Advanced BioEnergy, LLC - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Advanced BioEnergy, LLC	Financial_Report.xls
EX-31 - EXHIBIT 31 - Advanced BioEnergy, LLC	d918360dex31.htm
EX-32 - EXHIBIT 32 - Advanced BioEnergy, LLC	d918360dex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

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

¨	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: 000-52421

ADVANCED BIOENERGY, LLC

(Exact name of Registrant as Specified in its Charter)

Delaware

20-2281511

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

8000 Norman Center Drive, Suite 610

Bloomington, Minnesota 55437

(763) 226-2701

(Address, including zip code, and telephone number,

including area code, of Registrant’s Principal Executive Offices)

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. Yes x 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.) Yes x 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. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of May 1, 2015, the number of outstanding units was 25,410,851.

ADVANCED BIOENERGY, LLC

FORM 10-Q

Index


	Page
Part I. Financial Information
Item 1. Financial Statements		3
Consolidated Balance Sheets		3
Consolidated Statements of Operations		4
Consolidated Statement of Changes in Members’ Equity		5
Consolidated Statements of Cash Flows		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		29
Part II. Other Information
Item 1. Legal Proceedings		30
Item 1A. Risk Factors		30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3. Defaults Upon Senior Securities		30
Item 4. Mine Safety Disclosure		30
Item 5. Other Information		30
Item 6. Exhibits		30
Signatures		31
Exhibit Index		32

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)


	March 31, 2015			September 30, 2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	20,192		$	21,982
Accounts receivable:
Trade accounts receivable		4,452			4,190
Other receivables		165			77
Inventories		4,374			4,046
Prepaid expenses		1,027			682
Restricted cash		4,744			5,945

Total current assets		34,954			36,922

Property and equipment, net		46,341			49,644
Other assets		984			1,051

Total assets	$	82,279		$	87,617


LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	5,780		$	4,263
Accrued expenses		2,684			3,234
Current portion of long-term debt (stated principal amount of $38,118 and $3,117 at March 31, 2015 and September 30, 2014, respectively)		39,563			4,763

Total current liabilities		48,027			12,260

Other liabilities		36			50
Long-term debt (stated principal amount of $40,025 at September 30, 2014)		—			40,800

Total liabilities		48,063			53,110


Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and outstanding		48,638			48,638
Accumulated deficit		(14,422	)		(14,131	)

Total members’ equity		34,216			34,507

Total liabilities and members’ equity	$	82,279		$	87,617

See notes to consolidated financial statements.

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except per unit data)

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
Net sales
Ethanol and related products	$	37,110		$	51,720		$	74,602		$	99,707
Other		161			180			411			430

Total net sales		37,271			51,900			75,013			100,137
Cost of goods sold		39,380			45,612			73,842			85,710

Gross profit (loss)		(2,109	)		6,288			1,171			14,427
Selling, general and administrative expenses		889			1,224			1,640			2,308

Operating income (loss)		(2,998	)		5,064			(469	)		12,119
Other income, net		32			121			234			28
Interest income		6			8			12			18
Interest expense		(34	)		(178	)		(68	)		(655	)

Net Income (loss)	$	(2,994	)	$	5,015		$	(291	)	$	11,510


Weighted average units outstanding - basic and diluted		25,411			25,411			25,411			25,411

Income (loss) per unit - basic and diluted	$	(0.12	)	$	0.20		$	(0.01	)	$	0.45

See notes to consolidated financial statements.

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statement of Changes in Members’ Equity

For the Six Months Ended March 31, 2015

(Dollars in thousands)

(Unaudited)


	Member Units		Members’ Capital		Accumulated Deficit			Total

MEMBERS’ EQUITY - September 30, 2014		25,410,851	$	48,638	$	(14,131	)	$	34,507
Net loss		—		—		(291	)		(291	)

MEMBERS’ EQUITY - March 31, 2015		25,410,851	$	48,638	$	(14,422	)	$	34,216

See notes to consolidated financial statements

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


	Six Months Ended
	March 31, 2015			March 31, 2014
Cash flows from operating activities:
Net income (loss)	$	(291	)	$	11,510
Adjustments to reconcile net income (loss) to operating activities cash flows:
Depreciation		5,470			5,422
Amortization of deferred financing costs		44			45
Amortization of deferred revenue and rent		(14	)		(15	)
Amortization of additional carrying value of debt		(792	)		(1,273	)
(Gain) on troubled debt restructuring		(183	)		—
Change in working capital components:
Accounts receivable		(350	)		608
Inventories		(328	)		(716	)
Prepaid expenses		(345	)		(228	)
Accounts payable		1,622			(770	)
Accrued expenses		(550	)		(200	)

Net cash provided by operating activities		4,283			14,383

Cash flows from investing activities:
Purchase of property and equipment		(2,272	)		(389	)
Proceeds from sale of assets		—			6
Change in other assets		67			162
Change in restricted cash		1,201			(2,824	)

Net cash (used in) investing activities		(1,004	)		(3,045	)

Cash flows from financing activities:
Payments on debt		(5,069	)		(5,882	)
Distribution to members		—			(7,877	)

Net cash (used in) financing activities		(5,069	)		(13,759	)

Net (decrease) in cash and cash equivalents		(1,790	)		(2,421	)
Beginning cash and cash equivalents		21,982			27,796

Ending cash and cash equivalents	$	20,192		$	25,375

Supplemental disclosure of cash flow information:
Cash paid for interest	$	840		$	2,564

See notes to consolidated financial statements.

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015 and 2014

(Unaudited)

1. Organization and Significant Accounting Policies

The consolidated financial statements include the accounts of Advanced BioEnergy, LLC (“ABE” or the “Company”) and its wholly owned operating subsidiaries, ABE Fairmont, LLC (“ABE Fairmont”) and ABE South Dakota, LLC (“ABE South Dakota”). Substantially all of the assets of ABE Fairmont were sold in December 2012 and the subsidiary is now inactive. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2014. The financial information as of March 31, 2015 and the results of operations for the three and six months ended March 31, 2015 are not necessarily indicative of the results for the fiscal year ending September 30, 2015. In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary for fair presentation.

The Company currently operates three ethanol production facilities in the U.S. with a combined production capacity of 85 million gallons per year. The Company acquired existing facilities in Aberdeen, South Dakota (9 million gallons) and Huron, South Dakota (32 million gallons) in November 2006 and began operations at the 44 million gallon Aberdeen expansion facility in January 2008.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash balances are maintained in bank depositories and periodically exceed federally insured limits. The Company has not experienced losses in these accounts. The Company segregates cash restricted for debt service and has classified these funds according to the future anticipated use of the funds. Restricted cash includes cash held for debt service under the terms of its debt agreements and a deposit for a rail car sublease.

Receivables

Credit sales are made to a relatively small numbers of customers with no collateral required. Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables and considering a customer’s financial condition, credit history and current economic conditions. Receivables are written off if deemed uncollectible. Recoveries of receivables previously written off are recorded when received. There was no allowance for doubtful accounts recorded at March 31, 2015 or September 30, 2014.

Inventories

Chemicals and supplies, work in process, ethanol and distillers’ grains inventories are stated at the lower of weighted average cost or market.

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives:


Office equipment		3-7 Years
Process equipment		10 Years
Buildings		40 Years

Maintenance and repairs are charged to expense as incurred; major improvements and betterments are capitalized.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount on the asset group may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from operations are less than the carrying value of the asset group. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds the estimated fair value on that date.

Commodity Sales and Purchase Contracts, Derivative Instruments

The Company currently does not enter into commodity futures and exchange-traded commodity options contracts for the sale of its products or purchases of its inputs. However, the Company does enter into forward sales contracts for ethanol, distillers grains and corn oil, and purchase contracts for corn and natural gas. The Company classifies these sales and purchase contracts as normal sales and purchase contracts and accordingly are not marked to market. These contracts provide for the sale or purchase of an item other than a financial instrument or derivative instrument that will be delivered in quantities expected to be sold or used over a reasonable period in the normal course of business.

Revenue Recognition

Ethanol revenue is recognized when product title and all risk of ownership is transferred to the customer as specified in the contractual agreements with the marketers. Under the terms of the marketing agreements, revenue is recognized when product is loaded into rail cars or trucks for shipment. Revenue from the sale of co-products is recorded when title and all risk of ownership transfers to customers. Co-products are normally shipped free on board (“FOB”) shipping point. In accordance with the Company’s agreements for the marketing and sale of ethanol and related products, commissions due to the marketers are deducted from the gross sale price at the time of payment. Interest income is recognized as earned.

Income per Unit

Basic and diluted income per unit is computed using the weighted-average number of units outstanding during each period presented.

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. Actual results could differ from those estimates.

Income Taxes

The Company has elected to be treated as a partnership for tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. The Company files income tax returns in the U.S. federal and various state jurisdictions.

Risks and Uncertainties

The supply and demand for ethanol are impacted by federal and state legislation and regulation, most significantly the Renewable Fuels Standard (“RFS”), and any changes in legislation or regulation could cause the demand for ethanol to decline or its supply to increase, which could have a material adverse effect on our business, results of operations and financial condition, and the ability to operate at a profit.

In November 2013, the EPA proposed a 9.7% reduction of the original 2014 statutory corn-based ethanol blending volume requirements to approximately 13.0 billion gallons per year. This would be a reduction from the 2013 requirement of 13.8 billion gallons for corn-based ethanol, and the original 2014 volume per the statute of 14.4 billion gallons. Current ethanol production capacity is approximately 15.1 billion gallons per the RFA. The proposal was originally subject to a 60-day comment period and the EPA planned to release the final version of the 2014 Renewable Volume Obligations (“RVOs”) in June 2014, then extended the planned release date. On April 10, 2015, the EPA entered into a consent decree agreeing to a court-enforced timeline for establishing the RFS RVO numbers for 2014 and 2015. The proposed RVO numbers will be announced by June 1, 2015, and the final 2014 and 2015 RVO’s will be announced by November 30, 2015. The EPA has also committed to finalizing the 2016 RFS RVO numbers in 2015 as well, although this was not part of the consent decree.

Ethanol has historically traded at a discount to gasoline; however, with the recent decline in gasoline prices, at times ethanol may trade at a premium to gasoline, causing a disincentive for discretionary blending of ethanol beyond the rates required to comply with the RFS. Consequently, there may be a negative impact on ethanol pricing and demand, which could result in a material adverse effect on our business, results of operations and financial condition.

2. Inventories

A summary of inventories is as follows (in thousands):


	March 31, 2015		September 30, 2014
Chemicals	$	533	$	643
Work in process		907		768
Ethanol		1,070		840
Distillers grain		148		145
Supplies and parts		1,716		1,650

Total	$	4,374	$	4,046

3. Property and Equipment

A summary of property and equipment is as follows (in thousands):


	March 31, 2015			September 30, 2014
Land	$	1,811		$	1,811
Buildings		10,031			9,886
Process equipment		106,625			103,833
Office equipment		1,517			1,329
Construction in process		35			1,022

		120,019			117,881
Accumulated depreciation		(73,678	)		(68,237	)

Property and equipment, net	$	46,341		$	49,644

4. Long-term Debt

A summary of long-term debt is as follows (in thousands, except percentages):


	March 31, 2015 Interest Rate			March 31, 2015			September 30, 2014

ABE South Dakota:
Senior debt principal - variable		4.27	%	$	35,000		$	40,000
Restructuring fee		N/A			3,118			3,142
Additional carrying value of restructured debt		N/A			1,445			2,421

Total outstanding					39,563			45,563


Additional carrying value of restructured debt		N/A			(1,445	)		(2,421	)

Stated principal				$	38,118		$	43,142

The estimated maturities of debt at March 31 are as follows (in thousands):


	Stated Principal		Restructuring Fee		Amortization of Additional Carrying Value of Restructured Debt		Total
2016	$	35,000	$	3,118	$	1,445	$	39,563

Total debt	$	35,000	$	3,118	$	1,445	$	39,563

Senior Credit Agreement for the South Dakota Plants

ABE South Dakota entered into an Amended and Restated Senior Credit Agreement (the “Senior Credit Agreement”), effective as of June 18, 2010, and amended on December 9, 2011, which was accounted for under troubled debt restructuring rules. The Senior Credit Agreement was executed among ABE South Dakota, the lenders from time to time party thereto, and an Administrative Agent and Collateral Agent. The Senior Credit Agreement converted the outstanding principal amount of the loans and certain other amounts under interest rate protection agreements to a senior term loan. The interest accrued on outstanding term and working capital loans under the previous credit agreement were reduced to zero. ABE South Dakota agreed to pay a $3.0 million restructuring fee to the lender due at the earlier of March 31, 2016 and the date on which the loans are repaid in full. ABE South Dakota recorded the restructuring fee as non-interest bearing debt on its consolidated balance sheets. See “Additional Carrying Value of Restructured Debt” below.

The principal amount of the term loan facility is payable in quarterly payments of $750,000, with the remaining principal amount fully due and payable on March 31, 2016. During the quarter ended March 31, 2015, ABE South Dakota made debt sweep payments totaling $250,000 in addition to its scheduled principal payment of $750,000. During the quarter ended December 31, 2014, ABE South Dakota made debt sweep payments totaling $3.25 million in addition to its scheduled principal payments of $750,000. ABE South Dakota also paid a waiver fee installment of $68,750 to the senior lenders during the quarter ended March 31, 2015. ABE South Dakota is obligated to pay a remaining waiver fee of $206,250, payable in equal installments over the next three quarterly periods. The Company has recorded this fee as non-interest bearing debt on its consolidated balance sheet and the fee, net of the unamortized discount of $88,520, is included in the Restructuring Fee category in the above Debt tables.

ABE South Dakota has the option to select the interest rate on the senior term loan between base rate and euro-dollar rates for maturities of one to six months. Base rate loans bear interest at the administrative agent’s base rate plus an applicable margin of 3.0%. Euro-dollar loans bear interest at LIBOR plus the applicable margin of 4.0%. As of March 31, 2015, ABE South Dakota had selected the LIBOR plus 4.0% rate for a period of one month.

ABE South Dakota’s obligations under the Senior Credit Agreement are secured by a first-priority security interest in the equity and assets of ABE South Dakota.

ABE South Dakota is allowed to make equity distributions (other than certain tax distributions) to ABE only upon ABE South Dakota meeting certain financial conditions and if there is no more than $25 million of principal outstanding on the senior term loan. Loans outstanding under the Senior Credit Agreement are subject to mandatory prepayment in certain circumstances, including, but not limited to, mandatory prepayments based upon receipt of certain proceeds of asset sales, casualty proceeds, termination payments, and cash flows.

The Senior Credit Agreement and the related loan documentation include, among other terms and conditions, limitations (subject to specified exclusions) on ABE South Dakota’s ability to make asset dispositions; merge or consolidate with or into another person or entity; create, incur, assume or be liable for indebtedness; create, incur or allow liens on any property or assets; make investments; declare or make specified restricted payments or dividends; enter into new material agreements; modify or terminate material agreements; enter into transactions with affiliates; change its line of business; and establish bank accounts. Substantially all cash of ABE South Dakota is required to be deposited into special, segregated project accounts subject to security interests to secure obligations in connection with the Senior Credit Agreement. The Senior Credit Agreement contains customary events of default and also includes an event of default for defaults on other indebtedness by ABE South Dakota and certain changes of control.

The Company believes that ABE South Dakota will be able to refinance its debt, or extend the maturity of that debt with its senior lenders or another lender, when the debt becomes due in March 2016. The Company is currently in discussions with outside lenders regarding refinancing the debt.

Additional Carrying Value of Restructured Debt

Since the future maximum undiscounted cash payments on the amended and restated senior credit facility (including principal, interest and the restructuring fee) exceeded the adjusted carrying value at the time of the restructuring, no gain for the forgiven interest was recorded, the carrying value was not adjusted and the modification of terms was accounted for on a prospective basis, via a new effective interest calculation, amortized over the life of the note, offsetting interest expense.

As a result of the debt sweep payments made during fiscal 2014 and the quarters ended December 31, 2014 and March 31, 2015, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. As a result of the prepayments made during the three and six months ended March 31, 2015, gains of approximately $11,000 and $183,000 were recognized as other income during the three and six months ended March 31, 2015, respectively. Since the remaining scheduled principal and interest payments are equal to the carrying amount, all remaining payments based on current interest rates will be treated as a reduction in the carrying value of debt. Accordingly, any additional prepayments will create additional gain recognition.

ABE Letter of Credit

The Company has a $1.5 million irrevocable and non-transferable standby letter of credit related to a rail car sublease. This letter of credit is collateralized by $1.5 million of cash in a restricted account, which has been classified as restricted cash.

5. Major Customers

ABE South Dakota has marketing agreements (“Ethanol Marketing Agreements”) with NGL Energy Partners, LP (“NGL”), a diversified energy business. The Ethanol Marketing Agreements require that we sell to NGL all of the denatured fuel-grade ethanol produced at the South Dakota plants. The term of the Ethanol Marketing Agreements expires on June 30, 2016.

ABE South Dakota is party to a co-product marketing agreement with Dakotaland Feeds, LLC (“Dakotaland Feeds”), whereby Dakotaland Feeds markets the local sale of distillers’ grains produced at the ABE South Dakota Huron plant to third parties for an agreed-upon commission. ABE South Dakota has a marketing agreement with Gavilon to market the dried distillers’ grains from the Aberdeen plant through July 31, 2016. ABE South Dakota self-markets the wet distillers’ grains produced at the Aberdeen plant.

Sales and receivables from the ABE South Dakota’s major customers were as follows (in thousands):


	As of and for the Six Months Ending		As of and for the Six Months Ending		As Of
	March 31, 2015		March 31, 2014		September 30, 2014
NGL Energy - Ethanol
Six months revenues	$	59,185	$	78,366
Receivable balance at period end		3,426			$	3,566

Gavilon - Distillers Grains
Six months revenues	$	7,857	$	10,610
Receivable balance at period end		496			$	341

Dakotaland Feeds - Distillers Grains
Six months revenues	$	6,040	$	6,649
Receivable balance at period end		436			$	168

6. Risk Management

The Company is exposed to a variety of market risks, including the effects of changes in commodity prices and interest rates. These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program. The Company’s risk management program seeks to reduce the potentially adverse effects that the volatility of these

markets may have on its current and future operating results. To reduce these effects, the Company generally attempts to fix corn purchase prices and related sale prices of ethanol, distillers’ grains and corn oil, with forward purchase and sale contracts to lock in future operating margins. The Company had entered into the following fixed price forward contracts at March 31, 2015:

Commodity

Type

Quantity

Amount (in 000’s)

Period Covered Through

Ethanol

Sale

2,822,400 gallons

3,841

April 30, 2015

Corn

Purchase

520,000 bushels

1,888

May 31, 2015

Distillers grains

Sale

27,345 tons

3,851

September 30, 2015

Corn oil

Sale

47,000 lbs

April 30, 2015

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales” and therefore are not marked to market in the financial statements.

7. Parent Financial Statements

The following financial information represents the unconsolidated financial statements of Advanced BioEnergy, LLC (“ABE”) as of March 31, 2015 and September 30, 2014, and for the three and six months ended March 31, 2015 and 2014. ABE’s ability to receive distributions from ABE South Dakota is based on the terms and conditions in ABE South Dakota’s credit agreements. ABE South Dakota is allowed to make equity distributions (other than certain tax distributions) to ABE only upon ABE South Dakota meeting certain financial conditions and if there is no more than $25 million of principal outstanding on the senior term loan. There were no distributions from ABE South Dakota during the last three fiscal years.

Advanced BioEnergy, LLC (Unconsolidated)

Balance Sheets

(Unaudited)


	March 31, 2015			September 30, 2014
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	8,682		$	8,988
Restricted cash		1,500			1,500
Prepaid expenses		17			5

Total current assets		10,199			10,493

Property and equipment, net		272			340
Other assets:
Investment in ABE Fairmont		99			109
Investment in ABE South Dakota		24,406			24,363
Other assets		32			32

Total assets	$	35,008		$	35,337


LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Current liabilities, accrued expenses	$	756		$	780
Other liabilities		36			50

Total liabilities		792			830

Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and outstanding		48,638			48,638
Accumulated deficit		(14,422	)		(14,131	)

Total members’ equity		34,216			34,507

Total liabilities and members’ equity	$	35,008		$	35,337

Advanced BioEnergy, LLC (Unconsolidated)

Statements of Operations

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
	(Dollars in thousands)						(Dollars in thousands)

Equity in earnings (losses) of consolidated subsidiary	$	(2,776	)	$	5,284		$	33		$	11,997
Management fee income from subsidiary		—			388			—			783
Selling, general and administrative expenses		(224	)		(661	)		(335	)		(1,290	)

Operating income (loss)		(3,000	)		5,011			(302	)		11,490
Other income		—			—			—			12
Interest income		6			4			11			8

Net Income (loss)		(2,994	)		5,015			(291	)		11,510

Advanced BioEnergy, LLC (Unconsolidated)

Statements of Cash Flows

(Unaudited)


	Six Months Ended
	March 31,			March 31,
	2015			2014
	(Dollars in thousands)
Cash flows from operating activities:
Net income (loss)	$	(291	)	$	11,510
Adjustments to reconcile net income (loss) to operating activities cash flows:
Depreciation		68			78
Equity in earnings of consolidated subsidiaries		(33	)		(11,997	)
Distributions from consolidated subsidiaries		—			8,000
Gain on disposal of fixed assets		—			6
Amortization of deferred revenue and rent		(14	)		(16	)
Change in working capital components:
Accounts receivable		—			(12	)
Prepaid expenses		(12	)		(28	)
Accounts payable and accrued expenses		(24	)		20

Net cash provided by (used in) operating activities		(306	)		7,561


Cash flows from investing activities:
Purchase of property and equipment		—			(79	)

Net cash (used in) investing activities		—			(79	)


Cash flows from financing activities:
Distribution to members		—			(7,877	)

Net cash (used in) financing activities		—			(7,877	)


Net (decrease) in cash and cash equivalents		(306	)		(395	)
Beginning cash and cash equivalents		8,988			6,558

Ending cash and cash equivalents	$	8,682		$	6,163

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

Information Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations, performance and prospects. All statements that are not historical or current facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended September 30, 2014 and in this Form 10-Q. These risks and uncertainties include, but are not limited to, the following:

•

our operational results are subject to fluctuations in the prices of grain, utilities and ethanol, which are affected by various factors including weather, production levels, supply, demand, changes in technology and government support and regulations;

•

our margins can be volatile and could become negative, which may affect our ability to meet current obligations and debt service requirements at our ABE South Dakota entity;

•

our risk mitigation strategies could be unsuccessful and could materially harm our results;

•

our cash distributions depend upon our future financial and operational performance and will be affected by debt covenants, reserves and operating expenditures;

•

ethanol may trade at a premium to gasoline at times, causing a disincentive for discretionary blending of ethanol beyond the rates required to comply with the RFS. Consequently, there may be a negative impact on ethanol pricing and demand;

•

current government mandated standards such as the Renewable Fuels Standard may be reduced or eliminated, and legislative acts taken by state governments such as California related to low-carbon fuels that include the effects of indirect land use, may have an adverse effect on our business;

•

alternative fuel additives may be developed that are superior to, or cheaper than ethanol;

•

transportation, storage and blending infrastructure may become impaired, preventing ethanol from reaching markets;

•

our operating facilities may experience technical difficulties and not produce the gallons of ethanol expected;

•

our units are subject to a number of transfer restrictions, no public market exists for our units, and we do not expect one to develop;

•

the ability of our ABE South Dakota subsidiary to make distributions to ABE in light of restrictions in this subsidiary’s credit facility;

•

the ability of our ABE South Dakota subsidiary to refinance its existing indebtedness on or prior to the debt’s March 31, 2016 maturity date;

•

the supply of ethanol rail cars in the market has fluctuated in recent years and may affect our ability to obtain new tanker cars or negotiate new leases at a reasonable fee when our current leases expire; and

•

an increase in rail traffic congestion throughout the United States primarily due to the increase in cargo trains carrying shale oil, which, from time to time, has and may continue to affect our ability to return our tanker rail cars to the Aberdeen and Huron plants on a timely basis. Delays in returning rail cars to our plants may affect our ability to operate our plants at full capacity due to ethanol storage capacity constraints.

You can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to

update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed from time to time with the U.S. Securities and Exchange Commissions, which we refer to as the SEC, that advise interested parties of the risks and factors that may affect our business.

General

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements included herewith and notes to the consolidated financial statements thereto.

Overview

Advanced BioEnergy, LLC (“Company,” “we,” “our,” “Advanced BioEnergy” or “ABE”) was formed in 2005 as a Delaware limited liability company. Our business consists of producing ethanol and co-products, including wet, modified and dried distillers’ grains, as well as corn oil. Ethanol is a renewable, environmentally clean fuel source that is produced at numerous facilities in the United States, mostly in the Midwest. In the U.S., ethanol is produced primarily from corn and then blended with unleaded gasoline in varying percentages. The ethanol industry in the U.S. has grown significantly as the use of ethanol reduces harmful auto emissions, enhances octane ratings of the gasoline with which it is blended, offers consumers a cost-effective choice, and decreases the amount of crude oil in the U.S. needs to import from foreign sources.

To execute our business plan, we acquired ABE South Dakota, LLC (f/k/a/ Heartland Grain Fuels, LP) in November 2006, which owned existing ethanol production facilities in Aberdeen and Huron, South Dakota. We commenced construction of our expansion facility in Aberdeen, South Dakota in April 2007, and commenced operations in January 2008. Our production operations are carried out primarily through our operating subsidiary ABE South Dakota, which owns and operates facilities in Aberdeen and Huron, South Dakota.

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the related business nature and expected financial results, the Company’s plants are aggregated into one reporting segment.

DRY MILL PROCESS

Dry mill ethanol plants produce ethanol primarily by processing corn. Other possible feeds are grain sorghum, or other cellulosic materials. The corn is conveyed directly from South Dakota Wheat Growers to the plant where it is weighed and transferred to a scalper to remove rocks, cobs, and other debris. The corn is then fed to a hammer mill where it is ground into flour and conveyed into a slurry tank. Water, heat and enzymes are added to the flour in the slurry tank to start the process of converting starch from the corn into sugar. The slurry is pumped to a liquefaction tank where additional enzymes are added. These enzymes continue the starch-to-sugar conversion. The grain slurry is pumped into fermenters, where yeast is added to begin the batch-fermentation process. Fermentation is the process of the yeast converting the sugar into alcohol and carbon dioxide. After the fermentation is complete, a vacuum distillation system removes the alcohol from the corn mash. The 95% (190-proof) alcohol from the distillation process is then transported to a molecular sieve system, where it is dehydrated to 100% alcohol (200 proof). The 200-proof alcohol is then pumped to storage tanks and blended with a denaturant, usually natural gasoline. The 200-proof alcohol and 2.0-2.5% denaturant constitute denatured fuel ethanol.

Corn mash left over from distillation is pumped into a centrifuge for dewatering. The liquid from the centrifuge, known as thin stillage, is then pumped from the centrifuges to an evaporator, where it is concentrated into a syrup. The solids that exit the centrifuge, known as the wet cake, are conveyed to the dryer system. Syrup is added to the wet cake as it enters the dryer, where moisture is removed. The process produces distillers’ grains with solubles, which is used as a high-protein/fat animal-feed supplement. Dry-mill ethanol processing creates three forms of distillers’ grains: wet distillers’ grains with solubles, known as wet distillers’ grains; modified wet distillers’ grains with solubles, known as modified distillers’ grains; and dry distillers’ grains with solubles, known as dry distillers’ grains. Wet and modified distillers’ grains have been dried to approximately 65% and 50% moisture levels, respectively, and are predominately sold to nearby markets. Dried distillers’ grains have been dried to 11% moisture, have an almost indefinite shelf life and may be sold and shipped to more distant markets.

Corn oil is produced by processing evaporated thin stillage through a disk stack style centrifuge. Corn oil has a lower density than water or solids that make up the syrup. The centrifuges separate the relatively light oil from the heavier components of the syrup, eliminating the need for significant retention time. De-oiled syrup is returned to the process for blending into wet, modified, or dry distillers’ grains. The corn oil is then pumped into storage tanks before being loaded onto trucks for sale.

FACILITIES

The table below provides a summary of our ethanol plants in operation as of March 31, 2015:


Location	Estimated Annual Ethanol Production		Estimated Annual Distillers Grains Production(1)		Estimated Annual Corn Processed		Primary Energy Source
	(Million gallons)		(000’s Tons)		(Million bushels)
Aberdeen, SD(2)		9		27		3.2	Natural Gas
Aberdeen, SD(2)		44		134		15.7	Natural Gas
Huron, SD		32		97		11.4	Natural Gas

Consolidated		85		258		30.3

(1)	Our plants produce and sell wet, modified and dried distillers’ grains. The stated quantities are on a fully dried basis operating at full production capacity.

(2)	Our plant at Aberdeen consists of two production facilities that operate on a separate basis.

We have entered into a lease agreement for our corporate headquarters as of February 2011. Our corporate headquarters, located in Bloomington, Minnesota, is approximately 4,400 square feet, and is under lease until June 2016. This building provides offices for our corporate and administrative staff. We believe this space will be sufficient for our needs until the end of the lease period.

We believe that each of the operating facilities is in adequate condition to meet our current and future production goals. We believe that these plants are adequately insured for replacement cost plus related disruption expenditures.

We pledged a first-priority security interest in and first lien on substantially all of the assets of the ABE South Dakota plants to the collateral agent for the senior creditors of these plants.

Plan of Operations through March 31, 2016

Over the next twelve months, we will continue our focus on operational improvements at our South Dakota operating facilities. These operational improvements include exploring methods to improve ethanol yield per bushel and increasing production output at each of our plants, continued emphasis on safety and environmental regulation, reducing our operating costs, and optimizing our margin opportunities through prudent risk-management policies.

Results of Operations for the Quarter Ended March 31, 2015 Compared to Quarter Ended March 31, 2014

The following table reflects net sales from our products in total dollars and as a percentage of total net sales, as well as costs of corn and natural gas in total dollars and as a percentage of total net sales and total cost of goods sold (“COGS”) for the three months ended March 31, 2015 and 2014:


	Three Months Ended March 31, 2015								Three Months Ended March 31, 2014
	Net Sales		% of Total Net Sales						Net Sales		% of Total Net Sales
Product Sales Information	(In thousands)								(In thousands)
Ethanol	$	27,641		74.2	%				$	41,055		79.1	%
Distillers grains		9,218		24.7	%					10,255		19.8	%
Corn Oil		251		0.7	%					410		0.8	%
Other		161		0.4	%					180		0.3	%

Product Cost Information	Costs		% of Total Net Sales			% of COGS			Costs		% of Total Net Sales			% of COGS
Corn	$	26,717		71.7	%		67.8	%	$	28,326		54.6	%		62.1	%
Natural Gas		2,776		7.5	%		7.1	%		7,564		14.6	%		16.6	%

Net Sales

Net sales for the quarter ended March 31, 2015 were $37.3 million, compared to $51.9 million for the quarter ending March 31, 2014, a decrease of $14.6 million or 28%. The decrease was a result of lower net selling prices of 38% and 23% for ethanol and distillers’ prices, respectively. The decline in ethanol and distillers prices is the result of various factors including but not limited to market demand for these products and overall gasoline prices and demand. As a percentage of net sales, ethanol sales were 74% and 79% and distillers’ sales were 25% and 20%, for the quarters ending March 31, 2015 and March 31, 2014, respectively. Ethanol gallons sold increased by 8.9% for the quarter ended March 31, 2015, compared to the prior quarter ended March 31, 2014. Ethanol gallons sold were affected by overall rail service issues in the prior year quarter, which directly affected our ability to maintain production rates at various times. The addition of the one million gallons of ethanol storage at the Aberdeen plant mitigated this issue in the quarter ended March 31, 2015.

Cost of Goods Sold

Cost of goods sold for the quarter ended March 31, 2015 was $39.4 million, compared to $45.6 million for the quarter ended March 31, 2014, a decrease of $6.2 million. Our primary costs in the production of ethanol and related co-products are corn and natural gas. A decrease in natural gas costs represented a majority of the decline in cost of goods sold in the quarter ended March 31, 2015. Natural gas costs represented 8% and 15% of net sales and 7% and 17% of total cost of goods sold for the quarters ending March 31, 2015 and 2014, respectively. The cost of natural gas per mmbtu was $4.57 and $13.13 for the quarters ending March 31, 2015 and 2014, respectively, a decrease of 65% or $8.56 per mmbtu.

Corn costs represented 72% and 55% of net sales and 68% and 62% of cost of goods sold for the quarters ended March 31, 2015 and 2014, respectively. Corn prices declined 13% during the three month period ending March 31, 2015 compared to the prior year quarter. The decrease in corn prices was primarily driven by the strong corn harvest in the fall of 2014 resulting in a significant increase in the supply of corn available to the market as compared to the drought-impacted harvest in the fall of 2013. We used 8% more corn in the three month period ending March 31, 2015, compared to the prior year quarter as the result of higher production in the current period.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses are comprised primarily of recurring administrative personnel compensation, legal, technology, consulting, insurance and accounting fees.

Overall selling, general and administrative costs decreased by approximately $0.3 million to $0.9 million for the quarter ending March 31, 2015, versus the prior year quarter. The decrease was primarily a result of non-recurring severance and related expenses incurred in the three months ending March 31, 2014. As a percentage of net sales, selling, general and administrative expenses were 2.4% of net sales, for the quarters ending March 31, 2015 and 2014. Excluding the non-recurring costs incurred in the three months ending March 31, 2014, selling, general and administrative costs were 2.0% of net sales.

Interest Expense

Interest expense for the quarter ending March 31, 2015 was $34,000, compared to $178,000 for the prior year quarter. The decrease was a result of debt prepayments described in the following paragraph. The interest expense for the quarter ending March 31, 2015 related to our long-term debt was $383,000 plus $22,000 of amortization of deferred waiver fees, which was offset by $371,000 of amortization of additional carrying value of long-term debt. The amortization of additional carrying value is netted against interest expense on our income statement, thereby significantly reducing the interest expense reported on our income statement.

As a result of the debt sweep payments made during fiscal 2014 and the quarters ended December 31, 2014 and March 31, 2015, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. As a result of the prepayments made during the quarter ended March 31, 2015, a gain of approximately $11,000 was recognized as other income during the three months ended March 31, 2015. Since the remaining scheduled principal and interest payments are equal to the carrying amount, the amortization of the additional carrying value will offset the majority of the interest expense on our long-term debt, and the amount of interest expense reported on our income statement from currently outstanding debt will be minimal. Additionally, all remaining payments based on current interest rates will be treated as a reduction in the carrying value of debt. Accordingly, any additional prepayments will create additional gain recognition.

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


	Six Months Ended March 31, 2015								Six Months Ended March 31, 2014
	Net Sales		% of Total Net Sales						Net Sales		% of Total Net Sales
Product Sales Information	(In thousands)								(In thousands)
Ethanol	$	59,186		78.9	%				$	78,366		78.3	%
Distillers grains		14,766		19.7	%					20,462		20.4	%
Corn Oil		650		0.9	%					879		0.9	%
Other		411		0.5	%					431		0.4	%

Product Cost Information	Costs		% of Total Net Sales			% of COGS			Costs		% of Total Net Sales			% of COGS
Corn	$	48,212		64.3	%		65.3	%	$	55,821		55.7	%		65.1	%
Natural Gas		5,416		7.2	%		7.3	%		10,377		10.4	%		12.1	%

Net Sales

Net sales for the six months ended March 31, 2015 were $75.0 million, compared to $100.1 million for the six months ending March 31, 2014, a decrease of $25.1 million or 25%. The decrease was a result of lower net selling prices of 29% and 34% for ethanol and distillers’, respectively. The decline in ethanol and distillers prices is the result of various factors including but not limited to market demand for these products and overall gasoline prices and demand. As a percentage of net sales, ethanol sales were 79% and 78% and distillers’ sales were 20% and 20%, for the six months ending March 31, 2015 and March 31, 2014, respectively. Ethanol gallons sold increased slightly by 5.8% for the six months ended March 31, 2015, compared to the prior six months ended March 31, 2014. Ethanol gallons sold were affected by overall rail service issues in the current and prior year six months, which directly affected our ability to maintain production rates at various times. The addition of the ethanol storage at the Aberdeen plant mitigated the production issue in the six months ended March 31, 2015.

Cost of Goods Sold

Cost of goods sold for the six months ended March 31, 2015 was $73.8 million, compared to $85.7 million for the six months ended March 31, 2014, a decrease of $11.9 million. Our primary costs in the production of ethanol and related co-products are corn and natural gas. A decrease in corn costs represented a majority of the decline in cost of goods sold in the six months ended March 31, 2015. Corn costs represented 64% and 56% of net sales for the six months ended March 31, 2015 and 2014, respectively, and 65% of cost of goods sold for both periods. Corn prices declined 18% during the six-month period ending March 31, 2015 compared to the prior year six months. The decrease in corn prices was primarily driven by the strong corn harvest in the fall of 2014 resulting in a significant increase in the supply of corn available to the market as compared to the drought-impacted harvest in the fall of 2013. We used 6% more corn in the six month period ending March 31, 2015, compared to the prior year six month period as a result of higher production in the current period.

Natural gas costs represented 7% and 10% of net sales and 7% and 12% of total cost of goods sold for the quarters ending March 31, 2015 and 2014, respectively. The cost of natural gas per mmbtu decreased by $4.16 per mmbtu, or 48% for the six months ending March 31, 2015 compared to the prior year period. The higher natural gas cost per mmbtu for the six months ending March 31, 2014 was the result of significantly higher natural gas prices due to historically cold temperatures and resulting supply issues. Natural gas consumption decreased less than 1% for the six months ending March 31, 2015 compared to the prior year period.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses are comprised primarily of recurring administrative personnel compensation, legal, technology, consulting, insurance and accounting fees.

Overall selling, general and administrative costs decreased by approximately $0.7 million to $1.6 million for the six months ending March 31, 2015, versus the prior year period. As a percentage of net sales, selling, general and administrative expenses for the six months ending March 31, 2015 decreased to 2.2%, compared to 2.3% for the prior year period. The decrease was primarily a result of non-recurring severance and related expenses incurred in the six months ending March 31, 2014. Excluding these non-recurring costs incurred in six months ending March 31, 2014, selling, general and administrative costs were 2.0% of net sales.

Interest Expense

Interest expense for the six months ending March 31, 2015 was $68,000, compared to $655,000 for the prior year period. The decrease was a result of debt prepayments described in the following paragraph. The interest expense for the six months ending March 31, 2015 related to our long-term debt was $816,000 plus $44,000 of amortization of deferred waiver fees, which was offset by $792,000 of amortization of additional carrying value of long-term debt. The amortization of additional carrying value is netted against interest expense on our income statement, thereby significantly reducing the interest expense reported on our income statement.

As a result of the debt sweep payments made during fiscal 2014 and the quarter ended March 31, 2015, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. As a result of the prepayments made during the six months ending March 31, 2015, a gain of approximately $183,000 was recognized as Other Income during the six months ending March 31, 2015. Since the remaining scheduled principal and interest payments are equal to the carrying amount, the amortization of the additional carrying value will offset the majority of the interest expense on our long-term debt; as a result, the amount of interest expense reported on our income statement related to currently outstanding debt will be minimal. Additionally, all remaining payments based on current interest rates will be treated as a reduction in the carrying value of debt. Accordingly, any additional prepayments will create additional gain recognition.

Changes in Financial Position for the Six Months ended March 31, 2015

Current Assets

The $2.0 million decrease in current assets at March 31, 2015 compared to September 30, 2014 was primarily due to capital additions of $2.2 million related to the ethanol storage project and other equipment at our Aberdeen plant.

Property, Plant and Equipment

The $3.3 million decrease in property, plant and equipment at March 31, 2015 compared to September 30, 2014, was primarily due to recognizing $5.5 million of depreciation expense in the current quarter, offset by $2.2 million of capital expenditures.

Current Liabilities

Accounts payable and accrued expenses increased by $1.0 million at March 31, 2015 compared to September 30, 2014 primarily due to timing of payments to vendors.

Current Portion of Long-Term Debt and Long-term Debt

The current portion of long-term debt increased by $34.8 million at March 31, 2015 compared to September 30, 2014. The increase was due to the reclassification of long-term debt to current debt based on the March 2016 termination date of the existing debt agreement.

Long-term debt decreased by $40.8 million at March 31, 2015 compared to September 30, 2014. This decrease was due to the reclassification of the debt to current as described above, and the debt payments described below. Total interest bearing debt decreased by $5.0 million during the six months ended March 31, 2015. The decrease in interest bearing debt was comprised of $1.5 million of required principal payments and $3.5 million of long-term debt sweep payments. The remaining reduction in long-term debt was due to $792,000 of amortization of additional carrying value of long-term debt and $183,000 of gain recognition related to the carrying value of long-term debt, offset by $44,000 of deferred waiver fee amortization.

TRENDS AND UNCERTAINTIES AFFECTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS

Overview

Ethanol is currently blended with gasoline to meet regulatory standards as a clean air additive, an octane enhancer, a fuel extender and a gasoline alternative. According to the Renewable Fuels Association (“RFA”), as of January 2015, the estimated ethanol production capacity in the United States was 15.1 billion gallons per year, with approximately 0.5 billion gallons currently idle. The demand for ethanol is affected by what is commonly referred to as the “blending wall,” which is a regulatory cap on the amount of ethanol that can be blended into gasoline. The blend wall affects the demand for ethanol, and as industry production capacity reaches the blend wall, the supply of ethanol in the market may surpass the demand. Assuming current gasoline usage in the U.S. at 134 billion gallons per year and a blend rate of 10% ethanol and 90% gasoline, the current blend wall is approximately 13.4 billion gallons of ethanol per year.

Ethanol is most commonly sold as E10, the 10 percent blend of ethanol for use in all American automobiles. Increasingly, ethanol is also available as E85, a higher percentage ethanol blend for use in flexible fuel vehicles. To further drive growth in ethanol usage, Growth Energy, an ethanol industry trade association, requested a waiver from the Environmental Protection Agency (“EPA”) to increase the allowable amount of ethanol blended into gasoline from the current 10% level to a 15% level. In June 2012, the EPA approved E15 for use in vehicles with model years 2001 and later. Although regulatory and infrastructure issues remain in many states, E15 is now available in limited locations in at least twelve states per the RFA.

Our operations are highly dependent on commodity prices, especially prices for corn, ethanol, distillers’ grains and natural gas. As a result of price volatility for these commodities, our operating results may fluctuate substantially. The price and availability of corn are subject to significant fluctuations depending upon a number of factors that affect commodity prices in general, including crop conditions, weather, federal policy and foreign trade. Because the market price of ethanol is not always directly related to corn prices, at times ethanol prices may lag movements in corn prices and compress the overall margin structure at the plants. As a result, operating margins may become negative and we may be forced to shut down our plants.

We focus on locking in margins based on a cash flows model that continually monitors market prices of corn, natural gas and other input costs against prices for ethanol and distillers grains at each of our production facilities. We create offsetting positions by using a combination of derivative instruments, fixed-price purchases and sales, or a combination of strategies in order to manage risk associated with commodity price fluctuations. Our primary focus is not to manage general price movements, for example minimize the cost of corn consumed, but rather to lock in favorable margins whenever possible. In the quarter ended December 31, 2014, the average Chicago Opis Spot Ethanol Assessment was $1.49 per gallon and the average NYMEX RBOB spot gasoline price was $1.60 per gallon, or approximately $0.11 per gallon above ethanol prices.

Federal policy has a significant impact on ethanol market demand. Ethanol blenders previously benefited from incentives that encouraged usage and a tariff on imported ethanol that supported the domestic industry, both of which have now expired. Additionally, the Environmental Protection Agency’s Renewable Fuels Standard (“RFS”) mandates increased level of usage of both corn-based and cellulosic ethanol. Any adverse ruling on, or legislation affecting, RFS mandates in the future could have an adverse impact on short-term ethanol prices and our financial performance in the future.

The ethanol industry and our business depend upon continuation of the federal and state ethanol supports such as the RFS. We believe the ethanol industry expanded due to these federal mandates, policies, and incentives. These government mandates have supported a market for ethanol that might disappear without these programs. Alternatively, the government mandates may be continued at lower levels than those at which they currently exist. In addition, state regulatory activity may also negatively affect the consumption of corn-based ethanol in certain domestic markets such as California, due to low-carbon fuel standards that take into consideration the effects caused by indirect land use.

The Renewable Fuels Standard

The Renewable Fuels Standard (“RFS”) is a national program that imposes requirements with respect to the amount of renewable fuel produced and used in the United States. The RFS was revised by the EPA in July 2010 (“RFS2”) and applies to refineries, blenders, distributors and importers. We believe the RFS2 program has and will continue to increase the market for renewable fuels, such as ethanol, as a substitute for petroleum-based fuels. The RFS2 required that 16.55 billion gallons be sold or dispensed in 2013, increasing to 36.0 billion gallons by 2022, representing 7% of the anticipated gasoline and diesel consumption in 2022. In 2013, RFS2 required refiners and importers to blend renewable fuels totaling at least 9.74% of total fuel volume, of which 8.12% of total fuel volume, or 13.8 billion gallons, could be derived from corn-based ethanol. The remainder of the requirement is to be met by non-corn related advanced renewable fuels such as cellulosic ethanol and biomass-based biodiesel. The RFS requirement for corn-based ethanol is capped at 15.0 billion gallons starting in 2015.

In November 2013, the EPA proposed a 9.7% reduction of the original 2014 statutory corn-based ethanol blending volume requirements to approximately 13.0 billion gallons per year. This would have been a reduction from the 2013 requirement of 13.8 billion gallons for corn-based ethanol, and the original 2014 volume per the statute of 14.4 billion gallons. Current ethanol production capacity is approximately 14.9 billion gallons per the RFA. The proposal was originally subject to a 60-day comment period and the EPA planned to increase the final version of the 2014 Renewable Volume Obligations (“RVOs”) in June 2014, then extended the planned release date. On April 10, 2015, the EPA entered into a consent decree agreeing to a court-enforced timeline for establishing the RFS RVO numbers for 2014 and 2015. The proposed RVO numbers will be announced by June 1, 2015, and the final 2014 and 2015 RVO’s will be announced by November 30, 2015. The EPA has also committed to finalizing the 2016 RFS RVO numbers in 2015 as well, although this was not part of the consent decree.

The following chart illustrates the potential United States ethanol demand based on the schedule of minimum usage established by the program through the year 2022 (in billions of gallons).


Year	Total Renewable Fuel Requirement		Cellulosic Ethanol Minimum Requirement		Biodiesel Minimum Requirement		Advanced Biofuel		RFS Requirement That Can Be Met With Corn-Based Ethanol

2014 (1)		18.15		1.75		—		3.75		14.40
2014 (2)		15.21		0.02		1.28		2.20		13.01
2015		20.50		3.00		—		5.50		15.00
2016		22.25		4.25		—		7.25		15.00
2017		24.00		5.50		—		9.00		15.00
2018		26.00		7.00		—		11.00		15.00
2019		28.00		8.50		—		13.00		15.00
2020		30.00		10.50		—		15.00		15.00
2021		33.00		13.50		—		18.00		15.00
2022		36.00		16.00		—		21.00		15.00

(1)	Original statutory 2014 volumes.

(2)	Proposed EPA 2014 Renewable Fuel Standards issued November 2013.

The RFS2 went into effect on July 1, 2010 and requires certain gas emission reductions for the entire lifecycle, including production of fuels. The greenhouse gas reduction requirement generally does not apply to facilities that commenced construction prior to December 2007. If this changes and our plants must meet the standard for emissions reduction, it may impact the way we procure feed stock and modify the way we market and transport our products.

Ethanol Competition

The ethanol we produce is similar to ethanol produced by other plants. The RFA reports that as of January 2015, current U.S. ethanol production capacity was approximately 15.1 billion gallons per year. On a national level, there are numerous other production facilities with which we are in direct competition, many of whom have greater resources than we do. As of April 2015, South Dakota had 15 ethanol plants producing an aggregate of 1.0 billion gallons of ethanol per year.

The largest ethanol producers include: Abengoa Bioenergy Corp.; Archer Daniels Midland Company; Cargill, Inc.; Flint Hills Resources, LP; Green Plains Renewable Energy, Inc.; POET, LLC and Valero Renewable Fuels. Producers of this size may have an advantage over us from economies of scale and stronger negotiating positions with purchasers. We market our ethanol primarily on a regional and national basis. We believe that we are able to reach the best available markets through the use of experienced ethanol marketers and by the rail delivery methods we use. Our plants compete with other ethanol producers on the basis of price, and, to a lesser extent, delivery service. We believe that we can compete favorably with other ethanol producers due to our proximity to ample grain, natural gas, electricity and water supplies at favorable prices.

Competition from Alternative Fuels

Alternative fuels and alternative ethanol production methods are continually under development. The major oil companies have significantly greater resources than we have to develop alternative products and to influence legislation and public perception of ethanol. New ethanol products or methods of ethanol production developed by larger and better-financed competitors could provide them competitive advantages and harm our business.

Ethanol Marketing

CO-PRODUCTS

Sales of distillers’ grains have represented 24.7% and 19.8% of our revenues for the quarters ended March 31, 2015 and 2014, respectively. When the plants are operating at capacity, they produce approximately 258,000 tons of dried distillers’ grains equivalents per year, approximately 17 pounds per bushel of corn used. Distillers’ grains are a high-protein, high-energy animal feed supplement primarily marketed to the dairy and beef industry, as well as the poultry and swine markets. Dry mill ethanol processing creates three forms of distillers’ grains: wet distillers’ grains with solubles, known as wet distillers’ grains; modified wet distillers’ grains with solubles, known as modified distillers’ grains; and dry distillers’ grains with solubles. Wet and modified distillers’ grains have been dried to approximately 65% and 50% moisture levels, respectively, and are predominately sold to nearby markets. Dried distillers’ grains have been dried to 11% moisture, have an almost indefinite shelf life and may be sold and shipped to more distant markets.

In April 2012, we installed corn oil extraction technology at our Aberdeen plant. Corn oil systems are designed to extract non-edible corn oil during the thin stillage evaporation process immediately prior to production of distillers’ grains. Corn oil is produced by processing evaporated thin stillage through a disk stack style centrifuge. Corn oil has a lower density than the water or solids that make up the syrup. The centrifuges separate the relatively light oil from the heavier components of the syrup, eliminating the need for significant retention time. De-oiled syrup is returned to the process for blending into wet, modified, or dry distillers’ grains.

Industrial uses for corn oil include feedstock for biodiesel, livestock feed additives, rubber substitutes, rust preventatives, inks, textiles, soaps and insecticides. Our corn oil is primarily sold by truck to biodiesel manufacturers.

Competition

In the sales of distillers’ grains, we compete with other ethanol producers, as well as a number of large and smaller suppliers of competing animal feed. We believe the principal competitive factors are price, proximity to purchasers and product quality. Currently we derive 67% of our distillers’ grain revenues from the sale of dried distillers’ grains, which have an indefinite shelf life and can be transported by truck or rail, and 33% from the sale of modified or wet distillers’ grains, which have a shorter shelf life and are typically sold in local markets via truck.

We compete with other ethanol producers in the sale of corn oil. Many producers have added corn oil technology to their facilities.

Co-Product Marketing

ABE South Dakota has a marketing agreement with Dakotaland Feeds, LLC (“Dakotaland Feeds”) for marketing the sale of ethanol co-products produced at the Huron plant. ABE South Dakota has a marketing agreement with Gavilon, LLC (“Gavilon”) for dried distillers’ grains produced at the Aberdeen plants which became effective July 1, 2013. The marketing

agreement with Gavilon requires Gavilon to use commercially reasonable efforts to purchase substantially all of the dried distillers’ grains produced at the Aberdeen plants through July 31, 2016. The Aberdeen plant self-markets its wet and modified distillers’ grains.

ABE South Dakota is party to an agreement with Gavilon Ingredients, LLC, to market all the corn oil produced by the Aberdeen plant through September 30, 2015.

LIQUIDITY AND CAPITAL RESOURCES

Financing and Existing Debt Obligations

During quarter ended March 31, 2015, we conducted our business activities and plant operations through the parent company, Advanced BioEnergy, and its primary operating subsidiary, ABE South Dakota. ABE Fairmont has minimal activity following the December 2012 sale of the Fairmont facility. The liquidity and capital resources for each entity are based on the entity’s existing financing arrangements and capital structure. There are provisions contained in the financing agreements at ABE South Dakota preventing cross-default or collateralization between operating entities. Advanced BioEnergy is highly restricted in its ability to use the cash and other financial resources of ABE South Dakota for the benefit of Advanced BioEnergy, with the exception of allowable distributions as defined in the ABE South Dakota financing agreements.

Advanced BioEnergy, LLC (“ABE”)

ABE had cash and cash equivalents of $8.7 million on hand at March 31, 2015. ABE did not have any debt outstanding as of March 31, 2015. Until June 2014, ABE’s primary source of operating cash came from charging a monthly management fee to ABE South Dakota for management services provided to ABE South Dakota. The primary management services provided include risk management, accounting and finance, human resources and other general management related responsibilities.

Due to personnel reductions and other changes in the Company since the sale of the Fairmont plant, the Company re-evaluated the administrative services agreement with ABE South Dakota. The outcome of the re-evaluation resulted in termination of the administrative services agreement as of June 30, 2014 in conjunction with an overall change in the Company structure. The change in Company structure resulted in ABE employees becoming direct employees of ABE South Dakota. Accordingly, beginning in July 2014, ABE South Dakota no longer pays the Company a management fee for services.

From time to time, ABE may also receive certain allowable distributions from ABE South Dakota based on the terms and conditions in its senior credit agreement. ABE will not receive any distribution from ABE South Dakota for its fiscal 2014 financial results and has not received any in fiscal 2015.

We believe ABE has sufficient financial resources available to fund current operations and capital expenditure requirements for at least the next 12 months.

ABE Fairmont

ABE Fairmont had cash and cash equivalents of $0.1 million on hand at March 31, 2015, which is unrestricted and can be distributed to Advanced BioEnergy at any time.

ABE Fairmont has agreed to cooperate with Flint Hills Resources, LLC with respect to post-closing matters, including completing the transfer of certain railway lines. The Company anticipates that ABE Fairmont will remain in existence as a separate entity until it completes all its obligations under the asset purchase agreement and other ongoing agreements, except to the extent that the Company determines that it can perform these obligations itself after the liquidation of ABE Fairmont.

ABE South Dakota

ABE South Dakota had cash and cash equivalents of $11.4 million and $3.2 million of restricted cash on hand at March 31, 2015. The restricted cash consists of $3.0 million for a debt service payment reserve, and $0.2 million in an account for maintenance capital expenditures. As of March 31, 2015, ABE South Dakota had interest-bearing term debt outstanding of $35.0 million.

ABE South Dakota entered into an Amended and Restated Senior Credit Agreement effective as of June 18, 2010, and amended on December 9, 2011 (the “Senior Credit Agreement”) among ABE South Dakota, the lenders from time to time party thereto, and an Administrative Agent and Collateral Agent. The principal amount of the term loan facility is payable in quarterly payments of $750,000, with the remaining principal amount fully due and payable on March 31, 2016. Loans outstanding under the Senior Credit Agreement are subject to mandatory prepayment in certain circumstances, including, but not limited to, mandatory prepayments based upon receipt of certain proceeds of asset sales, casualty proceeds, termination payments, and cash flows.

ABE South Dakota has agreed to pay a $3.0 million restructuring fee to the lender due at the earlier of March 31, 2016 and the date on which the loans are repaid in full. ABE South Dakota recorded the restructuring fee as long-term, non-interest bearing debt. ABE South Dakota is also obligated to pay a waiver fee to the senior lenders of $206,250, payable in installments over the next three quarters. The Company has recorded this fee as non-interest bearing debt on its consolidated balance sheet, and is amortizing the fee to interest expense over the remaining life of the debt.

ABE South Dakota’s obligations under the Senior Credit Agreement are secured by a first-priority security interest in all of the equity in and assets of ABE South Dakota. ABE South Dakota is allowed to make equity distributions (other than certain tax distributions) to ABE only upon ABE South Dakota meeting certain financial conditions and if there is no more than $25 million of principal outstanding on the senior term loan. The Senior Credit Agreement and the related loan documentation include, among other terms and conditions, limitations (subject to specified exclusions) on ABE South Dakota’s ability to make asset dispositions; merge or consolidate with or into another person or entity; create, incur, assume or be liable for indebtedness; create, incur or allow liens on any property or assets; make investments; declare or make specified restricted payments or dividends; enter into new material agreements; modify or terminate material agreements; enter into transactions with affiliates; change its line of business; and establish bank accounts. Substantially all cash of ABE South Dakota is required to be deposited into special, segregated project accounts subject to security interests to secure obligations in connection with the Senior Credit Agreement. The Senior Credit Agreement contains customary events of default and also includes an event of default for defaults on other indebtedness by ABE South Dakota and certain changes of control.

At March 31, 2015, ABE South Dakota had a working capital deficit of ($22.6) million due to the reclassification of the long-term debt to current. Excluding the debt reclassification, ABE South Dakota net working capital was $13.7 million at March 31, 2015, a decrease of $2.7 million since September 2014.

CASH FLOWS

The following table shows our cash flows for the six months ended March 31, 2015 and 2014:


	Six Months Ended March 31
	2015			2014
	(In thousands)
Net cash provided by operating activities	$	4,283		$	14,383
Net cash (used in) investing activities		(1,004	)		(3,045	)
Net cash (used in) financing activities		(5,069	)		(13,759	)

Cash Flow from Operations

Cash flows provided by operating activities for the six months ending March 31, 2015 were approximately $4.3 million compared to $14.4 million for the prior year period, a decline of $10.1 million. Lower operating margins accounted for the majority of the overall decline in cash flows from operating activities.

Cash Flow from Investing Activities

Cash flows used in investing activities for the six months ending March 31, 2015 were approximately $1.0 million compared to $3.0 million for the prior year period. The current year six months included $2.3 million in additions to property and equipment and a reduction of $1.2 million in restricted cash, which was used to fund property and equipment additions. Cash used in investing activities in the prior year period were primarily related to the funding of required reserves related to the Company’s senior credit agreement which are classified as restricted cash upon funding.

Cash Flow from Financing Activities

Cash flows used in financing activities for the six months ending March 31, 2015 were $5.1 million compared to $13.8 million for the prior year period. The current year period included long-term debt payments of $5.1 million. Cash used in financing activities in the prior year period included long-term debt payments of approximately $5.9 million, plus $7.9 million in distributions to members.

CREDIT ARRANGEMENTS

Long-term debt consists of the following (in thousands, except percentages):


	March 31, 2015 Interest Rate			March 31, 2015			September 30, 2014

ABE South Dakota:
Senior debt principal - variable		4.27	%	$	35,000		$	40,000
Restructuring fee		N/A			3,118			3,142
Additional carrying value of restructured debt		N/A			1,445			2,421

Total outstanding					39,563			45,563


Additional carrying value of restructured debt		N/A			(1,445	)		(2,421	)

Stated principal				$	38,118		$	43,142

The estimated maturities of debt at March 31 are as follows (in thousands):


	Stated Principal		Restructuring Fee		Amortization of Additional Carrying Value of Restructured Debt		Total
2016	$	35,000	$	3,118	$	1,445	$	39,563

Total debt	$	35,000	$	3,118	$	1,445	$	39,563

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Note 1 to our consolidated financial statements contains a summary of our significant accounting policies, many of which require the use of estimates and assumptions. Accounting estimates are an integral part of the preparation of financial statements and are based upon management’s current judgment. We used our knowledge and experience about past events and certain future assumptions to make estimates and judgments involving matters that are inherently uncertain and that affect the carrying value of our assets and liabilities. We believe that of our significant accounting policies, the following are noteworthy because changes in these estimates or assumptions could materially affect our financial position and results of operations:

Revenue Recognition

Ethanol revenue is recognized when product title and all risk of ownership is transferred to the customer as specified in the contractual agreements with the marketers. Under the terms of the marketing agreements with NGL (f/k/a Gavilon), revenue is recognized when product is loaded into rail cars or trucks for shipment. Revenue from the sale of co-products is recorded when title and all risk of ownership transfers to customers. Co-products are normally shipped free on board (“FOB”) shipping point. Interest income is recognized as earned. In accordance with the Company’s agreements for the marketing and sale of ethanol and related products, commissions due to the marketers are deducted from the gross sale price at the time of payment.

Inventories

Chemicals and supplies, work in process, ethanol and distillers’ grains inventories are stated at the lower of weighted average cost or market.

Commodity Sales and Purchase Contracts, Derivative Instruments

The Company currently does not enter into commodity futures and exchange-traded commodity options contracts for the sale of its products or purchases of its inputs. However, the Company does enter into forward sales contracts for ethanol, distillers and corn oil, and purchase contracts for corn and natural gas. The Company classifies these sales and purchase contracts as normal sales and purchase contracts and accordingly these contracts are not marked to market. These contracts provide for the sale or purchase of an item other than a financial instrument or derivative instrument that will be delivered in quantities expected to be sold or used over a reasonable period in the normal course of business.

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives:


Office equipment			3-7 Years
Process equipment			10 Years
Buildings			40 Years

Maintenance and repairs are charged to expense as incurred; major improvements and betterments are capitalized. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount on the asset group may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from operations are less than the carrying value of the asset group. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds the estimated fair value.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

GOVERNMENT PROGRAMS AND TAX CREDITS

The State of South Dakota pays an incentive to operators of ethanol plants to encourage the growth of the ethanol industry. The Huron plant is eligible to receive an aggregate of $9.7 million, payable up to $1 million per year. The amounts are dependent on annual allocations by the State of South Dakota and the number of eligible plants. ABE South Dakota has received $411,461 in fiscal 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

COMMODITY PRICE RISK

We consider market risk to be the impact of adverse changes in market prices on our results of operations. We are subject to significant market risk with respect to the price of ethanol and corn. For the quarter ended March 31, 2015, sales of ethanol represented 74% of our total revenues and corn costs represented 68% of total cost of goods sold. In general, ethanol prices are affected by the supply and demand for ethanol, the cost of ethanol production, the availability of other fuel oxygenates, the regulatory climate and the cost of alternative fuels such as gasoline. The price of corn is affected by weather conditions and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors. At March 31, 2015, the price per gallon of ethanol and the price per bushel of corn on the CBOT were $1.49 and $3.36 respectively.

We are also subject to market risk on the selling prices of our distillers’ grains, which represented 25% of our total revenues for the quarter ended March 31, 2015. These prices fluctuate seasonally when the price of corn or other cattle feed alternatives fluctuate in price. The average dried distillers’ grains spot price for local customers was $170 per ton at March 31, 2015.

We are also subject to market risk with respect to our supply of natural gas that we consume in the ethanol production process. Natural gas costs represented 7.0% of total cost of sales for the quarter ended March 31, 2015. The price of natural gas is affected by overall supply, weather conditions and general economic, market and regulatory factors. At March 31, 2015, the price of natural gas on the NYMEX was $2.64 per mmbtu.

To reduce price risk caused by market fluctuations in the cost and selling prices of related commodities, we have entered into forward purchase/sale contracts. We entered into forward sales contracts which guaranteed prices on 40% of our ethanol gallons sold through April 2015. At March 31, 2015 we had entered into forward sale contracts representing 22% of our expected distillers’ grains production output through September 2015.

The following represents a sensitivity analysis that estimates our annual exposure to market risk with respect to our current corn and natural gas requirements and ethanol sales. Market risk is estimated as the potential impact on operating income resulting from a hypothetical 10% change in the fair value of our current corn and natural gas requirements and ethanol sales, net of corn and natural gas forward contracts used to hedge market risk with respect to our current corn and natural gas requirements. The results of this analysis, which may differ from actual results, are as follows:


	Estimated at Risk Volume (1)		Units		Hypothetical Change in Price			Spot Price(2)		Change in Annual Operating Income
	(In millions)									(In millions)
Ethanol		76.5		gallons		10.0	%	$	1.49	$	11.4
Distillers grains		0.2		tons		10.0	%		170.00		4.0
Corn		30.3		bushels		10.0	%		3.36		10.2
Natural gas		2.4		mmbtus		10.0	%		2.64		0.6

(1)

The volume of ethanol at risk is based on the assumption that we will enter into contracts for 10% of our expected annual gallons capacity of 85 million gallons. The volume of distillers’ grains at risk is based on the assumption that we will enter into contracts for 9% of our expected annual distillers’ grains production of 258,000 tons. The volume of corn is based on the assumption that we will enter into forward contracts for none of our estimated current 30.3 million bushel annual requirement. The volume of natural gas is based on the assumption that we will continue to lock in none of our estimated gas usage.

(2)	Current spot prices include the CBOT price per gallon of ethanol, the local price per bushel of corn, the NYMEX price per mmbtu of natural gas and our listed local advertised dried distillers’ grains price per ton as of March 31, 2015.

INTEREST RATE/FOREIGN EXCHANGE RISK

Our future earnings may be affected by changes in interest rates due to the impact those changes have on our interest expense on borrowings under our credit facility. As of March 31, 2015, we had $35.0 million of outstanding borrowings with variable interest rates. With each 1% increase in interest rates we will incur additional annual interest charges of $0.4 million.

We have no international sales. Substantially all of our purchases are denominated in U.S. dollars.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer, who is also our chief financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our chief executive officer, who is also our chief financial officer, concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officer, to allow timely decisions regarding required disclosures.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There are no material changes from risk factors as previously discussed in our September 30, 2014 Annual Report on Form 10-K, except as follows:

The debt of our ABE South Dakota subsidiary matures on March 31, 2016.

At March 31, 2015, the Company’s ABE South Dakota, LLC subsidiary had interest-bearing debt of $35.0 million and approximately $3.1 million of additional non-interest bearing debt, all of which is due on March 31, 2016. The Company currently believes that ABE South Dakota will be able to refinance this debt, or extend the maturity of the debt, with its senior lenders or another lender prior to the due debt, and is currently in discussions with outside lenders regarding refinancing the debt. If ABE South Dakota is unable to refinance or extend the maturity of this indebtedness on or prior to the maturity date, it could adversely affect the Company and the value of its units.

Ethanol may, at times, trade at a premium to gasoline, which could negatively impact ethanol pricing and demand.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The Company has agreed with AgStockTrade.com, an electronic bulletin board service, that the Company’s units would be eligible for the purchase and sale matching service operated through AgStockTrade.com. The Company expects its units to be available for purchase or sale on the AgStockTrade.com site on or before June 1, 2015. Any proposed sales would be subject to the limitations under the Company’s Operating Agreement, including approval by the Company’s Board of Directors.

Item 6. Exhibits

None.

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.

EXHIBIT INDEX


Exhibit No.	Description	Method of Filing

31	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer, Financial and Accounting Officer.	Filed Electronically

32	Section 1350 Certifications.	Filed Electronically

101	The following materials from Advanced BioEnergy’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL: (i) Consolidated Balance Sheets at March 31, 2015 and September 30, 2014; (ii) Consolidated Statements of Operations for the three and six months ended March 31, 2015 and March 31, 2014; (iii) Consolidated Statements of Changes in Member’s Equity for the six months ended March 31, 2015; (iv) Consolidated Statements of Cash Flows for the six months ended March 31, 2015 and 2014; and (v) Notes to the Consolidated Financial Statements.	Filed Electronically

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company