities measured at fair value on a recurring basis as of March 31, 2015:



Derivatives	Carrying Amount			Fair Value			Level 1			Level 2	Level 3
Corn Derivative Contracts	$	(156,536	)	$	(156,536	)	$	(156,536	)	—	—
Ethanol Derivative Contracts	$	804,071		$	804,071		$	804,071		—	—
Natural Gas Derivative Contracts	$	117,650		$	117,650		$	117,650		—	—

The following table provides information on those assets and liabilities measured at fair value on a recurring basis as of September 30, 2014:



Derivatives	Carrying Amount			Fair Value			Level 1			Level 2	Level 3
Corn Derivative Contracts	$	(1,277,147	)	$	(1,277,147	)	$	(1,277,147	)	—	—
Ethanol Derivative Contracts	$	1,690,531		$	1,690,531		$	1,690,531		—	—
Natural Gas Derivative Contracts	$	(10,000	)	$	(10,000	)	$	(10,000	)	—	—

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015

We determine the fair value of commodity derivative instruments 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.

6. BANK FINANCING

On June 10, 2013, the Company closed on a new loan agreement which replaced an earlier agreement. The agreement established two new notes, the Declining Revolving Note (Declining Note) and the Revolving Credit Note 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. On October 8, 2013, the Company executed a First Amendment of the First Amended and Restated Construction Loan Agreement (the "First Amendment") with its lender. The First Amendment amended the date upon which the Declining Note began to revolve, from April 8, 2014 to October 8, 2013.

On February 27, 2014, the Company executed a Second Amendment of the First Amended and Restated Construction Loan Agreement (the "Second Amendment") with its lender. The Second Amendment reduced the maximum availability of the Declining Note from approximately $26,000,000 to $5,000,000. In addition, the Company is required to make monthly interest payments on the Declining Note rather than the quarterly principal and interest payments previously required. The Second Amendment also deleted the requirements that the Company make excess cash flow payments and maintain a certain fixed charge coverage ratio, increased the maximum annual capital expenditures limit from $4,000,000 to $5,000,000 and removed all restrictions on redemptions of membership units and distributions to members. Finally, the Second Amendment extended the termination date of the Revolving Credit Note from June 11, 2014 to February 28, 2015.

On March 13, 2015, the Company executed a Third Amendment of First Amended and Restated Construction Loan Agreement (the "Third Amendment") with its lender. The Third Amendment had an effective date of February 28, 2015. The Third Amendment extended the termination date of the Revolving Credit Loan from February 28, 2015 to March 31, 2015.

On April 22, 2015, the Company executed a Fourth Amendment of First Amended and Restated Construction Loan Agreement with its lender (the "Fourth Amendment"). The Fourth Amendment had an effective date of March 31, 2015, and extended the termination date of the Revolving Credit Loan from March 31, 2015 to February 28, 2016 and changed the interest rate on the Revolving Credit Loan to the 1-month LIBOR plus two hundred ninety basis points.

Declining Note

The Declining Note has a limit of $5,000,000. The interest rate on the Declining Note is based on the 3-month LIBOR plus three hundred basis points. The interest rate at both March 31, 2015 and September 30, 2014 was 3.28%. There were no borrowings outstanding on the Declining Note at March 31, 2015 or September 30, 2014.

Revolving Credit Note

The Revolving Credit Note has a limit of $15,000,000 supported by a borrowing base made up of the Company's corn, ethanol, dried distillers grain and corn oil 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 Note was formerly based on the 1-month LIBOR plus three hundred basis points but was changed pursuant to the Fourth Amendment to the 1-month LIBOR plus two hundred ninety basis points. The interest rate at March 31, 2015 was 3.18%. There were no borrowings outstanding on the Revolving Credit Note at March 31, 2015 or September 30, 2014.

These loans are subject to protective covenants, which require the Company to maintain various financial ratios. The covenants require the Company to maintain a working capital requirement of $15,000,000, and allow the Company $5,000,000 of capital expenditures per year without prior approval.

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015

7. LEASES

At March 31, 2015, the Company had the following commitments for payments of rentals under leases which at inception had a non-cancellable term of more than one year:



	Total
April 1, 2015 to March 31, 2016	$	1,172,964
April 1, 2016 to March 31, 2017	1,172,964
April 1, 2017 to March 31, 2018	1,172,964
April 1, 2018 to March 31, 2019	682,588
Total minimum lease commitments	$	4,201,480

8. COMMITMENTS AND CONTINGENCIES

Contingencies

In February 2010, a lawsuit against the Company was filed by an unrelated party claiming the Company's operation of the oil separation system in a patent infringement. In connection with the lawsuit, in February 2010, the agreement for the construction and installation of the tricanter oil separation system was amended. In this amendment the manufacturer and installer of the tricanter oil separation system indemnifies the Company against all claims of infringement of patents, copyrights or other intellectual property rights from the Company's purchase and use of the tricanter oil system and agrees to defend the Company in the lawsuit filed at no expense to the Company. On October 23, 2014, the court granted summary judgment finding that all of the patents claimed were invalid and that the Company had not infringed. However, this ruling is subject to appeal. The manufacturer has, and the Company expects it will continue, to vigorously defend itself and the Company in these lawsuits and in any appeal filed.

If the ruling was to be successfully appealed, the Company estimates that damages sought in this litigation if awarded would be

based on a reasonable royalty to, or lost profits of, the plaintiff. If the court deems the case exceptional, attorney's fees may be awarded and are likely to be $1,000,000 or more. The manufacturer has also agreed to indemnify the Company for these fees. However, in the event that damages are awarded, if the manufacturer is unable to fully indemnify the Company for any reason, the Company could be liable. In addition, the Company may need to cease use of its current oil separation process and seek out a replacement or cease oil production altogether.The board of directors has approved a management proposal of a project which is expected to add storage capacity and also increase production capacity to near 135 million gallons over the next twelve to eighteen months. The plan is expected to cost approximately $18,300,000. In connection with the expansion, the Company executed a Construction Agreement dated April 15, 2015 with Custom Agri Builders, LLC to construct two grain bins, a grain dryer and an unloading pit at the plant for a fixed price of approximately $7,000,000, subject to execution of written change orders for modifications. This phase of the project is expected to be completed by the end of our the 2015 fiscal year.

The Company will require an expansion of its current credit facilities in order to fund the project. The board of directors recently approved a term sheet provided by the Company's lender which proposes an increase in the maximum availability of the Declining Note from $5,000,000 to $20,000,000 with the purpose of facilitating the construction of the expansion project. The lender has agreed to exclude the expansion project from the loan covenant that requires us to obtain a waiver for expenditures in excess of $5,000,000 per year. The term sheet proposes quarterly interest payments during the draw period ending February 28, 2016. The Declining Note would be amortized over seven years on or before the draw period ending February 28, 2016, with a final maturity date of February 28, 2021. The term sheet also proposes to lower the interest rate on the Declining Note to the 3-month LIBOR plus two hundred ninety basis points and would reinstate a prior requirement to maintain a minimum fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly and based on a rolling four quarters upon completion of the expansion project. Finally, the Company would pay a $45,000 commitment fee in connection with the transaction. These terms have been negotiated with the Company's lender, but are not final and are subject to execution of definitive agreements. There is no assurance that definitive agreements will be signed or that, if they are signed, the terms will be as proposed in the term sheet.

On March 27, 2015, the Company sent advance written notice of termination to U.S. Energy Services, Inc. of the Energy Management Agreement dated January 23, 2006 between the Company and U.S. Energy Services, Inc. (the “U.S. Energy Agreement”). The termination of the U.S. Energy Agreement will be effective on June 1, 2015.

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CARDINAL ETHANOL, LLC

Notes to Condensed Unaudited Financial Statements

March 31, 2015

The U.S. Energy Agreement will be replaced by an agreement we executed on April 1, 2015, with Capstone Energy Services, LLC (the "Capstone Agreement"). The term of the Capstone Agreement commences on June 1, 2015, and continues for one year unless earlier terminated due to an event of default. Following the expiration of the initial one-year term, the Capstone Agreement will be on a month-to-month basis and may be terminated by either party upon sixty days prior written notice.

9. 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 derived from the sale and distribution of ethanol, distillers grains and corn oil to customers primarily located in the U.S. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. Ethanol sales average approximately 77% of total revenues and corn costs average 78% of total cost of goods sold.

The Company's operating and financial performance is largely driven by prices at which the Company sells ethanol, distillers grains and corn oil, and the related cost of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and the unleaded gasoline and the 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.

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

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and six month periods ended March 31, 2015, compared to the same periods of the prior fiscal year. This discussion should be read in conjunction with the condensed financial statements and notes and the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

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 or elimination of the Renewable Fuel Standard;


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


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


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


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


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


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


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


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


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


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


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


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


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


•	Changes in federal and/or state laws;

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•	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;


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


•	Volatile commodity and financial markets; and


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

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 currently operating a 100 million gallon per year nameplate capacity ethanol plant in east central Indiana near Union City, Indiana. We began producing ethanol and distillers grains at the plant in November 2008. We are currently operating at above our 100 million gallons per year nameplate capacity and expect to continue to operate above our nameplate capacity into the near future.

Our revenues are primarily derived from the sale of our ethanol, distillers grains and corn oil. We market and sell our products primarily in the continental United States using third party marketers. Murex, LLC markets all of our ethanol. Our distillers grains are marketed by CHS, Inc. We market and distribute all of the corn oil we produce directly to end users and third party brokers.

On February 10, 2015, our the board of directors declared a cash distribution of $1,000 per membership unit to the holders of units of record at the close of business on February 10, 2015, for a total distribution of $14,606,000. The distribution was paid on February 26, 2015.

On March 13, 2015, we executed a Third Amendment of First Amended and Restated Construction Loan Agreement (the "Third Amendment") with our primary lender, First National Bank of Omaha ("FNBO"). The Third Amendment had an effective date of February 28, 2015, and amended the First Amended and Restated Construction Loan Agreement dated June 10, 2013 (the "Construction Loan Agreement"). The Third Amendment extended the termination date of the Revolving Credit Loan from February 28, 2015 to March 31, 2015. On April 22, 2015, we executed a Fourth Amendment of First Amended and Restated Construction Loan Agreement with FNBO (the "Fourth Amendment"). The Fourth Amendment had an effective date of March 31, 2015, and extended the termination date of the Revolving Credit Loan from March 31, 2015 to February 28, 2016 and changed the interest rate on the Revolving Credit Loan to the 1-month LIBOR plus two hundred ninety basis points.

On March 27, 2015, the Company sent advance written notice of termination to U.S. Energy Services, Inc. of the Energy Management Agreement dated January 23, 2006 between the Company and U.S. Energy Services, Inc. (the “U.S. Energy Agreement”). The term of the U.S. Energy Agreement is month-to-month and may be terminated by either party upon sixty days prior written notice. The termination of the U.S. Energy Agreement will be effective on June 1, 2015.

On April 1, 2015, we executed an Energy Management Services Agreement (the "Capstone Agreement") with Capstone Energy Services, LLC ("Capstone"). In exchange for payment of a monthly fee, Capstone will provide us with analysis and recommendations regarding energy procurement, transportation, storage and risk management. In addition, Capstone will negotiate and administer energy purchase, supply and transportation agreements on our behalf and manage daily and monthly supply and delivery of energy to the plant. The term of the Capstone Agreement commences on June 1, 2015, and continues for one year unless earlier terminated due to an event of default. Following the expiration of the initial one-year term, the Capstone Agreement will be on a month-to-month basis and may be terminated by either party upon sixty days prior written notice.

We are planning to add storage capacity to our plant and increase production capacity to near 135 million gallons over the next twelve to eighteen months. The plan is expected to cost approximately $18,300,000. In connection with the expansion, we executed a Construction Agreement dated April 15, 2015 with Custom Agri Builders, LLC to construct two grain bins, a grain dryer and an unloading pit at our plant for a fixed price of approximately $7,000,000, subject to execution of written change orders for modifications. This phase of the project is expected to be completed by the end of our the 2015 fiscal year.

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The ethanol industry is dependent on several economic incentives which if reduced or eliminated could significantly impact ethanol demand. One of these is the Renewable Fuels Standard (“RFS”) program which requires that, in each year, a certain amount of renewable fuels be used in the United States. However, the United States Environmental Protection Agency ("EPA") has the authority to waive the RFS statutory volume requirement, in whole or in part, provided one of the following two conditions have been met: (1) there is inadequate domestic renewable fuel supply; or (2) implementation of the requirement would severely harm the economy or environment of a state, region or the United States. Annually, the EPA passes a rule that establishes the number of gallons of different types of renewable fuels that must be used in the United States which is called the renewable volume obligations. The RFS statutory volume requirement for 2014 was approximately 18.15 billion gallons, of which corn based ethanol can be used to satisfy approximately 14.4 billion gallons. The RFS statutory volume requirement for 2015 is approximately 20.5 billion gallons, of which corn based ethanol can be used to satisfy approximately 15 billion gallons. However, on November 15, 2013, the EPA announced a proposal to significantly reduce the RFS levels for 2014 to 15.21 billion gallons of which corn based ethanol could be used to satisfy only 13 billion gallons. This proposed rule would result in a lowering of the 2014 standard below the 2013 level of 13.8 billion gallons. The EPA also sought comment on several petitions it has received for partial waiver of the statutory volumes for 2014. The 60-day public comment period ended on January 28, 2014 and the rule was submitted by the EPA to the Office of Management and Budget for review on August 22, 2014. Furthermore, there have also been recent proposals in Congress to reduce or eliminate the RFS. On November 21, 2014, the EPA announced that it would delay finalizing the rule on the 2014 RFS standards until after the end of 2014. The EPA indicated that it intends to take action on the 2014 standards in 2015 prior to or in conjunction with action on the 2015 standards. If the EPA's proposal becomes a final rule significantly reducing the volume requirements under the RFS or if the RFS were to be otherwise reduced or eliminated by the exercise of the EPA waiver authority or by Congress, the market price and demand for ethanol could decrease which will negatively impact our financial performance. Current domestic ethanol production capacity exceeds the EPA's proposed 2014 standard which can be satisfied by corn based ethanol.

We expect to fund our operations during the next 12 months using cash flow from our continuing operations and our current credit facilities. However, should we experience unfavorable operating conditions in the ethanol industry that prevent us from profitably operating the ethanol plant, we may need to seek additional funding.

Results of Operations for the Three Months Ended March 31, 2015 and 2014

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our statement of operations for the three months ended March 31, 2015 and 2014:



	2015			2014
Statement of Operations Data	Amount		%	Amount		%
Revenue	$	59,944,217	100.00	$	73,065,869	100.00
Cost of Goods Sold	54,593,946		91.07	54,829,756		75.04
Gross Profit	5,350,271		8.93	18,236,113		24.96
Operating Expenses	1,148,022		1.92	1,085,336		1.49
Operating Income	4,202,249		7.01	17,150,777		23.47
Other Income, net	3,224		0.01	1,432		—
Net Income	$	4,205,473	7.02	$	17,152,209	23.47

Revenues

Our revenues from operations come from three primary sources: sales of fuel ethanol, distillers grains and corn oil. The following table shows the sources of our revenue for the three months ended March 31, 2015 and 2014:

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	Three Months Ended March 31, 2015				Three Months Ended March 31, 2014
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol Sales	$	46,094,145	76.90	%	$	55,126,984	75.45	%
Distillers Grains Sales	11,620,651		19.39		14,807,907		20.27
Corn Oil Sales	1,991,799		3.32		2,680,276		3.67
Carbon Dioxide Sales	62,720		0.10		83,230		0.11
Other Revenue	174,902		0.29		367,472		0.50
Total Revenues	$	59,944,217	100.00	%	$	73,065,869	100.00	%

Ethanol

Our revenues from ethanol decreased for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014. This decrease in revenues is the result of a decrease in the average price per gallon of ethanol sold for the three months ended March 31, 2015 as compared to the same period in 2014.

We experienced an increase in ethanol gallons sold of approximately 19.3% for the three months ended March 31, 2015 as compared to the same period in 2014 resulting primarily from timing of ethanol shipments. We are currently operating at approximately 16% above our nameplate capacity. Management anticipates that the gallons of ethanol sold by our plant will remain relatively consistent for the remainder of our fiscal year.

Our average price per gallon of ethanol sold for the three months ended March 31, 2015 was approximately 30.0% lower than our average price per gallon of ethanol sold for the same period in 2014. This decline in average market price is due to several factors. A seasonal decline in domestic demand in combination with increased production and a decrease in ethanol exports all contributed to an increase in ethanol stocks. In addition, a decline in gasoline prices resulting from depressed crude oil values put further downward pressure on ethanol prices.

Management anticipates that ethanol prices will continue to change in relation to changes in corn and energy prices. If crude oil prices continue to stay at current low levels that could continue to have a significant negative impact on the market price of ethanol and our profitability particularly if ethanol stocks remain high. In addition, if the renewable volume obligations set forth in the RFS were to be reduced as proposed by the EPA, demand for ethanol could decrease further which will negatively impact ethanol prices.

In the ordinary course of business, we enter into forward contracts for our commodity purchases and sales. At March 31, 2015, we did not have any gallons of forward ethanol sales contracts. At March 31, 2015, we had a net short (selling) position of 17,850,000 gallons of ethanol under derivative contracts used to hedge our forward ethanol sales. These ethanol derivatives are traded on the New York Mercantile Exchange and are forecasted to settle for various delivery periods through July 2015. For the three months ended March 31, 2015 and 2014, we recorded net gains on our ethanol derivative contracts of $1,787,794 and losses of $4,435,605, respectively. These gains and losses were recorded with our revenues in the condensed statements of operations and comprehensive income.

Distillers Grains

Our revenues from distillers grains decreased in the three months ended March 31, 2015 as compared to the same period in 2014. This decrease in revenues is primarily the result of a decrease in the average market price per ton of distillers grains for the period ended March 31, 2015 compared to the same period in 2014. The average price per ton of distillers grains sold for the three months ended March 31, 2015 was approximately 21.3% lower than the average price per ton of distillers grains sold for the same period in 2014. This decline in the market price of distillers grains is due to the decline in corn prices of which distillers prices are directly correlated.

Distillers grains prices will likely continue to be supported so long as export demand from China continues at high levels. China, who is a significant consumer of exported distillers grains, stopped issuing import permits for distillers grains from the United States last June due to the presence in some shipments of an unapproved genetically modified organism. This dispute was resolved and the Chinese market reopened in December 2014. However, distillers grains prices could face downward pressure if domestic demand were to soften because end-users switch to lower priced alternatives.

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We sold approximately 0.1% less distillers grains in the three months ended March 31, 2015 as compared to the same period in 2014 due primarily to timing of distillers grains shipments. Management anticipates that the distillers grains sold by our plant will remain relatively consistent.

At March 31, 2015, we had forward dried distiller grains sales contracts in place for approximately 26.2% of expected production for the next twelve months at various fixed prices for various delivery periods through September 2015.

Corn Oil

Our revenues from corn oil sales decreased approximately 25.7% in the three months ended March 31, 2015 as compared to the same period in 2014 which was primarily a result of a decrease the pounds of corn oil sold and in the average price per pound received for our corn oil in the three months ended March 31, 2015 as compared to the same period in 2014. The average price per pound of corn oil was approximately 9.7% lower for the three months ended March 31, 2015 as compared to the same period in 2014 due to increased local supplies. We sold approximately 15.8% less corn oil in the three months ended March 31, 2015 as compared to the same period in 2014 due primarily to decreased oil extraction rates per bushel of corn.

Management expects corn oil prices will remain relatively steady in the near term but could decrease due to additional plants entering into the market and producing corn oil which could result in an oversupply negatively affecting prices unless additional demand can be created. Management expects corn oil production will also remain relatively steady.

At March 31, 2015, we had forward corn oil contracts in place for approximately 7.3% of expected production for the next twelve months at various prices for various delivery periods through April 2015.

Cost of Goods Sold

Our cost of goods sold as a percentage of revenues was approximately 91.0% for the three months ended March 31, 2015 as compared to approximately 75.0% for the same period in 2014. This increase in cost of goods sold as a percentage of revenues was the result of increased corn prices relative to the price of ethanol for the three months ended March 31, 2015 as compared to the same period in 2014. Our two largest costs of production are corn and natural gas.

Corn

Our largest cost associated with the production of ethanol, distillers grains and corn oil is corn cost. During the three months ended March 31, 2015, we used approximately 1.4% less bushels of corn to produce our ethanol, distillers grain and corn oil as compared to the same period in 2014. During the three months ended March 31, 2015, our average price paid per bushel of corn increased approximately 12.0% as compared to the same period in 2014 due to increased demand in our corn supply region. However, corn supplies have been sufficient locally and we have had no difficulty sourcing corn during our second fiscal quarter.

Weather, world supply and demand, current and anticipated stocks, agricultural policy and other factors can contribute to volatility in corn prices. Management expects that corn prices will be impacted depending on the progress of spring planting and the growing season. In addition, if producers plant fewer acres or if corn yields are low for the fall harvest, the price of corn could increase. If corn prices rise, it will have a negative effect on our operating margins unless the price of ethanol and distillers grains out paces rising corn prices.

In the ordinary course of business, we entered into forward purchase contracts for our commodity purchases. At March 31, 2015, we had forward corn purchase contracts at various fixed prices for various delivery periods through May 2016 for approximately 10.2% of our expected production needs for the next twelve months. Approximately $0 of the forward corn purchases were with related parties. At March 31, 2015, we had a net short (selling) position of 775,000 bushels of corn under derivative contracts used to hedge our forward corn contracts, corn inventory and ethanol sales. These corn derivatives are traded on the Chicago Board of Trade and are forecasted to settle for various delivery periods through July 2016. For the three months ended March 31, 2015 and 2014, we recorded net gains on our corn derivative contracts of $80,628 and $3,214,731, respectively. These gains were recorded against cost of goods sold in the statement of operations. Volatility in the price of corn could significantly impact our cost of goods sold.

Natural Gas

Our natural gas cost was lower during our three months ended March 31, 2015 as compared to the three months ended March 31, 2014. This decrease in cost of natural gas for the three months ended March 31, 2015 as compared to the same period in 2014 was primarily the result of a decrease of approximately 62.9% in the average price per MMBTU of our natural gas due

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to plentiful supply. We also used approximately 8.1% less natural gas for the three months ended March 31, 2015 as compared to the same period in 2014 due to higher energy usage efficiencies.

Unless we experience a catastrophic weather event that would cause problems related to the supply of natural gas, management anticipates that natural gas prices will continue to remain at current levels as natural gas production has replenished stock shortages from last year and is building above five year averages.

As of March 31, 2015, we had a net long (buying) position of 200,000 MMBTUs of natural gas under derivative contracts used to hedge our forward natural gas purchases. These natural gas derivatives are traded on the New York Mercantile Exchange and are forecasted to settle for various delivery periods through July 2015. For the three months ended March 31, 2015 and 2014, we recorded net losses on our natural gas derivative contracts of $94,009 and $12,969, respectively. These net losses were recorded in our cost of goods sold in our statement of operations.

Operating Expense

Our operating expenses as a percentage of revenues were approximately 1.9% for the three months ended March 31, 2015 compared to operating expenses of approximately 1.5% of revenues for the same period in 2014. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees and other general administrative costs. Our efforts to optimize efficiencies and maximize production may result in a decrease in our operating expenses on a per gallon basis. However, because these expenses generally do not vary with the level of production at the plant, we expect our operating expenses to remain relatively steady throughout the remainder of the 2015 fiscal year.

Operating Income

Our income from operations for the three months ended March 31, 2015 was approximately 7.0% of our revenues compared to operating income of approximately 23.0% of revenues for the same period in 2014. The decrease in operating income for the three months ended March 31, 2015 was primarily the result of the decreased ethanol prices relative to the price of corn.

Other Expense

Our other income for the three months ended March 31, 2015 and the same period in 2014 was minimal. Our other income for the three months ended March 31, 2015 and March 31, 2014 consisted primarily of miscellaneous and rent income.

Results of Operations for the Six Months Ended March 31, 2015 and 2014



	2015			2014
Statement of Operations Data	Amount		%	Amount			%
Revenue	$	125,802,808	100.00	$	156,638,634		100.00
Cost of Goods Sold	99,135,806		78.80	114,746,972			73.26
Gross Profit	26,667,002		21.20	41,891,662			26.74
Operating Expenses	2,502,027		1.99	2,306,201			1.47
Operating Income	24,164,975		19.21	39,585,461			25.27
Other Income (Expense), net	26,682		0.02	(695,453		)	(0.44	)
Net Income	$	24,191,657	19.23	$	38,890,008		24.83

Revenues

Our revenues from operations come from three primary sources: sales of fuel ethanol, distillers grains and corn oil. The following table shows the sources of our revenue for the six months ended March 31, 2015 and 2014:

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	Six Months Ended March 31, 2015				Six Months Ended March 31, 2014
Revenue Source	Amount		% of Revenues		Amount		% of Revenues
Ethanol Sales	$	96,674,641	76.85	%	$	120,031,369	76.63	%
Distillers Grains Sales	24,384,605		19.38		30,968,336		19.77
Corn Oil Sales	4,334,472		3.45		5,096,767		3.25
Carbon Dioxide Sales	151,705		0.12		174,690		0.12
Other Revnues	257,385		0.20		367,472		0.23
Total Revenues	$	125,802,808	100.00	%	$	156,638,634	100.00	%

Ethanol

Our revenues from ethanol decreased for the six months ended March 31, 2015 as compared to the six months ended March 31, 2014. This decrease in revenues is the result of a decrease in the average price per gallon of ethanol sold for the six months ended March 31, 2015 as compared to the same period in 2014.

We experienced an increase in ethanol gallons sold of approximately 3.5% for the six months ended March 31, 2015 as compared to the same period in 2014 resulting primarily from timing of ethanol shipments.

Our average price per gallon of ethanol sold for the six months ended March 31, 2015 was approximately 22.4% lower than our average price per gallon of ethanol sold for the same period in 2014 due primarily to increased domestic ethanol stocks and a decline in gasoline prices and crude oil values.

For the six months ended March 31, 2015 and 2014, we recorded net gains on our ethanol derivative contracts of $233,409 and losses of $1,774,955, respectively. These gains and losses were recorded with our revenues in the statement of operations.

Distillers Grains

Our revenues from distillers grains decreased in the six months ended March 31, 2015 as compared to the same period in 2014. This decrease in revenues is primarily the result of a decrease in the average market price per ton of distillers grains for the period ended March 31, 2015 compared to the same period in 2014. The average price per ton of distillers grains sold for the six months ended March 31, 2015 was approximately 21.6% lower than the average price per ton of distillers grains sold for the same period in 2014 due primarily to lower corn prices during the six months ended March 31, 2015 as compared to the same period in 2014 as market prices for distillers grains change in relation to the prices of other animal feeds, such as corn and also soybean meal.

We sold approximately 0.3% less distillers grains in the six months ended March 31, 2015 as compared to the same period in 2014 due primarily to timing of distillers grains shipments.

Corn Oil

Our revenues from corn oil sales decreased approximately 15.0% in the six months ended March 31, 2015 as compared to the same period in 2014 which was primarily a result of a decrease in corn oil sold and in average price per pound received for our corn oil in the six months ended March 31, 2015 as compared to the same period in 2014. The average price per pound of corn oil was approximately 9.7% lower for the six months ended March 31, 2015 as compared to the same period in 2014 due primarily to increased local supplies. We also sold 15.8% less pounds of corn oil in the six months ended March 31, 2015 as compared to the same period in 2014 due primarily to decreased oil extraction rates per bushel of corn.

Cost of Goods Sold

Our cost of goods sold as a percentage of revenues was approximately 79.0% for the six months ended March 31, 2015 as compared to approximately 73.0% for the same period in 2014. This increase in cost of goods sold as a percentage of revenues was primarily the result of decreased ethanol prices relative to the cost of corn for the six months ended March 31, 2015 as compared to the same period in 2014. Our two largest costs of production are corn and natural gas.

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Corn

During the six months ended March 31, 2015, we used approximately 1.8% more bushels of corn to produce our ethanol, distillers grain and corn oil as compared to the same period in 2014. During the six months ended March 31, 2015, our average price paid per bushel of corn decreased approximately 13.5% as compared to the same period in 2014 due to increased supply resulting from a plentiful 2014 harvest in our corn supply region.

For the six months ended March 31, 2015 and 2014, we recorded net losses on our corn derivative contracts of $38,694 and gains of $1,509,930, respectively. These losses and gains were recorded against cost of goods sold in the statement of operations. Volatility in the price of corn could significantly impact our cost of goods sold.

Natural Gas

Our natural gas cost was lower during our six months ended March 31, 2015 as compared to the same period in 2014. This decrease in cost of natural gas for the six months ended March 31, 2015 as compared to the same period in 2014 was primarily the result of a decrease of approximately 44.5% in the average price per MMBTU of natural gas due primarily to plentiful supply. We also used approximately 4.9% less natural gas for the six months ended March 31, 2015 as compared to the same period in 2014 due to higher energy usage efficiencies.

For the six months ended March 31, 2015 and 2014, we recorded net gains on our natural gas derivative contracts of $89,975 and net losses of $14,485, respectively. These net gains and losses were recorded in our cost of goods sold in our statement of operations.

Operating Expense

Our operating expenses as a percentage of revenues were approximately 2.0% for the six months ended March 31, 2015 compared to operating expense of approximately 1.5% of revenues for the same period in 2014. Operating expenses include salaries and benefits of administrative employees, insurance, taxes, professional fees and other general administrative costs. Our efforts to optimize efficiencies and maximize production may result in a decrease in our operating expenses on a per gallon basis. However, because these expenses generally do not vary with the level of production at the plant, we expect our operating expenses to remain relatively steady throughout the remainder of the 2015 fiscal year.

Operating Income

Our income from operations for the six months ended March 31, 2015 was approximately 19.0% of our revenues compared to operating income of approximately 25.0% of revenues for the same period in 2014. The decrease in operating income for the six months ended March 31, 2015 was primarily the result of decreased ethanol prices relative to the cost of corn.

Other Expense

Our other income for the six months ended March 31, 2015 was minimal and other expense for the same period in 2014 was approximately 0.4%. Our other expense for the six months ended March 31, 2014 consisted primarily of interest expense.

Changes in Financial Condition for the Six Months Ended March 31, 2015

The following table highlights the changes in our financial condition:



	March 31, 2015 (Unaudited)		September 30, 2014
Current Assets	$	48,963,375	$	60,034,736
Current Liabilities	$	15,058,652	$	13,380,637
Member's Equity	$	137,760,883	$	153,005,428

We experienced a decrease in our current assets at March 31, 2015 compared to September 30, 2014. This decrease was primarily driven by a decrease in our cash and trade accounts receivable at March 31, 2015 as compared to September 30, 2014. We experienced a decrease of approximately $8,090,000 in trade accounts receivable at March 31, 2015 compared to September 30,

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2014 due to timing of ethanol shipments. Cash decreased approximately $10,444,000 due to sending distributions to members. These decreases were partially offset by a an increase in our inventories of approximately $8,131,000 at March 31, 2015 as compared to September 30, 2014 due to having less ethanol on hand due to the timing of shipments.

We experienced an increase in our total current liabilities at March 31, 2015 compared to September 30, 2014. The increase is primarily due to an increase in our accounts payable for corn of approximately $2,292,000 at March 31, 2015 as compared to September 30, 2014 due to having more corn inventory purchased. This increase in our accounts payable for corn was partially offset by a decrease in our commodity derivative instruments of approximately $1,131,000 at March 31, 2015 as compared to September 30, 2014 due to the declining corn and ethanol futures prices.

Liquidity and Capital Resources

Based on financial forecasts performed by our management, we anticipate that we will have sufficient cash from our current credit facilities and cash from our operations to continue to operate the ethanol plant for the next 12 months. However, we may seek additional credit in order to complete certain capital improvements as described below. We do not anticipate seeking additional equity financing during our 2015 fiscal year. However, should we experience unfavorable operating conditions in the ethanol industry that prevent us from profitably operating the ethanol plant, we could have difficulty maintaining our liquidity and may need to rely on our revolving lines of credit for operations.

The following table shows cash flows for the six months ended March 31, 2015:



	2015			2014
Net cash provided by operating activities	$	30,427,696		$	40,893,260
Net cash used for investing activities	$	(1,435,682	)	$	(2,821,184	)
Net cash used for financing activities	$	(39,436,202	)	$	(50,539,459	)
Net decrease in cash	$	(10,444,188	)	$	(12,467,383	)
Cash, beginning of period	$	27,731,976		$	24,216,700
Cash, end of period	$	17,287,788		$	11,749,317

Cash Flow from Operations

We experienced a decrease in our cash flow from operations for the six months ended March 31, 2015 as compared to the same period in 2014. Approximately $30,428,000 of cash was provided by operating activities for the six months ended March 31, 2015 as compared to approximately $40,893,000 provided by operating activities for the six months ended March 31, 2014. This was primarily due to changes in net income for the six months ended March 31, 2015 compared with the same period in 2014, which was a result of decreased gross profits during the period.

Cash Flow used for Investing Activities

Cash used in investing activities was approximately $1,436,000 for the six months ended March 31, 2015 as compared to approximately $2,821,000 for the same period in 2014. Cash used in investing activities decreased due to a decrease in capital expenditures for the six months ended March 31, 2015 as compared to the same period in 2014. The decrease in capital expenditures is due to the construction of an approximately 730,000 bushel grain bin during the six months ended March 31, 2014, which was placed in service during the first quarter of fiscal year 2014.

Cash Flow used for Financing Activities

Cash used in financing activities was approximately $39,436,000 for the six months ended March 31, 2015 as compared to approximately $50,539,000 for the same period in 2014. This decrease was the result of our making no payments on long term debt for the six months ended March 31, 2015 as compared to approximately $27,944,000 for the six months ended March 31, 2014. This decrease was partially offset by our making distributions of approximately $39,436,000 for the six months ended March 31, 2015 as compared to distributions of approximately $22,595,000 for the six months ended March 31, 2014.

Our liquidity, results of operations and financial performance will be impacted by many variables, including the market price for commodities such as, but not limited to, corn, ethanol and other energy commodities, as well as the market price for any co-products generated by the facility and the cost of labor and other operating costs. Assuming future relative price levels for corn, ethanol and distillers grains remain consistent with the relative price levels as of March 31, 2015 we expect operations to generate adequate cash flows to maintain operations.

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Short and Long Term Debt Sources

On June 10, 2013, we closed on a loan agreement with First National Bank of Omaha ("FNBO"), the First Amended and Restated Construction Loan Agreement which replaced an earlier agreement and established two new notes, the Declining Revolving Note ("Declining Note") and the Revolving Credit Note. In exchange, 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 October 8, 2013, we executed a First Amendment of the First Amended and Restated Construction Loan Agreement (the "First Amendment") with FNBO which amended the date upon which the Declining Note began to revolve from April 8, 2014 to October 8, 2013.

On February 27, 2014, we entered into a Second Amendment of First Amended and Restated Construction Loan Agreement (the "Second Amendment"). The Second Amendment reduced the maximum availability of the Declining Note from approximately $26,000,000 to $5,000,000. In addition, we are required to make monthly interest payments on the Declining Note rather than the quarterly principal and interest payments previously required. The Second Amendment also deleted the requirements that we make excess cash flow payments and maintain a certain fixed charge coverage ratio, increased the maximum annual capital expenditures from $4,000,000 to $5,000,000 and removed the restrictions on redemptions of units and distributions to members. Finally, the Second Amendment extended the termination date of the Revolving Credit Note from June 11, 2014 to February 28, 2015.

On March 13, 2015, we executed a Third Amendment of First Amended and Restated Construction Loan Agreement (the "Third Amendment") with FNBO. The Third Amendment had an effective date of February 28, 2015. The Third Amendment extended the termination date of the Revolving Credit Loan from February 28, 2015 to March 31, 2015.

On April 22, 2015, we executed a Fourth Amendment of First Amended and Restated Construction Loan Agreement with FNBO (the "Fourth Amendment"). The Fourth Amendment had an effective date of March 31, 2015, and extended the termination date of the Revolving Credit Loan from March 31, 2015 to February 28, 2016 and changed the interest rate on the Revolving Credit Loan to the 1-month LIBOR plus two hundred ninety basis points.

Declining Note

The Declining Note currently has a limit of $5,000,000. The interest rate on the Declining Note is based on the 3-month LIBOR plus three hundred basis points. The interest rate at March 31, 2015 was 3.28%. There were no borrowings outstanding on the Declining Note at March 31, 2015 or September 30, 2014. We have begun negotiations with FNBO to increase the $5,000,000 limit on the Declining Note for capital expansion purposes. However, no definitive agreements have been executed.

Revolving Credit Note

The Revolving Credit Note has a limit of $15,000,000 supported by a borrowing base made up of our corn, ethanol, dried distillers grain and corn oil inventories reduced by accounts payable associated with those inventories having a priority over FNBO. It is also supported by the eligible accounts receivable and commodity trading account excess margin funds. The interest rate on the Revolving Credit note was based on the 1-month LIBOR plus three hundred basis points but was changed pursuant to the Fourth Amendment to the 1-month LIBOR plus two hundred ninety basis points. The interest rate at March 31, 2015 was 3.18%. There were no borrowings outstanding on the Revolving Credit Note at March 31, 2015 or September 30, 2014.

Covenants

Our loans are secured by our assets and material contracts. In addition, 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 loan agreement also requires us to obtain prior approval from our lender before making, or committing to make, capital expenditures exceeding an aggregate amount of $5,000,000 in any single fiscal year.

We are meeting our liquidity needs and complying with our financial covenants and the other terms of our loan agreements at March 31, 2015. Based on current management projections, we anticipate that future operations will be sufficient to generate enough cash flow to maintain operations, service any new debt and comply with our financial covenants and other terms of our loan agreements through March 31, 2015. 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

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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.

Tax Abatement

In October 2006, the real estate that our plant was constructed on was determined to be an economic revitalization area, which qualified us for tax abatement. The abatement period is for a ten year term, with an effective date beginning calendar year end 2009 for the property taxes payable in calendar year 2010. The program allows for 100% abatement of property taxes beginning in year 1, and then decreases on a ratable scale so that in year 11 the full amount of property taxes are due and payable. We must apply annually and meet specified criteria to qualify for the abatement program.

Capital Improvements

We began installation of certain technologies during our third fiscal quarter 2014 which we anticipate will decrease plant downtime, alleviate plant bottlenecks and better utilize fermentation capacities to increase production rates. Installation was completed during our first fiscal quarter 2015. The cost of these technologies was approximately $1,067,000.

The board of directors has approved a management proposal of a project which is expected to add storage capacity and also increase production capacity to near 135 million gallons over the next twelve to eighteen months. The plan is expected to cost approximately $18,300,000. In connection with the expansion, we executed a Construction Agreement dated April 15, 2015 with Custom Agri Builders, LLC to construct two grain bins, a grain dryer and an unloading pit at our plant for a fixed price of approximately $7,000,000, subject to execution of written change orders for modifications. This phase of the project is expected to be completed by the end of our the 2015 fiscal year.

We will require an expansion of our current credit facilities in order to fund the project. The board of directors recently approved a term sheet provided by our lender which proposes an increase in the maximum availability of the Declining Note from $5,000,000 to $20,000,000 with the purpose of facilitating the construction of the expansion project. Our lender has agreed to exclude the expansion project from the loan covenant that requires us to obtain a waiver for expenditures in excess of $5,000,000 per year. The term sheet proposes quarterly interest payments during the draw period ending February 28, 2016. The Declining Note would be amortized over seven years on or before the draw period ending February 28, 2016, with a final maturity date of February 28, 2021. The term sheet also proposes to lower the interest rate on the Declining Note to the 3-month LIBOR plus two hundred ninety basis points and would reinstate a prior requirement to maintain a minimum fixed charge coverage ratio of no less than 1.15:1.0 measured quarterly and based on a rolling four quarters upon completion of the expansion project. Finally, we would pay a $45,000 commitment fee in connection with the transaction. These terms have been negotiated with our lender, but are not final and are subject to execution of definitive agreements. There is no assurance that definitive agreements will be signed or that, if they are signed, the terms will be as proposed in the term sheet.

Critical Accounting Estimates

Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Our most critical accounting estimates, which require the greatest use of judgment by management, are designated as critical accounting estimates and include policies related to the useful lives of fixed assets; the valuation of basis and delay price contracts on corn purchases; derivatives; inventory; patronage dividends, long-lived and inventory purchase commitments. An in-depth description of these can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. 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 six months ended March 31, 2015.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to the impact of market fluctuations associated with interest rates and commodity prices as discussed below. We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars. We use derivative financial instruments as part of an overall strategy to manage market risk. We use cash, futures and option contracts to hedge changes to

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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.

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from our Declining Note and our Revolving Credit Note which bear a variable interest rate. The interest rate for the Declining Note is the 3-month LIBOR rate plus 300 basis points with no minimum. The interest rate for the Revolving Credit Note is the 1-month LIBOR rate plus 300 basis points with no minimum. There were no outstanding balances on the Declining Note or the Revolving Credit Note at March 31, 2015.

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 distiller's 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 fixed price contracts for corn purchases 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.

At March 31, 2015, we had a net short position of 17,850,000 gallons of ethanol under derivative contracts used to hedge our forward ethanol sales for various delivery periods through July 2015, a net short position of 775,000 bushels of corn under derivative contracts used to hedge our forward corn contracts, corn inventory and ethanol sales for various delivery periods through July 2016 and a net long position of 200,000 MMBTUs of natural gas under derivative contracts used to hedge our forward natural gas purchases for various delivery periods through July 2015. These derivatives have not been designated as an effective hedge for accounting purposes. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding as disclosed above. For the six months ended March 31, 2015, we recorded a gain due to the change in fair value of our outstanding ethanol derivative positions of $233,409, a loss due to the change in fair value of our outstanding corn derivative positions of $38,694 and a gain due to the change in fair value of our outstanding natural gas derivative positions of $89,975.

At March 31, 2015, we had forward corn purchase contracts at various fixed prices for various delivery periods through May 2016 for approximately 10.2% of our expected production needs for the next 12 months, forward dried distiller grains sales contracts at various fixed prices for various delivery periods through September 2015 for approximately 26.2% of expected production for the next 12 months and forward corn oil contracts at various prices for various delivery periods through April 2015 for approximately 7.3% of expected production for the next twelve months. As contracts are delivered, any gains or losses realized will be recognized in our gross margin. 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 and natural gas price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10%

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adverse change in the average cost of our corn and natural gas and average ethanol, distillers grains and corn oil prices as of March 31, 2015 net of the forward and future contracts used to hedge our market risk. The volumes are based on our expected use and sale of these commodities for a one year period from March 31, 2015. 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 March 31, 2015		Approximate Adverse Change to Income
Natural Gas	3,100,000	MMBTU	10	%		$	961,000
Ethanol	118,000,000	Gallons	10	%		$	17,700,000
Corn	36,811,000	Bushels	10	%		$	14,025,000
DDGs	232,000	Tons	10	%		$	4,417,000
Corn Oil	30,607,000	Pounds	10	%		$	857,000

Liability Risk

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

Item 4. Controls and Procedures

Disclosure Controls and Procedures

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

Our management, including our Chief Executive Officer (the principal executive officer), Jeff 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 March 31, 2015. 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 second quarter of fiscal 2015 that have materially affected, or are likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On June 27, 2008, we entered into a Tricanter Purchase and Installation Agreement with ICM, Inc. for the construction and installation of a Tricanter Oil Separation System. On February 12, 2010, GS CleanTech Corporation ("GS CleanTech") filed a lawsuit in the United States District Court for the Southern District of Indiana, claiming that the Company's operation of the oil

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recovery system manufactured and installed by ICM, Inc. infringes a patent claimed by GS CleanTech. GS CleanTech sought royalties and damages associated with the alleged infringement, as well as attorney's fees from the Company. GS CleanTech subsequently filed actions against at least fourteen other ethanol producing companies for infringement of its patent rights, adding several additional patents. GS CleanTech successfully petitioned for the cases to be joined in a multi-district litigation ("MDL") which was assigned to the United States District Court for the Southern District of Indiana (Case No. 1:10-ml-02181). We subsequently answered and counterclaimed that the patent claims at issue are invalid and that the Company is not infringing.

Motions for summary judgment were filed by the defendants, including the Company, and GS CleanTech. Meanwhile, GS Cleantech filed suit against another group of defendants which were joined with the MDL. On October 23, 2014, the United States District Court granted summary judgment finding that all of the patents claimed by GS CleanTech were invalid and that the Company had not infringed. We expect that GS CleanTech will appeal the ruling on the motions for summary judgment. However, no appeal has yet been filed as one counterclaim related to allegations of equitable conduct by GS CleanTech was not resolved by the rulings on summary judgment and is still pending.

On February 16, 2010, ICM, Inc. agreed to indemnify, at ICM's expense, the Company from and against all claims, demands, liabilities, actions, litigations, losses, damages, costs and expenses, including reasonable attorney's fees arising out of any claim of infringement of patents, copyrights or other intellectual property rights by reason of our purchase and use of the oil recovery system and agrees to defend the Company. Several of the other defendants also use equipment and processes provided by ICM, Inc. ICM, Inc. has, and we expect it will continue, to vigorously defend itself and the Company in this lawsuit and in any appeal filed by GS CleanTech. If GS CleanTech were to be successful in any appeal filed and allowed to continue to pursue its claims, we estimate that damages, if awarded, would be based on a reasonable royalty to, or lost profits of, GS CleanTech. Because of its October 23, 2014 ruling, it seems unlikely that the District Court would deem the case exceptional. However, in the event it would be deemed to be exceptional, attorney's fees may be awarded and are likely to be $1,000,000 or more. ICM, Inc. has also agreed to indemnify us. However, in the event that damages were to be awarded, if ICM, Inc. does not fully indemnify us for any reason, we could be liable and could also be required to cease use of our oil separation process and seek out a replacement or cease oil production altogether.

Item 1A. Risk Factors

The following risk factor is provided due to material changes from the risk factors previously disclosed in our annual report on Form 10-K. The risk factor set forth below should be read in conjunction with the risk factors section and the Management's Discussion and Analysis section for the fiscal year ended September 30, 2014, included in our annual report on Form 10-K.

Decreasing gasoline prices could negatively impact our ability to operate profitably. Discretionary blending is an important secondary market which is often determined by the price of ethanol versus the price of gasoline. In periods when discretionary blending is financially unattractive, the demand for ethanol may be reduced. In recent years, the price of ethanol has been less than the price of gasoline which increased demand for ethanol from fuel blenders. However, recently, low oil prices have driven down the price of gasoline which has reduced the spread between the price of gasoline and the price of ethanol which could discourage discretionary blending, dampen the export market and result in a downwards market adjustment in the price of ethanol. If oil and gasoline prices remain lower for a significant period of time, it could hurt our ability to profitably operate the ethanol plant which could 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.

Item 5. Other Information

None.

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Item 6. Exhibits.


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



Exhibit No.			Exhibit
10.1			Third Amendment of First Amended and Restated Construction Loan Agreement dated effective February 28, 2015.
31.1			Certificate Pursuant to 17 CFR 240.13a-14(a)*
31.2			Certificate Pursuant to 17 CFR 240.13a-14(a)*
32.1			Certificate Pursuant to 18 U.S.C. Section 1350*
32.2			Certificate Pursuant to 18 U.S.C. Section 1350*
101			The following financial information from Cardinal Ethanol, LLC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheets as of March 31, 2015 and September 30, 2014, (ii) Condensed Statements of Operations and Comprehensive Income for the three months ended March 31, 2015 and 2014, (iii) Statements of Cash Flows for the three months ended March 31, 2015 and 2014, and (iv) the Notes to Condensed Financial Statements.**

* Filed herewith.

** Furnished herewith.

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SIGNATURES

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



		CARDINAL ETHANOL, LLC

Date:	May 5, 2015	/s/ Jeff Painter
		Jeff Painter
		President and Chief Executive Officer
		(Principal Executive Officer)

Date:	May 5, 2015	/s/ William Dartt
		William Dartt
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Attached files

Cardinal Ethanol LLC Reports

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