Advanced BioEnergy, LLC (Form: 10-Q, Received: 02/13/2015 16:49:02)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-52421

ADVANCED BIOENERGY, LLC

(Exact name of Registrant as Specified in its Charter)

Delaware

20-2281511

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

8000 Norman Center Drive, Suite 610

Bloomington, Minnesota 55437

(763) 226-2701

(Address, including zip code, and telephone number,

including area code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of February 1, 2015, the number of outstanding units was 25,410,851.

ADVANCED BIOENERGY, LLC

FORM 10-Q

Index


	Page
Part I. Financial Information
Item 1. Financial Statements		3
Consolidated Balance Sheets		3
Consolidated Statements of Operations		4
Consolidated Statement of Changes in Members’ Equity		5
Consolidated Statements of Cash Flows		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		30
Part II. Other Information
Item 1. Legal Proceedings		32
Item 1A. Risk Factors		32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3. Defaults Upon Senior Securities		32
Item 4. Mine Safety Disclosure		32
Item 5. Other Information		32
Item 6. Exhibits		32
Signatures		33
Exhibit Index		34

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)


	December 31,			September 30,
	2014			2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18,407		$	21,982
Accounts receivable:
Trade accounts receivable		5,773			4,190
Other receivables		73			77
Inventories		4,391			4,046
Prepaid expenses		1,200			682
Restricted cash		5,076			5,945

Total current assets		34,920			36,922

Property and equipment, net		48,354			49,644
Other assets		1,051			1,051

Total assets	$	84,325		$	87,617

LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	3,349		$	4,263
Accrued expenses		2,731			3,234
Current portion of long-term debt (stated principal amount of $3,186 and $3,117 at December 31, 2014 and September 30, 2014, respectively)		4,664			4,763

Total current liabilities		10,744			12,260

Other liabilities		43			50
Long-term debt (stated principal amount of $35,978 and $40,025 at December 31, 2014 and September 30, 2014, respectively)		36,328			40,800

Total liabilities		47,115			53,110

Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and outstanding		48,638			48,638
Accumulated deficit		(11,428	)		(14,131	)

Total members’ equity		37,210			34,507

Total liabilities and members’ equity	$	84,325		$	87,617

See notes to consolidated financial statements.

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except per unit data)

(Unaudited)


	Three Months Ended
	December 31,			December 31,
	2014			2013
Net sales
Ethanol and related products	$	37,492		$	47,987
Other		250			250

Total net sales		37,742			48,237
Cost of goods sold		34,462			40,098

Gross profit		3,280			8,139
Selling, general and administrative expenses		751			1,084

Operating income		2,529			7,055
Other income (expense)		202			(93	)
Interest income		6			10
Interest expense		(34	)		(478	)

Net Income	$	2,703		$	6,494

Weighed average units outstanding - basic		25,411			25,411
Weighed average units outstanding - diluted		25,411			25,411
Net Income per unit - basic and diluted	$	0.11		$	0.26

See notes to consolidated financial statements.

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statement of Changes in Members’ Equity

For the Three Months Ended December 31, 2014

(Dollars in thousands)

(Unaudited)


	Member		Members’		Accumulated
	Units		Capital		Deficit			Total
MEMBERS’ EQUITY - September 30, 2014		25,410,851	$	48,638	$	(14,131	)	$	34,507
Net income		—		—		2,703			2,703

MEMBERS’ EQUITY - December 31, 2014		25,410,851	$	48,638	$	(11,428	)	$	37,210

See notes to consolidated financial statements

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	December 31,			December 31,
	2014			2013
Cash flows from operating activities:
Net income	$	2,703		$	6,494
Adjustments to reconcile net income to operating activities cash flows:
Depreciation		2,715			2,714
Amortization of deferred financing costs		22			23
Amortization of deferred revenue and rent		(7	)		(8	)
Amortization of additional carrying value of debt		(421	)		(639	)
Gain on troubled debt restructuring		(172	)		—
Loss on disposal of assets		—			6
Change in working capital components:
Accounts receivable		(1,579	)		(534	)
Inventories		(345	)		(899	)
Prepaid expenses		(518	)		(380	)
Accounts payable		(914	)		(205	)
Accrued expenses		(503	)		554

Net cash provided by operating activities		981			7,126

Cash flows from investing activities:
Purchase of property and equipment		(1,425	)		(228	)
Change in other assets		—			160
Change in restricted cash		869			(2,812	)

Net cash used in investing activities		(556	)		(2,880	)

Cash flows from financing activities:
Payments on debt		(4,000	)		(800	)
Distribution to members		—			(7,877	)

Net cash used in financing activities		(4,000	)		(8,677	)

Net (decrease) in cash and cash equivalents		(3,575	)		(4,431	)
Beginning cash and cash equivalents		21,982			27,796

Ending cash and cash equivalents	$	18,407		$	23,365

Supplemental disclosure of cash flow information:
Cash paid for interest	$	447		$	755

See notes to consolidated financial statements.

ADVANCED BIOENERGY, LLC & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 and 2013

(Unaudited)

1. Organization and Significant Accounting Policies

The consolidated financial statements include the accounts of Advanced BioEnergy, LLC (“ABE” or the “Company”) and its wholly owned operating subsidiaries, ABE Fairmont, LLC (“ABE Fairmont”) and ABE South Dakota, LLC (“ABE South Dakota”). Substantially all of the assets of ABE Fairmont were sold in December 2012 and the subsidiary is now inactive. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2014. The financial information as of December 31, 2014 and the results of operations for the three months ended December 31, 2014 are not necessarily indicative of the results for the fiscal year ending September 30, 2015. In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary for fair presentation.

The Company currently operates three ethanol production facilities in the U.S. with a combined production capacity of 85 million gallons per year. The Company acquired existing facilities in Aberdeen, South Dakota (9 million gallons) and Huron, South Dakota (32 million gallons) in November 2006 and began operations at the 44 million gallon Aberdeen expansion facility in January 2008.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash balances are maintained in bank depositories and periodically exceed federally insured limits. The Company has not experienced losses in these accounts. The Company segregates cash restricted for debt service and has classified these funds according to the future anticipated use of the funds. Restricted cash includes cash held for debt service under the terms of its debt agreements and a deposit for a rail car sublease.

Receivables

Credit sales are made to a relatively small numbers of customers with no collateral required. Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables and considering a customer’s financial condition, credit history and current economic conditions. Receivables are written off if deemed uncollectible. Recoveries of receivables previously written off are recorded when received. There was no allowance for doubtful accounts recorded at December 31 or September 30, 2014.

Inventories

Chemicals and supplies, work in process, ethanol and distillers’ grains inventories are stated at the lower of weighted average cost or market.

Property and Equipment

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

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 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 on that date.

Commodity Sales and Purchase Contracts, Derivative Instruments

The Company currently does not enter into commodity futures and exchange-traded commodity options contracts for the sale of its products or purchases of its inputs. However, the Company does enter into forward sales contracts for ethanol, distillers grains 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 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.

Revenue Recognition

Ethanol revenue is recognized when product title and all risk of ownership is transferred to the customer as specified in the contractual agreements with the marketers. Under the terms of the marketing agreements, revenue is recognized when product is loaded into rail cars or trucks for shipment. Revenue was previously recognized upon the release of the product for shipment. Revenue from the sale of co-products is recorded when title and all risk of ownership transfers to customers. Co-products are normally shipped free on board (“FOB”) shipping point. In accordance with the Company’s agreements for the marketing and sale of ethanol and related products, commissions due to the marketers are deducted from the gross sale price at the time of payment. Interest income is recognized as earned.

Income Per Unit

Basic and diluted income per unit is computed using the weighted-average number of units outstanding during each period presented.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Income Taxes

The Company has elected to be treated as a partnership for tax purposes and generally does not incur income taxes. Instead, the Company’s earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. The Company files income tax returns in the U.S. federal and various state jurisdictions.

Risks and Uncertainties

The supply and demand for ethanol are impacted by federal and state legislation and regulation, most significantly the Renewable Fuels Standard (“RFS”), and any changes in legislation or regulation could cause the demand for ethanol to decline or its supply to increase, which could have a material adverse effect on our business, results of operations and financial condition, and the ability to operate at a profit.

In November 2013, the EPA proposed a 9.7% reduction of the original 2014 statutory corn-based ethanol blending volume requirements to approximately 13.0 billion gallons per year. This would be a reduction from the 2013 requirement of 13.8 billion gallons for corn-based ethanol, and the original 2014 volume per the statute of 14.4 billion gallons. Current ethanol production capacity is approximately 14.9 billion gallons per the RFA. The proposal was originally subject to a 60-day comment period and the EPA planned to release the final version of the 2014 Renewable Volume Obligations (“RVOs”) in June 2014, then extended the planned release date. On November 21, 2014, the EPA announced that it would not finalize the 2014 RVOs until sometime in 2015 to allow them to take the appropriate time to correct their methodology and establish the necessary volumes to move forward with the original intent of the RFS.

Ethanol has historically traded at a discount to gasoline; however, with the recent decline in oil prices, ethanol is currently trading at a premium to gasoline causing a disincentive for discretionary blending of ethanol beyond the rates required to comply with the RFS. Consequently, there may be a negative impact on ethanol pricing and demand, which could result in a material adverse effect on our business, results of operations and financial condition.

2. Inventories

A summary of inventories is as follows (in thousands):


	December 31,		September 30,
	2014		2014
Chemicals	$	647	$	643
Work in process		895		768
Ethanol		1,040		840
Distillers grain		76		145
Supplies and parts		1,733		1,650

Total	$	4,391	$	4,046

3. Property and Equipment

A summary of property and equipment is as follows (in thousands):


	December 31,			September 30,
	2014			2014
Land	$	1,811		$	1,811
Buildings		9,886			9,886
Process equipment		103,833			103,833
Office equipment		1,329			1,329
Construction in process		2,447			1,022

		119,306			117,881
Accumulated depreciation		(70,952	)		(68,237	)

Property and equipment, net	$	48,354		$	49,644

4. Long-term Debt

A summary of long-term debt is as follows (in thousands, except percentages):


	December 31,
	2014			December 31,			September 30,
	Interest Rate			2014			2014
ABE South Dakota:
Senior debt principal - variable		4.24	%	$	36,000		$	40,000
Restructuring fee		N/A			3,164			3,142
Additional carrying value of restructured debt		N/A			1,828			2,421

Total outstanding					40,992			45,563

Additional carrying value of restructured debt		N/A			(1,828	)		(2,421	)

Stated principal				$	39,164		$	43,142

The estimated maturities of debt at December 31 are as follows (in thousands):


	Senior Debt Principal		Restructuring Fee Payable		Amortization of Additional Carrying Value of Restructured Debt		Total
2015	$	3,000	$	186	$	1,478	$	4,664
2016		33,000		2,978		350		36,328

Total debt	$	36,000	$	3,164	$	1,828	$	40,992

Senior Credit Agreement for the South Dakota Plants

ABE South Dakota entered into an Amended and Restated Senior Credit Agreement (the “Senior Credit Agreement”), effective as of June 18, 2010, and amended on December 9, 2011, which was accounted for under troubled debt restructuring rules. The Senior Credit Agreement was executed among ABE South Dakota, the lenders from time to time party thereto, and an Administrative Agent and Collateral Agent. The Senior Credit Agreement converted the outstanding principal amount of the loans and certain other amounts under interest rate protection agreements to a senior term loan. The interest accrued on outstanding term and working capital loans under the previous credit agreement were reduced to zero. ABE South Dakota agreed to pay a $3.0 million restructuring fee to the lender due at the earlier of March 31, 2016 and the date on which the loans are repaid in full. ABE South Dakota recorded the restructuring fee as non-interest bearing debt on its consolidated balance sheets. See “Additional Carrying Value of Restructured Debt” below.

The principal amount of the term loan facility is payable in quarterly payments of $750,000, with the remaining principal amount fully due and payable on March 31, 2016. During quarter ended December 31, 2014, ABE South Dakota made debt sweep payments totaling $3.25 million in addition to its scheduled principal payments of $750,000. ABE South Dakota is also obligated to pay a waiver fee to the senior lenders of $275,000, payable in equal installments during fiscal 2015 and 2016. The Company has recorded this fee as non-interest bearing debt on its consolidated balance sheet and is included in the Restructuring Fee category in the above Debt tables.

ABE South Dakota has the option to select the interest rate on the senior term loan between base rate and euro-dollar rates for maturities of one to six months. Base rate loans bear interest at the administrative agent’s base rate plus an applicable margin of 3.0%. Euro-dollar loans bear interest at LIBOR plus the applicable margin of 4.0%. As of December 31, 2014, ABE South Dakota had selected the LIBOR plus 4.0% rate for a period of one month.

ABE South Dakota’s obligations under the Senior Credit Agreement are secured by a first-priority security interest in the equity and assets of ABE South Dakota.

ABE South Dakota is allowed to make equity distributions (other than certain tax distributions) to ABE only upon ABE South Dakota meeting certain financial conditions and if there is no more than $25 million of principal outstanding on the senior term loan. Loans outstanding under the Senior Credit Agreement are subject to mandatory prepayment in certain circumstances, including, but not limited to, mandatory prepayments based upon receipt of certain proceeds of asset sales, casualty proceeds, termination payments, and cash flows.

The Senior Credit Agreement and the related loan documentation include, among other terms and conditions, limitations (subject to specified exclusions) on ABE South Dakota’s ability to make asset dispositions; merge or consolidate with or into another person or entity; create, incur, assume or be liable for indebtedness; create, incur or allow liens on any property or assets; make investments; declare or make specified restricted payments or dividends; enter into new material agreements; modify or terminate material agreements; enter into transactions with affiliates; change its line of business; and establish bank accounts. Substantially all cash of ABE South Dakota is required to be deposited into special, segregated project accounts subject to security interests to secure obligations in connection with the Senior Credit Agreement. The Senior Credit Agreement contains customary events of default and also includes an event of default for defaults on other indebtedness by ABE South Dakota and certain changes of control.

Additional Carrying Value of Restructured Debt

Since the future maximum undiscounted cash payments on the amended and restated senior credit facility (including principal, interest and the restructuring fee) exceeded the adjusted carrying value at the time of the restructuring, no gain for the forgiven interest was recorded, the carrying value was not adjusted and the modification of terms was accounted for on a prospective basis, via a new effective interest calculation, amortized over the life of the note, offsetting interest expense.

As a result of the debt sweep payments made during fiscal 2014 and the quarter ended December 31, 2014, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. As a result of the prepayments made during the quarter ended December 31, 2014, a gain of approximately $172,000 was recognized as Other Income during the three months ended December 31, 2014. Since the remaining scheduled principal and interest payments are equal to the carrying amount, all remaining payments based on current interest rates will be treated as a reduction in the carrying value of debt. Accordingly, any additional prepayments will create additional gain recognition.

ABE Letter of Credit

The Company has a $1.5 million irrevocable and non-transferable standby letter of credit related to a rail car sublease. This letter of credit is collateralized by $1.5 million of cash in a restricted account, which has been classified as restricted cash.

5. One-time Termination Benefit

Subsequent to the sale of its Fairmont facility in December 2012, the Company implemented a cost reduction program reducing its headquarters staff to align its staffing with the smaller remaining on-going operations. The Company has also accrued benefits due to the Chief Executive Officer in June 2014 under his amended employment agreement signed in January 2013. The unpaid amounts as of December 31, 2014 are expected to be paid at the time of various employee terminations.

At December 31, the accrued liability associated with the one-time termination benefits consisted of the following (in thousands):


	Workforce Reduction
Beginning balance at October 1, 2014	$	611
Charges		—
Payments		(23	)

Ending balance at December 31, 2014	$	588

6. Major Customers

ABE South Dakota has entered into marketing agreements (“Ethanol Marketing Agreements”) with Gavilon, LLC, a commodity marketing firm. The Ethanol Marketing Agreements require that we sell to Gavilon all of the denatured fuel-grade ethanol produced at the South Dakota plants. The term of the Ethanol Marketing Agreements began on August 1, 2012, and expires on June 30, 2016. In November 2013, Gavilon announced that its energy business would be acquired by NGL Energy Partners, LP (“NGL”). The sale to NGL was completed in early December 2013 at which time the Ethanol Marketing Agreements were assigned to NGL.

ABE South Dakota is party to a co-product marketing agreement with Dakotaland Feeds, LLC (“Dakotaland Feeds”), whereby Dakotaland Feeds markets the local sale of distillers’ grains produced at the ABE South Dakota Huron plant to third parties for an agreed-upon commission. ABE South Dakota has a marketing with Gavilon to market the dried distillers’ grains from the Aberdeen plant, effective July 1, 2013 until July 31, 2016. ABE South Dakota self-markets the wet distillers’ grains produced at the Aberdeen plant.

Sales and receivables from the ABE South Dakota’s major customers were as follows (in thousands):


	As of and for the Quarter Ending		For the Quarter Ending		As Of
	December 31,		December 31,		September 30,
	2014		2013		2014
NGL Energy - Ethanol
Three months revenues	$	31,545	$	37,311
Receivable balance at period end		4,611			$	3,566

Gavilon - Distillers Grains
Three months revenues	$	2,789	$	5,485
Receivable balance at period end		533			$	341

Dakotaland Feeds - Distillers Grains
Three months revenues	$	2,131	$	3,058
Receivable balance at period end		358			$	168

7. Risk Management

The Company is exposed to a variety of market risks, including the effects of changes in commodity prices and interest rates. These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program. The Company’s risk management program seeks to reduce the potentially adverse effects that the volatility of these markets may have on its current and future operating results. To reduce these effects, the Company generally attempts to fix corn purchase prices and related sale prices of ethanol, distillers’ grains and corn oil, with forward purchase and sale contracts to lock in future operating margins. The Company had entered into the following fixed price forward contracts at December 31, 2014 (in thousands):

Commodity

Type

Quantity

Amount (in 000’s)

Period Covered Through

Ethanol

Sale

691,200 gallons

1,030

January 31, 2015

Corn

Purchase

800,000 bushels

3,081

September 30, 2015

Distillers grains

Sale

39,690 tons

5,164

September 30, 2015

Corn oil

Sale

94,000 lbs

January 31, 2015

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales” and therefore are not marked to market in the financial statements.

8. Parent Financial Statements

The following financial information represents the unconsolidated financial statements of Advanced BioEnergy, LLC (“ABE”) as of December 31, 2014 and September 30, 2014, and for the three months ended December 31, 2014 and 2013. ABE’s ability to receive distributions from ABE South Dakota is based on the terms and conditions in ABE South Dakota’s credit agreements. ABE South Dakota is allowed to make equity distributions (other than certain tax distributions) to ABE only upon ABE South Dakota meeting certain financial conditions and if there is no more than $25 million of principal outstanding on the senior term loan. There were no distributions from ABE South Dakota during the last three fiscal years.

Advanced BioEnergy, LLC (Unconsolidated)

Balance Sheets

(Unaudited)


	December 31,			September 30,
	2014			2014
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	8,957		$	8,988
Restricted cash		1,500			1,500
Prepaid expenses		26			5

Total current assets		10,483			10,493

Property and equipment, net		304			340
Other assets:
Investment in ABE Fairmont		99			109
Investment in ABE South Dakota		27,182			24,363
Other assets		32			32

Total assets	$	38,100		$	35,337

LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accrued expenses	$	847		$	780

Total current liabilities		847			780

Other liabilities		43			50

Total liabilities		890			830
Members’ equity:
Members’ capital, no par value, 25,410,851 units issued and		48,638			48,638
Accumulated deficit		(11,428	)		(14,131	)

Total members’ equity		37,210			34,507

Total liabilities and members’ equity	$	38,100		$	35,337

Advanced BioEnergy, LLC (Unconsolidated)

Statements of Operations

(Unaudited)


	Three Months Ended
	December 31,			December 31,
	2014			2013
	(Dollars in thousands)
Equity in earnings of consolidated subsidiary	$	2,809		$	6,712
Management fee income from subsidiary		—			395
Selling, general and administrative expenses		(111	)		(629	)

Operating income		2,698			6,478
Other income		—			12
Interest income		5			4

Net income	$	2,703		$	6,494

Advanced BioEnergy, LLC (Unconsolidated)

Statements of Cash Flows

(Unaudited)


	Three Months Ended
	December 31,			December 31,
	2014			2013
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	2,703		$	6,494
Adjustments to reconcile net income to operating activities cash flows:
Depreciation		36			40
Equity in earnings of consolidated subsidiaries		(2,809	)		(6,712	)
Distributions from consolidated subsidiaries		—			8,000
Gain on disposal of fixed assets		—			6
Amortization of deferred revenue and rent		(7	)		(8	)
Change in working capital components:
Prepaid expenses		(21	)		(43	)
Accounts payable and accrued expenses		67			157

Net cash provided by (used in) operating activities		(31	)		7,934


Cash flows from investing activities:
Purchase of property and equipment		—			(79	)

Net cash used in investing activities		—			(79	)


Cash flows from financing activities:
Distribution to members		—			(7,877	)

Net cash used in financing activities		—			(7,877	)

Net (decrease) in cash and cash equivalents		(31	)		(22	)
Beginning cash and cash equivalents		8,988			6,558

Ending cash and cash equivalents	$	8,957		$	6,536

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations, performance and prospects. All statements that are not historical or current facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended September 30, 2014 and in this Form 10-Q. These risks and uncertainties include, but are not limited to, the following:

•

our operational results are subject to fluctuations in the prices of grain, utilities and ethanol, which are affected by various factors including weather, production levels, supply, demand, changes in technology and government support and regulations;

•

our margins can be volatile and could become negative, which may impact our ability to meet current obligations and debt service requirements at our ABE South Dakota entity;

•

our risk mitigation strategies could be unsuccessful and could materially harm our results;

•

our cash distributions depend upon our future financial and operational performance and will be affected by debt covenants, reserves and operating expenditures;

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current government mandated standards such as the Renewable Fuels Standard may be reduced or eliminated, and legislative acts taken by state governments such as California related to low-carbon fuels that include the effects of indirect land use, may have an adverse effect on our business;

•

alternative fuel additives may be developed that are superior to, or cheaper than ethanol;

•

transportation, storage and blending infrastructure may become impaired, preventing ethanol from reaching markets;

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our operating facilities may experience technical difficulties and not produce the gallons of ethanol expected;

•

our units are subject to a number of transfer restrictions, no public market exists for our units, and we do not expect one to develop;

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the ability of our ABE South Dakota subsidiary to make distributions to ABE in light of restrictions in this subsidiary’s credit facility;

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the supply of ethanol rail cars in the market has fluctuated in recent years and may affect our ability to obtain new tanker cars or negotiate new leases at a reasonable fee when our current leases expire; and

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an increase in rail traffic congestion throughout the United States primarily due to the increase in cargo trains carrying shale oil, which, from time to time, has and may continue to affect our ability to return our tanker rail cars to the Aberdeen and Huron plants on a timely basis. Delays in returning rail cars to our plants may affect our ability to operate our plants at full capacity due to ethanol storage capacity constraints.

You can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as

required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed from time to time with the U.S. Securities and Exchange Commissions, which we refer to as the SEC, that advise interested parties of the risks and factors that may affect our business.

General

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements included herewith and notes to the consolidated financial statements thereto.

Overview

Advanced BioEnergy, LLC (“Company,” “we,” “our,” “Advanced BioEnergy” or “ABE”) was formed in 2005 as a Delaware limited liability company. Our business consists of producing ethanol and co-products, including wet, modified and dried distillers’ grains, as well as corn oil. Ethanol is a renewable, environmentally clean fuel source that is produced at numerous facilities in the United States, mostly in the Midwest. In the U.S., ethanol is produced primarily from corn and then blended with unleaded gasoline in varying percentages. The ethanol industry in the U.S. has grown significantly as the use of ethanol reduces harmful auto emissions, enhances octane ratings of the gasoline with which it is blended, offers consumers a cost-effective choice, and decreases the amount of crude oil in the U.S. needs to import from foreign sources.

To execute our business plan, we acquired ABE South Dakota, LLC (f/k/a/ Heartland Grain Fuels, LP) in November 2006, which owned existing ethanol production facilities in Aberdeen and Huron, South Dakota. We commenced construction of our expansion facility in Aberdeen, South Dakota began in April 2007, and commenced operations in January 2008. Our production operations are carried out primarily through our operating subsidiary: ABE South Dakota, which owns and operates facilities in Aberdeen and Huron, South Dakota.

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the related business nature and expected financial results, the Company’s plants are aggregated into one reporting segment.

DRY MILL PROCESS

Dry mill ethanol plants produce ethanol primarily by processing corn. Other possible feeds are grain sorghum, or other cellulosic materials. The corn is conveyed directly from South Dakota Wheat Growers to the plant where it is weighed and transferred to a scalper to remove rocks, cobs, and other debris. The corn is then fed to a hammer mill where it is ground into flour and conveyed into a slurry tank. Water, heat and enzymes are added to the flour in the slurry tank to start the process of converting starch from the corn into sugar. The slurry is pumped to a liquefaction tank where additional enzymes are added. These enzymes continue the starch-to-sugar conversion. The grain slurry is pumped into fermenters, where yeast is added to begin the batch-fermentation process. Fermentation is the process of the yeast converting the sugar into alcohol and carbon dioxide. After the fermentation is complete, a vacuum distillation system removes the alcohol from the corn mash. The 95% (190-proof) alcohol from the distillation process is then transported to a molecular sieve system, where it is dehydrated to 100% alcohol (200 proof). The 200-proof alcohol is then pumped to storage tanks and blended with a denaturant, usually natural gasoline. The 200-proof alcohol and 2.0-2.5% denaturant constitute denatured fuel ethanol.

Corn mash left over from distillation is pumped into a centrifuge for dewatering. The liquid from the centrifuge, known as thin stillage, is then pumped from the centrifuges to an evaporator, where it is concentrated into a syrup. The solids that exit the centrifuge, known as the wet cake, are conveyed to the dryer system. Syrup is added to the wet cake as it enters the dryer, where moisture is removed. The process produces distillers’ grains with solubles, which is used as a high-protein/fat animal-feed supplement. Dry-mill ethanol processing creates three forms of distillers’ grains: wet distillers’ grains with solubles, known as wet distillers’ grains; modified wet distillers’ grains with solubles, known as modified distillers’ grains; and dry distillers’ grains with solubles, known as dry distillers’ grains. Wet and modified distillers’ grains have been dried to approximately 65% and 50% moisture levels, respectively, and are predominately sold to nearby markets. Dried distillers’ grains have been dried to 11% moisture, have an almost indefinite shelf life and may be sold and shipped to more distant markets.

Corn oil is produced by processing evaporated thin stillage through a disk stack style centrifuge. Corn oil has a lower density than water or solids that make up the syrup. The centrifuges separate the relatively light oil from the heavier components of the syrup, eliminating the need for significant retention time. De-oiled syrup is returned to the process for blending into wet, modified, or dry distillers’ grains. The corn oil is then pumped into storage tanks before being loaded onto trucks for sale .

FACILITIES

The table below provides a summary of our ethanol plants in operation as of December 31, 2014:

Estimated

Annual

Estimated

Annual

Distillers

Annual

Ethanol

Grains

Corn

Primary

Location

Production

Production(1)

Processed

Energy Source

(Million gallons)

(000’s Tons)

(Million bushels)

Aberdeen, SD(2)

3.2

Natural Gas

Aberdeen, SD(2)

134

15.7

Natural Gas

Huron, SD

11.4

Natural Gas

Consolidated

258

30.3

(1)	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.

(2)	Our plant at Aberdeen consists of two production facilities that operate on a separate basis.

We have entered into a lease agreement for our corporate headquarters as of February 2011. Our corporate headquarters, located in Bloomington, Minnesota, is approximately 4,400 square feet, and will be under leases until June 2016. This building provides offices for our corporate and administrative staff. We believe this space will be sufficient for our needs until the end of the lease period.

We believe that each of the operating facilities is in adequate condition to meet our current and future production goals. We believe that these plants are adequately insured for replacement cost plus related disruption expenditures.

We pledged a first-priority security interest in and first lien on substantially all of the assets of the ABE South Dakota plants to the collateral agent for the senior creditors of these plants.

Plan of Operations through December 31, 2015

Over the next twelve months, we will continue our focus on operational improvements at our South Dakota operating facilities. These operational improvements include exploring methods to improve ethanol yield per bushel and increasing production output at each of our plants, continued emphasis on safety and environmental regulation, reducing our operating costs, and optimizing our margin opportunities through prudent risk-management policies.

Results of Operations for the Quarter Ended December 31, 2014 Compared to Quarter Ended December 31, 2013

The following table reflects net sales from our products in total dollars and as a percentage of total net sales, as well as costs of corn and natural gas in total dollars and as a percentage of total net sales and total cost of goods sold (“COGS”) for the three months ended December 31, 2014 and 2013:


	Three Months Ended								Three Months Ended
	December 31, 2014								December 31, 2013
	Net Sales		% of Total Net Sales						Net Sales		% of Total Net Sales
Product Sales Information	(In thousands)								(In thousands)
Ethanol	$	31,545		84	%				$	37,311		77	%
Distillers grains	$	5,548		15	%				$	10,207		21	%
Corn Oil	$	399		1	%				$	469		1	%
Other	$	250		1	%				$	250		1	%

			% of Total			% of					% of Total			% of
Product Cost Information	Costs		Net Sales			COGS			Costs		Net Sales			COGS
	(In thousands)								(In thousands)
Corn	$	21,495		57	%		62	%	$	27,494		57	%		69	%
Natural Gas	$	2,640		7	%		8	%	$	2,813		6	%		7	%

Net Sales

Net sales for the quarter ended December 31, 2014 were $37.7 million, compared to $48.2 million for the quarter ending December 31, 2013, a decrease of $10.5 million or 22%. The decrease was a result of lower net ethanol and distillers’ prices. The decline in ethanol and distillers prices is the result of various factors including but not limited to market demand for these products, the spread between ethanol/distillers and corn prices and overall gasoline prices and demand. As a percentage of net sales, ethanol sales were 84% and 78% and distillers’ sales were 15% and 21%, for the quarters ending December 31, 2014 and December 31, 2013, respectively. Ethanol gallons sold increased slightly by 2.6% for the quarter ended December 31, 2014, compared to the prior quarter ended December 31, 2013. Ethanol gallons sold were impacted by overall rail service issues in the current and prior year quarters, which directly affected our ability to maintain production rates at various times.

Cost of Goods Sold

Cost of goods sold for the quarter ended December 31, 2014 was $34.5 million, compared to $40.1 million for the quarter ended December 31, 2013, a decrease of $5.6 million. Our primary costs in the production of ethanol and related co-products are corn and natural gas. A decrease in corn costs represented a majority of the decline in cost of goods sold in the quarter ended December 31, 2014. Corn costs represented 57% of net sales for both quarters, and 62% and 69% of cost of sales for the quarters ended December 31, 2014 and 2013, respectively. Corn prices declined 24% during the three-month period ending December 31, 2014 compared to the prior year quarter. The decrease in corn prices was primarily driven by the strong corn harvest in the fall of 2014 resulting in a significant increase in the supply of corn available to the market as compared to the drought-impacted harvest in the fall of 2013. We used 3% more corn in the three-month period ending December 31, 2014, compared to the prior year quarter. The slight increase in corn bushels used was the result of slightly higher production in the current period, which was partially offset by a decline in corn-to-ethanol yield experienced over the same period.

Natural gas costs represented 7% and 6% of net sales and 8% and 7% of total cost of sales for the quarters ending December 31, 2014 and 2013, respectively. The cost of natural gas per mmbtu was the same for the quarters ending December 31, 2014 and 2013. Overall production was slightly higher for the quarter ending December 31, 2014; however, our natural gas consumption declined by 6% due to plant efficiency improvements and warmer temperatures for the quarter ending December 31, 2014 versus the prior year quarter.

Selling, General, and Administrative Expenses

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

Overall selling, general and administrative costs decreased by approximately $0.3 million to $0.8 million for the quarter ending December 31, 2014, versus the prior year quarter. As a percentage of net sales, selling, general and administrative expenses for the quarter ending December 31, 2014 decreased to 2.0%, compared to 2.3% for the prior year quarter. The decrease was primarily a result of non-recurring expenses incurred in the quarter ending December 31, 2013 resulting from the 2012 sale of the Fairmont facility.

Excluding these non-recurring costs incurred in quarter ending December 31, 2013, selling, general and administrative costs remained consistent at 2.0% of net sales, for quarters ending December 31, 2014 and 2013.

Interest Expense

Interest expense for the quarter ending December 31, 2014 was $34,000, compared to $478,000 for the prior year quarter. The fiscal 2015 interest expense related to our long-term debt was $433,000 plus $22,000 of amortization of deferred waiver fees, which was offset by $421,000 of amortization of additional carrying value of long-term debt. The amortization of additional carrying value is netted against interest expense on our income statement, thereby significantly reducing the interest expense reported on our income statement.

As a result of the debt sweep payments made during fiscal 2014 and the quarter ended December 31, 2014, the carrying value of the debt exceeded the scheduled principal and interest payments remaining over the term of the loan. As a result of the prepayments made during the quarter ended December 31, 2014, a gain of approximately $172,000 was recognized as Other Income during the three months ended December 31, 2014. Since the remaining scheduled principal and interest payments are equal to the carrying amount, the amortization of the additional carrying value will offset the majority of the interest expense on our long-term debt, and the amount of interest expense reported on our income statement will be minimal. Additionally, all remaining payments based on current interest rates will be treated as a reduction in the carrying value of debt. Accordingly, any additional prepayments will create additional gain recognition.

Changes in Financial Position for the Three Months ended December 31, 2014

Current Assets

The $2.0 million decrease in current assets at December 31, 2014 compared to September 30, 2014 was primarily due to capital additions of $1.4 million during the current quarter related to the ethanol storage project and other equipment at our Aberdeen plant.

Property, Plant and Equipment

The $1.3 million decrease in property, plant and equipment at December 31, 2014 compared to September 30, 2014, was primarily due to recognizing $2.7 million of depreciation expense in the current quarter, offset by $1.4 million of capital expenditures.

Current Liabilities

Accounts payable and accrued expenses decreased by $1.4 million at December 31, 2014 compared to September 30, 2014 primarily due to timing of payments to vendors.

Long-term Debt

Long-term debt decreased by $4.6 million in the current quarter. Interest bearing debt decreased by $4.0 million during the current quarter. The decrease in interest bearing debt was comprised of a $750,000 required

principal payment and a $3.25 million long-term debt sweep payment. The remaining $0.6 million reduction in long-term debt was due to $421,000 of amortization of additional carrying value of long-term debt netted against interest expense and $172,000 of gain recognition related to the carrying value of long-term debt offset by $22,000 deferred waiver fee amortization.

TRENDS AND UNCERTAINTIES AFFECTING THE ETHANOL INDUSTRY AND OUR FUTURE OPERATIONS

Overview

Ethanol is currently blended with gasoline to meet regulatory standards as a clean air additive, an octane enhancer, a fuel extender and a gasoline alternative. According to the Renewable Fuels Association (“RFA”), as of December 2013, the estimated ethanol production capacity in the United States was 14.9 billion gallons per year, with approximately 1.2 billion gallons currently idle. The demand for ethanol is affected by what is commonly referred to as the “blending wall,” which is a regulatory cap on the amount of ethanol that can be blended into gasoline. The blend wall affects the demand for ethanol, and as industry production capacity reaches the blend wall, the supply of ethanol in the market may surpass the demand. Assuming current gasoline usage in the U.S. at 134 billion gallons per year and a blend rate of 10% ethanol and 90% gasoline, the current blend wall is approximately 13.4 billion gallons of ethanol per year.

Ethanol is most commonly sold as E10, the 10 percent blend of ethanol for use in all American automobiles. Increasingly, ethanol is also available as E85, a higher percentage ethanol blend for use in flexible fuel vehicles. To further drive growth in ethanol usage, Growth Energy, an ethanol industry trade association, requested a waiver from the Environmental Protection Agency (“EPA”) to increase the allowable amount of ethanol blended into gasoline from the current 10% level to a 15% level. In June 2012, the EPA approved E15 for use in vehicles with model years 2001 and later. Although regulatory and infrastructure issues remain in many states, E15 is now available in limited locations in at least twelve states per the RFA.

Our operations are highly dependent on commodity prices, especially prices for corn, ethanol, distillers’ grains and natural gas. As a result of price volatility for these commodities, our operating results may fluctuate substantially. The price and availability of corn are subject to significant fluctuations depending upon a number of factors that affect commodity prices in general, including crop conditions, weather, federal policy and foreign trade. Because the market price of ethanol is not always directly related to corn prices, at times ethanol prices may lag movements in corn prices and compress the overall margin structure at the plants. As a result, operating margins may become negative and we may be forced to shut down our plants.

We focus on locking in margins based on a cash flows model that continually monitors market prices of corn, natural gas and other input costs against prices for ethanol and distillers grains at each of our production facilities. We create offsetting positions by using a combination of derivative instruments, fixed-price purchases and sales, or a combination of strategies in order to manage risk associated with commodity price fluctuations. Our primary focus is not to manage general price movements, for example minimize the cost of corn consumed, but rather to lock in favorable margins whenever possible. In the quarter ended December 31, 2014, the average Chicago Opis Spot Ethanol Assessment was $1.86 per gallon and the average NYMEX RBOB spot gasoline price was $2.66 per gallon, or approximately $0.80 per gallon above ethanol prices.

Federal policy has a significant impact on ethanol market demand. Ethanol blenders previously benefited from incentives that encouraged usage and a tariff on imported ethanol that supported the domestic industry, both of which have now expired. Additionally, the Environmental Protection Agency’s Renewable Fuels Standard (“RFS”) mandates increased level of usage of both corn-based and cellulosic ethanol. Any adverse ruling on, or legislation affecting, RFS mandates in the future could have an adverse impact on short-term ethanol prices and our financial performance in the future.

The ethanol industry and our business depend upon continuation of the federal and state ethanol supports such as the RFS. We believe the ethanol industry expanded due to these federal mandates, policies, and incentives. These government mandates have supported a market for ethanol that might disappear without these programs. Alternatively, the government mandates may be continued at lower levels than those at which they currently exist. In addition, state regulatory activity may also negatively affect the consumption of corn-based ethanol in certain domestic markets such as California, due to low-carbon fuel standards that take into consideration the effects caused by indirect land use.

The Renewable Fuels Standard

The Renewable Fuels Standard (“RFS”) is a national program that imposes requirements with respect to the amount of renewable fuel produced and used in the United States. The RFS was revised by the EPA in July 2010 (“RFS2”) and applies to refineries, blenders, distributors and importers. We believe the RFS2 program has and will continue to increase the market for renewable fuels, such as ethanol, as a substitute for petroleum-based fuels. The RFS2 required that 16.55 billion gallons be sold or dispensed in 2013, increasing to 36.0 billion gallons by 2022, representing 7% of the anticipated gasoline and diesel consumption in 2022. In 2013, RFS2 required refiners and importers to blend renewable fuels totaling at least 9.74% of total fuel volume, of which 8.12% of total fuel volume, or 13.8 billion gallons, could be derived from corn-based ethanol. The remainder of the requirement is to be met by non-corn related advanced renewable fuels such as cellulosic ethanol and biomass-based biodiesel. The RFS requirement for corn-based ethanol is capped at 15.0 billion gallons starting in 2015.

In November 2013, the EPA proposed a 9.7% reduction of the original 2014 statutory corn-based ethanol blending volume requirements to approximately 13.0 billion gallons per year. This would have been a reduction from the 2013 requirement of 13.8 billion gallons for corn-based ethanol, and the original 2014 volume per the statute of 14.4 billion gallons. Current ethanol production capacity is approximately 14.9 billion gallons per the RFA. The proposal was originally subject to a 60-day comment period and the EPA planned to increase the final version of the 2014 Renewable Volume Obligations (“RVOs”) in June 2014, then extended the planned release date. On November, 21, 2014, the EPA announced that it would not finalize the 2014 RVOs until sometime in 2015 to allow it to take the appropriate time to correct its methodology and establish the necessary volumes to move forward with the original intent of the RFS.

The following chart illustrates the potential United States ethanol demand based on the schedule of minimum usage established by the program through the year 2022 (in billions of gallons).


			Cellulosic						RFS Requirement
	Total Renewable		Ethanol		Biodiesel				That Can Be Met
	Fuel		Minimum		Minimum		Advanced		With Corn-Based
Year	Requirement		Requirement		Requirement		Biofuel		Ethanol
2014 (1)		18.15		1.75		—		3.75		14.40
2014 (2)		15.21		0.02		1.28		2.20		13.01
2015		20.50		3.00		—		5.50		15.00
2016		22.25		4.25		—		7.25		15.00
2017		24.00		5.50		—		9.00		15.00
2018		26.00		7.00		—		11.00		15.00
2019		28.00		8.50		—		13.00		15.00
2020		30.00		10.50		—		15.00		15.00
2021		33.00		13.50		—		18.00		15.00
2022		36.00		16.00		—		21.00		15.00

(1)	Original statutory 2014 volumes .

(2)	Proposed EPA 2014 Renewable Fuel Standards issued November 2013.

The RFS2 went into effect on July 1, 2010 and requires certain gas emission reductions for the entire lifecycle, including production of fuels. The greenhouse gas reduction requirement generally does not apply to facilities that commenced construction prior to December 2007. If this changes and our plants must meet the standard for emissions reduction, it may impact the way we procure feed stock and modify the way we market and transport our products.

Ethanol Competition

The ethanol we produce is similar to ethanol produced by other plants. The RFA reports that as of November 2014, current U.S. ethanol production capacity was approximately 14.93 billion gallons per year. On a national level, there are numerous other production facilities with which we are in direct competition, many of whom have greater resources than we do. As of November 2014, South Dakota had 15 ethanol plants producing an aggregate of 1.0 billion gallons of ethanol per year.

The largest ethanol producers include: Abengoa Bioenergy Corp.; Archer Daniels Midland Company; Cargill, Inc.; Flint Hills Resources, LP; Green Plains Renewable Energy, Inc.; POET, LLC and Valero Renewable Fuels. Producers of this size may have an advantage over us from economies of scale and stronger negotiating positions with purchasers. We market our ethanol primarily on a regional and national basis. We believe that we are able to reach the best available markets through the use of experienced ethanol marketers and by the rail delivery methods we use. Our plants compete with other ethanol producers on the basis of price, and, to a lesser extent, delivery service. We believe that we can compete favorably with other ethanol producers due to our proximity to ample grain, natural gas, electricity and water supplies at favorable prices.

Competition from Alternative Fuels

Alternative fuels and alternative ethanol production methods are continually under development. The major oil companies have significantly greater resources than we have to develop alternative products and to influence legislation and public perception of ethanol. New ethanol products or methods of ethanol production developed by larger and better-financed competitors could provide them competitive advantages and harm our business.

Ethanol Marketing

ABE South Dakota entered into marketing agreements (“Ethanol Marketing Agreements”) with Gavilon, LLC, a commodity marketing firm, and affiliated companies and successors (collectively “Gavilon”), on May 4, 2012 (amended on July 31, 2012 and May 15, 2014). The Ethanol Marketing Agreements require that we sell to Gavilon all of the denatured fuel-grade ethanol produced at the South Dakota plants. The terms of the Ethanol Marketing Agreements began on August 1, 2012 and expire on June 30, 2016. In December 2013, the Gavilon energy segment was acquired by NGL Energy Partners, LP (“NGL”).

CO-PRODUCTS

Sales of distillers’ grains have represented 14.7% and 21.2% of our revenues for the quarters ended December 31, 2014 and 2013, respectively. When the plants are operating at capacity, they produce approximately 258,000 tons of dried distillers’ grains equivalents per year, approximately 17 pounds per bushel of corn used. Distillers’ grains are a high-protein, high-energy animal feed supplement primarily marketed to the dairy and beef industry, as well as the poultry and swine markets. Dry mill ethanol processing creates three forms of distillers’ grains: wet distillers’ grains with solubles, known as wet distillers’ grains; modified wet distillers’ grains with solubles, known as modified distillers’ grains; and dry distillers’ grains with solubles. Wet and modified distillers’ grains have been dried to approximately 65% and 50% moisture levels, respectively, and are predominately sold to nearby markets. Dried distillers’ grains have been dried to 11% moisture, have an almost indefinite shelf life and may be sold and shipped to more distant markets.

In April 2012, we installed corn oil extraction technology at our Aberdeen plant. Corn oil systems are designed to extract non-edible corn oil during the thin stillage evaporation process immediately prior to production of distillers’ grains. Corn oil is produced by processing evaporated thin stillage through a disk stack style centrifuge. Corn oil has a lower density than the water or solids that make up the syrup. The centrifuges separate the relatively light oil from the heavier components of the syrup, eliminating the need for significant retention time. De-oiled syrup is returned to the process for blending into wet, modified, or dry distillers’ grains.

Industrial uses for corn oil include feedstock for biodiesel, livestock feed additives, rubber substitutes, rust preventatives, inks, textiles, soaps and insecticides. Our corn oil is primarily sold by truck to biodiesel manufacturers.

Competition

In the sales of distillers’ grains, we compete with other ethanol producers, as well as a number of large and smaller suppliers of competing animal feed. We believe the principal competitive factors are price, proximity to purchasers and product quality. Currently we derive 66% of our distillers’ grain revenues from the sale of dried distillers’ grains, which have an indefinite shelf life and can be transported by truck or rail, and 34% from the sale of modified or wet distillers’ grains, which have a shorter shelf life and are typically sold in local markets via truck.

We compete with other ethanol producers in the sale of corn oil. Many producers have added corn oil technology to their facilities.

Co-Product Marketing

ABE South Dakota has a marketing agreement with Dakotaland Feeds, LLC (“Dakotaland Feeds”) for marketing the sale of ethanol co-products produced at the Huron plant. ABE South Dakota has a marketing agreement with Gavilon, LLC (“Gavilon”) for dried distillers’ grains produced at the Aberdeen plants which became effective July 1, 2013. The marketing agreement with Gavilon requires Gavilon to use commercially reasonable efforts to purchase substantially all of the dried distillers’ grains produced at the Aberdeen plants through July 31, 2016. The Aberdeen plant self-markets its wet and modified distillers’ grains.

ABE South Dakota is party to an agreement with Gavilon Ingredients, LLC, to market all the corn oil produced by the Aberdeen plant through September 30, 2015.

LIQUIDITY AND CAPITAL RESOURCES

Financing and Existing Debt Obligations

During quarter ended December 31, 2015, 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 minimal activity following the December 2012 sale of the Fairmont facility. The liquidity and capital resources for each entity are based on the entity’s existing financing arrangements and capital structure. There are provisions contained in the financing agreements at ABE South Dakota preventing cross-default or collateralization between operating entities. Advanced BioEnergy is 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 in the ABE South Dakota financing agreements.

Advanced BioEnergy, LLC (“ABE”)

ABE had cash and cash equivalents of $9.0 million on hand at December 31, 2014. ABE did not have any debt outstanding as of December 31, 2014. Until June 2014, ABE’s primary source of operating cash came from

charging a monthly management fee to ABE South Dakota for management services provided to ABE South Dakota. The primary management services provided include risk management, accounting and finance, human resources and other general management related responsibilities.

Due to personnel reductions and other changes in the Company since the sale of the Fairmont plant, the Company re-evaluated the administrative services agreement with ABE South Dakota. The outcome of the re-evaluation resulted in termination of the administrative services agreement as of June 30, 2014 in conjunction with an overall change in the Company structure. The change in Company structure resulted in ABE employees becoming direct employees of ABE South Dakota. Accordingly, beginning in July 2014, ABE South Dakota no longer pays the Company a management fee for services.

From time to time, ABE may also receive certain allowable distributions from ABE South Dakota based on the terms and conditions in its senior credit agreement. ABE will not receive any distribution from ABE South Dakota for its fiscal 2014 financial results.

We believe ABE has sufficient financial resources available to fund current operations and capital expenditure requirements for at least the next 12 months.

ABE Fairmont

ABE Fairmont had cash and cash equivalents of $0.1 million on hand at December 31, 2014, which is unrestricted and can be distributed to Advanced BioEnergy at any time.

ABE Fairmont has agreed to cooperate with Flint Hills Resources, LLC with respect to post-closing matters, including completing the transfer of certain railway lines. The Company anticipates that ABE Fairmont will remain in existence as a separate entity until it completes all its obligations under the asset purchase agreement and other ongoing agreements, except to the extent that the Company determines that it can perform these obligations itself after the liquidation of ABE Fairmont.

ABE South Dakota

ABE South Dakota had cash and cash equivalents of $9.3 million and $3.6 million of restricted cash on hand at December 31, 2014. The restricted cash consists of $3.0 million for a debt service payment reserve, and $0.6 million in an account for maintenance capital expenditures. As of December 31, 2014, ABE South Dakota had interest-bearing term debt outstanding of $36.0 million.

ABE South Dakota entered into an Amended and Restated Senior Credit Agreement effective as of June 18, 2010, and amended on December 9, 2011 (the “Senior Credit Agreement”) among ABE South Dakota, the lenders from time to time party thereto, and an Administrative Agent and Collateral Agent. The principal amount of the term loan facility is payable in quarterly payments of $750,000, with the remaining principal amount fully due and payable on March 31, 2016. Loans outstanding under the Senior Credit Agreement are subject to mandatory prepayment in certain circumstances, including, but not limited to, mandatory prepayments based upon receipt of certain proceeds of asset sales, casualty proceeds, termination payments, and cash flows.

ABE South Dakota has agreed to pay a $3.0 million restructuring fee to the lender due at the earlier of March 31, 2016 and the date on which the loans are repaid in full. ABE South Dakota recorded the restructuring fee as long-term, non-interest bearing debt. ABE South Dakota is also obligated to pay a waiver fee to the senior lenders of $275,000, payable in installments beginning in fiscal 2015. The Company has recorded this fee as non-interest bearing debt on its consolidated balance sheet, and is amortizing the fee to interest expense over the remaining life of the debt.

ABE South Dakota’s obligations under the Senior Credit Agreement are secured by a first-priority security interest in all of the equity in and assets of ABE South Dakota. ABE South Dakota is allowed to make equity distributions (other than certain tax distributions) to ABE only upon ABE South Dakota meeting certain financial conditions and if there is no more than $25 million of principal outstanding on the senior term loan. The Senior Credit Agreement and the related loan documentation include, among other terms and conditions, limitations (subject to specified exclusions) on ABE South Dakota’s ability to make asset dispositions; merge or consolidate with or into another person or entity; create, incur, assume or be liable for indebtedness; create, incur or allow liens on any property or assets; make investments; declare or make specified restricted payments or dividends; enter into new material agreements; modify or terminate material agreements; enter into transactions with affiliates; change its line of business; and establish bank accounts. Substantially all cash of ABE South Dakota is required to be deposited into special, segregated project accounts subject to security interests to secure obligations in connection with the Senior Credit Agreement. The Senior Credit Agreement contains customary events of default and also includes an event of default for defaults on other indebtedness by ABE South Dakota and certain changes of control.

At December 31, 2014, ABE South Dakota had working capital of $15.8 million. Net working capital, decreased by $0.6 million since September 2014.

The Company believes that ABE South Dakota will be able to refinance its debt, or extend the maturity of that debt with its senior lenders or another lender, when the debt becomes due in March 2016.

CASH FLOWS

The following table shows our cash flows for the three months ended December 31, 2014 and 2013:


	Three Months Ended December 31
	2014			2013
	(In thousands)
Net cash provided by operating activities	$	981		$	7,126
Net cash (used in) investing activities		(556	)		(2,880	)
Net cash (used in) financing activities		(4,000	)		(8,677	)

Cash Flow from Operations

Cash flows provided by operating activities for the quarter ending December 31, 2014 were approximately $981,000 compared to $7.1 million for the prior year quarter a decline of $6.1 million. Lower operating margins accounted for $4.9 million of the overall decline in cash flows from operating activities in addition to a $1.0 million increase in accounts receivables.

Cash Flow from Investing Activities

Cash flows used in investing activities for the quarter ending December 31, 2014 were approximately $556,000 compared to $2.9 million for the prior year quarter. The current year quarter included $1.4 million in additions to property and equipment and a reduction of $859,000 in restricted cash, which was used to fund property and equipment additions. Cash used in investing activities in the prior year quarter were primarily related to the funding of required reserves related to the Company’s senior credit agreement which are classified as restricted cash upon funding.

Cash Flow from Financing Activities

Cash flows used in financing activities for the quarter ending December 31, 2014 were $4.0 million compared to $8.7 million for the prior year quarter. The current year quarter included long-term debt payments of $4.0 million. Cash used in financing activities in the prior year quarter included long-term debt payments of approximately $800,000, plus $7.9 million in distributions to members.

CREDIT ARRANGEMENTS

Long-term debt consists of the following (in thousands, except percentages):


	December 31,
	2014			December 31,			September 30,
	Interest Rate			2014			2014
ABE South Dakota:
Senior debt principal - variable		4.24	%	$	36,000		$	40,000
Restructuring fee		N/A			3,164			3,142
Additional carrying value of restructured debt		N/A			1,828			2,421

Total outstanding					40,992			45,563

Additional carrying value of restructured debt		N/A			(1,828	)		(2,421	)

Stated principal				$	39,164		$	43,142

The estimated maturities of debt at December 31 are as follows (in thousands):


					Amortization of
					Additional Carrying
	Senior Debt		Restructuring		Value of
	Principal		Fee Payable		Restructured Debt		Total
2015	$	3,000	$	186	$	1,478	$	4,664
2016		33,000		2,978		350		36,328

Total debt	$	36,000	$	3,164	$	1,828	$	40,992

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

Ethanol revenue is recognized when product title and all risk of ownership is transferred to the customer as specified in the contractual agreements with the marketers. Under the terms of the marketing agreements with NGL (f/k/a Gavilon), revenue is recognized when product is loaded into rail cars or trucks for shipment. Revenue from the sale of co-products is recorded when title and all risk of ownership transfers to customers. Co-products are normally shipped free on board (“FOB”) shipping point. Interest income is recognized as earned. In accordance with the Company’s agreements for the marketing and sale of ethanol and related products, commissions due to the marketers are deducted from the gross sale price at the time of payment.

Inventories

Chemicals and supplies, work in process, ethanol and distillers’ grains inventories are stated at the lower of weighted average cost or market.

Commodity Sales and Purchase Contracts, Derivative Instruments

The Company currently does not enter into commodity futures and exchange-traded commodity options contracts for the sale of its products or purchases of its inputs. However, the Company does enter 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.

Property and Equipment

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

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

GOVERNMENT PROGRAMS AND TAX CREDITS

The State of South Dakota pays an incentive to operators of ethanol plants to encourage the growth of the ethanol industry. The Huron plant is eligible to receive an aggregate of $9.7 million, payable up to $1 million per year. The amounts are dependent on annual allocations by the State of South Dakota and the number of eligible plants. ABE South Dakota has received $249,999 in fiscal 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

COMMODITY PRICE RISK

We consider market risk to be the impact of adverse changes in market prices on our results of operations. We are subject to significant market risk with respect to the price of ethanol and corn. For the quarter ended December 31, 2014, sales of ethanol represented 84% of our total revenues and corn costs represented 62% of total cost of goods sold. In general, ethanol prices are affected by the supply and demand for ethanol, the cost of ethanol production, the availability of other fuel oxygenates, the regulatory climate and the cost of alternative fuels such as gasoline. The price of corn is affected by weather conditions and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors. At December 31, 2014, the price per gallon of ethanol and the price per bushel of corn on the CBOT were $1.605 and $3.97, respectively.

We are also subject to market risk on the selling prices of our distillers’ grains, which represented 15% of our total revenues for the quarter ended December 31, 2014. These prices fluctuate seasonally when the price of corn or other cattle feed alternatives fluctuate in price. The average dried distillers’ grains spot price for local customers was $160 per ton at December 31, 2014.

We are also subject to market risk with respect to our supply of natural gas that we consume in the ethanol production process. Natural gas costs represented 7.7% of total cost of sales for the quarter ended December 31, 2014. The price of natural gas is affected by overall supply, weather conditions and general economic, market and regulatory factors. At December 31, 2014, the price of natural gas on the NYMEX was $2.89 per mmbtu.

To reduce price risk caused by market fluctuations in the cost and selling prices of related commodities, we have entered into forward purchase/sale contracts. We entered into forward sales contracts which guaranteed prices on 10% of our ethanol gallons sold through January 2015. At December 31, 2014 we had entered into forward sale contracts representing 21% of our expected distillers’ grains production output through September 2015.

The following represents a sensitivity analysis that estimates our annual exposure to market risk with respect to our current corn and natural gas requirements and ethanol sales. Market risk is estimated as the potential impact on operating income resulting from a hypothetical 10% change in the fair value of our current corn and natural gas requirements and ethanol sales, net of corn and natural gas forward contracts used to hedge market risk with respect to our current corn and natural gas requirements. The results of this analysis, which may differ from actual results, are as follows:


										Change in
	Estimated at				Hypothetical					Annual
	Risk				Change in			Spot		Operating
	Volume (1)		Units		Price			Price(2)		Income
	(In millions)									(In millions)
Ethanol		76.5		gallons		10.0	%	$	1.61	$	12.3
Distillers grains		0.2		tons		10.0	%		160.00		3.4
Corn		30.3		bushels		10.0	%		3.97		12.0
Natural gas		2.4		mmbtus		10.0	%		2.89		0.7

(1)

The volume of ethanol at risk is based on the assumption that we will enter into contracts for 10% of our expected annual gallons capacity of 85 million gallons. The volume of distillers’ grains at risk is based on the assumption that we will enter into contracts for 9% of our expected annual distillers’ grains production of 258,000 tons. The volume of corn is based on the assumption that we will enter into forward contracts for none of our estimated current 30.3 million bushel annual requirement. The volume of natural gas is based on the assumption that we will continue to lock in none of our estimated gas usage.

(2)	Current spot prices include the CBOT price per gallon of ethanol, the local price per bushel of corn, the NYMEX price per mmbtu of natural gas and our listed local advertised dried distillers’ grains price per ton as of December 31, 2014.

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 December 31, 2014, we had $36.0 million of outstanding borrowings with variable interest rates. With each 1% increase in interest rates we will incur additional annual interest charges of $0.4 million.

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer, who is also our chief financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of

1934). Based on this evaluation, our chief executive officer, who is also our chief financial officer, concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officer, to allow timely decisions regarding required disclosures.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There are no material changes from risk factors as previously discussed in our September 30, 2014 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EXHIBIT INDEX


Exhibit No.	Description	Method of Filing

10.1	Exhibit 10.1 Amendment No. 2 dated as of January 12, 2015, by and among Advanced BioEnergy, LLC; Clean Energy Capital, LLC (“CEC”); various limited liability companies associated with CEC; Hawkeye Energy Holdings, LLC; South Dakota Wheat Growers Association, and certain Advanced BioEnergy, LLC directors, amending Voting Agreement originally dated as of August 28, 2009.	Filed herewith

31	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer, Financial and Accounting Officer.	Filed Electronically

32	Section 1350 Certifications.	Filed Electronically

101	The following materials from Advanced BioEnergy’s Filed Electronically Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, formatted in XBRL: (i) Consolidated Balance Sheets at December 31, 2014 and September 30, 2014 ; (ii) Consolidated Statements of Operations for the three months ended December 31, 2014 and December 31, 2013; (iii) Consolidated Statements of Changes in Member’s Equity for the three months ended December 31, 2014; (iv) Consolidated Statements of Cash Flows for the three months ended December 31, 2014 and 2013; and (v) Notes to the Consolidated Financial Statements.	Filed Electronically

Exhibit 10.1

AMENDMENT NO. 2

VOTING AGREEMENT

This AMENDMENT NO. 2 TO VOTING AGREEMENT (this “ Amendment ”) is made and entered into as of this 12 ^th day of January, 2015, by and among Advanced BioEnergy, LLC, a Delaware limited liability company (the “ Company ”), Clean Energy Capital, LLC, a Delaware limited liability company (“ CEC ”), Hawkeye Energy Holdings, LLC, a Delaware limited liability company (“ Hawkeye ”), Ethanol Capital Partners, L.P., Series E, a Delaware limited partnership (“ Series E ”), Ethanol Capital Partners, L.P., Series H, a Delaware limited partnership (“ Series H ”), Ethanol Capital Partners, L.P., Series I, a Delaware limited partnership (“ Series I ”), Ethanol Capital Partners, L.P., Series J, a Delaware limited partnership (“ Series J ”), Ethanol Capital Partners, L.P., Series L, a Delaware limited partnership (“ Series L ”), Ethanol Capital Partners, L.P., Series N, a Delaware limited partnership (“ Series N ”), Ethanol Capital Partners, L.P., Series O, a Delaware limited partnership (“ Series O ”), Ethanol Capital Partners, L.P., Series P, a Delaware limited partnership (“ Series P ”), Ethanol Capital Partners, L.P., Series Q, a Delaware limited partnership (“ Series Q ”), Ethanol Capital Partners, Series R, L.P., a Delaware limited partnership (“ Series R ”), Ethanol Capital Partners, Series S, L.P., a Delaware limited partnership (“ Series S ”), Ethanol Capital Partners, Series T, L.P., a Delaware limited partnership (“ Series T ”), South Dakota Wheat Growers Association, a South Dakota cooperative (“ SDWG ”), and each of the undersigned directors (the “ Directors ”) of the Company. The Company, CEC, Hawkeye, Series E, Series H, Series I, Series J, Series L, Series N, Series O, Series P, Series Q, Series S, Series R, Series T, SDWG and Directors are collectively referred to herein as the “ Parties .”

RECITALS

A. The Company, Hawkeye, Ethanol Investment Partners, LLC, a Delaware limited liability company (“ EIP ”), Series R, Series T, Tennessee Ethanol Partners, LP, a Delaware limited partnership (“ TEP ”), SDWG, and the Directors are parties to that certain Voting Agreement dated as of August 28, 2009, as amended by that certain Amendment No. 1 to Voting Agreement dated April 7, 2010 (the “ Original Voting Agreement ”). Capitalized terms not used herein but not otherwise defined have the meaning given to them in the Original Voting Agreement.

B. Prior to its dissolution and liquidation, EIP owned 2,750,000 units of membership interests (“ Units ”) in the Company.

C. On December 2, 2014 (the “ Dissolution Date ”), EIP dissolved and thereafter, in connection with the liquidation thereof, distributed the Units pro rata to its members in the following amounts (the “ EIP Unit Distribution ”):

i. Ethanol Capital Partners, L.P., Series M, a Delaware limited partnership (“ Series M ”), received 78,502 Units,

ii. Series E received 591,268 Units,

iii. Series H received 226,247 Units,

iv. Series I received 249,234 Units,

v. Series J received 109,531 Units,

vi. Series L received 115,072 Units,

vii. Series N received 387,249 Units,

viii. Series O received 258,249 Units,

ix. Series P received 258,016 Units,

x. Series Q received 381,544 Units, and

xi. Series S received 94,391 Units.

D. On October 31, 2014, the term of Series M expired and thereafter, in connection with the liquidation thereof, Series M distributed the Units received in the EIP Unit Distribution pro rata to its limited partners (the “ Series M Unit Distribution ”).

E. As of October 31, 2014, TEP owned 500,000 Units in the Company (the “ TEP Units ”). On October 31, 2014 (the “ TEP Dissolution Date ”), the term of TEP expired and thereafter, in connection with the liquidation thereafter, TEP distributed the TEP Units pro rata to its limited partners (the “ TEP Unit Distribution ”).

F. CEC is the sole manager of EIP and is the general partner and investment advisor to, and has sole voting and dispositive power over the assets of, each limited liability company member of EIP.

G. CEC is also the general partner and investment advisor to, and has sole management power over the assets of, Series E, Series H, Series I, Series J, Series L, Series N, Series O, Series P, Series Q and Series S.

H. CEC, Series E, Series H, Series I, Series J, Series L, Series N, Series O, Series P, Series Q and Series S are not currently parties to the Original Voting Agreement.

I. The Parties desire to add CEC, Series E, Series H, Series I, Series J, Series L, Series N, Series O, Series P, Series Q and Series S as parties to the Original Voting Agreement and to amend the Original Voting Agreement as set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the Parties agree as follows:

Additional Parties.

By execution of this Amendment, the Parties hereto hereby consent and agree that CEC, Series E, Series H, Series I, Series J, Series L, Series N, Series O, Series P, Series Q and Series S (the “New Partners”) are hereby added as parties to the Original Voting Agreement.

Removal of Parties.

a. By execution of this Amendment, the Parties hereto hereby acknowledge and agree that, effective as of the Dissolution Date, EIP shall be deemed to no longer be a party to the Original Voting Agreement. The Parties further agree that the New Partners, Series R and Series T shall succeed to all of EIP’s rights, privileges, obligations and duties under the Original Voting Agreement as amended hereby.

b. By execution of this Amendment, the Parties hereto hereby acknowledge and agree that, effective as of the TEP Dissolution Date, TEP shall be deemed to no longer be a party to the Original Voting Agreement.

Amendments .

The Original Voting Agreement is hereby amended as follows:

a. The Preamble is hereby amended and restated in its entirety to read as follows:

This Amended and Restated Voting Agreement (this “ Agreement ”) is made and entered into as of this 8th day of January, 2015, by and among (i) Advanced BioEnergy, LLC, a Delaware limited liability company (the “ Company ”), (ii) Clean Energy Capital, LLC (f/k/a Ethanol Capital Management, LLC), a Delaware limited liability company (“ CEC ”), (iii) Hawkeye Energy Holdings, LLC, a Delaware limited liability company (“ Hawkeye ”), (iv) Ethanol Capital Partners, L.P., Series E, a Delaware limited partnership (“ Series E ”), (v) Ethanol Capital Partners, L.P., Series H, a Delaware limited partnership (“ Series H ”), (vi) Ethanol Capital Partners, L.P., Series I, a Delaware limited partnership (“ Series I ”), (vii) Ethanol Capital Partners, L.P., Series J, a Delaware limited partnership (“ Series J ”), (viii) Ethanol Capital Partners, L.P., Series L, a Delaware limited partnership (“ Series L ”), (ix) Ethanol Capital Partners, L.P., Series N, a Delaware limited partnership (“ Series N ”), (x) Ethanol Capital Partners, L.P., Series O, a Delaware limited partnership (“ Series O ”), (xi) Ethanol Capital Partners, L.P., Series P, a Delaware limited partnership (“ Series P ”), (xii ) Ethanol Capital Partners, L.P., Series Q, a Delaware limited partnership (“ Series Q ”), (xiii) Ethanol Capital Partners, Series R, L.P., a Delaware limited partnership (“ Series R ”), (xiv) Ethanol Capital Partners, Series S, L.P., a Delaware limited partnership (“ Series S ”), (xv) Ethanol Capital Partners, Series T, L.P., a Delaware limited partnership (“ Series T ” and together with CEC, Series E, Series H, Series I, Series J, Series L, Series N, Series O, Series P, Series Q, Series R, and Series S, the “ Partners ”), and each of Hawkeye and Partners, an “ Investor ”), South Dakota Wheat Growers Association, a South Dakota cooperative (“ SDWG ”), and each of the undersigned directors (the “ Directors ”) of the Company.

The Company, Hawkeye, Partners, SDWG and Directors are collectively referred to herein as the “ Parties .”

Hawkeye, Partners, SDWG and Directors are collectively referred to herein as the “ Members .”

b. Section 2.5 of the Original Voting Agreement is hereby amended by deleting the lines beginning with “If to Hawkeye” through the line ending “Fax: (515) 233-5577” and substituting the following:


If to Hawkeye:		with a copy to:

Hawkeye Energy Holdings, LLC		Thomas H. Lee Partners
224 S. Bell Avenue		100 Federal Street, 35 ^th Floor
Ames, IA 50010		Boston, MA 02110
Attn: J.D. Schlieman		Attn: Joshua M. Nelson
Fax: (515) 233-5577		Fax: (617) 227-3514

		and a copy to:

		Weil, Gotshal & Manges LLP
		100 Federal Street, 34 ^th Floor
		Boston, MA 02110
		Attn: Benton B. Bodamer
		Fax: (617) 227-8337

c. Section 2.5 of the Original Voting Agreement is hereby amended by deleting the lines beginning with “If to Partners:” through the line ending with “Fax: (615) 744-5607” and substituting the following therefor:


If to Partners:		with a copy to:

Clean Energy Capital, LLC		Baker, Donelson, Bearman,
5151 E. Broadway Blvd, Suite 510		Caldwell, & Berkowitz, PC
Tucson, AZ 85711		211 Commerce St., Suite 800
Attn: Scott Brittenham		Nashville, TN 37201
Telephone: (520) 628-2000		Attn: Tonya Mitchem Grindon
Fax: (520) 323 9177		Telephone: (615) 726-5607
		Fax: (615) 744-5607

d. Section 2.5 of the Original Voting Agreement is hereby amended by deleting the lines beginning with “If to the Company:” through the line ending with “Fax: (763) 226-2725-5607” and substituting the following therefor”:


If to Partners:		with a copy to:

Advanced BioEnergy, LLC		Lindquist & Vennum LLP
8000 Norman Center Drive, Suite 610		80 S. Eighth Street, Suite 4200
Bloomington, MN 55437		Minneapolis, MN 55402
Attn: Richard Peterson		Attn: Thomas G. Lovett IV
Fax: (763) 226-2701		Fax: (612) 371-3207

e. Section 2.8 is hereby amended and restated in its entirety to read as follows:

2.8 Entire Agreement . This Agreement, together with the Subscription Documents, constitutes the full and entire understanding and agreement between the Parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the Parties is expressly terminated. The Voting Agreement between the Company, EIP and certain of the Directors and Officers, dated as of May 4, 2007, is hereby amended and restated in its entirety pursuant to this Agreement.

Consent and Waiver.

a. Section 1.8 of the Original Voting Agreement provides, in pertinent part, that the Members agree that (i) any Person to whom any Member transfers any of such Member’s Units shall be bound by the provisions of the Original Voting Agreement if such transferee were originally a party hereto, subject to certain limited exceptions, and that (ii) any attempted transfer in violation of Section 1.8 shall be null and void. In light of the foregoing, the Parties desire to consent to the Series M Unit Distribution and the TEP Unit Distribution and waive the transfer restrictions set forth in Section 1.8 of the Original Voting Agreement for (A) the limited partners of Series M who received Units held by Series M in connection with the Series M Unit Distribution and (B) the limited partners of TEP who received Units held by TEP in connection with the TEP Unit Distribution.

b. The Parties hereto hereby irrevocably and unconditionally:

i. consent to the Series M Unit Distribution;

ii. consent to the TEP Unit Distribution;

iii. waive the transfer restrictions set forth in Section 1.8 of the Original Voting Agreement for (A) those limited partners of Series M who received Units in connection with the Series M Unit Distribution with respect to the Units received and (B) those limited partners of TEP who received Units in connection with the TEP Unit Distribution with respect to the Units received; and

iv. acknowledge that the limited partners of Series M and TEP, respectively, will not be a party to, or subject to in any way, the Original Voting Agreement or this Amendment with respect to the Units received, and that the Units received by these limited partners will no longer be shares held by “Affiliates” and aggregated pursuant to Section 1.7 of the Voting Agreement.

Governing Law .

This Amendment shall be governed by and construed in accordance with the Limited Liability Company Act of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to its principles of conflicts of laws.

Counterparts .

This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Amendment may also be executed and delivered by facsimile or electronic signature via a .pdf document and in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Miscellaneous.

Except as specifically amended herein, the Original Voting Agreement shall remain in full force and effect. Any reference to this “Amendment” shall include the Recitals set forth in the beginning of this Amendment.

[Remainder of page intentionally left blank; signature page follows]

In witness whereof, the Parties hereto have executed this Amendment No. 2 to the Voting Agreement on the date first above written.


ADVANCED BIOENERGY, LLC

By:		/s/ Richard R. Peterson
Name:		Richard R. Peterson
Title:		CEO


CLEAN ENERGY CAPITAL, LLC

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES E, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES H, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES I, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES J, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager


ETHANOL CAPITAL PARTNERS, SERIES L, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES N, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES O, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES P, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES Q, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager


ETHANOL CAPITAL PARTNERS, SERIES S, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES R, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager

ETHANOL CAPITAL PARTNERS, SERIES T, LP
	By:	Clean Energy Capital, LLC
	Title:	General Partner

By:	/s/ Scott Brittenham
Name:	Scott Brittenham
Title:	Manager


HAWKEYE ENERGY HOLDINGS, LLC

By:		/s/ Joshua M. Nelson
Name:		Joshua M. Nelson
Title:		Director

SOUTH DAKOTA WHEAT GROWERS ASSOCIATION

By:		/s/ Dale Locken
Name:		Dale Locken
Title:		CEO/Treasurer

DIRECTORS:


/s/ Scott A. Brittenham		/s/ Troy L. Otte
Name:	Scott A. Brittenham	Name:	Troy L. Otte
Title:	Director	Title:	Director

/s/ JD Schlieman		/s/ Richard R. Peterson
Name:	JD Schlieman	Name:	Richard R. Peterson
Title:	Director	Title:	Director

/s/ Joshua M. Nelson		/s/ Charles Miller
Name:	Joshua M. Nelson	Name:	Charles Miller
Title:	Director	Title:	Director

EXHIBIT 31

CERTIFICATION

I, Richard R. Peterson, certify that:

1. I have reviewed this Form 10-Q of Advanced BioEnergy, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Advanced BioEnergy, LLC (the “Company”) on Form 10-Q for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard R. Peterson, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Richard R. Peterson

Richard R. Peterson

Chief Executive Officer and

Chief Financial Officer

February 13, 2015

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