x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the fiscal quarter ended June 30, 2020 | |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
Commission file number 000-50254 |
LAKE AREA CORN PROCESSORS, LLC | |||
(Exact name of registrant as specified in its charter) | |||
South Dakota | 46-0460790 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
46269 SD Highway 34 P.O. Box 100 Wentworth, South Dakota | 57075 | ||
(Address of principal executive offices) | (Zip Code) | ||
(605) 483-2676 | |||
(Registrant's telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer x | Smaller Reporting Company o | |
(Do not check if a smaller reporting company) | Emerging Growth Company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Page No. | |
June 30, 2020 | December 31, 2019* | ||||||
ASSETS | (unaudited) | ||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 2,822,648 | $ | 12,823,653 | |||
Accounts receivable | 7,926,635 | 1,576,093 | |||||
Inventory | 7,702,565 | 10,543,422 | |||||
Derivative financial instruments | 589,619 | 505,025 | |||||
Prepaid expenses | 346,530 | 479,422 | |||||
Total current assets | 19,387,997 | 25,927,615 | |||||
PROPERTY AND EQUIPMENT | |||||||
Land | 874,473 | 874,473 | |||||
Land improvements | 8,631,224 | 8,631,224 | |||||
Buildings | 9,316,576 | 9,316,576 | |||||
Equipment | 95,635,121 | 95,395,121 | |||||
Construction in progress | 179,037 | 150,925 | |||||
114,636,431 | 114,368,319 | ||||||
Less accumulated depreciation | (50,520,937 | ) | (47,660,838 | ) | |||
Net property and equipment | 64,115,494 | 66,707,481 | |||||
OTHER ASSETS | |||||||
Goodwill | 10,395,766 | 10,395,766 | |||||
Investments | 15,292,998 | 16,682,169 | |||||
Other | 89,291 | 97,287 | |||||
Total other assets | 25,778,055 | 27,175,222 | |||||
TOTAL ASSETS | $ | 109,281,546 | $ | 119,810,318 | |||
June 30, 2020 | December 31, 2019* | ||||||
LIABILITIES AND MEMBERS’ EQUITY | (unaudited) | ||||||
CURRENT LIABILITIES | |||||||
Outstanding checks in excess of bank balance | $ | 2,063,243 | $ | 1,155,264 | |||
Accounts payable | 4,367,796 | 13,812,388 | |||||
Accrued liabilities | 918,946 | 933,668 | |||||
Derivative financial instruments | 214,931 | 698,850 | |||||
Current portion of notes payable | 186 | 1,000,000 | |||||
Other | 4,000 | 4,000 | |||||
Total current liabilities | 7,569,102 | 17,604,170 | |||||
LONG-TERM LIABILITIES | |||||||
Notes payable | 43,761,172 | 37,989,208 | |||||
Other | — | 4,000 | |||||
Total long-term liabilities | 43,761,172 | 37,993,208 | |||||
MEMBERS' EQUITY (29,620,000 units issued and outstanding) | 57,951,272 | 64,212,940 | |||||
TOTAL LIABILITIES AND MEMBERS' EQUITY | $ | 109,281,546 | $ | 119,810,318 | |||
Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | ||||||||||||
REVENUES | $ | 25,424,832 | $ | 26,096,989 | $ | 57,881,070 | $ | 47,710,287 | |||||||
COSTS OF REVENUES | 19,812,907 | 24,798,025 | 60,118,787 | 43,961,060 | |||||||||||
GROSS PROFIT (LOSS) | 5,611,925 | 1,298,964 | (2,237,717 | ) | 3,749,227 | ||||||||||
OPERATING EXPENSES | 945,709 | 926,379 | 2,285,547 | 1,935,707 | |||||||||||
INCOME (LOSS) FROM OPERATIONS | 4,666,216 | 372,585 | (4,523,264 | ) | 1,813,520 | ||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest and other income | 31,660 | 15,657 | 346,030 | 151,064 | |||||||||||
Equity in net (loss) of investments | (66,498 | ) | (290,515 | ) | (1,225,802 | ) | (76,653 | ) | |||||||
Interest expense | (418,003 | ) | (290,624 | ) | (858,632 | ) | (290,624 | ) | |||||||
Total other (expense) | (452,841 | ) | (565,482 | ) | (1,738,404 | ) | (216,213 | ) | |||||||
NET INCOME (LOSS) | $ | 4,213,375 | $ | (192,897 | ) | $ | (6,261,668 | ) | $ | 1,597,307 | |||||
BASIC AND DILUTED EARNINGS (LOSS) PER UNIT | $ | 0.14 | $ | (0.01 | ) | $ | (0.21 | ) | $ | 0.05 | |||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING FOR THE CALCULATION OF BASIC & DILUTED EARNINGS (LOSS) PER UNIT | 29,620,000 | 29,620,000 | 29,620,000 | 29,620,000 | |||||||||||
DISTRIBUTIONS DECLARED PER UNIT | $ | — | $ | — | $ | — | $ | — | |||||||
Members' Equity | |||
Balance - December 31, 2018 | $ | 68,037,124 | |
Net income for the three-month period ended March 31, 2019 | 1,790,204 | ||
Balance - March 31, 2019 | 69,827,328 | ||
Net (loss) for the three-month period ended June 30, 2019 | (192,897 | ) | |
Balance - June 30, 2019 | $ | 69,634,431 |
Members' Equity | |||
Balance - December 31, 2019 | $ | 64,212,940 | |
Net (loss) for the three-month period ended March 31, 2020 | (10,475,043 | ) | |
Balance - March 31, 2020 | 53,737,897 | ||
Net income for the three-month period ended June 30, 2020 | 4,213,375 | ||
Balance - June 30, 2020 | $ | 57,951,272 |
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | ||||||
OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | (6,261,668 | ) | $ | 1,597,307 | ||
Adjustments to reconcile net income (loss) to cash used in operating activities | |||||||
Depreciation and amortization | 2,869,845 | 2,097,814 | |||||
Distributions in excess of earnings (earnings in excess of distributions) from investments | 1,389,172 | 167,968 | |||||
(Increase) decrease in | |||||||
Accounts receivable | (6,350,541 | ) | (2,086,458 | ) | |||
Inventory | 2,840,857 | (3,249,448 | ) | ||||
Prepaid expenses | 132,892 | 97,054 | |||||
Derivative financial instruments | (568,514 | ) | (625,568 | ) | |||
Increase (decrease) in | |||||||
Accounts payable | (9,447,821 | ) | 1,143,247 | ||||
Accrued and other liabilities | (18,722 | ) | 89,957 | ||||
NET CASH USED IN OPERATING ACTIVITIES | (15,414,500 | ) | (768,127 | ) | |||
INVESTING ACTIVITIES | |||||||
Purchase of property and equipment | (264,884 | ) | (7,634,093 | ) | |||
Purchase of investments | — | (633,924 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (264,884 | ) | (8,268,017 | ) | |||
FINANCING ACTIVITIES | |||||||
Increase in outstanding checks in excess of bank balance | 907,979 | 2,129,846 | |||||
Borrowings on notes payable | 43,770,400 | 26,500,000 | |||||
Payments on notes payable | (39,000,000 | ) | (15,100,000 | ) | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 5,678,379 | 13,529,846 | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (10,001,005 | ) | 4,493,702 | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 12,823,653 | 1,697,937 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 2,822,648 | $ | 6,191,639 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||
Cash paid during the period for interest, net of capitalized interest of $128 and $712,000 in 2020 and 2019, respectively. | $ | 854,213 | $ | 81,951 | |||
Capital expenditures in accounts payable | 3,229 | 947,996 |
• | sales of ethanol |
• | sales of distillers grains |
• | sales of distillers corn oil |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues ethanol | $ | 20,304,373 | $ | 20,673,752 | $ | 43,486,152 | $ | 37,009,577 | ||||||||
Revenues distillers grains | 4,010,385 | 4,420,567 | 11,735,394 | 8,904,917 | ||||||||||||
Revenues distillers corn oil | 1,110,074 | 1,002,670 | 2,659,524 | 1,795,793 | ||||||||||||
$ | 25,424,832 | $ | 26,096,989 | $ | 57,881,070 | $ | 47,710,287 |
Balance Sheet Classification | June 30, 2020 | December 31, 2019* | ||||||||
Forward contracts in gain position | $ | 109,237 | $ | 160,687 | ||||||
Futures contracts in gain position | 79,825 | 33,338 | ||||||||
Futures contracts in loss position | (150,400 | ) | (1,500 | ) | ||||||
Total | 38,662 | 192,525 | ||||||||
Cash held by broker | 550,957 | 312,500 | ||||||||
Current Assets | $ | 589,619 | $ | 505,025 | ||||||
Forward contracts in loss position | (Current Liabilities) | $ | (214,931 | ) | $ | (698,850 | ) |
Statement of Operations | Three Months Ended June 30, | |||||||||
Classification | 2020 | 2019 | ||||||||
Net realized and unrealized gains related to purchase contracts: | ||||||||||
Futures contracts | Cost of Revenues | $ | 333,387 | $ | 513,695 | |||||
Forward contracts | Cost of Revenues | 742,543 | 597,923 | |||||||
Statement of Operations | Six Months Ended June 30, | |||||||||
Classification | 2020 | 2019 | ||||||||
Net realized and unrealized gains (losses) related to purchase contracts: | ||||||||||
Futures contracts | Cost of Revenues | $ | 1,436,264 | $ | 674,581 | |||||
Forward contracts | Cost of Revenues | (2,370,490 | ) | 478,549 |
June 30, 2020 | December 31, 2019* | |||||||
Raw materials | $ | 4,339,694 | $ | 4,968,731 | ||||
Finished goods | 1,428,629 | 3,505,224 | ||||||
Work in process | 817,094 | 952,319 | ||||||
Parts inventory | 1,117,148 | 1,117,148 | ||||||
$ | 7,702,565 | $ | 10,543,422 |
Balance Sheet | June 30, 2020 | December 31, 2019 | ||||||
Current Assets | $ | 134,854,074 | $ | 219,618,012 | ||||
Other Assets | 214,571,494 | 226,475,383 | ||||||
Current Liabilities | 123,263,835 | 187,381,453 | ||||||
Long-term Liabilities | 76,889,035 | 95,219,540 | ||||||
Members' Equity | 149,272,698 | 163,492,402 | ||||||
Three Months Ended | ||||||||
Income Statement | June 30, 2020 | June 30, 2019 | ||||||
Revenue | $ | 49,534,870 | $ | 75,598,119 | ||||
Gross Profit | 7,273,860 | 2,771,334 | ||||||
Net (Loss) | (354,889 | ) | (3,358,215 | ) | ||||
Six Months Ended | ||||||||
Income Statement | June 30, 2020 | June 30, 2019 | ||||||
Revenue | $ | 142,162,849 | $ | 136,241,079 | ||||
Gross Profit | 2,323,164 | 8,829,314 | ||||||
Net (Loss) | (11,473,373 | ) | (347,474 | ) |
June 30, 2020 | December 31, 2019* | |||||||
Notes Payable - FCSA | 43,000,000 | 39,000,000 | ||||||
Notes Payable - Other | 770,400 | — | ||||||
Less unamortized debt issuance costs | (9,042 | ) | (10,792 | ) | ||||
43,761,358 | 38,989,208 | |||||||
Less current portion | (186 | ) | (1,000,000 | ) | ||||
$ | 43,761,172 | $ | 37,989,208 | |||||
*Derived from audited financial statements |
Years Ending June 30, | Principal | |||
2021 | $ | 186 | ||
2022 | 1,760,593 | |||
2023 | 1,000,200 | |||
2024 | 1,000,208 | |||
2025 | 4,000,215 | |||
thereafter | 36,008,998 |
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
June 30, 2020 | ||||||||||||||||
Assets: | ||||||||||||||||
Derivative financial instruments, | ||||||||||||||||
futures contracts | $ | 79,825 | $ | 79,825 | $ | — | $ | — | ||||||||
forward contracts | $ | 109,237 | $ | — | $ | 109,237 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivative financial instruments, | ||||||||||||||||
futures contracts | $ | 150,400 | $ | 150,400 | $ | — | $ | — | ||||||||
forward contracts | $ | 214,931 | $ | — | $ | 214,931 | $ | — | ||||||||
December 31, 2019* | ||||||||||||||||
Assets: | ||||||||||||||||
Derivative financial instruments, | ||||||||||||||||
futures contracts | $ | 33,338 | $ | 33,338 | $ | — | $ | — | ||||||||
forward contracts | $ | 160,687 | $ | — | $ | 160,687 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivative financial instruments, | ||||||||||||||||
futures contracts | $ | 1,500 | $ | 1,500 | $ | — | $ | — | ||||||||
forward contracts | $ | 698,850 | $ | — | $ | 698,850 | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues ethanol | $ | 20,324,281 | $ | 20,723,838 | $ | 43,565,787 | $ | 37,103,781 | |||||||
Revenues distillers dried grains | 1,140,435 | 849,741 | 3,678,750 | 1,175,323 | |||||||||||
Revenues corn oil | 1,114,584 | 1,010,829 | 2,677,418 | 1,810,516 | |||||||||||
Marketing fees ethanol | 19,909 | 60,960 | 79,636 | 121,920 | |||||||||||
Marketing fees distillers dried grains | 6,078 | 6,763 | 23,919 | 8,940 | |||||||||||
Marketing fees corn oil | 4,510 | 8,143 | 17,894 | 14,577 | |||||||||||
Denaturant purchases | 123,329 | 205,034 | 691,893 | 336,084 | |||||||||||
June 30, 2020 | December 31, 2019* | ||||||||||||||
Amounts due from RPMG | $ | 7,417,432 | $ | 891,227 | |||||||||||
Amounts due to RPMG | $ | 40,656 | $ | 46,234 |
2020 | 2019 | |||||||||||||
Income Statement Data | Amount | % | Amount | % | ||||||||||
Revenues | $ | 25,424,832 | 100.0 | $ | 26,096,989 | 100.0 | ||||||||
Cost of Revenues | 19,812,907 | 77.9 | 24,798,025 | 95.0 | ||||||||||
Gross Profit | 5,611,925 | 22.1 | 1,298,964 | 5.0 | ||||||||||
Operating Expense | 945,709 | 3.7 | 926,379 | 3.5 | ||||||||||
Income from Operations | 4,666,216 | 18.4 | 372,585 | 1.4 | ||||||||||
Other Income (Expense) | (452,841 | ) | (1.8 | ) | (565,482 | ) | (2.2 | ) | ||||||
Net Income (Loss) | $ | 4,213,375 | 16.6 | $ | (192,897 | ) | (0.7 | ) |
2020 | 2019 | |||||||||||||
Income Statement Data | Amount | % | Amount | % | ||||||||||
Revenues | $ | 57,881,070 | 100.0 | $ | 47,710,287 | 100.0 | ||||||||
Cost of Revenues | 60,118,787 | 103.9 | 43,961,060 | 92.1 | ||||||||||
Gross Profit | (2,237,717 | ) | (3.9 | ) | 3,749,227 | 7.9 | ||||||||
Operating Expense | 2,285,547 | 3.9 | 1,935,707 | 4.1 | ||||||||||
Income from Operations | (4,523,264 | ) | (7.8 | ) | 1,813,520 | 3.8 | ||||||||
Other Income (Expense) | (1,738,404 | ) | (3.0 | ) | (216,213 | ) | (0.5 | ) | ||||||
Net Income (Loss) | $ | (6,261,668 | ) | (10.8 | ) | $ | 1,597,307 | 3.3 |
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net cash (used in) operating activities | $ | (15,414,500 | ) | $ | (768,127 | ) | ||
Net cash (used in) investing activities | (264,884 | ) | (8,268,017 | ) | ||||
Net cash provided by financing activities | 5,678,379 | 13,529,846 |
Estimated Volume Requirements for the next 12 months (net of forward and futures contracts) | Unit of Measure | Hypothetical Adverse Change in Price | Approximate Adverse Change to Income | ||||||||
Ethanol | 92,000,000 | Gallons | 10 | % | $ | 13,156,000 | |||||
Corn | 28,768,915 | Bushels | 10 | % | $ | 8,630,674 | |||||
Natural Gas | 1,460,040 | MMBTU | 10 | % | $ | 237,987 |
Estimated Volume Requirements for the next 12 months (net of forward and futures contracts) | Unit of Measure | Hypothetical Adverse Change in Price | Approximate Adverse Change to Income | ||||||||
Ethanol | 92,000,000 | Gallons | 10 | % | $ | 13,064,000 | |||||
Corn | 24,526,548 | Bushels | 10 | % | $ | 10,227,570 | |||||
Natural Gas | 1,236,578 | MMBTU | 10 | % | $ | 248,552 |
Exhibit No. | Exhibit | |
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101 | The following financial information from Lake Area Corn Processors, LLC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019, (iii) Consolidated Statements of Cash Flows for the three and six months ended June 30, 2020 and 2019, and (iv) the Notes to Unaudited Consolidated Financial Statements.** |
LAKE AREA CORN PROCESSORS, LLC | |||
Date: | August 14, 2020 | /s/ Scott Mundt | |
Scott Mundt | |||
President and Chief Executive Officer (Principal Executive Officer) | |||
Date: | August 14, 2020 | /s/ Robbi Buchholtz | |
Robbi Buchholtz | |||
Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | The following Definitions under Article 1 Definitions of the Credit Agreement is hereby amended to read as follows: |
2. | The following Sections are hereby amended to read as follows: |
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. | The registrant's other certifying officer(s) and I are 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. | The registrant's other certifying officer(s) and 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. |
Date: | August 14, 2020 | /s/ Scott Mundt | |
Scott Mundt, Chief Executive Officer |
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. | The registrant's other certifying officer(s) and I are 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. | The registrant's other certifying officer(s) and 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. |
Date: | August 14, 2020 | /s/ Robbi Buchholtz | |
Robbi Buchholtz, Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | August 14, 2020 | /s/ Scott Mundt | |
Scott Mundt, | |||
Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | August 14, 2020 | /s/ Robbi Buchholtz | |
Robbi Buchholtz, | |||
Chief Financial Officer | |||
Consolidated Balance Sheets (Parenthetical) - shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Members' equity outstanding (units) | 29,620,000 | 29,620,000 |
Members' equity issued (units) | 29,620,000 | 29,620,000 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Statement [Abstract] | ||||
REVENUES | $ 25,424,832 | $ 26,096,989 | $ 57,881,070 | $ 47,710,287 |
COSTS OF REVENUES | 19,812,907 | 24,798,025 | 60,118,787 | 43,961,060 |
GROSS PROFIT | 5,611,925 | 1,298,964 | (2,237,717) | 3,749,227 |
OPERATING EXPENSES | 945,709 | 926,379 | 2,285,547 | 1,935,707 |
INCOME (LOSS) FROM OPERATIONS | 4,666,216 | 372,585 | (4,523,264) | 1,813,520 |
OTHER INCOME (EXPENSE) | ||||
Interest and other income | 31,660 | 15,657 | 346,030 | 151,064 |
Equity in net income (loss) of investments | (66,498) | (290,515) | (1,225,802) | (76,653) |
Interest expense | (418,003) | (290,624) | (858,632) | (290,624) |
Total other income (expense) | (452,841) | (565,482) | (1,738,404) | (216,213) |
NET INCOME (LOSS) | $ 4,213,375 | $ (192,897) | $ (6,261,668) | $ 1,597,307 |
BASIC AND DILUTED EARNINGS (LOSS) PER UNIT (in dollars per unit) | $ 0.14 | $ (0.01) | $ (0.21) | $ 0.05 |
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING FOR THE CALCULATION OF BASIC & DILUTED EARNINGS (LOSS) PER UNIT (units) | 29,620,000 | 29,620,000 | 29,620,000 | 29,620,000 |
DISTRIBUTIONS DECLARED PER UNIT (in dollars per unit) | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 |
Consolidated Statements of Changes in Members' Equity (Unaudited) |
USD ($) |
---|---|
Balance at the beginning of period at Dec. 31, 2018 | $ 68,037,124 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Net Income | 1,790,204 |
Balance at the end of period at Mar. 31, 2019 | 69,827,328 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Net Income | (192,897) |
Balance at the end of period at Jun. 30, 2019 | 69,634,431 |
Balance at the beginning of period at Dec. 31, 2019 | 64,212,940 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Net Income | (10,475,043) |
Balance at the end of period at Mar. 31, 2020 | 53,737,897 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Net Income | 4,213,375 |
Balance at the end of period at Jun. 30, 2020 | $ 57,951,272 |
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $ 128 | $ 307,885 |
Nature of Operations |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Nature of Operations [Abstract] | |
Nature of Operations | NATURE OF OPERATIONS Principal Business Activity Lake Area Corn Processors, LLC and subsidiary (the "Company") is a South Dakota limited liability company. The Company owns and manages Dakota Ethanol, LLC ("Dakota Ethanol"), a 90 million-gallon (annual nameplate capacity) ethanol plant, located near Wentworth, South Dakota. Dakota Ethanol sells ethanol and related products to customers located in North America. In addition, the Company has investment interests in five companies in related industries. See note 4 for further details. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America although the Company believes that the disclosures are adequate to make the information not misleading. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying financial statements. All adjustments are of a normal and recurring nature. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for a full year. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited financial statements for the year ended December 31, 2019, contained in the annual report on Form 10-K for 2019. Principles of Consolidation The consolidated financial statements of the Company include the accounts of its wholly owned subsidiary, Dakota Ethanol. All significant inter-company transactions and balances have been eliminated in consolidation. Revenue Recognition The Company has adopted the guidance of ASC Topic 606, Revenue from Contracts with Customers (Topic 606). Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires the Company to apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. The Company generally recognizes revenue at a point in time. The Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. Generally, ethanol and related products are shipped FOB shipping point and the control of the goods transfers to customers when the goods are loaded into trucks or rail cars are released to the railroad. Consideration is based on predetermined contractual prices or on current market prices.
Disaggregation of revenue: All revenue recognized in the income statement is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line:
Contract assets and contract liabilities: The Company has no significant contract assets or contract liabilities from contracts with customers. The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. Shipping costs Shipping costs incurred by the Company in the sale of ethanol, dried distiller's grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer. When the Company performs shipping and handling activities after the transfer of control to the customers (e.g., when control transfers prior to delivery), they are considered fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. Operating Segment The Company uses the "management approach" for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the "management approach" model, the Company has determined that its business is comprised of a single operating segment. Costs of Revenues The primary components of costs of revenues from the production of ethanol and related co-product are corn, energy (natural gas and electricity), raw materials (chemicals and denaturant), and direct labor costs. Shipping costs on modified and wet distiller's grains are included in costs of revenues. Inventory Valuation Inventories are generally valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value. In the valuation of inventories and purchase commitments, net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. Receivables and Credit Policies Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within fifteen days from the invoice date. Unpaid accounts receivable with invoice dates over thirty days old bear interest at 1.5% per month. Accounts receivable are stated at the amount billed to the customer. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management regularly reviews trade receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. The valuation allowance was zero as of June 30, 2020 and December 31, 2019. Investment in commodities contracts, derivative instruments and hedging activities The Company is exposed to certain risks related to its ongoing business operations. The primary risks that the Company manages by using forward or derivative instruments are price risks on anticipated purchases of corn and natural gas and the sale of ethanol, distillers grains and distillers corn oil. The Company is subject to market risk with respect to the price and availability of corn, the principal raw material the Company uses to produce ethanol and ethanol by-products. In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions. This is especially true when market conditions do not allow us to pass along increased corn costs to our customers. The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply. Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting. The Company does not apply the normal purchase and sales exemption for forward corn purchase contracts. As of June 30, 2020, the Company is committed to purchasing approximately 2.2 million bushels of corn on a forward contract basis with an average price of $2.99 per bushel. The total corn purchase contracts represent 7% of the annual projected plant corn usage. The Company enters into firm-price purchase commitments with natural gas suppliers under which the Company agrees to buy natural gas at a price set in advance of the actual delivery. Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time the price is fixed and the time the natural gas is delivered. At June 30, 2020, the Company is committed to purchasing approximately 610,000 MMBtus of natural gas with an average price of $2.17 per MMBtu. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchase contracts represent 30% of the annual plant requirements. The Company enters into firm-price sales commitments with distillers grains customers under which the Company agrees to sell distillers grains at a price set in advance of the actual delivery. Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers grain between the time the price is fixed and the time the distillers grains are delivered. At June 30, 2020, the Company is committed to selling approximately 42,000 dry equivalent tons of distillers grains with an average price of $108 per ton. The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers grains sales represent approximately 19% of the projected annual plant production. The Company enters into firm-price sales commitments with distillers corn oil customers under which the Company agrees to sell distillers corn oil at a price set in advance of the actual delivery. Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers corn oil between the time the price is fixed and the time the distillers corn oil is delivered. At June 30, 2020, the Company is committed to selling approximately 4.9 million pounds of distillers corn oil with an average price of $0.24 per pound. The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers corn oil sales represent approximately 22% of the projected annual plant production. The Company does not have any firm-priced sales commitments for ethanol as of June 30, 2020. The Company enters into short-term forward, option and futures contracts for ethanol, corn and natural gas as a means of managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments. As part of our trading activity, the Company uses futures and option contracts offered through regulated commodity exchanges to reduce risk of loss in the market value of inventories and purchase commitments. To reduce that risk, the Company generally takes positions using forward and futures contracts and options. Derivatives not designated as hedging instruments at June 30, 2020 and December 31, 2019 were as follows:
*Derived from audited financial statements Futures contracts and cash held by broker are all with one party and the right of offset exists. Therefore, on the balance sheet, these items are netted in one balance regardless of position. Forward contracts are with multiple parties and the right of offset does not exist. Therefore, these contracts are reported at the gross amounts on the balance sheet. Gains and losses related to derivative contracts related to corn are included as a component of costs of revenues.
Investments The Company has investment interests in five companies in related industries. All of these interests are at ownership shares less than 20%. These investments are all flow-through entities. Per ASC 323-30-S99-1, they are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account. Distributions or dividends received from the investments are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income based on the most recent reliable data. Goodwill Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on goodwill which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized, if necessary, for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. The Company performs the annual analysis as of December 31 of each fiscal year. A triggering event was determined to have occurred during the first quarter of 2020 and an impairment test was performed as of March 31, 2020. The Company determined there was no impairment. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the fair value of derivative financial instruments, lower of cost or net realizable value accounting for inventory and forward purchase contracts and goodwill impairment evaluation. Recently Issued Accounting Pronouncements In January 2017, FASB issued ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350)" (ASU 2017-04). ASU 2017-04 simplifies the test for goodwill impairment. It eliminates the two-step process of assessing goodwill impairment and replaces it with one step which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. Dakota Ethanol found it preferable to adopt ASU 2017-04 because the benefits of this standard to users of the financial statements will outweigh the costs of following the pre-existing guidance. The standard has not had a material impact on the Company's consolidated financial statements. In August 2018, FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement" (ASU 2018-13). ASU 2018-13 improves the effectiveness of the fair value disclosures in the financial statements. It adds, removes and modifies various disclosure requirements relating to the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. The standard has not had a material impact on the Company's consolidated financial statements. Risks and Uncertainties The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distiller grains to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the three months ended June 30, 2020, ethanol sales averaged approximately 80% of total revenues, while approximately 16% of revenues were generated from the sale of distiller grains and 4% of revenues were generated from the sale of corn oil. For the six months ended June 30, 2020, ethanol sales averaged approximately 75% of total revenues, while approximately 20% of revenues were generated from the sale of distiller grains and 5% of revenues were generated from the sale of corn oil. The Company's operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities. On January 30, 2020, the World Health Organization declared the coronavirus outbreak (COVID-19) a “Public Health Emergency of International Concern” and on March 11, 2020, declared COVID-19 a pandemic. The impact of COVID-19 has negatively impacted the Company’s operations, suppliers or other vendors, and customer base. Gasoline demand has been reduced in the United States which has forced the Company to reduce ethanol production accordingly. Any quarantines, labor shortages or other disruptions to the Company’s operations, or those of their customers, may adversely impact the Company’s revenues, ability to provide its services and operating results. In addition, a significant outbreak of epidemic, pandemic or contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, including the geographical area in which the Company operates, resulting in an economic downturn that could affect demand for its goods and services. The extent to which the coronavirus impacts the Company’s long-term results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others. |
Inventory |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | INVENTORY Inventory consisted of the following as of June 30, 2020 and December 31, 2019:
As of June 30, 2020 and December 31, 2019, the Company recorded a lower of cost or net realizable value write-down on corn inventory of approximately $0 and $424,000, ethanol inventory of approximately $0 and $167,000, distillers grains inventory of approximately $0 and $72,000, and corn oil inventory of approximately $0 and $0, respectively. *Derived from audited financial statements. |
Investments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | INVESTMENTS Dakota Ethanol has a 5% investment interest in the Company’s ethanol marketer, Renewable Products Marketing Group, LLC (RPMG). The net income which is reported in the Company’s income statement for RPMG is based on RPMG’s March 31, 2020 unaudited interim results. The carrying amount of the Company’s investment was approximately $1,244,000 and $1,295,000 as of June 30, 2020 and December 31, 2019, respectively. Dakota Ethanol has a 10% investment interest in Lawrenceville Tanks, LLC (LT), a partnership to operate an ethanol storage terminal in Georgia. The net income which is reported in the Company’s income statement for LT is based on LT’s June 30, 2020 unaudited interim results. The carrying amount of the Company’s investment was approximately $248,000 and $251,000 as of June 30, 2020 and December 31, 2019, respectively. Lake Area Corn Processors has a 10% investment interest in Guardian Hankinson, LLC (GH), a partnership to operate an ethanol plant in North Dakota. The net income which is reported in the Company’s income statement for GH is based on GH’s June 30, 2020 unaudited interim results. The carrying amount of the Company’s investment was approximately $4,259,000 and $4,991,000 as of June 30, 2020 and December 31, 2019, respectively. Lake Area Corn Processors has a 17% investment interest in Guardian Energy Management, LLC (GEM), a partnership to provide management services to ethanol plants. The net income which is reported in the Company’s income statement for GEM is based on GEM’s June 30, 2020 unaudited interim results. The carrying amount of the Company’s investment was approximately $53,000 as of June 30, 2020 and December 31, 2019. Lake Area Corn Processors has an 11% investment interest in Ring-neck Energy and Feeds, LLC (REF), a partnership to operate an ethanol plant in South Dakota. The net income which is reported in the Company’s income statement for REF is based on REF’s June 30, 2020 unaudited interim results. The carrying amount of the Company’s investment was approximately $9,490,000 and $10,093,000 as of June 30, 2020 and December 31, 2019, respectively. REF commenced operations during the second quarter of 2019. Prior to then, the ethanol plant was under construction. The carrying amount of the investment exceeds the underlying equity in net assets by approximately $1,086,000. The excess is comprised of a basis adjustment of approximately $446,000 and capitalized interest of $640,000. The excess is amortized over 20 years from May 2019, the time the plant became operational. The amortization is recorded in equity in net income of investments. Amortization was $28,831 and $3,946 for the six months ended June 30, 2020 and 2019, respectively. Condensed, combined unaudited financial information of the Company’s investments in RPMG, LT, GH, GEM and REF are as follows:
The Company recorded equity in net (loss) of approximately $(66,000) and $(1,226,000) from our investments for the three and six months ended June 30, 2020, respectively. |
Revolving Operating Note |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Short Term Note Payable [Abstract] | |
Revolving Operating Note | REVOLVING OPERATING NOTE On February 6, 2018, Dakota Ethanol executed a revolving promissory note with Farm Credit Services of America (FCSA) in the amount up to $10,000,000 or the amount available in accordance with the borrowing base calculation, whichever is less. Dakota Ethanol amended the note agreement with FCSA in June of 2020. Under the amendment, the available credit under the revolving operating note was reduced to $2,000,000. Interest on the outstanding principal balance will accrue at 300 basis points above the one-month LIBOR rate and is not subject to a floor. The rate was 3.20% at June 30, 2020. There is a non-use fee of 0.25% on the unused portion of the $2,000,000 availability. The note is collateralized by substantially all assets of the Company. The note expires on November 1, 2021. On June 30, 2020, Dakota Ethanol had no balance outstanding and approximately $2,000,000 available to be drawn on the revolving promissory note under the borrowing base. |
Long-Term Notes Payable |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Note Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Notes Payable | LONG-TERM NOTES PAYABLE On August 1, 2017, Dakota Ethanol executed a term note from FCSA in the amount of $8,000,000. Dakota Ethanol agreed to make monthly interest payments starting September 1, 2017 and annual principal payments of $1,000,000 starting on August 1, 2018. The payment on August 1, 2020 is no longer due after the note was amended with FCSA and is now due on August 1, 2025. The notes matures on August 1, 2025. Interest on the outstanding principal balance will accrue at 325 basis points above the one-month LIBOR rate until February 1, 2023 and increases to 350 basis points thereafter until maturity. The interest rate is not subject to a floor. The rate was 3.45% at June 30, 2020. On June 30, 2020, Dakota Ethanol had $6,000,000 outstanding on the note. On February 6, 2018, Dakota Ethanol executed a reducing revolving promissory note from FCSA in the amount up to $40,000,000 or the amount available in accordance with the borrowing availability under the credit agreement. Dakota Ethanol amended the note agreement with FCSA in June of 2020. Under the amendment, the available credit on the reducing revolving note was increased to $48,000,000. The amount Dakota Ethanol can borrow on the note decreases by $1,750,000 semi-annually starting on July 1, 2021 until the maximum balance reaches $32,250,000 on July 1, 2025. The note matures on January 1, 2026. Interest on the outstanding principal balance will accrue at 325 basis points above the one-month LIBOR rate until February 1, 2023 and the basis increases to 350 points thereafter until maturity. The interest rate is not subject to a floor. The rate was 3.45% at June 30, 2020. The note contains a non-use fee of 0.50% on the unused portion of the note. On June 30, 2020, Dakota Ethanol had $37,000,000 outstanding and $11,000,000 available to be drawn on the note. As part of the note payable agreement, Dakota Ethanol is subject to certain restrictive covenants establishing financial reporting requirements, distribution and capital expenditure limits, minimum debt service coverage ratios, net worth and working capital requirements. The note is collateralized by substantially all assets of the Company. The note payable agreement was amended in June 2020 with modifications to the requirements. The working capital covenant was reduced to $11,000,000 and the net worth covenant was reduced to $18,000,000. The next measurement date for the debt service coverage ratio was deferred until December 31, 2021. Management's current financial projections indicate that we will be in compliance with our revised financial covenants for the next 12 months and we expect to remain in compliance thereafter. The Company entered into a loan agreement with the Small Business Association through First State Bank, Gothenburg, NE on April 4, 2020 for $760,400 as part of the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The loan matures in April 2022 and has an interest rate of 1%. Proceeds of the loan are restricted for use towards payroll costs and other allowable uses such as covered utilities for incurred before December 31, 2020 under the Paycheck Protection Program Rules. Provisions of the agreement allow for a portion of the loan to be forgiven if certain qualifications are met. The Company anticipates applying for forgiveness of this loan . The Paycheck Protection Program Flexibility Act, which was put into effect on June 5, 2020, may effect the terms of our loan. The Company also received an Economic Injury Disaster Loan (EIDL) in the amount of $10,000 in June 2020. Repayment of the loan will begin in June 2021 and has a 30 year term at 3.75% interest. The balances of the notes payable are as follows. The balances reflect the updated agreement:
Principal maturities for the next five years are estimated as follows.
|
Fair Value Measurements |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company complies with the fair value measurements and disclosures standard which defines fair value, establishes a framework for measuring fair value, and expands disclosure for those assets and liabilities carried on the balance sheet on a fair value basis. The Company’s balance sheet contains derivative financial instruments that are recorded at fair value on a recurring basis. Fair value measurements and disclosures require that assets and liabilities carried at fair value be classified and disclosed according to the process for determining fair value. There are three levels of determining fair value. Level 1 uses quoted market prices in active markets for identical assets or liabilities. Level 2 uses observable market based inputs or unobservable inputs that are corroborated by market data. Level 3 uses unobservable inputs that are not corroborated by market data. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Derivative financial instruments. Commodity futures contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. Over-the-counter commodity options contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. Forward purchase contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from local grain terminal bid values. The fair value measurements consider observable data that may include live trading bids from local elevators and processing plants which are based off the CBOT markets. The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
*Derived from audited financial statements. During the three and six months ended June 30, 2020, the Company did not make any changes between Level 1 and Level 2 assets and liabilities. As of June 30, 2020 and December 31, 2019, the Company did not have any Level 3 assets or liabilities. Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis were not significant at June 30, 2020. Disclosure requirements for fair value of financial instruments require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The Company believes the carrying amount of cash and cash equivalents (level 1), accounts receivable (level 2), other receivables (level 2), accounts payable and accruals (level 2) and short-term debt (level 3) approximates fair value. The carrying amount of long-term obligations (level 3) at June 30, 2020 of $43,770,400 had an estimated fair value of approximately $43,770,400 based on estimated interest rates for comparable debt. The carrying amount of long-term obligations at December 31, 2019 of $39,000,000 had an estimated fair value of approximately $39,000,000. |
Related Party Transactions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | RELATED PARTY TRANSACTIONS Dakota Ethanol has a 5% interest in RPMG, and Dakota Ethanol has entered into marketing agreements for the exclusive rights to market, sell and distribute the entire ethanol, dried distiller's grains and corn oil inventories produced by Dakota Ethanol. The marketing fees are included in net revenues. The Company also purchases denaturant from RPMG. Revenues and marketing fees related to the agreements as well as denaturant purchases are as follows:
*Derived from audited financial statements. The Company purchased corn and services from members of its Board of Managers that farm and operate local businesses. Purchases during the three and six months ended June 30, 2020 totaled approximately $355,000 and $376,000, respectively. As of June 30, 2020 and December 31, 2019, the amount we owed to other related parties was approximately $0 and $0, respectively. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | Goodwill Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on goodwill which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized, if necessary, for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. The Company performs the annual analysis as of December 31 of each fiscal year. A triggering event was determined to have occurred during the first quarter of 2020 and an impairment test was performed as of March 31, 2020. The Company determined there was no impairment. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements of the Company include the accounts of its wholly owned subsidiary, Dakota Ethanol. All significant inter-company transactions and balances have been eliminated in consolidation. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition The Company has adopted the guidance of ASC Topic 606, Revenue from Contracts with Customers (Topic 606). Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires the Company to apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. The Company generally recognizes revenue at a point in time. The Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. Generally, ethanol and related products are shipped FOB shipping point and the control of the goods transfers to customers when the goods are loaded into trucks or rail cars are released to the railroad. Consideration is based on predetermined contractual prices or on current market prices.
Disaggregation of revenue: All revenue recognized in the income statement is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line:
Contract assets and contract liabilities: The Company has no significant contract assets or contract liabilities from contracts with customers. The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. Shipping costs Shipping costs incurred by the Company in the sale of ethanol, dried distiller's grains and corn oil are not specifically identifiable and as a result, revenue from the sale of those products is recorded based on the net selling price reported to the Company from the marketer. When the Company performs shipping and handling activities after the transfer of control to the customers (e.g., when control transfers prior to delivery), they are considered fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment | Operating Segment The Company uses the "management approach" for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the "management approach" model, the Company has determined that its business is comprised of a single operating segment. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of Revenues | Costs of Revenues The primary components of costs of revenues from the production of ethanol and related co-product are corn, energy (natural gas and electricity), raw materials (chemicals and denaturant), and direct labor costs. Shipping costs on modified and wet distiller's grains are included in costs of revenues. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Valuation | Inventory Valuation Inventories are generally valued using methods which approximate the lower of cost (first-in, first-out) or net realizable value. In the valuation of inventories and purchase commitments, net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables and Credit Policies | Receivables and Credit Policies Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within fifteen days from the invoice date. Unpaid accounts receivable with invoice dates over thirty days old bear interest at 1.5% per month. Accounts receivable are stated at the amount billed to the customer. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management regularly reviews trade receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. The valuation allowance was zero as of June 30, 2020 and December 31, 2019. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in commodities contracts, derivative instruments and hedging activities | Investment in commodities contracts, derivative instruments and hedging activities The Company is exposed to certain risks related to its ongoing business operations. The primary risks that the Company manages by using forward or derivative instruments are price risks on anticipated purchases of corn and natural gas and the sale of ethanol, distillers grains and distillers corn oil. The Company is subject to market risk with respect to the price and availability of corn, the principal raw material the Company uses to produce ethanol and ethanol by-products. In general, rising corn prices result in lower profit margins and, therefore, represent unfavorable market conditions. This is especially true when market conditions do not allow us to pass along increased corn costs to our customers. The availability and price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental policies with respect to agriculture and international trade and global demand and supply. Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting. The Company does not apply the normal purchase and sales exemption for forward corn purchase contracts. As of June 30, 2020, the Company is committed to purchasing approximately 2.2 million bushels of corn on a forward contract basis with an average price of $2.99 per bushel. The total corn purchase contracts represent 7% of the annual projected plant corn usage. The Company enters into firm-price purchase commitments with natural gas suppliers under which the Company agrees to buy natural gas at a price set in advance of the actual delivery. Under these arrangements, the Company assumes the risk of a price decrease in the market price of natural gas between the time the price is fixed and the time the natural gas is delivered. At June 30, 2020, the Company is committed to purchasing approximately 610,000 MMBtus of natural gas with an average price of $2.17 per MMBtu. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchase contracts represent 30% of the annual plant requirements. The Company enters into firm-price sales commitments with distillers grains customers under which the Company agrees to sell distillers grains at a price set in advance of the actual delivery. Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers grain between the time the price is fixed and the time the distillers grains are delivered. At June 30, 2020, the Company is committed to selling approximately 42,000 dry equivalent tons of distillers grains with an average price of $108 per ton. The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers grains sales represent approximately 19% of the projected annual plant production. The Company enters into firm-price sales commitments with distillers corn oil customers under which the Company agrees to sell distillers corn oil at a price set in advance of the actual delivery. Under these arrangements, the Company assumes the risk of a price increase in the market price of distillers corn oil between the time the price is fixed and the time the distillers corn oil is delivered. At June 30, 2020, the Company is committed to selling approximately 4.9 million pounds of distillers corn oil with an average price of $0.24 per pound. The Company accounts for these transactions as normal sales, and accordingly, does not mark these transactions to market. The distillers corn oil sales represent approximately 22% of the projected annual plant production. The Company does not have any firm-priced sales commitments for ethanol as of June 30, 2020. The Company enters into short-term forward, option and futures contracts for ethanol, corn and natural gas as a means of managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments. As part of our trading activity, the Company uses futures and option contracts offered through regulated commodity exchanges to reduce risk of loss in the market value of inventories and purchase commitments. To reduce that risk, the Company generally takes positions using forward and futures contracts and options. Derivatives not designated as hedging instruments at June 30, 2020 and December 31, 2019 were as follows:
*Derived from audited financial statements Futures contracts and cash held by broker are all with one party and the right of offset exists. Therefore, on the balance sheet, these items are netted in one balance regardless of position. Forward contracts are with multiple parties and the right of offset does not exist. Therefore, these contracts are reported at the gross amounts on the balance sheet. Gains and losses related to derivative contracts related to corn are included as a component of costs of revenues.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The Company has investment interests in five companies in related industries. All of these interests are at ownership shares less than 20%. These investments are all flow-through entities. Per ASC 323-30-S99-1, they are being accounted for by the equity method of accounting under which the Company’s share of net income is recognized as income in the Company’s statements of operations and added to the investment account. Distributions or dividends received from the investments are treated as a reduction of the investment account. The Company consistently follows the practice of recognizing the net income based on the most recent reliable data. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Policy [Policy Text Block] | no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the fair value of derivative financial instruments, lower of cost or net realizable value accounting for inventory and forward purchase contracts and goodwill impairment evaluation |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In January 2017, FASB issued ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350)" (ASU 2017-04). ASU 2017-04 simplifies the test for goodwill impairment. It eliminates the two-step process of assessing goodwill impairment and replaces it with one step which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the fair value up to the amount of the goodwill attributed to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. Dakota Ethanol found it preferable to adopt ASU 2017-04 because the benefits of this standard to users of the financial statements will outweigh the costs of following the pre-existing guidance. The standard has not had a material impact on the Company's consolidated financial statements. In August 2018, FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement" (ASU 2018-13). ASU 2018-13 improves the effectiveness of the fair value disclosures in the financial statements. It adds, removes and modifies various disclosure requirements relating to the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal year. The standard has not had a material impact on the Company's consolidated financial statements. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Risks and Uncertainties The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol and distiller grains to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the three months ended June 30, 2020, ethanol sales averaged approximately 80% of total revenues, while approximately 16% of revenues were generated from the sale of distiller grains and 4% of revenues were generated from the sale of corn oil. For the six months ended June 30, 2020, ethanol sales averaged approximately 75% of total revenues, while approximately 20% of revenues were generated from the sale of distiller grains and 5% of revenues were generated from the sale of corn oil. The Company's operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities. On January 30, 2020, the World Health Organization declared the coronavirus outbreak (COVID-19) a “Public Health Emergency of International Concern” and on March 11, 2020, declared COVID-19 a pandemic. The impact of COVID-19 has negatively impacted the Company’s operations, suppliers or other vendors, and customer base. Gasoline demand has been reduced in the United States which has forced the Company to reduce ethanol production accordingly. Any quarantines, labor shortages or other disruptions to the Company’s operations, or those of their customers, may adversely impact the Company’s revenues, ability to provide its services and operating results. In addition, a significant outbreak of epidemic, pandemic or contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, including the geographical area in which the Company operates, resulting in an economic downturn that could affect demand for its goods and services. The extent to which the coronavirus impacts the Company’s long-term results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others. |
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table depicts the disaggregation of revenue according to product line:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | Derivatives not designated as hedging instruments at June 30, 2020 and December 31, 2019 were as follows:
*Derived from audited financial statements |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gains (losses) related to purchase contracts |
|
Inventory (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventory consisted of the following as of June 30, 2020 and December 31, 2019:
As of June 30, 2020 and December 31, 2019, the Company recorded a lower of cost or net realizable value write-down on corn inventory of approximately $0 and $424,000, ethanol inventory of approximately $0 and $167,000, distillers grains inventory of approximately $0 and $72,000, and corn oil inventory of approximately $0 and $0, respectively. *Derived from audited financial statements. |
Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Condensed, combined unaudited financial information of the Company’s investments in RPMG, LT, GH, GEM and REF are as follows:
|
Long-Term Notes Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Note Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The balances of the notes payable are as follows. The balances reflect the updated agreement:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Principal repayment and amortization of debt issuance cost | Principal maturities for the next five years are estimated as follows.
|
Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
|
Related Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Revenues and marketing fees related to the agreements as well as denaturant purchases are as follows:
|
Nature of Operations (Details) gal in Millions |
6 Months Ended |
---|---|
Jun. 30, 2020
gal
| |
Product Information [Line Items] | |
Equity Method Investments, Number of Entities | 5 |
Product [Member] | Ethanol [Member] | |
Product Information [Line Items] | |
Annual production capacity | 90 |
Summary of Significant Accounting Policies - Revenue from customers (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Including Assessed Tax | $ 25,424,832 | $ 26,096,989 | $ 57,881,070 | $ 47,710,287 |
Ethanol [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Including Assessed Tax | 20,304,373 | 20,673,752 | 43,486,152 | 37,009,577 |
Distillers Grain [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Including Assessed Tax | 4,010,385 | 4,420,567 | 11,735,394 | 8,904,917 |
Corn Oil [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Including Assessed Tax | $ 1,110,074 | $ 1,002,670 | $ 2,659,524 | $ 1,795,793 |
Summary of Significant Accounting Policies - Receivables and Credit Policies (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Receivables [Abstract] | ||
Payment term | 15 days | |
Payment term before interest is applied | 30 days | |
Trade Receivable, Unpaid Balance, Interest Rate | 1.50% | |
SEC Schedule, 12-09, Valuation Allowances and Reserves, Amount | $ 0 | $ 0 |
Summary of Significant Accounting Policies - Derivative Instruments - Income Statement (Details) - Not Designated as Hedging Instrument [Member] - Cost of Sales [Member] - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Future [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | $ 333,387 | $ 513,695 | $ 1,436,264 | $ 674,581 |
Forward Contracts [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss) on Derivative, Net | $ 742,543 | $ 597,923 | $ (2,370,490) | $ 478,549 |
Summary of Significant Accounting Policies - Investments (Details) |
Jun. 30, 2020 |
---|---|
Accounting Policies [Abstract] | |
Equity Method Investments, Number of Entities | 5 |
Ownership percentage in equity method investments (less than) | 20.00% |
Summary of Significant Accounting Policies Revenue Recognition (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Policy Text Block] | 0 |
Summary of Significant Accounting Policies Goodwill (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Policy [Policy Text Block] | no |
Summary of Significant Accounting Policies Concentration Risk (Details) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2020
Rate
|
Jun. 30, 2020
Rate
|
|
Ethanol [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 80.00% | 7500.00% |
Distillers Grain [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 16.00% | 2000.00% |
Corn Oil [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 4.00% | 500.00% |
Inventory (Details) - USD ($) |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory [Line Items] | ||
Raw Materials | $ 4,339,694 | $ 4,968,731 |
Finished Goods | 1,428,629 | 3,505,224 |
Work in Process | 817,094 | 952,319 |
Parts Inventory | 1,117,148 | 1,117,148 |
Inventory, Net | 7,702,565 | 10,543,422 |
Corn [Member] | ||
Inventory [Line Items] | ||
Inventory Adjustments | 0 | 424,000 |
Ethanol [Member] | ||
Inventory [Line Items] | ||
Inventory Adjustments | 0 | 167,000 |
Distillers Grain [Member] | ||
Inventory [Line Items] | ||
Inventory Adjustments | 0 | 72,000 |
Corn Oil [Member] | ||
Inventory [Line Items] | ||
Inventory Adjustments | $ 0 | $ 0 |
Revolving Operating Note (Details) - Farm Credit Services of America [Member] - Line of Credit [Member] - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Feb. 06, 2018 |
|
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 2,000,000 | $ 10,000,000 |
Basis spread on variable rate | 3.00% | |
Interest rate at period end | 3.20% | |
Unused capacity, commitment fee percentage | 0.25% | |
Amount outstanding | $ 0 | |
Remaining borrowing capacity | $ 2,000,000 |
W3LZ7]_X"?*C0
M+/ME3XE$<+\9PWYI,TYS6G 09A%@?$-S$%=56;G7PJY>B!"IPKD**)*26+
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M=U^J,OXL]MT['\Q6CQ,AB&@W2TU$W[E:!DLA7]F7W,X70.Q8P!T_N*N':I &9NCS)H.PQ>* \7\/*6IN"!NE4;W0+O*^''
MKQ:*JY*F ZPC#C)A
Y9>
M96*Q;)F<'((1MC)WNC(J:BP'>65R$75B'<*:"(R5W,<@LQ:VM0B3DPG#J+0?
M_NZ)QD=]+Q'NFNGF1:HVW(Z WMH/T'D[-WZZM]/W [J=DF^J:2O09/CB602N
MG6CM@6W53)&-9:E2LRWD3X!<<)#[K978NT,0Z/]69C\ 4$L#!!0 ( *-C
M#E'-W71:01L )!3 8 >&PO=V]R:W-H965T-L"EO>2;L!$I94-5^:&ONZ4UB[F,X LS$MO7-UZ%L>
M4_E*3.>+[&9$,S+#:3:$;7I1/P+);_/G./=Q"5L\&X^NL\5D).C#S6*>S:<(
M[A^)[;Y \.3L]2E!:*BB!S77ZV";0H.0TCA3%R=94$E7*PPUU&=M75K@*XRN
M]^%KZW23)W/N"B#FW$#V6FLO;X1T"R
MIWOHZ'X^/#OA/YNR)T;]1 S[P_Z9^4:>#R.:;_3E?/CMV<+4&L3I7V?6O?'K
MWM"Z-R?6_;&JLEU>%$*6F7A5UK)
%BN:-.UR9[XT>>>
M\615*^D>Y63BZ,O_SIXIKL)+U]A!70F=30D]<>>;3>'K-SZ'?[;5\T!M0U?G
M3[X2;8%84_J/*]I;1/!Q,/FX0\X.6SFP Q2U=(8*/AZ,DLF\2SF.ADTA4AG?
MC,1X/DWFP]')?9]N8_V"75_R<5Y]E>T/DIO1)!E.;N#OR?0F&<\V' Y3 9
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M_W[B:NXG%BNK