GENERAL



This Management's Discussion and Analysis section discusses the Company's
results of operations for the years ending September 30, 2019, 2018 and 2017,
together with its balance sheets as of September 30, 2019, and 2018. This
discussion should be read in conjunction with the consolidated financial
statements included herewith and the notes to the consolidated financial
statements thereto and the risk factors contained herein, as well as Part I,
Item 1. "Business - Company Overview and Recent Events."

OVERVIEW

Advanced BioEnergy, LLC ("Company," "we," "our," "Advanced BioEnergy" or "ABE")
was formed in 2005 as a Delaware limited liability company. Until the December
19, 2019 closing the Asset Sale as described above, our business consisted of
producing ethanol and co-products, including wet, modified and dried distillers'
grains, and corn oil through the two ethanol production facilities in Aberdeen
and Huron, South Dakota owned and operated by our subsidiary, ABE South Dakota,
LLC ("ABE South Dakota").

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



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

(1) Actual permitted gallons are 65.7 million for Aberdeen and 42.0 million for

Huron totaling 107.7 million gallons.

(2) Our plants produce and sell wet, modified, and dried distillers' grains. The

stated quantities are on a fully dried basis operating at full production


    capacity.


RESULTS OF OPERATIONS

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

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





                                                        Year Ended                               Year Ended
                                                    September 30, 2019                       September 30, 2018

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

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




Net Sales

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

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Cost of Goods Sold



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

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

Selling, General, and Administrative Expenses

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



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

Interest Expense

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

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

The following table reflects quantities of our products sold at average net prices as well as bushels of corn ground and therms of natural gas burned at average costs for fiscal 2018 and fiscal 2017 for our South Dakota plants:





                                                       Year Ended                               Year Ended
                                                   September 30, 2018                       September 30, 2017

Product Sales Information                      Quantity          Average Cost          Quantity           Average Cost
                                            (In thousands)                          (In thousands)
Ethanol (gallons)                                    83,869     $         1.23                84,742     $         1.39
Distillers grains (tons)                                209     $       128.06                   210     $        96.91
Corn Oil (pounds)                                    20,273     $         0.20                19,551     $         0.25

Product Cost Information                       Quantity         Average Price          Quantity          Average Price
Corn (bushels)                                       29,357     $         3.25                29,517     $         3.15
Natural Gas (therms)                                  2,106     $         3.92                 2,123     $         3.36




Net Sales

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

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Cost of Goods Sold



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

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

Selling, General, and Administrative Expenses

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



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

Interest Expense



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

Changes in Financial Position for the Year ended September 30, 2019

Current Assets



The decrease in current assets at September 30, 2019 compared to September 30,
2018 of $8.2 million was primarily due to principal payments of $1.0 million,
capital expenditures of $7.4 million and cash from operation of $9.8 million,
offset by proceeds from debt of $10.8 million.

Property, Plant and Equipment

The $3.5 million increase in property, plant and equipment at September 30, 2019 compared to September 30, 2018 was primarily due to $7.4 million of capital expenditures offset by $3.9 million of depreciation expense.

Current Liabilities



Accounts payable and accrued expenses decreased by $1.0 million at September 30,
2019 compared to September 30, 2018. The primary reason for the increase is a
difference of timing of payments to vendors along with a change in
classification of the railcar damage accrual from current to long-term.

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

The current portion of long-term debt increased by $28.8 million at September 30, 2019 compared to September 30, 2018. The increase was the result of a $6.5 million short-term revolver in August 2019, and all debt becoming current due to an event of default.

Long-term debt decreased by $19.0 million at September 30, 2019 compared to September 30, 2018. This decrease was the result of all debt becoming current due to an event of default.



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CAPITAL RESOURCES



During fiscal 2019, we conducted our business activities and plant operations
through the parent company, Advanced BioEnergy, and its primary operating
subsidiary, ABE South Dakota. ABE Fairmont has had minimal activity since the
December 2012 sale of the Fairmont facility. The liquidity and capital resources
for each entity are based on that entity's existing financing arrangements and
capital structure. In fiscal 2019, Advanced BioEnergy was highly restricted in
its ability to use the cash and other financial resources of ABE South Dakota
for the benefit of Advanced BioEnergy, with the exception of allowable
distributions as defined under the Master Credit Agreement with AgCountry. With
the December 19, 2019 repayment of our obligations to AgCountry, the Master
Credit Agreement and related agreements were terminated in accordance with their
terms.

Advanced BioEnergy, LLC

ABE had cash and cash equivalents of $0.2 million on hand at September 30, 2019. ABE did not have any debt outstanding as of September 30, 2019.



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

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

ABE Fairmont

ABE Fairmont was dissolved in fiscal 2019 and did not exist at September 30, 2019.

ABE South Dakota

ABE South Dakota had cash and cash equivalents of $5.2 million on hand at September 30, 2019. As of September 30, 2019, ABE South Dakota had interest-bearing term debt outstanding of $29.9 million.

AgCountry Master Credit Agreement



On December 19, 2019, all amounts outstanding under the Master Credit Agreement
dated December 29, 2015, as amended ("Master Credit Agreement") between ABE
South Dakota as borrower and AgCountry Farm Credit Services, PCA as lender
("AgCountry") were repaid in full. The total amount repaid was approximately
$31.0 million, which was repaid from the purchase price from the Asset Sale
described above. The $31.0 million payment consisted of the following amounts
outstanding as of the closing date of the Asset Sale: $30.5 million in
principal, $0.4 million in interest and $0.1 million in fees and
expenses. Effective upon the repayment, the Master Credit Agreement and all
related documents were terminated in accordance with their terms and AgCountry
released its security interest in, and liens and mortgages on, all of the
properties, rights and assets of ABE South Dakota.

Below is a summary of the Master Credit Agreement and its terms that were in effect as of September 30, 2019:



On December 29, 2015, ABE South Dakota entered into the Master Credit Agreement
with AgCountry to refinance its existing 2010 Senior Credit Agreement. On
December 29, 2015, the Company also entered into (i) a First Supplement to the
Master Credit Agreement covering a $10.0 million Revolving Term Facility and
(ii) a Second Supplemental covering a $20.0 million Term Loan. The transaction
funded on December 30, 2015.

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

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

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

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



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

• ABE South Dakota has a minimum working capital requirement of $12.75

million at September 30, 2016 and thereafter. Working capital is

calculated as (i) (a) current assets plus (b) the amount available under

the Revolving Term Facility, less (ii) current liabilities, measured

quarterly.

• ABE South Dakota's owner's equity ratio was the ratio of (i) net worth

divided by (ii) total assets. This ratio was to be measured annually at

fiscal year-end and would have increased by 2% each fiscal year, from 40%

at September 30, 2015, until a 50% ratio was achieved and maintained. This

covenant was eliminated by the First Amendment (as defined below).

• ABE South Dakota must maintain a ratio of current assets to current

liabilities of not less than 1.2 to 1.0.

• ABE South Dakota's debt to EBITDA ratio must be less than 4.00:1.00. Debt

is defined as total interest bearing debt, while EBITDA is defined as

earnings before interest, taxes, depreciation, and amortization. The debt


        to EBITDA ratio will be measured quarterly, but tested annually at each
        fiscal year end.

• ABE South Dakota's minimum fixed charge coverage ratio is 1.15:1.00 and is

measured quarterly, but tested annually at each fiscal year end. The fixed


        charge coverage ratio is calculated by dividing EBITDA by the sum of
        scheduled payments of principal and interest, capital expenditures, any
        cash taxes, and distributions. When ABE South Dakota has achieved and
        maintained an owners' equity ratio of 60.0% and working capital of $15.0

million, then the minimum fixed charge coverage ratio requirement will be

reduced to 1.00:1.00. If the owners' equity ratio subsequently declines


        below 60.0%, or working capital declines below $15.0 million, then the
        1.15:1.00 minimum fixed charge ratio covenant will be reinstated.

• ABE South Dakota is limited to annual capital expenditures of $2.0 million

without prior consent of AgCountry, and is limited from incurring

additional debt over certain amounts without prior approval, and making

additional investments without prior approval of AgCountry.

• ABE South Dakota is also prohibited from making member distributions in


        excess of 40% of pre-tax net income in a given year without the prior
        consent of Ag Country. When ABE South Dakota achieves and maintains
        owners' equity ratio of 60.0% and working capital of $15.0 million, then
        it may pay member dividends of 100.0% of pre-tax net income. If the

owner's equity ratio declines below 60.0%, or working capital declines

below $15.0 million, then dividends will be restricted until ABE South

Dakota regains compliance. ABE South Dakota must meet all loan covenants

before and after any distribution.

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

2016 Term Loan



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

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2018 Construction and Term Loan



On March 13, 2018, ABE South Dakota entered into the Fourth Supplement to the
Master Credit Agreement ("2018 Term Loan") with AgCountry to finance a grain
storage and receiving facility at the Aberdeen plant. The agreement provides for
a $5.0 million multiple advance credit facility. The loan has a variable
interest rate equal to the one-month LIBOR rate plus a "Margin" of 350 basis
points. During the construction period, the Company will make quarterly interest
payments in arrears on the first day of each quarter. Upon completion of
construction, the Company will begin making quarterly principal payments in the
amount of $250,000 per quarter, plus accrued interest. The 2018 Term Loan will
be fully amortized over five years, with the final payment on July 1, 2024. At
September 30, 2019, $4.3 million had been drawn on the 2018 Term Loan, and
$47,000 in loan fees and closing costs had been incurred, which have been
classified as deferred financing costs and will be amortized as interest expense
over the term of the loan.

2019 Short-Term Revolving Credit Loan



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

Amendments and Waivers to Master Credit Agreement



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

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

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

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

As a result of a depressed margin environment in fiscal 2019 and fiscal 2018,
ABE South Dakota requested waivers for certain specific Events of Default in
fiscal 2019 and at September 30, 2018, and requested covenant amendments for
specific future covenants for which ABE South Dakota projected possible
non-compliance. Although ABE South Dakota's lender, AgCountry Farm Credit
Services, PCA, granted certain waivers and covenant amendments to the Master
Credit Agreement, as discussed below, we were unable to meet other certain
covenant and payment obligations subsequent to those waived and accordingly, an
Event of Default occurred.

On October 19, 2018, ABE South Dakota entered into a Limited Waiver and Third
Amendment to the Master Credit Agreement ("Third Amendment") to waive certain
Events of Default related to covenant compliance as of September 30, 2018 and
temporarily amend certain future covenants. The Third Amendment included the
following covenant waiver and amendments: (i) the Fixed Charge Coverage Ratio
was waived as of September 30, 2018 and reduced to a ratio of 1.00:1.00 as of
September 30, 2019, and reverts back to 1.15:1.00 at September 30, 2020, (ii)
the Working Capital Covenant was reduced to $10 million at September 30, 2018
and December 31, 2018, $9 million at March 31, 2019 and June 30, 2019, then
increased to $10 million at September 30, 2019 and $12 million at September 30,
2020 and all times thereafter, (iii) the Capital Expenditures covenant was
increased to $8.0 million for the year ending September 30, 2019, and reverts
back to $2.0 million for all subsequent years, and (iv) the outstanding Debt to
EBITDA Ratio was waived at September 30, 2018 and will revert back to the
requirement that it be less than 4:00:1:00 on the last day of each fiscal year
end beginning September 30, 2019.

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

(i) defer the next three principal payments due January 1, April 1, and July


        1, 2019 until the Term Loan maturity date on January 1, 2021;


  (ii) waive the Fixed Charge Coverage Ratio at September 30, 2019,


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


  (iv) waive the September 30, 2019 Debt to EBITDA Ratio, and

(v) add a Cash Sweep Covenant whereby ABE South Dakota would be required to

pay additional principal at the end of each fiscal year in the amount of

30 percent of Free Cash Flow. In order for a Cash Sweep payment to be

made, ABE South Dakota must remain in compliance with all covenants before

and after the payment. Free Cash Flow is defined as: fiscal year EBITDA

less interest expense, scheduled principal payments, and non-financed

maintenance capital expenditures. The Fourth Amendment would also restrict

future dividend payments until all covenants revert back to originally set

levels.




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

On August 7, 2019, ABE South Dakota entered into a Second Limited Waiver Agreement to the Master Credit Agreement ("Second Limited Waiver") to waive outstanding and expected Events of Default related to compliance with the Working Capital Covenant at July 31, 2019 and August 31, 2019, and the Current Ratio Covenant at June 30, 2019, July 31, 2019 and August 31, 2019.



On October 9, 2019, ABE South Dakota entered into a Third Limited Waiver and
Deferral Agreement ("Third Limited Waiver") to: (i) waive outstanding Events of
Default related to compliance with the Working Capital and Current Ratio
covenants at September 30, 2019, (ii) extend the funding period of the 2018 Term
Loan to November 1, 2019, (iii) amend the repayment obligations of the 2018 Term
Loan to begin January 1, 2020, and (iv) defer the principal payment due October
1, 2019 to the Term Loan Maturity Date.

CASH FLOWS

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





                                                               Years Ended September 30
                                                     2019                2018                2017
                                                (In thousands)      (In thousands)      (In thousands)
Net cash provided by (used in) operating
activities                                      $        (9,755 )   $         1,508     $        13,186
Net cash used in investing activities                    (7,318 )            (3,861 )            (2,663 )
Net cash provided by (used in) financing
activities                                                9,769              (4,724 )            (7,135 )






Cash Flow from Operations

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

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

Cash Flow from Investing Activities



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

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

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Cash Flow from Financing Activities



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

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

CREDIT ARRANGEMENTS



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



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




CONTRACTUAL OBLIGATIONS

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



                                                              Years Ending September 30,
                                   2020        2021        2022        2023        2024      Thereafter       Total
Long-term debt obligations(1)    $ 29,593     $     -     $     -     $     -     $    -     $         -     $ 29,593
Operating lease obligations(2)      3,633       3,379       2,666       1,939        735               -       12,352

Total contractual obligations $ 33,226 $ 3,379 $ 2,666 $ 1,939 $ 735 $ - $ 41,945

(1) Amounts represent principal and interest due under our credit facilities,

assuming contractual maturities.

(2) Operating lease obligations consist primarily of rail cars, mobile equipment


    and office space.




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

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Note 1 to our consolidated financial statements contains a summary of our
significant accounting policies, many of which require the use of estimates and
assumptions. Accounting estimates are an integral part of the preparation of
financial statements and are based upon management's current judgment. We used
our knowledge and experience about past events and certain future assumptions to
make estimates and judgments involving matters that are inherently uncertain and
that affect the carrying value of our assets and liabilities. We believe that of
our significant accounting policies, the following are noteworthy because
changes in these estimates or assumptions could materially affect our financial
position and results of operations:

Revenue Recognition



Effective October 1, 2018, the Company adopted the new guidance of Accounting
Standard Codification ("ASC") Topic 606, "Revenue from Contracts with Customers"
(Topic 606) using the modified retrospective approach. Topic 606 requires the
Company to recognize revenue to reflect the transfer of promised goods or
services to customers in an amount that reflects the consideration to which ABE
expects to be entitled in exchange for those goods or services. The new guidance
requires the Company to apply the following steps: (1) identify the contract
with a customer; (2) identify the performance obligations in the contract; (3)
determine the transaction price; (4) allocate the transaction price to the
performance obligations in the contract; and (5) recognize revenue when, or as,
the Company satisfies a performance obligation. The Company generally recognizes
revenue at a point in time. The majority of the Company's contracts with
customers have one performance obligation and a contract duration of one year or
less. The adoption of this new guidance did not result in any change to our
recognition of revenue.

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

  • Sales of ethanol


  • Sales of distillers grains


  • Sales of distillers corn oil

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

Commodity Sales and Purchase Contracts, Derivative Instruments



The Company enters into forward sales contracts for ethanol, distillers and corn
oil, and purchase contracts for corn and natural gas. The Company classifies
these sales and purchase contracts as normal sales and purchase contracts and
accordingly these contracts are not marked to market. These contracts provide
for the sale or purchase of an item other than a financial instrument or
derivative instrument that will be delivered in quantities expected to be sold
or used over a reasonable period in the normal course of business.

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

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

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

Inventories

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

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives:





                          Office equipment    3-7 Years
                          Other equipment     1-5 Years
                          Process equipment    15 Years
                          Buildings            40 Years

Interest capitalized in property and equipment was $353,000 and $32,000 in fiscal 2019 and 2018, respectively.


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Maintenance and repairs are charged to expense as incurred; major improvements
and betterments are capitalized. Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount on
the asset group may not be recoverable. An impairment loss would be recognized
when estimated undiscounted future cash flows from operations are less than the
carrying value of the asset group. An impairment loss would be measured by the
amount by which the carrying value of the asset exceeds the estimated fair
value.

INTEREST RATE/FOREIGN EXCHANGE RISK



Our future earnings may be affected by changes in interest rates due to the
impact those changes have on our interest expense on borrowings under our credit
facility. As of September 30, 2019, we had $20.8 million of outstanding
borrowings with variable interest rates. With each 1% increase in interest rates
we will incur additional annual interest charges of $0.21 million.

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

IMPACT OF INFLATION

We believe that inflation has not had a material impact on our results of operations since inception.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.


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