UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, ~~2018~~2019

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, MN 55437

(763) 226-2701

(Address, including zip code, and telephone number,

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

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Membership Units

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically 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 such files.) Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☑	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Our membership units are not publicly traded; therefore, our public float is not measurable.

As of December 1, ~~2018~~2019, the number of outstanding membership units was 25,410,851.

Portions of the registrant’s definitive Proxy Statement for the registrant’s 2019 Annual Meeting of Members are incorporated by reference into Part III.

ADVANCED BIOENERGY, LLC

FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, ~~2018~~2019

INDEX

		Page
PART I
Item 1.	Business	54
Item 1A.	Risk Factors	109
Item 2.	Properties	2112
Item 3.	Legal Proceedings	2112
Item 4.	Mine Safety Disclosures	2212
PART II
Item 5.	Market for Registrant’s Common Equity, Related Unit holder Matters and Issuer Purchases of Equity Securities	2313
Item 6.	Selected Financial Data	2515
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2616
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3626
Item 8.	Financial Statements and Supplementary Data	3727
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	5850
Item 9A.	Controls and Procedures	5850
Item 9B.	Other Information	5850
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	5951
Item 11.	Executive Compensation	5951
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Unit holder Matters	5951
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5951
Item 14.	Principal Accountant Fees and Services	5951
PART IV
Item 15.	Exhibits and Financial Statement Schedules	6052
Item 16	Form 10-K Summary	6355
SIGNATURES		6456

IMPORTANT NOTE REGARDING RECENT EVENTS

This Annual Report on Form 10-K for the year ended September 30, 2019 should be read in light of the recent events described under Part I, Item 1. “Business – Company Overview and Recent Events.”

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K 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~~Part I, Item 1A, “Risk Factors” section of this Annual Report on Form 10-K. ~~These risks and uncertainties include, but are not limited to, the following:~~

•You ~~our~~can ~~operational~~identify ~~results~~forward-looking ~~are~~statements ~~subject~~by toterms ~~fluctuations~~such inas ~~the~~“anticipates,” ~~prices~~“believes,” of“could,” ~~grain~~“estimates,” ~~utilities~~“expects,” ~~and~~“intends,” ~~ethanol~~“may,” ~~which~~“plans,” ~~are~~“potential,” ~~affected~~“predicts,” by“projects,” ~~various~~“should,” ~~factors~~“will,” ~~including~~“would,” ~~weather~~and similar expressions intended to identify forward-looking statements. Forward-looking statements include any statements regarding the conduct of our liquidation, ~~production~~dissolution ~~levels~~and winding up, ~~supply~~including, ~~demand~~but not limited to, ~~changes~~estimates inregarding ~~technology~~the ~~and~~timing ~~government~~of, ~~support~~or ~~and~~assets ~~regulations;~~available for, distribution to our members.

•Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our ~~margins~~estimates ~~have~~and ~~fluctuated~~assumptions inonly as of the ~~past~~date ~~and~~of ~~could~~this ~~again~~report. ~~become~~Except ~~negative~~as required by law, ~~which~~we ~~may~~assume ~~affect~~no ~~our~~obligation ~~ability~~to update any forward-looking statement or to ~~meet~~update ~~current~~the ~~obligations,~~reasons ~~service~~actual ~~our~~results ~~debt~~could differ materially from those anticipated in any forward-looking statement. Readers are urged to carefully review and ~~satisfy~~consider ~~financial~~“Risk ~~covenants~~Factors” ofand other disclosures made by us in this Annual Report on Form 10-K and in our ~~credit~~other ~~agreement~~reports filed from time to time with ~~AgCountry;~~the U.S. Securities and Exchange Commission, which we refer to as the SEC.

• our dependence on third parties for the marketing and sale of our ethanol and co-products;

• our current dependence on Agtegra Cooperative for the corn we need to produce ethanol;

• our ability to successfully construct and operate a new grain receiving and storage facility at our Aberdeen, South Dakota plant;

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

• our cash distributions to unit holders 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 (as defined below). This may have a negative impact on ethanol pricing and demand;

• current government mandated standards such as the RFS 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, and although our units are now listed on an internet-based matching platform, we cannot ensure that a market will ever develop for our units;

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

• anti-dumping and countervailing duties investigations by the Chinese government into U.S. distillers grains exported to China could result in reduced export demand for distillers grains and have a negative impact on domestic distillers grain prices;

• the ethanol tariff imposed by the Chinese government rose from 5 to 45 percent in 2018, and as of December 2018 remained at 45 percent; this higher tariff could result in reduced export demand for ethanol and have a negative impact on domestic ethanol prices;

• in late August 2017, the Brazilian government imposed a tariff of 20 percent on U.S. ethanol imports. The tariff applies to imports after an initial tax-free quota of 600 million liters, or 158.5 million gallons, per year. This tariff remains in effect as of December 2018. The tariff could result in reduced export demand for United States ethanol and have a negative impact on domestic ethanol prices;

• 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 our 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 Commission, which we refer to as the SEC, that advise interested parties of the risks and factors that may affect our business.

INTELLECTUAL PROPERTY

Advanced BioEnergyTM, our logos and the other trademarks, trade names and service marks of Advanced BioEnergy mentioned in this report are our property. This report also contains trademarks and service marks belonging to other entities.

INDUSTRY AND MARKET DATA

We obtained the industry, market and competitive position data used throughout this report from our own research, studies conducted by third parties, independent industry associations, governmental associations or general publications and other publicly available information. In particular, we have based much of our discussion of the ethanol industry, including government regulation relevant to the industry and forecasted growth in demand, on information published by the Renewable Fuels Association (“RFA”) and Growth Energy, the national trade associations for the U.S. ethanol industry. Because the RFA and Growth Energy are trade organizations for the ethanol industry, they may present information in a manner that is more favorable to that industry than would be presented by an independent source. Although we believe these sources are reliable, we have not independently verified the information. Forecasts are particularly likely to be inaccurate, especially over long periods of time.

ETHANOL UNITS

All references in this report to gallons of ethanol are to gallons of denatured ethanol. Denatured ethanol is ethanol blended with 2.0% to 2.5% denaturant, such as gasoline, to render it undrinkable and thus not subject to alcoholic beverage taxes.

4SEGMENT REPORTING

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 financial results, the Company’s plants are aggregated into one reportable segment.

PART I

ITEM 1.

BUSINESS

COMPANY OVERVIEW

Advanced BioEnergy, LLC (the “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, and corn oil. Ethanol~~ is acarried ~~renewable,~~out ~~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~~through ~~corn~~our ~~and~~wholly-owned ~~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~~subsidiary, ~~enhances~~ABE ~~octane~~South ~~ratings of the gasoline with which it is blended~~Dakota, ~~offers~~LLC ~~consumers~~(“ABE aSouth ~~cost-effective choice, and decreases the amount of crude oil the U~~Dakota”).~~S. needs to import from foreign sources.~~

ToOn ~~execute~~August ~~our business plan~~1, ~~in November 2006~~2019, weAdvanced ~~acquired~~BioEnergy and ABE South Dakota, ~~LLC~~entered ~~(f/k/a~~into ~~Heartland~~an ~~Grain~~asset ~~Fuels,~~purchase ~~LP),~~agreement ~~which~~(the ~~owned~~“Asset ~~existing~~Purchase ~~ethanol~~Agreement ~~production~~”) ~~facilities~~with inGlacial ~~Aberdeen~~Lakes ~~and Huron~~Energy, ~~South~~LLC ~~Dakota.~~(“GLE”), Weunder ~~commenced~~which ~~construction~~ABE ofSouth ~~our~~Dakota ~~expansion~~agreed ~~facility~~to insell its Aberdeen, and Huron South Dakota inethanol ~~April~~plants ~~2007,~~ and ~~commenced~~related ~~operations~~businesses into ~~January~~GLE ~~2008.~~(the ~~Our~~“Asset ~~production~~Sale”). ~~operations~~The ~~are~~Asset ~~carried~~Purchase ~~out~~Agreement ~~primarily~~and ~~through~~Asset ~~our~~Sale, ~~operating~~which ~~subsidiary:~~constitutes ~~ABE~~the ~~South~~sale ~~Dakota,~~of ~~LLC~~substantially ~~(“ABE~~all ~~South~~of ~~Dakota”)~~the ~~which~~assets ~~owns~~of ~~and~~the ~~operates~~Company, ~~ethanol~~was ~~facilities~~unanimously inapproved ~~Aberdeen~~by ~~and~~the ~~Huron,~~Company’s ~~South~~Board ~~Dakota.~~of Directors.

~~Operating~~At ~~segments~~a ~~are~~Special ~~defined~~Meeting ~~as components~~ of anMembers ~~enterprise~~held ~~for~~on ~~which~~September ~~separate~~19, ~~financial~~2019, ~~information~~the isCompany’s ~~available~~members ~~that~~approved isthe ~~evaluated~~Asset ~~regularly~~Purchase byAgreement and the ~~chief~~Asset ~~operating~~Sale. Also ~~decision~~at ~~maker~~the inSpecial ~~deciding~~Meeting ~~how~~of toMembers, ~~allocate~~the ~~resources~~members ~~and~~approved ina ~~assessing~~Plan ~~performance.~~of ~~Based~~Liquidation onand Dissolution (the ~~related~~“Plan ~~business~~of ~~nature~~Liquidation”) ~~and~~for ~~expected financial results,~~ the ~~Company’s~~voluntary ~~plants~~liquidation ~~are~~and ~~aggregated~~dissolution ~~into~~of ~~one~~the ~~reportable segment~~Company.

On December 19, 2019, Advanced BioEnergy, ABE South Dakota and GLE closed the Asset Sale. At the closing, ABE South Dakota sold to GLE substantially all of the assets related to its business of producing ethanol and co-products, including wet, modified and dried distillers’ grains and corn oil, through its plants located in Aberdeen, South Dakota and Huron, South Dakota.

Under the Asset Purchase Agreement, the purchase price was $47.5 million, plus the value of the Company’s inventory at closing, which was approximately $2.3 million. At the closing, Buyer paid to ABE South Dakota a total of $8.3 million in cash, which reflects the purchase price, less the approximately $31.0 million to repay the AgCountry Master Credit Agreement obligations, less the amount of certain accrued contract liabilities, and less $4.75 million of the purchase price that was deposited into an indemnity escrow account. The indemnity escrow account will be used to satisfy any of Buyer’s claims for indemnification under the Asset Purchase Agreement and any amounts remaining after the eighteen (18)-month anniversary of the closing will be released to the Company. The Company also paid approximately $0.7 million in transaction expenses at closing.

Upon the closing of the Asset Sale, the Company commenced its liquidation in accordance with the Plan of Liquidation. In connection with the Company’s liquidation in accordance with the Plan of Liquidation, the Company’s Board of Directors determined that the Company’s transfer records will be closed from and after the close of business on December 19, 2019. The Board of Directors will not consider and the Company will not record or recognize any transfer of the Company’s units occurring after the close of business on December 19, 2019.

Under the Plan of Liquidation, the Board of Directors of the Company may establish a liquidating trust and distribute assets of the Company to the liquidating trust. At this time, the Board of Directors of the Company has determined not to establish a liquidating trust. However, the Company will continue the process of liquidating its assets and winding up the Company otherwise in accordance with the Plan of Liquidation.

The Company’s Board of Directors intends to meet in January 2020 to determine the next steps in the Plan of Liquidation, including the amount and timing of any initial distribution to members, which the Company expects will be in January or February 2020. The Board anticipates that the amount of the initial distribution to members will be between $7.7 and $8.4 million or $0.30 to $0.33 per unit based on 25,410,851 units outstanding as of December 19, 2019, with a final distribution to be paid upon release of the indemnity escrow account.

This Annual Report on Form 10-K presents the Company’s business, assets, and financial results and position as of September 30, 2019 unless otherwise stated. The information presented in this Annual Report on Form 10-K is not necessarily indicative of results to be expected during the period from October 1, 2019 to the December 19, 2019 closing date of the Asset Sale. Following the December 19, 2019 closing date, the Company has not engaged and will not engage in any business activities except to the extent necessary to preserve the value of its assets, wind up its business affairs and distribute its assets in accordance with the Plan of Liquidation. Accordingly, our financial position or financial performance for any period prior to December 19, 2019 will be of limited value to a member’s understanding of the timing and amount of potential distributions during liquidation. See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

FACILITIES

The table below provides a summary of our dry mill ethanol plants in operation as of September 30, ~~2018~~2019:

Location	Opened	Estimated Annual Ethanol Production(1)		Estimated Annual Distillers’ Grains Production(2)		Estimated Annual Corn Oil Production		Estimated Annual Corn Processed		Primary Energy Source
		(Million gallons)		(000s Tons)		(000s lbs)		(Million bushels)
Aberdeen, SD(3)	January 2008		48		134		11,561		15.7	Natural Gas
Aberdeen, SD	January 2008		48		134		11,561		15.7	Natural Gas
Huron, SD	September 1999		32		97		5,717		11.4	Natural Gas
Consolidated			80		231		17,278		27.1

(1)	Actual permitted gallons are 65.7 million for Aberdeen and 42.0 million for Huron totaling 107.7 million gallons.

(2)	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.

(3) Our plant at Aberdeen formerly consisted of two production facilities that operated on a separate basis. The larger plant is represented in table above. In April 2016, the Company ceased operations at its smaller, nine million gallon Aberdeen facility due to inefficiencies at this older plant and capital expenditures required to keep the plant in operating condition, coupled with a weak margin environment. In the fourth quarter of fiscal 2016, the Company decided not to resume operations at this facility in the future and, accordingly, impaired the value of this asset on its financial statements to an estimated salvage value of $200,000, which resulted in a loss of $1,584,000 in the fourth quarter of fiscal 2016. During fiscal 2017, the Company received proceeds of $155,000 from the salvage of the smaller plant. At September 30, 2017, the remaining value of the asset on the Company’s financial statements was $45,000. During fiscal 2018, the Company received proceeds of $98,000 from the salvage of the smaller plant. At September 30, 2018, the remaining value of the asset on the Company’s financial statements was $0.

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

Under the ABE South Dakota security agreement with AgCountry (defined below), AgCountry holds a first priority security interest and mortgage in all inventory, accounts receivable, intangibles, equipment, fixtures, buildings, and a first mortgage in land owned or leased by ABE South Dakota.

ETHANOL

Ethanol sales have represented 7776%, 8277%, and 8082% of our revenues in the years ended September 30, ~~2018~~2019, ~~2017~~2018, and ~~2016~~2017, respectively. In ~~2017~~2018, the United States consumed 14.4942 billion gallons of ethanol representing 10.1% of the 142.9886 billion gallons of finished motor gasoline consumed, according to the U.S Energy Information Administration (“EIA”). Ethanol is currently blended with gasoline to meet regulatory standards as a clean air additive, an octane enhancer, a fuel extender and as a gasoline alternative.

Ethanol is most commonly sold as E10, the 10 percent blend of ethanol that can be used in all American automobiles. Increasingly, ethanol is also available as E15, which is a higher octane fuel with a 15 percent blend of ethanol. In June 2012, the EPA approved E15 for use in vehicles with model years 2001 and later. According to the Renewable Fuels Association, this group of approved vehicles makes up 90 percent of all vehicles on the road today. Although regulatory issues remain in many states, E15 is now available in limited locations in 29 states. Ethanol is also available as E85, a higher percentage ethanol blend for use in flexible fuel vehicles.

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 was capped at 15.0 billion gallons starting in 2015.

As of ~~October~~November ~~2018~~2019, current annualized ethanol production is approximately 1615.29 billion gallons per the RFA. On November 30 2017, the EPA announced the final rule for 2018 RVOs, which is set at 15.0 billion gallons for corn-based ethanol. This rule is also set at 100% of the original conventional biofuel requirement of 15.0 billion gallons, but has a reduction in the amount of advanced biofuels required. On June 26, 2018 the EPA announced proposed RVOs for 2019, which include 15.0 billion gallons for corn-based ethanol, consistent with both the 2018 RVOs and the original statutory volumes. On November 30, 2018 the EPA announced the final RVOs for 2019. The final RVOs for 2019 were consistent with the volumes proposed in June, with an increase only in advanced biofuel volumes to 4.92 billion gallons from the proposed 4.88 billion gallons. The 15.0 billion gallons that can be met with corn-based ethanol remains the same as the June 2018 proposal and the original statutory volumes.

The following chart illustrates the potential United States ethanol demand based on the schedule of minimum usage established by the RFS2 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
2017(1)		24.00		5.50		—		9.00		15.00
2018 (2)		19.29		0.29		2.10		4.29		15.00
2017(2)		19.28		0.31		2.00		4.28		15.00
2019 (1)		28.00		8.50		-		13.00		15.00
2018(1)		26.00		7.00				11.00		15.00
2019 (3)		19.92		0.42		2.10		4.92		15.00
2018(3)		19.29		0.29		2.10		4.29		15.00
2020 (1)		30.00		10.50		2.43		15.00		15.00
2019(1)		28.00		8.50		—		13.00		15.00
2020 (4)		20.00		0.54		-		5.04		15.00
2019(4)		19.88		0.38		2.10		4.88		15.00
2021		33.00		13.50		-		18.00		15.00
2019(5)		19.92		0.42		2.10		4.92		15.00
2022		36.00		16.00		-		21.00		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 volumes.

(2) Final EPA Renewable Fuel Standards for ~~2017~~2018 issued November ~~2016~~2017.

(3) Final EPA Renewable Fuel Standards for ~~2018~~2019 issued November ~~2017~~2018.

(4) Proposed EPA Renewable Fuel Standards for ~~2019~~2020 issued ~~June~~July ~~2018~~2019.

(5) Final EPA Renewable Fuel Standards for 2019 issued November 2018.

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.

Clean Air Additive

A clean air additive is a substance that, when added to gasoline, reduces tailpipe emissions, resulting in improved air quality characteristics. Ethanol contains 35% oxygen, approximately twice that of MTBE, a historically used oxygenate. The additional oxygen found in ethanol, when blended with gasoline at a 10% level, results in more complete combustion of the fuel in the engine cylinder and reduces tailpipe emissions, including volatile organic compound emissions, by as much as 30%. Pure ethanol, which is non-toxic, water soluble and biodegradable, replaces some of the harmful gasoline components, including benzene.

Octane Enhancer

Pure ethanol possesses an average octane rating of 113, enabling refiners to conform lower octane blend stock to gasoline standards, while also expanding the volume of fuel produced. In addition, ethanol is commonly added to finished regular grade gasoline at the wholesale terminal to produce higher octane mid-grade and premium gasoline. At present, ethanol represents one of the few commercially viable sources of octane enhancer available to refiners.

Fuel Extender

Ethanol extends the volume of gasoline by the amount of ethanol blended with conventional gasoline, thereby reducing dependence on foreign crude oil and refined products. Furthermore, ethanol is easily added to gasoline after the refining process, reducing the need for large, capital intensive capacity expansion projects at refineries.

E85, a Gasoline Alternative

Ethanol is the primary blend component in E85. According to the U.S. Department of Energy, today there are over 3,310 retail stations offering E85 in the United States. The RFA estimates that there are now more than 22.0 million ethanol-flexible fuel vehicles (“FFVs”), on the road in the U.S. today, which is approximately eight percent of all vehicles.

E15

As noted above, to increase ethanol usage, Growth Energy requested a waiver from the EPA to increase the allowable amount of ethanol blended to a 15% level. In June 2012, the EPA approved E15 to be used in vehicles with model years 2001 and later. Although regulatory issues remain in many states, E15 is available in limited locations in 29 states as of November 2018.

Ethanol Competition

The ethanol we produce is similar to ethanol produced by other plants. The RFA reports that as of November ~~2018~~2019, current annual U.S. ethanol production capacity was approximately 16.25 billion gallons per year, with actual annualized production around 1615.09 billion gallons per year. On a national level, there are numerous other production facilities with which we are in direct competition, many of which have greater resources than we do. As of November ~~2018~~2019, South Dakota had 15 ethanol plants producing an aggregate of 1.1 billion gallons of ethanol per year.

The largest ethanol producers include: 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

ABE South Dakota has ethanol marketing agreements with NGL Energy Partners, LP (“NGL”), a diversified energy business. These ethanol marketing agreements require that we sell to NGL all of the denatured fuel-grade ethanol produced at the South Dakota plants. These ethanol marketing agreements were originally set to expire on June 30, 2019. On ~~and~~April ~~will~~1, ~~automatically~~2019, ~~renew~~the ~~unless~~agreements ~~cancelled~~were byamended ~~either~~to ~~party~~change the term to month-to-month, with three months ~~prior~~written notice by either party required to terminate the ~~end~~agreement. On September 27, 2019, the Company provided notice of termination to NGL due to the ~~term~~pending Asset Sale, which closed on December 19, 2019. The agreements will terminate on December 31, 2019.

CO-PRODUCTS

Sales of distillers’ grains have represented 20%, 1420%, and 1814% of our revenues for the years ended September 30, ~~2018~~2019, ~~2017~~2018, and ~~2016~~2017, respectively. When the plants are operating at capacity, they produce approximately 231,000 tons of dried distillers’ grains equivalents per year, approximately 15-16 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, but also to the poultry and swine markets. Dry mill ethanol processing creates three forms of distillers’ grains: (i) wet distillers’ grains with solubles, known as wet distillers’ grains; (ii) modified wet distillers’ grains with solubles, known as modified distillers’ grains; and (iii) 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 this Form 10-K, we sometimes refer to these products as “distillers’ grains” or “distillers’.”

We installed corn oil extraction technology at our Aberdeen plant in 2012. We installed corn oil extraction technology at our Huron plant that became fully operational in October 2016. 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 6864% 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 3236% from the sale of modified or wet distillers’ grains, which have a shorter shelf life and are typically sold in local markets and delivered via truck.

We compete with other ethanol producers in the sale of corn oil. We ship all of the corn oil from our facilities via truck. Many ethanol producers have added corn oil technology to their facilities.

Co-Product Marketing

ABE South Dakota has an agreement with Dakotaland Feeds, LLC (“Dakotaland Feeds”) to market and sell wet distillers grains produced at the Huron plant and modified distillers grains produced at the Aberdeen plant. ABE South Dakota has a marketing agreement with Gavilon Ingredients, LLC (“Gavilon”) for the dried distillers’ grains produced at the Huron and Aberdeen plants that became effective July 1, 2013. The marketing agreement requires Gavilon to use commercially reasonable efforts to purchase substantially all of the dried distillers’ grains produced at the Huron and Aberdeen plants ~~through~~which were originally set to expire on July 31, 2019. On May 8, 2019, the term of the agreement was amended to continue until either party gave no less than sixty days written notice. On September 30, 2019, the Company provided notice of termination due to the pending Asset Sale. The agreement terminated on November 30, 2019. The Company continued to sell dried distillers’ to Gavilon through the closing of the Asset Sale. The Aberdeen plant self-~~markets~~marketed its wet and a small portion of modified distillers’ grains.

ABE South Dakota iswas party to an agreement with Gavilon to market all the corn oil produced by the Huron and Aberdeen plants through November 30, 2019 and September 30, 2019, respectively. On, July 16, 2019, a notice of termination for the Huron plant was given to Gavilon which terminated the contract as of October 20, 2019. The Company continued to sell corn oil to Gavilon through the closing of the Asset Sale. On August 21, 2019 a termination notice for the Aberdeen plants was given to Gavilon whereby the agreement terminated on the closing date of the Asset Sale.

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 Agtegra Cooperative 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 hammermill 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 then 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 blend 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: (i) wet distillers’ grains with solubles, known as wet distillers’ grains; (ii) modified wet distillers’ grains with solubles, known as modified distillers’ grains; and (iii) 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.

RAW MATERIALS

Corn

InOur ~~2017,~~production ~~the~~facilities produce ethanol ~~industry~~by ~~consumed~~using ~~approximately~~a ~~5.5~~dry-mill ~~billion~~process, ~~bushels~~with an annual production capacity of ~~corn~~approximately 80 million gallons, which ~~approximated~~yields ~~38%~~approximately 2.8 gallons of ~~the~~denatured 14ethanol per bushel of corn.6 When our South Dakota facilities are operating at capacity, they process approximately 27 ~~billion~~million bushels of ~~domestic~~ corn ~~production~~per year. We have a grain origination agreement with Agtegra Cooperative (“Agtegra”) under which Agtegra originates, ~~according~~stores and delivers corn to the UAberdeen and Huron plants.S Although our agreement with Agtegra allows us to purchase corn from other sources, we have historically not done this. ~~Department~~Our agreement with Agtegra was automatically renewed in November 2016 and was set to expire in November 2019. On May 4, 2018, we issued a partial notice of ~~Agriculture~~termination of this agreement with respect to the Aberdeen plant due to our plans to construct a grain storage and receiving facility. This partial termination became effective on November 8, 2019. On April 16, 2019, the remaining agreement for the Huron plant was amended to terminate with 24 months written notice by either party.

Our production facilities produce ethanol by using a dry-mill process, with an annual production capacity of approximately 80 million gallons, which yields approximately 2.8 gallons of denatured ethanol per bushel of corn. When our South Dakota facilities are operating at capacity, they process approximately 27 million bushels of corn per year. We have a grain origination agreement with Agtegra Cooperative (“Agtegra”) under which Agtegra originates, stores and delivers corn to the Aberdeen and Huron plants. Although our agreement with Agtegra allows us to purchase corn from other sources, we have historically not done this. Our agreement with Agtegra was automatically renewed in November 2016 and was set to expire in November 2019. On May 4, 2018, we issued a partial notice of termination of this agreement with respect to the Aberdeen plant due to our plans to construct a grain storage and receiving facility. The remaining agreement for the Huron plant expires in November 2019 and will automatically renew unless cancelled at least 180 days prior to the end of the renewal term.

We purchase corn from Agtegra through forward fixed-priced contracts, forward basis contracts and daily spot pricing. Our forward contracts specify the amount of corn, the price and the time period over which the corn is to be delivered. These forward contracts are at fixed-prices or prices based on the Chicago Board of Trade (“CBOT”) prices.

Natural Gas

When our South Dakota facilities operate at capacity, they require approximately 2.1 million British Thermal Units (“mmbtu”) of natural gas per year. Natural gas prices and availability are affected by weather conditions and overall economic conditions. We have constructed our own natural gas pipeline for the Aberdeen plant. This pipeline originates at a mainline and allows our Aberdeen plant to source gas from various national marketers without paying transportation cost to the local utility. Our Huron plant does not have an owned pipeline and is subject to additional transportation charges. The Huron plant generally purchases its natural gas from national suppliers. Natural gas prices can be volatile; therefore from time to time we use hedging strategies to reduce our exposure to natural gas price fluctuations.

Shipment of Ethanol by Rail Car

We transport ethanol to our customers primarily via tanker rail cars. As of September 30, ~~2018~~2019, we are leasing ethanol tank cars under leases that expire at varying times over the next ~~six~~five years. Over the past several years, there have periodically been periods of increased rail traffic congestion throughout the United States, primarily due to the increase significant in cargo trains carrying shale oil. From time to time, this congestion has affected our ability to have our tanker rail cars return 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. To mitigate this risk, the Company added one million gallons of denatured ethanol storage at the Aberdeen plant, which became operational in January 2015. ~~The Company may also consider additional storage capacity at the Huron plant in the future.~~

ENVIRONMENTAL MATTERS

We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground; the generation, storage, handling, use, transportation and disposal of hazardous materials; and the health and safety of our employees. Any violation of these laws and regulations or permit conditions could result in substantial fines, natural resource damage, criminal sanctions, and damage claims from third parties, and permit revocations or facility shutdowns. We believe we are currently in substantial compliance with environmental laws and regulations and do not anticipate a material adverse effect on our business or financial condition as a result of our efforts to comply with these requirements. However, our business is still subject to risks associated with environmental and other regulations and associated costs. Protection of the environment requires us to incur expenditures for equipment, processes and permitting. We use various pollution control equipment in our production facilities. In fiscal 2015, we installed a Continuous Emissions Monitoring System (“CEMS”) at our Aberdeen plant to enable us to burn increased levels of natural gas while ensuring compliance with emissions regulations. The total capital expenditure related to the bag house and CEMS unit was approximately $420,000.

material adverse effect on our business or financial condition as a result of our efforts to comply with these requirements. However, our business is still subject to risks associated with environmental and other regulations and associated costs. Protection of the environment requires us to incur expenditures for equipment, processes and permitting. We use various pollution control equipment in our production facilities. In fiscal 2015, we installed a Continuous Emissions Monitoring System (“CEMS”) at our Aberdeen plant to enable us to burn increased levels of natural gas while ensuring compliance with emissions regulations. The total capital expenditure related to the bag house and CEMS unit was approximately $420,000.

EMPLOYEES

As of December 1, ~~2018~~2019, we had 6255 full-time employees. None of our employees are covered by a collective bargaining agreement.

SEASONALITY

Our operating results are influenced by seasonal fluctuations in the price of our primary operating inputs, corn and natural gas, and the price of our primary products, ethanol and distillers’ grains. Historically, the spot price of corn tends to rise during the spring planting season in May and June and tends to decrease during the fall harvest in October and November. The price for natural gas however, tends to move opposite of corn and tends to be lower in the spring and summer and higher in the fall and winter. The price of distillers’ grains tends to rise during the fall and winter cattle feeding seasons and be lower in the spring and summer when pasture grazing is readily available, although this effect can be mitigated if export markets are strong.

REPORTS

The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports are available on the Company’s website www.advancedbioenergy.com as soon as reasonably practicable after it electronically files these materials with the SEC.

ITEM 1A.

RISK FACTORS

~~RISKS~~We ~~RELATED~~have TOidentified ~~OUR~~and ~~BUSINESS~~discussed below the most significant risk factors affecting the Company following the commencement of our liquidation, dissolution and winding up on December 19, 2019 pursuant to the Plan of Liquidation. There may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect the implementation of the Plan of Liquidation.

~~Current~~RISKS ~~ABE~~RELATED ~~South~~TO ~~Dakota~~OUR debt financing agreements contain restrictive covenants. Our failure to comply with applicable debt financing covenants and agreements could have a material adverse effect on our business, results of operations and financial condition.LIQUIDATION

~~The~~We ~~terms~~cannot ofdetermine ~~our~~at ~~existing~~this ~~debt~~time ~~financing~~the ~~agreements~~amount ~~contain, and any future debt financing agreements we enter into may contain, financial, maintenance, organizational, operational~~ or ~~other~~timing ~~restrictive~~of ~~covenants.~~any Ifdistributions ~~ABE South Dakota is unable~~ to ~~comply~~our ~~with~~members ~~these~~because ~~covenants~~there orare ~~service~~many ~~its debt~~factors, wesome ~~may~~of bewhich ~~forced~~are tooutside ~~reduce~~of ~~or delay planned capital expenditures, sell assets, restructure~~ our ~~indebtedness or submit to foreclosure proceedings~~control, ~~any of~~ which could ~~result~~affect ~~in a material adverse effect upon~~ our ~~business,~~ability ~~results~~to ofmake ~~operations~~such ~~and financial condition~~distributions.

AsWe plan to distribute, in an initial distribution (with potential subsequent distributions thereafter), a ~~result~~portion of athe ~~depressed~~net ~~margin~~proceeds ~~environment~~from inthe ~~fiscal~~Asset ~~2018,~~Sale ~~ABE~~and ~~South~~the ~~Dakota~~Company’s ~~was~~other ~~required~~cash, subject to ~~request~~establishing ~~waivers~~a contingency reserve for ~~certain~~remaining ~~Events~~costs and liabilities. The amount and timing of ~~Default~~the atdistributions ~~September~~to members will be determined by the Board in its discretion, subject to the provisions of the Plan of Liquidation. However, the Board anticipates an initial distribution in January 2020 in an amount between $7.7 and $8.4 million or $0.30 to $0.33 per unit based on 25,410,851 ~~2018~~units outstanding as of December 19, 2019. Subsequent distributions will be made in such amounts and ~~covenant~~at ~~amendments~~such ~~for~~times ~~certain~~as ~~future~~determined ~~covenants~~by ~~for~~the ~~which~~Board ~~ABE~~in ~~South~~its ~~Dakota~~discretion in accordance with the Plan of Liquidation. The Board anticipates that there will be a subsequent distributions of approximately $7,500,000 or approximately $0.30 per unit.

The timing and amount of distributions are subject to change depending on a variety of factors, including, but not limited to, whether we are able to sell our remaining assets and the prices therefor; the timing of the sale of our remaining assets; the amount we will be required to pay to satisfy unknown or contingent liabilities in the future, including the cost of winding down our business through the date of our final dissolution; inaccuracies in the cost estimates to resolve currently known contingent liabilities; general business and economic conditions; and other matters.

In addition, we will continue to incur claims, liabilities and expenses following the Asset Sale closing as we effect the liquidation, such as personnel expense, insurance, taxes, legal and accounting fees and miscellaneous office expenses. Our estimates regarding our expense levels may be inaccurate. Any unforecasted or unexpected claims, liabilities or expenses that arise during liquidation and dissolution or any claims, liabilities or expenses that exceed our estimates could leave us with less cash than is necessary to pay liabilities and expenses and would likely reduce the amount of cash available for ultimate distribution to our members. Further, if cash to be received from the sale of our remaining assets is not adequate to provide for all of our obligations, liabilities, expenses and claims, we will not be able to make any subsequent distribution to our members.

Accordingly, there can be no assurance as to the timing or amount of distributions to our members.

If we fail to create an adequate contingency reserve for payment of our expenses and liabilities, each of our members who receives liquidating distributions could be held liable for payment to our creditors of that member’s pro rata unit of amounts owed to creditors in excess of the contingency reserve, up to the amount actually distributed to that member in the liquidation.

Following the winding up of our business and affairs, we will file a Certificate of Cancellation with the Secretary of State of the State of Delaware to dissolve the Company. If a court holds at any time that we have failed to make adequate provision for our expenses and liabilities in the liquidation or if the amount ultimately required to be paid in respect of such liabilities exceeds the amount available from our contingency reserve, our creditors could seek an injunction against the making of distributions on the grounds that the amounts to be distributed are needed to provide for the payment of our expenses and liabilities. Any such action could delay or substantially diminish the amount of any cash distributions to members. If we fail to create an adequate contingency reserve for payment of our expenses and liabilities, creditors could assert claims against each member receiving a distribution for the payment of any shortfall, up to the amounts previously received by the member in distributions from us. In such event, a member could be required to return all distributions previously made to such member pursuant to the Plan of Liquidation and could receive nothing from us under the Plan of Liquidation. Moreover, in the event a member has paid taxes on amounts previously received by the member, a repayment of all or a portion of such amount could result in a member incurring a net tax cost if the member’s repayment of an amount previously distributed does not cause a commensurate reduction in taxes payable. The Board is not required to obtain a solvency opinion as a condition to authorizing a liquidating distribution and we cannot ensure that the contingency reserve established by us will be adequate to cover all expenses and liabilities.

The tax treatment of any liquidating distributions may vary from member to member, and the discussion in this proxy statement regarding such tax treatment is general in nature. You should consult your own tax advisor instead of relying on the discussions of tax treatment in this proxy statement for tax advice.

We have not requested a ruling from the Internal Revenue Service with respect to the anticipated tax consequences of the liquidation, and we will not seek an opinion of counsel with respect to the anticipated tax consequences of any liquidating distributions. If any of the anticipated tax consequences to members proves to be incorrect, the result could be increased taxation at the member level, thus reducing the benefit to our members and us from the liquidation and distributions. Tax considerations applicable to particular members may vary with and be contingent upon the member’s individual circumstances.

We will continue to incur claims, liabilities and expenses that will reduce the amount available for distribution to members.

Claims, liabilities and expenses (such as costs, salaries, directors’ and officers’ insurance, payroll and local taxes, legal and accounting fees and miscellaneous office expenses) will continue to be incurred as we wind down our operations. These expenses will reduce the amount of assets available for ultimate distribution to members. If we incur obligations, liabilities, expenses and claims in excess of those we currently anticipate, the amount distributed to our members may be lower than we currently estimate.

We will continue to incur the expenses of complying with public company reporting requirements.

Following the Asset Sale and through the subsequent liquidation and dissolution, we have an obligation to continue to comply with the applicable reporting requirements of the Exchange Act even though compliance with these reporting requirements may be economically burdensome. In connection with the liquidation, the Company intends to seek relief from the SEC to deregister its units or suspend certain of its reporting obligations under the Exchange Act. However, there can be no assurance that any such relief will be granted. Until we are able to deregister our units and suspend our periodic reporting obligations under the Exchange Act, we will remain a reporting issuer and will incur attendant costs relating to filing such reports with the SEC. The expenses incurred by us in complying with the applicable reporting requirements would reduce the assets available for ultimate distribution to our members.

We depend on certain key personnel to administer our liquidation, and the loss of any of these persons may prevent us from implementing the liquidation in an effective and timely manner.

The timely and successful implementation of the Plan on Liquidation depends largely upon the continued services of our chief executive officer and other key personnel. Any loss or interruption of the services of one of these key personnel could result in our inability to timely and cost-effectively manage through the process of liquidation, dissolution and winding up pursuant to the Plan of Liquidation, including increased expenses associated with the implementation of the Plan of Liquidation that may reduce the assets available for ultimate distribution to our members.

~~projected~~The ~~non-compliance. Although~~units ~~ABE~~are ~~South~~not ~~Dakota’s~~transferrable ~~lender, AgCountry Farm Credit Services, PCA, granted the waivers~~ and ~~covenant~~under ~~amendments via~~ the ~~Third~~Plan ~~and~~of ~~Fourth Amendments to the 2015 Credit Agreement~~Liquidation, ~~we cannot project with certainty that we will meet all covenant obligations, as amended, if depressed margins continue for an extended period of time. If ABE South Dakota is unable to comply with~~ the ~~amended~~rights ~~covenants, we cannot be certain that our lender will grant us future waivers, which could result in any or all~~ of the ~~impacts~~Company’s ~~noted~~members ~~above~~are ~~and~~limited ~~could~~to ~~result in a material adverse effect upon our business~~distributions, ~~results~~if ~~of operations and financial condition~~any.

~~Our~~Upon ~~financial~~the ~~performance~~closing isof ~~highly~~the ~~dependent~~Asset Sale on ~~commodity~~December ~~prices~~19, ~~which~~2019, ~~are~~the ~~subject~~Company tocommenced ~~significant~~its ~~volatility~~liquidation in accordance with the Plan of Liquidation. The Board of Directors has determined that from and after the close of business on December 19, ~~uncertainty~~2019, the Company’s transfer records will be closed and ~~supply~~the ~~disruptions~~Company will not record or recognize any transfer of the Company’s units occurring after the close of business on December 19, so2019. Holders of units in the Company have no rights in respect of such units, except the right to receive distributions, if any, pursuant to and in accordance with the Plan of Liquidation, our ~~results~~Operating ~~may~~Agreement and Delaware law. However, there can be ~~materially~~no ~~adversely~~assurance ~~affected~~as to the timing or amount of distributions to our members due to the factors described in this section.

Our results of operations and financial condition are significantly affected by the cost and supply of corn and natural gas, and by the selling price for ethanol, distillers’ grains, corn oil and gasoline, which are commodities. Changes in the price and supply of these commodities are subject to and determined by market forces over which we have no control.

Our revenues exclusively depend on the market prices for ethanol, distillers’ grains and corn oil. These prices can be volatile due to a number of factors, including overall supply and demand, the price of corn, the price of and demand for gasoline, the level of government support and the availability and price of competing products.

One of our members beneficially owns a large percentage of our units, which may enable it to control substantially all matters requiring member approval. This member, THL and affiliated entities (f/k/a Hawkeye Energy Holdings), has been granted other special voting rights.

In August 2009, we and each of our then-current directors, Agtegra Cooperative (formerly South Dakota Wheat Growers Association), entities associated with Clean Energy Capital (“CEC”) (and predecessor entities) and entities associated with Thomas H. Lee Partners, L.P. (“THL”) executed a Voting Agreement (the “Voting Agreement”). The Voting Agreement, as amended January 25, 2015, among other things, currently requires the parties to (a) nominate for election to the board two designees of THL and the Chief Executive Officer of the Company, (b) recommend to the members the election of each of these designees, (c) vote (or act by written consent) all units (or other voting equity securities) of the Company they beneficially own, hold of record or otherwise control at any time, in person or by proxy, to elect each of the designees to the board, (d) not take any action that would result in (and take any action necessary to prevent) the removal of any of the designees from the board or the increase in the size of the board to more than nine members without the consent of the THL and the Chief Executive Officer, and (e) not grant a proxy with respect to any units that is inconsistent with the parties’ obligations under the Voting Agreement. As of January 1, 2017, entities associated with CEC no longer have a five percent ownership interest in the Company and accordingly, CEC is not entitled to designees for whom the other parties to the Voting Agreement must vote. The Company has also granted THL board observation rights under the Voting Agreement. At December 1, 2018, the parties to the Voting Agreement held in the aggregate approximately 40% of the outstanding units of the Company.

As a result of the Voting Agreement and its ownership, THL has the ability to significantly influence the outcome of any actions taken by our board of directors. In addition, given the large ownership of this entity, THL can significantly influence other actions, such as amendments to our operating agreement, mergers, going private transactions, and other extraordinary transactions, and any decisions concerning the terms of any of these transactions. The ownership and voting positions of this member may have the effect of delaying, deterring, or preventing a change in control or a change in the composition of our board of directors. This member may also use its contractual rights, including access to management, and its large ownership position to address its own interests, which may be different from those of our other members.

We are required to sell substantially all of our ethanol to NGL Energy Partners LP, which may place us at a competitive disadvantage and reduce profitability.

The Company’s operating subsidiary, ABE South Dakota, has ethanol marketing agreements with NGL Energy Partners, LP (“NGL”), a diversified energy business. These ethanol marketing agreements require that we sell to NGL all of the denatured fuel-grade ethanol produced at the South Dakota plants. These ethanol marketing agreements expire on June 30, 2019 and will automatically renew unless cancelled by either party three months prior to the end of the current term.

ABE South Dakota depends on NGL to market ABE’s ethanol and manage the logistics of ABE South Dakota’s rail cars to ensure ABE South Dakota is able to continue producing ethanol without exceeding its storage capacity, which would result in unplanned slowdowns or shut downs. Any failure or default by NGL in its obligations to ABE South Dakota may negatively affect our profitability.

We depend upon NGL to market the ethanol we produce, and we sublease from NGL a majority of the ethanol rail cars we use to transport our ethanol to customers. If we are unable to renew these agreements with NGL, our liquidity and profitability could be adversely affected, if we are unable to find similar pricing and payment terms from other marketers.

We depend on others for sales of our products and purchases of our inputs, which may place us at a competitive disadvantage and reduce profitability.

As noted above, we currently have agreements with a third-party marketing firm, NGL, to market all of the ethanol we produce at our facilities. We also contract with third parties to market the sale of most of the distillers’ grains and corn oil produced at our South Dakota plants. If the ethanol or co-product marketers breach their contracts or do not have the ability, for financial or other reasons, to market all of the ethanol we produce or to market the co-products produced at the South Dakota plants, we may not have any readily available alternative means to sell our products. Our lack of a sales force and reliance on these third parties to sell and market most of our products may place us at a competitive disadvantage. Our failure to sell all of our ethanol and co-products may result in lower revenues and reduced profitability.

We have a grain origination agreement with Agtegra under which Agtegra originates, stores and delivers corn to the Aberdeen and Huron plants. Although our agreement with Agtegra allows us to purchase corn from other sources, we have historically not done this. Our agreement with Agtegra was automatically renewed in November 2016 and was set to expire in November 2019. On May 4, 2018, we issued a partial notice of termination of this agreement with respect to the Aberdeen plant due to our plans to construct a grain storage and receiving facility. The remaining agreement for the Huron plant expires in November 2019 and will automatically renew unless cancelled at least 180 days prior to the end of the renewal term. We have also begun to explore constructing grain storage at our Huron plant. The process of constructing and operating our own grain storage facilities requires a substantial commitment of time and capital and there is no assurance that we will be successful. If we are unable to negotiate a more favorable grain origination agreement with Agtegra for our Huron plant, or successfully construct and operate our own grain storage facility at either plant, it could have a material adverse effect on our business, results of operations and financial condition.

We are exposed to credit risk resulting from non-payment by significant customers.

We have a concentration of credit risk because our ABE South Dakota subsidiary generally sells all of its ethanol to a single customer. Although we typically receive payments within twenty days from the date of sale for our ethanol, distillers’ grains and corn oil, we continually monitor this credit risk exposure. In addition, we may prepay for or make deposits on undelivered inventories. Our credit risk concentrations for inventory advances are primarily with a few major suppliers of petroleum products and agricultural inputs. The inability of a third party to pay our accounts receivable or to deliver us inventory for advance payments we made may cause us to experience losses and may adversely affect our liquidity and our ability to make our payments when due. As of September 30, 2018, the total receivable balance at ABE South Dakota was $4.2 million, of which 99% was due from three customers.

Our profitability depends on the spread between ethanol and corn prices, which can vary significantly.

Gross profit on gallons produced at our facilities, which accounts for the substantial majority of our operating income, principally depends on the spread between ethanol and corn prices.

The price of corn is influenced by weather conditions (including droughts or excess rainfall) and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors, including government policies and subsidies with respect to agriculture and international trade, and global and local supply and demand. Conversely, ethanol prices are primarily influenced by market demand and can fluctuate widely depending on industry-wide ethanol inventory levels.

Volatility in oil and gas prices may materially affect ethanol pricing and demand and make it difficult to manage profit margins.

Ethanol has historically traded at a discount to gasoline; however with the recent volatility in oil and gas prices, ethanol prices have also fluctuated. When ethanol trades at a discount to gasoline it encourages discretionary blending, thereby potentially increasing the demand for ethanol beyond required blending rates. Conversely, when ethanol trades at a premium to gasoline, there is a disincentive for discretionary blending and ethanol demand is negatively affected. Consequently, ethanol pricing and demand may also be volatile, which makes it difficult to manage profit margins and which could result in a material adverse effect on our business, results of operations and financial condition.

The market for natural gas is subject to market conditions that create uncertainty in the price and availability of the natural gas that we use in our manufacturing process.

Natural gas costs represented approximately 6.2% of our cost of goods sold in the year ended September 30, 2018. We rely upon third parties for our supply of natural gas that we consume to produce ethanol. The prices for and availability of natural gas are subject

to volatile market conditions. These market conditions often are affected by factors beyond our control such as higher prices resulting from colder than average weather conditions, hurricanes in the Gulf of Mexico, and the expansion of hydraulic fracturing in the U.S. over the past several years, which has expanded domestic supplies, and overall economic conditions. Significant disruptions in the supply of natural gas could impair our ability to produce ethanol. Furthermore, increases in natural gas prices or changes in our natural gas costs relative to natural gas costs paid by competitors may adversely affect our results of operations and financial position. Natural gas prices over the period from October 1, 2012 through September 30, 2018, based on the New York Mercantile Exchange or NYMEX, daily futures data, have ranged from a low of $2.44 per million British Thermal Units, or mmbtu, on April 27, 2015 to a high of $6.49 per mmbtu on February 24, 2014. At September 30, 2018, the NYMEX price of natural gas was $3.01 per mmbtu.

We may engage in hedging transactions and other risk mitigation strategies that could harm our results.

We are exposed to a variety of market risks, including the effects of changes in commodity prices. Hedging activities can result in losses when a position is purchased in a declining market or a position is sold in a rising market. We cannot ensure that we will not experience hedging losses in the future. Hedging arrangements also expose us to the risk of financial loss in situations where the other party to the hedging contract defaults on its contract or, in the case of exchange-traded contracts, where there is a change in the expected differential between the underlying price in the hedging agreement and the actual prices paid or received by us. In addition, failure to have adequate capital to use various hedging strategies, may expose us to substantial risk of loss, or result in a loss for our company. As of September 30, 2017 and 2018, we did not have any material derivative contracts outstanding.

Our lack of business diversification could result in adverse operating results if our revenues from our primary products decrease.

Our business consists of the production and sale of ethanol, distillers’ grains, and corn oil. We do not have any other lines of business or other potential sources of revenue. Our lack of business diversification could cause us to shut down operations and be unable to meet financial obligations if we are unable to generate positive cash flows from the production and sale of ethanol and co-products because we do not currently expect to have any other lines of business or alternative revenue sources.

Our operating results may fluctuate significantly, which makes our future results difficult to predict and could cause our operating results to fall below expectations.

Our operating results have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful, and our past results do not necessarily indicate our future performance.

We depend on certain key personnel, and the loss of any of these persons may prevent us from implementing our business plan in an effective and timely manner.

Our success depends largely upon the continued services of our chief executive officer and other key personnel. Any loss or interruption of the services of one of these key personnel could result in our inability to manage our operations effectively or pursue our business strategy.

RISKS RELATED TO OUR UNITS

We have placed significant restrictions on transferability of the units, no public trading market exists for our units and there is no assurance that unit holders will receive future cash distributions.

Our units are subject to substantial transfer restrictions pursuant to our operating agreement. As a result, investors may not be able to easily liquidate their investments in the units and, therefore, may be required to assume the risks of investments in us for an indefinite period of time, which may be the life of our Company.

Further, although our units are now listed on an internet-based matching platform, there is currently no established public trading market for our units, and we do not anticipate an active trading market will develop. In order for the Company to maintain its partnership tax status, unit holders may not trade the units on an established securities market or readily trade the units on a secondary market (or the substantial equivalent thereof).

To help ensure that a secondary market does not develop, our operating agreement prohibits transfers without the approval of our board of directors. The board of directors will not approve transfers unless they fall within “safe harbors” contained in the publicly traded partnership rules under the tax code, which include, without limitation, the following:

• Transfers by gift to the member’s descendants,

• Transfer upon the death of a member,

• Transfers between family members, and

• Transfers that comply with the “qualifying matching services” requirements.

Distributions are payable at the sole discretion of our board of directors, subject to the provisions of the Delaware Limited Liability Company Act, our operating agreement and the requirements of our creditors. We cannot ensure that we will make cash distributions in the future. Our board may elect to retain future profits to provide operational financing for the plants, debt retirement and possible plant expansion, the construction or acquisition of additional plants or other company opportunities. This means that members may receive little or no return on their investment and be unable to liquidate their investment due to transfer restrictions and lack of a public trading market.

Our members have limited voting rights.

Members cannot exercise control over our daily business affairs. Subject to the provisions in our operating agreement, our board of directors may modify our business plans without the members’ consent.

In addition to the election of directors, the disposition of substantially all of our assets through merger, exchange or otherwise, except for dissolution of our Company or a transfer of our assets to a wholly owned subsidiary, requires the affirmative vote of a majority of our membership voting interests.

Our members may only propose amendments to the Operating Agreement if they hold more than 1% of the units outstanding. Members may demand a member meeting only if they represent a majority of the membership voting interests.

Amendments to our operating agreement (other than amendments that would modify the limited liability of a member or alter a member’s economic interest, which requires a two-thirds vote of the membership interests adversely affected) require the affirmative vote of a majority of the membership voting interests represented at a meeting.

RISKS RELATED TO THE ETHANOL INDUSTRY

If demand does not sufficiently increase and production capacity and imported ethanol increase, industry overcapacity could develop.

According to the RFA, domestic ethanol production capacity has increased dramatically from 1.7 billion gallons per year in January 1999 to 16.2 billion gallons per year as of November 2018. In addition to this increase in production capacity, excess ethanol production capacity also may result from decreases in the demand for ethanol or increased imported supply, which could result from a number of factors, including but not limited to, regulatory developments, reduced exports and reduced gasoline consumption in the U.S. Reduced gasoline consumption could occur as a result of increased prices for gasoline or crude oil, which could cause businesses and consumers to reduce driving or acquire vehicles with more favorable gasoline mileage, or as a result of technological advances, such as the commercialization of engines utilizing hydrogen fuel-cells, which could supplant gasoline-powered engines. There are a number of governmental initiatives designed to reduce gasoline consumption, including tax credits for hybrid vehicles and consumer education programs. In August 2012, the Federal government issued regulations to increase fuel efficiency and reduce greenhouse gas pollution for all new cars and trucks sold in the United States. These new standards will cover cars and light trucks for Model Years 2017-2025, requiring performance equivalent to 54.5 mpg in 2025. These standards are likely to reduce the overall demand for gasoline, and therefore ethanol.

Any increase in the supply of distillers’ grains, without corresponding increases in demand, could lead to lower prices or an inability to sell our distillers’ grains. A decline in the price of distillers’ grains, or the distillers’ grains market generally, could have a material adverse effect on our business, results of operations and financial condition.

Volatility in gasoline selling price and production cost may reduce our gross margins.

Ethanol is used both as a fuel additive to reduce vehicle emissions and as an octane enhancer to improve the octane rating of the gasoline with which it is blended. Therefore, the supply and demand for gasoline affects the price of ethanol, and our business and future results of operations may be materially adversely affected if gasoline demand or price decreases.

The price of distillers’ grains is affected by the price of other commodity products; decreases in the price of these commodities could decrease the price of distillers’ grains.

Distillers’ grains compete with other protein-based animal feed products. The price of distillers’ grains may decrease when the price of competing feed products decrease. The prices of competing animal feed products are based in part on the prices of the

commodities from which they are derived. Downward pressure on commodity prices, such as corn and soybean meal, will generally cause the price of competing animal feed products to decline, resulting in downward pressure on the price of distillers’ grains. Because the price of distillers’ grains is not tied to production costs, decreases in the price of distillers’ grains will result in us generating less revenue and lower profit margins.

Growth in the sale and distribution of ethanol depends on the changes in and expansion of related infrastructure, which may not occur on a timely basis, if at all, and our operations could be adversely affected by infrastructure disruptions.

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. In 2017, the United States consumed 14.49 billion gallons of ethanol representing 10.1% of the 142.98 billion gallons of finished motor gasoline consumed, according to the U.S Energy Information Administration (“EIA”). Ethanol plants in the United States produced 15.8 billion gallons in 2017, approximately 0.5 billion gallons more than were produced in 2016. 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 142.98 billion gallons per year and a blend rate of 10% ethanol and 90% gasoline, the current blend wall is approximately 14.3 billion gallons of ethanol per year. In order to expand demand for ethanol, higher percentage blends must be used in standard vehicles.

To drive growth in ethanol usage, Growth Energy requested a waiver from the EPA to increase the allowable amount of ethanol blended into gasoline from the current 10% level to a 15% level. A final decision, announced on October 13, 2010, allows E15 usage in 2007 and newer vehicles, and was updated on January 21, 2011 to include 2001 to 2006 vehicles. Although regulatory issues remain in many states, E15 is now available in limited locations in 29 states.

Additional infrastructure will be required to handle the additional 5% of blending including:

• Expansion of refining and blending facilities to handle ethanol;

• Growth in the number of service stations equipped to handle ethanol fuels, which often requires investment in new pumps and storage capacity at stations;

• Additional storage facilities for ethanol;

• Additional rail capacity; and

• Increase in truck fleets capable of transporting ethanol within localized markets

Without infrastructure investments by unrelated parties, the demand for ethanol may not increase, which could have an adverse effect on our business.

Corn-based ethanol may compete with cellulose-based ethanol in the future, which could make it more difficult for us to produce ethanol on a cost-effective basis.

A current focus in ethanol production research is the development of an efficient method of producing ethanol from cellulose-based biomass, such as agricultural waste, forest residue, and municipal solid waste and energy crops. This focus is driven by governmental mandates including the Renewable Fuels Standard, as most recently amended (“RFS2”), and the fact that cellulose-based biomass would create opportunities to produce ethanol in areas that are unable to grow corn. Furthermore, ethanol produced from cellulose based biomass is generally considered to emit less carbon emission than ethanol produced from corn. If an efficient method of producing ethanol from cellulose-based biomass is developed and commercialized on a large scale, we may not be able to compete effectively. There is currently one commercial scale plant dedicated to cellulosic ethanol production operating, and several others producing a combination of corn-based and cellulosic ethanol via pathways approved by the EPA. We currently believe it would not be cost-effective for us to convert our existing plants into cellulose-based biomass facilities. If we are unable to produce ethanol as cost effectively as cellulose-based producers, our ability to generate revenue and operate profitably will be negatively affected.

Competition from new or advanced technology may lessen the demand for ethanol and negatively affect our profitability.

Alternative fuels, gasoline oxygenates and ethanol production methods are continually under development. A number of automotive, industrial and power generation manufacturers are developing more efficient engines, hybrid engines and alternative clean power systems using fuel cells or clean burning gaseous fuels. Vehicle manufacturers are working to develop vehicles that are more fuel efficient and have reduced emissions using conventional gasoline. Vehicle manufacturers have developed and continue to work to improve hybrid technology, which powers vehicles by engines that use both electric and conventional gasoline fuel sources. In the future, the emerging fuel cell industry will offer a technological option to address increasing worldwide energy costs, the long-term

availability of petroleum reserves and environmental concerns. Fuel cells have emerged as a potential alternative to certain existing power sources because of their higher efficiency, reduced noise and lower emissions. Fuel cell industry participants are currently targeting the transportation, stationary power and portable power markets to decrease fuel costs, lessen dependence on crude oil and reduce harmful emissions. If the fuel cell and hydrogen industries continue to expand and gain broad acceptance, and hydrogen becomes readily available to consumers for motor vehicle use, we may not be able to compete effectively. This additional competition could reduce the demand for ethanol, which would adversely affect our profitability and reduce the value of our units.

Competition in the ethanol industry could limit our growth and harm our operating results.

The market for ethanol and other biofuels is highly competitive. Our current and prospective competitors include many large companies that have substantially greater market presence, geographic diversity, name recognition and financial, marketing and other resources than we do. We compete directly or indirectly with large companies, such as Archer Daniels Midland Company; Cargill, Inc.; Flint Hills Resources, LLC; Green Plains Renewable Energy, Inc.; POET, LLC and Valero Energy Corporation and with other companies that are seeking to develop large-scale ethanol plants and alliances. Pressure from our competitors could require us to reduce our prices or increase our spending for marketing, which would erode our margins and could have a material adverse effect on our business, financial condition and results of operations.

Imported ethanol may be a less expensive alternative to domestic ethanol, which would cause us to lose market share and reduce the value of your investment.

Brazil is currently the world’s second largest producer and exporter of ethanol. In Brazil, ethanol is produced primarily from sugarcane, which can be less costly to produce than U.S. corn-based ethanol. When former import tariffs from Brazil were removed, a significant barrier to entry into the U.S. ethanol market was eliminated. Competition from ethanol imported from Brazil or Caribbean or Central American countries may affect our ability to sell our ethanol profitably.

RISKS RELATED TO ETHANOL PRODUCTION

Operational difficulties at our plants could negatively affect our sales volumes and could cause us to incur substantial losses.

Our operations are subject to unscheduled downtime and operational hazards inherent to our industry, such as equipment failures, utility outages, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation disruptions and accidents and natural disasters. We may have difficulty managing the process maintenance required to maintain our nameplate production capacities. If our ethanol plants do not produce ethanol and distillers’ grains at the levels we expect, our business, results of operations, and financial condition may be materially adversely affected.

Improperly trained employees may not follow procedures, resulting in damage to certain parts of the ethanol production facility, which could negatively affect operating results if our plants do not produce ethanol and its by-products as anticipated.

The production of ethanol and distillers’ grains demands continuous supervision and judgments regarding mixture rates, temperature and pressure adjustments. Errors of judgment due to lack of training or improper manufacturer instructions could send chemicals into sensitive areas of production, which may reduce or halt ethanol or distillers’ grains production at our facilities.

Rail traffic congestion may affect our ability to return our tanker rail cars to our plants on a timely basis, and could require us to reduce or cease production in the event we exceed our ethanol storage capacity.

There have been periodic significant increases in rail traffic congestion throughout the United States primarily due to the increase in cargo trains carrying shale oil. From time to time, this congestion has and may continue to affect our ability to have our tanker rail cars return 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. In response to the rail congestion issues we constructed an additional one million gallons of denatured ethanol storage at our Aberdeen, South Dakota plant. The additional storage became operational in January 2015 and increased the total denatured ethanol storage at the Aberdeen plant to approximately two million gallons. We are evaluating whether to add ethanol storage at our Huron, South Dakota plant.

We may have difficulty obtaining enough corn to operate the plants profitably.

There may not be an adequate supply of corn produced in the areas surrounding our plants to satisfy our requirements. Even if there is an adequate supply of corn and we make arrangements to purchase it, we could encounter difficulties finalizing the sales transaction and managing the delivery of the corn, including difficulties caused by inclement weather. If we do not obtain corn in the quantities we plan to use, we may not be able to operate our plants at full capacity. If the price of corn in our local markets is higher

due to lack of supply, drought, or other reasons, our profitability may suffer and we may incur significant losses from operations. As a result, our ability to make a profit may decline.

RISKS RELATED TO REGULATION AND GOVERNMENTAL ACTION

We are exposed to additional regulatory risk that may prevent the sale of our products to customers located in certain states or require us to change the way we operate.

Legislative acts by the State of California and the Environmental Protection Agency (i.e. RFS2) require cleaner emissions and reduced carbon footprints including effects caused by indirect land use. These acts, when implemented, may prohibit the sale of our products to certain customers, which may materially adversely impact our results from operations, or may require us to procure feedstock and market our products in a fashion that negatively impacts our financial performance.

The use and demand for ethanol and its supply are affected by federal and state legislation and regulation, most significantly the Renewable Fuels Standard. Any changes in applicable 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.

Various federal and state laws, regulations and programs affect the demand for ethanol as a fuel or fuel additive. Tariffs generally apply to the import of ethanol from other countries. These laws, regulations and programs are constantly changing. Federal and state legislators and environmental regulators could adopt or modify laws, regulations or programs that could adversely affect the use of ethanol.

On November 30, 2017, the EPA announced final RVO requirements for the RFS for calendar year 2018. The conventional biofuel requirement of 15 billion gallons remained the same as the rule proposed in July 2017. On June 26, 2018 the EPA announced proposed RVOs for 2019, which include 15.0 billion gallons for corn-based ethanol, consistent with both the 2018 RVOs. The 15.0 billion gallon level for corn-based ethanol achieves the statutory requirement level as originally set by Congress when the RFS was enacted. However, opponents of ethanol such as large oil companies will likely continue their efforts to repeal or reduce the RFS through lawsuits or lobbying of Congress. Successful reduction or repeal of the blending requirements of the RFS could result in a significant decrease in ethanol demand.

Current ethanol production capacity is approximately 16.2 billion gallons according to the RFA. Reduction of blending requirements could reduce the demand for and price of ethanol. If demand for ethanol decreases, it could materially adversely affect our business, results of operations and financial condition.

The U.S. Department of Transportation is requiring the tanker cars that are used to transport ethanol be replaced or retrofitted to meet new rail safety standards.

We use tanker rail cars to transport the majority of the ethanol produced at our facilities. We currently have 411 tanker cars under lease of which a portion will not be taken possession of until fiscal 2019. The majority of the tanker cars used by our company and the rest of the ethanol industry are DOT-111 tanker cars; these are the same type of tanker cars used by the oil industry to transport crude oil.

In response to various incidents on the rail system involving the transportation of crude oil products, the Department of Transportation (“DOT”) has issued new safety regulations surrounding the transportation of highly flammable liquids, which includes not only crude oil products, but also ethanol. The DOT originally proposed a three-year timetable for replacing or modifying current DOT-111 railcars used in ethanol service. However, the ethanol industry argued that it should be afforded more time because corn-based fuel shipped by rail poses less of a risk to public safety than crude oil. The DOT’s final rule gave the ethanol industry until May 1, 2023 to replace or retrofit current DOT-111 cars. Although the extended timetable was a positive outcome for the ethanol industry, the new requirements could result in a shortage of compliant tanker cars. This could have an adverse impact on our operations, because we may be faced with drastically increased lease costs or be forced to retrofit the tanker cars we have under lease, which could have an adverse impact on our business both in the cost of the retrofits as well as potential disruption to our production as a result of cars being out of service while they are retrofitted.

Imported ethanol could undermine the ethanol industry in the U.S.

Imported ethanol is no longer subject to any tariffs since December 31, 2011. Since production costs for ethanol in many countries may be less from time to time than what they are in the U.S., the duty-free import of ethanol may negatively affect the demand for domestic ethanol and the price at which we sell our ethanol.

Tariffs imposed on ethanol exports to China have recently been increased by the Chinese government and could negatively affect the demand and pricing for ethanol.

The 2017 ethanol tariff for imports into China was increased to 30% as of January 1, 2017; the 2016 ethanol tariff was 5%. U.S. exports of ethanol to China were at a historical high in 2016, as China was one of the top buyers of U.S. ethanol. On April 2, 2018, the Chinese government increased the tariff on U.S. ethanol imports into China from 30 to 45 percent.

We cannot estimate the exact effect this tariff increase will have on the overall domestic ethanol market. However, the increased tariff is expected to reduce overall U.S. ethanol export demand, which could have a negative effect on U.S. domestic ethanol prices.

The Brazilian government has imposed tariffs on ethanol exports to Brazil, which could negatively affect the demand and pricing for ethanol.

In late August 2017, the Brazilian government imposed a tariff of 20 percent on U.S. ethanol imports which became effective in September 2017. The tariff applies to imports after an initial tax-free quota of 600 million liters, or 158.5 million gallons, per year. The U.S. exported more than 445 million gallons of ethanol to Brazil in 2017, which was a sixty percent increase in the amount exported to Brazil during 2016. In the first six months of 2018, ethanol exports to Brazil were up 28 percent over the same period in 2017. However, as Brazil’s domestic ethanol prices have decreased in recent months due to a large Brazilian sugar harvest, imported ethanol has become more expensive than Brazil’s domestic supply and Brazilian ethanol imports from the U.S. have declined. We cannot estimate the exact effect this tariff is having on the overall domestic ethanol market. However, it is possible a tariff at this level could reduce ethanol prices in the domestic market by decreasing export demand for U.S. ethanol.

Regulations governing the production and sale of animal feeds, including distillers’ grains, may change our operating procedures and increase our operating costs, and could affect the export markets for distillers’ grains.

In November 2015, in response to Food Safety and Modernization Act (“FSMA”) implemented in 2011, the Food and Drug Administration (“FDA”) issued final rules for Current Good Manufacturing Practices (“CGMP”): Hazard Analysis, Risk-Based Preventative Controls and Oversight and Management of Preventative Controls for human and animal food facilities. The final rules require FDA-registered food facilities to address safety concerns for sourcing, manufacturing and shipping food products through food safety programs and plans, which includes conducting hazard analyses, developing risk-based preventative controls and monitoring, and addressing intentional adulteration, recalls, sanitary transportation and supplier verification. The implementation of the final rule varies depending on the size of the organization and other criteria. We became subject to CGMP compliance beginning September 2017, and preventive controls became effective in September 2018. We prepared a detailed compliance plan using third party resources and trained our employees on the requirements of FSMA. Implementation of the final regulations has changed certain operating procedures for the production, handling and sale of distillers’ grains. As we continue to operate within the requirements of FSMA, it may increase our operating and compliance costs.

Actions by the Chinese government may limit the sale of distillers’ grains to China.

China has historically been one of the world’s largest importers of U.S. dry distillers’ grains. In late 2013, the Chinese government signaled its intent to regulate the quality of food imports into China. To achieve this goal, the China AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine) agency indicated that it would require U.S. food producers to register and comply with Chinese food preparation guidelines, and the U.S. government to monitor the production of food products in the U.S. that are exported to China, in a manner similar to the system proposed under the FSMA.

In November 2013, Chinese authorities rejected corn shipments to China because the cargoes included MIR162, a variety of genetically engineered, insect-resistant corn that had been approved in the United States and a number of other countries but not in China. In June 2014, quarantine authorities in China stopped issuing permits for the import of dried distillers’ grains from the United States due to the presence of MIR162 in shipments.

In late December 2014, Chinese officials lifted the ban on MIR162, thereby re-opening the market for distiller’s grains exports to China. Once the ban had been lifted, China resumed imports of distiller’s grains. If China were to reinstate the ban on MIR162 or take similar action, it could decrease demand for distillers’ grains and decrease distillers’ grain prices in the United States’ domestic market by decreasing worldwide demand.

Chinese investigations into United States distillers grains exports into China could negatively affect the demand and pricing for distillers grains.

In January 2016, China’s Ministry of Commerce (“MOC”) launched anti-dumping and countervailing duties investigations into U.S. distillers grains being imported into China. The anti-dumping investigation is in response to claims made by Chinese producers

that U.S. distillers grains were being sold at prices below normal value, thereby damaging the domestic industry. The countervailing duties investigation is in response to claims that U.S. distillers grain exports are subsidized by the U.S. government. On September 23, 2016, China's MOC issued a preliminary duty of 33.8 percent for all producers related to the antidumping investigation on U.S. distillers grain, due at the time of product arrival. On September 28, 2016, MOC issued preliminary duties of between 10 and 10.7 percent, depending on the producer of the product, related to the countervailing duty investigation on U.S. distillers grain; this is also due at time of product arrival. These duties were larger than expected and market prices for U.S. distillers began to drop following the imposition of these duties. In January 2017, China further increased these duties in a final ruling following the investigation. Distillers grains anti-dumping duties were increased to 42.2 to 53.7 percent and the distillers grains countervailing duties were increased to 11.2 to 12 percent.

China has historically been one of the world’s largest importers of distillers grain. In 2015, it accounted for 50 percent of the U.S. distillers grain exports. In 2016, distillers grain imports by China were down 50 percent versus 2015 to 3.3 million metric tons, and in 2017, China imported only 416,000 tons of distillers grains. We cannot estimate the exact effect these duties will have on the overall domestic distillers grains market. However, the U.S. is the world's largest exporter of distillers grains, and if the duties remain in place, it will likely continue to reduce distillers grains prices in the domestic market by decreasing worldwide demand for distillers grains.

Various studies have criticized ethanol, and could lead to the reduction or repeal of government regulations such as the RFS that promote the use and domestic production of ethanol.

Although many trade groups, academics and governmental agencies have supported ethanol as a fuel additive that promotes a cleaner environment, others have criticized ethanol production as consuming considerably more energy and emitting more greenhouse gases than other biofuels. Other studies have suggested that corn-based ethanol is less efficient than ethanol produced from switch grass or wheat grain and that ethanol’s demand on corn has resulted in higher food prices and shortages. If these views gain widespread acceptance, support for existing measures promoting use and domestic production of corn-based ethanol could decline, leading to reduction or repeal of these measures.

We may be adversely affected by environmental, health and safety laws, regulations and liabilities.

We are subject to extensive air, water and other environmental regulations, including those relating to the discharge of materials into the air, water and ground; the generation, storage, handling, use, transportation and disposal of hazardous materials; and the health and safety of our employees. In addition, the plants we operate or manage need to maintain a number of environmental permits. Each ethanol plant we operate and manage is subject to environmental regulation by the State of South Dakota and by the EPA. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts on the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations or facility shutdowns, liability for the costs of investigation or remediation and for damages to natural resources. Our operating subsidiary may also be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials from those plants.

Environmental issues, such as contamination and compliance with applicable environmental standards, could arise at any time during operation of an ethanol plant. If this occurs, our operating subsidiary could be required to spend significant resources to remedy the issues and may limit operation of the ethanol plant. Our operating subsidiary may be liable for the investigation and cleanup of environmental contamination that might exist or could occur at each of the properties that it owns or operates where it handles hazardous substances. If these substances have been or are disposed of or released at sites that undergo investigation or remediation by regulatory agencies, our operating subsidiary may be responsible under the CERCLA (otherwise known as the “Superfund Act”) or other environmental laws for all or part of the costs of investigation and remediation, and for damages to natural resources. Our operating subsidiary may also be subject to related claims by private parties, including our employees and property owners or residents near the plants, alleging property damage and personal injury due to exposure to hazardous or other materials at or from those plants. Additionally, employees, property owners or residents near our ethanol plants could object to the air emissions or water discharges from our ethanol plants. Ethanol production has been known to produce an unpleasant odor. Environmental and public nuisance claims or toxic tort claims could be brought against us as a result of this odor or their other releases to the air or water. Some of these matters may require us to expend significant resources for investigation, cleanup, installation of control technologies or other compliance-related items, or other costs.

Additionally, the hazards and risks associated with producing and transporting our products (such as fires, natural disasters, explosions, abnormal pressures and blowouts) may also result in personal injury claims by third parties or damage to property owned by us or by third parties. We could sustain losses for uninsurable or uninsured events, or in amounts in excess of existing insurance coverage. Events that result in significant personal injury to third parties or damage to property owned by us or third parties or other losses that are not fully covered by insurance could have a material adverse effect on our business, results of operations and financial condition.

We also cannot ensure that our operating subsidiary will be able to comply with all necessary permits to continue to operate its ethanol plants. Failure to comply with all applicable permits and licenses could subject our operating subsidiary to future claims or increase costs and materially adversely affect our business, results of operations and financial condition. Additionally, environmental laws and regulations, both at the federal and state level, are subject to change and these changes can be made retroactively. Consequently, even if our operating subsidiary obtains the required permits, it may be required to invest or spend considerable resources to comply with future environmental regulations, such as regulation of greenhouse gasses, or new or modified interpretations of those regulations, which could materially adversely affect our business, results of operations and financial condition. Present and future environmental laws and regulations (and interpretations thereof) applicable to the operations of our operating subsidiary, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our business, results of operations and financial condition.

Our employees are exposed to the physical hazards of heights, rotating, motorized mechanical and mobile machinery, and equipment and chemicals. Despite procedures, training, physical and engineered barriers and preventative measures, we may still be exposed to liabilities of Occupational Safety and Health Administration fines and incur potential punitive damages as a result of employee injuries that fall outside the workman’s compensation program and insurable losses.

RISKS RELATED TO TAX ISSUES

Income allocations assigned to unit holder units may result in taxable income in excess of cash distributions, which means unit holders may have to pay income tax on their investment with personal funds.

Unit holders will be required to pay tax on their allocated shares of our taxable income. It is likely that a unit holder will receive allocations of taxable income in some years that result in a tax liability that is in excess of any cash distributions we may make to the unit holder in that year. Among other things, this result might occur due to accounting methodology, lending covenants that restrict our ability to pay cash distributions, or our decision to retain the cash generated by the business to fund our operating activities and obligations. In the event unit holders have used prior tax losses to offset non-ABE taxable income, the use of these losses may result in future tax liability.

IRS classification of the company as a corporation rather than as a partnership would result in higher taxation and reduced profits.

We are a Delaware limited liability company that has elected to be taxed as a partnership for federal and state income tax purposes, with income, gain, loss, deduction and credit passed through to the holders of the units. However, if for any reason the IRS successfully determines that we should be taxed as a corporation rather than as a partnership, we would be taxed on our net income at rates of up to 21%, or such lower rate as may be established by Congress, for federal income tax purposes, and all items of our income, gain, loss, deduction and credit would be reflected only on our tax returns and would not be passed through to the holders of the units. If we were to be taxed as a corporation for any reason, distributions we make to investors will be treated as ordinary dividend income to the extent of our earnings and profits, and the payment of dividends would not be deductible by us, thus resulting in double taxation of our earnings and profits. If we pay taxes as a corporation, we will have less cash to distribute to our unit holders. Treatment of our company as a corporation for tax purposes could materially adversely affect our business and financial condition.

We might elect to convert our entity status from a limited liability company to a corporation, which would increase our tax burden.

Although we have no current plans to convert to a corporation, our company might elect in the future to convert to a corporation. If we convert to a corporation, no profits will be allocable to unit holders, there will be no tax liability to our unit holders unless we pay a dividend and our company, as a result, would not make tax distributions to our unit holders with respect to these allocable profits. Conversion to a corporation would require an approval by member vote pursuant to our operating agreement. If we elect to be organized as a corporation, we will be subject to Subchapter C of the Internal Revenue Code. We would be taxed on our net income at rates of up to 21%, or such lower rate as may be established by Congress, for federal income tax purposes, and all items of our income, gain, loss, deduction and credit would be reflected only on our tax returns and would not be passed through to the unit holders. Distributions, if made to investors, would be treated as ordinary dividend income to the extent of our earnings and profits, and the payment of dividends would not be deductible by us, resulting in double taxation of our earnings and profits. If we pay taxes as a corporation, we will also have less cash to distribute to our unit holders. Treatment of our company as a corporation for tax purposes could materially adversely affect our business and financial condition.

The IRS may classify your investment as a passive activity, resulting in the inability of unit holders to deduct losses associated with their investment.

It is likely that an investor’s interest in us will be treated as a “passive activity” for tax purposes. If an investor is an individual, estate, trust or a closely held corporation, and if the investor’s interest is deemed to be a “passive activity,” then the investor’s allocated share of any loss we incur will be deductible only against income or gains the investor has earned from other passive activities. Passive activity losses that are disallowed in any taxable year are suspended and may be carried forward and used as an offset against passive activity income in future years. These rules could restrict a unit holder’s ability to currently deduct any of our losses that are passed through to such unit holder.

allocated share of any loss we incur will be deductible only against income or gains the investor has earned from other passive activities. Passive activity losses that are disallowed in any taxable year are suspended and may be carried forward and used as an offset against passive activity income in future years. These rules could restrict a unit holder’s ability to currently deduct any of our losses that are passed through to such unit holder.

An IRS audit could result in adjustments to our allocations of income, gain, loss and deduction, causing additional tax liability to unit holders.

The IRS may audit our income tax returns and may challenge positions taken for tax purposes and allocations of income, gain, loss and deduction to investors. If the IRS were successful in challenging our allocations in a manner that reduces loss or increases income allocable to unit holders, our unit holders may have additional tax liabilities. In addition, such an audit could lead to separate audits of a unit holder’s tax returns, especially if adjustments are required, which could result in adjustments on unit holders’ tax returns. Any of these events could result in additional tax liabilities, penalties and interest to unit holders, and the cost of filing amended tax returns.

ITEM 2.

PROPERTIES

The table below provides a summary of our ethanol plants in operation as of September 30, ~~2018.~~2019, Wewhich ~~currently~~were ~~own~~ each owned by ABE South Dakota until the closing of ~~these~~the ~~facilities~~Asset Sale on December 19, 2019.

Location	Opened	Estimated Annual Ethanol Production(1)		Estimated Annual Distillers’ Grains Production(2)		Estimated Annual Corn Oil Production		Estimated Annual Corn Processed		Primary Energy Source
		(Million gallons)		(000s Tons)		(000s lbs)		(Million bushels)
Aberdeen, SD(3)	January 2008		48		134		11,561		15.7	Natural Gas
Huron, SD	September 1999		32		97		5,717		11.4	Natural Gas
Consolidated			80		231		17,278		27.1

(1)	Actual permitted gallons are 65.7 million for Aberdeen and 42.0 million for Huron totaling 107.7 million gallons.

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

(3)

Our plant at Aberdeen formerly consisted of two production facilities that operated on a separate basis. The larger plant is represented in table above. In April 2016, the Company ceased operations at its smaller, nine-million gallon facility in Aberdeen due to inefficiencies at this older plant and capital expenditures required to keep the plant in operating condition, coupled with the weak margin environment. In the fourth quarter of fiscal 2016, the Company decided not to resume operations at this facility in the future and, accordingly, impaired the value of this asset on its financial statements to an estimated salvage value of $200,000, which resulted in a loss of $1,584,000 in the fourth quarter of fiscal 2016. During fiscal 2017, the Company received proceeds of $155,000 from the salvage of the smaller plant. At September 30, 2017 the remaining value of the asset on the Company’s financial statement was $45,000. During fiscal 2018, the Company received proceeds of $98,000 from the salvage of the smaller plant. At September 30, 2018, the remaining value of the asset on the Company’s financial statements was $0.

We currently lease approximately 4,400 square feet for our corporate and administrative staff at our corporate headquarters in Bloomington, Minnesota, through September 2021. The current base rent is $20.00 per square foot, or approximately $7,300 per month for the twelve month that began July 1, 2018, with annual increases of $.50 per square foot. We believe this space will be sufficient for our needs until the end of the lease period or any negotiated earlier surrender of the leased property in connection with our liquidation.

WeAs ~~believe~~of ~~that~~September ~~each~~30, of2019, ~~the~~AgCountry ~~operating~~held ~~facilities~~a isfirst priority security interest and mortgage in ~~adequate~~all ~~condition~~inventory, toaccounts ~~meet~~receivable, ~~our~~intangibles, ~~current~~equipment, fixtures, buildings, and ~~future~~a ~~production~~first ~~goals~~mortgage in land owned or leased by ABE South Dakota pursuant to a security agreement with AgCountry. With Wethe ~~believe~~December ~~that~~19, ~~these~~2019 ~~plants~~repayment ~~are~~of ~~adequately~~our ~~insured~~obligations ~~for~~to ~~replacement~~AgCountry, ~~cost~~AgCountry ~~plus~~released ~~related~~its ~~disruption~~security ~~expenditures~~interest in, and liens and mortgages on, all of the properties, rights and assets of ABE South Dakota.

Under the ABE South Dakota, LLC security agreement with AgCountry (defined below), AgCountry holds a first priority security interest and mortgage in all inventory, accounts receivable, intangibles, equipment, fixtures, buildings, and a first mortgage in land owned or leased by ABE South Dakota.

ITEM 3.

LEGAL PROCEEDINGS

None.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

2212

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is no established trading market for our membership units, but ~~since~~from June 2015 to March 2019, our units ~~have~~were ~~been~~ listed on AgStockTrade.com, an internet-based matching platform. ~~Our~~In ~~membership~~March ~~units~~2019, ~~are~~we ~~subject~~suspended tounit ~~substantial~~matching ~~transfer~~on ~~restrictions~~AgStockTrade.com. In ~~pursuant~~connection towith ~~our~~the ~~operating~~Company’s ~~agreement,~~liquidation ~~which~~in ~~prohibits~~accordance ~~transfers~~with ~~without~~the Plan of Liquidation, the ~~approval~~Company’s Board of ~~our~~Directors ~~board~~determined that the Company’s transfer records will be closed from and after the close of ~~directors~~business on December 19, 2019. The ~~board~~Board of ~~directors~~Directors will not ~~approve~~consider ~~transfers~~and ~~unless~~the ~~they~~Company ~~fall~~will ~~within~~not ~~“safe~~record ~~harbors”~~or ~~contained~~recognize inany ~~the~~transfer ~~publicly~~of ~~traded~~the ~~partnership~~Company’s ~~rules~~units ~~under~~occurring after the ~~tax~~close ~~code,~~of ~~which~~business ~~include,~~on ~~without~~December ~~limitation~~19, ~~the following:~~2019.

• transfers by gift to the member’s descendants;

• transfers upon the death of a member;

• transfers between family members; and

• transfers that comply with the “qualifying matching services” requirements.

Holders

There were 125,~~603~~410,851 ~~holders~~units ofoutstanding ~~record~~as of ~~our~~December ~~units~~1, as2019 ofheld ~~December~~ by 1,610 ~~2018~~holders of record.

Issuer Purchases of Equity Securities

We did not purchase any of our equity securities during fiscal ~~2018~~2019.

Distributions

InWe ~~December~~did ~~2012,~~not ~~after~~make ~~the~~any ~~sale~~distributions ofto our ~~Fairmont,~~members ~~Nebraska~~during ~~facility,~~fiscal ~~we paid a distribution of $4~~2019.15 ~~per~~With ~~unit~~the torepayment ~~our unit holders. Our board~~ of ~~directors~~AgCountry ~~declared~~Master aCredit ~~cash~~Agreement ~~distribution~~obligations ~~of $0.31 per unit~~ on ~~September 18,~~December ~~2013~~19, ~~which~~2019 ~~was~~and ~~paid~~termination ~~out in October 2013. In June 2014, our board~~ of ~~directors~~the ~~declared~~Master aCredit ~~cash~~Agreement ~~distribution~~and ofrelated ~~$0.48 per unit~~documents, ~~which~~all ~~was paid out in June 2014. In February 2017, our board of directors declared a cash distribution of $0.15 per unit, which was paid out in February 2017. Subject to any~~ loan covenants or restrictions ~~with~~imposed by any ~~lenders,~~lender weon ~~may~~our ~~elect~~ability to make ~~future~~ distributions towere ~~our members in proportion to the units that each member holds relative to the total number of units outstanding~~terminated. ~~There can be no assurance that we will ever be able to pay any subsequent distributions to our unit holders.~~

~~Our~~The ~~board~~Company’s ~~may~~Board ~~elect~~of Directors intends to ~~retain~~meet ~~future~~in ~~profits~~January 2020 to ~~provide~~determine ~~operational~~the ~~financing~~next ~~for~~steps in the ~~plants,~~Plan ~~debt~~of ~~retirement~~Liquidation, ~~implementation~~including ofthe ~~new~~amount ~~technology~~ and ~~various~~timing ~~expansion~~of ~~plans~~any initial distribution to members, ~~including~~which ~~development~~the ofCompany ~~new~~expects ~~product~~will ~~lines~~be in January or February 2020. The ~~Additionally,~~Board ~~our~~anticipates ~~lenders~~that ~~may~~the ~~further~~amount ~~restrict~~of ~~our~~the ~~ability~~initial distribution to ~~make~~members ~~distributions~~will be between $7.7 ~~Unit~~and ~~holders~~$8.4 ~~will~~million beor ~~required~~$0.30 to ~~report~~$0.33 onper ~~their~~unit ~~income~~based ~~tax~~on ~~return~~25,410,851 ~~their~~units ~~allocable~~outstanding ~~share~~as of ~~the~~December ~~income~~19, ~~gains~~2019, ~~losses~~with ~~and~~a ~~deductions~~final wedistribution ~~have~~to ~~recognized~~be ~~without~~paid ~~regard~~upon release of the indemnity escrow. The timing and amount of distributions are subject to ~~whether~~change wedepending ~~make~~on ~~any~~a ~~cash~~variety of factors. See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Future distributions to our members will be made in proportion to the units that each member holds relative to the total number of units outstanding.

ESTIMATED INITIAL DISTRIBUTION TO MEMBERS (unaudited)

	Low Range			High Range
Cash balance as of September 30, 2019	$	5,423		$	5,423
Gross asset purchase price		47,500			47,500
Value of inventory and certain prepaids purchased at closing		2,480			2,480
Bank debt payable (1)		(31,004	)		(31,004	)
Cash held in escrow (2)		(4,750	)		(4,750	)
Other reductions in purchase price (3)		(5,841	)		(5,841	)
Total cash assumed following asset sale		13,808			13,808

Transaction-related expenses (4)		1,500			1,500
Other reserve amount (5)		2,750			2,750
Net other balance sheet items (6)		500			100
Wind down costs		1,400			1,100
Total reduction in cash estimated following the asset sale		6,150			5,450

Estimated cash initial distribution	$	7,658		$	8,358
Units outstanding as of closing date		25,410,851			25,410,851
Estimated initial per unit distribution (7)	$	0.30		$	0.33

(1)

Full payment of the Company’s outstanding senior debt including accrued interest and fees paid at closing.

(2)

Consists of $4.750 million held in escrow for 18-months from the closing date.

(3)

Reductions in the gross asset purchase price for assumed liabilities related to repair obligations under certain rail car leases and to cure a title exception.

(4)

Consists of estimated financial advisor fees, legal expenses, accounting and other miscellaneous expenses related to the Asset Sale.

(5)

Consists of $2.75 million for indemnity reserve escrow established post closing.

(6)

Includes payment of outstanding liabilities, net of accounts receivable collections and sale of other assets.

(7)

Estimated initial per unit distribution. An additional final distribution is expected with the expiration of the 18-month escrow noted above.

Performance Graph

As disclosed above under “Market Information” and elsewhere in this Form 10-K, there is no established trading market for our membership units, which are subject to substantial transfer restrictions pursuant to our operating agreement. Given that our units are not publicly traded on an exchange or any over-the-counter market and we have very limited valuation data on our membership units, we have omitted the performance graph showing the change in our unit holder return.

Unregistered Sales of Equity Securities

The Company had no unregistered sales of securities in fiscal 2018.

Securities Authorized for Issuance under Equity Compensation Plans

The equity securities outstanding as of September 30, ~~2018~~2019 under equity compensation plans are (i) the 200,000 January 18, 2013 Unit Appreciation Right (which was approved by the Company’s unit holders at the 2013 Regular Meeting of Members), (ii) the 12,500 January 28, 2015 Unit Appreciation Right, and (iii) the 100,000 January 27, 2016 Unit Appreciation Right. Each of these equity awards are to the Company’s Chief Executive Officer Richard Peterson. The following table provides information as of September 30, ~~2018~~2019 with respect to Company’s Units under equity compensation plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders		200,000	$	0.21	None
Equity compensation plans not approved by security holders		12,500	$	0.85	None
Equity compensation plans not approved by security holders		100,000	$	1.09	None
Total		312,500			None

2414

ITEM 6.

SELECTED FINANCIAL DATA

The following table presents selected consolidated financial and operating data as of the dates and for the periods indicated. The selected consolidated income statement data and other financial data for the years ended September 30, ~~2015~~2016 and ~~2014~~2015 and as of September 30, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015 have been derived from our audited consolidated financial statements that are not included in this Form 10-K. The selected consolidated balance sheet financial data as of September 30, ~~2018~~2019 and ~~2017~~2018 and the selected consolidated income statement data and other financial data for each of the three years in the period ended September 30, ~~2018~~2019 have been derived from the audited Consolidated Financial Statements included elsewhere in this Form 10-K, as well as Part I, Item 1, “Business – Company Overview and Recent Events”. You should read the following table in conjunction with Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the accompanying notes included elsewhere in this Form 10-K. Among other things, those financial statements include more detailed information regarding the basis of presentation for the following consolidated financial data.

	Years Ended September 30,
	2018			2017			2016			2015			2014
	2019			2018			2017			2016			2015
	(in thousands, except per unit data)
Income statement data:
Ethanol and related product sales	$	~~133~~127,~~772~~991		$	~~143~~133,~~532~~772		$	~~144~~143,~~695~~532		$	~~151~~144,~~706~~695		$	~~198~~151,~~347~~706
Other revenues		-			-			~~183~~-			~~411~~183			~~430~~411
Total net sales		~~133~~127,~~772~~991			~~143~~133,~~532~~772			~~144~~143,~~878~~532			~~152~~144,~~117~~878			~~198~~152,~~777~~117
Cost of goods sold		~~133~~138,~~628~~284			~~130~~133,~~228~~628			~~145~~130,~~367~~228			~~151~~145,~~511~~367			~~165~~151,~~171~~511
Gross profit (loss)		~~144~~(10,293	)		~~13,304~~144			~~(489~~13,304	)		~~606~~(489	)		~~33,~~606
Selling, general and administrative expenses		23,~~729~~416			32,~~798~~729			3,~~267~~798			23,~~999~~267			42,~~833~~999
Asset impairment		-			-			~~1,584~~-			-1,584			-
Operating income (loss)		(213,~~585~~709	)		9(2,~~506~~585	)		(59,~~340~~506	)		(25,~~393~~340	)		28(2,~~773~~393	)
Other income		~~259~~164			~~132~~259			~~383~~132			~~434~~383			~~1,383~~434
Other expense		-			-			~~(73~~-	)		(773	)		-(7	)
Interest income		53			115			5111			2251			3522
Interest expense		(~~736~~1,035	)		(~~880~~736	)		(~~914~~880	)		(~~147~~914	)		(~~710~~147	)
Net Income (loss)		(314,~~057~~577	)		8(3,~~769~~057	)		(58,~~893~~769	)		(25,~~091~~893	)		29(2,~~481~~091	)
Basic weighted units outstanding		25,411			25,411			25,411			25,411			25,411
Diluted weighted units outstanding		25,411			25,411			25,411			25,411			25,411
Income (loss) per unit basic	$	(0.1257	)	$	(0.3512	)	$	(0.2335	)	$	(0.0823	)	$	1(0.1608	)
Income (loss) per unit diluted	$	(0.1257	)	$	(0.3512	)	$	(0.2335	)	$	(0.0823	)	$	1(0.1608	)

As of September 30,

2018

2017

2016

2015

2014

2019

2018

2017

2016

2015

(In thousands)

Balance sheet data:

Cash and cash equivalents

125,~~727~~423

1812,~~804~~727

1518,~~416~~804

1615,~~566~~416

2116,~~982~~566

Property and equipment, net

3235,~~211~~662

3132,~~226~~211

3231,~~231~~226

4132,~~155~~231

4941,~~644~~555

Total assets

5550,~~434~~700

6155,~~629~~434

6061,~~033~~629

7260,~~788~~033

8772,~~617~~788

Total debt

1929,~~738~~593

2419,~~366~~738

2724,~~593~~366

3227,~~654~~593

4532,~~563~~654

Total equity

2813,~~423~~846

3128,~~480~~423

2631,~~523~~480

3226,~~416~~523

3432,~~507~~416

2515

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

~~The~~This ~~following~~Management’s ~~discussion~~Discussion and ~~analysis~~Analysis ~~provides~~section ~~information~~discusses ~~that~~the ~~management~~Company’s ~~believes~~results isof ~~relevant~~operations tofor anthe ~~assessment~~years ~~and~~ending ~~understanding~~September of30, ~~our~~2019, ~~consolidated~~2018 ~~financial~~and ~~condition~~2017, ~~and~~together ~~results~~with its balance sheets as of ~~operations~~September 30, 2019, and 2018. This discussion should be read in conjunction with the consolidated financial statements included herewith and the notes to the consolidated financial statements thereto and the risk factors contained herein, as well as Part I, Item 1. “Business – Company Overview and Recent Events.”

This Management’s Discussion and Analysis section discusses the Company’s results of operations for the years ending September 30, 2018, 2017 and 2016, together with its balance sheets as of September 30, 2018, and 2017.

OVERVIEW

Advanced BioEnergy, LLC (“Company,” “we,” “our,” “Advanced BioEnergy” or “ABE”) was formed in 2005 as a Delaware limited liability company. ~~Our~~Until the December 19, 2019 closing the Asset Sale as described above, our business ~~consists~~consisted of producing ethanol and co-products, including wet, modified and dried distillers’ grains, and corn oil. ~~Ethanol~~through isthe atwo ~~renewable,~~ethanol ~~environmentally~~production ~~clean fuel source that is produced at numerous~~ facilities in ~~the~~Aberdeen ~~United~~and ~~States~~Huron, ~~mostly~~South inDakota ~~the~~owned ~~Midwest. In the U.S., ethanol is produced primarily from corn~~ and ~~then~~operated ~~blended~~by ~~with~~our ~~unleaded gasoline in varying percentages. The ethanol industry in the U.S. has grown significantly as the use of ethanol reduces harmful auto emissions~~subsidiary, ~~enhances~~ABE ~~octane~~South ~~ratings of the gasoline with which it is blended~~Dakota, ~~offers~~LLC ~~consumers~~(“ABE aSouth ~~cost-effective choice, and decreases the amount of crude oil the U~~Dakota”).~~S. needs to import from foreign sources.~~

ToThe ~~execute~~table ~~our~~below ~~business~~provides ~~plan, in November 2006 we acquired ABE South Dakota, LLC (“ABE South Dakota”)(f/k/~~a ~~Heartland~~summary ~~Grain~~of ~~Fuels,~~our ~~LP),~~dry ~~which~~mill ~~owned existing~~ ethanol ~~production~~plants ~~facilities~~ in ~~Aberdeen~~operation ~~and~~as ~~Huron, South Dakota. We began construction~~ of ~~our new facility in Aberdeen~~September 30, South Dakota in April 2007, and began operations in January 2008. Our production operations are carried out primarily through our operating subsidiary ABE South Dakota which owns and operates ethanol facilities in Aberdeen and Huron, South Dakota. 2019:

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 in assessing performance. Based on the related business nature and expected financial results, the Company’s plants are aggregated into one reporting segment.

Location	Opened	Estimated Annual Ethanol Production(1)		Estimated Annual Distillers’ Grains Production(2)		Estimated Annual Corn Oil Production		Estimated Annual Corn Processed		Primary Energy Source
		(Million gallons)		(000s Tons)		(000s lbs)		(Million bushels)
Aberdeen, SD	January 2008		48		134		11,561		15.7	Natural Gas
Huron, SD	September 1999		32		97		5,717		11.4	Natural Gas
Consolidated			80		231		17,278		27.1

Location	Opened	Estimated Annual Ethanol Production(1)		Estimated Annual Distillers’ Grains Production(2)		Estimated Annual Corn Oil Production		Estimated Annual Corn Processed		Primary Energy Source
		(Million gallons)		(000s Tons)		(000s lbs)		(Million bushels)
Aberdeen, SD(3)	January 2008		48		134		11,561		15.7	Natural Gas
Huron, SD	September 1999		32		97		5,717		11.4	Natural Gas
Consolidated			80		231		17,278		27.1

(1)	Actual permitted gallons are 65.7 million for Aberdeen and 42.0 million for Huron totaling 107.7 million gallons.

(2)	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.

(3) Our plant at Aberdeen formerly consisted of a single production facility that is represented in the table above. Prior to April 2016, we also operated a smaller, nine-million gallon Aberdeen facility. We closed this smaller plant in April 2016 due to inefficiencies and the ongoing capital expenditures required to keep it in operating condition, coupled with the weak margin environment. We decided during our fiscal 2016 fourth quarter not to resume operations at this facility in the future and, accordingly, impaired the value of this asset on our financial statements to an estimated salvage value of $200,000, which resulted in a loss of $1,584,000 in the fourth quarter of fiscal 2016. During fiscal 2017, the Company received proceeds of $155,000 from the salvage of the smaller plant. At September 30, 2017 the remaining value of the asset on the Company’s financial statement was $45,000. During fiscal 2018, the Company received proceeds of $98,000 from the salvage of the smaller plant. At September 30, 2018, the remaining value of the asset on the Company’s financial statements was $0.

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.

PLAN OF OPERATIONS THROUGH SEPTEMBER 30, 2019

Over the next year we will continue our focus on operational improvements at our South Dakota operating facilities, including completion of the grain storage and receiving facility we are constructing at our Aberdeen plant. 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

Year Ended September 30, 2019 Compared to Year Ended September 30, 2018

The following table reflects quantities of our products sold at average net prices as well as bushels of corn ground and therms of natural gas burned at average costs for fiscal 2019 and fiscal 2018 for our South Dakota plants:

	Year Ended September 30, 2019				Year Ended September 30, 2018
Product Sales Information	Quantity		Average Price		Quantity		Average Price
	(In thousands)				(In thousands)
Ethanol (gallons)		82,902	$	1.18		83,869	$	1.23
Distillers grains (tons)		203	$	126.49		209	$	128.06
Corn Oil (pounds)		20,446	$	0.22		20,273	$	0.20

Product Cost Information	Quantity		Average Cost		Quantity		Average Cost
Corn (bushels)		28,803	$	3.59		29,357	$	3.25
Natural Gas (therms)		2,050	$	3.31		2,106	$	3.92

Net Sales

Net sales for fiscal 2019 were $128.0 million, compared to $133.8 million for fiscal 2018, a decrease of $5.8 million or 4%. The decrease was a result of lower ethanol and distillers’ prices combined with a decrease in ethanol gallons and distillers’ tons sold, partially offset by an increase in corn oil price and corn oil pounds sold. The decrease in ethanol and distillers prices is the result of various factors, including but not limited to, market demand for our products, the spread between ethanol/distillers, corn prices and overall gasoline demand. Ethanol gallons sold decreased 1.0 million gallons or 2% in fiscal 2019, compared to fiscal 2018. Corn oil pounds sold increased 0.2 million pounds or 1% in fiscal 2019, compared to fiscal 2018. The increase in corn oil pounds sold is the result of increased production efficiency at both plants.

Cost of Goods Sold

Cost of goods sold for fiscal 2019 was $138.3 million, compared to $133.6 million for fiscal 2018, an increase of $4.7 million. An increase in corn costs offset by a decrease in natural gas costed represented a portion of the increase in cost of goods sold in fiscal 2019. Corn costs represented 74.7% and 71.4% of cost of sales for the fiscal years 2019 and 2018, respectively. Corn prices increased approximately 10% in fiscal 2019 from fiscal 2018; however, we used 2% fewer corn bushels in fiscal 2019 than in fiscal 2018, due to lower ethanol production in fiscal 2019.

Natural gas costs represented 4.9% and 6.2% of cost of sales for fiscal years 2019 and 2018, respectively. The cost of natural gas per mmbtu decreased 18% in fiscal 2019, compared to fiscal 2018. The cost of natural gas in fiscal 2018 was higher than fiscal 2019 due to lower stocks coming out of the withdrawal season, which is the colder season from November through March, in 2017. These lower stock levels drove prices higher during fiscal 2018.

Selling, General, and Administrative Expenses

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

Overall selling, general and administrative costs increased by approximately $0.7 million to $3.4 million in fiscal 2019, compared to fiscal 2018. The increase was primarily a result of higher costs in fiscal 2019 related to the Asset Sale and related transactions. As a percentage of net sales, fiscal 2019 selling, general and administrative expenses increased to 2.7%, compared to 2.0% for fiscal 2018.

Interest Expense

Interest expense for fiscal 2019 was $1.0 million compared to $0.7 million in fiscal 2018. Fiscal 2019 interest expense included $0.7 million of variable rate interest and $0.6 million of fixed rate interest related to our outstanding debt and $0.1 million of amortization of deferred financing costs offset by $0.4 million of capitalized interest. Fiscal 2018 interest expense included $0.6 million of variable rate interest related to our outstanding debt and $0.1 million of amortization of deferred financing costs.

Year Ended September 30, 2018 Compared to Year Ended September 30, 2017

	Year Ended September 30, 2018				Year Ended September 30, 2017
Product Sales Information	Quantity		Average ~~Price~~Cost		Quantity		Average ~~Price~~Cost
	(In thousands)				(In thousands)
Ethanol (gallons)		83,869	$	1.23		84,742	$	1.39
Distillers grains (tons)		209	$	128.06		210	$	96.91
Corn Oil (pounds)		20,273	$	0.20		19,551	$	0.25
Product Cost Information	Quantity		Average ~~Cost~~Price		Quantity		Average ~~Cost~~Price
Corn (bushels)		29,357	$	3.25		29,517	$	3.15
Natural Gas (therms)		2,106	$	3.92		2,123	$	3.36

Net Sales

Net sales for fiscal 2018 were $133.8 million, compared to $143.5 million for fiscal 2017, a decrease of $9.7 million or 7%. The decrease was a result of lower ethanol and corn oil prices combined with a decrease in ethanol gallons and distillers’ tons sold, partially offset by an increase in distillers’ price and corn oil pounds sold. The decrease in ethanol and increase in distillers’ prices is the result of various factors, including but not limited to, market demand for our products, the spread between ethanol/distillers, corn prices and overall gasoline demand. Ethanol gallons sold decreased 0.9 million gallons or 1% in fiscal 2018, compared to fiscal 2017. Corn oil pounds sold increased 0.7 million pounds or 4% in fiscal 2018, compared to fiscal 2017. The increase in corn oil pounds sold is the result of increased production efficiency at both plants.

Cost of Goods Sold

Cost of goods sold for fiscal 2018 was $133.6 million, compared to $130.2 million for fiscal 2017, an increase of $3.4 million. An increase in corn and natural gas costs represented a portion of the increase in cost of goods sold in fiscal 2018. Corn costs represented 72.0% and 71.6% of cost of sales for the fiscal years 2018 and 2017, respectively. Corn prices increased approximately 3% in fiscal 2018 from fiscal 2017; however, we used 1% fewer corn bushels in fiscal 2018 than in fiscal 2017, due to lower ethanol production in fiscal 2018.

Natural gas costs represented 6.2% and 5.5% of cost of sales for fiscal years 2018 and 2017, respectively. The cost of natural gas per mmbtu increased 17% in fiscal 2018, compared to fiscal 2017. The increased cost of natural gas in fiscal 2018 was due to lower stocks coming out of the withdrawal season, which is the colder season from November through March, in 2017. These lower stock levels drove prices higher in fiscal 2018.

Selling, General, and Administrative Expenses

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

Overall selling, general and administrative costs decreased by approximately $1.1 million to $2.7 million in fiscal 2018, compared to fiscal 2017. The decrease was primarily a result of higher costs in fiscal 2017 related to the tear down of the smaller Aberdeen plant, certain taxes paid in connection with transporting our ethanol in the state of Washington, and employee incentive compensation. As a percentage of net sales, fiscal 2018 selling, general and administrative expenses decreased to 2.0%, compared to 2.6% for fiscal 2017.

Interest Expense

Interest expense for fiscal 2018 was $0.7 million compared to $0.9 million in fiscal 2017. Fiscal 2018 interest expense included $0.6 million of variable rate interest related to our outstanding debt and $0.1 million of amortization of deferred financing costs. Fiscal 2017 interest expense included $0.8 million of variable rate interest related to our outstanding debt and $0.1 million of amortization of deferred financing costs.

~~Year~~Changes ~~Ended~~in ~~September 30,~~Financial ~~2017~~Position ~~Compared~~for tothe Year ~~Ended~~ended September 30, ~~2016~~2019

	Year Ended September 30, 2017				Year Ended September 30, 2016
Product Sales Information	Quantity		Average Cost		Quantity		Average Cost
	(In thousands)				(In thousands)
Ethanol (gallons)		84,742	$	1.39		87,790	$	1.32
Distillers grains (tons)		210	$	96.91		231	$	112.79
Corn Oil (pounds)		19,551	$	0.25		10,566	$	0.23
Product Cost Information	Quantity		Average Price		Quantity		Average Price
Corn (bushels)		29,517	$	3.15		30,649	$	3.34
Natural Gas (therms)		2,123	$	3.36		2,311	$	2.62

Net Sales

Net sales for fiscal 2017 were $143.5 million, compared to $144.9 million for fiscal 2016, a decrease of $1.4 million or 1%. The decrease was a result of lower distillers’ prices combined with a decrease in ethanol gallons and distillers’ tons sold, partially offset by an increase in corn oil prices and pounds sold. The increase in ethanol and decrease in distillers prices is the result of various factors including but not limited to market demand for our products, the spread between ethanol/distillers, corn prices and overall gasoline demand. Ethanol gallons sold decreased 3.0 million gallons or 5% in fiscal 2017, compared to fiscal 2016. Corn oil pounds sold were higher in fiscal 2017 due to the Huron corn oil system starting production in October 2016, as well as increased production efficiency in our Aberdeen corn oil system.

Cost of Goods Sold

Cost of goods sold for fiscal 2017 was $130.2 million, compared to $145.4 million for fiscal 2016, a decrease of $15.2 million. A decrease in corn costs represented a portion of the decrease in cost of goods sold in fiscal 2017. Corn costs represented 71.6% and 70.4% of cost of sales for the fiscal years 2017 and 2016, respectively. Corn prices decreased approximately 6% in fiscal 2017 from fiscal 2016, and we used 5% fewer corn bushels in fiscal 2017 than in fiscal 2016, due to lower ethanol production in fiscal 2017.

Natural gas costs represented 5.5% and 4.2% of cost of sales for fiscal years 2017 and 2016, respectively. The cost of natural gas per mmbtu increased 30% in fiscal 2017, compared to fiscal 2016. The increased cost of natural gas in fiscal 2017 was due to elevated stocks coming out of the withdrawal season in 2016, which drove prices lower in fiscal 2016.

The estimated useful life of process equipment was re-evaluated and adjusted from 10 years to 15 years in the prior year. As a result of this change in estimate, depreciation expense was reduced approximately $5.3 million in fiscal 2017 compared to fiscal 2016.

Selling, General, and Administrative Expenses

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

Overall selling, general and administrative costs increased by approximately $0.5 million to $3.8 million in fiscal 2017, compared to fiscal 2016. As a percentage of net sales, fiscal 2017 selling, general and administrative expenses increased to 2.6%, compared to 2.2% for fiscal 2016.

Asset Impairment

Expense related to asset impairment for fiscal 2017 was zero, compared to $1.6 million for fiscal 2016. The expense in fiscal 2016 was the result of the Company’s decision not to resume operations at its smaller Aberdeen plant in the fourth quarter of fiscal 2016.

Interest Expense

Interest expense for fiscal 2017 and fiscal 2016 was $0.9 million. Fiscal 2017 interest expense included $0.8 million of variable rate interest related to our outstanding debt and $0.1 million of amortization of deferred financing costs. Fiscal 2016 interest expense included $1.1 million of variable rate interest related to our outstanding debt and $0.1 million of amortization of deferred financing costs. These fiscal 2016 interest expense items were offset by $0.3 million of deferred gain resulting from the troubled debt restructuring that occurred in 2010.

As a result of debt sweep payments made to the 2010 Credit Agreement during fiscal 2016, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. Therefore, as a result of the final payment on the 2010 Credit Agreement in fiscal 2016, a gain of approximately $325,000 was recognized as other income during the fiscal year ended September 30, 2016.

Changes in Financial Position for the Year ended September 30, 2018

Current Assets

The decrease in current assets at September 30, ~~2018~~2019 compared to September 30, ~~2017~~2018 of $68.92 million was primarily due to principal payments of $41.70 million, ~~and~~ capital expenditures of $7.4 million and cash from operation of $9.28 million, offset by ~~cash~~proceeds from ~~operations~~debt of $110.58 million.

Property, Plant and Equipment

The $13.05 million increase in property, plant and equipment at September 30, ~~2018~~2019 compared to September 30, ~~2017~~2018 was primarily due to $47.24 million of ~~cash and $0.7 million of~~ capital expenditures ~~in accounts payable,~~ offset by $3.9 million of depreciation expense.

Current Liabilities

Accounts payable and accrued expenses ~~increased~~decreased by $1.50 million at September 30, ~~2018~~2019 compared to September 30, ~~2017~~2018. The primary reason for the increase is a difference of timing of payments to vendors, ~~which~~along ~~includes~~with ~~$0.7~~a ~~million~~change ~~related~~in toclassification of the ~~Aberdeen~~railcar ~~grain~~damage ~~storage~~accrual ~~project~~from current to long-term.

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

The current portion of long-term debt ~~decreased~~increased by $328.78 million at September 30, ~~2018~~2019 compared to September 30, ~~2017~~2018. The ~~decrease~~increase was ~~due to making~~ the ~~final~~result ~~payment~~ of ~~the~~a ~~2016 Term Loan in July 2018 and~~ $36.05 million ~~debt~~short-term ~~payments~~revolver ~~being~~in ~~deferred~~August as2019, ~~part~~and ofall ~~the~~debt ~~Fourth~~becoming ~~Amendment~~current due to ~~the~~an ~~credit~~event ~~agreement,~~of ~~defined below~~default.

Long-term debt decreased by $119.0 million at September 30, ~~2018~~2019 compared to September 30, ~~2017~~2018. This decrease was ~~due~~the toresult ~~$4.0~~of ~~million~~all in debt ~~payments,~~becoming ~~offset~~current bydue ~~$3.0~~to ~~million~~an event of ~~deferred debt payments as described above~~default.

CAPITAL RESOURCES

During fiscal ~~2018~~2019, 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 had minimal activity since the December 2012 sale of the Fairmont facility. The liquidity and capital resources for each entity are based on that entity’s existing financing arrangements and capital structure. In fiscal 2019, Advanced BioEnergy iswas 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 under the ~~2015~~Master Credit Agreement with AgCountry. With the December 19, 2019 repayment of our obligations to AgCountry, the Master Credit Agreement and related agreements were terminated in accordance with their terms.

Advanced BioEnergy, LLC ~~(“ABE”)~~

ABE had cash and cash equivalents of $10.2 million on hand at September 30, ~~2018~~2019. ABE did not have any debt outstanding as of September 30, ~~2018~~2019.

29From time to time, ABE may receive certain allowable distributions from ABE South Dakota, subject to compliance with the terms and conditions of the Master Credit Agreement. ABE will not receive any distribution from ABE South Dakota for its fiscal 2019 financial results.

From time to time, ABE may receive certain allowable distributions from ABE South Dakota, subject to compliance with the terms and conditions of the 2015 Credit Agreement. ABE will not receive any distribution from ABE South Dakota for its fiscal 2018 financial results.

In connection with the execution of a rail car sublease, the Company, as parent of ABE South Dakota, agreed to post a $2.5 million irrevocable and non-transferable standby letter of credit in May 2012 for the benefit of NGL Crude Logistics, LLC (“NGL” f/k/a Gavilon) as security for the payment obligations of ABE South Dakota under certain agreements with NGL. The Company deposited $2.5 million in a restricted account as collateral for this letter of credit and classified it as restricted cash. Effective May 15, 2014, the letter of credit and corresponding deposit of collateral were decreased by $1.0 million in conjunction with an amendment to the rail car sublease. Effective June 27, 2016, the letter of credit and corresponding deposit of collateral was decreased by $0.5 million in conjunction with an amendment to the rail car sublease. Effective July 31, 2018, the letter of credit was terminated and the corresponding collateral requirement was eliminated.

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~~was nodissolved ~~cash~~in ~~and~~fiscal ~~cash~~2019 ~~equivalents~~and ondid ~~hand~~not exist at September 30, ~~2018~~2019. 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.~~5.2 million on hand at September 30, ~~2018~~2019. As of September 30, ~~2018~~2019, ABE South Dakota had interest-bearing term debt outstanding of $2029.09 million.

~~2015~~AgCountry ~~Senior~~Master Credit Agreement

On December 29 19, ~~2015~~2019, ~~ABE~~all ~~South~~amounts ~~Dakota~~outstanding ~~entered~~under ~~into~~the a Master Credit Agreement dated December 29, 2015, as amended (“~~2015~~Master Credit Agreement”) ~~with~~between ABE South Dakota as borrower and AgCountry Farm Credit Services, PCA as lender, (“AgCountry”) towere ~~refinance~~repaid ~~its~~in ~~existing~~full. The ~~2010~~total ~~Senior~~amount ~~Credit~~repaid ~~Agreement.~~was Onapproximately ~~December 29,~~$31.0 ~~2015~~million, ~~the~~which ~~Company~~was ~~also~~repaid ~~entered~~from ~~into~~the ~~(i) a~~purchase ~~First~~price ~~Supplement~~from to the ~~2015~~Asset ~~Credit~~Sale ~~Agreement~~described ~~covering~~above. aThe $1031.0 million ~~Revolving~~payment ~~Term~~consisted ~~Facility~~of ~~and~~the ~~(ii) a~~following ~~Second~~amounts ~~Supplemental~~outstanding ~~covering~~as aof the closing date of the Asset Sale: $2030.5 million in principal, $0.4 million ~~Term~~in ~~Loan~~interest and $0.1 ~~The~~million ~~transaction~~in ~~funded~~fees and expenses. Effective upon the repayment, the Master Credit Agreement and all related documents were terminated in accordance with their terms and AgCountry released its security interest in, and liens and mortgages on, ~~December 30~~all of the properties, ~~2015~~rights and assets of ABE South Dakota.

~~The~~Below ~~$20.0~~is ~~million Term Loan had~~ a ~~variable~~summary ~~interest rate (“Variable Rate”) equal to the one-month LIBOR rate plus a “Margin”~~ of ~~350 basis points at September 30, 2018. Subsequent to~~ the ~~end~~Master ofCredit ~~the~~Agreement ~~fiscal~~and ~~year,~~its onterms ~~October~~that ~~26,~~were ~~2018, the Company elected to lock~~ in aeffect ~~fixed~~as ~~interest rate~~ of 6.4%, rather than the Variable Rate, on the remaining balance of the Term Loan. The Company may elect one or more fixed or adjustable interest rates, rather than the Variable Rate, based on AgCountry’s cost of funds at the time of the election, plus the Margin. Any election must apply to $1.0 million or more owing on the Term Loan. Beginning April 1, 2016, the Company began making quarterly principal payments of $1.0 million, plus accrued interest, on the Term Loan. The Term Loan will be fully amortized over five years with the final payment on January 1, 2021. At September 30, ~~2018, the balance of the Term Loan was $10.0 million.~~2019:

~~The~~On ~~$10.0~~December ~~Revolving~~29, ~~Term~~2015, ~~Facility~~ABE ~~has~~South aDakota ~~Variable~~entered ~~Rate~~into ~~equal to~~ the ~~one~~Master ~~month~~Credit ~~LIBOR~~Agreement ~~rate~~with ~~plus~~AgCountry anto ~~initial~~refinance ~~Margin~~its ofexisting ~~350~~2010 ~~basis~~Senior ~~points~~Credit Agreement. ~~The~~On ~~applicable LIBOR interest rate at November 30, 2018~~December ~~was 2.~~29%., ~~Borrowings under the Revolving Term Facility may be advanced~~2015, ~~repaid and re-borrowed during~~ the ~~term. The~~ Company isalso ~~required~~entered tointo ~~make~~(i) a ~~quarterly~~First ~~interest~~Supplement ~~payments~~to on the ~~Revolving~~Master ~~Term~~Credit ~~Facility,~~Agreement ~~with~~covering ~~the~~a ~~full principal amount outstanding due on January 1, 2021~~$10.0 ~~Under~~million ~~the~~ Revolving Term Facility, ~~the~~and ~~Company~~(ii) a isSecond ~~required~~Supplemental tocovering ~~pay~~a ~~unused~~$20.0 ~~commitment~~million ~~fees~~Term ofLoan. 50The ~~basis~~transaction ~~points.~~funded Aton ~~September~~ December 30, ~~2018, the balance of the Revolving Term Facility was $10~~2015.~~0 million.~~

The $20.0 million Term Loan had a fixed interest rate (“Fixed Rate”) at September 30, 2019. The Fixed Rate was equal to 6.32%. On October 26, 2018, the Company elected to lock in a fixed rate of 6.4%, rather than a variable rate, on the remaining balance of the Term Loan. On January 2, 2019, the Company entered into an Interest Rate Conversation Agreement with AgCountry, under which the Fixed Rate of 6.4% was reduced to 6.32% for the remainder of the loan term. Beginning April 1, 2016, the Company began making quarterly principal payments of $1.0 million, plus accrued interest, on the Term Loan. The Term Loan was originally scheduled to be fully amortized over five years with the final payment on January 1, 2021. As described below, the payments originally due in January, April, July and October 2019 have been deferred and are now due at the end of the term, or January 1, 2021. At September 30, 2019, the outstanding balance on the Term Loan was $9.0 million.

The $10.0 Revolving Term Facility has a variable rate (“Variable Rate”) equal to the one-month LIBOR rate of plus an initial Margin of 350 basis points. At September 30, 2019, the Variable Rate was equal to the one-month LIBOR rate of 2.20% plus a Margin of 350 basis points. Borrowings under the Revolving Term Facility may be advanced, repaid and re-borrowed during the term. The Company is required to make quarterly interest payments on the Revolving Term Facility, with the full principal amount outstanding due on January 1, 2021. Under the Revolving Term Facility, the Company is required to pay unused commitment fees of 50 basis points. At September 30, 2019, the balance of the Revolving Term Facility was $10.0 million.

The Margin will (i) decrease to 3.25% when the aggregate principal balance of all outstanding loans and the unfunded commitment level is $20.0 million or less, and (ii) decrease to 3.00% when this amount is $15.0 million or less.

On December 29, 2015, ABE South Dakota, LLC also entered into a Security Agreement with AgCountry under which borrowings under the ~~2015~~Master Credit Agreement are secured by substantially all of ABE South Dakota’s assets. AgCountry holds a first priority security interest and mortgage in all inventory, accounts receivable, intangibles, equipment, fixtures, buildings, and a first mortgage in land owned or leased by ABE South Dakota.

The Master Credit Agreement also included customary financial and non-financial covenants that limit capital expenditures, distributions and debt and require minimum working capital, owner’s equity, current ratio, debt to EBITDA ratio, and fixed charge coverage ratios as follows as of September 30, 2019:

~~The~~• ~~2015~~ABE ~~Credit~~South ~~Agreement~~Dakota ~~also~~has ~~included~~a ~~customary~~minimum ~~financial~~working ~~and~~capital ~~non-financial~~requirement ~~covenants~~of ~~that~~$12.75 ~~limit~~million ~~capital~~at ~~expenditures~~September 30, ~~distributions~~2016 and ~~debt~~thereafter. ~~and~~Working ~~require~~capital ~~minimum~~is ~~working~~calculated ~~capital,~~as ~~owner’s~~(i) ~~equity,~~(a) current ~~ratio,~~assets ~~debt~~plus to(b) ~~EBITDA~~the ~~ratio,~~amount ~~and~~available ~~fixed~~under ~~charge~~the ~~coverage~~Revolving ~~ratios~~Term asFacility, ~~follows:~~less (ii) current liabilities, measured quarterly.

• ABE South Dakota has a minimum working capital requirement of $10.0 million beginning at loan closing, increasing to $12.75 million at September 30, 2016 and thereafter. Working capital is calculated as (i) (a) current assets plus (b) the amount available under the Revolving Term Facility, less (ii) current liabilities, measured quarterly.

•

ABE South Dakota’s owner’s equity ratio was the ratio of (i) net worth divided by (ii) total assets. This ratio was to be measured annually at fiscal year-end and would have increased by 2% each fiscal year, from 40% at September 30, 2015, until a 50% ratio was achieved and maintained. This covenant was eliminated by the First Amendment (as defined below).

•

ABE South Dakota must maintain a ratio of current assets to current liabilities of not less than 1.2 to 1.0.

•

ABE South Dakota’s debt to EBITDA ratio must be less than 4.00:1.00. Debt is defined as total interest bearing debt, while EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. The debt to EBITDA ratio will be measured quarterly, but tested annually at each fiscal year end.

•

ABE South Dakota’s minimum fixed charge coverage ratio is 1.15:1.00 and is measured quarterly, but tested annually at each fiscal year end. The fixed charge coverage ratio is calculated by dividing EBITDA by the sum of scheduled payments of principal and interest, capital expenditures, any cash taxes, and distributions. When ABE South Dakota has achieved and maintained an owners’ equity ratio of 60.0% and working capital of $15.0 million, then the minimum fixed charge coverage ratio requirement will be reduced to 1.00:1.00. If the owners’ equity ratio subsequently declines below 60.0%, or working capital declines below $15.0 million, then the 1.15:1.00 minimum fixed charge ratio covenant will be reinstated.

•

ABE South Dakota is limited to annual capital expenditures of $2.0 million without prior consent of AgCountry, and is limited from incurring additional debt over certain amounts without prior approval, and making additional investments without prior approval of AgCountry.

•

ABE South Dakota is also prohibited from making member distributions in excess of 40% of pre-tax net income in a given year without the prior consent of Ag Country. When ABE South Dakota achieves and maintains owners’ equity ratio of 60.0% and working capital of $15.0 million, then it may pay member dividends of 100.0% of pre-tax net income. If the owner’s equity ratio declines below 60.0%, or working capital declines below $15.0 million, then dividends will be restricted until ABE South Dakota regains compliance. ABE South Dakota must meet all loan covenants before and after any distribution.

A number of these covenants have been amended in connection with subsequent term loans, a construction loan, and amendments and waivers as described below.

2016 Term Loan

On September 28, 2016, ABE South Dakota entered into the Third Supplement to the ~~2015~~Master Credit Agreement (“2016 Term Loan”) with AgCountry to finance the corn oil extraction system at the Huron plant. The total loan commitment for the 2016 Term Loan was $1.7 million, and the loan has a variable interest rate equal to the one-month LIBOR rate plus a “Margin” of 350 basis points. Beginning January 1, 2017, the Company began making quarterly payments of accrued interest on the 2016 Term Loan. A total of $1.1 million of the $1.7 million commitment was drawn from this loan. On April 1, 2017, the Company began making quarterly principal payments of $212,500 on the 2016 Term Loan. As of September 30, ~~2018~~2019, the 2016 Term Loan was paid in full.

2018 Construction and Term Loan

On March 13, 2018, ABE South Dakota entered into the Fourth Supplement to the ~~2015~~Master Credit Agreement (“2018 Term Loan”) with AgCountry to finance a grain storage and receiving facility at the Aberdeen plant. The agreement provides for a $5.0 million multiple advance credit facility. The loan has a variable interest rate equal to the one-month LIBOR rate plus a “Margin” of 350 basis points. During the construction period, the Company will make quarterly interest payments in arrears on the first day of each quarter. Upon completion of construction, the Company will begin making quarterly principal payments in the amount of $250,000 per quarter, plus accrued interest. The 2018 Term Loan will be fully amortized over five years, with the final payment on July 1, 2024. At September 30, ~~2018~~2019, no$4.3 ~~funds~~million had been drawn on the 2018 Term Loan, and $47,000 in loan fees and closing costs had been incurred, which have been classified as deferred financing costs and will be amortized as interest expense over the term of the loan.

~~Amendment~~2019 ~~and~~Short-Term ~~Waivers~~Revolving ~~to 2015~~ Credit ~~Agreement~~Loan

On ~~September~~August 287, ~~2016~~2019, ABE South Dakota entered into athe ~~Limited~~Fifth ~~Waiver~~Supplement ~~and First Amendment~~ to the ~~2015~~Master Credit Agreement (“~~First~~2019 ~~Amendment~~Revolving Loan”), with AgCountry to ~~(i)~~provide ~~eliminate~~a $6.5 million short-term revolving credit loan. The 2019 Revolving Loan was obtained to finance working capital needs through the ~~Owner’s~~closing ~~Equity~~of ~~Ratio~~the ~~Covenant~~Asset Sale, ~~(ii)~~as ~~temporarily~~well ~~increase~~as the ~~Capital~~purchase ~~Expenditures~~of ~~Covenant~~approximately 800,000 bushels of corn. The 2019 Revolving Loan has a variable interest rate equal to the one-month LIBOR rate plus a Margin of 400 basis points. Borrowings under the Revolving Loan may be advanced, repaid and re-borrowed during the term, except during an outstanding Event of Default. The Company is required to make monthly interest payments on the Revolving Loan which began September 1, 2019, with the full principal amount outstanding due on the earlier of November 1, 2019 or the date on which the obligations have been declared or have automatically become due and payable, whether by acceleration or otherwise. At September 30, 2019, the balance of the 2019 Revolving Loan was $6.5 million

31Amendments and Waivers to Master Credit Agreement

On September 28, 2016, ABE South Dakota entered into a Limited Waiver and First Amendment to the Master Credit Agreement (“First Amendment”) to (i) eliminate the Owner’s Equity Ratio Covenant, (ii) temporarily increase the Capital Expenditures Covenant to $3.0 million for fiscal 2016 to finance the corn oil extraction system at the Huron plant, and (iii) waive other post-closing obligations.

On November 19, 2016, ABE South Dakota received a waiver to the ~~2015~~Master Credit Agreement from AgCountry that waived certain Events of Default related to the Working Capital requirement and the Total Outstanding Debt to EBITDA Ratio at September 30, 2016.

On October 16, 2017, ABE South Dakota received a waiver to the ~~2015~~Master Credit Agreement from AgCountry that waived an Event of Default related to the Capital Expenditure Covenant for fiscal 2017. The Capital Expenditure Covenant for fiscal 2016 was increased to $3.0 million due to the addition of the corn oil extraction system at Huron. However, a portion of the capital expenditure cost was incurred in fiscal 2017, so an additional waiver was granted for this period.

On March 13, 2018, in conjunction with the 2018 Term Loan, ABE South Dakota entered into a Second Amendment to the ~~2015~~Master Credit Agreement (“Second Amendment”) to temporarily increase the Capital Expenditures Covenant to $6.0 million per year for the years ending September 30, 2018 and 2019. The covenant will revert back to $2.0 million per year for all years ending after September 30, 2019.

OnAs ~~October~~a ~~19,~~result ~~2018,~~of ~~ABE~~a ~~South~~depressed ~~Dakota~~margin ~~entered~~environment ~~into~~in afiscal ~~Limited~~2019 ~~Waiver~~ and ~~Third~~fiscal ~~Amendment~~2018, toABE ~~the~~South ~~2015~~Dakota ~~Credit~~requested ~~Agreement~~waivers ~~(“Third~~for ~~Amendment”) to waive~~ certain specific Events of Default ~~related~~in tofiscal ~~covenant~~2019 ~~compliance~~and asat of September 30, 2018, and ~~temporarily~~requested ~~amend certain future covenants. The Third Amendment included the following~~ covenant ~~waiver and~~ amendments: ~~(i)~~for ~~the~~specific ~~Fixed~~future ~~Charge~~covenants ~~Coverage~~for ~~Ratio~~which ~~was~~ABE ~~waived~~South asDakota ofprojected ~~September~~possible ~~30, 2018 and reduced to a ratio of 1~~non-compliance.~~00:1.00~~ Although asABE ofSouth ~~September~~Dakota’s 30lender, ~~2019,~~AgCountry ~~and~~Farm ~~reverts~~Credit ~~back to 1.15:1.00 at September 30~~Services, ~~2020~~PCA, ~~(ii)~~granted ~~the~~certain ~~Working~~waivers ~~Capital~~and ~~Covenant~~covenant ~~was~~amendments ~~reduced~~ to ~~$10~~the ~~million~~Master atCredit ~~September 30~~Agreement, ~~2018~~as ~~and~~discussed ~~December 31~~below, ~~2018,~~we $9were ~~million~~unable ~~at March 31, 2019 and June 30, 2019, then increased~~ to ~~$10~~meet ~~million~~other atcertain ~~September 30, 2019 and $12 million at September 30, 2020 and all times thereafter, (iii) the Capital Expenditures~~ covenant ~~was increased to $8.0 million for the year ending September 30, 2019,~~ and ~~reverts~~payment ~~back~~obligations ~~to $2.0 million for all~~ subsequent ~~years, and (iv) the outstanding Debt~~ to ~~EBITDA~~those ~~Ratio was~~ waived atand ~~September 30~~accordingly, ~~2018~~an ~~and~~Event ~~will revert back to the requirement that it be less than 4:00:1:00 on the last day~~ of ~~each~~Default ~~fiscal year end beginning September 30, 2019~~occurred.

On ~~December~~October 2819, 2018, ABE South Dakota entered into a Limited Waiver and ~~Deferral~~Third ~~Agreement and Fourth~~ Amendment to the ~~2015~~Master Credit Agreement (“~~Fourth~~Third Amendment”) to ~~defer~~waive ~~three~~certain ~~future~~Events ~~principal~~of ~~payments~~Default ~~and~~related ~~waive~~to covenant compliance as of September 30, 2018 and temporarily amend certain future covenants. The ~~Fourth~~Third Amendment included the following covenant ~~waivers~~waiver and amendments: (i) the Fixed Charge Coverage Ratio was waived as of September 30, 2018 and reduced to a ratio of 1.00:1.00 as of September 30, 2019, and reverts back to 1.15:1.00 at September 30, 2020, (ii) the Working Capital Covenant was reduced to $10 million at September 30, 2018 and December 31, 2018, $9 million at March 31, 2019 and June 30, 2019, then increased to $10 million at September 30, 2019 and $12 million at September 30, 2020 and all times thereafter, (iii) the Capital Expenditures covenant was increased to $8.0 million for the year ending September 30, 2019, and reverts back to $2.0 million for all subsequent years, and (iv) the outstanding Debt to EBITDA Ratio was waived at September 30, 2018 and will revert back to the requirement that it be less than 4:00:1:00 on the last day of each fiscal year end beginning September 30, 2019.

On December 28, 2018, ABE South Dakota entered into a Limited Waiver and Deferral Agreement and Fourth Amendment to the Master Credit Agreement (“Fourth Amendment”) to defer three future principal payments and waive and temporarily amend certain future covenants. The Fourth Amendment included the following covenant waivers and amendments:

(i)

defer the next three principal payments due January 1, April 1, and July 1, 2019 until the Term Loan maturity date on January 1, 2021;

(ii)

waive the Fixed Charge Coverage Ratio at September 30, 2019,

(iii)

amend the Working Capital Covenant to $4 million at December 31, 2018 and subsequent months until increasing to $5 million at September 30, 2020, and increasing to $12 million at September 30, 2021,

(iv)

waive the September 30, 2019 Debt to EBITDA Ratio, and

(v)

add a Cash Sweep Covenant whereby ABE South Dakota would be required to pay additional principal at the end of each fiscal year in the amount of 30 percent of Free Cash Flow. In order for a Cash Sweep payment to be made, ABE South Dakota must remain in compliance with all covenants before and after the payment. Free Cash Flow is defined as: fiscal year EBITDA less interest expense, scheduled principal payments, and non-financed maintenance capital expenditures. The Fourth Amendment would also restrict future dividend payments until all covenants revert back to originally set levels.

~~2010~~On ~~Senior~~July 17, 2019, ABE South Dakota entered into a Limited Waiver Agreement to the Master Credit Agreement (“Limited Waiver”) to waive the Event of Default related to compliance with the Working Capital Covenant at May 31, 2019 and June 30, 2019. As a condition to AgCountry granting the Limited Waiver, ABE South Dakota’s parent company, Advanced BioEnergy, LLC was required to make a cash investment not less than $300,000 to be available for ABE South Dakota’s working capital needs.

On August 7, 2019, ABE South Dakota entered into ana ~~Amended~~Second ~~and~~Limited ~~Restated~~Waiver ~~Senior Credit~~ Agreement ~~effective~~to asthe ofMaster ~~June 18,~~Credit ~~2010,~~Agreement ~~and amended on December 9, 2011~~ (~~the~~ “~~2010~~Second ~~Senior~~Limited ~~Credit Agreement~~Waiver”) ~~among ABE South Dakota, the lenders from time~~ to ~~time~~waive ~~party~~outstanding ~~thereto,~~ and anexpected ~~Administrative~~Events ~~Agent~~of ~~and~~Default ~~Collateral~~related ~~Agent.~~to ~~The~~compliance ~~principal~~with ~~amount of~~ the ~~term~~Working ~~loan~~Capital ~~facility~~Covenant ~~was~~at ~~payable~~July ~~in quarterly payments of $750~~31,~~000,~~ ~~with~~2019 ~~the remaining principal amount fully due~~ and ~~payable~~August ~~on March~~ 31, ~~2016.~~2019, ~~Loans~~and ~~outstanding under~~ the ~~2010~~Current ~~Senior~~Ratio ~~Credit~~Covenant ~~Agreement~~at ~~were~~June ~~subject to mandatory prepayment in certain circumstances~~30, ~~including~~2019, ~~but~~July ~~not limited to~~31, ~~mandatory~~2019 ~~prepayments~~and ~~based~~August ~~upon receipt of certain proceeds of asset sales~~31, ~~casualty proceeds, termination payments, and cash flows~~2019.

On October 9, 2019, ABE South Dakota ~~agreed~~entered tointo ~~pay~~ a ~~$3.0 million~~Third ~~restructuring~~Limited ~~fee~~Waiver toand ~~the~~Deferral ~~lender~~Agreement ~~due~~(“Third atLimited ~~the~~Waiver”) ~~earlier~~to: of(i) ~~March 31,~~waive ~~2016~~outstanding ~~and~~Events ~~the~~of ~~date~~Default onrelated ~~which~~to ~~the~~compliance ~~loans~~with ~~were~~the ~~repaid~~Working inCapital ~~full.~~and ~~ABE~~Current ~~South~~Ratio ~~Dakota~~covenants ~~recorded~~at ~~the~~September ~~restructuring~~30, ~~fee as long-term~~2019, ~~non-interest~~(ii) ~~bearing~~extend ~~debt. ABE South Dakota was also obligated to pay~~ the ~~final~~funding ~~installment~~period of ~~a waiver fee to~~ the ~~senior~~2018 ~~lenders~~Term inLoan ~~March~~to ~~2016.~~November ~~The original waiver fee was $275~~1,~~000~~ ~~of which $68~~2019,~~750~~ ~~was~~(iii) ~~payable~~amend inthe ~~March~~repayment ~~2016.~~obligations ~~The~~of ~~Company~~the ~~recorded~~2018 ~~this~~Term ~~fee~~Loan asto ~~non-interest~~begin ~~bearing~~January ~~debt~~1, ~~on its consolidated balance sheet~~2020, and ~~amortized~~(iv) defer the ~~fee~~principal topayment ~~interest~~due ~~expense~~October ~~over~~1, ~~the~~2019 ~~remaining~~to ~~life~~the ofTerm ~~the~~Loan ~~debt~~Maturity Date.

In connection with closing the 2015 Credit Agreement, ABE South Dakota paid in full all amounts outstanding under the 2010 Senior Credit Agreement, including $29.0 million of principal, accrued interest, the $3.0 restructuring fee, and the waiver fee of $68,750, and all security interests of the prior lenders were extinguished.

CASH FLOWS

The following table shows our cash flows for the years ended September 30:

	Years Ended September 30
	2018			2017			2016
	2019			2018			2017
	(In thousands)			(In thousands)			(In thousands)
Net cash provided by operating activities	$	1,508		$	13,186		$	1,723
Net cash provided by (used in) operating activities	$	(9,755	)	$	1,508		$	13,186
Net cash used in investing activities		(37,~~861~~318	)		(23,~~663~~861	)		(2,~~416~~663	)
Net cash used in financing activities		(4,724	)		(7,135	)		(4,069	)
Net cash provided by (used in) financing activities		9,769			(4,724	)		(7,135	)

Cash Flow from Operations

Our cash flows from operations in fiscal 2019 were lower compared to fiscal 2018, primarily due to decreased margins in fiscal 2019.

Our cash flows from operations in fiscal 2018 were lower compared to fiscal 2017, primarily due to decreased margins in fiscal 2018.

Our cash flows from operations in fiscal 2017 were higher compared to fiscal 2016, primarily due to increased margins in fiscal 2017.

Cash Flow from Investing Activities

We used more cash for investing activities in fiscal 2019 compared to fiscal 2018, primarily as a result of $7.4 million spent on capital expenditures in fiscal 2019 compared to $4.2 million in fiscal 2018.

We used more cash for investing activities in fiscal 2018 compared to fiscal 2017, primarily as a result of $4.2 million spent on capital expenditures in fiscal 2018 compared to $3.0 million in fiscal 2017.

We used more cash from investing activities in fiscal 2017 compared to fiscal 2016, primarily as a result of $3.0 million spent on capital expenditures in fiscal 2017 compared to $2.6 million in fiscal 2016. 22

Cash Flow from Financing Activities

We had more cash provided by financing activities in fiscal 2019 versus fiscal 2018 primarily due to debt proceeds of $10.8 million in fiscal 2019. In fiscal 2019 $1.0 million was used for debt payments versus $4.7 million in fiscal 2018.

We used less cash for financing activities in fiscal 2018 versus 2017 primarily due to a $3.8 million distribution to unit holders in fiscal 2017. This was offset by $1.1 million drawn from the 2016 Term Loan for the Huron corn oil project in fiscal 2017. It was also offset by debt payments of $4.7 million in fiscal 2018 versus $4.4 million in fiscal 2017.

We used more cash for financing activities in fiscal 2017 versus 2016 primarily due to a $3.8 million distribution to unit holders. This was offset by $1.1 million drawn from the 2016 Term Loan for the Huron corn oil project. In fiscal 2016, we received $30.0 million in proceeds from the 2015 Credit Agreement and used $34.1 million for payments on debt, including $2.0 million toward normal principal payments and $32.1 million to satisfy all remaining obligations of the 2010 Senior Credit Agreement. This resulted in a net use of cash from financing activities of $4.1 million in fiscal 2016.

CREDIT ARRANGEMENTS

A summary of debt in effect at September 30, ~~2018~~2019 is as follows (in thousands, except percentages):

	September 30, 2018 Interest Rate			September 30, 2018			September 30, 2017
	September 30, 2019 Interest Rate			September 30, 2019			September 30, 2018
ABE South Dakota:
Senior debt principal—variable		5.57	%		20,000			24,677
Senior debt principal - fixed		6.32	%		9,000			-
Deferred financing costs	N/A				(262	)		(311	)
Senior debt principal - variable		5.70	%		14,312			20,000
Total outstanding				$	19,738		$	24,366
Short term revolving line		6.20	%		6,500			-
Deferred financing costs	N/A				(219	)		(262	)
Total outstanding				$	29,593		$	19,738

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of September 30, ~~2018~~2019.

	Years Ending September 30,
	2019		2020		2021		2022			2023			Thereafter			Total
	2020		2021		2022		2023			2024			Thereafter			Total
Long-term debt obligations(1)	$	~~905~~29,593	$	~~3,895~~-	$	~~14,967~~-	$	~~(10~~-	)	$	(9-	)	$	~~(10~~-	)	$	1929,~~738~~593
Operating lease obligations(2)		3,~~413~~633		23,~~777~~379		2,~~529~~666		1,~~839~~939			~~1,134~~735			~~311~~-			12,~~003~~352
Total contractual obligations	$	433,~~318~~226	$	63,~~672~~379	$	172,~~496~~666	$	1,~~829~~939		$	~~1,125~~735		$	~~301~~-		$	3141,~~741~~945

(1)	Amounts represent principal and interest due under our credit facilities, assuming contractual maturities.

(2)	Operating lease obligations consist primarily of rail cars, mobile equipment and office space.

In connection with the closing of the Asset Sale, the Company assigned or cancelled any and all lease commitments above as they relate to ABE South Dakota and will have no further payment obligations. Following the closing of the Asset sale, ABE has future commitments for fiscal 2020 of $163,000, fiscal 2021 of $153,000 and fiscal 2022 of $3,000, which it will resolve through the liquidation, dissolution and winding up pursuant to the Plan of Liquidation.

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~~Effective ~~revenue~~October is1, ~~recognized~~2018, ~~when~~the ~~product~~Company ~~title~~adopted ~~and~~the ~~all~~new ~~risk~~guidance of ~~ownership~~Accounting isStandard ~~transferred~~Codification to(“ASC”) ~~the~~Topic ~~customer~~606, as“Revenue ~~specified~~from inContracts ~~the~~with ~~contractual~~Customers” ~~agreements~~(Topic ~~with~~606) using the ~~marketers~~modified retrospective approach. ~~Under~~Topic 606 requires the ~~terms~~Company ofto recognize revenue to reflect the ~~marketing~~transfer ~~agreements~~of ~~with~~promised ~~NGL,~~goods ~~revenue~~or isservices ~~recognized~~to ~~when~~customers ~~product~~in isan ~~loaded~~amount ~~into~~that ~~rail~~reflects ~~cars~~the orconsideration ~~trucks~~to which ABE expects to be entitled in exchange for ~~shipment~~those goods or services. ~~Revenue~~The ~~from~~new guidance requires the ~~sale~~Company ofto ~~co-products~~apply isthe ~~recorded~~following ~~when~~steps: ~~title~~(1) ~~and~~identify ~~all~~the ~~risk~~contract ofwith ~~ownership~~a ~~transfers~~customer; to(2) ~~customers.~~identify ~~Co-products~~the ~~are~~performance ~~normally~~obligations ~~shipped~~in ~~free~~the oncontract; ~~board~~(3) determine the transaction price; (~~“FOB”~~4) ~~shipping~~allocate ~~point.~~the ~~Interest~~transaction ~~income~~price isto ~~recognized~~the performance obligations in the contract; and (5) recognize revenue when, or as, ~~earned~~the Company satisfies a performance obligation. InThe ~~accordance~~Company ~~with~~generally recognizes revenue at a point in time. The majority of the Company’s ~~agreements~~contracts ~~for~~with ~~the~~customers ~~marketing~~have one performance obligation and ~~sale~~a ofcontract ~~ethanol~~duration ~~and~~of ~~related~~one ~~products,~~year ~~commissions~~or ~~due~~less. The toadoption ~~the~~of ~~marketers~~this ~~are~~new ~~deducted~~guidance ~~from~~did ~~the~~not ~~gross~~result ~~sale~~in ~~price~~any atchange ~~the~~to ~~time~~our recognition of ~~payment~~revenue.

The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods is are transferred to our customers when a railcar or truck is loaded , in an amount that reflects the consideration that we expect to receive in exchange for those goods.

•

Sales of ethanol

•

Sales of distillers grains

•

Sales of distillers corn oil

We disclose disaggregation of revenue according to product line, along with accounts receivable from contracts with customers, in Note 7.

Commodity Sales and Purchase Contracts, Derivative Instruments

The Company enters 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.

On occasion, the Company has entered into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn purchases and forecasted ethanol sales. Accounting for derivative contracts requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction.

Although the Company believes its derivative positions are economic hedges, it has not designated any of these positions as hedges for accounting purposes and has recorded its derivative positions on its balance sheet at their fair value, with changes in fair value recognized in current period earnings.

In addition, certain derivative financial instruments that meet the criteria for derivative accounting treatment also qualify for a scope exception to derivative accounting, as they are considered normal purchases and sales. The availability of this exception is based on the assumption that the Company has the ability and it is probable that it will deliver or take delivery of the underlying item. Derivatives that are considered to be normal purchases and sales are exempt from derivative accounting treatment, and are accounted for under accrual accounting.

Inventories

Ethanol inventory, raw materials, work-in-process and parts inventory are valued using methods that approximate the lower of cost (first-in, first-out) or net realizable value (“NRV”). Distillers’ grains and related products are stated at NRV. In the valuation of inventories and purchase and sale commitments, the Company determines NRV by estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

inventories and purchase and sale commitments, the Company determines NRV by estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

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
Other equipment		1-5 Years
Process equipment		15 Years
Buildings		40 Years

Interest capitalized in property and equipment was $32353,000 ~~thousand~~ and $032,000 in fiscal ~~2018~~2019 and ~~2017~~2018, respectively.

During the fourth quarter of fiscal 2016, the Company decided to permanently cease operations at its smaller Aberdeen plant. Accordingly, the Company recorded an impairment of $1.6 million during the fourth quarter of fiscal 2016. In connection with the impairment of the smaller Aberdeen plant, the Company also re-evaluated the estimated lives of process equipment. Prior to June 30, 2016, the Company used an estimated useful life of 10 years for process equipment. Based on the re-evaluation, the Company determined a change in estimate was necessary. Accordingly, the Company adjusted the estimated useful life for process equipment to 15 years in the fourth quarter of fiscal 2016. As a result of this change in estimate, depreciation expense was reduced by approximately $1.8 million in fiscal 2016 and $5.3 million in fiscal 2017. Depreciation in subsequent periods has been and will be reduced to reflect the longer estimated useful life.24

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.

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 September 30, ~~2018~~2019, we had $20.08 million of outstanding borrowings with variable interest rates. With each 1% increase in interest rates we will incur additional annual interest charges of $0.221 million.

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

IMPACT OF INFLATION

We believe that inflation has not had a material impact on our results of operations since inception. ~~We cannot ensure that inflation will not have an adverse impact on our operating results and financial condition in future periods.~~

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

3525

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET 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 year ended September 30, ~~2018~~2019, sales of ethanol represented 7776% of our total revenues and corn costs represented 7175% 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 September 30, ~~2018~~2019, the price per gallon of ethanol and the price per bushel of corn on the CBOT were $1.0837 and $3.5688, respectively.

We are also subject to market risk on the selling prices of our distillers’ grains, which represented 20% of our total revenues for the fiscal year ended September 30, ~~2018~~2019. 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 $~~115~~126 per ton at September 30, ~~2018~~2019.

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 65% of total cost of sales for the year ended September 30, ~~2018~~2019. The price of natural gas is affected by overall supply, weather conditions and general economic, market and regulatory factors. At September 30, ~~2018~~2019, the price of natural gas on the NYMEX was $32.0133 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 716% of our ethanol gallons sold through October ~~2018~~2019. At September 30, ~~2018~~2019 we had entered into forward sale contracts representing 7936% of our expected distillers’ grains production output through October ~~2018~~2019.

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		72.0	gallons		10.0	%	$	1.0837	$	79.89
Distillers grains		0.2	tons		10.0	%		~~115~~126.00		2.35
Corn		27.1	bushels		10.0	%		3.5688		910.65
Natural gas		2.1	mmbtus		10.0	%		32.0133		0.65

(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 80 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 231,000 tons. The volume of corn is based on the assumption that we will enter into forward contracts for none of our estimated current 27.1 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 September 30, ~~2018~~2019.

3626

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements

		Page
Advanced BioEnergy, LLC
Report of Independent Registered Public Accounting Firm		3847
Financial Statements:
Consolidated Balance Sheets		3948
Consolidated Statements of Operations		4049
Consolidated Statements of Changes in Members’ Equity		4150
Consolidated Statements of Cash Flows		4251
Notes to Consolidated Financial Statements		4352

3727

Report of Independent Registered Public Accounting Firm

To the Members and the Board of Directors of Advanced BioEnergy, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Advanced BioEnergy, LLC and its subsidiaries (the Company) as of September 30, ~~2018~~2019 and ~~2017~~2018, the related consolidated statements of operations, changes in members’ equity and cash flows for each of the three years in the period ended September 30, ~~2018~~2019, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, ~~2018~~2019 and ~~2017~~2018, and the results of its operations and its cash flows for each of the three years in the period ended September 30, ~~2018~~2019, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matter – Subsequent Events

As discussed in Note 12 to the financial statements, the Company sold substantially all Company assets related to its ethanol plants on December 19, 2019, and has repaid all outstanding debt obligations.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company’s auditor since 2005.

Des Moines, Iowa

December 3130, ~~2018~~2019

3828

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Balance Sheets

	September 30,			September 30,
	2018			2017
	2019			2018
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	125,~~727~~423		$	1812,~~804~~727
Accounts receivable:
Trade accounts receivables		43,~~198~~451			4,~~039~~198
Other receivables		~~192~~174			~~805~~192
Inventories		4,~~922~~871			4,~~334~~922
Prepaid expenses		~~732~~667			~~665~~732
Restricted cash		-			1,000
Total current assets		14,586			22,771
Total current assets		22,771			29,647
Property and equipment, net		35,662			32,211
Property and equipment, net		32,211			31,226
Other assets		452			452
Other assets		452			756
Total assets	$	50,700		$	55,434
Total assets	$	55,434		$	61,629
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	43,~~635~~908		$	34,~~531~~635
Accrued expenses		2,~~615~~326			2,~~221~~615
Current portion of long-term debt (stated principal amount of $1,000 and $4,677 at September 30, 2018 and September 30, 2017, respectively)		905			4,581
Current portion of long-term debt (stated principal amount of $29,812 and $1,000 at September 30, 2019 and September 30, 2018, respectively)		29,593			905
Total current liabilities		835,~~155~~827			108,~~333~~155
Other liabilities		231,027			3123
Long-term debt (stated principal amount of $19,000 and $20,000 at September 30, 2018 and September 30, 2017, respectively)		18,833			19,785
Long-term debt (stated principal amount of $0 and $19,000 at September 30, 2019 and September 30, 2018, respectively)		-			18,833
Total liabilities		2736,~~011~~854			3027,~~149~~011
Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and outstanding		44,826			44,826
Accumulated deficit		(1630,~~403~~980	)		(1316,~~346~~403	)
Total members’ equity		2813,~~423~~846			3128,~~480~~423
Total liabilities and members’ equity	$	5550,~~434~~700		$	6155,~~629~~434

See notes to consolidated financial statements.

3929

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Operations

	Years Ended
	September 30, 2018			September 30, 2017			September 30, 2016
	September 30, 2019			September 30, 2018			September 30, 2017
	(in thousands, except per unit data)
Net sales
Ethanol and related products	$	~~133~~127,~~772~~991		$	~~143~~133,~~532~~772		$	~~144~~143,~~695~~532
Other		-			-			183
Total net sales		127,991			133,772			143,532
Total net sales		133,772			143,532			144,878
Cost of goods sold		138,284			133,628			130,228
Cost of goods sold		133,628			130,228			145,367
Gross profit (loss)		(10,293	)		144			13,304
Gross profit (loss)		144			13,304			(489	)
Selling, general and administrative		3,416			2,729			3,798
Selling, general and administrative		2,729			3,798			3,267
Operating income (loss)		(13,709	)		(2,585	)		9,506
Asset impairment		-			-			1,584
Other income		164			259			132
Operating income (loss)		(2,585	)		9,506			(5,340	)
Interest income		3			5			11
Other income		259			132			383
Interest expense		(1,035	)		(736	)		(880	)
Other expense		-			-			(73	)
Net income (loss)	$	(14,577	)	$	(3,057	)	$	8,769
Interest income		5			11			51
Interest expense		(736	)		(880	)		(914	)
Net income (loss)	$	(3,057	)	$	8,769		$	(5,893	)
Weighted average units outstanding—basic & diluted		25,411			25,411			25,411
Net income (loss) per unit—basic & diluted	$	(0.1257	)	$	(0.3512	)	$	(0.2335	)
Cash distributions declared per unit	$	-		$	~~0.15~~-		$	-0.15

See notes to consolidated financial statements

4030

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Changes in Members’ Equity

For the Years Ended September 30, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017

	Member Units		Members’ Capital			Accumulated Deficit			Total
	(Dollars in thousands)
MEMBERS’ EQUITY— September 30, 2015		25,410,851	$	48,638		$	(16,222	)	$	32,416
MEMBERS’ EQUITY— September 30, 2016		25,410,851	$	48,638		$	(22,115	)	$	26,523
Net (loss)		-		-			(5,893	)		(5,893	)
MEMBERS’ EQUITY— September 30, 2016		25,410,851		48,638			(22,115	)		26,523
Distribution to members		-		(3,812	)		-			(3,812	)
Net income		-		-			8,769			8,769
MEMBERS’ EQUITY— September 30, 2017		25,410,851		44,826			(13,346	)		31,480
Net (loss)		-		-			(3,057	)		(3,057	)
MEMBERS’ EQUITY— September 30, 2018		25,410,851	$	44,826		$	(16,403	)	$	28,423
Net (loss)		-		-			(14,577	)		(14,577	)
MEMBERS’ EQUITY— September 30, 2019		25,410,851	$	44,826		$	(30,980	)	$	13,846

See notes to consolidated financial statements

4131

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Cash Flows

	Years Ended
	September 30, 2018			September 30, 2017			September 30, 2016
	September 30, 2019			September 30, 2018			September 30, 2017
	(in thousands)
Cash flows from operating activities:
Net income (loss)	$	(314,~~057~~577	)	$	8(3,~~769~~057	)	$	(58,~~893~~769	)
Adjustments to reconcile net income (loss) to operating activities cash flows:
Depreciation		3,~~867~~835			3,~~820~~867			93,~~579~~820
Amortization of deferred financing costs		9695			9596			2995
Amortization of deferred revenue and rent		(8	)		(98	)		19(9	)
Amortization of additional carrying value of debt		-			-			(699	)
Loss (gain) on sale of assets		1			(19	)		-
Gain on sale of assets		(19	)		-			-
Loss on impairment and disposal of assets		-			-			102
Gain on troubled debt restructuring		-			-			(322	)
Loss on impairment and disposal of assets		-			102			1,593
Change in working capital components:
Trade accounts receivable		~~(159~~747	)		~~453~~(159	)		~~(502~~453	)
Other receivable		~~613~~18			~~(221~~613	)		(~~467~~221	)
Inventories		~~(588~~51	)		~~196~~(588	)		91196
Prepaid expenses		~~(67~~65	)		47(67	)		3147
Accounts payable		~~436~~(697	)		~~(44~~436	)		(~~1,681~~44	)
Accrued expenses		394			(22	)		(55	)
Accrued expenses and other liabilities		715			394			(22	)
Net cash provided by operating activities		1,508			13,186			1,723
Net cash provided by (used in) operating activities		(9,755	)		1,508			13,186
Cash flows from investing activities:
Purchase of property and equipment		(47,~~184~~365	)		(24,~~975~~184	)		(2,~~579~~975	)
Proceeds from the sale of assets, net of transaction costs		1947			-19			47-
Change in other assets		~~304~~-			~~312~~304			~~116~~312
Net cash used in investing activities		(37,~~861~~318	)		(23,~~663~~861	)		(2,~~416~~663	)
Cash flows from financing activities:
Payments on debt		(41,~~677~~000	)		(4,~~425~~677	)		(344,~~069~~425	)
Proceeds from debt		-10,812			~~1,102~~-			301,~~000~~102
Payment of deferred financing costs		(4743	)		-(47	)		-
Distribution to members		-			~~(3,812~~-	)		-(3,812	)
Net cash used in financing activities		(4,724	)		(7,135	)		(4,069	)
Net cash provided by (used in) financing activities		9,769			(4,724	)		(7,135	)
Net increase (decrease) in cash, cash equivalents and restricted cash		(7,~~077~~304	)		3(7,~~388~~077	)		(43,~~762~~388	)
Beginning cash, cash equivalents and restricted cash		1912,~~804~~727			1619,~~416~~804			2116,~~178~~416
Ending cash, cash equivalents and restricted cash	$	125,~~727~~423		$	1912,~~804~~727		$	1619,~~416~~804
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest of $32 thousand and $0 in fiscal 2018 and fiscal 2017, respectively	$	698		$	805		$	934
Cash paid for interest, net of capitalized interest of $353 thousand and $32 in fiscal 2019 and fiscal 2018, respectively	$	1,061		$	698		$	805
Supplemental disclosure of non-cash financing and investing activities:
Reclassification of property and equipment to other assets		-			-			200
Accounts payable related to fixed assets		663			693			25
Accounts payable related to fixed assets		693			25			84

See notes to consolidated financial statements.

4232

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Organization and Significant Accounting Policies

The consolidated financial statements include the accounts of the Company and its wholly owned 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.

Advanced BioEnergy, LLC is organized as a Delaware limited liability company. Members’ liability is limited pursuant to the Delaware Limited Liability Company Act. The Company’s operating agreement provides for the term of the entity to last until a Dissolution Event occurs as defined in the operating agreement; there is no exact Dissolution Event or date specified.

~~The~~At ~~Company~~September ~~currently~~30, ~~operates~~2019, the Company owned two ethanol production facilities in Aberdeen and Huron, South Dakota with a combined production capacity of 80 million gallons per year. On August 1, 2019, the Company and ABE South Dakota entered into an asset purchase agreement (the “Asset Purchase Agreement ”) with Glacial Lakes Energy, LLC (“GLE”), under which ABE South Dakota agreed to sell its Aberdeen and Huron, South Dakota ethanol plants and related businesses to GLE (the “Asset Sale”). On December 19, 2019, Advanced BioEnergy, ABE South Dakota and GLE closed the Asset Sale. At the closing, ABE South Dakota sold to GLE substantially all of the assets related to its business of producing ethanol and co-products, including wet, modified and dried distillers’ grains and corn oil, through its plants located in Aberdeen, South Dakota and Huron, South Dakota.

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. Restricted cash at September 30, 2017 included a deposit for a rail car sublease.

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts in the consolidated statement of cash flows (in thousands):

	September 30,		September 30,		September 30,
	2018		2017		2016
	2019		2018		2017
Cash and cash equivalents	$	125,~~727~~423	$	1812,~~804~~727	$	1518,~~416~~804
Restricted cash		-		~~1,000~~-		1,000
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	125,~~727~~423	$	1912,~~804~~727	$	1619,~~416~~804

Fair Value of Financial Instruments

Financial instruments include cash, cash equivalents and restricted cash, accounts receivable, accounts payable, accrued expenses, and long-term debt. The fair value of the long-term debt is estimated based on level 3 inputs based on ~~the~~ current anticipated interest rate that management believes would currently be available to the Company for similar debt, taking into account the current credit risk of the Company and other market factors. Based on these factors, the fair value of the long-term debt is currently estimated toat ~~approximate~~ carrying value. Excluding cash and cash equivalents, the fair value of the other financial instruments are estimated to approximate carrying value due to the short-term nature of these instruments, and are considered to be Level 3 inputs.

Fair Value Measurements

In determining fair value of its derivative financial instruments, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often uses certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three fair value hierarchy categories:

Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less-active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Commodity futures and exchange-traded commodity options contracts are reported at fair value, utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live-trading levels from the Chicago Board of Trade (“CBOT”) and New York Mercantile Exchange (“NYMEX”) markets.

There were no material balances of financial assets or financial liabilities, including derivative financial instruments, measured at the approximate fair value at September 30, ~~2018~~2019 or ~~2017~~2018.

Deferred Financing Costs

Deferred financing costs are recorded at cost and include expenditures related to secure debt financing. Deferred financing costs are shown as contra debt and are being amortized into interest expense over the term of the agreement using the straight-line method, which approximates the effective interest method.

Receivables

Credit sales are made to a relatively small number 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 September 30, ~~2018~~2019 or September 30, ~~2017~~2018.

Inventories

Ethanol inventory, raw materials, work-in-process and parts inventory are valued using methods that approximate the lower of cost (first-in, first-out) or net realizable value (“NRV”). Distillers grains and related products are stated at ~~net realizable value~~NRV. In the valuation of inventories and purchase and sale commitments, the Company determines NRV by estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

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
Other equipment		1-5 Years
Process equipment		15 Years
Building		40 Years

Interest capitalized in property and equipment was $32353,000 ~~thousand~~ and $032,000 in fiscal ~~2018~~2019 and ~~2017~~2018, respectively.

During the fourth quarter of fiscal 2016, the Company decided to permanently cease operations at its smaller Aberdeen plant. Accordingly, the Company impaired the value of this asset to an estimated salvage value of $200,000 and recorded an impairment of approximately $1.6 million during the fourth quarter of fiscal 2016. In fiscal 2017, the Company incurred an additional expenses of $387,000 related to the demolition and other costs, which is included in selling, general and administrative expenses. During fiscal 2017, the Company had received proceeds of $155,000 from the salvage value of the smaller plant, and had a remaining value of $45,000. In fiscal 2018, the Company incurred additional expenses of $215,000 related to the demolition, which is included in selling, general and administrative expenses. During fiscal 2018, the Company received proceeds of $98,000 from the salvage value of the smaller plant, and had a remaining value of $0. In connection with the impairment of the smaller Aberdeen plant, the Company also re-evaluated the estimated lives of process equipment. Prior to June 30, 2016, the Company used an estimated useful life of 10 years for process equipment. Based on the re-evaluation, the Company determined a change in estimate was necessary. Accordingly, the Company adjusted the estimated useful life for process equipment to 15 years in the fourth quarter of fiscal 2016. As a result of this change in estimate, depreciation expense was reduced in subsequent reporting periods.

4434

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 may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows from operations are less than the carrying value of the asset group. An impairment loss is measured by the amount by which the carrying value of the asset ~~group~~ exceeds the estimated fair value on that date.

Commodity Sales and Purchase Contracts, Derivative Instruments

Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair value, with changes in fair value recognized in current period earnings.

Revenue Recognition

~~Ethanol~~Effective ~~revenue~~October is1, ~~recognized~~2018, ~~when~~the ~~product~~Company ~~title~~adopted ~~and~~the ~~all~~new ~~risk~~guidance of ~~ownership~~Accounting isStandard ~~transferred~~Codification to(“ASC”) ~~the~~Topic ~~customer~~606, as“Revenue ~~specified~~from inContracts ~~the~~with ~~contractual~~Customers” ~~agreements~~(Topic ~~with~~606) using the ~~marketers~~modified retrospective approach. ~~Under~~Topic 606 requires the ~~terms~~Company ofto recognize revenue to reflect the ~~marketing~~transfer ~~agreements,~~of ~~revenue~~promised isgoods ~~recognized~~or ~~when~~services ~~product~~to iscustomers ~~loaded~~in ~~into~~an ~~rail~~amount ~~cars~~that orreflects ~~trucks~~the consideration to which ABE expects to be entitled in exchange for ~~shipment~~those goods or services. ~~Revenue~~The ~~from~~new guidance requires the ~~sale~~Company ofto ~~co-products~~apply isthe ~~recorded~~following ~~when~~steps: ~~title~~(1) ~~and~~identify ~~all~~the ~~risk~~contract ofwith ~~ownership~~a ~~transfers~~customer; to(2) ~~customers.~~identify ~~Co-products~~the ~~are~~performance ~~normally~~obligations ~~shipped~~in ~~free~~the oncontract; ~~board~~(3) determine the transaction price; (~~“FOB”~~4) ~~shipping~~allocate ~~point~~the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. InThe ~~accordance~~Company ~~with~~generally recognizes revenue at a point in time. The majority of the Company’s ~~agreements~~contracts ~~for~~with ~~the~~customers ~~marketing~~have one performance obligation and ~~sale~~a contract duration of ~~ethanol~~one ~~and~~year ~~related~~or ~~products,~~less. The ~~commissions~~Company ~~due~~has tono ~~the~~significant ~~marketers~~contract ~~are~~assets ~~deducted~~or ~~from~~contract ~~the~~liabilities ~~gross~~from ~~sale~~contracts ~~price~~with atcustomers. ~~the~~The ~~time~~adoption of ~~payment.~~this ~~Interest~~new ~~income~~guidance isdid ~~recognized~~not asresult ~~earned~~in any change to our recognition of revenue.

The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods is are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods.

•Sales of ethanol

•Sales of distillers grains

•Sales of distillers corn oil

We disclose disaggregation of revenue according to product line, along with accounts receivable from contracts with customers, in Note 7.

Unit Based Compensation

The Company uses the estimated market value at the time the units are granted to value those units granted to officers and directors. The Company records compensation cost on the straight line method over the vesting period for service based awards. If the units vest upon achievement of a certain milestone, the Company recognizes the expense in the period in which the goal was met.

Shipping Costs

Shipping costs are not separately identified under the contract with the marketer and therefore are reflected net in sales.

Income (Loss) Per Unit

Basic and diluted income (loss) per unit is computed using the weighted-average number of vested units outstanding during the period. Unit warrants are considered unit equivalents and are considered in the diluted income-per-unit computation.

Segment Reporting

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.

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. The Company’s federal income tax returns are open and subject to examination from the 2015 tax return year and forward. Various state income tax returns are generally open from the 2014 and later tax return years based on individual state statute of limitations.

Management has evaluated the Company’s tax positions under the Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes and concluded the Company has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance.

Recent Accounting Pronouncements

~~Effective~~In ~~October 1~~February 2016, ~~2018~~the ASC was amended and a new accounting standard, ~~the~~ASC ~~Company~~Topic 842, “Leases,” was ~~required~~issued to ~~adopt~~increase the ~~amended~~transparency ~~guidance~~and incomparability ~~ASC~~among ~~606,~~organizations ~~“Revenue~~by ~~from~~recognizing ~~Contracts~~lease ~~with~~assets ~~Customers”~~and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In order to meet that objective, ~~which~~the ~~requires~~new ~~revenue~~standard requires recognition of the assets and liabilities that arise from leases. Accordingly, a lessee will recognize a right-of-use (ROU) asset for its right to ~~reflect~~use the ~~transfer~~underlying asset and a lease liability for the corresponding lease obligation. The lease liability will initially be measured at the present value of ~~promised~~the ~~goods~~future orminimum ~~services~~lease topayments ~~customers~~over inthe anlease ~~amount~~term. ~~that~~The ~~reflects~~ROU asset will initially be measured as the ~~consideration~~sum of the initial lease liability, initial costs directly attributable to ~~which~~negotiating and arranging the ~~entity~~lease, ~~expects~~and payments made by a lessee to bethe ~~entitled~~lessor inat ~~exchange~~or before the lease commencement date less any lease incentives received. Lessees can make an accounting policy election by class of underlying asset not to recognize a ROU asset and corresponding lease liability for ~~those~~leases ~~goods~~with a term of 12 months or ~~services~~less. ~~The~~Accounting ~~updated~~by ~~standard~~lessors ~~permits~~will ~~either~~remain largely unchanged from current U.S. GAAP. In transition, lessees and lessors are required to recognize and measure leases at the ~~modified~~beginning orof ~~full~~the ~~retrospective~~earliest ~~with~~period ~~cumulative~~presented ~~effect~~using ~~transition~~a ~~method~~modified retrospective approach. The ~~Company~~modified ~~has~~retrospective ~~completed~~approach includes a ~~comparison~~number of ~~the~~optional ~~current~~practical ~~revenue~~expedients ~~recognition~~that ~~policies~~companies may elect to ~~the~~apply. ~~ASC~~These ~~606~~practical ~~requirements~~expedients ~~for~~relate ~~each~~to the identification and classification of leases that commenced before the ~~Company’s~~effective ~~major~~date, ~~revenue~~initial ~~categories.~~direct ~~Results~~costs ~~indicate~~for leases that ~~the~~commenced ~~guidance~~before ~~will~~the ~~not~~effective ~~materially~~date, ~~change~~and the ~~amount~~ability to use hindsight in evaluating lessee options to extend or ~~timing~~terminate ofa ~~revenues~~lease ~~recognized~~or byto purchase the ~~Company~~underlying asset. The ~~Company~~transition ~~will~~guidance ~~adopt~~also ~~ASC~~provides ~~606~~specific ~~using~~guidance ~~the~~for ~~retrospective~~sale and leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized in accordance with ~~cumulative~~the ~~effect~~business ~~transition~~combinations ~~method~~guidance for leases. The ~~Company~~new ~~expects~~standard tois ~~have~~effective ~~enhanced~~for ~~disclosures~~public incompanies ~~future~~for ~~reporting~~fiscal years beginning after December 15, 2018, and interim periods within those years, ~~but~~with ~~does~~early ~~not~~adoption ~~expect~~permitted. Due to the Company sale of substantially all of its assets on December 19, 2019 (see Note 12), this standard towill not have a material impact on ~~the~~these ~~Company's~~ consolidated financial statements and related disclosures.

Effective January 1, 2018, and presented retrospectively, the Company adopted the amended guidance in ASC 230, “Statement of Cash Flows,” which amends existing guidance to require that the Statement of Cash Flows now include restricted cash and restricted cash equivalents along with cash and cash equivalents when reconciling beginning and end-of-period amounts. Effective January 1, 2018, the Company no longer presents transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the Statement of Cash Flows. 36

In February 2016, the ASC was amended and a new accounting standard, ASC Topic 842, “Leases,” was issued to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In order to meet that objective, the new standard requires recognition of the assets and liabilities that arise from leases. Accordingly, a lessee will recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. The lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. The ROU asset will initially be measured as the sum of the initial lease liability, initial costs directly attributable to negotiating and arranging the lease, and payments made by a lessee to the lessor at or before the lease commencement date less any lease incentives received. Lessees can make an accounting policy election by class of underlying asset not to recognize a ROU asset and corresponding lease liability for leases with a term of 12 months or less. Accounting by lessors will remain largely unchanged from current U.S. GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that companies may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized in accordance with the business combinations guidance for leases. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods

within those years, with early adoption permitted. Based upon preliminary assessments, the Company expects the standard to have a material impact on its assets and liabilities due to the recognition of right-of-use assets and lease liabilities on its consolidated balance sheets. The Company is continuing its assessment, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures.

2.	Inventories

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

	September 30, 2018		September 30, 2017
	September 30, 2019		September 30, 2018
Chemicals	$	~~783~~507	$	~~939~~783
Work in process		~~677~~757		~~646~~677
Ethanol		1,~~261~~320		~~788~~1,261
Distillers grain		~~416~~146		~~157~~416
Supplies and parts		1,~~785~~859		1,~~804~~785
Total	$	4,922	$	4,334
Corn		282		-
Total	$	4,871	$	4,922

3.	Property and Equipment

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

	September 30, 2018			September 30, 2017
	September 30, 2019			September 30, 2018
Land	$	1,~~811~~838		$	1,811
Buildings		87,~~168~~786			8,~~128~~168
Process equipment		110,~~348~~570			~~109~~110,~~006~~348
Other equipment		~~636~~903			~~147~~636
Office equipment		~~1,239~~378			1,~~770~~239
Construction in process		39,~~561~~421			~~580~~3,561
		125,763			121,442
		130,896			125,763
Accumulated depreciation		(9395,~~552~~234	)		(9093,~~216~~552	)
Property and equipment, net	$	3235,~~211~~662		$	3132,~~226~~211

4737

Debt

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

	September 30, 2018 Interest Rate			September 30, 2018			September 30, 2017
	September 30, 2019 Interest Rate			September 30, 2019			September 30, 2018
ABE South Dakota:
Senior debt principal—variable		5.57	%		20,000			24,677
Senior debt principal - fixed		6.32	%		9,000			-
Deferred financing costs	N/A				(262	)		(311	)
Senior debt principal - variable		5.70	%		14,312			20,000
Total outstanding				$	19,738		$	24,366
Short term revolving line		6.20	%		6,500			-
Deferred financing costs	N/A				(219	)		(262	)
Total outstanding				$	29,593		$	19,738

The estimated maturities of debt at September 30, ~~2018~~2019 are as follows (in thousands):

	Senior Debt Principal		Deferred Financing Costs			Total
2019	$	1,000	$	(95	)	$	905
2020	$	29,812	$	(219	)	$	29,593
2020		4,000		(105	)		3,895
Total debt	$	29,812	$	(219	)	$	29,593
2021		15,000		(33	)		14,967
2022		-		(10	)		(10	)
2023		-		(9	)		(9	)
Thereafter		-		(10	)		(10	)
Total debt	$	20,000	$	(262	)	$	19,738

2015 Senior Credit Agreement for the South Dakota Plants

On December 29 19, ~~2015~~2019, ~~ABE~~all ~~South~~amounts ~~Dakota~~outstanding ~~entered~~under ~~into~~the a Master Credit Agreement dated December 29, 2015, as amended (“~~2015~~Master Credit Agreement”) ~~with~~between ABE South Dakota as borrower and AgCountry Farm Credit Services, PCA as lender, (“AgCountry”) towere ~~refinance~~repaid ~~its~~in ~~existing~~full. The ~~2010~~total ~~Senior~~amount ~~Credit~~repaid ~~Agreement.~~was Onapproximately ~~December 29,~~$31.0 ~~2015~~million, ~~the~~which ~~Company~~was ~~also~~repaid ~~entered~~from ~~into~~the ~~(i) a~~purchase ~~First~~price ~~Supplement~~from to the ~~2015~~Asset ~~Credit~~Sale ~~Agreement~~described ~~covering~~in aNote 12. The $1031.0 million ~~Revolving~~payment ~~Term~~consisted ~~Facility~~of ~~and~~the ~~(ii) a~~following ~~Second~~amounts ~~Supplemental~~outstanding ~~covering~~as aof the closing date of the Asset Sale: $2030.5 million in principal, $0.4 million ~~Term~~in ~~Loan~~interest and $0.1 ~~The~~million ~~transaction~~in ~~funded~~fees and expenses. Effective upon the repayment, the Master Credit Agreement and all related documents were terminated in accordance with their terms and AgCountry released its security interest in, and liens and mortgages on, ~~December 30~~all of the properties, ~~2015~~rights and assets of ABE South Dakota.

~~The~~Below ~~$20.0~~is ~~million Term Loan had~~ a ~~variable~~summary ~~interest rate (“Variable Rate”) at September 30, 2018. The Variable Rate was equal to the one-month LIBOR rate~~ of ~~2.07%, plus a “Margin” of 350 basis points. Subsequent to~~ the ~~end~~Master ofCredit ~~the~~Agreement ~~fiscal~~and ~~year,~~its onterms ~~October~~that ~~26,~~were ~~2018, the Company elected to lock~~ in aeffect ~~fixed~~as ~~interest rate~~ of 6.4%, rather than the Variable Rate, on the remaining balance of the Term Loan. The Company may elect one or more fixed or adjustable interest rates, rather than the Variable Rate, based on AgCountry’s cost of funds at the time of the election, plus the Margin. Any election must apply to $1.0 million or more owing on the Term Loan. Beginning April 1, 2016, the Company began making quarterly principal payments of $1.0 million, plus accrued interest, on the Term Loan. The Term Loan will be fully amortized over five years with the final payment on January 1, 2021. At September 30, ~~2018, the outstanding balance on the Term Loan was $10.0 million.~~ 2019:

~~The~~On ~~$10.0~~December ~~Revolving~~29, ~~Term~~2015, ~~Facility~~ABE ~~has~~South aDakota ~~Variable~~entered ~~Rate~~into ~~equal~~the toMaster ~~the~~Credit ~~one-month~~Agreement ~~LIBOR~~with ~~rate~~AgCountry ~~plus~~to anrefinance ~~initial~~its ~~Margin~~existing of2010 ~~350~~Senior ~~basis~~Credit ~~points~~Agreement. ~~Borrowings~~On ~~under~~December 29, ~~the Revolving Term Facility may be advanced~~2015, ~~repaid and re-borrowed during~~ the ~~term. The~~ Company isalso ~~required~~entered tointo ~~make~~(i) a ~~quarterly~~First ~~interest~~Supplement ~~payments~~to on the ~~Revolving~~Master ~~Term~~Credit ~~Facility,~~Agreement ~~with~~covering ~~the~~a ~~full principal amount outstanding due on January 1, 2021~~$10.0 ~~Under~~million ~~the~~ Revolving Term Facility, ~~the~~and ~~Company~~(ii) a isSecond ~~required~~Supplemental tocovering ~~pay~~a ~~unused~~$20.0 ~~commitment~~million ~~fees~~Term ofLoan. 50The ~~basis~~transaction ~~points.~~funded Aton ~~September~~ December 30, ~~2018, the balance of the Revolving Term Facility was $10~~2015.~~0 million.~~

ABE South Dakota, LLC also entered into a Security Agreement with AgCountry under which borrowings under the ~~2015~~Master Credit Agreement are secured by substantially all of ABE South Dakota’s assets. AgCountry holds a first priority security interest and mortgage in all inventory, accounts receivable, intangibles, equipment, fixtures, buildings, and a first mortgage in land owned or leased by ABE South Dakota.

4838

The ~~2015~~Master Credit Agreement also included financial and non-financial covenants that limit distributions and debt and require minimum working capital, owner’s equity, current ratio, debt to EBITDA ratio, and fixed charge coverage ratios. Those covenants included the following:

•

ABE South Dakota has a minimum working capital requirement of $10.0 million beginning at loan closing, increasing to $12.75 million at September 30, 2016 and thereafter. Working capital is calculated as (i) (a) current assets plus (b) the amount available under the Revolving Term Facility, less (ii) current liabilities, measured quarterly.

•

ABE South Dakota’s owner’s equity ratio was the ratio of (i) net worth divided by (ii) total assets. This ratio was to be measured annually at fiscal year-end and would have increased by 2% each fiscal year, from 40% at September 30, 2015, until a 50% ratio was achieved and maintained This covenant was eliminated by the First Amendment (as defined below).

•

ABE South Dakota must maintain a ratio of current assets to current liabilities of not less than 1.2 to 1.0.

•

ABE South Dakota debt to EBITDA ratio must be less than 4.00:1.00. Debt is defined as total interest bearing debt, while EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. The debt to EBITDA ratio will be measured quarterly, but tested annually at each fiscal year end.

•

ABE South Dakota’s minimum fixed charge coverage ratio is 1.15:1.00 and is measured quarterly, but tested annually at each fiscal year end. The fixed charge coverage ratio is calculated by dividing EBITDA by the sum of scheduled payments of principal and interest, capital expenditures, any cash taxes, and distributions. When ABE South Dakota has achieved reached and maintained an owners’ equity ratio of 60.0% and working capital of $15.0 million, then the minimum fixed charge coverage ratio requirement will be reduced to 1.00:1.00. If subsequently the owners’ equity ratio declines below 60.0%, or working capital declines below $15.0 million, then the 1.15:1.00 minimum fixed charge ratio covenant will be reinstated.

•

A number of these covenants have been amended in connection with subsequent term loans, a construction loan, and amendments and waivers as described below.

2016 Term Loan

On September 28, 2016, ABE South Dakota entered into the Third Supplement to the ~~2015~~Master Credit Agreement (“2016 Term Loan”) with AgCountry to finance the corn oil extraction system at the Huron plant. The total loan commitment for 2016 Term Loan was $1.7 million, and the loan ~~has~~had a variable interest rate equal to the one-month LIBOR rate plus a “Margin” of 350 basis points. A total of $1.1 million of the $1.7 million commitment was drawn from this loan. On January 1, 2017, the Company began making quarterly payments of accrued interest on the 2016 Term Loan. On April 1, 2017, the Company began making quarterly principal payments of $212,500 on the 2016 Term Loan. As of September 30, ~~2018~~2019 the 2016 Term Loan was paid in full.

2018 Construction and Term Loan

~~Amendments and Waivers to 2015 Credit Agreement~~39

On2019 ~~September~~Short-Term ~~28,~~Revolving ~~2016, ABE South Dakota entered into a Limited Waiver and First Amendment to the 2015~~ Credit ~~Agreement (“First Amendment”) to (i) eliminate the Owner’s Equity Ratio Covenant, (ii) temporarily increase the Capital Expenditures Covenant~~ Loan

49On August 7, 2019, ABE South Dakota entered into the Fifth Supplement to the Master Credit Agreement (“2019 Revolving Loan”), with AgCountry to provide a $6.5 million short-term revolving credit loan. The 2019 Revolving Loan was obtained to finance working capital needs through the closing of the Asset Sale, as well as the purchase of approximately 800,000 bushels of corn. The 2019 Revolving Loan has a variable interest rate equal to the one-month LIBOR rate plus a Margin of 400 basis points. Borrowings under the Revolving Loan may be advanced, repaid and re-borrowed during the term, except during an outstanding Event of Default. The Company is required to make monthly interest payments on the Revolving Loan which began September 1, 2019, with the full principal amount outstanding due on the earlier of November 1, 2019 or the date on which the obligations have been declared or have automatically become due and payable, whether by acceleration or otherwise. At September 30, 2019, the balance of the 2019 Revolving Loan was $6.5 million.

toAmendments ~~$3.0 million for fiscal 2016 to finance the corn oil extraction system at the Huron plant,~~ and ~~(iii)~~Waivers ~~waive other obligations related~~ to ~~the~~Master ~~post~~Credit ~~closing agreement.~~ Agreement

On ~~November~~September 1928, 2016, ABE South Dakota ~~received~~entered into a ~~waiver~~Limited Waiver and First Amendment to the ~~2015~~Master Credit Agreement ~~from~~(“First ~~AgCountry~~Amendment”) ~~that~~to ~~waived~~(i) ~~certain~~eliminate ~~Events~~the ofOwner’s ~~Default~~Equity ~~related~~Ratio toCovenant, ~~the~~(ii) ~~Working~~temporarily increase the Capital ~~requirement~~Expenditures ~~and~~Covenant ~~the~~to ~~Total~~$3.0 ~~Outstanding~~million ~~Debt~~for fiscal 2016 to ~~EBITDA~~finance ~~Ratio~~the corn oil extraction system at ~~September~~the 30Huron plant, ~~2016~~and (iii) waive other obligations related to the post closing agreement.

On ~~October~~November 1619, ~~2017~~2016, ABE South Dakota received a waiver to the ~~2015~~Master Credit Agreement from AgCountry that waived ~~an Event~~certain Events of Default related to the ~~Capital~~Working ~~Expenditure Covenant for fiscal 2017. The~~ Capital ~~Expenditure~~requirement ~~Covenant~~and ~~for~~the ~~fiscal~~Total ~~2016~~Outstanding ~~was~~Debt ~~increased~~ to ~~$3.0~~EBITDA ~~million~~Ratio ~~due to the addition of corn oil extraction system~~ at ~~Huron.~~September ~~However~~30, ~~a portion of the capital expenditure cost was incurred in fiscal 2017, so an additional waiver was granted for this period~~2016.

On ~~March~~October 1316, ~~2018~~2017, inABE ~~conjunction~~South ~~with~~Dakota received a waiver to the ~~2018~~Master ~~Term~~Credit ~~Loan,~~Agreement ~~ABE~~from ~~South~~AgCountry ~~Dakota~~that ~~entered~~waived ~~into~~an Event aof ~~Second~~Default ~~Amendment~~related to the ~~2015~~Capital ~~Credit~~Expenditure ~~Agreement~~Covenant ~~(“Second~~for ~~Amendment”)~~fiscal to2017. ~~temporarily~~The ~~increase the~~ Capital ~~Expenditures~~Expenditure Covenant for fiscal 2016 was increased to $63.0 million ~~per~~due ~~year~~to ~~for~~ the ~~years~~addition ~~ending~~of ~~September~~corn ~~30,~~oil ~~2018~~extraction ~~and~~system ~~2019~~at Huron. ~~The~~ ~~covenant~~However, ~~will~~a ~~revert~~portion ~~back~~of tothe ~~$2.0~~capital ~~million~~expenditure ~~per~~cost ~~year~~was ~~for~~incurred ~~all~~in ~~years~~fiscal ~~ending~~2017, ~~after~~so ~~September~~an ~~30,~~additional ~~2019~~waiver was granted for this period.

AsOn aMarch ~~result~~13, ~~of a depressed margin environment in fiscal~~ 2018, ~~ABE~~in ~~South~~conjunction ~~Dakota~~with ~~was~~the ~~required~~2018 toTerm ~~request waivers for certain Events of Default at September 30~~Loan, ~~2018, and covenant amendments for certain future covenants for which~~ ABE South Dakota ~~projected~~entered ~~non-compliance. Although~~into ~~ABE~~a ~~South~~Second ~~Dakota’s~~Amendment ~~lender,~~to ~~AgCountry~~the ~~Farm~~Master Credit ~~Services,~~Agreement ~~PCA,~~(“Second ~~granted~~Amendment”) ~~the~~to ~~waivers~~temporarily ~~and~~increase ~~covenant amendments via~~ the ~~Third~~Capital ~~and~~Expenditures ~~Fourth~~Covenant ~~Amendments~~ to ~~the~~$6.0 ~~2015~~million ~~Credit~~per ~~Agreement,~~year wefor ~~cannot~~the ~~project~~years ~~with~~ending ~~certainty~~September ~~that we will meet all covenant obligations~~30, as2018 ~~amended,~~and ~~if depressed margins continue for an extended period of time~~2019. IfThe ~~ABE~~covenant ~~South~~will ~~Dakota~~revert isback ~~unable~~ to ~~comply~~$2.0 ~~with~~million ~~the~~per ~~amended~~year ~~covenants,~~for weall ~~cannot~~years beending ~~certain~~after ~~that~~September ~~our lender will grant us future waivers~~30, ~~which could result in a material adverse effect upon our business, results of operations and financial condition~~2019.

OnAs ~~October~~a ~~19,~~result ~~2018,~~of ~~ABE~~a ~~South~~depressed ~~Dakota~~margin ~~entered~~environment ~~into~~in afiscal ~~Limited~~2019 ~~Waiver~~ and ~~Third~~fiscal ~~Amendment~~2018, toABE ~~the~~South ~~2015~~Dakota ~~Credit~~requested ~~Agreement~~waivers ~~(“Third~~for ~~Amendment”) to waive~~ certain specific Events of Default ~~related~~in tofiscal ~~covenant~~2019 ~~compliance~~and asat of September 30, 2018, and ~~temporarily~~requested ~~amend certain future covenants. The Third Amendment included the following~~ covenant ~~waiver and~~ amendments: ~~(i)~~for ~~the~~specific ~~Fixed~~future ~~Charge~~covenants ~~Coverage~~for ~~Ratio~~which ~~was~~ABE ~~waived~~South asDakota ofprojected ~~September~~possible ~~30, 2018, reduced to a ratio of 1~~non-compliance.~~00:1.00~~ Although asABE ofSouth ~~September~~Dakota’s 30lender, ~~2019,~~AgCountry ~~and~~Farm ~~reverts~~Credit ~~back to 1.15:1.00 at September 30~~Services, ~~2020~~PCA, ~~(ii)~~granted the ~~Working~~waivers ~~Capital~~and ~~Covenant~~covenant ~~was~~amendments ~~reduced~~ to ~~$10~~the ~~million~~Master atCredit ~~September 30~~Agreement, ~~2018~~as ~~and~~discussed ~~December 31~~below, ~~2018,~~we $9were ~~million~~unable ~~at March 31, 2019 and June 30, 2019, then increased~~ to ~~$10~~meet ~~million~~other atcertain ~~September 30, 2019 and $12 million at September 30, 2020 and all times thereafter, (iii) the Capital Expenditures~~ covenant ~~was increased to $8.0 million for the year ending September 30, 2019,~~ and ~~reverts~~payment ~~back~~obligations ~~to $2.0 million for all~~ subsequent ~~years, and (iv) the outstanding Debt~~ to ~~EBITDA~~those ~~Ratio was~~ waived atand ~~September 30~~accordingly, ~~2018~~an ~~and~~Event ~~will revert back to the requirement that it be less than 4:00:1:00 on the last day~~ of ~~each~~Default ~~fiscal year end beginning September 30, 2019~~occurred.

On ~~December~~October 2819, 2018, ABE South Dakota entered into a Limited Waiver and ~~Deferral~~Third ~~Agreement and Fourth~~ Amendment to the ~~2015~~Master Credit Agreement (“~~Fourth~~Third Amendment”) to ~~defer~~waive ~~three~~certain ~~future~~Events ~~principal~~of ~~payments~~Default ~~and~~related ~~waive~~to covenant compliance as of September 30, 2018 and temporarily amend certain future covenants. The ~~Fourth~~Third Amendment included the following covenant ~~waivers~~waiver and amendments: (i) the Fixed Charge Coverage Ratio was waived as of September 30, 2018, reduced to a ratio of 1.00:1.00 as of September 30, 2019, and reverts back to 1.15:1.00 at September 30, 2020, (ii) the Working Capital Covenant was reduced to $10 million at September 30, 2018 and December 31, 2018, $9 million at March 31, 2019 and June 30, 2019, then increased to $10 million at September 30, 2019 and $12 million at September 30, 2020 and all times thereafter, (iii) the Capital Expenditures covenant was increased to $8.0 million for the year ending September 30, 2019, and reverts back to $2.0 million for all subsequent years, and (iv) the outstanding Debt to EBITDA Ratio was waived at September 30, 2018 and will revert back to the requirement that it be less than 4:00:1:00 on the last day of each fiscal year end beginning September 30, 2019.

~~(vi)~~On ~~defer~~December ~~the~~28, ~~next~~2018, ~~three~~ABE ~~principal~~South ~~payments~~Dakota ~~due~~entered ~~January~~into 1,a ~~April~~Limited 1,Waiver and ~~July~~Deferral 1,Agreement ~~2019~~and ~~until~~Fourth Amendment to the ~~Term~~Master ~~Loan~~Credit ~~maturity~~Agreement ~~date~~(“Fourth onAmendment”) ~~January~~to 1,defer ~~2021;~~three future principal payments and waive and temporarily amend certain future covenants. The Fourth Amendment included the following covenant waivers and amendments:

(~~vii~~i) ~~waive~~defer the ~~Fixed~~next ~~Charge~~three ~~Coverage~~principal ~~Ratio~~payments atdue ~~September~~January 301, April 1, and July 1, 2019 until the Term Loan maturity date on January 1, 2021;

(~~viii~~ii) ~~amend~~waive the ~~Working~~Fixed ~~Capital~~Charge ~~Covenant~~Coverage toRatio ~~$4 million~~ at ~~December 31, 2018 and subsequent months until increasing to $5 million at~~ September 30, ~~2020~~2019, ~~and increasing to $12 million at September 30, 2021,~~

(ixiii) ~~waive~~amend the Working Capital Covenant to $4 million at December 31, 2018 and subsequent months until increasing to $5 million at September 30, ~~2019~~2020, ~~Debt~~and increasing to ~~EBITDA~~$12 ~~Ratio~~million at September 30, ~~and~~2021,

(xiv) ~~add~~waive ~~a Cash Sweep Covenant whereby ABE South Dakota would be required to pay additional principal at~~ the ~~end~~September ~~of each fiscal year in the amount of~~ 30, ~~percent~~2019 ofDebt ~~Free Cash Flow. In order for a Cash Sweep payment~~ to ~~be made, ABE South Dakota must remain in compliance with all covenants before and after the payment. Free Cash Flow is defined as: fiscal year~~ EBITDA ~~less interest expense~~Ratio, ~~scheduled principal payments,~~ and ~~non-financed maintenance capital expenditures. The Fourth Amendment would also restrict future dividend payments until all covenants revert back to originally set levels.~~

Subsequent to the Third and Fourth Amendments described above, ABE South Dakota evaluated projected covenant compliance for the 12 month period following September 30, 2018. Based on this evaluation, ABE South Dakota determined compliance over the next 12 month period is reasonably possible and, as a result, has recognized debt as both current (when payment is due within 12 months of year-end) and long-term on its financial statements.40

50(v) add a Cash Sweep Covenant whereby ABE South Dakota would be required to pay additional principal at the end of each fiscal year in the amount of 30 percent of Free Cash Flow. In order for a Cash Sweep payment to be made, ABE South Dakota must remain in compliance with all covenants before and after the payment. Free Cash Flow is defined as: fiscal year EBITDA less interest expense, scheduled principal payments, and non-financed maintenance capital expenditures. The Fourth Amendment would also restrict future dividend payments until all covenants revert back to originally set levels.

~~ABE~~On ~~South~~August ~~Dakota entered into an Amended and Restated Senior Credit Agreement (the “2010 Senior Credit Agreement”)~~7, ~~effective as of June 18~~2019, ~~2010, and amended on December 9, 2011, which was accounted for under troubled debt restructuring rules. The 2010 Senior Credit Agreement was executed among~~ ABE South Dakota, ~~the~~entered ~~lenders~~into ~~from~~a ~~time~~Second toLimited ~~time~~Waiver ~~party~~Agreement ~~thereto,~~to ~~and~~the anMaster ~~Administrative Agent and Collateral Agent. The 2010 Senior~~ Credit Agreement ~~converted~~(“Second ~~the~~Limited ~~outstanding~~Waiver”) ~~principal amount of the loans and certain other amounts under interest rate protection agreements~~ to awaive ~~senior term loan. The interest accrued on~~ outstanding ~~term~~ and ~~working~~expected ~~capital~~Events ~~loans~~of ~~under~~Default ~~the~~related ~~previous credit agreement were reduced~~ to ~~zero.~~compliance ~~ABE~~with ~~South Dakota agreed to pay a $3.0 million restructuring fee to~~ the ~~lender~~Working ~~due~~Capital Covenant at ~~the~~July ~~earlier of March~~ 31, ~~2016~~2019 and ~~the~~August ~~date~~31, on2019, ~~which~~and the ~~loans~~Current ~~are~~Ratio ~~repaid~~Covenant inat ~~full.~~June ~~ABE~~30, ~~South~~2019, ~~Dakota~~July ~~recorded~~31, ~~the~~2019 ~~restructuring~~and ~~fee~~August as31, ~~non-interest bearing debt on its consolidated balance sheets~~2019. ~~See “Additional Carrying Value of Restructured Debt” below.~~

~~The~~On ~~principal~~October ~~amount~~9, of2019, ~~the~~ABE ~~term~~South ~~loan~~Dakota ~~facility~~entered ~~was~~into ~~payable~~a inThird ~~quarterly~~Limited ~~payments~~Waiver ~~of $750,000, with the remaining principal amount fully due~~ and ~~payable~~Deferral onAgreement ~~March 31,~~(“Third ~~2016.~~Limited ~~During~~Waiver”) ~~the~~to: ~~year~~(i) ~~ended~~waive ~~September 30,~~outstanding ~~2015,~~Events ~~ABE~~of ~~South~~Default ~~Dakota~~related ~~made debt sweep payments totaling $8.0 million in addition~~ to ~~its~~compliance ~~scheduled~~with ~~principal~~the ~~payments~~Working ofCapital ~~$3.0~~and ~~million.~~Current ~~ABE~~Ratio ~~South~~covenants ~~Dakota~~at ~~was~~September ~~also~~30, ~~obligated~~2019, to(ii) ~~pay~~extend the ~~remaining~~funding ~~$68,750~~period ~~installment~~ of athe ~~$275,000~~2018 ~~waiver~~Term ~~fee~~Loan to ~~the~~November ~~senior~~1, ~~lenders on March 31~~2019, ~~2016.~~(iii) ~~The~~amend ~~Company~~the ~~recorded~~repayment ~~this~~obligations ~~fee~~of asthe ~~non-interest~~2018 ~~bearing~~Term ~~debt~~Loan onto ~~its~~begin ~~consolidated~~January ~~balance~~1, ~~sheet~~2020, and is(iv) ~~included~~defer in the ~~Restructuring~~principal ~~Fee~~payment ~~category~~due inOctober ~~the~~1, ~~above~~2019 ~~debt~~to ~~tables~~the ~~net~~Term ofLoan ~~the~~Maturity ~~unamortized portion~~Date.

~~ABE~~Subsequent ~~South~~to ~~Dakota had~~ the ~~option~~amendments toand ~~select~~waivers ~~the~~described ~~interest~~above, ~~rate~~ABE onSouth ~~the~~Dakota ~~senior~~evaluated ~~term~~projected ~~loan~~covenant ~~between~~compliance ~~base~~for ~~rate~~the ~~and~~12 ~~euro-dollar~~month ~~rates~~period ~~for~~following ~~maturities~~September of30, ~~one~~2019. Based toon ~~six~~this ~~months.~~evaluation, ~~Base~~ABE ~~rate~~South ~~loans~~Dakota ~~bear~~determined ~~interest~~compliance atover the ~~administrative~~next ~~agent’s~~12 ~~base~~month ~~rate~~period ~~plus~~was annot ~~applicable~~reasonably ~~margin~~possible ofand, ~~3.0%.~~as ~~Euro-dollar~~a ~~loans~~result, ~~bear~~has ~~interest~~recognized atall ~~LIBOR~~debt ~~plus~~as ~~the~~current ~~applicable~~on ~~margin~~its offinancial 4statements.~~0%.~~ The Asdebt ofwas ~~September 30,~~subsequently ~~2015,~~repaid ~~ABE~~in ~~South~~connection ~~Dakota~~with ~~had~~the ~~selected~~sale ~~the~~of ~~LIBOR~~substantially ~~plus~~all ~~4.0%~~of ~~rate~~ABE ~~for~~South aDakota’s ~~period~~assets, ofsee ~~one~~Note ~~month~~12.

ABE South Dakota’s obligations under the 2010 Senior Credit Agreement were secured by a first-priority security interest in the equity and assets of ABE South Dakota.

In connection with closing, ABE South Dakota paid in full all amounts outstanding under the 2010 Senior Credit Agreement, including $29.0 million of principal, accrued interest, the $3.0 restructuring fee, and the waiver fee of $68,750, and all security interests of the prior lenders were extinguished.

Additional Carrying Value of Restructured Debt

Since the future maximum undiscounted cash payments on the 2010 Senior Credit Agreement (including principal, interest and the restructuring fee) exceeded the adjusted carrying value at the time of the June 2010 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 final payoff of the 2010 Credit Agreement in December 2015, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. As a result, a gain of $0.3 million was recognized in fiscal 2016.

ABE Letter of Credit

In connection with the execution of a rail car sublease, the Company, as parent of ABE South Dakota agreed to post a $2.5 million irrevocable and non-transferable standby letter of credit in May 2012 for the benefit of its ethanol marketer as security for the payment obligations of ABE South Dakota. The Company deposited $2.5 million in a restricted account as collateral for this letter of credit and classified it as restricted cash. Effective May 15, 2014, the letter of credit and corresponding deposit of collateral was decreased by $1.0 million in conjunction with an amendment to the rail car sublease. Effective June 27, 2016, the letter of credit and corresponding deposit of collateral was decreased by $0.5 million in conjunction with an amendment to the rail car sublease. Effective July 31, 2018, the letter of credit was terminated and the corresponding collateral requirement was eliminated.

5.	Members’ Equity

Unit Appreciation Rights

As of September 30, ~~2018~~2019, the Company had 312,500 Unit Appreciation Rights (“UAR”) fully vested and outstanding. At the time of their respective grants, (i) 200,000 of the UARs had an exercise price of $1.15 per unit, (ii) 12,500 of the UARs had an exercise price of $1.00 per unit, and (iii) 100,000 of the UARs had an exercise price of $1.24 per unit. As a result of cash distributions paid to the Company’s unit holders subsequent to the dates of the respective UAR grants, as of September 30, ~~2018~~2019, (i) the exercise price of the 200,000 January 2013 UARs has been reduced to $0.21 per unit, (ii) the exercise price of the 12,500 January 2015 UARs has been reduced to $0.85 and (iii) the exercise price of the 100,000 January 2016 UARs is $1.09 per unit. The exercise price of each of these awards will be reduced by any future distributions paid to the Company’s unit holders. The units are contingently exercisable only under certain limited circumstances; therefore, the Company is not recognizing compensation expense related to the awards until these defined circumstances are probable of occurring.

price of the 200,000 January 2013 UARs has been reduced to $0.21 per unit, (ii) the exercise price of the 12,500 January 2015 UARs has been reduced to $0.85 and (iii) the exercise price of the 100,000 January 2016 UARs is $1.09 per unit. The exercise price of each of these awards will be reduced by any future distributions paid to the Company’s unit holders. The units are contingently exercisable only under certain limited circumstances; therefore, the Company is not recognizing compensation expense related to the awards until these defined circumstances are probable of occurring.

Board Representation and Voting Agreement

The Company, certain directors of the Company, South Dakota Wheat Growers Association, entities associated with Clean Energy Capital, LLC (“CEC”) (and predecessor entities) and entities associated with Thomas H. Lee Partners, L.P. (“THL”) (and predecessor entities), have each executed a voting agreement (the “Voting Agreement”). The Voting Agreement requires the parties to (a) nominate for election to the Board two designees of THL and the Chief Executive Officer of the Company, (b) recommend to the members the election of each of the designees, (c) vote all units of the Company they beneficially own or otherwise control to elect each of the designees to the Board, (d) not take any action that would result in the removal of any of the designees from the Board or to increase the size of the Board to more than nine members, and (e) not grant a proxy with respect to any units that is inconsistent with the parties’ obligations under the Voting Agreement. At December 1, ~~2018~~2019, the parties to the Voting Agreement held in the aggregate approximately 39.6% of the outstanding units of the Company.

6.	Lease Commitments and Contingencies

Lease Commitments

The Company leases ethanol and distillers rail cars, office and other equipment and an office facility under operating lease agreements with the following approximate future minimum rental commitments through ~~2023~~2024 for the years ended September 30 (in thousands):

	Minimum Rental Commitments
2019	$	3,413
2020	$	3,633
2020		2,777
2021		3,379
2021		2,529
2022		2,666
2022		1,839
2023		1,939
2023		1,134
2024		735
Thereafter		~~311~~-
	$	12,~~003~~352

The Company recognized rent expense related to the above leases of approximately $3.9 million, $43.59 million, and $54.05 million for the years ended September 30, ~~2018~~2019, ~~2017~~2018, and ~~2016~~2017, respectively.

52The Company closed on the Asset Sale on December 19, 2019. In connection with the closing of the Asset Sale, the Company assigned or cancelled any and all lease commitments above as they relate to ABE South Dakota, and will have no further payment obligations. Following the closing of the Asset Sale, ABE has future commitments for fiscal 2020 of $163,000, fiscal 2021 of $153,000 and fiscal 2022 of $3,000, which it will resolve through the liquidation, dissolution and winding up pursuant to the Plan of Liquidation.

7.	Major Customers

ABE South Dakota has ethanol marketing agreements with NGL ~~Energy~~Crude ~~Partners,~~Logistics LPLLC (“NGL”)~~(formerly Gavilon~~, ~~LLC),~~ a diversified energy business. These 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 these ethanol marketing agreements ~~expires~~were originally set to expire on June 30, 2019. On April 1, 2019, the agreements were amended to change the term to month-to-month, with three months written notice by either party required to terminate the agreement. On September 27, 2019, the Company provided notice of termination due to the pending Asset Sale. The agreements will terminate on December 31, 2019.

ABE South Dakota is party to a co-product marketing agreement with Dakotaland Feeds, LLC (“Dakotaland Feeds”), ~~whereby~~under which Dakotaland Feeds markets the local sale of wet distillers’ grains produced at the ABE South Dakota Huron plant and modified distillers’ produced at the Aberdeen plant to third parties for an agreed upon commission. ABE South Dakota has a marketing agreement with Gavilon Ingredients, LLC (“Gavilon”) to market the dried distillers’ grains ~~from~~at the Aberdeen and Huron plants ~~through~~which were originally set to expire on July 31, 2019. On May 8, 2019, the agreement was amended so the term would continue until either party gave no less than sixty days written notice. On September 30, 2019, the Company provided notice of termination due to the pending Asset Sale. The agreement terminated on November 30, 2019. The Company continued to sell dried distillers’ to Gavilon through the closing of the Asset Sale. ABE South Dakota self-~~markets~~marketed its wet and a small portion of modified distillers’ grains produced at the Aberdeen plant.

ABE South Dakota iswas party to an agreement with Gavilon to market all of the corn oil produced by the Huron and Aberdeen plants through November 30, 2019 and September 30, 2019, respectively. On, July 16, 2019, a notice of termination for the Huron plant was delivered to Gavilon which terminated the contract as of October 20, 2019. The Company continued to sell corn oil to Gavilon through the closing of the Asset Sale. On August 21, 2019 a termination notice for the Aberdeen plants was delivered to Gavilon whereby the agreement terminated on the closing date of the Asset Sale.

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

September 30, 2018

September 30, 2017

September 30, 2016

As of and for the Twelve Months Ending

September 30, 2019

September 30, 2018

September 30, 2017

NGL Energy—Ethanol

Twelve months revenues

~~102~~97,~~617~~846

~~118~~102,~~000~~617

~~116~~118,~~455~~000

Receivable balance at period end

32,~~274~~342

3,~~116~~274

3,~~642~~116

Gavilon—Ethanol, Corn Oil & Distillers Grains

Gavilon—Corn Oil & Distillers Grains

Twelve months revenues

16,~~698~~679

1316,~~786~~698

1513,~~269~~786

Receivable balance at period end

~~385~~408

~~326~~385

~~323~~326

Dakotaland Feeds—Distillers Grains

Twelve months revenues

12,~~647~~311

1012,~~663~~647

1110,~~686~~663

Receivable balance at period end

~~499~~465

~~575~~499

~~470~~575

Other Various Small Customers—Distillers Grains

Twelve months revenues

1,155

1,810

1,083

Receivable balance at period end

129

8.	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. In addition to entering into contracts to purchase 0.81 million bushels of corn in which the basis or futures price was not locked, the Company had entered into the following fixed price forward sales and purchase contracts at September 30, ~~2018~~2019:

Commodity	Type	Quantity	Amount (in 000’s)		Period Covered Through
Ethanol	Sale	~~475~~1,~~200~~056,600 gallons	$	~~512~~1,414	October 31, ~~2018~~2019
Distillers grains	Sale	156,~~172~~871 tons		~~974~~401	October 31, ~~2018~~2019
Corn oil	Sale	~~400~~250,000 pounds		8452	October 31, ~~2018~~2019
Corn	Purchase	20,000 bushels		58	October 31, 2018
Natural gas	Purchase	265,000 mmbtus		784	March 31, 2019

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.

9.	Employee Benefit Plan

The Company sponsors a 401(k) plan for eligible employees. Eligible employees may make elective deferral contributions to the plan. The Company’s matching contribution is 100% of the employee’s elective deferrals, not to exceed 5% of the employee’s eligible wages. The Company contributed approximately $~~152~~146,000, $~~165~~152,000, and $~~160~~165,000, to the plan in the years ended September 30, ~~2018~~2019, ~~2017~~2018, and ~~2016~~2017, respectively.

10.	Related Party Transactions

Grain Purchases from Agtegra

The Company purchased $97103.3 million, $9397.83 million and $~~104~~93.98 million of corn from Agtegra in the years ended September 30, ~~2018~~2019, ~~2017~~2018, and ~~2016~~2017 pursuant to a grain origination agreement, which covers all corn purchases in South Dakota. Agtegra owns approximately 5% of the Company’s outstanding units. As of September 30, ~~2018~~2019 and ~~2017~~2018, the Company had outstanding amounts payable to Agtegra of approximately $21.79 million and $2.27 million, respectively.

11.	Quarterly Financial Data (Unaudited)

The following table presents summarized quarterly financial data for the years ended September 30, ~~2018~~2019 and ~~2017~~2018. Dollars in thousands, except per unit amounts:

Year Ended September 30, 2019	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Total net sales	$	31,952		$	33,119		$	31,052		$	31,868
Gross loss		(2,274	)		(1,461	)		(2,753	)		(3,805	)
Net loss		(3,108	)		(2,498	)		(3,872	)		(5,099	)
Basic & diluted loss per common unit	$	(0.12	)	$	(0.10	)	$	(0.15	)	$	(0.20	)

Year Ended September 30, 2018	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Total net sales	$	30,498		$	33,769		$	36,171		$	33,334
Gross profit (loss)		(410	)		(67	)		180			441
Net loss		(1,299	)		(884	)		(570	)		(304	)
Basic & diluted loss per common unit	$	(0.05	)	$	(0.03	)	$	(0.02	)	$	(0.01	)

Year Ended September 30, 2017	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
Total net sales	$	38,508	$	33,786	$	33,819	$	37,419
Gross profit		7,357		950		1,248		3,749
Net income		6,037		88		357		2,287
Basic & diluted income per common unit	$	0.24	$	0.00	$	0.01	$	0.09

12.	Asset Sale and Subsequent Events

12On August 1, 2019, the Advanced BioEnergy, LLC and ABE South Dakota entered into an Asset Purchase Agreement with Glacial Lakes Energy (“GLE” or “Buyer”) under which ABE South Dakota agreed to sell substantially all the assets related to its Aberdeen and Huron, South Dakota ethanol plants and related businesses to GLE, pursuant to the terms and conditions of the Asset Purchase Agreement (the “Asset Sale”). The ~~Parent~~Asset ~~Financial~~Sale ~~Statements~~closed on December 19, 2019.

~~The~~Under ~~following~~the ~~financial~~Asset ~~information~~Purchase ~~represents~~Agreement, the ~~unconsolidated~~purchase ~~financial~~price ~~statements~~was of$47.5 ~~Advanced BioEnergy~~million, ~~LLC~~plus ~~(“ABE”)~~the asvalue of ~~September 30,~~the ~~2018~~Company’s ~~and~~inventory ~~2017~~at closing, ~~and~~which ~~for~~was ~~the~~approximately ~~years~~$2.3 ~~ended~~million. ~~September 30,~~At ~~2018~~the closing, ~~2017~~Buyer ~~and~~paid ~~2016.~~to ABE’s ~~ability~~South toDakota ~~receive~~a ~~distributions~~total ~~from~~of ~~ABE~~$8.3 ~~South~~million ~~Dakota~~in iscash, ~~based~~which onreflects the ~~terms~~purchase ~~and~~price, ~~conditions~~less in the ~~ABE~~approximately ~~South~~$31.0 ~~Dakota~~million ~~credit~~repay ~~agreement.~~the ~~Under~~AgCountry ~~its~~Master ~~current~~Credit ~~credit~~Agreement ~~agreement~~obligations, ~~ABE~~less ~~South~~the ~~Dakota~~amount isof ~~allowed~~certain toaccrued ~~make~~contract ~~equity~~liabilities, ~~distributions~~and ofless up$4.75 tomillion ~~40%~~ of ~~its~~the ~~net~~purchase ~~income,~~price ~~and~~that ~~may~~was ~~distribute~~deposited upinto toan ~~100%~~indemnity ofescrow ~~its~~account. ~~net~~The ~~income~~indemnity ifescrow itaccount ~~achieves~~will ~~and~~be ~~maintains~~used anto ~~owner~~satisfy any of Buyer’s ~~equity~~claims ~~ratio~~for ofindemnification atunder ~~least~~the ~~60%~~Asset Purchase Agreement and ~~working~~any ~~capital~~amounts remaining after the eighteen (18)-month anniversary of atthe ~~least~~closing ~~$15~~will ~~million.~~be ~~There~~released ~~were~~to nothe ~~distributions~~Company. ~~from~~The ~~ABE~~Company ~~South~~also ~~Dakota~~paid ~~during~~approximately ~~the~~$0.7 ~~last~~million ~~three~~in ~~fiscal~~transaction ~~years~~expenses at closing.

54Effective upon the repayment on December 19, 2019, the Master Credit Agreement with AgCountry and all related documents were terminated in accordance with their terms and AgCountry released its security interest in, and liens and mortgages on, all of the properties, rights and assets of ABE South Dakota.

Upon the closing of the Asset Sale, the Company commenced its liquidation in accordance with the Plan of Liquidation. Under the Plan of Liquidation, the Company will be liquidated and the proceeds of the sale will be distributed to unit holders, after payment of the Company’s outstanding obligations and other expenses related to the Plan of Liquidation. The Company’s Board of Directors intends to meet in January 2020 to determine the next steps in the Plan of Liquidation, including the amount and timing of any initial distribution to members, which the Company expects will be in January or February 2020. The Board anticipates that the amount of the initial distribution to members will be between $7.7 and $8.4 million or $0.30 to $0.33 per unit based on 25,410,851 units outstanding as of December 19, 2019, with a final distribution to be paid upon release of the indemnity escrow. However, there can be no assurance as to the timing or amount of distributions to our members.

ADVANCED BIOENERGY, LLC

Pro Forma Condensed Consolidated Balance Sheet (unaudited)

September 30, 2019

	As Reported 9/30/2019			Pro Forma Adjustments				Pro Forma 9/30/2019

ASSETS
Current assets:
Cash and cash equivalents	$	5,423		$	8,331		(1)	$	13,754
Cash held in escrow		-			4,750		(2)		4,750
Accounts receivable:
Trade accounts receivables		3,451			-				3,451
Other receivables		174			-				174
Inventories		4,871			(4,871	)	(3)		-
Prepaid expenses		667			(132	)	(4)		535
Total current assets		14,586			8,078				22,664
Property and equipment, net		35,662			(35,645	)	(5)		17
Other assets		452			-				452
Total assets	$	50,700		$	(27,567	)		$	23,133
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	3,908		$	-			$	3,908
Accrued expenses		2,326			-				2,326
Current portion of long-term debt		29,593			(29,593	)	(6)		-
Total current liabilities		35,827			(29,593	)			6,234
Other liabilities		1,027			(1,011	)	(7)		16
Long-term debt		-			-				-
Total liabilities		36,854			(30,604	)			6,250
Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and outstanding		44,826			-				44,826
Accumulated deficit		(30,980	)		3,037		(8)		(27,943	)
Total members’ equity		13,846			3,037				16,883
Total liabilities and members’ equity	$	50,700		$	(27,567	)		$	23,133

(1)

Net cash received by the Company at closing of $8.331 million.

(2)

Consists of $4.750 million held in escrow for 18-months from the closing date.

(3)

Cash paid for inventory at closing was $2.3 million, this excludes spare parts and critical parts which were included in the asset purchase price.

(4)

Prepaid expenses paid in cash to the Company at closing related to operating lease payments made in advance.

(5)

Reduction in property and equipment as a result of the Asset Sale.

(6)

The Company’s outstanding obligations to its senior lender were paid in full at closing.

(7)

Reduction in the gross price for assumed liabilities related to repair obligations under certain rail car leases.

(8)

Net estimated change in assets and liabilities from September 30, 2019 to the closing date of the Asset Sale on December 19, 2019.

ESTIMATED INITIAL DISTRIBUTION TO MEMBERS (unaudited)

	Low Range			High Range
Cash balance as of September 30, 2019	$	5,423		$	5,423
Gross asset purchase price		47,500			47,500
Value of inventory and certain prepaids purchased at closing		2,480			2,480
Bank debt payable (1)		(31,004	)		(31,004	)
Cash held in escrow (2)		(4,750	)		(4,750	)
Other reductions in purchase price (3)		(5,841	)		(5,841	)
Total cash assumed following asset sale		13,808			13,808

Transaction-related expenses (4)		1,500			1,500
Other reserve amount (5)		2,750			2,750
Net other balance sheet items (6)		500			100
Wind down costs		1,400			1,100
Total reduction in cash estimated following the asset sale		6,150			5,450

Estimated cash initial distribution	$	7,658		$	8,358
Units outstanding as of closing date		25,410,851			25,410,851
Estimated initial per unit distribution (7)	$	0.30		$	0.33

(1)

Full payment of the Company’s outstanding senior debt including accrued interest and fees paid at closing.

(2)

Consists of $4.750 million held in escrow for 18-months from the closing date.

(3)

Reductions in the gross asset purchase price for assumed liabilities related to repair obligations under certain rail car leases and to cure a title exception.

(4)

Consists of estimated financial advisor fees, legal expenses, accounting and other miscellaneous expenses related to the Asset Sale.

(5)

Consists of $2.75 million for indemnity reserve escrow established post closing.

(6)

Includes payment of outstanding liabilities, net of accounts receivable collections and sale of other assets.

(7)

Estimated initial per unit distribution. An additional final distribution is expected with the expiration of the 18-month escrow noted above.

13.	Parent Financial Statements

The following financial information represents the unconsolidated financial statements of Advanced BioEnergy as of September 30, 2019 and 2018, and for the years ended September 30, 2019, 2018 and 2017. ABE’s ability to receive distributions from ABE South Dakota is based on the terms and conditions in its Master Credit Agreement with AgCountry. Under the Master Credit Agreement, ABE South Dakota is allowed to make equity distributions of up to 40% of its net income and may distribute up to 100% of its net income if it achieves and maintains an owner’s equity ratio of at least 60% and working capital of at least $15 million. There were no distributions from ABE South Dakota during the last three fiscal years. In connection with the closing of the Asset Sale on December 19, 2019, the Master Credit Agreement was terminated in accordance with its terms with the repayment in full of the approximately $31.0 million in obligations to AgCountry.

Advanced BioEnergy, LLC (Unconsolidated)

Balance Sheets

	September 30,			September 30,
	2018			2017
	2019			2018
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	~~1,220~~176		$	~~725~~1,220
Restricted cash		-			1,000
Total current assets		176			1,220
Total current assets		1,220			1,725
Property and equipment, net		17			25
Property and equipment, net		25			54
Other assets:
Investment in ABE South Dakota		2713,~~303~~782			2927,~~862~~303
Other assets		32			32
Total assets	$	2814,~~580~~007		$	3128,~~673~~580
LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Accrued expenses		~~134~~146			~~162~~134
Other liabilities		2315			3123
Total liabilities		~~157~~161			~~193~~157
Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and outstanding		44,826			44,826
Accumulated deficit		(1630,~~403~~980	)		(1316,~~346~~403	)
Total members’ equity		2813,~~423~~846			3128,~~480~~423
Total liabilities and members’ equity	$	2814,~~580~~007		$	3128,~~673~~580

5547

Advanced BioEnergy, LLC (Unconsolidated)

Statements of Operations

	Years Ended
	September 30,			September 30,			September 30,
	2018			2017			2016
	2019			2018			2017
	(Dollars in thousands)
Equity in earnings (losses) of consolidated subsidiary	$	(213,~~559~~821	)	$	9(2,~~442~~559	)	$	(59,~~296~~442	)
Selling, general and administrative expenses .		(~~534~~760	)		(~~684~~534	)		(~~640~~684	)
Operating income (loss)		(314,~~093~~581	)		8(3,~~758~~093	)		(58,~~936~~758	)
Other income (expense)		30			-			(6	)
Other income		1			30			-
Interest income		63			116			4911
Net Income (loss)	$	(314,~~057~~577	)	$	8(3,~~769~~057	)	$	(58,~~893~~769	)

5648

Advanced BioEnergy, LLC (Unconsolidated)

Statements of Cash Flows

	Years Ended
	September 30,			September 30,			September 30,
	2018			2017			2016
	2019			2018			2017
	(Dollars in thousands)
Cash flows from operating activities:
Net income (loss)	$	(314,~~057~~577	)	$	8(3,~~769~~057	)	$	(58,~~893~~769	)
Adjustments to reconcile net income (loss) to operating activities cash flows:
Depreciation		298			6429			~~102~~64
Equity in (earnings) losses of consolidated subsidiaries		213,~~559~~821			(92,~~442~~559	)		5(9,~~296~~442	)
Gain on disposal of fixed assets		-			-			(15	)
Amortization of deferred revenue and rent		(8	)		(8	)		(8	)
Amortization of deferred revenue and rent		(8	)		(8	)		19
Change in working capital components:
Other receivable		-			-			6
Accounts payable		-			-			(5	)
Accounts payable		-			(5	)		5
Accrued expenses		12			(28	)		(17	)
Accrued expenses		(28	)		(17	)		(116	)
Net cash used in operating activities		(744	)		(505	)		(639	)
Net cash used in operating activities		(505	)		(639	)		(596	)
Cash flows from investing activities:
Purchase of property and equipment		-			-			(41	)
Net cash provided by investing activities		-			-			-
Proceeds from disposal of fixed assets		-			-			47
Net cash provided by investing activities		-			-			6
Cash flows from financing activities:
Distribution to subsidiary		-			-			(3,000	)
Investment in subsidiary		(300	)		-			-
Distribution from subsidiary		-			-			108
Distribution to members		-			-			(3,812	)
Distribution to members		-			(3,812	)		-
Net cash used in financing activities		(300	)		-			(3,812	)
Net cash used in financing activities		-			(3,812	)		(2,892	)
Net decrease in cash, cash equivalents and restricted cash		(1,044	)		(505	)		(4,451	)
Net decrease in cash, cash equivalents and restricted cash		(505	)		(4,451	)		(3,482	)
Beginning cash, cash equivalents and restricted cash		1,220			1,725			6,176
Beginning cash, cash equivalents and restricted cash		1,725			6,176			9,658
Ending cash, cash equivalents and restricted cash	$	176		$	1,220		$	1,725
Ending cash, cash equivalents and restricted cash	$	1,220		$	1,725		$	6,176

5749

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the officer serving as both our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by our Company 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 Commission rules and forms.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, ~~2018~~2019. This assessment is based on the criteria for effective internal control described in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that our internal control over financial reporting was effective as of September 30, ~~2018~~2019.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Controls over Financial Reporting

Our management, with the participation of the officer serving as both our chief executive officer and chief financial officer, performed an evaluation as to whether any change in the internal controls over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934) occurred during our fourth fiscal quarter. Based on that evaluation, the chief executive officer and chief financial officer concluded that no change occurred in the internal controls over financial reporting during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B.

OTHER INFORMATION

The Audit Committee of the Company’s Board of Directors, with the assistance of independent legal and accounting advisors, is conducting an internal investigation of the Company’s administration of its travel and expense policy (“T&E Policy”)None. The Audit Committee is working closely with its advisors to complete this investigation in as timely a manner as possible. The Company’s Board of Directors has taken steps to strengthen the administration of the T&E Policy during the internal investigation, pending any changes or other actions that the Board may take upon completion of the investigation. The Company does not believe the results of the final investigation will result in any material change to its Results of Operations.

5850

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

~~Incorporated~~In ~~herein~~accordance bywith ~~reference~~General isInstruction G(3), the information ~~appearing~~called ~~under~~for ~~the~~by ~~headings~~this ~~“Election~~Item ofwill ~~Directors”~~be ~~and~~provided ~~“Company~~as ~~Governance”~~part ~~in the Company’s proxy statement for the Company’s 2019 Annual Meeting~~ of ~~Members~~amendment ~~(the~~to ~~“Proxy~~this ~~Statement”)~~Form 10-K to be filed nonot later than 120 days after the end of the fiscal year ~~ended~~covered ~~September 30,~~by ~~2018~~this Form 10-K.

There were no material changes to the procedures by which unit holders may recommend nominees to the board of directors since our last report.

Incorporated herein by reference is the information appearing under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has posted this Code of Business Conduct and Ethics on the Advanced BioEnergy website at www.advancedbioenergy.com.

We intend to disclose any amendments to, or waivers from, the Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions or with respect to the required elements of the Code of Business Ethics, by disclosing the amendment or waiver on this website.

ITEM 11.

EXECUTIVE COMPENSATION

~~Incorporated~~In ~~herein~~accordance bywith ~~reference~~General isInstruction G(3), the information ~~appearing~~called ~~under~~for ~~the~~by ~~heading~~this ~~“Executive~~Item ~~Compensation”~~will inbe provided as part of amendment to this Form 10-K to be filed not later than 120 days after the ~~Proxy~~end ~~Statement~~of the fiscal year covered by this Form 10-K.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS

~~Incorporated~~In ~~herein~~accordance bywith ~~reference~~General isInstruction G(3), the information ~~appearing~~called ~~under~~for ~~the~~by ~~heading~~this ~~“Security~~Item ~~Ownership~~will be provided as part of ~~Certain~~amendment ~~Beneficial~~to ~~Owners”~~this inForm 10-K to be filed not later than 120 days after the ~~Proxy~~end ~~Statement~~of the fiscal year covered by this Form 10-K.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

~~Incorporated~~In ~~herein~~accordance bywith ~~reference~~General isInstruction G(3), the information ~~appearing~~called ~~under~~for ~~the~~by ~~heading~~this ~~“Corporate~~Item ~~Governance”~~will inbe provided as part of amendment to this Form 10-K to be filed not later than 120 days after the ~~Proxy~~end ~~Statement~~of the fiscal year covered by this Form 10-K.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

~~Incorporated~~In ~~herein~~accordance bywith ~~reference~~General isInstruction G(3), the information ~~appearing~~called ~~under~~for ~~the~~by ~~heading~~this ~~“Ratification~~Item will be provided as part of ~~the~~amendment ~~Independent~~to ~~Registered~~this ~~Public~~Form ~~Accounting~~10-K ~~Firm”~~to inbe filed not later than 120 days after the ~~Proxy~~end ~~Statement~~of the fiscal year covered by this Form 10-K.

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PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1) Financial Statements—an index to our financial statements is located above on page 3727 of this report. The financial statements appear on page 3828 through page 5750 of this report.

(2) Exhibits—the exhibits filed herewith are set forth on the Exhibit Index filed as a part of this report.

EXHIBIT INDEX

2.1		Asset Purchase Agreement dated as of August 1, 2019 by and among ABE South Dakota, LLC, Advanced BioEnergy, LLC and Glacial Lakes Energy, LLC (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated August 1, 2019).
2.2		Plan of Liquidation and Dissolution dated August 15, 2019 of Advanced BioEnergy, LLC (incorporated by reference to Annex C to the Registrant’s definitive proxy statement dated August 27, 2019 for the Special Meeting of Members held on September 19, 2019).
3.1		Certificate of Formation (Incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form SB-2, filed on May 27, 2005 (File No. 333-125335) (“Form SB-2”).
3.2		Fifth Amended and Restated Operating Agreement of the Registrant, effective as of March 16, 2012 (Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K dated March 22, 2012).
4.1		Form of Certificate of Membership Units (Incorporated by reference to Exhibit 4.1 to Form SB-2).
4.3		Investor Rights Agreement with South Dakota Wheat Growers Association dated as of November 7, 2006 (Incorporated by reference to Exhibit 10 to the Registrant’s Current Report on Form 8-K dated November 8, 2006).
4.3.1		Investor Rights Agreement with South Dakota Wheat Growers Association dated as of November 7, 2006, as amended (Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2007).
4.3.2		Second Amendment to Investor Rights Agreement with South Dakota Wheat Growers Association dated as of August 28, 2009 (Incorporated by reference to Exhibit 4.5 to the Registrant’s Current Report on Form 8-K dated on September 3, 2009).
4.4		Registration Rights Agreement with Hawkeye Energy Holdings, LLC dated as of August 28, 2009 (Incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K dated August 28, 2009).
10.1		Master Credit Agreement dated December 29, 2015 between ABE South Dakota, LLC as Borrower and AgCountry Farm Credit Services, PCA as Lender (“Master Credit Agreement”) (Incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.1.1		Limited Waiver and First Amendment dated September 28, 2016 to Master Credit Agreement (Incorporated by reference to Exhibit 10.1.1 to Registrant’s Annual Report on Form 10-K for the year ended September 30, 2016).
10.1.2		Limited Waiver Letter dated October 16, 2017 from AgCountry Farm Credit Services, PCA to ABE South Dakota, LLC. (Incorporated by reference to Exhibit 10.1.2 to Registrant’s Annual Report on Form 10-K for the year ended September 30, 2017).
10.2		First Supplement dated December 29, 2015 to the Master Credit Agreement (“Revolving Term Facility”) (Incorporated herein by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.3		Revolving Credit Note for $10.0 million from ABE South Dakota, LLC to AgCountry Farm Credit Services, PCA. (Incorporated herein by reference to Exhibit 10.3 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.4		Second Supplement dated December 29, 2015 to the Master Credit Agreement (“Term Loan”) (Incorporated herein by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.5		Term Loan Note for $20.0 million from ABE South Dakota, LLC to AgCountry Farm Credit Services, PCA. (Incorporated herein by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.6		Third Supplement dated September 28, 2016 to the Master Credit Agreement (“2016 Term Loan”) (Incorporated by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2016).
10.7		Fourth Supplement dated as of March 13, 2018 to the Master Credit Agreement (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated March 13, 2018).
10.8		Second Amendment dated September 28, 2016 to Master Credit Agreement (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report Form 8-K dated March 13, 2018)
10.9		Form of Construction and Term Note from ABE South Dakota to AgCountry Farm Credit Services, PCA (Incorporated by reference to Exhibit 10.3 of Registrant’s Current Report on Form 8-K dated March 13, 2018)
10.10		Third Amendment dated as of October 19, 2018 to the Master Credit Agreement (“Third Amendment”)

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10.11		Limited Waiver and Deferral Agreement and Fourth Amendment dated as of December 28, 2018 to the Master Credit Agreement (“Fourth Amendment”)
10.5		Term Loan Note for $20.0 million from ABE South Dakota, LLC to AgCountry Farm Credit Services, PCA. (Incorporated herein by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2015).
10.6		Third Supplement dated September 28, 2016 to the Master Credit Agreement (“2016 Term Loan”) (Incorporated by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2016).
10.7		Fourth Supplement dated as of March 13, 2018 to the Master Credit Agreement (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated March 13, 2018).
10.8		Second Amendment dated September 28, 2016 to Master Credit Agreement (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report Form 8-K dated March 13, 2018)
10.9		Form of Construction and Term Note from ABE South Dakota to AgCountry Farm Credit Services, PCA (Incorporated by reference to Exhibit 10.3 of Registrant’s Current Report on Form 8-K dated March 13, 2018)
10.10		Third Amendment dated as of October 19, 2018 to the Master Credit Agreement (Incorporated by reference to Exhibit 10.10 of Registrant’s Annual Report on Form 10-K for the year ended September 30, 2018).
10.11		Limited Waiver and Deferral Agreement and Fourth Amendment dated as of December 28, 2018 to the Master Credit Agreement (Incorporated by reference to Exhibit 10.10 of Registrant’s Annual Report on Form 10-K for the year ended September 30, 2018).
10.12		Security Agreement dated December 29, 2015, between ABE South Dakota, LLC, and AgCountry Farm Credit Services, PCA. (Incorporated herein by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the Year ended September 30, 2015).
10.13		Agreement between Heartland Grain Fuels, LP and ICM, Inc. dated July 14, 2006 (Incorporated by reference to Exhibit 10.24 to the Registrant’s Annual Report on Form 10-KSB for year ended September 30, 2006).
10.14		Grain Origination Agreement between Heartland Grain Fuels, L.P. and South Dakota Wheat Growers Association dated November 8, 2006 (Incorporated by reference to Exhibit 10.40 to the Form SB-2/A dated February 7, 2007).
10.14.1		Amendment to Grain Origination Agreement dated as of October 1, 2007 between Heartland Grain Fuels, L.P. and South Dakota Wheat Growers Association (Incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K dated October 15, 2007).
10.14.2		Notice letter dated May 4, 2018 from ABE South Dakota, LLC to South Dakota Wheat Growers Association (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated May 4, 2018.)
10.15		Side Letter dated as of August 21, 2009 executed by Advanced BioEnergy, LLC in favor of Hawkeye Energy Holdings, LLC (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 26, 2009).
10.16		Voting Agreement among Advanced BioEnergy, LLC, Hawkeye Energy Holdings, LLC Ethanol Investment Partners, LLC South Dakota Wheat Growers Association, a South Dakota cooperative, and certain directors of the Company dated as of August 28, 2009. (Incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K dated August 28, 2009).
10.16.1		Amendment No. 1 to Voting Agreement dated as of April 7, 2010 by and among Advanced BioEnergy, LLC, Hawkeye Energy Holdings, LLC, Ethanol Investment Partners, LLC, Ethanol Capital Partners, Series R, LP, Ethanol Capital Partners, Series T, LP, Tennessee Ethanol Partners, LP, South Dakota Wheat Growers Association and the directors of Advanced BioEnergy, LLC party thereto (Incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K dated April 7, 2010).
10.16.2		Amendment No. 2 to Voting Agreement dated as of January 12, 2015, by and among Advanced BioEnergy, LLC; Clean Energy Capital, LLC (“CEC”); various limited liability companies associated with CEC; Hawkeye Energy Holdings, LLC; South Dakota Wheat Growers Association, and certain Advanced BioEnergy, LLC directors, amending Voting Agreement originally dated as of August 28, 2009, as amended. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended December 31, 2014).
10.16.3		Amendment No. 3 to Voting Agreement dated February 11, 2016 by and amount Advanced BioEnergy, LLC; CEC; various limited liability companies associated with CEC; Hawkeye Energy Holdings, LLC; South Dakota Wheat Growers Association, and certain Advanced BioEnergy, LLC directors, amending Voting Agreement originally dated as of August 28, 2009 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended December 31, 2015).
10.17+		Second Amended and Restated Employment Agreement dated May 11, 2011 between Advanced BioEnergy, LLC and Richard Peterson (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).
10.17.1+		Amendment No. 1 dated January 18, 2013 to Second Amended and Restated Employment Agreement between Advanced BioEnergy, LLC and Richard Peterson (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated January 25, 2013).
10.17.2+		Amendment No. 2 dated June 7, 2014 to Second Amended and Restated Employment Agreement between Advanced BioEnergy, LLC and Richard Peterson (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form10-Q for the quarter ended June 30, 2014).
10.18+		Unit Appreciation Right Agreement dated January 18, 2013 between Advanced BioEnergy and Richard Peterson (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated on January 25, 2013.)
10.18.1+		Amendment No. 1 dated as of August 4, 2017 to Unit Appreciation Right Agreement dated as of January 18, 2013 between Advanced BioEnergy LLC and Richard Peterson, (incorporated by reference to Exhibit 10.3 to Registration Form 10-Q for the quarter ended June 30, 2017).

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10.16.3		Amendment No. 3 to Voting Agreement dated February 11, 2016 by and amount Advanced BioEnergy, LLC; CEC; various limited liability companies associated with CEC; Hawkeye Energy Holdings, LLC; South Dakota Wheat Growers Association, and certain Advanced BioEnergy, LLC directors, amending Voting Agreement originally dated as of August 28, 2009 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended December 31, 2015).
10.17+		Second Amended and Restated Employment Agreement dated May 11, 2011 between Advanced BioEnergy, LLC and Richard Peterson (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011).
10.17.1+		Amendment No. 1 dated January 18, 2013 to Second Amended and Restated Employment Agreement between Advanced BioEnergy, LLC and Richard Peterson (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated January 25, 2013).
10.17.2+		Amendment No. 2 dated June 7, 2014 to Second Amended and Restated Employment Agreement between Advanced BioEnergy, LLC and Richard Peterson (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2014).
10.18+		Unit Appreciation Right Agreement dated January 18, 2013 between Advanced BioEnergy and Richard Peterson (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated on January 25, 2013.)
10.18.1+		Amendment No. 1 dated as of August 4, 2017 to Unit Appreciation Right Agreement dated as of January 18, 2013 between Advanced BioEnergy LLC and Richard Peterson, (incorporated by reference to Exhibit 10.3 to Registration Form 10-Q for the quarter ended June 30, 2017).
10.19+		Unit Appreciation Right Agreement dated as of January 28, 2015 between Advanced Bioenergy, LLC and Richard Peterson, (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended June 30, 2017).
10.20 +		Unit Appreciation Right Agreement dated as of January 27, 2016 between Advanced Bioenergy, LLC and Richard Peterson, incorporated by referenced to Exhibit 10.2 of the Registrant’s Form 10-Q for the quarter ended June 30, 2017.
10.21		Ethanol Marketing Agreement dated May 4, 2012 between ABE South Dakota, LLC and Gavilon, LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.21.1		Amendment No. 1 dated July 31, 2012 to Ethanol Marketing Agreement between ABE South Dakota, LLC and Gavilon, LLC. (Incorporated by reference to Exhibit 10.1.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.
10.22		Amendment No. 2 dated as of May 15, 2014 to Ethanol Marketing Agreement between ABE South Dakota, LLC and NGL Crude Logistics, LLC f/k/a/Gavilon, LLC. (Incorporated by reference to Exhibit 10.15.2 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2014).
10.23		Distiller’s Grains Marketing Agreement dated May 4, 2012 between ABE South Dakota, LLC and Gavilon Ingredients, LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.23.1		Amendment No. 1 dated July 31, 2012 to Distiller’s Grains Marketing Agreement between ABE South Dakota, LLC and Gavilon Ingredients, LLC (Incorporated by reference to Exhibit 10.2.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.24		Rail Car Sublease Agreement dated May 4, 2012 by and among Gavilon, LLC, ABE South Dakota, LLC and ABE Fairmont, LLC. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.24.1		Amendment No. 1 dated July 31, 2012 to Rail Car Sublease by and among Gavilon, LLC, ABE South Dakota, LLC and ABE Fairmont, LLC. (Incorporated by reference to Exhibit 10.4.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.24.2*		Amendment No. 4 dated as of May 15, 2014 to Rail Car Sublease between NGL Crude Logistics, LLC, f/k/a Gavilon, LLC, and ABE South Dakota, LLC. (Incorporated by reference to Exhibit 10.17.2 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2014).
21		List of Subsidiaries of the Registrant.
10.25*		Second Amendment dated as of April 16, 2019 to the Grain Origination Agreement between ABE South Dakota, LLC and Agtegra Cooperative. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019).
24		Powers of Attorney.
31.1		Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer.
31.2		Rule 13a-14(a)/15d-14(a) Certification by Principal Financial and Accounting Officer.
32		Section 1350 Certifications.
101		The following materials from Advanced BioEnergy’s Annual Report on Form 10-K for the year ended September 30, 2018, formatted in XBRL: (i) Consolidated Balance Sheets at September 30, 2018 and 2017 ; (ii) Consolidated Statements of Operations for the years ended September 30, 2018, 2017 and 2016; (iii) Consolidated Statements of Changes in Members’ Equity for the years ended September 30, 2018, 2017 and 2016; (iv) Consolidated Statements of Cash Flows for the years ended September 30, 2018, 2017 and 2016; and (v) Notes to the Consolidated Financial Statements.

10.26		Amendment No. 4 dated as of April 1, 2019 to Ethanol Marketing Agreement dated May 4, 2012, as amended, between NGL Crude Logistics LLC, f/k/a Gavilon, LLC and ABE South Dakota, LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019).

10.27		Voting Agreement, dated as of August 1, 2019, between Thomas H. Lee Partners LLC, and associated parties, and Glacial Lakes Energy, LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 1, 2019).

10.28		Fifth Supplement to the Master Credit Agreement, dated as of August 7, 2019, between ABE South Dakota, LLC and AgCountry Farm Credit Services, PCA as lender. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 7, 2019).

10.29		Amendment to Future Advance Mortgage and Security Agreement and Fixture Financing Statement and Assignment of Leases and Rents – Mortgage – Collateral Real Estate Mortgage, dated as of August 7, 2019, by and between ABE South Dakota, LLC and AgCountry Farm Credit Services, PCA as lender. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 7, 2019).

10.30		Second Limited Waiver Agreement, dated as of August 7, 2019, between ABE South Dakota, LLC and AgCountry Farm Credit Services, PCA as lender. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated August 7, 2019).

10.31		Collateral Assignment of Rights Under Sale Documents, dated as of August 7, 2019, by ABE South Dakota, LLC in favor of AgCountry Farm Credit Services, PCA as lender. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K dated August 7, 2019).

10.32		Third Limited Waiver and Deferral Agreement, dated as of October 9, 2019, between ABE South Dakota, LLC and AgCountry Farm Credit Services, PCA as lender.

21		List of Subsidiaries of the Registrant.

24		Powers of Attorney.

31.1		Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification by Principal Financial and Accounting Officer.

32		Section 1350 Certifications.

101		The following materials from Advanced BioEnergy’s Annual Report on Form 10-K for the year ended September 30, 2019, formatted in XBRL: (i) Consolidated Balance Sheets at September 30, 2019 and 2018 ; (ii) Consolidated Statements of Operations for the years ended September 30, 2019, 2018 and 2017; (iii) Consolidated Statements of Changes in Members’ Equity for the years ended September 30, 2019, 2018 and 2017; (iv) Consolidated Statements of Cash Flows for the years ended September 30, 2019, 2018 and 2017; and (v) Notes to the Consolidated Financial Statements.

*	Material has been omitted pursuant to a request for confidential treatment and these materials have been filed separately with the SEC.

+	Management compensatory plan/arrangement.

ITEM 16.

FORM 10-K SUMMARY

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on December 3130, ~~2018~~2019.

ADVANCED BIOENERGY, LLC
(Registrant)

By:		/S/ RICHARD R. PETERSON
		Richard R. Peterson
		Chief Executive Officer, President, Chief Financial Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on December 3130, ~~2018~~2019.

Name		Title

/S/ RICHARD R. PETERSON		Chief Executive Officer, President, Chief Financial Officer and Director (Principal Executive, Financial and Accounting Officer)
Richard R. Peterson

*		Director, Chairman
J.D. Schlieman		Director, Chairman

*		Director
Theodore J. Christianson		Director

*		Director
Daniel R. Kueter		Director

*		Director
Charles M. Miller		Director

*		Director
Troy L. Otte		Director

*		Director
Brian D. Thome		Director

/S/ RICHARD R. PETERSON
Richard R. Peterson, as power of attorney, where designated by *

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