##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended September 30, 2009
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 000-53036
 CARDINAL ETHANOL, LLC
  Indiana
    
    20-2327916(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 1554 N. County Road 600 E., Union City, IN
    
    47390(Address of principal executive offices)
    
    (Zip Code)
 (765) 964-3137
 None
 None
 o Yes þ No
 o Yes þ No
 þ Yes o No
 o Yes o No
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



Table of Contents
 PART I
    
    
    4ITEM 1. BUSINESS
    
    
    4ITEM 1A. RISK FACTORS
    
    
    15ITEM 2. PROPERTIES
    
    
    20ITEM 3. LEGAL PROCEEDINGS
    
    
    21ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    21PART II
    
    
    21ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    21ITEM 6. SELECTED FINANCIAL DATA
    
    
    22ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    22ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    35ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    54ITEM 9A(T). CONTROLS AND PROCEDURES
    
    
    54ITEM 9B. OTHER INFORMATION
    
    
    56PART III
    
    
    56ITEM 10. DIRECTORS; EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
    
    
    56ITEM 11. EXECUTIVE COMPENSATION
    
    
    56ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS
    
    
    56ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    56ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    56ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    57SIGNATURES
    
    
    57Exhibit 10.6Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
  
    
    Changes in the availability and price of corn and natural gas;
    
    Our inability to secure credit we may require to continue our operations;
    
    Negative impacts that our hedging activities may have on our operations;
    
    Decreases in the market prices of ethanol and distillers grains;
    
    Ethanol supply exceeding demand; and corresponding ethanol price reductions;
    
    Changes in the environmental regulations that apply to our plant operations;
    
    Changes in our business strategy, capital improvements or development plans;
    
    Changes in plant production capacity or technical difficulties in operating the plant;
    
    Changes in general economic conditions or the occurrence of certain events causing an
economic impact in the agriculture, oil or automobile industries;
    
    Lack of transport, storage and blending infrastructure preventing ethanol from
reaching high demand markets;
    
    Changes in federal and/or state laws (including the elimination of any federal and/or
state ethanol tax incentives);
    
    Changes and advances in ethanol production technology;
    
    Additional ethanol plants built in close proximity to our ethanol facility;
    
    Competition from alternative fuel additives;
    
    Changes in interest rates and lending conditions;
    
    Our ability to generate free cash flow to invest in our business and service our debt;
    
    Our ability to retain key employees and maintain labor relations; and
    
    Volatile commodity and financial markets.
   3




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AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1.
    
    BUSINESS.
 Business Development
    Principal Products and Markets
  Ethanol
    4




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Distillers Grains
   Corn Oil
  Ethanol and Distillers Grains Markets
 Distribution of Principal Products
   5




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Distribution of Principal Products
  Ethanol Distribution
  Distillers Grains Distribution
  New Products and Services
   6




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Federal Ethanol Supports and Governmental Regulation
 Federal Ethanol Supports
  Undiffer-Biomass-
    
    
    entiatedRenew-able
    
    
    Advanced
    
    
    Cellulosic
    
    
    based
    
    
    AdvancedYear
    
    Biofuel
    
    
    Biofuel
    
    
    Biofuel
    
    
    Diesel
    
    
    Biofuel
    
    
    Total RFS2008
    
    
    9.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.02009
    
    
    10.5
    
    
    
    .6
    
    
    
    
    
    
    
    .5
    
    
    
    0.1
    
    
    
    11.12010
    
    
    12
    
    
    
    .95
    
    
    
    .1
    
    
    
    .65
    
    
    
    0.2
    
    
    
    12.952011
    
    
    12.6
    
    
    
    1.35
    
    
    
    .25
    
    
    
    .8
    
    
    
    0.3
    
    
    
    13.952012
    
    
    13.2
    
    
    
    2
    
    
    
    .5
    
    
    
    1
    
    
    
    0.5
    
    
    
    15.22013
    
    
    13.8
    
    
    
    2.75
    
    
    
    1
    
    
    
    
    
    
    
    1.75
    
    
    
    16.552014
    
    
    14.4
    
    
    
    3.75
    
    
    
    1.75
    
    
    
    
    
    
    
    2
    
    
    
    18.152015
    
    
    15
    
    
    
    5.5
    
    
    
    3
    
    
    
    
    
    
    
    2.5
    
    
    
    20.52016
    
    
    15
    
    
    
    7.25
    
    
    
    4.25
    
    
    
    
    
    
    
    3.0
    
    
    
    22.252017
    
    
    15
    
    
    
    9
    
    
    
    5.5
    
    
    
    
    
    
    
    3.5
    
    
    
    242018
    
    
    15
    
    
    
    11
    
    
    
    7
    
    
    
    
    
    
    
    4.0
    
    
    
    262019
    
    
    15
    
    
    
    13
    
    
    
    8.5
    
    
    
    
    
    
    
    4.5
    
    
    
    282020
    
    
    15
    
    
    
    15
    
    
    
    10.5
    
    
    
    
    
    
    
    4.5
    
    
    
    302021
    
    
    15
    
    
    
    18
    
    
    
    13.5
    
    
    
    
    
    
    
    4.5
    
    
    
    332022
    
    
    15
    
    
    
    21
    
    
    
    16
    
    
    
    
    
    
    
    5
    
    
    
    36
     7




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Effect of Governmental Regulation
    Competition
    8




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9




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U.S. FUEL ETHANOL PRODUCTION CAPACITY
BY TOP PRODUCERS
Producers of Approximately 400
 million gallons per year (mmgy) or more
 Under Construction/Current Capacity
    
    
    ExpansionsCompany
    
    Location
    
    (mmgy)
    
    
    (mmgy)POET Biorefining  TOTAL
    
    
    
    
    1,537.0
    
    
    
    10.0POET Biorefining  Alexandria
    
    Alexandria, IN
    
    
    68.0POET Biorefining  Ashton
    
    Ashton, IA
    
    
    56.0POET Biorefining  Big Stone
    
    Big Stone City, SD
    
    
    79.0POET Biorefining  Bingham Lake
    
    Bingham Lake, MN
    
    
    35.0POET Biorefining  Caro
    
    Caro, MI
    
    
    53.0
    
    
    
    5.0POET Biorefining  Chancellor
    
    Chancellor, SD
    
    
    110.0POET Biorefining  Coon Rapids
    
    Coon Rapids, IA
    
    
    54.0POET Biorefining  Corning
    
    Corning, IA
    
    
    65.0POET Biorefining  Emmetsburg
    
    Emmetsburg, IA
    
    
    55.0POET Biorefining  Fostoria
    
    Fostoria, OH
    
    
    68.0POET Biorefining  Glenville
    
    Albert Lea, MN
    
    
    42.0POET Biorefining  Gowrie
    
    Gowrie, IA
    
    
    69.0POET Biorefining  Hanlontown
    
    Hanlontown, IA
    
    
    56.0POET Biorefining  Hudson
    
    Hudson, SD
    
    
    56.0POET Biorefining  Jewell
    
    Jewell, IA
    
    
    69.0POET Biorefining  Laddonia
    
    Loddonia, MO
    
    
    50.0
    
    
    
    5.0POET Biorefining  Lake Crystal
    
    Lake Crystal, MN
    
    
    56.0POET Biorefining  Leipsic
    
    Leipsic, OH
    
    
    68.0POET Biorefining  Macon
    
    Macon, MO
    
    
    46.0POET Biorefining  Marion
    
    Marion, OH
    
    
    68.0POET Biorefining  Mitchell
    
    Mitchell, SD
    
    
    68.0POET Biorefining  Manchester
    
    North Manchester, IN
    
    
    68.0POET Biorefining  Portland
    
    Portland, IN
    
    
    68.0POET Biorefining  Preston
    
    Preston, MN
    
    
    46.0POET Biorefining  Scotland
    
    Scotland, SD
    
    
    11.0POET Biorefining  Groton
    
    Groton, SD
    
    
    53.0Archer Daniels Midland*  TOTAL
    
    
    
    
    1,070.0
    
    
    
    550Decatur, ILCedar Rapids, IAClinton, IAColumbus, NEMarshall, MNPeoria, ILWallhalla, NDValero Renewable Fuels
    
    
    
    
    780.0Albert City, IA
    
    
    110.0Charles City, IA
    
    
    110.0Ft Dodge, IA
    
    
    110.0Hartley, IA
    
    
    110.0Welcome, MN
    
    
    110.0Albion, NE
    
    
    110.0Aurora, SD
    
    
    120.0Hawkeye Renewables, LLC  TOTAL
    
    
    
    
    445.0Iowa Falls, IA
    
    
    105Fairbank, IA
    
    
    120Menlo, IA
    
    
    110Shell Rock, IA
    
    
    110Green Plains Renewable Energy
    
    
    
    
    425.0Shenandoah, IA
    
    
    55.0Superior, IA
    
    
    110.0Bluffton, IN
    
    
    100.0Central City, NE
    
    
    50.0Ord, NE
    
    
    110.0Obion, TN
 *
    
    Individual state production capacity not reported   10




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Distillers Grains Competition
    11




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Sources and Availability of Raw Materials
 Corn Feedstock Supply
         12




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Risk Management Services
  Utilities
  Natural Gas.
  Electricity.
  13




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Water
  Employees
  Research and Development
  Patents, Trademarks, Licenses, Franchises and Concessions
  Seasonality of Ethanol Sales
  Working Capital
  Dependence on One or a Few Major Customers
   14




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Costs and Effects of Compliance with Environmental Laws
    
 ITEM 1A.
    
    RISK FACTORS.
 You should carefully read and consider the risks and uncertainties below and the other
information contained in this report. The risks and uncertainties described below are not the only
ones we may face. The following risks, together with additional risks and uncertainties not
currently known to us or that we currently deem immaterial could impair our financial condition and
results of operation.
 Risks Relating to Our Business
 We have a significant amount of debt, and our existing debt financing agreements contain, and
our future debt financing agreements may contain, restrictive covenants that limit distributions
and impose restrictions on the operation of our business.
 Increases in the price of corn or natural gas would reduce our profitability.
   15




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Risks Relating to Our Business  We engage
in hedging transactions which involve risks that could harm our business
 Declines in the price of ethanol or distillers grain would significantly reduce our revenues.
 We may violate the terms of our credit agreements and financial covenants which could result
in our lender demanding immediate repayment of our loans.
 Our inability to secure credit facilities we may require in the future may negatively impact
our liquidity.
 The ethanol industry is an industry that is changing rapidly which can result in unexpected
developments that could negatively impact our operations and the value of our units.
 We engage in hedging transactions which involve risks that could harm our business.
  16




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Our business is not diversified.
 We depend on our management and key employees, and the loss of these relationships could
negatively impact our ability to operate profitably.
 Changes and advances in ethanol production technology could require us to incur costs to
update our plant or could otherwise hinder our ability to compete in the ethanol industry or
operate profitably.
 We may be subject to litigation involving our corn oil extraction technology.
  17




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Risks Related to Ethanol Industry
 Demand for ethanol may not continue to grow unless ethanol can be blended into gasoline in
higher percentage blends for conventional automobiles.
 Technology advances in the commercialization of cellulosic ethanol may decrease demand for
corn based ethanol which may negatively affect our profitability.
 New plants under construction or decreases in the demand for ethanol may result in excess
production capacity in our industry .
 Decreasing gasoline prices may negatively impact the selling price of ethanol which could
reduce our ability to operate profitably
  18




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Growth in the ethanol industry is dependent on growth in the fuel blending infrastructure to
accommodate ethanol, which may be slow and could result in decreased demand for ethanol.
 We operate in an intensely competitive industry and compete with larger, better financed
entities which could impact our ability to operate profitably.
 Competition from the advancement of alternative fuels may lessen the demand for ethanol.
 Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds
to air pollution, harms engines and/or takes more energy to produce than it contributes may affect
the demand for ethanol.
 Risks Related to Regulation and Governmental Action
 Government incentives for ethanol production, including federal tax incentives, may be
eliminated in the future, which could hinder our ability to operate at a profit .
  19




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Changes in environmental regulations or violations of these regulations could be expensive and
reduce our profitability.
 Carbon dioxide may be regulated in the future by the EPA as an air pollutant requiring us to
obtain additional permits and install additional environmental mitigation equipment, which could
adversely affect our financial performance
 
 ITEM 2.
    
    PROPERTIES.
  
    
    A grains area, fermentation area, distillation  evaporation area;
 
    
    A dryer/energy center area;
 
    
    A tank farm;
 
    
    An auxiliary area; and
 
    
    An administration building.
  Item 7 
Managements Discussion and Analysis of Financial Condition and Results of Operations.
  20




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ITEM 3.
    
    LEGAL PROCEEDINGS.
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
      # ofQuarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Traded2008 1st
    
    $
    4,500
    
    
    $
    4,500
    
    
    $
    4,500.00
    
    
    
    162008 2nd
    
    $
    4,300
    
    
    $
    4,500
    
    
    $
    4,425.00
    
    
    
    162008 3rd
    
    $
    3,875
    
    
    $
    3,876
    
    
    $
    3,875.33
    
    
    
    62008 4th
    
    $
    2,900
    
    
    $
    3,850
    
    
    $
    3,470.00
    
    
    
    152009 1st
    
    $
    4,000
    
    
    $
    4,000
    
    
    $
    4,000.00
    
    
    
    52009 2nd
    
    $
    3,000
    
    
    $
    3,275
    
    
    $
    3,052.50
    
    
    
    102009 3rd
    
    $
    2,950
    
    
    $
    3,000
    
    
    $
    2,985.00
    
    
    
    202009 4th
    
    $
    2,850
    
    
    $
    2,850
    
    
    $
    2,850.00
    
    
    
    5
  21




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# ofSellers Quarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Listed2008 1st
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    
    
    
    None2008 2nd
    
    $
    4,000
    
    
    $
    4,275
    
    
    $
    4,034.38
    
    
    
    82008 3rd
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    
    
    
    None2008 4th
    
    $
    5,000
    
    
    $
    5,000
    
    
    $
    5,000.00
    
    
    
    42009 1st
    
    $
    5,000
    
    
    $
    5,000
    
    
    $
    5,000.00
    
    
    
    162009 2nd
    
    $
    3,500
    
    
    $
    4,000
    
    
    $
    4,107.14
    
    
    
    282009 3rd
    
    $
    3,000
    
    
    $
    3,000
    
    
    $
    3,000.00
    
    
    
    32009 4th
    
    $
    2,800
    
    
    $
    2,800
    
    
    $
    2,800.00
    
    
    
    1
 Item 7 
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
 ITEM 6.
    
    SELECTED FINANCIAL DATA.
  
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 This report contains forward-looking statements that involve future events, our future
performance and our expected future operations and actions. In some cases you can identify
forward-looking statements by the
use of words such as may, will, should, anticipate, believe, expect, plan,
future, intend, could, estimate, predict, hope, potential, continue, or the
negative of these terms or other similar expressions. These forward-looking statements are only
our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or
actions may differ materially from these forward-looking statements for many reasons, including the
reasons described in this report. We are not under any duty to update the forward-looking
statements contained in this report. We cannot guarantee future results, levels of activity,
performance or achievements. We caution you not to put undue reliance on any forward-looking
statements, which speak only as of the date of this report. You should read this report and the
documents that we reference in this report and have filed as exhibits, completely and with the
understanding that our actual future results may be materially different from what we currently
expect. We qualify all of our forward-looking statements by these cautionary statements.
 Overview
   22




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Results of Operations
 Fiscal Year Ended September 30, 2009
  Fiscal Year EndedSeptember 30, 2009(Audited)Income Statement Data
    
    Amount
    
    
    PercentRevenues
    
    $
    167,738,057
    
    
    
    100.00
    %Cost of Goods Sold
    
    $
    160,674,617
    
    
    
    95.79
    %Gross Profit
    
    $
    7,063,440
    
    
    
    4.21
    %Operating Expenses
    
    $
    3,726,051
    
    
    
    2.22
    %Operating Income
    
    $
    3,337,389
    
    
    
    1.99
    %Other Expense
    
    $
    4,288,574
    
    
    
    2.56
    %Net Loss
    
    $
    951,185
    
    
    
    0.57
    %
 Revenues
     23




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Cost of Goods Sold
   24




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Operating Expense
  Operating Income
  Other Expense
  Additional Information
  Fiscal Year EndedSeptember 30, 2009Production:Ethanol sold (gallons)
    
    
    87,645,515Distillers grains sold (tons)
    
    
    267,699Revenues:Ethanol average price per gallon
    
    $
    1.58Distillers grains average price per ton
    
    $
    103.53Primary Inputs:Corn ground (bushels)
    
    
    32,293,302Natural gas purchased (MMBTU)
    
    
    2,760,264Costs of Primary Inputs:Corn average price per bushel ground
    
    $
    4.04Natural gas average price per MMBTU
    
    $
    4.907Other Costs:Chemical and additive costs per gallon of ethanol sold
    
    $
    0.066Denaturant cost per gallon of ethanol sold
    
    $
    0.036Electricity cost per gallon of ethanol sold
    
    $
    0.033Direct Labor cost per gallon of ethanol sold
    
    $
    0.022
  25




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$3,073,000.
   26




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Three Month Period Ended September 30, 2009
  Quarter EndedSeptember 30, 2009(Unaudited)Income Statement Data
    
    Amount
    
    
    PercentRevenues
    
    $
    50,712,760
    
    
    
    100.00
    %Cost of Goods Sold
    
    $
    44,575,493
    
    
    
    87.90
    %Gross Profit
    
    $
    6,137,267
    
    
    
    12.10
    %Operating Expenses
    
    $
    1,024,974
    
    
    
    2.02
    %Operating Income
    
    $
    5,112,293
    
    
    
    10.08
    %Other Expense
    
    $
    1,385,340
    
    
    
    2.73
    %Net Income
    
    $
    3,726,953
    
    
    
    7.35
    %
  Three Months EndedSeptember 30, 2009Production:Ethanol sold (gallons)
    
    
    26,654,467Distillers grains sold (tons)
    
    
    83,129Revenues:Ethanol average price per gallon
    
    $
    1.607Distillers grains average price per ton
    
    $
    89.64Primary Inputs:Corn ground (bushels)
    
    
    9,314,330Natural gas purchased (MMBTU)
    
    
    767,709Costs of Primary Inputs:Corn average price per bushel ground
    
    $
    3.725Natural gas average price per MMBTU
    
    $
    3.509Other Costs:Chemical and additive costs per gallon of ethanol sold
    
    $
    0.059Denaturant cost per gallon of ethanol sold
    
    $
    0.037Electricity cost per gallon of ethanol sold
    
    $
    0.034Direct Labor cost per gallon of ethanol sold
    
    $
    0.017
 Changes in Financial Condition for the Fiscal Year Ended September 30, 2009
   27




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Critical Accounting Estimates
        28




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Trends and Uncertainties Impacting the Ethanol Industry and Our Operations
  Economic Downturn
  Corn Prices
    29




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Ethanol Industry Competition
  Ethanol Marketing
  Distillers Grains Marketing
   Derivatives
  Technology Developments
   Government Legislation and Regulations
   30




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Liquidity and Capital Resources
    Year Ended September 30,2009
    
    
    2008Net cash used in operating activities
    
    $
    2,244,876
    
    
    $
    1,894,355Net cash used in investing activities
    
    
    13,931,689
    
    
    
    59,289,152Net cash provided by financing activities
    
    
    22,980,155
    
    
    
    61,005,541
 Cash Flow Used in Operating Activities
  Cash Flow Used in Investing Activities
  Cash Flow Provided by Financing Activities
   31




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Credit Facilities
         32




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33




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Grant and Government Programs
   Off-Balance Sheet Arrangements
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   34




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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
  
     
  35




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CARDINAL ETHANOL, LLC
  September 30, 2009
    
    
    September 30, 2008ASSETSCurrent AssetsCash
    
    $
    7,265,125
    
    
    $
    461,535Trade accounts receivable
    
    
    5,945,146
    
    
    
    Miscellaneous receivables
    
    
    1,021,479
    
    
    
    27,000Inventories
    
    
    5,791,302
    
    
    
    Deposits
    
    
    1,045,079
    
    
    
    195,250Prepaid and other current assets
    
    
    846,771
    
    
    
    57,723Derivative instruments
    
    
    135,012
    
    
    
    Total current assets
    
    
    22,049,914
    
    
    
    741,508Property and EquipmentLand and land improvements
    
    
    20,978,132
    
    
    
    2,657,484Plant and equipment
    
    
    116,888,805
    
    
    
    36,238Building
    
    
    6,991,721
    
    
    
    619,615Office equipment
    
    
    307,494
    
    
    
    238,395Vehicles
    
    
    31,928
    
    
    
    31,928Construction in process
    
    
    
    
    
    
    136,743,326145,198,080
    
    
    
    140,326,986Less accumulated depreciation
    
    
    (7,988,509
    )
    
    
    (41,330
    )Net property and equipment
    
    
    137,209,571
    
    
    
    140,285,656Other AssetsDeposits
    
    
    368,808
    
    
    
    1,541,200Financing costs, net of amortization
    
    
    699,959
    
    
    
    856,595Total other assets
    
    
    1,068,767
    
    
    
    2,397,795Total Assets
    
    $
    160,328,252
    
    
    $
    143,424,959LIABILITIES AND EQUITYCurrent LiabilitiesAccounts payable
    
    $
    1,329,785
    
    
    $
    3,937,930Accounts payable-corn
    
    
    1,556,398
    
    
    
    Construction retainage payable
    
    
    351,700
    
    
    
    5,679,730Accrued expenses
    
    
    1,533,963
    
    
    
    304,607Derivative instruments
    
    
    861,569
    
    
    
    1,753,198Current maturities of long-term debt and capital lease obligations
    
    
    7,402,860
    
    
    
    6,617Total current liabilities
    
    
    13,036,275
    
    
    
    11,682,082Long-Term Debt and Capital Lease Obligations
    
    
    77,427,000
    
    
    
    61,818,344Derivative Instruments
    
    
    3,269,980
    
    
    
    Commitments and ContingenciesMembers EquityMembers contributions, net of cost of raising capital,14,606 units outstanding
    
    
    70,912,213
    
    
    
    70,912,213Accumulated other comprehensive loss
    
    
    (4,131,549
    )
    
    
    (1,753,198
    )Accumulated income (deficit)
    
    
    (185,667
    )
    
    
    765,518Total members equity
    
    
    66,594,997
    
    
    
    69,924,533Total Liabilities and Members Equity
    
    $
    160,328,252
    
    
    $
    143,424,959
   36




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CARDINAL ETHANOL, LLC
  Year Ended
    
    
    Year EndedSeptember 30, 2009
    
    
    September 30, 2008Revenues
    
    $
    167,738,057
    
    
    $
    Cost of Goods SoldCost of goods sold
    
    
    159,079,141
    
    
    
    Lower of cost or market adjustment
    
    
    1,595,476
    
    
    
    Total
    
    
    160,674,617
    
    
    
    Gross Profit
    
    
    7,063,440
    
    
    
    Operating ExpensesProfessional fees
    
    
    757,950
    
    
    
    363,768General and administrative
    
    
    2,968,101
    
    
    
    902,600Total
    
    
    3,726,051
    
    
    
    1,266,368Operating Income (Loss)
    
    
    3,337,389
    
    
    
    (1,266,368
    )Other Income (Expense)Grant income
    
    
    24,702
    
    
    
    143,862Interest and dividend income
    
    
    2,654
    
    
    
    108,440Interest expense
    
    
    (4,345,390
    )
    
    
    Miscellaneous income
    
    
    29,460
    
    
    
    5,812Total
    
    
    (4,288,574
    )
    
    
    258,114Net Loss
    
    $
    (951,185
    )
    
    $
    (1,008,254
    )Weighted Average Units Outstanding 
basic and diluted
    
    
    14,606
    
    
    
    14,606Net Loss Per Unit  basic and diluted
    
    $
    (65.12
    )
    
    $
    (69.03
    )
   37




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CARDINAL ETHANOL, LLC
  AccumulatedAccumulated
    
    
    OtherMember
    
    
    Income
    
    
    ComprehensiveContributions
    
    
    (Deficit)
    
    
    LossBalance  October 1, 2007
    
    
    70,912,213
    
    
    
    1,773,772
    
    
    
    (222,506
    )Comprehensive lossNet loss for year ended September 30, 2008
    
    
    
    
    
    
    (1,008,254
    )
    
    
    Other comprehensive lossUnrealized loss on derivative contracts, net
    
    
    
    
    
    
    
    
    
    
    (1,530,692
    )Balance  September 30, 2008
    
    
    70,912,213
    
    
    
    765,518
    
    
    
    (1,753,198
    )Comprehensive incomeNet loss for year ended September 30, 2009
    
    
    
    
    
    
    (951,185
    )
    
    
    Other comprehensive incomeUnrealized loss on derivative contracts, net
    
    
    
    
    
    
    
    
    
    
    (2,378,351
    )Balance  September 30, 2009
    
    $
    70,912,213
    
    
    $
    (185,667
    )
    
    $
    (4,131,549
    )
   38




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CARDINAL ETHANOL, LLC
  Year Ended
    
    
    Year EndedSeptember 30, 2009
    
    
    September 30, 2008Cash Flows from Operating ActivitiesNet loss
    
    $
    (951,185
    )
    
    $
    (1,008,254
    )Adjustments to reconcile net loss to net cash from operations:Depreciation and amortization
    
    
    8,099,316
    
    
    
    33,077Change in fair value of derivative instruments
    
    
    (3,072,937
    )
    
    
    Loss on sale of fixed asset
    
    
    
    
    
    
    1,472Lower of cost or market adjustments to inventory
    
    
    1,595,476Change in assets and liabilities:Trade accounts receivables
    
    
    (5,945,146
    )
    
    
    Miscellaneous receivable
    
    
    (994,479
    )
    
    
    (22,460
    )Interest receivable
    
    
    
    
    
    
    21,618Inventories
    
    
    (7,386,778
    )
    
    
    Prepaid and other current assets
    
    
    (789,048
    )
    
    
    (37,924
    )Deposits
    
    
    322,563
    
    
    
    (1,097,450
    )Derivative instruments
    
    
    2,937,925
    
    
    
    Accounts payable
    
    
    1,153,663
    
    
    
    141,822Accounts payable-corn
    
    
    1,556,398
    
    
    
    Accrued expenses
    
    
    1,229,356
    
    
    
    73,744Net cash used in operating activities
    
    
    (2,244,876
    )
    
    
    (1,894,355
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (912,507
    )
    
    
    (846,152
    )Payments for construction in process
    
    
    (13,019,182
    )
    
    
    (79,043,000
    )Proceeds from investments, net
    
    
    
    
    
    
    20,600,000Net cash used in investing activities
    
    
    (13,931,689
    )
    
    
    (59,289,152
    )Cash Flows from Financing ActivitiesPayments for financing costs
    
    
    (24,744
    )
    
    
    (112,399
    )Payments for capital lease obligations
    
    
    (7,245
    )
    
    
    Proceeds from long-term debt
    
    
    24,806,928
    
    
    
    61,117,940Payments on long-term debt
    
    
    (1,794,784
    )
    
    
    Net cash provided by financing activities
    
    
    22,980,155
    
    
    
    61,005,541Net Increase (Decrease) in Cash
    
    
    6,803,590
    
    
    
    (177,966
    )Cash  Beginning of Period
    
    
    461,535
    
    
    
    639,501Cash  End of Period
    
    $
    7,265,125
    
    
    $
    461,535Supplemental Cash Flow InformationInterest paid, net of $387,167 and $1,533,995 capitalized, respectively
    
    $
    2,874,893
    
    
    $
    Supplemental Disclosure of Noncash Investing and Financing ActivitiesConstruction costs in construction retainage and accounts payable
    
    $
    351,700
    
    
    $
    9,429,538Interest paid by debt financing
    
    
    
    
    
    
    675,132Financing costs in accounts payable
    
    
    
    
    
    
    12,000Loss on derivative instruments included in other comprehensive income
    
    
    (2,378,351
    )
    
    
    (1,530,692
    )Accrued interest capitalized in construction in process
    
    
    
    
    
    
    214,785Amortization of financing costs capitalized
    
    
    17,243
    
    
    
    56,699Assets acquired through capital lease obligations
    
    
    
    
    
    
    31,889
   39




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##### Table of Contents



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash
  Accounts Receivable
   Inventories
   40




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Property and Equipment
  Land improvements
    
    15-20 yearsOffice building
    
    10-40 yearsOffice equipment
    
    5 yearsPlant and process equipment
    
    10-40 years
  Long-Lived Assets
   Financing Costs
   41




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Grants
  Revenue Recognition
   Derivative Instruments
     Fair Value of Financial Instruments
   42




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##### Table of Contents



Capitalization of interest
  Environmental Liabilities
  Net Loss per Unit
  Income Taxes
   43




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Adoption of New Accounting Pronouncements
   Subsequent Events
  2. CONCENTRATIONS
  3. INCOME TAXES
  2009
    
    
    2008Financial statement basis of assets
    
    $
    160,328,252
    
    
    $
    143,424,959Organization and start-up costs
    
    
    1,976,610
    
    
    
    1,720,109Book to tax depreciation and amortization
    
    
    (25,874,665
    )
    
    
    (16,675
    )Book to tax derivative instruments
    
    
    (135,012
    )
    
    
    Income tax basis of assets
    
    $
    136,295,185
    
    
    $
    145,128,393Financial statement basis of liabilities
    
    $
    93,733,255
    
    
    $
    73,500,426Interest rate swap
    
    
    (4,131,549
    )
    
    
    (1,753,198
    )Income tax basis of liabilities
    
    $
    89,601,706
    
    
    $
    71,747,228
  44




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##### Table of Contents



4. MEMBERS EQUITY
  5. INVENTORIES
  Raw materials
    
    $
    1,806,167Work in progress
    
    
    1,348,451Finished goods
    
    
    2,021,267Spare parts
    
    
    615,417Total
    
    $
    5,791,302
   6. DERIVATIVE INSTRUMENTS
  Commodity Contracts
    45




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##### Table of Contents



Interest Rate Contract
     Instrument
    
    Balance Sheet Location
    
    Assets
    
    
    LiabilitiesInterest rate swap
    
    Derivative Instruments  Current
    
    $
    
    
    
    $
    861,569Interest rate swap
    
    Derivative Instruments  Long Term
    
    
    
    
    
    
    3,269,980Corn contracts
    
    Derivative Instruments  Current
    
    
    135,012
    
    
    
    
  Amount of
    
    
    
    
    Amount of
    
    
    
    
    Amount ofLoss
    
    
    Location of
    
    Loss Reclassified
    
    
    
    
    LossRecognized
    
    
    Loss
    
    From Accumulated
    
    
    
    
    RecognizedIn OCI on
    
    
    Reclassified
    
    OCI into
    
    
    
    
    in Income onDerivative   for
    
    
    From
    
    Income on Derivative 
    
    
    Location of
    
    DerivativeYear ended
    
    
    Accumulated
    
    Year ended
    
    
    Loss
    
    Year endedSeptember 30,
    
    
    OCI into
    
    September 30,
    
    
    Recognized
    
    September 30,2009
    
    
    Income
    
    2009
    
    
    in Income
    
    2009Interest rate swaps
    
    $
    2,378,351
    
    
    Interest expense
    
    $
    229,047
    
    
    Interest expense
    
    $
    661,494Total
    
    $
    2,378,351
    
    
    
    
    $
    229,047
    
    
    
    
    $
    661,494
 Statement of Operations
    
    Year ended September 30,Location
    
    2009Commodity contracts
    
    Cost of Goods Sold
    
    $
    3,072,937
  46




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7. FAIR VALUE MEASUREMENTS
  
    
    Level 1 inputs are quoted prices in active markets for identical assets or liabilities
as of the reporting date. Active markets are those in which transactions for the asset or
liability occur with sufficient frequency and volume to provide pricing information on an
ongoing basis.
 
    
    Level 2 inputs include the following:
 
    
    Quoted prices in active markets for similar assets or liabilities.
 
    
    Quoted prices in markets that are not active for identical or similar assets or liabilities.
 
    
    Inputs other than quoted prices that are observable for the asset or liability.
 
    
    Inputs that are derived primarily from or corroborated by observable
market data by correlation or other means.
 
    
    Level 3 inputs are unobservable inputs for the asset or liability.
  Fair Value Measurement UsingCarrying Amount
    
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest rate swap
liability
    
    $
    4,131,549
    
    
    $
    4,131,549
    
    
    $
    
    
    
    $
    4,131,549
    
    
    $
    Commodity derivative
instruments
    
    
    135,012
    
    
    
    135,012
    
    
    
    135,012
    
    
    
    
    
    
    
    
  8. BANK FINANCING
  Line of Credit
   47




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Fixed Rate Note
   Variable Rate Note and Long Term Revolving Note
  Corn Oil Extraction Note
  Letters of Credit
    48




---



##### Table of Contents



Fixed rate loan
    
    $
    40,816,864Variable rate loan
    
    
    30,728,352Revolving loan
    
    
    9,750,000Corn oil extraction note
    
    
    3,510,000Capital lease obligation (note 9)
    
    
    24,644Totals
    
    
    84,829,860Less amounts due within one year
    
    
    (7,402,860
    )Net long-term debt
    
    $
    77,427,000
  2010
    
    $
    7,402,8602011
    
    
    7,872,4772012
    
    
    8,365,3502013
    
    
    8,893,1022014
    
    
    52,296,071Total long-term debt
    
    $
    84,829,860
 9. LEASES
     Capital
    
    
    Operating
    
    
    Total2010
    
    $
    8,184
    
    
    $
    1,084,800
    
    
    $
    1,092,9842011
    
    
    8,928
    
    
    
    1,084,800
    
    
    
    1,093,7282012
    
    
    8,928
    
    
    
    1,084,800
    
    
    
    1,093,7282013
    
    
    744
    
    
    
    1,068,500
    
    
    
    1,069,2442014
    
    
    
    
    
    
    90,094
    
    
    
    90,094Total minimum lease commitments
    
    
    26,784
    
    
    
    4,412,994
    
    
    
    4,439,778Less interest
    
    
    (2,140
    )
    
    
    
    
    
    
    (2,140
    )Present value of minimum lease payments
    
    $
    24,644
    
    
    $
    4,412,994
    
    
    $
    4,437,638
  49




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##### Table of Contents



10. COMMITMENTS AND CONTINGENCIES
 Plant Construction Contract
     Corn Procurement
  Marketing Agreement
   50




---



##### Table of Contents



Utility Agreement
    Software License Agreement
  Development Agreement
  Tax abatement
   51




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##### Table of Contents



Legal Proceedings
  11. EMPLOYEE BENEFIT PLAN
  12. ACCUMULATED OTHER COMPREHENSIVE LOSS AND COMPREHENSIVE LOSS
  2009
    
    
    2008Balance at beginning of year
    
    $
    (1,753,198
    )
    
    $
    (222,506
    )Unrealized loss on derivative instruments
    
    
    (2,378,351
    )
    
    
    (1,530,692
    )Balance at end of year
    
    $
    (4,131,549
    )
    
    $
    (1,753,198
    )
  2009
    
    
    2008Net loss
    
    $
    (951,185
    )
    
    $
    (1,008,254
    )Interest rate swap fair value change
    
    
    (2,378,351
    )
    
    
    (1,530,692
    )Comprehensive loss
    
    $
    (3,329,536
    )
    
    $
    (2,538,946
    )
 13. UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS
    52




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53




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A(T).
    
    CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
    Managements Annual Report on Internal Control over Financial Reporting
    54




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
 
 
  
    55




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B.
    
    OTHER INFORMATION.
  
 PART III
  
 ITEM 10.  DIRECTORS; EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION.
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   56




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##### Table of Contents



ITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.1
    
    
    Fixed Rate Note between First National Bank of
Omaha and Cardinal Ethanol, LLC dated April 8,
2009.
    
    
    110.2
    
    
    Long Term Revolving Note between First National
Bank of Omaha and Cardinal Ethanol, LLC dated April
8, 2009.
    
    
    110.3
    
    
    Variable Rate Note between First National Bank of
Omaha and Cardinal Ethanol, LLC dated April 8,
2009.
    
    
    110.4
    
    
    Corn Oil Extraction Term Note between First
National Bank of Omaha and Cardinal Ethanol, LLC
dated April 8, 2009.
    
    
    110.5
    
    

Amendment
No 1 to Ethanol Purchase and Sale Agreement between Murex N.A., LTD
and Cardinal Ethanol, LLC dated July 2, 2009.
    
    
    210.6
    
    

Results
Guarantee Agreement between Pavilion Technologies and Cardinal Ethanol, LLC
dated September 30, 2009.
    
    
    *31.1
    
    
    Certificate pursuant to 17 CFR 240 15d-14(a)
    
    
    *31.2
    
    
    Certificate pursuant to 17 CFR 240 15d-14(a)
    
    
    *32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    
    *32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350
    
    
    *
 
 (*)
    
    Filed herewith.(1)
    
    Incorporated by reference as filed on Form 10-Q filed with the SEC on May 20, 2009.(2)
    
    Incorporated by reference as
filed on Form 8-K filed with the SEC on July 7, 2009 as exhibit
99.1. 
 SIGNATURES
  CARDINAL ETHANOL, LLCDate:      December 28, 2009
    /s/ Jeff PainterJeff PainterChief Executive Officer
(Principal Executive Officer)Date:      December 28, 2009
    /s/ Dale SchwietermanDale SchwietermanChief Financial Officer

(Principal Financial and Accounting Officer)  57




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Date:          December 28, 2009
    /s/ Troy PrescottTroy PrescottChairman and DirectorDate:          December 28, 2009
    /s/ Dale SchwietermanDale SchwietermanTreasurer  and DirectorDate: December 28, 2009
    /s/ Tom ChalfantTom ChalfantSecretary and DirectorDate:          December 28, 2009
    /s/ Robert DavisRobert Davis,Vice Chairman and DirectorDate:          December 28, 2009
    /s/ Ralph BrumbaughRalph Brumbaugh, DirectorDate: December 28, 2009
    /s/ Thomas C. ChronisterThomas C. Chronister, DirectorDate:          December 28, 2009
    /s/ Everett Leon HartEverett Leon Hart, DirectorDate:          December 28, 2009
    /s/ Cyril G. LeFevreCyril G. LeFevre, DirectorDate:          December 28, 2009
    /s/ C. Allan RosarC. Allan Rosar, DirectorDate:          December 28, 2009
    /s/ Lawrence A. LagowskiLawrence A. Lagowski, DirectorDate:          December 28, 2009
    /s/ Robert BakerRobert Baker, Director  58