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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-KSB
 
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended September 30, 2007
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 333-131749
 CARDINAL ETHANOL, LLC
  Indiana
(State or other jurisdiction of 
incorporation or organization)
    
    20-2327916
(I.R.S. Employer Identification No.)2 OMCO Square, Suite 201, Winchester, IN
    
    47394(Address of principal executive offices)
    
    (Zip Code)
 (765) 584-2209
  None
  None
 þ o
 þ
 o þ
 None
   o þ




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##### 



Table of Contents
 PART I
    
    
    3ITEM 1. DESCRIPTION OF BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    21ITEM 2. DESCRIPTION OF PROPERTY
    
    
    31ITEM 3. LEGAL PROCEEDINGS
    
    
    31ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    31PART II
    
    
    32ITEM 5. MARKET FOR COMMON EQUITY AND RELATED MEMBER MATTERS
    
    
    32ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    33ITEM 7. FINANCIAL STATEMENTS
    
    
    45ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    56ITEM 8A. CONTROLS AND PROCEDURES
    
    
    56ITEM 8B. OTHER INFORMATION
    
    
    56PART III
    
    
    56ITEM 9. DIRECTORS; EXECUTIVE OFFICERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
    
    
    56ITEM 10. EXECUTIVE COMPENSATION
    
    
    63ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS
    
    
    64ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    67ITEM 13. EXHIBITS
    
    
    69ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    70SIGNATURES
    
    
    70Exhibit 10.36Exhibit 10.37Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 Business Development
        3




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See Distribution of Principal Products.
   Principal Products and Markets
  Ethanol
    Distillers Grains
   4




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Local Ethanol and Distillers Grains Markets
 Distribution of Principal Products
  Regional Ethanol Markets
  National Ethanol Markets
     5




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Distribution of Principal Products
  Ethanol Distribution
  Distillers Grains Distribution
   6




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New Products and Services
  Federal Ethanol Supports and Governmental Regulation
 Federal Ethanol Supports
  th
     7




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8




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Effect of Governmental Regulation
    9




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Competition
      10




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most
 U.S. FUEL ETHANOL BIOREFINERIES AND PRODUCTION CAPACITY
million gallons per year (mmgy)
 UnderConstruction/Current Capacity
    
    ExpansionsCOMPANY
    
    LOCATION
    
    FEEDSTOCK
    
    (mmgy)
    
    (mmgy)Abengoa Bioenergy Corp.
    
    York, NE
    
    Corn/milo
    
    55Colwich, KS
    
    
    
    25Portales, NM
    
    
    
    30Ravenna, NE
    
    
    
    88Aberdeen Energy*
    
    Mina, SD
    
    Corn
    
    
    
    100Absolute Energy, LLC*
    
    St. Ansgar, IA
    
    Corn
    
    
    
    100ACE Ethanol, LLC
    
    Stanley, WI
    
    Corn
    
    41Adkins Energy, LLC*
    
    Lena, IL
    
    Corn
    
    40Advanced Bioenergy
    
    Fairmont, NE
    
    Corn
    
    
    
    100AGP*
    
    Hastings, NE
    
    Corn
    
    52Agri-Energy, LLC*
    
    Luverne, MN
    
    Corn
    
    21Al-Corn Clean Fuel*
    
    Claremont, MN
    
    Corn
    
    35
    
    15Amaizing Energy, LLC*
    
    Denison, IA
    
    Corn
    
    40Archer Daniels Midland
    
    Decatur, IL
    
    Corn
    
    1,070
    
    550Cedar Rapids, IA
    
    CornClinton, IA
    
    CornColumbus, NE
    
    CornMarshall, MN
    
    CornPeoria, IL
    
    CornWallhalla, ND
    
    Corn/barleyAkralon Energy, LLC
    
    Liberal, KS
    
    Corn
    
    
    
    110Aventine Renewable Energy, Inc.
    
    Pekin, IL
    
    Corn
    
    207
    
    226Aurora, NE
    
    CornMt. Vernon, IN
    
    CornBadger State Ethanol, LLC*
    
    Monroe, WI
    
    Corn
    
    48Big River Resources, LLC *
    
    West Burlington, IA
    
    Corn
    
    52BioFuel Energy-PioneerTrail Energy
    
    Wood River, NE
    
    Corn
    
    
    
    115LLCBioFuel Energy  Buffal Lake Energy
    
    Fairmont, MN
    
    Corn
    
    
    
    115LLCBlue Flint Ethanol
    
    Underwood, ND
    
    Corn
    
    50Bonanza Energy, LLC
    
    Garden City, KS
    
    Corn/milo
    
    
    
    55Bushmills Ethanol, Inc.*
    
    Atwater, MN
    
    Corn
    
    40Cardinal Ethanol
    
    Harrisville, IN
    
    Corn
    
    
    
    100Cargill, Inc.
    
    Blair, NE
    
    Corn
    
    85Eddyville, IA
    
    Corn
    
    35Cascade Grain
    
    Clatskanie, OR
    
    Corn
    
    
    
    108CassCo Amaizing Energy, LLC
    
    Atlantic, IA
    
    Corn
    
    
    
    110Castle Rock Renewable Fuels, LLC
    
    Necedah, WI
    
    Corn
    
    
    
    50Celunol
    
    Jennings, LA
    
    Sugar cane bagasse
    
    
    
    1.5Center Ethanol Company
    
    Sauget, IL
    
    Corn
    
    
    
    54Central Indiana Ethanol, LLC
    
    Marion, IN
    
    Corn
    
    40Central Illinois Energy, LLC
    
    Canton, IL
    
    Corn
    
    
    
    37
  11




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UnderConstruction/Current Capacity
    
    ExpansionsCOMPANY
    
    LOCATION
    
    FEEDSTOCK
    
    (mmgy)
    
    (mmgy)Central MN Ethanol Coop*
    
    Little Falls, MN
    
    Corn
    
    21.5Chief Ethanol
    
    Hastings, NE
    
    Corn
    
    62Chippewa Valley Ethanol Co.*
    
    Benson, MN
    
    Corn
    
    45Cilion Ethanol
    
    Keyes, CA
    
    Corn
    
    50Commonwealth Agri-Energy, LLC*
    
    Hopkinsville, KY
    
    Corn
    
    33Corn, LP*
    
    Goldfield, IA
    
    Corn
    
    50Cornhusker Energy Lexington, LLC
    
    Lexington, NE
    
    Corn
    
    40Corn Plus, LLP*
    
    Winnebago, MN
    
    Corn
    
    44Coshoctan Ethanol, OH
    
    Coshoctan, OH
    
    Corn
    
    
    
    60Dakota Ethanol, LLC*
    
    Wentworth, SD
    
    Corn
    
    50DENCO, LLC*
    
    Morris, MN
    
    Corn
    
    21.5E Energy Adams, LLC
    
    Adams, NE
    
    Corn
    
    
    
    50E3 Biofuels
    
    Mead, NE
    
    Corn
    
    24E Caruso (Goodland Energy Center)
    
    Goodland, KS
    
    Corn
    
    
    
    20East Kansas Agri-Energy, LLC*
    
    Garnett, KS
    
    Corn
    
    35Elkhorn Valley Ethanol, LLC
    
    Norfolk, NE
    
    Corn
    
    40ESE Alcohol Inc.
    
    Leoti, KS
    
    Seed corn
    
    1.5Ethanol Grain Processors, LLC
    
    Obion, TN
    
    Corn
    
    
    
    100First United Ethanol, LLC
    
    Mitchell Co., GA
    
    Corn
    
    
    
    100Front Range Energy, LLC
    
    Windsor, CO
    
    Corn
    
    40Gateway Ethanol
    
    Pratt, KS
    
    Corn
    
    
    
    55Glacial Lakes Energy, LLC*
    
    Watertown, SD
    
    Corn
    
    50
    
    50Global
Ethanol/Midwest Grain Processors
    
    Lakota, IA
    
    Corn
    
    95Riga, MI
    
    Corn
    
    57Golden Cheese Company of California*
    
    Corona, CA
    
    Cheese whey
    
    5Golden Grain Energy L.L.C.*
    
    Mason City, IA
    
    Corn
    
    110
    
    50Golden Triangle Energy, LLC*
    
    Craig, MO
    
    Corn
    
    20Grand River Distribution
    
    Cambria, WI
    
    Corn
    
    
    
    40Grain Processing Corp.
    
    Muscatine, IA
    
    Corn
    
    20Granite Falls Energy, LLC
    
    Granite Falls, MN
    
    Corn
    
    52Greater Ohio Ethanol, LLC
    
    Lima, OH
    
    Corn
    
    
    
    54Green Plains Renewable Energy
    
    Shenandoah, IA
    
    Corn
    
    50Superior, IA
    
    Corn
    
    
    
    50Hawkeye Renewables, LLC
    
    Iowa Falls, IA
    
    Corn
    
    105Fairbank, IA
    
    Corn
    
    115Menlo, IA
    
    Corn
    
    
    
    100Shell Rock, IA
    
    Corn
    
    
    
    110Heartland Corn Products*
    
    Winthrop, MN
    
    Corn
    
    100Heartland Grain Fuels, LP*
    
    Aberdeen, SD
    
    Corn
    
    9Huron, SD
    
    Corn
    
    12
    
    18Heron Lake BioEnergy, LLC
    
    Heron Lake, MN
    
    Corn
    
    
    
    50Holt County Ethanol
    
    O'Neill, NE
    
    Corn
    
    
    
    100Husker Ag, LLC*
    
    Plainview, NE
    
    Corn
    
    26.5Idaho Ethanol Processing
    
    Caldwell, ID
    
    Potato Waste
    
    4Illinois River Energy, LLC
    
    Rochelle, IL
    
    Corn
    
    50Indiana Bio-Energy
    
    Bluffton, IN
    
    Corn
    
    
    
    101Iroquois Bio-Energy Company, LLC
    
    Rensselaer, IN
    
    Corn
    
    40KAAPA Ethanol, LLC*
    
    Minden, NE
    
    Corn
    
    40Kansas Ethanol, LLC
    
    Lyons, KS
    
    Corn
    
    
    
    55Land O Lakes*
    
    Melrose, MN
    
    Cheese whey
    
    2.6Levelland/Hockley County Ethanol, LLC
    
    Levelland, TX
    
    Corn
    
    
    
    40Lifeline Foods, LLC
    
    St. Joseph, MO
    
    Corn
    
    40Lincolnland Agri-Energy, LLC*
    
    Palestine, IL
    
    Corn
    
    48
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UnderConstruction/Current Capacity
    
    ExpansionsCOMPANY
    
    LOCATION
    
    FEEDSTOCK
    
    (mmgy)
    
    (mmgy)Lincolnway Energy, LLC*
    
    Nevada, IA
    
    Corn
    
    50Little Sioux Corn Processors, LP*
    
    Marcus, IA
    
    Corn
    
    52Marquis Energy, LLC
    
    Hennepin, IL
    
    Corn
    
    
    
    100Marysville Ethanol, LLC
    
    Marysville, MI
    
    Corn
    
    
    
    50Merrick & Company
    
    Golden, CO
    
    Waste beer
    
    3MGP Ingredients, Inc.
    
    Pekin, IL
    
    Corn/wheat starch
    
    78Atchison, KSMid America Agri Products/Wheatland
    
    Madrid, NE
    
    Corn
    
    
    
    44Mid-Missouri Energy, Inc.*
    
    Malta Bend, MO
    
    Corn
    
    45Midwest Renewable Energy, LLC
    
    Sutherland, NE
    
    Corn
    
    25Millennium Ethanol
    
    Marion, SD
    
    Corn
    
    
    
    100Minnesota Energy*
    
    Buffalo Lake, MN
    
    Corn
    
    18NEDAK Ethanol
    
    Atkinson, NE
    
    Corn
    
    
    
    44New Energy Corp.
    
    South Bend, IN
    
    Corn
    
    102North Country Ethanol, LLC*
    
    Rosholt, SD
    
    Corn
    
    20Northeast Biofuels
    
    Volney, NY
    
    Corn
    
    
    
    114Northwest Renewable, LLC
    
    Longview, WA
    
    Corn
    
    
    
    55Otter Tail Ag Enterprises
    
    Fergus Falls, MN
    
    Corn
    
    
    
    57.5Pacific Ethanol
    
    Madera, CA
    
    Corn
    
    35Boardman, OR
    
    Corn
    
    35Burley, ID
    
    Corn
    
    
    
    50Stockton, CA
    
    Corn
    
    
    
    50Imperial, CA
    
    Corn
    
    
    
    50Panda Ethanol
    
    Hereford, TX
    
    Corn/milo
    
    
    
    115Parallel Products
    
    Louisville, KY
    
    Beverage Waste
    
    5.4R. Cucamonga, CAPatriot Renewable Fuels, LLC
    
    Annawan, IL
    
    Corn
    
    
    
    100Penford Products
    
    Ceder Rapids, IA
    
    Corn
    
    
    
    45Permeate Refining
    
    Hopkinton, IA
    
    Sugars & starches
    
    1.5Phoenix Biofuels
    
    Goshen, CA
    
    Corn
    
    25Pinal Energy, LLC
    
    Maricopa, AZ
    
    Corn
    
    55Pine Lake Corn Processors, LLC*
    
    Steamboat Rock, IA
    
    Corn
    
    20Plainview BioEnergy, LLC
    
    Plainview, TX
    
    Corn
    
    
    
    100Platinum Ethanol, LLC
    
    Arthur, IA
    
    Corn
    
    
    
    110Plymouth Ethanol, LLC
    
    Merrill, IA
    
    Corn
    
    
    
    50POET
    
    Sioux Falls, SD
    
    
    
    1,100
    
    375Alexandria, IN
    
    Corn
    
    
    
    #Ashton, IA
    
    CornBig Stone, SD
    
    CornBingham Lake, MN
    
    CornCaro, MI
    
    CornChancellor, SD
    
    CornCoon Rapids, IA
    
    CornCorning, IA
    
    CornEmmetsburg, IA
    
    CornFostoria, OH
    
    Corn
    
    
    
    #Glenville, MN
    
    CornGowrie, IA
    
    CornGroton, SD
    
    CornHanlontown, IA
    
    CornHudson, SD
    
    CornJewell, IA
    
    CornLaddonia, MO
    
    Corn
  13




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UnderConstruction/Current Capacity
    
    ExpansionsCOMPANY
    
    LOCATION
    
    FEEDSTOCK
    
    (mmgy)
    
    (mmgy)Lake Crystal, MN
    
    CornLeipsic, OH
    
    Corn
    
    
    
    #Macon, MO
    
    CornMarion, OH
    
    Corn
    
    
    
    #Mitchell, SD
    
    CornNorth Manchester, IN
    
    Corn
    
    
    
    #Portland, IN
    
    CornPreston, MN
    
    CornScotland, SD
    
    CornPrairie Horizon Agri-Energy, LLC
    
    Phillipsburg, KS
    
    Corn
    
    40Quad-County Corn Processors*
    
    Galva, IA
    
    Corn
    
    27Red Trail Energy, LLC
    
    Richardton, ND
    
    Corn
    
    50Redfield Energy, Inc.
    
    Redfield, SD
    
    Corn
    
    50Reeve Agri-Energy
    
    Garden City, KS
    
    Corn/milo
    
    12Renew Energy
    
    Jefferson Junction, WI
    
    Corn
    
    
    
    130Siouxland Energy & Livestock Coop*
    
    Sioux Center, IA
    
    Corn
    
    25
    
    35Siouxland Ethanol, LLC
    
    Jackson, NE
    
    Corn
    
    50Southwest Iowa Renewable Energy, LLC*
    
    Council Bluffs, IA
    
    Corn
    
    
    
    110Sterling Ethanol, LLC
    
    Sterling, CO
    
    Corn
    
    42Tate & Lyle
    
    Loudon, TN
    
    Corn
    
    67
    
    38Ft. Dodge, IA
    
    Corn
    
    
    
    105The Andersons Albion Ethanol LLC
    
    Albion, MI
    
    Corn
    
    55The Andersons Clymers Ethanol, LLC
    
    Clymers, IN
    
    Corn
    
    110The Andersons Marathon Ethanol, LLC
    
    Greenville, OH
    
    Corn
    
    
    
    110Tharaldson Ethanol
    
    Casselton, ND
    
    Corn
    
    
    
    110Trenton Agri Products, LLC
    
    Trenton, NE
    
    Corn
    
    40United Ethanol
    
    Milton, WI
    
    Corn
    
    52United WI Grain Producers, LLC*
    
    Friesland, WI
    
    Corn
    
    49US BioEnergy Corp.
    
    Albert City, IA
    
    Corn
    
    300
    
    400Woodbury, MI
    
    CornHankinson, ND
    
    Corn
    
    
    
    #Central City, NE
    
    Corn
    
    
    
    #Ord, NE
    
    CornDyersville, IA
    
    Corn
    
    
    
    #Janesville, MN
    
    Corn
    
    
    
    #Marion, SD
    
    CornU.S. Energy Partners, LLC (White Energy)
    
    Russell, KS
    
    Milo/wheat starch
    
    48Utica Energy, LLC
    
    Oshkosh, WI
    
    Corn
    
    48VeraSun Energy Corporation
    
    Aurora, SD
    
    Corn
    
    560
    
    330Albion, NE
    
    CornCharles City, IA
    
    CornLinden, IN
    
    CornWelcome, MN
    
    Corn
    
    
    
    #Hartely, IA
    
    Corn
    
    
    
    #Bloomingburg, OH
    
    Corn
    
    
    
    #Western New York Energy, LLC
    
    Shelby, NY
    
    Corn
    
    
    
    50Western Plains Energy, LLC*
    
    Campus, KS
    
    Corn
    
    45Western Wisconsin Renewable Energy, LLC*
    
    Boyceville, WI
    
    Corn
    
    40White Energy
    
    Hereford, TX
    
    Corn/Milo
    
    
    
    100Wind Gap Farms
    
    Baconton, GA
    
    Brewery Waste
    
    0.4Renova Energy
    
    Torrington, WY
    
    Corn
    
    5
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UnderConstruction/Current Capacity
    
    ExpansionsCOMPANY
    
    LOCATION
    
    FEEDSTOCK
    
    (mmgy)
    
    (mmgy)Hyaburn, ID
    
    Corn
    
    
    
    20Xethanol BioFuels, LLC
    
    Blairstown, IA
    
    Corn
    
    5
    
    35Yuma Ethanol
    
    Yuma, CO
    
    Corn
    
    
    
    40Total Current Capacity at
131 ethanol biorefineries
    
    
    
    
    
    7,022.9Total Under Construction (72)/
Expansions (10)
    
    
    
    
    
    
    
    6,451.9Total Capacity
    
    
    
    
    
    13,474.8
 * locally-owned
    
    Renewable Fuels Association# plant under construction
    
    Updated: October 30, 2007
 Competition from Alternative Fuels
      15




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Distillers Grains Competition
   Sources and Availability of Raw Materials
 Corn Feedstock Supply
      16




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Risk Management Services
  Utilities
  Natural Gas.
  17




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Electricity.
 Water
  Research and Development
  Dependence on One or a Few Major Customers
  Costs and Effects of Compliance with Environmental Laws
  Alcohol Fuel Producers Permit.
  18




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SPCC and RMP.
  Air Permits.
 Benjamin L. Culy; John W. Parrett, & Jimmie R. Rutledge v. Indiana Department of
Environmental Management & Cardinal Ethanol, LLC
    19




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Water Permits.
       20




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Employees
     # Full-TimePosition
    
    PersonnelGeneral manager
    
    
    1Plant Manager
    
    
    1Commodities Manager
    
    
    1Controller
    
    
    1Lab Manager
    
    
    1Lab Technician
    
    
    2Secretary/Clerical
    
    
    3Shift Supervisors
    
    
    4Officer Manager
    
    
    1Maintenance Supervisor
    
    
    1Maintenance Craftsmen
    
    
    6Plant Operators
    
    
    23TOTAL
    
    
    45
 
 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.
  21




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Risks Related to Cardinal Ethanol as a Development-Stage Company
 Cardinal Ethanol has no operating history, which could result in errors in management and
operations causing a reduction in the value of your investment.
 We have little to no experience in the ethanol industry and our directors do not dedicate
their efforts to our project on a full time basis, which may affect our ability to build and
operate the ethanol plant.
 We will depend on Fagen, Inc. for expertise in beginning operations in the ethanol industry
and any loss of this relationship could cause us delay and added expense, placing us at a
competitive disadvantage.
 If we fail to finalize critical agreements, or the final agreements are unfavorable compared
to what we currently anticipate, our project may fail or be harmed in ways that significantly
reduce the value of your investment.
 Our business is not diversified.
 We have a history of losses and may not ever operate profitably.
 We will depend on decisions made by our initial board of directors until the plant is built.
  22




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We have two full-time employees, but we may not be able to hire employees capable of
effectively operating the ethanol plant, which may hinder our ability to operate profitably.
 Risks Related to Construction of the Ethanol Plant
 We depend on Fagen, Inc. and ICM, Inc. to design and build our ethanol plant and their failure
to perform could force us to abandon business, hinder our ability to operate profitably or decrease
the value of your investment.
  We may need to increase cost estimates for construction of the ethanol plant, and such
increase could result in devaluation of our units if ethanol plant construction requires additional
capital.
  Construction delays could result in delays in our ability to generate profits if our
production and sale of ethanol and its co-products are similarly delayed.
  23




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Fagen, Inc. and ICM, Inc. may have current or future commitments to design and build other
ethanol manufacturing facilities ahead of our plant and those commitments could delay construction
of our plant and our ability to generate revenues.
 Defects in plant construction could result in delays in our ability to generate revenues if
our plant does not produce ethanol and its co-products as anticipated.
 The plant site may have unknown environmental problems that could be expensive and time
consuming to correct, which may delay or halt plant construction and delay our ability to generate
revenue.
 The ethanol industry is a feedstock limited industry. An inadequate supply of corn, our
primary feedstock, could cause the price of corn to increase and threaten the viability of our
plant .
 Risks Relating to Our Business
 We have no operating history and our business may not be as successful as we anticipate.
 We expect to be heavily dependent on rail as our primary mode of transporting our product to
distribution terminals .
  24




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The expansion of domestic ethanol production in combination with state bans on Methyl Tertiary
Butyl Ether (MTBE) and/or state renewable fuels standards may place strains on destination terminal
and blender infrastructure such that our ethanol cannot be marketed and shipped to the blending
terminals that would otherwise provide us the best cost advantages .
 Our financial performance will be significantly dependent on corn and natural gas prices and
market prices for ethanol and distillers grains.
   . See Risks Relating to Our Business  We expect to engage in hedging transaction
which involve risks that can harm our business.
  25




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We expect to sell all of the ethanol we produce to Murex in accordance with an exclusive
ethanol marketing agreement.
 We expect to engage in hedging transactions which involve risks that can harm our business.
   26




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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.
 Risks Related to Ethanol Industry
 Competition from the advancement of alternative fuels may lessen the demand for ethanol and
negatively impact our profitability, which could reduce the value of your investment .
 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 and could reduce the value of
your investment
   27




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As domestic ethanol production continues to grow, ethanol supply may exceed demand causing
ethanol prices to decline .
  Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds
to air pollution, harms engines, reduces fuel efficiency, takes more energy to produce than it
contributes and leads to increased food prices which may affect the demand for ethanol and could
affect our ability to market our product .
 The inability of retailers to obtain pump certifications and availability of flex fuel
vehicles for use by consumers could prevent retailers from selling E85, which could decrease the
overall demand for ethanol.
  Competition from ethanol imported from Caribbean Basin countries may be a less expensive
alternative to our ethanol, which would cause us to lose market share and reduce the value of your
investment .
  28




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##### Table of Contents



Competition from ethanol imported from Brazil may be a less expensive alternative to our
ethanol, which would cause us to lose market share and reduce the value of your investment .
 Risks Related to Regulation and Governmental Action
 A change in government policies favorable to ethanol may cause demand for ethanol to decline,
which could reduce our ability to operate profitably .
 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 .
 Renewable Fuels Standard.
    29




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##### Table of Contents



Volumetric Ethanol Excise Tax Credit.
 Small Ethanol Producer Tax Credit.
  Changes in environmental regulations or violations of the regulations could be expensive and
reduce our profit .
 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
  30




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##### Table of Contents



ITEM 2. DESCRIPTION OF PROPERTY.
    Item 6 -
Managements Discussion and Analysis of Financial Condition and Plan of Operation.
 
 ITEM 3. LEGAL PROCEEDINGS.
 Benjamin L. Culy;
John W. Parrett, & Jimmie R. Rutledge v. Indiana Department of Environmental Management & Cardinal
Ethanol, LLC
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   31




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##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
   Item 6  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS.
  Aggregate Price of the
    
    
    
    Aggregate price of theAmount Registered
    
    amount registered
    
    Amount sold
    
    amount sold16,400
    
    $82,000,000
    
    14,038
    
    $70,190,000
  Net proceeds
    
    $
    69,576,865
    1Purchase of Land
    
    
    (2,646,989
    )Construction of Plant
    
    
    (46,923,859
    )Financing costs
    
    
    (739,167
    )Project Development
    
    
    (126,000
    )Deposit on Operating Plant Expense
    
    
    (639,000
    )Other
    
    
    (673705
    )Balance
    
    $
    17,828,145
 (1)
    
    Gross proceeds net of offering expenses of $613,135.
    32




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##### Table of Contents



ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 Forward Looking Statements
  
    
    Changes in our business strategy, capital improvements or development plans;
    
    Construction delays and technical difficulties in constructing the plant;
    
    Changes in the environmental regulations that apply to our plant site and
operations;
    
    Ability to secure marketing services;
    
    Changes in general economic conditions or the occurrence of certain events causing
an economic impact in the agriculture, oil or automobile industries;
    
    Changes in the availability and price of natural gas and corn, and the market and
price for ethanol and distillers grains;
    
    Changes in federal and/or state laws (including the elimination of any federal
and/or state ethanol tax incentives);
    
    Overcapacity within the ethanol industry;
    
    Changes and advances in ethanol production technology; and
    
    Competition from alternative fuel additives.
  Overview
   33




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Plan of Operations for the Next 12 Months
  Project Capitalization
     34




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Plant construction and start-up of plant operations
    35




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36




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##### Table of Contents




    
    Grains Area: The grain receiving tunnels are complete. The DDG silos
have been poured and the DDG storage building is complete. Foundation work for the
grain silos is complete and the slip forms are being constructed.
    
    Fermentation/Process Area: Three fermentation tanks are under roof as
well as the beer well. The remaining fermentation tanks are in various stages of
completion. Structural steel is being placed and some of the process area vessels
are set.
    
    Distillation/Evaporation Area: The eight evaporators are set in place.
Foundations and floors are complete and structural steel is being placed.
  37




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
    
    Dryer/Energy Center Area: The four drum dryers have been set. Building
foundation work is underway, including pouring of various concrete footers and
columns. The Thermal Oxidizers have been installed. Additional foundation work
and floors are poured. Work is underway for completing the wet distillers grain
area.
    
    Auxiliary: The chiller has been set. The office building foundation is
complete and structural steel is being placed. The cooling tower is being
constructed as all the concrete is poured. Construction of the fire water tank
has begun. The tank farm tanks are completed with painting currently being done.
Two stabilization ponds have been dug and the liners are waiting to be inserted as
weather allows.
  Marketing and Risk Management Agreements
    38




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##### Table of Contents



Permitting and Regulatory Activities
  Benjamin L. Culy; John W. Parrett, & Jimmie R. Rutledge v. Indiana Department of
Environmental Management & Cardinal Ethanol, LLC
   Trends and Uncertainties Impacting the Ethanol Industry and Our Future Operations
    39




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40




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##### Table of Contents



Trends and uncertainties impacting the corn and natural gas markets and our future cost of goods
sold
    41




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Technology Developments
   Liquidity and Capital Resources
 Estimated Sources of Funds
  Sources
of Funds (1)
    
    
    
    
    
    PercentOffering Proceeds (2)
    
    $
    70,190,000
    
    
    
    44.50
    %Seed Capital Proceeds (3)
    
    $
    1,360,000
    
    
    
    0.86
    %Grants(5)
    
    $
    775,000
    
    
    
    0.49
    %Interest Income
    
    $
    2,412,000
    
    
    
    1.53
    %Senior Debt Financing (4)
    
    $
    83,000,000
    
    
    
    52.62
    %Total Sources of Funds
    
    $
    157,737,000
    
    
    
    100.00
    %
 (1)
    
    The amount of senior debt financing may be adjusted depending on the amount of
grants we are able to obtain.(2)
    
    We received proceeds for approximately $70,190,000 in our registered offering and
issued 14,038 registered units to our investors.(3)
    
    We have issued a total of 496 units to our seed capital investors at a price of
$2,500.00 per unit. In addition, we have issued 72 units to our founders at a price of
$1,666.67 per unit. We have issued a total of 568 units in our two private placements in
exchange for proceeds of $1,360,000.
  42




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(4)
    
    On December 19, 2006, we closed our debt financing with First National Bank of
Omaha. Our senior credit facility is in the amount of $96,000,000, consisting of a
construction note of up to $83,000,000, a $10,000,000 revolving line of credit, up to
$3,000,000 in letters of credit.(5)
    
    In December 2005, we were awarded a $100,000 Value-Added Producer Grant from the
United States Department of Agriculture (USDA). In September 2006 we were awarded a
$300,000 Value-Added Producer Grant from the USDA which we expect to use for working
capital expenses. In addition, we have been awarded a $250,000 grant from Randolph
County and $125,000 from the city of Union City. We have also been chosen to receive
training assistance for up to $33,500 from the Skills Enhancement Fund; industrial
development infrastructure assistance for $90,000 from the Industrial Development Grant
Fund; tax credits over a ten-year period of up to $500,000 from the Economic Development
for a Growing Economy; and Indiana income tax credits over a 9 year period up to
$3,000,000 from the Hoosier Business Investment Tax Credit program. We have not yet
received any money or tax credits from these IEDC grants to date.
 Estimated Uses of Proceeds
   Percent ofUse of Proceeds
    
    Amount
    
    
    TotalPlant construction cost
    
    $
    114,640,570
    
    
    
    72.68
    %Land and development cost
    
    
    11,228,484
    
    
    
    7.12
    %Office equipment
    
    
    290,000
    
    
    
    0.18
    %Railroad
    
    
    4,500,000
    
    
    
    2.85
    %Construction management costs
    
    
    736,150
    
    
    
    0.47
    %Contingency
    
    
    1,501,249
    
    
    
    0.95
    %Rolling stock
    
    
    579,000
    
    
    
    0.37
    %Fire Protection/Water Supply
    
    
    5,695,000
    
    
    
    3.61
    %Start up costs:Financing costs
    
    
    3,744,785
    
    
    
    2.38
    %Organization costs
    
    
    637,462
    
    
    
    0.40
    %Operating costs
    
    
    1,504,300
    
    
    
    0.95
    %Pre start-up costs
    
    
    680,000
    
    
    
    0.43
    %Inventory  working capital
    
    
    5,000,000
    
    
    
    3.17
    %Inventory  corn
    
    
    3,000,000
    
    
    
    1.90
    %Inventory  chemicals and ingredients
    
    
    500,000
    
    
    
    0.32
    %Inventory  Ethanol & DDGS
    
    
    3,000,000
    
    
    
    1.90
    %Spare parts  process equipment
    
    
    500,000
    
    
    
    0.32
    %Total
    
    $
    157,737,000
    
    
    
    100.00
    %
   43




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Financial Results
   Critical Accounting Estimates
  Off-Balance Sheet Arrangements
  Employees
  DESCRIPTION OF BUSINESS -
Employees.
  44




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ITEM 7. FINANCIAL STATEMENTS.
 (BHZ LOGO)
  
     
  45




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CARDINAL ETHANOL, LLC
  September 30,ASSETS
    
    2007Current AssetsCash and cash equivalents
    
    $
    639,501Investments
    
    
    20,600,000Grant receivable
    
    
    4,540Interest receivable
    
    
    21,618Prepaid and other current assets
    
    
    19,799Total current assets
    
    
    21,285,458Property and EquipmentOffice equipment
    
    
    17,932Vehicles
    
    
    31,928Construction in process
    
    
    60,672,524Land
    
    
    2,657,48463,379,868Less accumulated depreciation
    
    
    (8,506
    )Net property and equipment
    
    
    63,371,362Other AssetsDeposits
    
    
    639,000Deferred offering costs
    
    
    Land options
    
    
    Financing costs
    
    
    788,895Total other assets
    
    
    1,427,895Total Assets
    
    $
    86,084,715
 September 30,LIABILITIES AND EQUITY
    
    2007Current LiabilitiesAccounts payable
    
    $
    7,874,839Construction retainage payable
    
    
    5,507,813Accrued expenses
    
    
    16,078Derivative instruments
    
    
    222,506Total current liabilities
    
    
    13,621,236Commitments and ContingenciesMembers EquityMembers contributions, net of cost of raising capital, 14,606 units outstanding
    
    
    70,912,213Accumulated other comprehensive loss; net unrealized
loss on derivative instruments
    
    
    (222,506
    )Income (deficit) accumulated during development stage
    
    
    1,773,772Total members equity
    
    
    72,463,479Total Liabilities and Members Equity
    
    $
    86,084,715
   46




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CARDINAL ETHANOL, LLC
  Year Ended
    
    
    Year Ended
    
    
    From Inception(February 7, 2005)September 30,
    
    
    September 30,
    
    
    to September 30,2007
    
    
    2006
    
    
    2007Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating ExpensesProfessional fees
    
    
    407,164
    
    
    
    301,475
    
    
    
    743,961General and administrative
    
    
    467,916
    
    
    
    288,247
    
    
    
    766,312Total
    
    
    875,080
    
    
    
    589,722
    
    
    
    1,510,273Operating Loss
    
    
    (875,080
    )
    
    
    (589,722
    )
    
    
    (1,510,273
    )Other IncomeGrant income
    
    
    531,138
    
    
    
    100,000
    
    
    
    631,138Interest and dividend income
    
    
    2,597,924
    
    
    
    34,809
    
    
    
    2,634,220Miscellaneous income
    
    
    1,399
    
    
    
    17,190
    
    
    
    18,687Total
    
    
    3,130,461
    
    
    
    151,999
    
    
    
    3,284,045Net Income (Loss)
    
    $
    2,255,381
    
    
    $
    (437,723
    )
    
    $
    1,773,772Weighted Average Units Outstanding
    
    
    12,026
    
    
    
    477
    
    
    
    4,741Net Income (Loss) Per Unit
    
    $
    187.54
    
    
    $
    (917.66
    )
    
    $
    374.13
   47




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CARDINAL ETHANOL, LLC
  AccumulatedOtherMember
    
    
    Retained
    
    
    Comprehensive
    
    
    ComprehensiveContributions
    
    
    Earnings
    
    
    Income (Loss)
    
    
    LossBalance  February 7, 2005 (Date of Inception)Capital contributions  72 units, $1,666.67 per unit, February
2005
    
    $
    120,000Net loss for the period from inception to September 30, 2005
    
    
    
    
    
    $
    (43,886
    )Balance  September 30, 2005
    
    
    120,000
    
    
    
    (43,886
    )
    
    
    
    
    
    
    Capital contributions  496 units,
$2,500 per unit, December 2005
    
    
    1,240,000Costs related to capital contributions
    
    
    (24,652
    )Net loss for
the year ending September 30, 2006
    
    
    
    
    
    
    (437,723
    )Balance  September 30, 2006
    
    
    1,335,348
    
    
    
    (481,609
    )
    
    
    
    
    
    
    Capital contributions 
14,014 units, $5,000 per unit,
December 2006
    
    
    70,070,000Capital contributions 
20 units, $5,000 per unit, January 2007
    
    
    100,000Capital contributions 
4 units, $5,000 per unit, February 2007
    
    
    20,000Costs related to capital contributions
    
    
    (613,135
    )Comprehensive incomeNet income
for the year ended September 30, 2007
    
    
    
    
    
    
    2,255,381
    
    
    $
    2,255,381Other comprehensive incomeUnrealized loss on derivative contracts
    
    
    
    
    
    
    
    
    
    
    (222,506
    )
    
    $
    (222,506
    )Balance  September 30, 2007
    
    $
    70,912,213
    
    
    $
    1,773,772
    
    
    $
    2,032,875
    
    
    $
    (222,506
    )
   48




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CARDINAL ETHANOL, LLC
  Year Ended
    
    
    Year Ended
    
    
    From Inception
(February 7, 2005)September 30,
    
    
    September 30,
    
    
    to September 30,2007
    
    
    2006
    
    
    2007Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    2,255,381
    
    
    $
    (437,723
    )
    
    $
    1,773,772Adjustments to reconcile net loss to net cash from operations:Depreciation
    
    
    6,601
    
    
    
    1,876
    
    
    
    8,556Loss on sale of investments
    
    
    
    
    
    
    810
    
    
    
    712Gain on sale of asset
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Unexercised land options
    
    
    
    
    
    
    16,800
    
    
    
    16,800Change in assets and liabilities:Investments
    
    
    (20,600,000
    )
    
    
    
    
    
    
    (20,600,000
    )Grant receivable
    
    
    (4,540
    )
    
    
    
    
    
    
    (4,540
    )Interest receivable
    
    
    (20,326
    )
    
    
    (1,292
    )
    
    
    (21,618
    )Prepaid expenses
    
    
    5,394
    
    
    
    (11,467
    )
    
    
    (19,799
    )Deposits
    
    
    (639,000
    )
    
    
    
    
    
    
    (639,000
    )Accounts payable
    
    
    (104,429
    )
    
    
    111,223
    
    
    
    28,301Accrued expenses
    
    
    12,222
    
    
    
    3,481
    
    
    
    16,078Net cash provided by (used in) operating activities
    
    
    (19,088,747
    )
    
    
    (316,292
    )
    
    
    (19,440,788
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (32,827
    )
    
    
    (12,937
    )
    
    
    (49,860
    )Purchase of land
    
    
    (2,647,484
    )
    
    
    
    
    
    
    (2,647,484
    )Payments for construction in process
    
    
    (47,324,173
    )
    
    
    
    
    
    
    (47,324,173
    )Payments for land options
    
    
    
    
    
    
    (26,800
    )
    
    
    (26,800
    )Proceeds from (purchases of) investments, net
    
    
    
    
    
    
    65,763
    
    
    
    (712
    )Net cash provided by (used in) investing activities
    
    
    (50,004,484
    )
    
    
    26,026
    
    
    
    (50,049,029
    )Cash Flows from Financing ActivitiesCosts related to capital contributions
    
    
    (25,209
    )
    
    
    (604,193
    )
    
    
    (637,787
    )Payments for financing costs
    
    
    (762,895
    )
    
    
    (20,000
    )
    
    
    (782,895
    )Member contributions
    
    
    70,190,000
    
    
    
    1,240,000
    
    
    
    71,550,000Net cash provided by financing activities
    
    
    69,401,896
    
    
    
    615,807
    
    
    
    70,129,318Net Increase in Cash and Cash Equivalents
    
    
    308,665
    
    
    
    325,541
    
    
    
    639,501Cash and Cash Equivalents  Beginning of Period
    
    
    330,836
    
    
    
    5,295
    
    
    
    Cash and Cash Equivalents  End of Period
    
    $
    639,501
    
    
    $
    330,836
    
    
    $
    639,501Supplemental Disclosure of Noncash Investing and Financing ActivitiesConstruction costs in construction retainage and accounts payable
    
    $
    12,008,990
    
    
    $
    
    
    
    $
    12,008,990Financing costs in accounts payable
    
    
    6,000
    
    
    
    
    
    
    
    6,000Deferred offering costs included in accounts payable
    
    
    
    
    
    
    9,051
    
    
    
    Deferred offering costs netted against members equity
    
    
    637,787
    
    
    
    
    
    
    
    637,787Land option applied to land purchase
    
    
    10,000
    
    
    
    
    
    
    
    10,000Loss on derivative instruments included in other
comprehensive income
    
    
    222,506
    
    
    
    
    
    
    
    222,506
   49




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CARDINAL ETHANOL, LLC
  1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash and Cash Equivalents
   Investments
  Property and Equipment
  Deferred Offering Costs
   50




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##### Table of Contents



CARDINAL ETHANOL, LLC
  Financing Costs
  Grants
  Derivative Instruments
   Fair Value of Financial Instruments
  Recently Issued Accounting Pronouncements
    51




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##### Table of Contents



CARDINAL ETHANOL, LLC
  2. MEMBERS EQUITY
    3. INCOME TAXES
  Financial statement basis of assets
    
    $
    86,084,715Plus: organization and start-up costs capitalized
    
    
    748,302Less: accumulated tax depreciation and amortization greater
than financial statement basis
    
    
    (3,386
    )Income tax basis of assets
    
    $
    86,829,631
  4. BANK FINANCING
     52




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CARDINAL ETHANOL, LLC
   5. COMMITMENTS AND CONTINGENCIES
 Plant Construction Contract
         53




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##### Table of Contents



CARDINAL ETHANOL, LLC
  Land Options
   Grants
   Consulting Services
  Marketing Agreements
    54




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##### Table of Contents



CARDINAL ETHANOL, LLC
  Utility Agreement
    55




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##### Table of Contents



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 8A. CONTROLS AND PROCEDURES.
   
 ITEM 8B. OTHER INFORMATION.
  
 PART III.
 
 ITEM 9. DIRECTORS; EXECUTIVE OFFICERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
 Identification of Directors, Executive Officers and Significant Employees
  Director
    
    OfficeTroy Prescott
    
    Director & Chairman/PresidentThomas Chalfant
    
    Director & Vice Chairman/Vice PresidentDale Schwieterman
    
    Director & TreasurerJeremey Jay Herlyn
    
    Director & SecretaryRobert E. Anderson
    
    DirectorLawrence Allen Baird
    
    DirectorLarry J. Barnette
    
    DirectorRalph Brumbaugh
    
    DirectorThomas C. Chronister
    
    DirectorRobert John Davis
    
    DirectorDavid Matthew Dersch
    
    DirectorG. Melvin Featherston
    
    Director
  56




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##### Table of Contents



Director
    
    OfficeJohn W. Fisher
    
    DirectorEverett Leon Hart
    
    DirectorBarry Hudson
    
    DirectorLee James Kunzman
    
    DirectorCyril George LeFevre
    
    DirectorRobert L. Morris
    
    DirectorCurtis Allan Rosar
    
    DirectorJohn N. Shanks II
    
    DirectorMichael Alan Shuter
    
    DirectorSteven John Snider
    
    DirectorJerrold Lee Voisinet
    
    DirectorAndrew J. Zawosky
    
    DirectorMatthew Sederstrom
    
    DirectorStephen L. Clark
    
    DirectorL. Marshall Roch
    
    DirectorLawrence A. Lagowski
    
    DirectorJeff Painter
    
    General Manager
 Business Experience of Directors and Officers
  Troy Prescott, Chairman/President, Director,
   Thomas E. Chalfant, Vice Chairman/Vice President, Director,
   Dale A. Schwieterman, Treasurer, Director,
   57




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##### Table of Contents



Jeremey Jay Herlyn, Secretary, Director
   Robert E. Anderson, Director, th
   Lawrence Allen Baird, Director,
   Larry J. Barnette, Director,
   Ralph E. Brumbaugh, Director,
    58




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##### Table of Contents



Thomas C. Chronister, Director,
   Robert John Davis, Director,
   David Mathews Dersch, Director
   G Melvin Featherston, Director,
   John Wesley Fisher, Director,
   59




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##### Table of Contents



Everett Leon Hart, Director,
   Barry Hudson, Director,
   Lee James Kunzman, Director
   Cyril George LeFevre, Director,
   Robert L. Morris, Director,
   60




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##### Table of Contents



Curtis Allan Rosar, Director,
   John Nelton Shanks II, Director,
   Michael Alan Shuter, Director
   Steven John Snider, Director,
    61




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##### Table of Contents



Jerrold Leo Voisinet, Director,
   Andrew Zawosky Jr. Director
   Matthew Sederstrom, Director
   Stephen L. Clark, Director
 ®
  Dr. L. Marshall Roch, II Director
   Lawrence A. Lagowski Director
   62




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##### Table of Contents



Significant Employees
   Code of Ethics
   Identification of Audit Committee
  Audit Committee Financial Expert
  
 ITEM 10. EXECUTIVE COMPENSATION.
 Compensation of Named Executive Officers and Directors
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##### Table of Contents



General Manager Employment Agreement
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
 Security Ownership of Certain Beneficial Owners
  Amount andName and Address of
    
    Nature of
    
    PercentTitle of Class
    
    Beneficial Owner
    
    Beneficial Ownership
    
    of ClassMembership Units
    
    Steven L. Clark
    
    950 units (1)
    
    6.50%1625 North GatewoodWichita, KS 67206
 (1)
    
    All units are owned by Stephen L. Clark Family Partnership, LP and Stephen L. Clark is the
sole managing member of Clark Family General, LLC which is the general partner of Stephen L. Clark
Family Partnership, LP.
 Security Ownership of Management
  (3) Amount and(2) Name and Address of
    
    Nature of
    
    (4) Percent(1) Title of Class
    
    Beneficial Owner
    
    Beneficial Ownership
    
    of ClassMembership Units
    
    Troy Prescott3780 N. 250 EastWinchester, IN 47394
    
    82 units
    
    0.56%Membership Units
    
    Thomas Chalfant12028 W. 700 NorthParker City, IN 47368
    
    57 units
    
    0.39%Membership Units
    
    Dale Schwieterman3924 CR 716 ACelina, OH 45822
    
    46 units
    
    0.31%Membership Units
    
    John N. Shanks, II349 N. 500 WestAnderson, IN 46011
    
    16 units
    
    0.11%Membership Units
    
    Robert E. Anderson5737 E. 156th StreetNoblesville, IN 46062
    
    72 units
    
    0.49%
  64




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(3) Amount and(2) Name and Address of
    
    Nature of
    
    (4) Percent(1) Title of Class
    
    Beneficial Owner
    
    Beneficial Ownership
    
    of ClassMembership Units
    
    Lawrence Allen Baird2579 S. 500 WestTipton, IN 46072
    
    48 units
    
    0.33%Membership Units
    
    Larry J. Barnette3247 N. 300 EastPortland, IN 47371
    
    26 units
    
    0.18%Membership Units
    
    Ralph BrumbaughP.O. Box 309Arcanum, OH 45304
    
    100 units
    
    0.68%Membership Units
    
    Thomas C. Chronister440 Kerr Island NorthRome City, IN 46784
    
    68 units
    
    0.47%Membership Units
    
    Robert John Davis4465 N. Co. Rd. 100 EastNew Castle, IN 47362
    
    36 units
    
    0.25%Membership Units
    
    David Matthew Dersch305 N. Greenbriar Rd.Muncie, IN 47304
    
    696 units(1)
    
    4.77%Membership Units
    
    G. Melvin Featherston14740 River Rd.Noblesville, IN 46062
    
    106 units(2)
    
    0.73%Membership Units
    
    John W. FisherP.O. Box 1408Muncie, IN 47308
    
    236 units (3)
    
    1.62%Membership Units
    
    Everett Hart(2)6934 Bradford ChildrensHome Rd.Greenville, OH 45331
    
    100 units
    
    0.68%Membership Units
    
    Jeremey Jay Herlyn841 Hidden Valley Dr.Richmond, IN 47374
    
    36 units
    
    0.25%Membership Units
    
    Barry Hudson1525 Meridian St.Portland, IN 47371
    
    66 units
    
    0.45%Membership Units
    
    Lee James Kunzman4740 Pennington Ct.Indianapolis, IN 46254
    
    20 units
    
    0.14%
  65




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(3) Amount and(2) Name and Address of
    
    Nature of
    
    (4) Percent(1) Title of Class
    
    Beneficial Owner
    
    Beneficial Ownership
    
    of ClassMembership Units
    
    Cyril George LeFevre1318 Fox Rd.Fort Recovery, OH 45846
    
    36 units
    
    0.25%Membership Units
    
    Robert L. Morris9380 W. CR 1000 S.Losantville, IN 47354
    
    32 units
    
    0.22%Membership Units
    
    Curtis Allan Rosar3587 Wernle Rd.Richmond, IN 47374
    
    416 units(4)
    
    2.85%Membership Units
    
    Michael Alan Shuter6376 N. 300 WestAnderson, IN 46011
    
    26 units
    
    0.18%Membership Units
    
    Steven John Snider7290 Langdon Rd.Yorktown, IN 47396
    
    40 units
    
    0.27%Membership Units
    
    Jerrold Lee Voisinet450 Garby Rd.Piqua, OH 45356
    
    24 units
    
    0.16%Membership Units
    
    Andrew J. Zawosky50 Celestial Way # 208Juno Beach, FL 33408
    
    120 units
    
    0.82%Membership Units
    
    Matthew Sederstrom605 Jefferson CircleMarshall, MN 56258
    
    406 units (5)
    
    2.78%Membership Units
    
    Stephen L. Clark1625 North GatewoodWichita, KS 67206
    
    950 units (6)
    
    6.50%Membership Units
    
    Dr. L. Marshall Roch, II2006 East Robinwood DriveMuncie, IN 47304
    
    500  units (7)
    
    3.42%Membership Units
    
    Lawrence A. Lagowski600 North Buffalo GroveRoad, Suite 300Buffalo Grove, IL 60089
    
    410 units(8)
    
    2.81%Membership Units
    
    All Directors and Officers as a Group
    
    4,771 units
    
    32.67%
 
 (1)
    
    Six hundred units are owned by Dersch Energy, LLC and Dr. Dersch is a principal of Dersch
Energy, LLC. Eighty units are held by the David M. Dersch IRA.(2)
    
    Sixty units are owned by Melrock Farms, LLC and G. Melvin Featherston is a principal of
Melrock Farms, LLC.(3)
    
    One hundred units are owned by Ball Brothers Foundation and 60 units are held by Fisher
Properties of Indiana, Inc. and John W. Fisher is a principal of Ball Brothers Foundation and
Fisher Properties of Indiana, Inc.
  66




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##### Table of Contents



(4)
    
    Forty units are owned by the Marian Rosar Irrevocable Trust. Forty units are owned by Rosar
Family, LP; 100 units are owned by Devco Realty; and 20 units are owned by Quad Investments.
Curtis Allan Rosar is a principal of Rosar Family, LP, Devco Realty and Quad Investments. In
addition, 10 units are owned by Naomi C. Kaeuper Revocable Living Trust.(5)
    
    Two hundred units are held by Fagen, Inc. and 200 units are held by Fagen, Energy, Inc. and
Matt Sederstrom is the representative selected by Fagen, Inc. to serve on our board of
directors.(6)
    
    All units are owned by Stephen L. Clark Family Partnership, LP and Stephen L. Clark is the
sole managing member of Clark Family General, LLC which is the general partner of Stephen L.
Clark Family Partnership, LP.(7)
    
    Four hundred units are owned by Roch Investment, LLC and 100 units are owned by L Marshall
Roch II Conversion IRA.(8)
    
    Four hundred units are owned by Indeck Energy Services, Inc. and Mr. Lagowski is the
representative selected by Indeck Energy Services, Inc. to serve on our board of directors.
 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
 Transaction with director and member Troy Prescott
   Transaction with director and member Robert Davis
   Director Independence
   67




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Audit Committee
  Compensation Committee
  Nominating Committee
   68




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ITEM 13. EXHIBITS.
  Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.29
    
    Employment Agreement dated January 22, 2007 between
Cardinal Ethanol, LLC and Jeff Painter.
    
    
    110.30
    
    Owner/Contractor Agreement dated January 25, 2006
between Cardinal Ethanol, LLC and Fleming
Excavating, Inc.
    
    
    110.31
    
    Agreement to Extend and Modify Gas Distribution
System between Ohio Valley Gas Corporation and
Cardinal Ethanol, LLC dated March 19, 2007.
    
    
    210.32
    
    Long Term Transportation Service Contract for
Redelivery of Natural Gas between Ohio Valley Gas
Corporation and Cardinal Ethanol, LLC dated March
20, 2007.
    
    
    210.33
    
    Agreement between Indiana Michigan Power Company
and Cardinal Ethanol, LLC dated April 18, 2007.
    
    
    210.34
    
    Risk Management Agreement entered into between
Cardinal Ethanol, LLC and John Stewart &
Associates, Inc. dated July 16, 2007.
    
    
    310.35
    
    Railroad Construction Contract entered into between
Cardinal Ethanol, LLC and Amtrac of Ohio, Inc.
dated July 13, 2007.
    
    
    310.36
    
    Design Build Construction Contract between Hogenson
Construction Company and Cardinal Ethanol, LLC
dated August 22, 2007.
    
    
    *10.37
    
    Consent to Assignment and Assumption of Marketing
Agreement between Commodity Specialists Company and
Cardinal Ethanol, LLC dated August 28, 2007.
    
    
    *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
    
    
    *
 
 (1)
    
    Incorporated by reference to the exhibit of the same number on our Quarterly Report on Form
10-QSB for the quarter ended December 30, 2006 and filed on February 14, 2007.(2)
    
    Incorporated by reference to the exhibit of the same number on our Quarterly Report on Form
10-QSB for the quarter ended March 31, 2007 and filed on May 15, 2007(3)
    
    Incorporated by reference to the exhibit of the same number on our Quarterly Report on Form
10-QSB for the quarter ended June 30, 2007 and filed on August 3, 2007.(*)
    
    Filed herewith.(+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission.
  69




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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  Category
    
    Year
    
    
    FeesAudit Fees(1)
    
    
    2007
    
    
    $
    85,0002006
    
    
    $
    94,000Audit-Related Fees(1)
    
    
    2007
    
    
    $2006
    
    
    $Tax Fees
    
    
    2007
    
    
    $2006
    
    
    $
    1,300All Other Fees
    
    
    2007
    
    
    $2006
    
    
    $
 (1)
    
    Audit fees consist of fees for services rendered related to the Companys fiscal year end
audits, quarterly reviews, registration statement and related amendments.
   
 SIGNATURES
  CARDINAL ETHANOL, LLCDate: December 12, 2007

/s/  Troy PrescottTroy PrescottChairman
(Principal Executive Officer)Date: December 12, 2007

/s/ Dale SchwietermanDale SchwietermanTreasurer
(Principal Financial and Accounting Officer)  CARDINAL ETHANOL, LLCDate: December 12, 2007
    /s/ Troy PrescottTroy PrescottChairman
(Principal Executive Officer)Date: December 12, 2007
    /s/ Dale SchwietermanDale SchwietermanTreasurer
(Principal Financial and Accounting Officer)  70




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##### Table of Contents



Date: December 12, 2007
    /s/ Troy PrescottTroy PrescottChairman(Principal Executive Officer)Date: December 12, 2007
    /s/ Dale SchwietermanDale SchwietermanTreasurer(Principal Financial and Accounting Officer)Date: December 12, 2007
    /s/ Tom ChalfantTom ChalfantVice Chairman, Vice President and DirectorDate: December 12, 2007
    /s/ Jeremey HerlynJeremey Herlyn, DirectorDate: December 12, 2007
    /s/ Robert E. AndersonRobert E. Anderson, DirectorDate: December 12, 2007
    /s/ Lawrence Allen BairdLawrence Allen Baird, DirectorDate: December 12, 2007
    /s/ Larry J. BarnetteLarry J. Barnette, DirectorDate: December 12, 2007
    /s/ Ralph BrumbaughRalph Brumbaugh, DirectorDate: December 12, 2007
    /s/ Thomas C. ChronisterThomas C. Chronister, DirectorDate: December 12, 2007
    /s/ Robert John DavisRobert John Davis, DirectorDate: December 12, 2007
    /s/ David Matthew DerschDavid Matthew Dersch, DirectorDate: December 12, 2007
    /s/ G. Melvin FeatherstonG. Melvin Featherston, DirectorDate: December 12, 2007
    /s/ John W. FisherJohn W. Fisher, Director  71




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##### Table of Contents



Date: December 12, 2007
    /s/ Everett Leon HartEverett Leon Hart, DirectorDate: December 12, 2007
    /s/ Cyril G. LeFevreCyril G. LeFevre, DirectorDate: December 12, 2007
    /s/ Robert L. MorrisRobert L. Morris, DirectorDate: December 12, 2007
    /s/ C. Allan RosarC. Allan Rosar, DirectorDate: December 12, 2007
    /s/ John ShanksJohn Shanks, DirectorDate: December 12, 2007
    /s/ Michael A. ShuterMichael A. Shuter, DirectorDate: December 12, 2007
    /s/ Steven J. SniderSteven J. Snider, DirectorDate: December 12, 2007
    /s/ Jerrold L. VoisinetJerrold L. Voisinet, DirectorDate: December 12, 2007
    /s/ Matthew SederstromMatthew Sederstrom, DirectorDate: December 12, 2007
    /s/ Stephen L. ClarkStephen L. Clark, DirectorDate: December 12, 2007
    /s/ Dr. L. Marshall RochDr. L. Marshall Roch, II, DirectorDate: December 12, 2007
    /s/ Lawrence A. LagowskiLawrence A. Lagowski, DirectorDate: December 12, 2007
    /s/ Lee KunzmanLee Kunzman, DirectorDate: December 12, 2007
    /a/ Andrew ZawoskyAndrew Zawosky, DirectorDate: December 12, 2007
    /s/ Barry HudsonBarry Hudson, Director  72




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Method ofNo.
    
    Description
    
    Filing10.29
    
    Employment Agreement dated January 22, 2007 between
Cardinal Ethanol, LLC and Jeff Painter.
    
    
    110.30
    
    Owner/Contractor Agreement dated January 25, 2006
between Cardinal Ethanol, LLC and Fleming
Excavating, Inc.
    
    
    110.31
    
    Agreement to Extend and Modify Gas Distribution
System between Ohio Valley Gas Corporation and
Cardinal Ethanol, LLC dated March 19, 2007.
    
    
    210.32
    
    Long Term Transportation Service Contract for
Redelivery of Natural Gas between Ohio Valley Gas
Corporation and Cardinal Ethanol, LLC dated March
20, 2007.
    
    
    210.33
    
    Agreement between Indiana Michigan Power Company
and Cardinal Ethanol, LLC dated April 18, 2007.
    
    
    210.34
    
    Risk Management Agreement entered into between
Cardinal Ethanol, LLC and John Stewart &
Associates, Inc. dated July 16, 2007.
    
    
    310.35
    
    Railroad Construction Contract entered into between
Cardinal Ethanol, LLC and Amtrac of Ohio, Inc.
dated July 13, 2007.
    
    
    310.36
    
    Design Build Construction Contract between Hogenson
Construction Company and Cardinal Ethanol, LLC
dated August 22, 2007.
    
    
    *10.37
    
    Consent to Assignment and Assumption of Marketing
Agreement between Commodity Specialists Company and
Cardinal Ethanol, LLC dated August 28, 2007.
    
    
    *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
    
    
    *
 
 (1)
    
    Incorporated by reference to the exhibit of the same number on our Quarterly Report on Form
10-QSB for the quarter ended December 30, 2006 and filed on February 14, 2007.(2)
    
    Incorporated by reference to the exhibit of the same number on our Quarterly Report on Form
10-QSB for the quarter ended March 31, 2007 and filed on May 15, 2007(3)
    
    Incorporated by reference to the exhibit of the same number on our Quarterly Report on Form
10-QSB for the quarter ended June 30, 2007 and filed on August 3, 2007.(*)
    
    Filed herewith.(+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission.
  73