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 six month period ended March 31, 2022, compared to the same period of the prior fiscal year. This discussion should be read in conjunction with the condensed financial statements and notes and the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021.

Forward Looking Statements

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



•Reduction, delay, or elimination of the Renewable Fuel Standard;
•Changes in the availability and price of corn, natural gas and other grains;
•Our inability to secure credit or obtain additional equity financing we may
require in the future to continue our operations;
•Decreases in the price we receive for our ethanol, distiller grains, corn oil
and other grains;
•Our ability to satisfy the financial covenants contained in our credit
agreements with our senior lender;
•Our ability to profitably operate the ethanol plant and maintain a positive
spread between the selling price of our products and our raw material costs;
•Negative impacts that our hedging activities may have on our operations;
•Ethanol and distiller grains supply exceeding demand and corresponding price
reductions;
•Our ability to generate free cash flow to invest in our business and service
our debt;
•Changes in the environmental regulations that apply to our plant operations;
•Changes in our business strategy, capital improvements or development plans;
•Changes in plant production capacity or technical difficulties in operating the
plant;
•Changes in general economic conditions or the occurrence of certain events
causing an economic impact in the agriculture, oil or automobile industries;
•Lack of transport, storage and blending infrastructure preventing our products
from reaching high demand markets;
•Changes in federal and/or state laws;
•Changes and advances in ethanol production technology;
•Competition from alternative fuel additives;
•Changes in interest rates or the lack of credit availability;
•Changes in legislation benefiting renewable fuels;
•Competition from the increased use of electric vehicles;
•Our ability to retain key employees and maintain labor relations;
•Volatile commodity and financial markets;
•Limitations and restrictions contained in the instruments and agreements
governing our indebtedness;
•Decreases in export demand due to the imposition of tariffs by foreign
governments on ethanol, distillers grains and soybeans produced in the United
States;
•Use by the EPA of small refinery exemptions;
•A slowdown in global and regional economic activity, demand for our products
and the potential for labor shortages and shipping disruptions resulting from
COVID-19; and
•Global economic uncertainty, market disruptions and increased volatility in
commodity prices caused by the Russian invasion of Ukraine and resulting
sanctions by the United States and other countries.

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


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

Overview

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

On January 20, 2022, we entered into an Equipment Purchase and Installation Agreement (the "Agreement") with ICM, Inc. pursuant to which ICM has agreed to engineer, procure, construct, and install its high protein feed system and license to us its proprietary, patent-protected technology to use, operate and maintain the system. Pursuant to the Agreement, we will pay approximately $45,390,000 which is payable in installments and is subject to adjustment pursuant to change orders. We will also pay license fees of $10 per ton of PROTOMAX™ produced by the system for a period of 10 years. We expect to fund the project from operations and from and our current credit facilities as amended.

On February 15, 2022, the board of directors declared a cash distribution of $1,500 per membership unit to the holders of units of record at the close of business on February 15, 2022 for a total distribution of $21,909,000. We paid the distribution on February 25, 2022.

On March 30, 2022, we executed an Eighteenth Amendment of First Amended and Restated Construction Loan Agreement, to be effective as of February 28, 2022, which amends the First Amended and Restated Construction Loan Agreement dated June 10, 2013 (the "Amendment"). The primary purposes of the Amendment are to provide additional financing to fund the construction and installation of a system to produce high protein feed at the plant and extend the termination date of the Revolving Credit Loan to February 28, 2023. Please refer to Item 1 - Financial Statements - Note 7 - Bank Financing for more information.

Subsequent to quarter end, we received notice that we were awarded approximately $7,950,000 under the USDA Biofuel Producer Program. We expect to receive the funds within the next 30 days.

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

Results of Operations for the Three Months Ended March 31, 2022 and 2021

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our statement of operations for the three month ended March 31, 2022 and 2021:


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