Results of Operations for the Fiscal Years Ended October 31, 2019 and 2018



The following table shows the results of our operations and the percentage of
revenues, cost of goods sold, gross profit (loss), operating expenses, operating
loss and other items to total revenues in our statements of operations for the
fiscal years ended October 31, 2019 and 2018:
                                         2019                         2018
Statements of Operations Data     Amount           %           Amount           %
Revenues                      $ 97,249,109     100.00  %   $ 94,943,746     100.00  %
Cost of Goods Sold             101,759,731     104.64  %     97,723,069     102.93  %
Gross Loss                      (4,510,622 )    (4.64 )%     (2,779,323 )    (2.93 )%
Operating Expenses               3,200,285       3.29  %      2,891,093       3.05  %
Operating Loss                  (7,710,907 )    (7.93 )%     (5,670,416 )    (5.97 )%
Other Income (Expense), Net       (563,329 )    (0.58 )%       (489,008 )    (0.52 )%
Net Loss                      $ (8,274,236 )    (8.51 )%   $ (6,159,424 )    (6.49 )%

The following table shows the sources of our revenues for the fiscal years ended October 31, 2019 and 2018.


                                          2019                                2018
                                               Percentage of                       Percentage of
Revenue Sources                 Amount        Total Revenues        Amount        Total Revenues
Ethanol Sales               $  75,541,437            77.68 %    $  72,664,310            76.53 %
Modified Wet Distillers
Grains Sales                    3,874,384             3.98 %        3,323,857             3.50 %
Dried Distillers Grains
Sales                          14,700,718            15.12 %       15,641,622            16.48 %
Corn Oil Sales                  3,132,570             3.22 %        3,313,957             3.49 %
Total Revenues              $  97,249,109           100.00 %    $  94,943,746           100.00 %



Revenues

Ethanol

Our total revenues were higher for the fiscal year ended October 31, 2019
compared to the fiscal year ended October 31, 2018. Revenue from ethanol sales
increased by approximately 3.96% during the fiscal year ended October 31, 2019
compared to the fiscal year ended October 31, 2018 primarily due to higher
ethanol prices and an increase in gallons sold during the fiscal year ended
October 31, 2019 compared to the fiscal year end October 31, 2018. The average
ethanol sales price per gallon we received for the fiscal year ended October 31,
2019 was approximately 1.6% higher than the average price received for the
fiscal year ended October 31, 2018. In addition, we experienced an increase in
the gallons of ethanol sold during the fiscal year ended October 31, 2019
compared to the fiscal year ended October 31, 2018. The gallons of ethanol we
sold during the fiscal year ended October 31, 2019 increased by 2.3% as compared
to the number of gallons of ethanol sold for the fiscal year ended October 31,
2018.

Ethanol prices have been negatively affected by record levels of domestic
production coupled with a decline in ethanol exports due to trade disputes with
foreign governments and the institution of a tariff by China on ethanol produced
in the United States. In addition, the EPA's continued use of the small refinery
exemption could also have a negative impact on ethanol prices unless refiners
are required to blend additional gallons of ethanol to make up for the gallons
exempted. However, a positive outcome of trade talks between the United States
and China could lead to an increase in ethanol demand from China and higher
ethanol prices. In addition, approval of the year-round sale of E15 could
contribute to higher ethanol prices. Ethanol prices will also likely continue to
generally be directionally consistent with changes in corn and energy prices.

The increase in ethanol gallons sold for the fiscal year ended October 31, 2019,
as compared to the number of gallons of ethanol we sold for the fiscal year
ended October 31, 2018, was mainly due to less gallons in inventory at
October 31, 2019. Management anticipates that overall ethanol production may
increase in the future as compared with the amounts produced for

                                       22
--------------------------------------------------------------------------------

the fiscal year ended October 31, 2019 due to our receipt of our new air permit
which allows us to increase gallons of denatured ethanol produced per 12-month
rolling average.

In the ordinary course of business, we enter into forward contracts for our
commodity purchases and sales. At October 31, 2019, we had no forward fixed
price ethanol sales contracts. For the fiscal years ended October 31, 2019 and
2018, we recorded losses due to changes in the fair value of our outstanding
ethanol derivative positions of approximately $240,000 and $81,000,
respectively.

Distillers Grains



Revenue from distillers grains decreased by approximately 2.1% during the fiscal
year ended October 31, 2019 compared to the fiscal year ended October 31, 2018,
primarily due to lower distillers grains prices during the fiscal year ended
October 31, 2019 compared to same period of 2018. For the fiscal year ended
October 31, 2019, the average price per ton that we received for our dried
distillers grains was approximately 0.5% lower than the average price we
received during the fiscal year ended October 31, 2018 due to price decreases in
the protein market that correlate to the price of soybean meal and lower export
demand due to the recent swine flu outbreak in China, Vietnam and other foreign
countries. For the fiscal year ended October 31, 2019, the average price per ton
that we received for our modified distillers grains was approximately 6.3%
higher than during the fiscal year ended October 31, 2018 due to increased
demand and reduced production in our local area.

Distillers grains prices typically change in proportion to corn prices and
availability of corn. Domestic demand for distillers grains could decrease if
corn prices decline and end-users switch to lower priced alternatives or if
there is a swine flu outbreak in the U.S. Changes in foreign demand also impact
distillers grains prices. If the swine flu outbreak continues in or spreads to
other foreign countries that could have a negative effect on distillers grains
prices. The imposition by China of anti-dumping and anti-subsidy duties on
distillers grains produced in the U.S. have also had a negative effect on export
demand from China resulting in lower distillers grains prices. In addition,
trade actions by the Trump administration and foreign governments have created
additional uncertainty as to future agricultural export demand from China and
other countries. However, a positive outcome of trade talks between the United
States and China could lead to an increase in distillers grains demand from
China.

The tons of dried distillers grains we sold during the fiscal year ended
October 31, 2019 decreased by approximately 5.6% as compared to the tons of
dried distillers grains we sold during the fiscal year ended October 31, 2018.
The tons of modified distillers grains we sold during the fiscal year ended
October 31, 2019, increased by approximately 9.7% as compared to the same period
for 2018 due to an increase in the demand for our product in our area. Overall,
the number of tons of distillers grains sold decreased during our fiscal year
ended October 31, 2019 compared to the fiscal year ended October 31, 2018 due to
increased efficiencies in ethanol production which resulted in our producing
less distillers grains. Management anticipates that the overall amount of
distillers grains produced may increase in the future as compared with the
amounts produced for the fiscal year ended October 31, 2019, due to our receipt
of our new air permit which allows us to increase gallons of ethanol produced
and which would also increase our distillers grains production.

Corn Oil



Revenue from corn oil sales decreased by approximately 5.5% for the fiscal year
ended October 31, 2019, as compared to the fiscal year ended October 31, 2018,
primarily due to a decrease in pounds of corn oil sold during the fiscal year
ended October 31, 2019 compared to the fiscal year ended October 31, 2018. The
pounds of corn oil we sold during the fiscal year ended October 31, 2019
decreased by approximately 11.7% as compared to the pounds of corn oil we sold
for the fiscal year ended October 31, 2018 due to our corn oil extraction
equipment running less efficiently. Management anticipates that the overall
amount of corn oil produced may increase in the future as compared with the
amounts produced for the fiscal year ended October 31, 2019, due to our receipt
of our new air permit which allows us to increase gallons of ethanol produced
and which would also increase our corn oil production.

The average price per pound of corn oil sold increased during the fiscal year
ended October 31, 2019 compared to the same period of 2018. For the fiscal year
ended October 31, 2019, the average price per pound of corn oil we received was
approximately 4.3% higher than during the fiscal year ended October 31, 2018 due
to increased demand from the corn oil feed market. Management anticipates that
corn oil prices in the future will be affected by changes in corn and energy
prices and the recent renewal of the biodiesel blenders' tax credit.


                                       23
--------------------------------------------------------------------------------

Cost of Goods Sold



Our two largest costs of production are corn (65.1% of cost of goods sold for
the fiscal year ended October 31, 2019) and natural gas (4.7% of cost of goods
sold for the fiscal year ended October 31, 2019). Our total cost of goods sold
was approximately 4.1% more during the fiscal year ended October 31, 2019
compared to the fiscal year ended October 31, 2018 due to increased corn costs
and depreciation.

Corn

Our average price per bushel of corn for the fiscal year ended October 31, 2019
increased by approximately 2.2% as compared to the fiscal year ended October 31,
2018 primarily due to increased market value for corn. We used approximately
2.1% less bushels of corn in the fiscal year ended October 31, 2019 as compared
to the fiscal year ended October 31, 2018 due to improved efficiencies in
ethanol production.

Management expects there to be an adequate corn supply available in our area to
operate the ethanol plant. However, corn prices have been volatile and are
likely to remain so in the future depending on weather conditions, supply and
demand, stocks and other factors which could significantly impact our costs of
production.

Management anticipates corn consumption may increase in the future as compared
with the amounts produced for the fiscal year ended October 31, 2019, due to our
receipt of our new air permit which allows us to increase gallons of ethanol
produced and which would also increase our corn consumption.

At October 31, 2019, we had approximately 190,000 bushels of forward fixed basis
corn purchase contracts and 453,000 bushels of forward fixed price corn purchase
contracts valued at approximately $1,725,000 for various delivery periods
through July 2021. We recorded losses due to changes in the fair value of our
outstanding corn derivative positions for the fiscal years ended October 31,
2019 and 2018 of approximately $835,000 and $149,000, respectively.

Natural Gas



For the fiscal year ended October 31, 2019, we purchased approximately 5.6% less
natural gas as compared to the same period of 2018. This decrease in natural gas
usage is primarily due to the decrease in dried distillers grains production.
Our average price per MMBTU of natural gas was approximately 4.2% lower for the
fiscal year ended October 31, 2019 compared to the fiscal year ended October 31,
2018.

Natural gas prices were lower on average for the fiscal year ended October 31,
2019 due to an increased supply and our locking in prices for the majority of
our natural gas requirements. Management anticipates that natural gas prices
will increase if the natural gas industry experiences production problems or if
there are large increases in natural gas demand which will likely depend on the
severity of the winter weather conditions experienced during our 2020 fiscal
year.

At October 31, 2019, we had approximately 2,968,000 MMBTUs of forward natural
gas fixed price purchase contracts valued at approximately $7,497,000 for
delivery periods through March 2021. For the fiscal years ended October 31, 2019
and 2018, we recorded gains due to the change in fair value of our outstanding
natural gas derivative positions of approximately $22,000 and $38,000,
respectively.

Operating Expenses



We had operating expenses for the fiscal year ended October 31, 2019 of
$3,200,285 compared to operating expenses of $2,891,093 for the fiscal year
ended October 31, 2018. Management attributes this increase in operating
expenses to an increase in licenses and permit fees, payment of a civil penalty
to the Environmental Protection Agency and also an increase in IT fees and
advertising costs. We continue to pursue strategies to optimize efficiencies and
maximize production. These efforts may result in a decrease in our operating
expenses on a per gallon basis. However, because these expenses do not vary with
the level of production at the plant, we expect our operating expenses to remain
relatively steady.

Operating Loss

We had an operating loss for the fiscal year ended October 31, 2019 of
$7,710,907 compared to an operating loss of $5,670,416 for the fiscal year ended
October 31, 2018. This decrease in our profitability for the fiscal year ended
October 31, 2019, was due primarily to the increase in the price we paid for
corn relative to the price we received for ethanol.


                                       24
--------------------------------------------------------------------------------

Other Income (Expense), Net



We had total other expense for the fiscal year ended October 31, 2019 of
$563,329 compared to other expense of $489,008 for the fiscal year ended
October 31, 2018. Our other expense for the fiscal year ended October 31, 2019,
consisted primarily of interest expense which was offset in part by income from
investments.

Results of Operations for the Fiscal Years Ended October 31, 2018 and 2017



The following table shows the results of our operations and the percentage of
revenues, cost of goods sold, gross profit (loss), operating expenses, operating
profit (loss) and other items to total revenues in our statements of operations
for the fiscal years ended October 31, 2018 and 2017:
                                         2018                         2017
Statements of Operations Data     Amount           %           Amount            %
Revenues                      $ 94,943,746     100.00  %   $ 100,225,143     100.00  %
Cost of Goods Sold              97,723,069     102.93  %      93,476,303      93.27  %
Gross Profit (Loss)             (2,779,323 )    (2.93 )%       6,748,840       6.73  %
Operating Expenses               2,891,093       3.05  %       2,739,770       2.73  %
Operating Profit (Loss)         (5,670,416 )    (5.97 )%       4,009,070       4.00  %
Other Income (Expense), Net       (489,008 )    (0.52 )%        (489,758 )    (0.49 )%
Net Income (Loss)             $ (6,159,424 )    (6.49 )%   $   3,519,312       3.51  %

The following table shows the sources of our revenues for the fiscal years ended October 31, 2018 and 2017.


                                          2018                                2017
                                               Percentage of                       Percentage of
Revenue Sources                 Amount        Total Revenues        Amount        Total Revenues
Ethanol Sales               $  72,664,310            76.53 %    $  81,765,292            81.58 %
Modified Wet Distillers
Grains Sales                    3,323,857             3.50 %        2,285,156             2.28 %
Dried Distillers Grains
Sales                          15,641,622            16.48 %       12,463,304            12.44 %
Corn Oil Sales                  3,313,957             3.49 %        3,711,391             3.70 %
Total Revenues              $  94,943,746           100.00 %    $ 100,225,143           100.00 %



Revenues

Ethanol

Our total revenues were lower for the fiscal year ended October 31, 2018
compared to the fiscal year ended October 31, 2017. Revenue from ethanol sales
decreased by approximately 11.1% during the fiscal year ended October 31, 2018
compared to the fiscal year ended October 31, 2017 primarily due to lower
ethanol prices and a decrease in gallons sold during the fiscal year ended
October 31, 2018 compared to the fiscal year end October 31, 2017. The average
ethanol sales price per gallon we received for the fiscal year ended October 31,
2018 was approximately 10.9% lower than the average price received for the
fiscal year ended October 31, 2017. In addition, we experienced a slight
decrease in the gallons of ethanol sold during the fiscal year ended October 31,
2018 compared to the fiscal year ended October 31, 2017. The gallons of ethanol
we sold during the fiscal year ended October 31, 2018 decreased by less than 1%
as compared to the number of gallons of ethanol sold for the fiscal year ended
October 31, 2017.

Ethanol prices were lower on average during our 2018 fiscal year due to record
levels of domestic production. In addition, ethanol prices were negatively
affected by trade disputes with foreign governments and the institution of a
tariff by China on ethanol produced in the United States resulting in decreased
export demand from China.

The decrease in ethanol gallons sold for the fiscal year ended October 31, 2018, as compared to the number of gallons of ethanol we sold for the fiscal year ended October 31, 2017, was mainly due to a slight decrease in ethanol production.





                                       25
--------------------------------------------------------------------------------

In the ordinary course of business, we enter into forward contracts for our commodity purchases and sales. At October 31, 2018, we had no forward fixed price ethanol sales contracts. We recorded a loss related to ethanol based derivative instruments of approximately $81,000 for the fiscal year ended October 31, 2018. We recorded a gain related to ethanol based derivative instruments of approximately $569,000 for the fiscal year ended October 31, 2017.

Distillers Grains



Revenue from distillers grains increased by approximately 28.6% during the
fiscal year ended October 31, 2018 compared to the fiscal year ended October 31,
2017, primarily due to higher distillers grains prices during the fiscal year
ended October 31, 2018 compared to same period of 2017. For the fiscal year
ended October 31, 2018, the average price per ton that we received for our
modified distillers grains was approximately 16.2% higher than during the fiscal
year ended October 31, 2017. For the fiscal year ended October 31, 2018, the
average price per ton that we received for our dried distillers grains was
approximately 32.4% higher than the average price we received during the fiscal
year ended October 31, 2017.

Management attributes the increase in the average price we received for dried
distillers grains for the fiscal year ended October 31, 2018, as compared to the
fiscal year ended October 31, 2017, to price increases in the protein market
that correlate to the price of soybean meal, the imposition by China of
anti-dumping and anti-subsidy duties on distillers grains produced in the U.S.
and trade actions by the Trump administration and foreign governments which
created additional uncertainty as to future agricultural export demand from
China and other countries.

The tons of dried distillers grains we sold during the fiscal year ended
October 31, 2018 decreased by approximately 5% as compared to the tons of dried
distillers grains we sold during the fiscal year ended October 31, 2017. The
tons of modified distillers grains we sold during the fiscal year ended
October 31, 2018, increased by approximately 25.1% as compared to the same
period for 2017 due to an increase in the demand for our product in our area.
Overall, the number of tons of distillers grains sold increased during our
fiscal year ended October 31, 2018 compared to the fiscal year ended October 31,
2017 due to the increase in modified distillers grain production which has a
higher moisture content.

Corn Oil

Revenue from corn oil sales decreased by approximately 10.7% for the fiscal year
ended October 31, 2018, as compared to the fiscal year ended October 31, 2017,
primarily due to lower corn oil prices during the fiscal year ended October 31,
2018 compared to the same period of 2017. For the fiscal year ended October 31,
2018, the average price per pound of corn oil we received was approximately
20.7% lower than during the fiscal year ended October 31, 2017 due to decreased
demand from the corn oil feed market.

The pounds of corn oil we sold during the fiscal year ended October 31, 2018
increased by approximately 7.6% as compared to the pounds of corn oil we sold
for the fiscal year ended October 31, 2017 due to our corn oil extraction
equipment running more efficiently.

Cost of Goods Sold



Our two largest costs of production are corn (67.7% of cost of goods sold for
the fiscal year ended October 31, 2018) and natural gas (5.4% of cost of goods
sold for the fiscal year ended October 31, 2018). Our total cost of goods sold
was approximately 4.5% more during the fiscal year ended October 31, 2018
compared to the fiscal year ended October 31, 2017 due to increased corn costs
and depreciation.

Corn

Our average price per bushel of corn for the fiscal year ended October 31, 2018
increased by approximately 4.2% as compared to the fiscal year ended October 31,
2017 primarily due to increased market value for corn. We used approximately
0.6% less bushels of corn in the fiscal year ended October 31, 2018 as compared
to the fiscal year ended October 31, 2017 due to a slight decrease in gallons
produced.

At October 31, 2018, we had approximately 40,000 bushels of forward fixed basis
corn purchase contracts and 998,000 bushels of forward fixed price corn purchase
contracts valued at approximately $3,554,000 for various delivery periods
through November 2020. We recorded losses related to corn derivative instruments
of approximately $149,000 and gains of approximately $1,751,000 for the fiscal
years ended October 31, 2018 and October 31, 2017, respectively.



                                       26
--------------------------------------------------------------------------------

Natural Gas



For the fiscal year ended October 31, 2018, we purchased approximately 1.8% less
natural gas as compared to the same period of 2017. This decrease in natural gas
usage is primarily due to the decrease in dried distillers grains production.
Our average price per MMBTU of natural gas was approximately 4.0% lower for the
fiscal year ended October 31, 2018 compared to the fiscal year ended October 31,
2017.

Natural gas prices were lower on average during our 2018 fiscal year due to an
increased supply resulting primarily from a relatively mild winter during our
2018 fiscal year and our locking in prices for the majority of our natural gas
requirements.

At October 31, 2018, we had approximately 2,493,000 MMBTUs of forward natural
gas fixed price purchase contracts valued at approximately $6,268,000 for
delivery periods through December 2020. We recorded gains related to natural gas
based derivative instruments of approximately $38,000 and $11,000 for the fiscal
years ended October 31, 2018 and October 31, 2017, respectively.

Operating Expenses



We had operating expenses for the fiscal year ended October 31, 2018 of
$2,891,093 compared to operating expenses of $2,739,770 for the fiscal year
ended October 31, 2017. Management attributes a portion of this increase in
operating expenses to licenses and permit fees. We continue to pursue strategies
to optimize efficiencies and maximize production. These efforts may result in a
decrease in our operating expenses on a per gallon basis. However, because these
expenses do not vary with the level of production at the plant, we expect our
operating expenses to remain relatively steady.

Operating Loss



We had an operating loss for the fiscal year ended October 31, 2018 of
$5,670,416, compared to operating profit of $4,009,070 for the fiscal year ended
October 31, 2017. This decrease in our profitability for the fiscal year ended
October 31, 2018, was due primarily to the decrease in the price we received for
ethanol relative to the price we paid for corn.

Other Income (Expense), Net



We had total other expense for the fiscal year ended October 31, 2018 of
$489,008 compared to other expense of $489,758 for the fiscal year ended
October 31, 2017. Our other expense for the fiscal year ended October 31, 2018,
consisted primarily of interest expense which was offset in part by income from
investments.

Changes in Financial Condition for the Fiscal Years Ended October 31, 2019 and 2018



The following table highlights the changes in our financial condition for the
fiscal year ended October 31, 2019 from our previous fiscal year ended
October 31, 2018:

                       October 31, 2019      October 31, 2018
Current Assets        $       12,604,430    $       10,850,002
Current Liabilities           10,794,082             8,026,683
Long-Term Liabilities          7,244,124             7,222,371



Current Assets. The increase in current assets at October 31, 2019 was primarily
the result of increases in accounts receivable and cash and cash equivalents.
These increases were partially offset by decreases in inventories and derivative
instruments.

Current Liabilities. The increase in current liabilities at October 31, 2019 was primarily the result of increases in accounts payable.



Long-Term Liabilities. Long-term debt increased at October 31, 2019, as compared
to October 31, 2018, primarily due to increased borrowings on our Term Revolving
Loan.


                                       27

--------------------------------------------------------------------------------

Liquidity and Capital Resources



Our primary sources of liquidity are our Term Revolving Loan and cash generated
from operations. Based on financial forecasts performed by our management, we
anticipate that we will have sufficient cash on hand, cash from our current
credit facilities, and cash from our operations to continue to operate the
ethanol plant at capacity for the next 12 months. We do not currently anticipate
seeking additional equity or debt financing in the near term. However, high corn
prices significantly increase our cost of goods sold. If increases in cost of
goods sold are not offset by corresponding increases in the prices we receive
from the sale of our products, these increases in cost of goods sold can have a
significant negative impact on our financial performance. If we experience
unfavorable operating conditions in the ethanol industry that prevent us from
profitably operating the ethanol plant, we could have difficulty maintaining our
liquidity and we may have to secure additional debt or equity financing for
working capital or other purposes. We do not currently anticipate that we will
need to secure additional capital resources for any other significant purchases
of property and equipment in the next 12 months.

The following table shows cash flows for the fiscal years ended October 31, 2019
and 2018:

                                           October 31, 2019      October 31, 2018

Net cash provided by operating activities $ 2,957,651 $ 4,393,981 Net cash used in investing activities

            (1,709,039 )          (2,274,830 )
Net cash used in financing activities               (40,200 )          (2,426,658 )



Cash Flow From Operations

We experienced a decrease in our cash provided by operating activities for the
fiscal year ended October 31, 2019, as compared to the fiscal year ended
October 31, 2018. This decrease was primarily due to an increase in our net loss
during the fiscal year ended October 31, 2019.

Cash Flow From Investing Activities



We used less cash for investing activities during the fiscal year ended
October 31, 2019 as compared to the fiscal year ended October 31, 2018. This
change was primarily due to a decrease in capital expenditures during the fiscal
year ended October 31, 2019.

Cash Flow From Financing Activities



We used less cash for financing activities during the fiscal year ended
October 31, 2019, as compared to the fiscal year ended October 31, 2018. This
decrease was primarily a result of increased borrowings on long-term debt and a
decrease in the amount we paid towards the principal balance on our loan and
decreased distributions to members during the fiscal year ended October 31,
2019, as compared to the fiscal year ended October 31, 2018.

The following table shows cash flows for the fiscal years ended October 31, 2018
and 2017:

                                           October 31, 2018      October 31, 2017

Net cash provided by operating activities $ 4,393,981 $ 12,450,713 Net cash used in investing activities

            (2,274,830 )          (5,119,398 )
Net cash used in financing activities            (2,426,658 )          (8,722,906 )



Cash Flow From Operations

We experienced a decrease in our cash provided by operating activities for the fiscal year ended October 31, 2018, as compared to the fiscal year ended October 31, 2017. This decrease was primarily due to a decrease in our net income during the fiscal year ended October 31, 2018.


                                       28
--------------------------------------------------------------------------------

Cash Flow From Investing Activities



We used less cash for investing activities during the fiscal year ended
October 31, 2018 as compared to the fiscal year ended October 31, 2017. This
change was primarily due to a decrease in capital expenditures during the fiscal
year ended October 31, 2018.

Cash Flow From Financing Activities



We used less cash for financing activities during the fiscal year ended
October 31, 2018, as compared to the fiscal year ended October 31, 2017. This
decrease was primarily a result of increased borrowings on long-term debt, a
decrease in the amount we paid towards the principal balance on our loan and
decreased member unit repurchases during the fiscal year ended October 31, 2018,
as compared to the fiscal year ended October 31, 2017.

Short-Term and Long-Term Debt Sources



On January 22, 2016, we entered into a Second Amended and Restated Credit
Agreement with Compeer Financial f/k/a AgStar Financial Services, PCA
("Compeer"). In connection therewith, as of the same date, we executed a Second
Amended and Restated Term Notes, Second Amended and Restated Term Revolving
Notes, an Amended and Restated Security Agreement and a Second Amended and
Restated Mortgage, Security Agreement, Assignment of Leases and Fixture
Financing Statement. The Second Amended and Restated Credit Agreement decreased
the Variable Rate Term Loan to $15,000,000, increased the Term Revolving Loan to
$15,000,000 and eliminated the Revolving Line of Credit. Effective April 20,
2018, we executed a First Amendment to Second Amended and Restated Credit
Agreement with Compeer which increased the availability under the Term Revolving
Loan to $20,000,000. In connection therewith, as of the same date, we executed a
Third Amended and Restated Term Revolving Note and a Third Amended and Restated
Mortgage, Security Agreement, Assignment of Leases and Fixture Financing
Statement. Subsequent to our fiscal year end, on December 17, 2019, Compeer
waived our violation at October 31, 2019, of the minimum debt service coverage
ratio set forth in the Second Amended and Restated Credit Agreement.

Variable Rate Term Loan



The Variable Rate Term Loan is for $15,000,000 with a variable interest rate
based on the 30-day LIBOR rate plus 325 basis points with no minimum interest
rate. The applicable interest rate at October 31, 2019 was 5.30%. Monthly
principal payments are due on the Term Loan of approximately $250,000 plus
accrued interest. Payments are based upon a five year amortization. Payments of
all amounts outstanding are due on January 22, 2021. The outstanding balance on
this note was $3,500,000 at October 31, 2019. We may convert the Term Loan to a
fixed rate loan, subject to certain conditions as described in the Second
Amended and Restated Credit Agreement and with the consent of Compeer.

Term Revolving Loan



The Term Revolving Loan is for up to $20,000,000 with a variable interest rate
that is based on the 30-day LIBOR rate plus 325 basis points with no minimum
interest rate. The applicable interest rate at October 31, 2019 was 5.30%. The
Term Revolving Loan may be advanced, repaid and re-borrowed during the term.
Monthly interest payments are due on the Term Revolving Loan with payment of all
amounts outstanding due on January 22, 2023. The outstanding balance on this
note was $6,499,000 at October 31, 2019. We are also required to pay unused
commitment fees for the Term Revolving Loan as defined in the Second Amended and
Restated Credit Agreement.

Covenants and other Miscellaneous Financing Agreement Terms



The loan facility with Compeer is secured by substantially all business assets.
We executed a mortgage in favor of Compeer creating a first lien on our real
estate and plant and a security interest in all personal property located on the
premises and assigned in favor of Compeer, all rents and leases to our property,
our marketing contracts, our risk management services contract, and our natural
gas, electricity, water service and grain procurement agreements.

We are also subject to various financial and non-financial covenants that limit
distributions and debt and require minimum debt service coverage, tangible net
worth, and working capital requirements. Our debt service coverage ratio is to
be no less than 1.25:1.00 measured annually by comparing our adjusted EBITDA to
our scheduled payments of principal and interest. Our minimum working capital is
$8,250,000, which is calculated as current assets plus the amount available for
drawing under our Term Revolving Loan and undrawn amounts on outstanding letters
of credit, less current liabilities, and is measured quarterly.


                                       29
--------------------------------------------------------------------------------

We are limited to annual capital expenditures of $5,000,000 without prior
approval, incurring additional debt over certain amounts without prior approval,
and making additional investments as described in the Amended and Restated
Credit Agreement without prior approval. We are allowed to make cash
distributions to members as frequently as monthly in an amount equal to 75% of
net income if working capital is greater than or equal to $8,250,000, or 100% of
net income if working capital is greater than or equal to $11,000,000, or an
unlimited amount if working capital is greater than or equal to $11,000,000 and
there is no outstanding balance on the Term Loan.

Presently, we are meeting our liquidity needs and complying with our financial
covenants and the other terms of our loan agreements with Compeer except as to
our violation, at October 31, 2019, of the minimum debt service coverage ratio
requirement of 1.25:1.00 which was waived by Compeer on December 17, 2019. We
will continue to work with Compeer to try to ensure that the terms of our loan
agreements are met going forward. However, we cannot provide any assurance that
our actions will result in sustained profitable operations or that we will not
be in violation of our loan covenants or in default on our principal payments in
the future. Should unfavorable market conditions result in our violation of the
terms or covenants of our loan and we fail to obtain a waiver of any such term
or covenant, Compeer could deem us in default of our loans and require us to
immediately repay a significant portion or possibly the entire outstanding
balance of our loans. In the event of a default, Compeer could also elect to
proceed with a foreclosure action on our plant.

Contractual Cash Obligations



In addition to our long-term debt obligations, we have certain other contractual
cash obligations and commitments. The following tables provide information
regarding our contractual obligations and approximate commitments as of
October 31, 2019:

                                                           Payment Due by Period
                                             Less than One   One to Three  Three to Five
                                  Total           Year          Years          Years       After Five Years
Long-Term Debt Obligations    $  9,999,000   $  2,750,000   $    750,000   $  6,499,000                   -
Operating Lease Obligations        786,240        168,480        336,960        280,800                   -
Purchase Obligations             8,510,005      5,753,360      2,756,645              -                   -

Total Contractual Obligations $ 19,295,245 $ 8,671,840 $ 3,843,605 $ 6,779,800 $

               -

Critical Accounting Estimates



Management uses various estimates and assumptions in preparing our financial
statements in accordance with generally accepted accounting principles.  These
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Accounting estimates that are the most important to the
presentation of our results of operations and financial condition, and which
require the greatest use of judgment by management, are designated as our
critical accounting estimates. We have the following critical accounting
estimates:

Long-Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.


 Impairment testing for assets requires various estimates and assumptions,
including an allocation of cash flows to those assets and, if required, an
estimate of the fair value of those assets.  Our estimates are based upon
assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable. These valuations require the use of management's assumptions,
which do not reflect unanticipated events and circumstances that may occur.

Given the significant assumptions required and the possibility that actual conditions will differ, we consider the assessment of carrying value of property and equipment to be a critical accounting estimate.

Inventory Valuation



We value our inventory at lower of cost or net realizable value. Our estimates
are based upon assumptions believed to be reasonable, but which are inherently
uncertain and unpredictable. These valuations require the use of management's
assumptions which do not reflect unanticipated events and circumstances that may
occur. In our analysis, we consider corn costs and ethanol prices, break-even
points for our plant and our risk management strategies in place through our
derivative instruments. Given the significant assumptions required and the
possibility that actual conditions will differ, we consider the valuation of the
lower of cost or net realizable value on inventory to be a critical accounting
estimate.


                                       30

--------------------------------------------------------------------------------

Derivatives



We are exposed to market risks from changes in interest rates, corn, natural
gas, and ethanol prices. We may seek to minimize these commodity price
fluctuation risks through the use of derivative instruments. In the event we
utilize derivative instruments, we will attempt to link these instruments to
financing plans, sales plans, market developments, and pricing activities. Such
instruments in and of themselves can result in additional costs due to
unexpected directional price movements.

We have entered into ethanol, corn and natural gas derivatives in order to
protect cash flows from fluctuations caused by volatility in commodity prices.
In practice, as markets move, we actively attempt to manage our risk and adjust
hedging strategies as appropriate. We do not use hedge accounting which would
match the gain or loss on our hedge positions to the specific commodity
contracts being hedged. Instead, we use fair value accounting for our hedge
positions, which means that as the current market price of our hedge position
changes, the gains and losses are immediately recognized in our cost of goods
sold. The immediate recognition of hedging gains and losses under fair value
accounting can cause net income (loss) to be volatile from quarter to quarter
due to the timing of the change in value of the derivative instruments relative
to the cost and use of the commodity being hedged.

As of October 31, 2019, the fair values of our commodity-based derivative
instruments are a net liability of $651,818. As the prices of the hedged
commodity moves in reaction to market trends and information, our statement of
operations will be affected depending on the impact such market movements have
on the value of our derivative instruments. Depending on market movements, crop
prospects and weather, these price protection positions may cause immediate
adverse effects, but are expected to protect the Company over the term of the
contracts for the hedged amounts.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

© Edgar Online, source Glimpses