##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended September 30, 2010
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 000-53036
 CARDINAL ETHANOL, LLC
  Indiana
    
    20-2327916(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)1554 N. County Road 600 E., Union City, IN
    
    47390(Address of principal executive offices)
    
    (Zip Code)
 (765) 964-3137
 None
 None
 o Yes þ No
 o Yes þ No
 þ Yes o No
 o Yes o No
 Form 10-K. þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o Yes þ No
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



Table of Contents
 PART I
    
    
    4ITEM 1. BUSINESS
    
    
    4ITEM 1A. RISK FACTORS
    
    
    14ITEM 2. PROPERTIES
    
    
    20ITEM 3. LEGAL PROCEEDINGS
    
    
    20ITEM 4. REMOVED AND RESERVED
    
    
    20PART II
    
    
    20ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    20ITEM 6. SELECTED FINANCIAL DATA
    
    
    23ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    24ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    F-1ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    36ITEM 9A. CONTROLS AND PROCEDURES
    
    
    36ITEM 9B. OTHER INFORMATION
    
    
    37PART III
    
    
    37ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
    
    
    37ITEM 11. EXECUTIVE COMPENSATION
    
    
    37ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS
    
    
    37ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    37ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    38ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    38SIGNATURES
    
    
    41Exhibit 10.30Exhibit 10.31Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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




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AVAILABLE INFORMATION
  
 PART I
 
 ITEM 1.
    
    BUSINESS.
 Business Development
   Financial Information
 Item 7  Managements Discussion and Analysis of Financial Condition and
Results of Operations Item 8  Financial Statements and Supplementary Data
 Principal Products and Markets
  Ethanol
    4




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




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




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Federal Ethanol Supports and Governmental Regulation
 Federal Ethanol Supports
      7




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Effect of Governmental Regulation
    8




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Competition
   U.S. FUEL ETHANOL PRODUCTION CAPACITY
BY TOP PRODUCERS
Producers of Approximately 400
million gallons per year (mmgy) or more
 Under Construction/Current Capacity
    
    
    ExpansionsCompany
    
    (mmgy)
    
    
    (mmgy)POET Biorefining
    
    
    1,629.0
    
    
    
    5.0Archer Daniels Midland
    
    
    1,450.0
    
    
    
    275Valero Renewable Fuels
    
    
    1,130.0Green Plains Renewable Energy
    
    
    657.0
    9




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Distillers Grains Competition
   10




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Sources and Availability of Raw Materials
 Corn Feedstock Supply
        11




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Risk Management Services
   Utilities
  Natural Gas.
   12




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Electricity.
 Water
  Employees
  Research and Development
  Patents, Trademarks, Licenses, Franchises and Concessions
  Seasonality of Ethanol Sales
  Working Capital
   13




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Dependence on One or a Few Major Customers
  Financial Information about Geographic Areas
  
 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
 If the Federal Volumetric Ethanol Excise Tax Credit (VEETC) expires on December 31, 2011, it
could negatively impact our profitability
 We have a significant amount of debt, and our existing debt financing agreements contain, and
our future debt financing agreements may contain, restrictive covenants that limit distributions
and impose restrictions on the operation of our business.
 Increases in the price of corn or natural gas would reduce our profitability.
   14




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Risks Relating to Our Business  We engage
in hedging transactions which involve risks that could harm our business
 Declines in the price of ethanol or distillers grain would significantly reduce our revenues.
 We may violate the terms of our credit agreements and financial covenants which could result
in our lender demanding immediate repayment of our loans.
 Our inability to secure credit facilities we may require in the future may negatively impact
our liquidity.
 The ethanol industry is an industry that is changing rapidly which can result in unexpected
developments that could negatively impact our operations and the value of our units.
  15




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We engage in hedging transactions which involve risks that could harm our business.
  Our business is not diversified.
 We depend on our management and key employees, and the loss of these relationships could
negatively impact our ability to operate profitably.
 Changes and advances in ethanol production technology could require us to incur costs to
update our plant or could otherwise hinder our ability to compete in the ethanol industry or
operate profitably.
 We are subject to litigation involving our corn oil extraction technology.
  16




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Risks Related to Ethanol Industry
 Demand for ethanol may not continue to grow unless ethanol can be blended into gasoline in
higher percentage blends for conventional automobiles.
 The California Low Carbon Fuel Standard may decrease demand for corn based ethanol which could
negatively impact our profitability.
 Technology advances in the commercialization of cellulosic ethanol may decrease demand for
corn based ethanol which may negatively affect our profitability.
 New plants under construction or decreases in the demand for ethanol may result in excess
production capacity in our industry .
  17




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Decreasing gasoline prices may negatively impact the selling price of ethanol which could
reduce our ability to operate profitably
 Growth in the ethanol industry is dependent on growth in the fuel blending infrastructure to
accommodate ethanol, which may be slow and could result in decreased demand for ethanol.
 We operate in an intensely competitive industry and compete with larger, better financed
entities which could impact our ability to operate profitably.
 Competition from the advancement of alternative fuels may lessen the demand for ethanol.
 Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds
to air pollution, harms engines and/or takes more energy to produce than it contributes may affect
the demand for ethanol.
  18




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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 .
   Changes in environmental regulations or violations of these regulations could be expensive and
reduce our profitability.
 Carbon dioxide may be regulated in the future by the EPA as an air pollutant requiring us to
obtain additional permits and install additional environmental mitigation equipment, which could
adversely affect our financial performance
  19




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ITEM 2.
    
    PROPERTIES.
  
    
    A grains area, fermentation area, distillation  evaporation area;
    
    A dryer/energy center area;
    
    A tank farm;
    
    An auxiliary area; and
    
    An administration building.
  Item 7 
Managements Discussion and Analysis of Financial Condition and Results of Operations.
 
 ITEM 3.
    
    LEGAL PROCEEDINGS.
    
 ITEM 4.
    
    REMOVED AND RESERVED.
 
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
   20




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# ofQuarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Traded2009 1st
    
    $
    4,000
    
    
    $
    4,000
    
    
    $
    4,000.00
    
    
    
    52009 2nd
    
    $
    3,000
    
    
    $
    3,275
    
    
    $
    3,052.50
    
    
    
    102009 3rd
    
    $
    2,950
    
    
    $
    3,000
    
    
    $
    2,985.00
    
    
    
    202009 4th
    
    $
    2,850
    
    
    $
    2,850
    
    
    $
    2,850.00
    
    
    
    52010 1st
    
    $
    2,250
    
    
    $
    2,700
    
    
    $
    2,557.29
    
    
    
    242010 2nd
    
    $
    2,650
    
    
    $
    3,400
    
    
    $
    2,817.50
    
    
    
    802010 3rd
    
    $
    3,100
    
    
    $
    3,400
    
    
    $
    3,217.25
    
    
    
    202010 4th
    
    $
    3,400
    
    
    $
    3,500
    
    
    $
    3,416.13
    
    
    
    62
  # ofSellers Quarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Listed2009 1st
    
    $
    5,000
    
    
    $
    5,000
    
    
    $
    5,000.00
    
    
    
    162009 2nd
    
    $
    3,500
    
    
    $
    4,000
    
    
    $
    4,107.14
    
    
    
    282009 3rd
    
    $
    3,000
    
    
    $
    3,000
    
    
    $
    3,000.00
    
    
    
    32009 4th
    
    $
    2,800
    
    
    $
    2,800
    
    
    $
    2,800.00
    
    
    
    12010 1st
    
    $
    2,250
    
    
    $
    2,700
    
    
    $
    2,557.29
    
    
    
    242010 2nd
    
    $
    2,650
    
    
    $
    3,800
    
    
    $
    2,841.46
    
    
    
    822010 3rd
    
    $
    3,100
    
    
    $
    3,400
    
    
    $
    3,217.25
    
    
    
    202010 4th
    
    $
    3,400
    
    
    $
    3,500
    
    
    $
    3,558.54
    
    
    
    82
  21




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Item 7  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
 Performance Graph
  COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 *
    
    $100 invested on 9/30/05 in
stock or index, including reinvestment of dividends.Fiscal year ending September
30.  22




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ITEM 6.
    
    SELECTED FINANCIAL DATA
 Item 7- Management Discussion and Analysis of Financial Condition and Results of
Operations
 Statement of Operations Data:
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Revenues
    
    $
    224,807,338
    
    
    $
    167,738,057
    
    
    $
    
    
    
    $
    
    
    
    $
    Cost Goods Sold
    
    
    195,880,762
    
    
    
    160,674,617
    
    
    
    
    
    
    
    
    
    
    
    Gross Profit
    
    
    28,926,576
    
    
    
    7,063,440
    
    
    
    
    
    
    
    
    
    
    
    Operating Expenses
    
    
    3,735,530
    
    
    
    3,726,051
    
    
    
    1,266,368
    
    
    
    875,080
    
    
    
    589,722Impairment Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss)
    
    
    25,191,046
    
    
    
    3,337,389
    
    
    
    (1,266,368
    )
    
    
    (875,080
    )
    
    
    (589,722
    )Other Income (Expense)
    
    
    (4,740,467
    )
    
    
    (4,288,574
    )
    
    
    258,114
    
    
    
    3,130,461
    
    
    
    151,999Net Income
    
    $
    20,450,579
    
    
    $
    (951,185
    )
    
    $
    (1,008,254
    )
    
    $
    2,255,381
    
    
    $
    (437,723
    )Weighted Average Units Outstanding
    
    
    14,606
    
    
    
    14,606
    
    
    
    14,606
    
    
    
    12,026
    
    
    
    477Net Income (Loss) Per Unit
    
    $
    1,400.15
    
    
    $
    (65.12
    )
    
    $
    (69.03
    )
    
    $
    187.54
    
    
    $
    (917.66
    )Cash Distributions Per Unit
    
    $
    60.00
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Balance Sheet Data:
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Current Assets
    
    $
    29,289,713
    
    
    $
    22,049,914
    
    
    $
    741,508
    
    
    $
    21,285,458
    
    
    $
    357,321Net Property and Equipment
    
    
    132,780,346
    
    
    
    137,209,571
    
    
    
    140,285,656
    
    
    
    63,371,362
    
    
    
    15,078Other Assets
    
    
    851,732
    
    
    
    1,068,767
    
    
    
    2,397,795
    
    
    
    1,427,895
    
    
    
    626,977Total Assets
    
    
    162,921,791
    
    
    
    160,328,252
    
    
    
    143,424,959
    
    
    
    86,084,715
    
    
    
    999,376Current Liabilities
    
    
    17,952,961
    
    
    
    13,036,275
    
    
    
    11,682,082
    
    
    
    13,621,236
    
    
    
    145,637Long-Term Debt
    
    
    56,188,380
    
    
    
    77,427,000
    
    
    
    61,818,344
    
    
    
    
    
    
    
    Members Equity
    
    
    85,650,048
    
    
    
    66,594,997
    
    
    
    69,924,533
    
    
    
    72,463,479
    
    
    
    853,739
 
 *
    
    See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operationsfor further discussion of our financial results.  23




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 This report contains forward-looking statements that involve future events, our future
performance and our expected future operations and actions. In some cases you can identify
forward-looking statements by the use of words such as may, will, should, anticipate,
believe, expect, plan, future, intend, could, estimate, predict, hope,
potential, continue, or the negative of these terms or other similar expressions. These
forward-looking statements are only our predictions and involve numerous assumptions, risks and
uncertainties. Our actual results or actions may differ materially from these forward-looking
statements for many reasons, including the reasons described in this report. We are not under any
duty to update the forward-looking statements contained in this report. We cannot guarantee future
results, levels of activity, performance or achievements. We caution you not to put undue reliance
on any forward-looking statements, which speak only as of the date of this report. You should read
this report and the documents that we reference in this report and have filed as exhibits,
completely and with the understanding that our actual future results may be materially different
from what we currently expect. We qualify all of our forward-looking statements by these
cautionary statements.
 Overview
  Results of Operations
 Comparison of Fiscal Year Ended September 30, 2010 and September 30, 2009
  Fiscal Year Ended
    
    
    Fiscal Year EndedSeptember 30, 2010
    
    
    September 30, 2009(Audited)
    
    
    (Audited)Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    224,807,338
    
    
    
    100.00
    %
    
    $
    167,738,057
    
    
    
    100.00
    %Cost of Goods Sold
    
    
    195,880,762
    
    
    
    87.13
    %
    
    
    160,674,617
    
    
    
    95.79
    %Gross Profit
    
    
    28,926,576
    
    
    
    12.87
    %
    
    
    7,063,440
    
    
    
    4.21
    %Operating Expenses
    
    
    3,735,530
    
    
    
    1.65
    %
    
    
    3,726,051
    
    
    
    2.22
    %Operating Income
    
    
    25,191,046
    
    
    
    11.22
    %
    
    
    3,337,389
    
    
    
    1.99
    %Other (Expense)
    
    
    (4,740,467
    )
    
    
    (2.11
    )%
    
    
    (4,288,574
    )
    
    
    (2.56
    )%Net Income (Loss)
    
    $
    20,450,579
    
    
    
    9.11
    %
    
    $
    (951,185
    )
    
    
    (0.57
    )%
  24




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Fiscal Year ended
    
    
    Fiscal Year endedSeptember 30, 2010
    
    
    September 30, 2009Production:Ethanol sold (gallons)
    
    
    109,986,252
    
    
    
    87,645,515Distillers grains sold (tons)
    
    
    321,087
    
    
    
    267,699Revenues:Ethanol average price per gallon
    
    $
    1.739
    
    
    $
    1.58Distillers grains average price per ton
    
    $
    97.390
    
    
    $
    103.53Primary Inputs:Corn ground (bushels)
    
    
    39,408,254
    
    
    
    32,293,302Natural gas purchased (MMBTU)
    
    
    3,126,888
    
    
    
    2,760,264Costs of Primary Inputs:Corn average price per bushel ground
    
    $
    3.851
    
    
    $
    4.04Natural gas average price per MMBTU
    
    $
    5.009
    
    
    $
    4.907Other Costs:Chemical and additive costs per gallon of ethanol sold
    
    $
    0.062
    
    
    $
    0.066Denaturant cost per gallon of ethanol sold
    
    $
    0.042
    
    
    $
    0.036Electricity cost per gallon of ethanol sold
    
    $
    0.031
    
    
    $
    0.033Direct Labor cost per gallon of ethanol sold
    
    $
    0.018
    
    
    $
    0.022
 Revenues
  Ethanol
    25




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Distillers Grains
    26




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Corn Oil
  Cost of Goods Sold
  Corn Costs
    Natural Gas Costs
   27




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Operating Expense
  Operating Income
  Other Expense
  Changes in Financial Condition for the Fiscal Year Ended September 30, 2010 and 2009
    28




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Comparison of Fiscal Years Ended September 30, 2009 and 2008
  Critical Accounting Estimates
        29




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Liquidity and Capital Resources
    Year ended September 30,2010
    
    
    2009Net cash provided by (used in) operating activities
    
    $
    19,940,794
    
    
    $
    (2,244,876
    )Net cash used in investing activities
    
    
    (3,765,300
    )
    
    
    (13,931,689
    )Net cash provided by (used in) financing activities
    
    
    (20,122,799
    )
    
    
    22,980,155
 Cash Flow From Operating Activities
  Cash Flow Used in Investing Activities
  Cash Flow Used For Financing Activities
   30




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The following table shows cash flows for the fiscal years ended September 30, 2009 and 2008:
 Year ended September 30,2009
    
    
    2008Net cash used in operating activities
    
    $
    (2,244,876
    )
    
    $
    (1,894,355
    )Net cash used in investing activities
    
    
    (13,931,689
    )
    
    
    (59,289,152
    )Net cash provided by financing activities
    
    
    22,980,155
    
    
    
    61,005,541
 Cash Flow Used in Operating Activities
  Cash Flow Used in Investing Activities
  Cash Flow Provided by Financing Activities
  Short Term and Long Term Debt Source
   Line of Credit
   31




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Fixed Rate Note
   Variable Rate Note and Long Term Revolving Note
  Corn Oil Extraction Note
  Letter of Credit
   32




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Covenants
        Tax Abatement
   33




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Contractual Cash Obligations
  Payment Due By PeriodOne to
    
    
    Three toLess than
    
    
    Three
    
    
    Five
    
    
    After FiveContractual Cash Obligations
    
    Total
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    YearsLong-Term Debt Obligations
    
    $
    65,583,421
    
    
    $
    9,395,041
    
    
    $
    56,188,380
    
    
    $
    
    
    
    $
    Operating Lease Obligations
    
    
    3,328,194
    
    
    
    1,084,800
    
    
    
    2,243,394
    
    
    
    
    
    
    
    Purchase Obligations
    
    
    36,111,691
    
    
    
    33,365,354
    
    
    
    2,746,337
    
    
    
    
    
    
    
    Total Contractual Cash Obligations
    
    $
    105,023,306
    
    
    $
    43,845,195
    
    
    $
    61,178,111
    
    
    $
    
    
    
    $
    
  Off-Balance Sheet Arrangements
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Interest Rate Risk
   Outstanding ApproximateVariable Rate Debt at
    
    
    Interest Rate at
    
    
    Adverse 10% change in
    
    
    Annual Adverse change toSeptember 30, 2010
    
    
    September 30, 2010
    
    
    Interest Rates
    
    
    Income$
    28,000,000
    
    
    
    5.0
    %
    
    
    0.5
    %
    
    $
    140,000
 Item 7  Managements Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources
  34




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##### Table of Contents



Commodity Price Risk
    HypotheticalEstimated Volume
    
    
    
    
    
    
    Adverse Change inRequirements for the next 12
    
    
    
    
    
    
    Price as of
    
    
    Approximatemonths (net of forward and
    
    
    
    
    
    
    September 30,
    
    
    Adverse Change tofutures contracts)
    
    
    Unit of Measure
    
    
    2010
    
    
    IncomeNatural Gas
    
    
    3,162,500
    
    
    MMBTU
    
    
    10
    %
    
    $
    1,160,000Ethanol
    
    
    115,000,000
    
    
    Gallons
    
    
    10
    %
    
    $
    24,380,000Corn
    
    
    42,000,000
    
    
    Bushels
    
    
    10
    %
    
    $
    19,572,000
 Liability Risk
   35




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##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
  
    /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P 
  F-1




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##### Table of Contents



CARDINAL ETHANOL, LLC
  September 30, 2010
    
    
    September 30, 2009ASSETSCurrent AssetsCash
    
    $
    3,317,820
    
    
    $
    7,265,125Trade accounts receivable
    
    
    13,262,640
    
    
    
    5,945,146Miscellaneous receivables
    
    
    1,030,197
    
    
    
    1,021,479Inventories
    
    
    8,333,140
    
    
    
    5,791,302Deposits
    
    
    409,940
    
    
    
    1,045,079Prepaid and other current assets
    
    
    965,099
    
    
    
    846,771Derivative instruments
    
    
    1,970,877
    
    
    
    135,012Total current assets
    
    
    29,289,713
    
    
    
    22,049,914Property and EquipmentLand and land improvements
    
    
    21,082,869
    
    
    
    20,978,132Plant and equipment
    
    
    117,122,818
    
    
    
    116,888,805Building
    
    
    6,991,721
    
    
    
    6,991,721Office equipment
    
    
    316,219
    
    
    
    307,494Vehicles
    
    
    31,928
    
    
    
    31,928Construction in process
    
    
    3,480,322
    
    
    
    149,025,877
    
    
    
    145,198,080Less accumulated depreciation
    
    
    (16,245,531
    )
    
    
    (7,988,509
    )Net property and equipment
    
    
    132,780,346
    
    
    
    137,209,571Other AssetsDeposits
    
    
    80,000
    
    
    
    368,808Investment
    
    
    266,583
    
    
    
    Financing costs, net of amortization
    
    
    505,149
    
    
    
    699,959Total other assets
    
    
    851,732
    
    
    
    1,068,767Total Assets
    
    $
    162,921,791
    
    
    $
    160,328,252LIABILITIES AND EQUITYCurrent LiabilitiesAccounts payable
    
    $
    2,154,370
    
    
    $
    1,329,785Accounts payable- corn
    
    
    3,266,780
    
    
    
    1,556,398Construction retainage payable
    
    
    351,700
    
    
    
    351,700Accrued expenses
    
    
    1,264,755
    
    
    
    1,533,963Derivative instruments
    
    
    1,520,315
    
    
    
    861,569Current maturities of long-term debt and capital lease obligations
    
    
    9,395,041
    
    
    
    7,402,860Total current liabilities
    
    
    17,952,961
    
    
    
    13,036,275Long-Term Debt and Capital Lease Obligations
    
    
    56,188,380
    
    
    
    77,427,000Derivative Instruments
    
    
    3,130,402
    
    
    
    3,269,980Commitments and ContingenciesMembers EquityMembers contributions, net of cost of raising capital,14,606
units issued and outstanding
    
    
    70,912,213
    
    
    
    70,912,213Accumulated other comprehensive loss
    
    
    (4,650,717
    )
    
    
    (4,131,549
    )Retained earnings (deficit)
    
    
    19,388,552
    
    
    
    (185,667
    )Total members equity
    
    
    85,650,049
    
    
    
    66,594,997Total Liabilities and Members Equity
    
    $
    162,921,791
    
    
    $
    160,328,252
   F-2




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##### Table of Contents



CARDINAL ETHANOL, LLC
  Fiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    Fiscal Year EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2008Revenues
    
    $
    224,807,338
    
    
    $
    167,738,057
    
    
    $
    Cost of Goods SoldCost of goods sold
    
    $
    195,880,762
    
    
    $
    159,079,141
    
    
    $
    Lower of cost or market adjustment
    
    
    
    
    
    
    1,595,476
    
    
    
    Total
    
    
    195,880,762
    
    
    
    160,674,617
    
    
    
    Gross Profit (Loss)
    
    
    28,926,576
    
    
    
    7,063,440
    
    
    
    Operating ExpensesProfessional fees
    
    
    612,115
    
    
    
    757,950
    
    
    
    363,758General and administrative
    
    
    3,123,415
    
    
    
    2,968,101
    
    
    
    902,600Total
    
    
    3,735,530
    
    
    
    3,726,051
    
    
    
    1,266,368Operating Income (Loss)
    
    
    25,191,046
    
    
    
    3,337,389
    
    
    
    (1,266,368
    )Other Income (Expense)Grant income
    
    
    
    
    
    
    24,702
    
    
    
    143,862Interest and dividend income
    
    
    2,792
    
    
    
    2,654
    
    
    
    108,440Interest expense
    
    
    (4,797,649
    )
    
    
    (4,345,390
    )
    
    
    Miscellaneous income
    
    
    54,390
    
    
    
    29,460
    
    
    
    5,812Total
    
    
    (4,740,467
    )
    
    
    (4,288,574
    )
    
    
    258,114Net Income (Loss)
    
    $
    20,450,579
    
    
    $
    (951,185
    )
    
    $
    (1,008,254
    )Weighted Average Units Outstanding  basic and diluted
    
    
    14,606
    
    
    
    14,606
    
    
    
    14,606Net Income (Loss) Per Unit  basic and diluted
    
    $
    1,400.15
    
    
    $
    (65.12
    )
    
    $
    (69.03
    )Distributions Per Unit
    
    $
    60.00
    
    
    $
    
    
    
    $
    
   F-3




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##### Table of Contents



CARDINAL ETHANOL, LLC
  Fiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    Fiscal Year EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2008Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    20,450,579
    
    
    $
    (951,185
    )
    
    $
    (1,008,254
    )Adjustments to reconcile net income (loss) to net cash from operations:Depreciation and amortization
    
    
    8,451,832
    
    
    
    8,099,316
    
    
    
    33,077Change in fair value of derivative instruments
    
    
    2,424,135
    
    
    
    (3,072,937
    )
    
    
    Loss on sale of fixed asset
    
    
    
    
    
    
    
    
    
    
    1,472Dividend income
    
    
    (266,583
    )
    
    
    
    
    
    
    Lower of cost or market adjustments to inventory
    
    
    
    
    
    
    1,595,476
    
    
    
    Change in assets and liabilities:Trade accounts receivables
    
    
    (7,317,494
    )
    
    
    (5,945,146
    )
    
    
    Miscellaneous receivable
    
    
    (8,718
    )
    
    
    (994,479
    )
    
    
    (22,460
    )Interest receivable
    
    
    
    
    
    
    
    
    
    
    21,618Inventories
    
    
    (2,541,838
    )
    
    
    (7,386,778
    )
    
    
    Prepaid and other current assets
    
    
    (118,328
    )
    
    
    (789,048
    )
    
    
    (37,924
    )Deposits
    
    
    923,947
    
    
    
    322,563
    
    
    
    (1,097,450
    )Derivative instruments
    
    
    (4,260,000
    )
    
    
    2,937,925
    
    
    
    Accounts payable
    
    
    824,585
    
    
    
    1,153,663
    
    
    
    141,822Accounts payable-corn
    
    
    1,709,592
    
    
    
    1,556,398
    
    
    
    Accrued expenses
    
    
    (330,915
    )
    
    
    1,229,356
    
    
    
    73,744Net cash provided by (used for) operating activities
    
    
    19,940,794
    
    
    
    (2,244,876
    )
    
    
    (1,894,355
    )Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (284,978
    )
    
    
    (912,507
    )
    
    
    (846,152
    )Payments for construction in process
    
    
    (3,480,322
    )
    
    
    (13,019,182
    )
    
    
    (79,043,000
    )Proceeds from investments, net
    
    
    
    
    
    
    
    
    
    
    20,600,000Net cash used for investing activities
    
    
    (3,765,300
    )
    
    
    (13,931,689
    )
    
    
    (59,289,152
    )Cash Flows from Financing ActivitiesDividends paid
    
    
    (876,360
    )
    
    
    
    
    
    
    Payments for financing costs
    
    
    
    
    
    
    (24,744
    )
    
    
    112,399Payments for capital lease obligations
    
    
    (7,770
    )
    
    
    (7,245
    )
    
    
    Proceeds from long-term debt
    
    
    
    
    
    
    24,806,928
    
    
    
    61,117,940Payments on long-term debt
    
    
    (19,238,669
    )
    
    
    (1,794,784
    )
    
    
    Net cash provided by (used for) financing activities
    
    
    (20,122,799
    )
    
    
    22,980,155
    
    
    
    61,005,451Net Increase (Decrease) in Cash
    
    
    (3,947,305
    )
    
    
    6,803,590
    
    
    
    (177,966
    )Cash  Beginning of Period
    
    
    7,265,125
    
    
    
    461,535
    
    
    
    639,501Cash  End of Period
    
    $
    3,317,820
    
    
    $
    7,265,125
    
    
    $
    461,535
   F-4




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##### Table of Contents



CARDINAL ETHANOL, LLC
  Fiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    Fiscal Year EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2008Supplemental Cash Flow InformationInterest paid, net of $0 and $387,167 and $1,533,995 capitalized, respectively
    
    $
    5,067,484
    
    
    $
    2,874,893
    
    
    $
    Supplemental Disclosure of Noncash Investing and Financing ActivitiesConstruction costs in construction retainage and accounts payable
    
    $
    
    
    
    $
    351,700
    
    
    $
    9,429,538Interest paid by debt financing
    
    
    
    
    
    
    
    
    
    $
    675,132Financing costs in accounts payable
    
    
    
    
    
    
    
    
    
    
    12,000Change in derivative instruments included in accumulated other comprehensive loss
    
    
    (519,168
    )
    
    
    (2,378,351
    )
    
    
    (1,530,692
    )Accrued interest capitalized in construction process
    
    
    
    
    
    
    
    
    
    
    214,785Amortization of financing costs capitalized
    
    
    
    
    
    
    17,243
    
    
    
    56,699Capital expenditures included in accrued expenses
    
    
    62,497
    
    
    
    
    
    
    
    
   F-5




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##### Table of Contents



CARDINAL ETHANOL, LLC
  AccumulatedRetained
    
    
    OtherMember
    
    
    Earnings
    
    
    ComprehensiveContributions
    
    
    (Deficit)
    
    
    LossBalance  October 1, 2007
    
    
    70,912,213
    
    
    
    1,773,772
    
    
    
    (222,506
    )Net loss for year ended September 30, 2008
    
    
    
    
    
    
    (1,008,254
    )
    
    
    Other comprehensive lossUnrealized loss on derivative contracts, net
    
    
    
    
    
    
    
    
    
    
    (1,530,692
    )Balance  September 30, 2008
    
    
    70,912,213
    
    
    
    765,518
    
    
    
    (1,753,198
    )Net loss for year ended September 30, 2009
    
    
    
    
    
    
    (951,185
    )
    
    
    Other comprehensive incomeUnrealized loss on derivative contracts, net
    
    
    
    
    
    
    
    
    
    
    (2,378,351
    )Balance  September 30, 2009
    
    $
    70,912,213
    
    
    $
    (185,667
    )
    
    $
    (4,131,549
    )Net income for year ended September 30, 2010
    
    
    
    
    
    
    20,450,579
    
    
    
    Members Distributions
    
    
    
    
    
    
    (876,360
    )Other comprehensive incomeUnrealized loss on derivative contracts, net
    
    
    
    
    
    
    
    
    
    
    (519,168
    )Balance  September 30, 2010
    
    $
    70,912,213
    
    
    $
    19,388,552
    
    
    $
    (4,650,717
    )
   F-6




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##### Table of Contents



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Fiscal Reporting Period
   Cash
  Accounts Receivable
   Inventories
   F-7




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##### Table of Contents



Property and Equipment
  Land improvements
    
    15-20 yearsOffice building
    
    10-40 yearsOffice equipment
    
    5 yearsPlant and process equipment
    
    10-40 years
  Long-Lived Assets
   Financing Costs
  Grants
   F-8




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##### Table of Contents



Revenue Recognition
   Derivative Instruments
    Fair Value of Financial Instruments
  
    
    Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Company has the ability to access at the measurement date.
 
    
    Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
    
    Level 3 inputs are unobservable inputs for the asset or liability.
  F-9




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##### Table of Contents



Capitalization of interest
  Environmental Liabilities
  Net Income (Loss) per Unit
  Income Taxes
  2. CONCENTRATIONS
   F-10




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##### Table of Contents



3. INCOME TAXES
  2010
    
    
    2009Financial statement basis of assets
    
    $
    162,921,791
    
    
    $
    160,328,252Organization and start-up costs
    
    
    1,976,610
    
    
    
    1,976,610Book to tax depreciation and amortization
    
    
    (47,327,329
    )
    
    
    (25,874,665
    )Book to tax derivative instruments
    
    
    (1,970,877
    )
    
    
    (135,012
    )Income tax basis of assets
    
    $
    115,600,195
    
    
    $
    136,295,185Financial statement basis of liabilities
    
    $
    77,271,743
    
    
    $
    93,733,255Interest rate swap
    
    
    (4,650,717
    )
    
    
    (4,131,549
    )Income tax basis of liabilities
    
    $
    72,621,026
    
    
    $
    89,601,706
 4. MEMBERS EQUITY
   5. INVENTORIES
  2010
    
    
    2009Raw materials
    
    $
    2,481,521
    
    
    $
    1,806,167Work in progress
    
    
    1,646,842
    
    
    
    1,348,451Finished goods
    
    
    3,214,725
    
    
    
    2,021,267Spare parts
    
    
    990,052
    
    
    
    615,417Total
    
    $
    8,333,140
    
    
    $
    5,791,302
    F-11




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##### Table of Contents



6. DERIVATIVE INSTRUMENTS
  Commodity Contracts
    2010
    
    
    2009Short
    
    
    5,425,000
    
    
    
    620,000Long
    
    
    
    
    
    
    190,000
  2010
    
    
    2009Short
    
    
    3,570,000
    
    
    
    Long
    
    
    
    
    
    
    
 Interest Rate Swap
    F-12




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##### Table of Contents



2010:
 Instrument
    
    Balance Sheet Location
    
    Assets
    
    
    LiabilitiesInterest rate swap
    
    Derivative Instruments  Current
    
    $
    
    
    
    $
    1,520,315Interest rate swap
    
    Derivative Instruments  Long Term
    
    
    
    
    
    
    3,130,402Corn contracts
    
    Derivative Instruments  Current
    
    
    1,937,660
    
    
    
    Ethanol contracts
    
    Derivative Instruments  Current
    
    
    33,217
    
    
    
    
 2009:
 Instrument
    
    Balance Sheet Location
    
    Assets
    
    
    LiabilitiesInterest rate swap
    
    Derivative Instruments  Current
    
    $
    
    
    
    $
    861,569Interest rate swap
    
    Derivative Instruments  Long Term
    
    
    
    
    
    
    3,269,980Corn contracts
    
    Derivative Instruments  Current
    
    
    135,012
    
    
    
    
  Amount of(Loss)
    
    
    
    
    
    
    Amount ofReclassified
    
    
    
    
    
    
    Gain or (Loss)Amount of
    
    
    
    
    
    
    From
    
    
    
    
    
    
    Recognized in(Loss)
    
    
    Location of
    
    
    Accumulated
    
    
    
    
    
    
    Income onRecognized In
    
    
    (Loss)
    
    
    OCI into
    
    
    
    
    
    
    DerivativeOCI on
    
    
    Reclassified
    
    
    Income on
    
    
    
    
    
    
    (ineffectiveDerivatives in
    
    Derivative - for
    
    
    From
    
    
    Derivative -
    
    
    Location of
    
    
    portion)YearCash Flow
    
    Year ended
    
    
    Accumulated
    
    
    Year ended
    
    
    (Loss)
    
    
    endedHedging
    
    September 30,
    
    
    OCI into
    
    
    September 30,
    
    
    Recognized in
    
    
    September 30,Relationship
    
    2010
    
    
    Income
    
    
    2010
    
    
    Income
    
    
    2010Interest rate swaps
    
    $
    (2,440,450
    )
    
    Interest expense
    
    
    $
    (1,921,282
    )
    
    Interest expense
    
    
    $
    
 Derivatives Not Designated as
    
    State of Operations
    
    Year endedHedging Instruments
    
    Location
    
    September 30, 2010Corn contracts
    
    Cost of Goods Sold
    
    $
    (2,457,352
    )Ethanol contracts
    
    Cost of Goods Sold
    
    $
    33,217
  F-13




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##### Table of Contents



Amount of(Loss)
    
    
    
    
    
    
    Amount ofReclassified
    
    
    
    
    
    
    Gain or (Loss)Amount of
    
    
    
    
    
    
    From
    
    
    
    
    
    
    Recognized in(Loss)
    
    
    Location of
    
    
    Accumulated
    
    
    
    
    
    
    Income onRecognized In
    
    
    (Loss)
    
    
    OCI into
    
    
    
    
    
    
    DerivativeOCI on
    
    
    Reclassified
    
    
    Income on
    
    
    
    
    
    
    (ineffectiveDerivatives in
    
    Derivative - for
    
    
    From
    
    
    Derivative -
    
    
    Location of
    
    
    portion)YearCash Flow
    
    Year ended
    
    
    Accumulated
    
    
    Year ended
    
    
    (Loss)
    
    
    endedHedging
    
    September 30,
    
    
    OCI into
    
    
    September 30,
    
    
    Recognized in
    
    
    September 30,Relationship
    
    2009
    
    
    Income
    
    
    2009
    
    
    Income
    
    
    2009Interest rate swaps
    
    $
    (2,793,043
    )
    
    Interest expense
    
    
    $
    (414,692
    )
    
    Interest expense
    
    
    $
    
 Derivatives Not Designated as
    
    State of Operations
    
    Year endedHedging Instruments
    
    Location
    
    September 30, 2009Corn contracts
    
    Cost of Goods Sold
    
    $
    3,072,937
 7. FAIR VALUE MEASUREMENTS
  2010Fair Value Measurement UsingCarrying Amount
    
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest rate swap liability
    
    $
    (4,650,717
    )
    
    $
    (4,650,717
    )
    
    $
    
    
    
    $
    (4,650,717
    )
    
    $
    Commodity derivative instruments
    
    
    1,970,877
    
    
    
    1,970,877
    
    
    
    1,970,877
    
    
    
    
    
    
    
    
 2009Fair Value Measurement UsingCarrying Amount
    
    
    Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest rate swap liability
    
    $
    (4,131,549
    )
    
    $
    (4,131,549
    )
    
    $
    
    
    
    $
    (4,131,549
    )
    
    $
    Commodity derivative instruments
    
    
    135,012
    
    
    
    135,012
    
    
    
    135,012
    
    
    
    
    
    
    
    
   F-14




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##### Table of Contents



8. BANK FINANCING
  Line of Credit
  Fixed Rate Note
   Variable Rate Note and Long Term Revolving Note
  Corn Oil Extraction Note
   F-15




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##### Table of Contents



Letters of Credit
    2010
    
    
    2009Fixed rate loan
    
    $
    37.996,164
    
    
    $
    40,816,864Variable rate loan
    
    
    24,420,383
    
    
    
    30,728,352Revolving loan
    
    
    
    
    
    
    9,750,000Corn oil extraction note
    
    
    3,150,000
    
    
    
    3,510,000Capital lease obligation (note 9)
    
    
    16,874
    
    
    
    24,644Totals
    
    
    65,583,421
    
    
    
    84,829,860Less amounts due within one year
    
    
    (9,395,041
    )
    
    
    (7,402,860
    )Net long-term debt
    
    $
    56,188,380
    
    
    $
    77,427,000
  2011
    
    $
    9,395,0412012
    
    
    9,057,8572013
    
    
    9,619,4622014
    
    
    37,511,061Total long-term debt
    
    $
    65,583,421
 9. LEASES
     F-16




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##### Table of Contents



Capital
    
    
    Operating
    
    
    Total2011
    
    $
    8,928
    
    
    $
    1,084,800
    
    
    $
    1,093,7282012
    
    
    8,928
    
    
    
    1,084,800
    
    
    
    1,093,7282013
    
    
    744
    
    
    
    1,068,500
    
    
    
    1,069,2442014
    
    
    
    
    
    
    90,094
    
    
    
    90,094Total minimum lease commitments
    
    
    18,600
    
    
    
    3,328,194
    
    
    
    3,346,794Less interest
    
    
    (1,726
    )
    
    
    
    
    
    
    (1,726
    )Present value of minimum lease payments
    
    $
    16,874
    
    
    $
    3,328,194
    
    
    $
    3,346,794
 10. COMMITMENTS AND CONTINGENCIES
 Corn Procurement
  Marketing Agreement
   Utility Agreement
  Software License Agreement
   F-17




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##### Table of Contents



Development Agreement
  Tax abatement
  Legal Proceedings
  11. EMPLOYEE BENEFIT PLAN
  12. ACCUMULATED OTHER COMPREHENSIVE LOSS AND COMPREHENSIVE LOSS
  2010
    
    
    2009Balance at beginning of year
    
    $
    (4,131,549
    )
    
    $
    (1,753,198
    )Unrealized loss on derivative instruments
    
    
    (519,168
    )
    
    
    (2,378,351
    )Balance at end of year
    
    $
    (4,650,717
    )
    
    $
    (4,131,549
    )
  2010
    
    
    2009Net Income (loss)
    
    $
    20,450,579
    
    
    $
    (951,185
    )Interest rate swap fair value change
    
    
    (519,168
    )
    
    
    (2,378,351
    )Comprehensive Income (loss)
    
    $
    19,931,411
    
    
    $
    (3,329,536
    )
  F-18




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##### Table of Contents



13. UNCERTAINTIES IMPACTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS
    14. QUARTERLY FINANCIAL DATA (UNAUDITED)
  First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFiscal year ended September 30, 2010Revenues
    
    $
    63,549,871
    
    
    $
    54,805,570
    
    
    $
    47,654,811
    
    
    $
    58,797,086Gross profit
    
    
    12,951,536
    
    
    
    8,610,842
    
    
    
    3,462,355
    
    
    
    3,901,843Operating income
    
    
    12,047,683
    
    
    
    7,652,759
    
    
    
    2,499,980
    
    
    
    2,990,624Net income
    
    
    10,786,825
    
    
    
    6,456,611
    
    
    
    1,330,075
    
    
    
    1,877,068Basic and diluted earnings per unit
    
    $
    738.52
    
    
    $
    442.05
    
    
    $
    91.06
    
    
    $
    128.51
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFiscal year ended September 30, 2009Revenues
    
    $
    26,272,445
    
    
    $
    47,664,537
    
    
    $
    45,338,895
    
    
    $
    50,712,760Gross profit (loss)
    
    
    (2,405,958
    )
    
    
    (644,990
    )
    
    
    3,977,120
    
    
    
    6,137,267Operating income (loss)
    
    
    (3,002,334
    )
    
    
    (1,660,596
    )
    
    
    2,888,022
    
    
    
    5,112,293Net income (loss)
    
    
    (3,690,810
    )
    
    
    (2,435,132
    )
    
    
    1,445,144
    
    
    
    3,729,613Basic and diluted earnings (loss) per unit
    
    $
    (252.69
    )
    
    $
    (166.72
    )
    
    $
    98.94
    
    
    $
    255.35
  F-19




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##### Table of Contents



First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFiscal year ended September 30, 2008Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Gross profit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    (184,805
    )
    
    
    (181,665
    )
    
    
    (212,870
    )
    
    
    (687,028
    )Net income (loss)
    
    
    (41,894
    )
    
    
    (119,990
    )
    
    
    (180,188
    )
    
    
    (666,182
    )Basic and diluted earnings (loss) per unit
    
    $
    (2.87
    )
    
    $
    (8.22
    )
    
    $
    (12.34
    )
    
    $
    (45.61
    )
   F-20




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
   Internal Control Over Financial Reporting
 Inherent Limitations Over Internal Controls
       36




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##### Table of Contents



Managements Annual Report on Internal Control Over Financial Reporting
   Changes in Internal Control over Financial Reporting
  
 ITEM 9B.
    
    OTHER INFORMATION.
  
 PART III.
  
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION.
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS.
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
   37




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##### Table of Contents



ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
  (1) Financial Statements
  (2) Financial Statement Schedules
  (3) Exhibits
 Exhibit
    
    
    
    FiledNo.
    
    Exhibit
    
    Herewith
    
    Incorporated by Reference3.1
    
    
    Articles of Organization of the registrant.
    
    
    
    Exhibit 3.1 to the
registrants
registration statement
on Form SB-2 (Commission
File 333-131749) filed
on February 10, 2006.3.1A
    
    
    Name Change Amendment
    
    
    
    Exhibit 3.1A to the
registrants
registration statement
on Form SB-2 (Commission
File 333-131749) filed
on February 10, 2006.3.2
    
    
    Second Amended and Restated Operating
Agreement of the registrant
    
    
    
    Exhibit 3.2 to the
registrants
registration statement
on Form SB-2 (Commission
File 333-131749) filed
on February 10, 2006.4.1
    
    
    Form of Membership Unit Certificate.
    
    
    
    Exhibit 4.2 to the
registrants
registration statement
on Form SB-2 (Commission
File 333-131749) filed
on February 10, 2006.10.1
    
    
    Energy Management Agreement dated January 23,
2006 between Cardinal Ethanol, LLC and U.S.
Energy Services, Inc.
    
    
    
    Exhibit 10.9 to the
registrants
registration statement
on Form SB-2 (Commission
File 333-131749) filed
on February 10, 2006.10.2
    
    
    Distillers Grain Marketing Agreement dated
December 13, 2006 between Cardinal Ethanol,
LLC and Commodity Specialist Company.
    
    
    
    Exhibit 10.19 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.3
    
    
    Ethanol Purchase and Sale Agreement dated
December 18, 2006 between Cardinal Ethanol,
LLC and Murex N.A., Ltd.
    
    
    
    Exhibit 10.21 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.4
    
    
    Construction Loan Agreement dated December
19, 2006 between Cardinal Ethanol, LLC and
First National Bank of Omaha.
    
    
    
    Exhibit 10.22 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.
  38




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##### Table of Contents



Exhibit
    
    
    
    FiledNo.
    
    Exhibit
    
    Herewith
    
    Incorporated by Reference10.5
    
    
    Construction Note dated December 19, 2006
between Cardinal Ethanol, LLC and First
National Bank of Omaha.
    
    
    
    Exhibit 10.23 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.6
    
    
    Revolving Note dated December 19, 2006
between Cardinal Ethanol, LLC and First
National Bank of Omaha.
    
    
    
    Exhibit 10.24 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.7
    
    
    Letter of Credit Promissory Note and
Continuing Letter of Credit Agreement dated
December 19, 2006 between Cardinal Ethanol,
LLC and First National Bank of Omaha.
    
    
    
    Exhibit 10.25 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.8
    
    
    Construction Loan Mortgage, Security
Agreement, Assignment of Leases and Rents and
Fixture Financing Statement dated December
19, 2006 between Cardinal Ethanol, LLC and
First National Bank of Omaha.
    
    
    
    Exhibit 10.26 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.9
    
    
    Security Agreement dated December 19, 2006
between Cardinal Ethanol, LLC and First
National Bank of Omaha.
    
    
    
    Exhibit 10.27 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.10
    
    
    Master Agreement dated December 19, 2006
between Cardinal Ethanol, LLC and First
National Bank of Omaha.
    
    
    
    Exhibit 10.28 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.10.11
    
    
    Employment Agreement dated January 22, 2007
between Cardinal Ethanol, LLC and Jeff
Painter.
    
    
    
    Exhibit 10.29 to the
registrants Form 10-QSB
filed with the
Commission on February
14, 2007.10.12
    
    
    Long Term Transportation Service Contract for
Redelivery of Natural Gas between Ohio Valley
Gas Corporation and Cardinal Ethanol, LLC
dated March 20, 2007.
    
    
    
    Exhibit 10.32 to the
registrants Form 10-QSB
filed with the
Commission on May 15,
2007.10.13
    
    
    Agreement between Indiana Michigan Power
Company and Cardinal Ethanol, LLC dated April
18, 2007.
    
    
    
    Exhibit 10.33 to the
registrants Form 10-QSB
filed with the
Commission on May 15,
2007.10.14
    
    
    Risk Management Agreement entered into
between Cardinal Ethanol, LLC and John
Stewart & Associates, Inc. dated July 16,
2007.
    
    
    
    Exhibit 10.34 to the
registrants Form 10-QSB
filed with the
Commission on August 3,
2007.10.15
    
    
    Consent to Assignment and Assumption of
Marketing Agreement between Commodity
Specialists Company and Cardinal Ethanol, LLC
dated August 28, 2007.
    
    
    
    Exhibit 10.37 to the
registrants Form 10-KSB
filed with the
Commission on December
17, 2007.10.16
    
    
    Tricanter Installation and Purchase Agreement
between ICM, Inc. and Cardinal Ethanol, LLC
dated June 27, 2008.
    
    
    
    Exhibit 10.1 to the
registrants Form 10-QSB
filed with the
Commission on August 14,
2008
  39




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##### Table of Contents



Exhibit
    
    
    
    FiledNo.
    
    Exhibit
    
    Herewith
    
    Incorporated by Reference10.17
    
    
    Corn Oil Extraction Note between First
National Bank of Omaha and Cardinal Ethanol,
LLC dated July 31, 2008.
    
    
    
    Exhibit 10.2 to the
registrants Form 10-QSB
filed with the
Commission on August 14,
200810.18
    
    
    First Amendment of Construction Loan Mortgage
between First National Bank of Omaha and
Cardinal Ethanol, LLC dated July 31, 2008.
    
    
    
    Exhibit 10.3 to the
registrants Form 10-QSB
filed with the
Commission on August 14,
200810.19
    
    
    Third Amendment of Construction Loan
Agreement between First National Bank of
Omaha and Cardinal Ethanol, LLC dated July
31, 2008.
    
    
    
    Exhibit 10.4 to the
registrants Form 10-QSB
filed with the
Commission on August 14,
2008.10.20
    
    
    Fixed Rate Note between First National Bank
of Omaha and Cardinal Ethanol, LLC dated
April 8, 2009.
    
    
    
    Exhibit 10.1 to the
registrants Form 10-Q
filed with the
Commission on May 20,
2009.10.21
    
    
    Long Term Revolving Note between First
National Bank of Omaha and Cardinal Ethanol,
LLC dated April 8, 2009.
    
    
    
    Exhibit 10.2 to the
registrants Form 10-Q
filed with the
Commission on May 20,
2009.10.22
    
    
    Variable Rate Note between First National
Bank of Omaha and Cardinal Ethanol, LLC dated
April 8, 2009.
    
    
    
    Exhibit 10.3 to the
registrants Form 10-Q
filed with the
Commission on May 20,
2009.10.23
    
    
    Corn Oil Extraction Term Note between First
National Bank of Omaha and Cardinal Ethanol,
LLC dated April 8, 2009.
    
    
    
    Exhibit 10.4 to the
registrants Form 10-Q
filed with the
Commission on May 20,
2009.10.24
    
    
    Amendment No 1 to Ethanol Purchase and Sale
Agreement between Murex N.A., LTD and
Cardinal Ethanol, LLC dated July 2, 2009.
    
    
    
    Exhibit 99.1 to the
registrants Form 8-K
filed with the
Commission on July 7,
2009.10.25
    
    
    Results Guarantee Agreement between Pavilion
Technologies and Cardinal Ethanol, LLC dated
September 30, 2009.
    
    
    
    Exhibit 10.6 to the
registrants Form 10-K
filed with the
Commission on December
28, 2009.10.26
    
    
    Amendment to Tricanter Purchase and
Installation Agreement between ICM, Inc. and
Cardinal Ethanol, LLC dated February 16,
2010.
    
    
    
    Exhibit 10.1 to the
registrants Form 10-Q
filed with the
Commission on May 14,
2010.10.27
    
    
    Carbon Dioxide Purchase and Sale Agreement
between EPCO Carbon Dioxide Products, Inc.
and Cardinal Ethanol, LLC dated March 8,
2010.
    
    
    
    Exhibit 10.2 to the
registrants Form 10-Q
filed with the
Commission on May 14,
2010.10.28
    
    
    Construction Agreement between LAH
Development, LLC and Cardinal Ethanol, LLC
dated May 11, 2010.
    
    
    
    Exhibit 10.3 to the
registrants Form 10-Q
filed with the
Commission on May 14,
2010.10.29
    
    
    Non-Exclusive Co2 Facility Site Lease
Agreement between EPCO Carbon Dioxide
Products, Inc and Cardinal Ethanol, LLC dated
August 11, 2010.
    
    
    
    Exhibit 10.1 to the
registrants Form 10-Q
filed with the
Commission on August 12,
2010.
  40




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##### Table of Contents



Exhibit
    
    
    
    FiledNo.
    
    Exhibit
    
    Herewith
    
    Incorporated by Reference10.30
    
    
    Employee Bonus Memo dated October 14, 2010.
    
    X10.31
    
    
    Employee Bonus Plan for 2010/2011.
    
    X14.1
    
    
    Code of Ethics of Cardinal Ethanol, LLC.
    
    
    
    Exhibit 14.1 to the
registrants Form 10-KSB
filed with the
Commission on December
22, 2006.31.1
    
    
    Certificate Pursuant to 17 CFR 240.13a-14(a)
    
    X31.2
    
    
    Certificate Pursuant to 17 CFR 240.13a-14(a)
    
    X32.1
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
    
    X32.2
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
    
    X
 (+)
    
    Confidential Treatment Requested.(X)
    
    Filed herewith 
 SIGNATURES
  CARDINAL ETHANOL, LLCDate: December 21, 2010
    /s/ Jeff PainterJeff PainterChief Executive Officer
(Principal Executive Officer)Date: December 21, 2010
    /s/ William DarttWilliam DarttChief Financial Officer
(Principal Financial Officer)  41




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##### Table of Contents



Date: December 21, 2010
    
    /s/ Robert DavisRobert DavisChairman and DirectorDate: December 21, 2010
    
    /s/ Dale SchwietermanDale SchwietermanTreasurer and DirectorDate: December 21, 2010
    
    /s/ Tom ChalfantTom ChalfantSecretary and DirectorDate: December 21, 2010
    
    /s/ Troy PrescottTroy PrescottVice Chairman and DirectorDate: December 21, 2010
    
    /s/ Ralph BrumbaughRalph Brumbaugh, DirectorDate: December 21, 2010
    
    /s/ Thomas C. ChronisterThomas C. Chronister, DirectorDate: December 21, 2010David Matthew Dersch, DirectorDate: December 21, 2010
    
    /s/ Everett Leon HartEverett Leon Hart, DirectorDate: December 21, 2010
    
    /s/ Cyril G. LeFevreCyril G. LeFevre, DirectorDate: December 21, 2010
    
    /s/ C. Allan RosarC. Allan Rosar, DirectorDate: December 21, 2010Lawrence A. Lagowski, DirectorDate: December 21, 2010
    
    /s/ Robert BakerRobert Baker, DirectorDate: December 21, 2010L. Marshall Roch, Director
  42