##### Table of Contents



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, 2008
 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
 þ o
 þ
 o þ
 None
   o þ




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##### Table of Contents



DOCUMENTS INCORPORATED BY REFERENCE
   2




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##### 



Table of Contents
 PART I
    
    
    5ITEM 1. DESCRIPTION OF BUSINESS
    
    
    5ITEM 1A. RISK FACTORS
    
    
    21ITEM 2. DESCRIPTION OF PROPERTY
    
    
    26ITEM 3. LEGAL PROCEEDINGS
    
    
    26ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    26PART II
    
    
    26ITEM 5. MARKET FOR COMMON EQUITY, RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    26ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    27ITEM 7. FINANCIAL STATEMENTS
    
    
    38ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    52ITEM 8A(T). CONTROLS AND PROCEDURES
    
    
    52ITEM 8B. OTHER INFORMATION
    
    
    54PART III
    
    
    54ITEM 9. DIRECTORS; EXECUTIVE OFFICERS,
PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
    
    
    54ITEM 10. EXECUTIVE COMPENSATION
    
    
    54ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS
    
    
    54ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    54ITEM 13. EXHIBITS
    
    
    55ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    55SIGNATURES
    
    
    56Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   3




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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.
   4




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##### Table of Contents



AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 Business Development
     See Distribution of Principal Products.
    5




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##### Table of Contents



Principal Products and Markets
  Ethanol
    Distillers Grains
  Local Ethanol and Distillers Grains Markets
 Distribution of Principal Products
  Regional Ethanol Markets
   6




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##### Table of Contents



National Ethanol Markets
  Distribution of Principal Products
  Ethanol Distribution
  Distillers Grains Distribution
  New Products and Services
   7




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##### Table of Contents



Federal Ethanol Supports and Governmental Regulation
 Federal Ethanol Supports
  Undiffer-Biomass-
    
    
    entiatedRenewable
    
    
    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
 Source: Renewable Fuels Association    8




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##### Table of Contents



Effect of Governmental Regulation
    Competition
    9




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##### Table of Contents



10




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##### Table of Contents



most
 U.S. FUEL ETHANOL BIOREFINERIES AND PRODUCTION CAPACITY
million gallons per year (mmgy)
 Operating
    
    
    ExpansionCapacity
    
    
    Capacity
    
    
    Under ConstructionCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)
    
    
    Capacity (mgy)Abengoa Bioenergy Corp. (Total)
    
    
    
    
    
    
    168.0
    
    
    
    
    
    
    
    176.0Abengoa Bioenergy Corp.
    
    Madison, IL
    
    cornAbengoa Bioenergy Corp.
    
    Mt. Vernon, IN
    
    cornAbengoa Bioenergy Corp.
    
    Colwich, KS
    
    corn/miloAbengoa Bioenergy Corp.
    
    Ravenna, NE
    
    CornAbengoa Bioenergy Corp.
    
    York, NE
    
    CornAbsolute Energy, LLC*
    
    St. Ansgar, IA
    
    Corn
    
    
    100.0ACE Ethanol, LLC
    
    Stanley, WI
    
    Corn
    
    
    41.0Adkins Energy, LLC*
    
    Lena, IL
    
    Corn
    
    
    40.0Advanced Bioenergy
    
    Fairmont, NE
    
    Corn
    
    
    100.0Ag Energy Resources, Inc.
    
    Benton, IL
    
    corn
    
    
    
    
    
    
    
    
    
    
    5.0AGP*
    
    Hastings, NE
    
    Corn
    
    
    52.0Agri-Energy, LLC*
    
    Luverne, MN
    
    Corn
    
    
    21.0Al-Corn Clean Fuel*
    
    Claremont, MN
    
    Corn
    
    
    42.0Amaizing Energy, LLC*
    
    Atlantic, IA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    110.0Amaizing Energy, LLC*
    
    Denison, IA
    
    Corn
    
    
    48.0Archer Daniels Midland (Total)
    
    
    
    
    
    
    1,070.0
    
    
    
    550.0Archer Daniels Midland
    
    Cedar Rapids, IA
    
    CornArcher Daniels Midland
    
    Clinton, IA
    
    CornArcher Daniels Midland
    
    Decatur, IL
    
    CornArcher Daniels Midland
    
    Peoria, IL
    
    CornArcher Daniels Midland
    
    Marshall, MN
    
    CornArcher Daniels Midland
    
    Wallhalla, ND
    
    Corn/barleyArcher Daniels Midland
    
    Columbus, NE
    
    CornArkalon Energy, LLC
    
    Liberal, KS
    
    Corn
    
    
    110.0Aventine Renewable Energy, LLC
(Total)
    
    
    
    
    
    
    207.0Aventine Renewable Energy, LLC
    
    Pekin, IL
    
    CornAventine Renewable Energy, LLC
    
    Aurora, NE
    
    CornBadger State Ethanol, LLC*
    
    Monroe, WI
    
    Corn
    
    
    48.0Big River Resources, LLC*
    
    West Burlington, IA
    
    Corn
    
    
    52.0BioEnergy International
    
    Clearfield, PA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    110.0BioFuel Energy  Buffalo Lake
Energy, LLC
    
    Fairmont, MN
    
    Corn
    
    
    115.0BioFuel Energy  Pioneer Trail
Energy, LLC
    
    Wood River, NE
    
    Corn
    
    
    115.0Blue Flint Ethanol
    
    Underwood, ND
    
    Corn
    
    
    50.0Bonanza Energy, LLC
    
    Garden City, KS
    
    Corn/milo
    
    
    55.0Bunge-Ergon Vicksburg
    
    Vicksburg, MS
    
    corn
    
    
    54.0Bushmills Ethanol, Inc.*
    
    Atwater, MN
    
    Corn
    
    
    40.0Calgren Renewable Fuels, LLC
    
    Pixley, CA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    55.0Cardinal Ethanol
    
    Union City, IN
    
    Corn
    
    
    100.0Cargill, Inc.
    
    Eddyville, IA
    
    Corn
    
    
    35.0Cargill, Inc.
    
    Blair, NE
    
    Corn
    
    
    85.0Cascade Grain
    
    Clatskanie, OR
    
    Corn
    
    
    108.0Castle Rock Renewable Fuels, LLC
    
    Necedah, WI
    
    Corn
    
    
    50.0
  11




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Operating
    
    
    ExpansionCapacity
    
    
    Capacity
    
    
    Under ConstructionCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)
    
    
    Capacity (mgy)Center Ethanol Company
    
    Sauget, IL
    
    Corn
    
    
    54.0Central Indiana Ethanol, LLC
    
    Marion, IN
    
    Corn
    
    
    40.0Central MN Ethanol Coop*
    
    Little Falls, MN
    
    Corn
    
    
    21.5Chief Ethanol
    
    Hastings, NE
    
    Corn
    
    
    62.0Chippewa Valley Ethanol Co.*
    
    Benson, MN
    
    Corn
    
    
    45.0Cilion Ethanol
    
    Keyes, CA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    50.0Clean Burn Fuels, LLC
    
    Raeford, NC
    
    Corn
    
    
    
    
    
    
    
    
    
    
    60.0Commonwealth Agri-Energy, LLC*
    
    Hopkinsville, KY
    
    Corn
    
    
    33.0Corn Plus, LLP*
    
    Winnebago, MN
    
    Corn
    
    
    44.0Corn, LP*
    
    Goldfield, IA
    
    Corn
    
    
    50.0Cornhusker Energy Lexington, LLC
    
    Lexington, NE
    
    Corn
    
    
    40.0Coshocton Ethanol, OH
    
    Coshocton, OH
    
    Corn
    
    
    60.0Dakota Ethanol, LLC*
    
    Wentworth, SD
    
    Corn
    
    
    50.0DENCO, LLC
    
    Morris, MN
    
    Corn
    
    
    21.5Didion Ethanol
    
    Cambria, WI
    
    Corn
    
    
    40.0E Caruso (Goodland Energy Center)
    
    Goodland, KS
    
    Corn
    
    
    
    
    
    
    
    
    
    
    20.0E Energy Adams, LLC
    
    Adams, NE
    
    Corn
    
    
    50.0East Kansas Agri-Energy, LLC*
    
    Garnett, KS
    
    Corn
    
    
    35.0Elkhorn Valley Ethanol, LLC
    
    Norfolk, NE
    
    Corn
    
    
    40.0ESE Alcohol Inc.
    
    Leoti, KS
    
    Seed corn
    
    
    1.5Ethanol Grain Processors, LLC
    
    Obion, TN
    
    Corn
    
    
    100.0Front Range Energy, LLC
    
    Windsor, CO
    
    Corn
    
    
    40.0Glacial Lakes Energy, LLC*
    
    Watertown, SD
    
    Corn
    
    
    100.0Global Ethanol/Midwest Grain
Processors
    
    Lakota, IA
    
    Corn
    
    
    95.0Global Ethanol/Midwest Grain
Processors
    
    Riga, MI
    
    Corn
    
    
    57.0Golden Cheese Company of
California*
    
    Corona, CA
    
    Cheese whey
    
    
    5.0Golden Grain Energy, LLC*
    
    Mason City, IA
    
    Corn
    
    
    110.0
    
    
    
    50.0Golden Triangle Energy, LLC*
    
    Craig, MO
    
    Corn
    
    
    20.0Grain Processing Corp.
    
    Muscatine, IA
    
    Corn
    
    
    20.0Granite Falls Energy, LLC*
    
    Granite Falls, MN
    
    Corn
    
    
    52.0Greater Ohio Ethanol, LLC
    
    Lima, OH
    
    Corn
    
    
    54.0Green Plains Renewable Energy
    
    Shenandoah, IA
    
    Corn
    
    
    50.0Green Plains Renewable Energy
    
    Superior, IA
    
    Corn
    
    
    50.0Hawkeye Renewables, LLC
    
    Fairbank, IA
    
    Corn
    
    
    115.0Hawkeye Renewables, LLC
    
    Iowa Falls, IA
    
    Corn
    
    
    105.0
  12




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Operating
    
    
    ExpansionCapacity
    
    
    Capacity
    
    
    Under ConstructionCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)
    
    
    Capacity (mgy)Hawkeye Renewables, LLC
    
    Menlo, IA
    
    Corn
    
    
    110.0Hawkeye Renewables, LLC
    
    Shell Rock, IA
    
    Corn
    
    
    110.0Heartland Corn Products*
    
    Winthrop, MN
    
    Corn
    
    
    100.0Heartland Grain Fuels, LP*
    
    Aberdeen, SD
    
    Corn
    
    
    9.0Heartland Grain Fuels, LP*
    
    Huron, SD
    
    Corn
    
    
    12.0
    
    
    
    18.0Heron Lake BioEnergy, LLC
    
    Heron Lake, MN
    
    Corn
    
    
    50.0Homeland Energy
    
    New Hampton, IA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    100.0Husker Ag, LLC*
    
    Plainview, NE
    
    Corn
    
    
    26.5Idaho Ethanol Processing
    
    Caldwell, ID
    
    Potato Waste
    
    
    4.0Illinois River Energy, LLC
    
    Rochelle, IL
    
    Corn
    
    
    50.0Indiana Bio-Energy
    
    Bluffton, IN
    
    Corn
    
    
    101.0Iroquois Bio-Energy Company, LLC
    
    Rensselaer, IN
    
    corn
    
    
    40.0KAAPA Ethanol, LLC*
    
    Minden, NE
    
    Corn
    
    
    40.0Kansas Ethanol, LLC
    
    Lyons, KS
    
    Corn
    
    
    55.0KL Process Design Group
    
    Upton, WY
    
    Wood waste
    
    
    1.5Land O Lakes*
    
    Melrose, MN
    
    Cheese whey
    
    
    2.6Levelland/Hockley County Ethanol, LLC
    
    Levelland, TX
    
    Corn
    
    
    40.0Lifeline Foods, LLC
    
    St. Joseph, MO
    
    Corn
    
    
    40.0Lincolnland Agri-Energy, LLC*
    
    Palestine, IL
    
    Corn
    
    
    48.0Lincolnway Energy, LLC*
    
    Nevada, IA
    
    Corn
    
    
    50.0Little Sioux Corn Processors, LP*
    
    Marcus, IA
    
    Corn
    
    
    52.0Marquis Energy, LLC
    
    Hennepin, IL
    
    Corn
    
    
    100.0Marysville Ethanol, LLC
    
    Marysville, MI
    
    Corn
    
    
    50.0Merrick & Company
    
    Aurora, CO
    
    Waste beer
    
    
    3.0MGP Ingredients, Inc.
    
    Pekin, IL
    
    Corn/wheat starch
    
    
    78.0MGP Ingredients, Inc.
    
    Atchison, KSMid America Agri Products/Horizon
    
    Cambridge, NE
    
    Corn
    
    
    44.0Mid America Agri Products/Wheatland
    
    Madrid, NE
    
    Corn
    
    
    44.0Mid-Missouri Energy, Inc.*
    
    Malta Bend, MO
    
    Corn
    
    
    45.0Midwest Renewable Energy, LLC
    
    Sutherland, NE
    
    Corn
    
    
    25.0Minnesota Energy*
    
    Buffalo Lake, MN
    
    Corn
    
    
    18.0NEDAK Ethanol
    
    Atkinson, NE
    
    Corn
    
    
    
    
    
    
    
    
    
    
    44.0New Energy Corp.
    
    South Bend, IN
    
    Corn
    
    
    102.0North Country Ethanol, LLC*
    
    Rosholt, SD
    
    Corn
    
    
    20.0Northeast Biofuels
    
    Volney, NY
    
    Corn
    
    
    114.0Northwest Renewable, LLC
    
    Longview, WA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    55.0Otter Tail Ag Enterprises
    
    Fergus Falls, MN
    
    Corn
    
    
    57.5Pacific Ethanol
    
    Madera, CA
    
    Corn
    
    
    40.0
  13




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Operating
    
    
    ExpansionCapacity
    
    
    Capacity
    
    
    Under ConstructionCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)
    
    
    Capacity (mgy)Pacific Ethanol
    
    Stockton, CA
    
    Corn
    
    
    60.0Pacific Ethanol
    
    Burley, ID
    
    Corn
    
    
    50.0Pacific Ethanol
    
    Boardman, OR
    
    Corn
    
    
    40.0Panda Ethanol
    
    Hereford, TX
    
    Corn/milo
    
    
    
    
    
    
    
    
    
    
    115.0Parallel Products
    
    Rancho Cucamonga, CAParallel Products
    
    Louisville, KY
    
    Beverage waste
    
    
    5.4Patriot Renewable Fuels, LLC
    
    Annawan, IL
    
    Corn
    
    
    100.0Penford Products
    
    Cedar Rapids, IA
    
    Corn
    
    
    45.0Phoenix Biofuels
    
    Goshen, CA
    
    Corn
    
    
    31.5Pinal Energy, LLC
    
    Maricopa, AZ
    
    Corn
    
    
    55.0Pine Lake Corn Processors, LLC*
    
    Steamboat Rock, IA
    
    Corn
    
    
    20.0Platinum Ethanol, LLC*
    
    Arthur, IA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    110.0Plymouth Ethanol, LLC*
    
    Merrill, IA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    50.0POET Biorefining  Alexandria
    
    Alexandria, IN
    
    Corn
    
    
    68.0POET Biorefining  Ashton
    
    Ashton, IA
    
    Corn
    
    
    56.0POET Biorefining  Big Stone
    
    Big Stone City, SD
    
    Corn
    
    
    79.0POET Biorefining  Bingham Lake
    
    Bingham Lake, MN
    
    
    
    
    35.0POET Biorefining  Caro
    
    Caro, MI
    
    Corn
    
    
    53.0POET Biorefining  Chancellor
    
    Chancellor, SD
    
    Corn
    
    
    110.0POET Biorefining  Coon Rapids
    
    Coon Rapids, IA
    
    Corn
    
    
    52.0POET Biorefining  Corning
    
    Corning, IA
    
    Corn
    
    
    65.0POET Biorefining  Emmetsburg
    
    Emmetsburg, IA
    
    Corn
    
    
    55.0POET Biorefining  Fostoria
    
    Fostoria, OH
    
    Corn
    
    
    68.0POET Biorefining  Glenville
    
    Albert Lea, MN
    
    Corn
    
    
    42.0POET Biorefining  Gowrie
    
    Gowrie, IA
    
    Corn
    
    
    69.0POET Biorefining  Hanlontown
    
    Hanlontown, IA
    
    Corn
    
    
    56.0POET Biorefining  Hudson
    
    Hudson, SD
    
    Corn
    
    
    56.0POET Biorefining  Jewell
    
    Jewell, IA
    
    Corn
    
    
    69.0POET Biorefining  Laddonia
    
    Laddonia, MO
    
    Corn
    
    
    50.0POET Biorefining  Lake Crystal
    
    Lake Crystal, MN
    
    Corn
    
    
    56.0POET Biorefining  Leipsic
    
    Leipsic, OH
    
    Corn
    
    
    68.0POET Biorefining  Macon
    
    Macon, MO
    
    Corn
    
    
    46.0POET Biorefining  Marion
    
    Marion, OH
    
    Corn
    
    
    
    
    
    
    
    
    
    
    65.0POET Biorefining  Mitchell
    
    Mitchell, SD
    
    Corn
    
    
    68.0POET Biorefining  North Manchester
    
    North Manchester, IN
    
    Corn
    
    
    68.0
  14




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##### Table of Contents



Operating
    
    
    ExpansionCapacity
    
    
    Capacity
    
    
    Under ConstructionCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)
    
    
    Capacity (mgy)POET Biorefining  Portland
    
    Portland, IN
    
    Corn
    
    
    68.0POET Biorefining  Preston
    
    Preston, MN
    
    Corn
    
    
    46.0POET Biorefining  Scotland
    
    Scotland, SD
    
    Corn
    
    
    11.0POET
Biorefining  Groton
    
    Groton, SD
    
    Corn
    
    
    53.0Prairie Horizon Agri-Energy, LLC
    
    Phillipsburg, KS
    
    Corn
    
    
    40.0Quad-County Corn Processors*
    
    Galva, IA
    
    Corn
    
    
    27.0Range Fuels
    
    Soperton, GA
    
    Wood waste
    
    
    
    
    
    
    
    
    
    
    20.0Red Trail Energy, LLC
    
    Richardton, ND
    
    Corn
    
    
    50.0Redfield Energy, LLC *
    
    Redfield, SD
    
    Corn
    
    
    50.0Reeve Agri-Energy
    
    Garden City, KS
    
    Corn/milo
    
    
    12.0Renew Energy
    
    Jefferson Junction, WI
    
    Corn
    
    
    130.0Renova Energy
    
    Torrington, WY
    
    Corn
    
    
    5.0Riverland Biofuels
    
    Canton, IL
    
    corn
    
    
    37.0Show Me Ethanol
    
    Carrollton, MO
    
    Corn
    
    
    55.0Siouxland Energy & Livestock Coop*
    
    Sioux Center, IA
    
    Corn
    
    
    60.0Siouxland Ethanol, LLC
    
    Jackson, NE
    
    Corn
    
    
    50.0Southwest Georgia Ethanol, LLC
    
    Mitchell Co., GA
    
    Corn
    
    
    100.0Southwest Iowa Renewable Energy,
LLC *
    
    Council Bluffs, IA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    110.0Sterling Ethanol, LLC
    
    Sterling, CO
    
    Corn
    
    
    42.0Tate & Lyle
    
    Ft. Dodge, IA
    
    Corn
    
    
    
    
    
    
    
    
    
    
    105.0Tate & Lyle
    
    Loudon, TN
    
    Corn
    
    
    67.0
    
    
    
    38.0Tharaldson Ethanol
    
    Casselton, ND
    
    Corn
    
    
    
    
    
    
    
    
    
    
    110.0The
Andersons Albion Ethanol, LLC
    
    Albion, MI
    
    Corn
    
    
    55.0The Andersons Clymers Ethanol, LLC
    
    Clymers, IN
    
    Corn
    
    
    110.0The Andersons Marathon Ethanol, LLC
    
    Greenville, OH
    
    Corn
    
    
    110.0Trenton Agri Products, LLC
    
    Trenton, NE
    
    Corn
    
    
    40.0United Ethanol
    
    Milton, WI
    
    Corn
    
    
    52.0United WI Grain Producers, LLC*
    
    Friesland, WI
    
    Corn
    
    
    49.0Utica Energy, LLC
    
    Oshkosh, WI
    
    Corn
    
    
    48.0VeraSun Energy Corporation (Total)
    
    
    
    
    
    
    1,310.0
    
    
    
    
    
    
    
    110.0VeraSun Energy Corporation
    
    Albert City, IA
    
    CornVeraSun Energy Corporation
    
    Charles City, IA
    
    CornVeraSun Energy Corporation
    
    Ft. Dodge, IA
    
    CornVeraSun Energy Corporation
    
    Hartley, IA
    
    Corn
  15




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Operating
    
    
    ExpansionCapacity
    
    
    Capacity
    
    
    Under ConstructionCompany
    
    Location
    
    Feedstock
    
    (mgy)
    
    
    (mgy)
    
    
    Capacity (mgy)VeraSun Energy Corporation
    
    Linden, IN
    
    CornVeraSun Energy Corporation
    
    Lake Odessa, MI
    
    CornVeraSun Energy Corporation
    
    Welcome, MN
    
    CornVeraSun Energy Corporation
    
    Hankinson, ND
    
    CornVeraSun Energy Corporation
    
    Albion, NE
    
    CornVeraSun Energy Corporation
    
    Central City, NE
    
    CornVeraSun Energy Corporation
    
    Ord, NE
    
    CornVeraSun Energy Corporation
    
    Bloomingburg, OH
    
    CornVeraSun Energy Corporation
    
    Aurora, SD
    
    CornVeraSun Energy Corporation
    
    Marion, SD
    
    CornVerenium
    
    Jennings, LA
    
    Sugar Cane bagasse
    
    
    1.5Western New York Energy LLC
    
    Shelby, NY
    
    
    
    
    50.0Western Plains Energy, LLC*
    
    Campus, KS
    
    Corn
    
    
    45.0Western
Wisconsin Renewable Energy, LLC*
    
    Boyceville, WI
    
    Corn
    
    
    40.0White Energy
    
    Russell, KS
    
    Milo/wheat starch
    
    
    48.0White Energy
    
    Hereford, TX
    
    Corn/Milo
    
    
    100.0White Energy
    
    Plainview, TX
    
    Corn
    
    
    100.0Wind Gap Farms
    
    Baconton, GA
    
    Brewery waste
    
    
    0.4Xethanol BioFuels, LLC
    
    Blairstown, IA
    
    Corn
    
    
    5.0Yuma Ethanol
    
    Yuma, CO
    
    Corn
    
    
    40.0TOTALS
    
    
    
    
    
    
    11,051.4
    
    
    
    656.0
    
    
    
    1,580.0mgy for
    
    mgy for
    
    
    mgy for180
    
    
    expanding
    
    
    
    21operating refineries
    
    refineries
    
    
    
    refineries under construction
 *
    
    locally owned Last updated: November 21, 2008
 Competition from Alternative Fuels
   16




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cellulose-based
  Distillers Grains Competition
   Sources and Availability of Raw Materials
 Corn Feedstock Supply
   17




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Risk Management Services
   18




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Utilities
  Natural Gas.
  Electricity.
 Water
   19




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Employees
 Managements Discussion and Analysis or Plan
of Operating Employees.
 Research and Development
  Dependence on One or a Few Major Customers
  Costs and Effects of Compliance with Environmental Laws
  Alcohol Fuel Producers Permit.
 SPCC and RMP.
  Air Permits.
   20




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##### Table of Contents



Water Permits. re-circulated
    
 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.
  21




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Our financial performance will be significantly dependent on corn prices and generally we will
not be able to pass on increases in input prices to our customers.
  The spread between ethanol and corn prices can vary significantly.
 Our revenues will be greatly affected by the price at which we can sell our ethanol and
distillers grains.
 We expect to engage in hedging transactions which involve risks that can harm our business.
 Technology advances in the
commercialization of cellulosic ethanol may decrease demand for
corn based ethanol which may negatively affect our profitability. commercial-scale
  22




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Negative media attention associated with the use of corn in the ethanol production process may
lead to decreases in demand for the ethanol we produce which could negatively affect our
profitability.
 Government incentives and mandates for ethanol production and use may be eliminated in the
future, which could hinder our ability to operate profitably .
 Increases in the price of corn may reduce our profitability .
 Decreasing gasoline prices may negatively impact the selling price of ethanol which could
reduce our ability to operate profitably
 Our inability to secure credit facilities we may require in the future may negatively impact
our liquidity.
  23




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We have a limited operating history.
 Our business is not diversified.
 Risks Related to Ethanol Industry
 Overcapacity within the ethanol industry could cause an oversupply of ethanol and a decline in
ethanol prices.
 We expect to operate in a 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.
  24




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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.
 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 .
 Renewable Fuels Standard.
  Changes in environmental regulations or violations of the 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 .
  25




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ITEM 2. DESCRIPTION OF PROPERTY.
  
    
    A grains area, fermentation area, distillation  evaporation area;
 
    
    A dryer/energy center area;
 
    
    A tank farm;
 
    
    An auxiliary area; and
 
    
    An administration building.
 Item 6 
Managements Discussion and Analysis of Financial Condition and Plan of Operation.
 
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5.
    
    MARKET FOR COMMON EQUITY, RELATED MEMBER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF
EQUITY SECURITIES.
     26




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Completed Unit TransactionsFiscal Quarter
    
    Low PerUnit Price
    
    
    High PerUnit Price2007 1st
    
    $
    
    
    
    $
    2007 2nd
    
    $
    
    
    
    $
    2007 3rd
    
    $
    6,500
    
    
    $
    6,5002007 4th
    
    $
    4,920
    
    
    $
    5,0002008 1st
    
    $
    4,500
    
    
    $
    4,9002008 2nd
    
    $
    4,300
    
    
    $
    4,5002008 3rd
    
    $
    3,875
    
    
    $
    3,8752008 4th
    
    $
    2,900
    
    
    $
    3,876
 Item 6  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS.
 
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 This report contains forward-looking statements that involve significant risks and
uncertainties. The following discussion, which focuses on our plan of operation for the next
twelve months, consists almost entirely of forward-looking information and statements. Actual
events or results may differ materially from those indicated or anticipated, as discussed in the
section entitled Cautionary Statements Regarding Forward Looking Statements. This may occur as a
result of many factors, including those set forth in Item 1, Description of BusinessRisk
Factors. The following discussion of our financial condition and plan of operation should also be
read in conjunction with our financial statements and notes to financial statements contained in
this report.
 Overview
    27




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See Distribution of Principal Products.
   Plan of Operations for the Next 12 Months
  Project Capitalization
  1-month 1-month 1-month
  28




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Plant operations
    29




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##### Table of Contents



Corn Oil Separation
    Permitting and Regulatory Activities
  Alcohol Fuel Producers Permit.
  30




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##### Table of Contents



SPCC and RMP.
  Air Permits.
    Water Permits.
 Trends and Uncertainties Impacting the Ethanol Industry and Our Operations
    31




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Corn Prices
    Natural Gas
  Ethanol Supply and Demand
     32




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Ethanol Industry Competition
  Ethanol Marketing
  Distillers Grains Marketing
   Derivatives
  Technology Developments
 cellulose-based
  33




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Government Legislation and Regulations
   Economic Downturn
   34




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Liquidity and Capital Resources
 Estimated Sources of Funds
  Sources of Funds (1)
    
    
        
    PercentOffering Proceeds (2)
    
    $
    70,190,000
    
    
    
    43.51
    %Seed Capital Proceeds (3)
    
    $
    1,360,000
    
    
    
    0.84
    %Grants(4)
    
    $
    775,000
    
    
    
    0.48
    %Interest Income
    
    $
    2,412,000
    
    
    
    1.49
    %Senior Debt Financing (5)
    
    $
    86,600,000
    
    
    
    53.68
    %Total Sources of Funds
    
    $
    161,337,000
    
    
    
    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 496 units to our seed capital investors at a price of $2,500.00 per
unit and 72 units to our founders at a price of $1,666.67 for total proceeds of
$1,360,000.(4)
    
    Includes a $100,000 Value-Added Producer Grant from the United States Department
of Agriculture (USDA); a $300,000 Value-Added Producer Grant from the USDA; a
$250,000 grant from Randolph County and $125,000 from the city of Union City.(5)
    
    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. In addition, we have entered into a Third Amendment of
Construction Loan Agreement under which First National Bank of Omaha agreed to amend our
Construction Loan Agreement to include a new loan up to the maximum amount of $3,600,000
for the purchase and installation of a corn oil extraction system. Estimated Uses of Proceeds
   Percent ofUse of Proceeds
    
    Amount
    
    
    TotalPlant construction cost
    
    $
    114,640,570
    
    
    
    71.06
    %Corn oil separation system
    
    
    3,600,000
    
    
    
    2.23
    %Land and development cost
    
    
    11,228,484
    
    
    
    6.96
    %Office equipment
    
    
    290,000
    
    
    
    0.18
    %Railroad
    
    
    4,500,000
    
    
    
    2.79
    %Construction management costs
    
    
    736,150
    
    
    
    0.46
    %Contingency
    
    
    1,501,249
    
    
    
    0.93
    %Rolling stock
    
    
    579,000
    
    
    
    0.36
    %Fire Protection/Water Supply
    
    
    5,695,000
    
    
    
    3.53
    %Start up costs:Financing costs
    
    
    3,744,785
    
    
    
    2.32
    %Organization costs
    
    
    637,462
    
    
    
    0.39
    %Operating costs
    
    
    1,504,300
    
    
    
    0.93
    %Pre start-up costs
    
    
    680,000
    
    
    
    0.42
    %Inventory  working capital
    
    
    5,000,000
    
    
    
    3.10
    %Inventory  corn
    
    
    3,000,000
    
    
    
    1.86
    %Inventory  chemicals and ingredients
    
    
    500,000
    
    
    
    0.31
    %Inventory  Ethanol & DDGS
    
    
    3,000,000
    
    
    
    1.86
    %Spare parts  process equipment
    
    
    500,000
    
    
    
    0.31
    %Total
    
    $
    161,337,000
    
    
    
    100.00
    %
  35




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Financial Results
  Critical Accounting Estimates
  Off-Balance Sheet Arrangements
   36




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Employees
       # Full-TimePosition
    
    PersonnelGeneral manager
    
    
    1Plant Manager
    
    
    1Commodities Manager
    
    
    1Chief Financial Officer
    
    
    1Accounting Supervisor
    
    
    1Environmental, Health & Safety Officer
    
    
    1Production Supervisor
    
    
    1Lab Manager
    
    
    1Lab Technician
    
    
    2Secretary/Clerical
    
    
    4Shift Supervisors
    
    
    4Officer Manager
    
    
    1Maintenance Supervisor
    
    
    1Maintenance Craftsmen
    
    
    6Plant Operators
    
    
    22TOTAL
    
    
    48
   37




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ITEM 7. FINANCIAL STATEMENTS.
 
  
     
  38




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CARDINAL ETHANOL, LLC
  September 30, 2008ASSETSCurrent AssetsCash
    
    $
    461,535Grant receivable
    
    
    27,000Deposits
    
    
    195,250Prepaid and other current assets
    
    
    57,723Total current assets
    
    
    741,508Property and EquipmentLand
    
    
    2,657,484Office equipment
    
    
    238,395Machinery and Equipment
    
    
    36,238Vehicles
    
    
    31,928Building
    
    
    619,615Construction in process
    
    
    136,743,326140,326,986Less accumulated depreciation
    
    
    (41,330
    )Net property and equipment
    
    
    140,285,656Other AssetsDeposits
    
    
    1,541,200Financing costs, net of amortization
    
    
    856,595Total other assets
    
    
    2,397,795Total Assets
    
    $
    143,424,959LIABILITIES AND EQUITYCurrent LiabilitiesAccounts payable
    
    $
    3,937,930Construction retainage payable
    
    
    5,679,730Accrued expenses
    
    
    304,607Derivative instruments
    
    
    1,753,198Current maturities of capital lease obligations
    
    
    6,617Total current liabilities
    
    
    11,682,082Long-Term Debt and Captial Lease Obligations
    
    
    61,818,344Commitments 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
    
    
    (1,753,198
    )Income accumulated during development stage
    
    
    765,518Total members equity
    
    
    69,924,533Total Liabilities and Members Equity
    
    $
    143,424,959
   39




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CARDINAL ETHANOL, LLC
  From InceptionYear Ended
    
    
    Year Ended
    
    
    (February 7, 2005)September 30, 2008
    
    
    September 30, 2007
    
    
    to Septemeber 30, 2008Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating ExpensesProfessional fees
    
    
    363,768
    
    
    
    407,164
    
    
    
    1,107,729General and administrative
    
    
    902,600
    
    
    
    467,916
    
    
    
    1,668,912Total
    
    
    1,266,368
    
    
    
    875,080
    
    
    
    2,776,641Operating Loss
    
    
    (1,266,368
    )
    
    
    (875,080
    )
    
    
    (2,776,641
    )Other IncomeGrant income
    
    
    143,862
    
    
    
    531,138
    
    
    
    775,000Interest and dividend income
    
    
    108,440
    
    
    
    2,597,924
    
    
    
    2,742,660Miscellaneous income
    
    
    5,812
    
    
    
    1,399
    
    
    
    24,499Total
    
    
    258,114
    
    
    
    3,130,461
    
    
    
    3,542,159Net Income (Loss)
    
    $
    (1,008,254
    )
    
    $
    2,255,381
    
    
    $
    765,518Weighted Average Units Outstanding  basic and
diluted
    
    
    14,606
    
    
    
    12,026
    
    
    
    7,452Net Income (Loss) Per Unit  basic and diluted
    
    $
    (69.03
    )
    
    $
    187.54
    
    
    $
    102.73
   40




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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
    
    $
    120,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Net 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
    
    
    1,240,000
    
    
    
    
    
    
    
    
    
    
    
    Costs 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
    
    
    70,070,000
    
    
    
    
    
    
    
    
    
    
    
    Capital contributions - 20 units, $5,000 per unit, January 2007
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    Capital contributions - 4 units, $5,000 per unit, February 2007
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    Costs related to capital contributions
    
    
    (613,135
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive incomeNet income for the year ended September 30, 2007
    
    
    
    
    
    
    2,255,381
    
    
    
    2,255,381
    
    
    
    Other comprehensive lossUnrealized loss on derivative contracts
    
    
    
    
    
    
    
    
    
    
    (222,506
    )
    
    
    (222,506
    )Balance  September 30, 2007
    
    
    70,912,213
    
    
    
    1,773,772
    
    
    
    2,032,875
    
    
    
    (222,506
    )Comprehensive lossNet loss for year ended September 30, 2008
    
    
    
    
    
    
    (1,008,254
    )
    
    
    (1,008,254
    )
    
    
    Other comprehensive lossUnrealized loss on derivative contracts
    
    
    
    
    
    
    
    
    
    
    (1,530,692
    )
    
    
    (1,530,692
    )Balance  September 30, 2008
    
    $
    70,912,213
    
    
    $
    765,518
    
    
    $
    (506,071
    )
    
    $
    (1,753,198
    )
   41




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CARDINAL ETHANOL, LLC
  From InceptionYear Ended
    
    
    Year Ended
    
    
    (February 7, 2005)Sept 30, 2008
    
    
    Sept 30, 2007
    
    
    to September 30, 2008Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    (1,008,254
    )
    
    $
    2,255,381
    
    
    $
    765,518Adjustments to reconcile net income (loss) to net cash
from operations:Depreciation
    
    
    33,077
    
    
    
    6,601
    
    
    
    25,767Loss on sale of investments
    
    
    
    
    
    
    
    
    
    
    712Loss (gain) on sale of asset
    
    
    1,472
    
    
    
    (50
    )
    
    
    1,472Unexercised land options
    
    
    
    
    
    
    
    
    
    
    16,800Change in assets and liabilities:Investments
    
    
    
    
    
    
    (20,600,000
    )
    
    
    Grant receivable
    
    
    (22,460
    )
    
    
    (4,540
    )
    
    
    (27,000
    )Interest receivable
    
    
    21,618
    
    
    
    (20,326
    )
    
    
    Prepaid expenses
    
    
    (37,924
    )
    
    
    5,394
    
    
    
    (57,723
    )Deposits
    
    
    (1,097,450
    )
    
    
    (639,000
    )
    
    
    (1,736,450
    )Accounts payable
    
    
    141,822
    
    
    
    (104,429
    )
    
    
    176,122Accrued expenses
    
    
    73,744
    
    
    
    12,222
    
    
    
    89,822Net cash provided by (used in) operating activities
    
    
    (1,894,355
    )
    
    
    (19,088,747
    )
    
    
    (744,960
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (846,152
    )
    
    
    (32,827
    )
    
    
    (896,012
    )Purchase of land
    
    
    
    
    
    
    (2,647,484
    )
    
    
    (2,647,484
    )Payments for construction in process
    
    
    (79,043,000
    )
    
    
    (47,324,173
    )
    
    
    (126,351,356
    )Payments for land options
    
    
    
    
    
    
    
    
    
    
    (26,800
    )Proceeds from (purchases of) investments, net
    
    
    20,600,000
    
    
    
    
    
    
    
    (712
    )Net cash used in investing activities
    
    
    (59,289,152
    )
    
    
    (50,004,484
    )
    
    
    (129,922,364
    )Cash Flows from Financing ActivitiesCosts related to capital contributions
    
    
    
    
    
    
    (25,209
    )
    
    
    (637,787
    )Payments for financing costs
    
    
    (112,399
    )
    
    
    (762,895
    )
    
    
    (901,294
    )Proceeds from construction loan
    
    
    61,117,940
    
    
    
    
    
    
    
    61,117,940Member contributions
    
    
    
    
    
    
    70,190,000
    
    
    
    71,550,000Net cash provided by financing activities
    
    
    61,005,541
    
    
    
    69,401,896
    
    
    
    131,128,859Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (177,966
    )
    
    
    308,665
    
    
    
    461,535Cash and Cash Equivalents  Beginning of Period
    
    
    639,501
    
    
    
    330,836
    
    
    
    Cash  End of Period
    
    $
    461,535
    
    
    $
    639,501
    
    
    $
    461,535Supplemental Cash Flow InformationInterest paid, net of $1,533,995 and $0 capitalized, respectively
    
    $
    
    
    
    $
    
    
    
    $
    Supplemental Disclosure of Noncash Investing and Financing ActivitiesConstruction costs in construction retainage and accounts payable
    
    $
    9,429,538
    
    
    $
    12,008,990
    
    
    $
    9,429,538Interest paid by debt financing
    
    
    675,132
    
    
    
    
    
    
    
    675,132Financing costs in accounts payable
    
    
    12,000
    
    
    
    6,000
    
    
    
    12,000Deferred 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 loss
    
    
    (1,530,692
    )
    
    
    (222,506
    )
    
    
    (1,753,198
    )Accrued interest capitalized in construction in process
    
    
    214,785
    
    
    
    
    
    
    
    214,785Amortization of financing costs capitalized
    
    
    56,699
    
    
    
    
    
    
    
    56,699Assets acquired through capital lease obligations
    
    
    31,889
    
    
    
    
    
    
    
    31,889
   42




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##### Table of Contents



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Fiscal Reporting Period
  Accounting Estimates
  Cash
  Property and Equipment
  Carrying Value of Long-Lived Assets
    43




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##### Table of Contents



Deferred Offering Costs
  Financing Costs
  Grants
  Derivative Instruments
 Accounting for Derivative Instruments and Hedging
Activities
     44




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##### Table of Contents



Fair Value of Financial Instruments
  Capitalization of interest
  Net Income (Loss) per Unit
  Income Taxes
  Recently Issued Accounting Pronouncements
    45




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
Activities,
  2. MEMBERS EQUITY
    3. INCOME TAXES
  2008Financial statement basis of assets
    
    $
    143,424,959Plus: organization and start-up costs capitalized
    
    
    1,720,109Less: accumulated tax depreciation and amortization greater than
financial statement basis
    
    
    (16,675
    )Income tax basis of assets
    
    $
    145,128,393
   46




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##### Table of Contents



4. BANK FINANCING
        47




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##### Table of Contents



5. LEASES
    Capital
    
    
    Operating2009
    
    $
    8,184
    
    
    $
    887,0002010
    
    
    8,928
    
    
    
    1,008,0002011
    
    
    8,928
    
    
    
    1,008,0002012
    
    
    8,928
    
    
    
    1,008,0002013
    
    
    744
    
    
    
    1,008,000Thereafter
    
    
    
    
    
    
    121,000Total minimum lease commitments
    
    
    35,712
    
    
    
    5,040,000Less interest
    
    
    (3,823
    )
    
    
    Present value of minimum lease payments
    
    $
    31,889
    
    
    $
    5,040,000
 6. COMMITMENTS AND CONTINGENCIES
 Plant Construction Contract
     48




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##### Table of Contents



Corn Procurement
  Grants
   Consulting Services
   49




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##### Table of Contents



Marketing Agreements
   Utility Agreement
   7. EMPLOYEE BENEFIT PLAN
  8. UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS
    50




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##### Table of Contents



51




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##### Table of Contents



ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.  
 ITEM 8A(T). CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
    Managements Annual Report on Internal Control over Financial Reporting
    52




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##### Table of Contents




    
    Reconciliation of Significant Accounts  currently a documented reconciliation
of the trial balance including the balance sheet and other significant accounts are not
being conducted by management. The reconciliations must be conducted, evidenced, and
reviewed prior to closing out the quarters and reporting financial statements. Failure to
reconcile our significant accounts amounts to a material weakness to the Companys internal
controls over its financial reporting processes.
    
    Review and Approval of Top Sided Accounting Entries to the General Ledger -
currently there is no documented evidence of a review and approval of routine or non-routine
adjusting journal entries within the accounting system by the appropriate level of
management. The lack of review and approval amounts to a material weakness to the Companys
internal controls over its financial reporting processes.
    
    Financial Reporting Segregation of Duties  Currently there is a pervasive
issue regarding a general lack of segregation of duties. Requisite segregation of duties is
not clearly defined or established throughout the financial reporting related business
processes. The lack of segregation of duties amounts to a material weakness to the
Companys internal controls over its financial reporting processes.
  
    
    Cardinal Ethanol will continue to create and refine a structure in which
critical accounting policies and estimates are identified, and together with other complex
areas, are subject to multiple reviews by accounting personnel. In addition, Cardinal
Ethanol will enhance and test our year-end financial close process. Additionally, Cardinal
Ethanols audit committee will increase its review of our disclosure controls and
procedures. We also intend to more frequently engage an external accounting firm to assist
us with our review of financial information relative to our financing arrangements. Finally,
we have designated individuals responsible for identifying reportable developments. We
believe these actions will remediate the material weakness by focusing additional attention
and resources in our internal accounting functions. However, the material weakness will not
be considered remediated until the applicable remedial controls operate for a sufficient
period of time and management has concluded, through testing, that these controls are
operating effectively.
     53




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 8B. OTHER INFORMATION.
  
 PART III.
 
 
 ITEM 9.
    
    DIRECTORS; EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
COMPLIANCE WITH SECTION16(a)OF THE EXCHANGE ACT.  
 ITEM 10. EXECUTIVE COMPENSATION.
  
 ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
  
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
   54




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##### Table of Contents



ITEM 13. EXHIBITS.
  Exhibit No.
    
    Description
    
    Method of Filing10.1
    
    Corn Feedstock Supply Agency Agreement dated July 15, 2008.
    
    110.2
    
    Tricanter Installation and Purchase Agreement between
ICM, Inc. and Cardinal Ethanol, LLC dated June 27, 2008.
    
    210.3
    
    Corn Oil Extraction Note between First
National Bank of Omaha and Cardinal Ethanol, LLC dated July 31, 2008.
    
    210.4
    
    First Amendment of Construction Loan Mortgage between First National Bank of
Omaha and Cardinal Ethanol, LLC dated July 31, 2008.
    
    210.5
    
    Third Amendment of Construction Loan Agreement between First National Bank of Omaha and Cardinal
Ethanol, LLC dated July 31, 2008.
    
    231.1
    
    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 8-K filed with the SEC on July 18, 2008.(2)
    
    Incorporated by reference as filed on Form 10-QSB filed with the SEC on August 14, 2008.(+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission. 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   55




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##### Table of Contents



SIGNATURES
  CARDINAL ETHANOL, LLCDate: December 22, 2008
    /s/ Jeff PainterJeff PainterChief Executive Officer
(Principal Executive Officer) Date: December 22, 2008
    /s/ Techia BrewerTechia BrewerChief Financial Officer
(Principal Financial and Accounting Officer)  Date:             December 22, 2008
    /s/ Troy PrescottTroy PrescottChairman and DirectorDate:             December 22, 2008
    /s/ Dale SchwietermanDale SchwietermanTreasurer  and DirectorDate: December 22, 2008
    /s/ Tom ChalfantTom ChalfantVice Chairman, Vice President and DirectorDate:             December 22, 2008
    /s/ Steven J. SniderSteven J. Snider,Secretary and DirectorDate:             December 22, 2008
    /s/ Robert E. AndersonRobert E. Anderson, DirectorDate:             December 22, 2008
    /s/ Larry J. BarnetteLarry J. Barnette, DirectorDate:             December 22, 2008
    /s/ Ralph BrumbaughRalph Brumbaugh, DirectorDate: December 22, 2008
    /s/ Thomas C. ChronisterThomas C. Chronister, Director  56




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##### Table of Contents



Date: December 22, 2008
    /s/ Robert John DavisRobert John Davis, DirectorDate: December 22, 2008
    /s/ David Matthew DerschDavid Matthew Dersch, DirectorDate: December 22, 2008
    /s/ John W. FisherJohn W. Fisher, DirectorDate: December 22, 2008
    /s/ Everett Leon HartEverett Leon Hart, DirectorDate: December 22, 2008
    /s/ Cyril G. LeFevreCyril G. LeFevre, DirectorDate: December 22, 2008
    /s/ Robert L. MorrisRobert L. Morris, DirectorDate: December 22, 2008
    /s/ C. Allan RosarC. Allan Rosar, DirectorDate: December 22, 2008
    /s/ Michael A. ShuterMichael A. Shuter, DirectorDate: December 22, 2008
    /s/ Jerrold L. VoisinetJerrold L. Voisinet, DirectorDate: December 22, 2008
    /s/ Stephen L. ClarkStephen L. Clark, Director  57




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing10.1
    
    Corn Feedstock Supply Agency Agreement dated July 15, 2008.
    
    110.2
    
    Tricanter Installation and Purchase Agreement between ICM, Inc.
and Cardinal Ethanol, LLC dated June 27, 2008.
    
    210.3
    
    Corn Oil Extraction Note between First National Bank of Omaha and Cardinal Ethanol,
LLC dated July 31, 2008.
    
    210.4
    
    First Amendment of Construction Loan Mortgage between First National
Bank of Omaha and Cardinal Ethanol, LLC dated July 31, 2008.
    
    210.5
    
    Third Amendment of Construction Loan Agreement between First National Bank of Omaha
and Cardinal Ethanol, LLC dated July 31, 2008.
    
    231.1
    
    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 8-K filed with the SEC on July 18, 2008.(2)
    
    Incorporated by reference as filed on Form 10-QSB filed with the SEC on August 14, 2008.(+)
    
    Material has been omitted pursuant to a request for confidential treatment and such materials
have been filed separately with the Securities and Exchange Commission.  58