We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and nine month periods ended June 30, 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, inflation, 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.


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

Overview

Cardinal Ethanol, LLC is an Indiana limited liability company operating an ethanol plant in east central Indiana near Union City, Indiana. 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 and subsequent adjustments due to change orders executed by the parties, we expect to pay approximately $46,570,000, which is payable in installments. This price is subject to further adjustment in the event additional change orders are executed. 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 our current credit facilities as amended. We currently anticipate installation to begin during the fourth quarter of our fiscal year 2022.

On May 17, 2022, our board of directors declared a cash distribution of $675 per membership unit to the holders of units of record at the close of business on May 17, 2022 for a total distribution of $9,859,050. The distribution was paid on May 31, 2022.

On May 23, 2022, we received an award from the USDA Biofuel Producer Program of approximately $7,652,000.

We have engaged with Vault 44.01 (USA) LLC ("Vault") to pursue the possible joint development of integrated carbon dioxide facilities, transportation infrastructure and a carbon sequestration site for the carbon dioxide emissions produced by our plant (the "CCS Project"). We have performed an initial study and assessment of the technical and economic feasibility of the CCS Project and optimal commercial structure and have taken certain steps towards implementing the CCS Project including filing the application for the necessary permitting. However, the CCS Project is still in its preliminary stages and is subject to many variables that could have a material effect on its feasibility and our ability to construct and complete the CCS Project.

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




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