IMPORTANT NOTE REGARDING RECENT EVENTS

This Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 should be read in light of the recent events described below under "Overview."

Information Regarding Forward-Looking Statements



This Quarterly Report on Form 10-Q contains forward-looking statements regarding
our business, financial condition, results of operations, performance and
prospects. All statements that are not historical or current facts are
forward-looking statements and are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks, uncertainties and other factors,
many of which may be beyond our control and may cause our actual results,
performance or achievements to be materially different from any future results,
performances or achievements expressed or implied by the forward-looking
statements. Certain of these risks and uncertainties are described in the "Risk
Factors" section of our Annual Report on Form 10-K for the year ended
September 30, 2019 and in this Form 10-Q.

You can identify forward-looking statements by terms such as "anticipates,"
"believes," "could," "estimates," "expects," "intends," "may," "plans,"
"potential," "predicts," "projects," "should," "will," "would," and similar
expressions intended to identify forward-looking statements. Forward-looking
statements reflect our current views with respect to future events, are based on
assumptions, and are subject to risks and uncertainties. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. Also, forward-looking statements represent our estimates and
assumptions only as of the date of this report. Except as required by law, we
assume no obligation to update any forward-looking statements publicly, or to
update the reasons actual results could differ materially from those anticipated
in any forward-looking statements, even if new information becomes available in
the future. Readers are urged to carefully review and consider the various
disclosures made by us in this report and in our other reports filed from time
to time with the U.S. Securities and Exchange Commissions, which we refer to as
the SEC, that advise interested parties of the risks and factors that may affect
our business.

General

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

Overview

Advanced BioEnergy, LLC (the "Company," "we," "our," "Advanced BioEnergy" or
"ABE") was formed in 2005 as a Delaware limited liability company. Our business
is carried out primarily through our wholly-owned subsidiary, ABE South Dakota,
LLC ("ABE South Dakota").

On August 1, 2019, Advanced BioEnergy and ABE South Dakota entered into an asset
purchase agreement (the "Asset Purchase Agreement ") with Glacial Lakes Energy,
LLC ("GLE"), under which ABE South Dakota agreed to sell its Aberdeen and Huron
South Dakota ethanol plants and related businesses to GLE (the "Asset Sale").
The Asset Purchase Agreement and Asset Sale, which constitutes the sale of
substantially all of the assets of the Company, was unanimously approved by the
Company's Board of Directors.

At a Special Meeting of Members held on September 19, 2019, the Company's members approved the Asset Purchase Agreement and the Asset Sale. Also at the Special Meeting of Members, the members approved a Plan of Liquidation and Dissolution (the "Plan of Liquidation") for the voluntary liquidation and dissolution of the Company.



On December 19, 2019, Advanced BioEnergy, ABE South Dakota and GLE closed the
Asset Sale. At the closing, ABE South Dakota sold to GLE substantially all of
the assets related to its business of producing ethanol and co-products,
including wet, modified and dried distillers' grains and corn oil, through its
plants located in Aberdeen, South Dakota and Huron, South Dakota.

Under the Asset Purchase Agreement, the purchase price was $47.5 million, plus
the value of the Company's inventory at closing, which was approximately $2.3
million. At the closing, Buyer paid to ABE South Dakota a total of $8.3 million
in cash, which reflects the purchase price, less the approximately $31.0 million
to repay the AgCountry Master Credit Agreement obligations, less the amount of
certain accrued contract liabilities, and less $4.75 million of the purchase
price that was deposited into an indemnity escrow account. The indemnity escrow
account will be used to satisfy any of Buyer's claims for indemnification under
the Asset Purchase Agreement and any amounts remaining after the eighteen
(18)-month anniversary of the closing will be released to the Company. The
Company also paid approximately $0.7 million in transaction expenses at closing.

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Upon the closing of the Asset Sale, the Company commenced its liquidation in
accordance with the Plan of Liquidation. In connection with the Company's
liquidation in accordance with the Plan of Liquidation, the Company's Board of
Directors determined that the Company's transfer records will be closed from and
after the close of business on December 19, 2019. The Board of Directors will
not consider and the Company will not record or recognize any transfer of the
Company's units occurring after the close of business on December 19, 2019.



As a result of the December 19, 2019 Effective Date under the Plan of
Liquidation, the Company is not engaged in any business operations other than to
satisfy its obligations to dissolve, wind up and liquidate under the Plan of
Liquidation or, to the limited extent necessary, to preserve or enhance the
value of assets in connection with their sale. Under the Delaware Limited
Liability Act and the Company's operating agreement, the Company was immediately
dissolved when the Board implemented the Plan of Reorganization. The Company
plans to dispose of its remaining assets and resolve any remaining claims,
whether known, contingent or unknown, as promptly as reasonably practical.

The Company's Board of Directors met in January 2020 and declared a distribution
of $7.8 million or $0.31 per unit based on 25,410,851 units outstanding. The
distribution was paid to all members of record as of January 24, 2020. The
Company expects to make a final distribution shortly after release of the
indemnity escrow account in June 2021.

Except as otherwise reported herein, this Quarterly Report on Form 10-Q presents
the Company's business, assets, and financial results and position as they
occurred during the quarter beginning September 30, 2019 and ending December 31,
2019. Following the December 19, 2019 closing date, the Company has not engaged
and will not engage in any business activities except to the extent necessary to
preserve the value of its assets, wind up its business affairs and distribute
its assets in accordance with the Plan of Liquidation. Accordingly, our
financial position or financial performance for any period prior to December 19,
2019 will be of limited value to a member's understanding of the timing and
amount of potential distributions during liquidation.

FACILITIES

The table below provides a summary of our ethanol plants in operation until the Asset Sale on December 19, 2019:





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

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

Huron totaling 107.7 million gallons.

(2) Our plants produced and sold wet, modified and dried distillers' grains. The

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

capacity.




In October 2015, we amended the existing lease agreement for our corporate
headquarters. Under the amended lease, we agreed to lease approximately 4,400
square feet for our corporate and administrative staff in Bloomington,
Minnesota, through September 2021. The base rent is $20.50 per square foot, or
approximately $7,500 per month for the twelve month period beginning July 1,
2019, with annual increases of $.50 per square foot. We believe this space will
be sufficient for our needs until the end of the lease period.

Plan of Liquidation



As described above, the Company's members approved the Plan of Liquidation at a
Special Meeting of Members on September 19, 2019. Upon the closing of the Asset
Sale, the Company commenced its liquidation in accordance with the Plan of
Liquidation. Following the December 19, 2019 closing date, the Company has not
engaged and will not engage in any business activities except to the extent
necessary to preserve the value of its assets, wind up its business affairs and
distribute its assets in accordance with the Plan of Liquidation.

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Results of Operations for the Quarter Ended December 31, 2019 Compared to Quarter Ended December 31, 2018



The following table reflects quantities of our products sold at average net
prices as well as bushels of corn ground and therms of natural gas burned at
average costs for three months ended December 31, 2019 and 2018 for our South
Dakota plants:



                                                Three Months                             Three Months
                                             December 31, 2019                        December 31, 2018
                                        Quantity          Average Price          Quantity          Average Price

Product Sales Information            (In thousands)                           (In thousands)
Ethanol (gallons)                             17,794     $          1.30               21,736     $          1.09
Distillers grains (tons)                          43     $        130.26                   55     $        126.00
Corn Oil (pounds)                              3,731     $          0.19                5,805     $          0.22




  Product Cost Information    Quantity       Average Cost       Quantity       Average Cost
  Corn (bushels)                  6,120     $         3.69          7,607     $         3.26
  Natural Gas (therms)              458     $         2.61            543     $         4.13




Net Sales

Net sales for the quarter ended December 31, 2019 were $29.5 million, compared
to $32.0 million for the quarter ending December 31, 2018, a decrease of
$2.5 million or 8%. Ethanol gallons sold decreased by 18% as a result of fewer
selling days in the quarter due to the Asset Sale on December 19, 2019, while
ethanol prices increased 19% for the quarter ended December 31, 2019, compared
to the prior quarter ended December 31, 2018. As a percentage of net sales,
ethanol sales were 78% and 74% and distillers' sales were 19% and 22%, for the
quarters ending December 31, 2019 and December 31, 2018, respectively.

Cost of Goods Sold



Cost of goods sold for the quarter ended December 31, 2019 was $30.1 million,
compared to $34.2 million for the quarter ended December 31, 2018, a decrease of
$4.1 million. Our primary costs in the production of ethanol and related
co-products are corn and natural gas. A $2.2 million decrease in corn costs, and
a $1.0 million decrease in natural gas costs along with various expenses related
to the Asset Sale represented a majority of the decrease in cost of goods sold
in the quarter ended December 31, 2019. Corn costs represented 76% and 73% of
cost of sales for the quarters ended December 31, 2019 and 2018, respectively.
Corn prices increased 13% during the three-month period ending December 31, 2019
compared to the prior year quarter. We used 16% less corn in the three-month
period ending December 31, 2019, compared to the three months ended December 31,
2018.

Natural gas costs represented 4% and 7% of total cost of sales for the quarters
ending December 31, 2019 and 2018, respectively. The cost of natural gas per
mmbtu decreased by 47% to $2.61 for the quarter ended December 31, 2019 compared
to the previous quarter. Prices were lower in the current year quarter in part
due to warmer temperatures, causing a decrease in the price per mmbtu. Our
natural gas consumption decreased by 16% due to fewer production days as a
result of the Asset Sale on December 19, 2019, in the quarter ending December
31, 2019 compared to the quarter ending December 31, 2018.

Selling, General, and Administrative Expenses

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



Overall selling, general and administrative costs for the quarters ended
December 31, 2019 and 2018 were $1.6 million and $0.8 million, respectively. The
$0.8 million increase was primarily the result of increased costs related to the
Asset Sale. As a percentage of net sales, selling, general and administrative
expenses were 5% and 2% of net sales, for the quarter ending December 31, 2019
and 2018 respectively.

Interest Expense

Interest expense for the quarter December 31, 2019 was $734,000 compared to
$201,000 for the quarter ending December 31, 2018. Interest expense in the
current year quarter was higher than in the prior year quarter. The overall debt
level and interest rates were higher in the current year quarter. There was also
$80,000 of interest capitalized in the current year quarter. All outstanding
debt was paid in full on December 19, 2019 at the closing of the Asset Sale.

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Changes in Financial Position for the Three Months ended December 31, 2019

Current Assets



The $4.3 million increase in current assets at December 31, 2019 compared to
September 30, 2019 was primarily due to the gain from the Asset Sale offset by
negative operating margins and transaction expenses related to the Asset Sale in
the three months ended December 31, 2019.

Property, Plant and Equipment

The $35.7 million decrease in property, plant and equipment at December 31, 2019 compared to September 30, 2019, was directly related to the Asset Sale.

Current Liabilities



Accounts payable and accrued expenses decreased by $3.5 million at December 31,
2019 compared to September 30, 2019 primarily due to consummation of the Asset
Sale, which resulted in the discontinuation of on-going business operations.

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



The current portion of long-term debt decreased by $29.6 million at December 31,
2019 compared to September 30, 2019. The decrease was the result of the Asset
Sale and all debt being paid in full.

CAPITAL RESOURCES



During the quarter ended December 31, 2019, we conducted our business
activities, plant operations, and initial wind-down activities subsequent to the
Asset Sale through the parent company, Advanced BioEnergy, and its operating
subsidiary ABE South Dakota. The liquidity and capital resources for each entity
are based on the entity's existing financing arrangements and capital structure.
Advanced BioEnergy was highly restricted in its ability to use the cash and
other financial resources of ABE South Dakota for the benefit of Advanced
BioEnergy, with the exception of allowable distributions under the 2015 Credit
Agreement with AgCountry, which was paid off in December 2019.

Advanced BioEnergy, LLC ("ABE")

ABE had cash and cash equivalents of $0.1 million on hand at December 31, 2019. ABE did not have any debt outstanding as of December 31, 2019.



We believe ABE has sufficient financial resources available to fund the winding
up and dissolution of the Company in accordance with the Plan of Liquidation and
Dissolution.

ABE South Dakota

ABE South Dakota had cash and cash equivalents of $17.2 million on hand at
December 31, 2019. Of the total cash on hand, $4.75 million is restricted cash
being held in an indemnity escrow account until June 19, 2021, as noted above.
As of December 31, 2019, ABE South Dakota had no interest-bearing debt
outstanding.

AgCountry Master Credit Agreement



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

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CASH FLOWS



The following table shows our cash flows for the three months ended December 31,
2019 and 2018:



                                                          Three Months Ended December 31
                                                             2019                  2018
                                                                  (In thousands)
Net cash used in operating activities                  $         (1,442 )     $       (1,913 )
Net cash provided by (used in) investing activities              43,156               (2,995 )
Net cash used in financing activities                           (29,812 )               (100 )




Cash Flow from Operations

Cash flows used in operating activities for the three months ending December 31,
2019 were approximately $1.4 million compared to $1.9 million used in the prior
year period, a decrease of $0.5 million. Lower operating margins accounted for
the majority of the overall decrease in cash flows from operating activities.

Cash Flow from Investing Activities



Cash flows provided by investing activities for the three months ending December
31, 2019 were approximately $43.2 million compared to $3.0 million used for the
prior year period. The current year three months included $42.7 million in
proceeds from the Asset Sale offset by $0.9 million in additions. The prior
three months included $3.0 million in additions, primarily related to the grain
storage project at the Aberdeen facility.

Cash Flow from Financing Activities



Cash flows used in financing activities for the three months ending December 31,
2019 were $29.8 million compared to $0.1 million for the prior year period. The
current year period included $30.5 million for payments on debt, offset by $0.7
million debt proceeds from the construction loan used to finance the Aberdeen
grain storage project. The three months ended December 31, 2018 included $1.0
million for payments on debt, offset by $0.9 million debt proceeds from the
construction loan.

CREDIT ARRANGEMENTS



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



                                          September 30,
                                              2019                December 31,         September 30,
                                          Interest Rate               2019                 2019
ABE South Dakota:
Senior debt principal - fixed                 6.32%            $                -     $         9,000
Senior debt principal - variable              5.70%                             -              14,312
Short term revolving line                     6.20%                             -               6,500
Deferred financing costs                       N/A                              -                (219 )
Total outstanding (stated principal)                           $                -     $        29,593

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES



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

Revenue Recognition



Effective October 1, 2018, the Company adopted the new guidance of ASC Topic
606, Revenue from Contracts with Customers (Topic 606) using the modified
retrospective approach. Topic 606 requires the Company to recognize revenue to
reflect the transfer of

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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 new guidance requires the Company to apply the following
steps: (1) identify the contract with a customer; (2) identify the performance
obligations in the contract; (3) determine the transaction price; (4) allocate
the transaction price to the performance obligations in the contract; and (5)
recognize revenue when, or as, the Company satisfies a performance obligation.
The Company generally recognizes revenue at a point in time. The majority of the
Company's contracts with customers have one performance obligation and a
contract duration of one year or less. The adoption of this new guidance did not
result in any change to our recognition of revenue.

The following is a description of principal activities from which we generated
revenue. Revenues from contracts with customers are recognized when control of
the promised goods are 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.

  • Sales of ethanol


  • Sales of distillers grains


  • Sales of distillers corn oil

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

Inventories



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

Commodity Sales and Purchase Contracts, Derivative Instruments



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

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

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

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

Property and Equipment

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





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


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

INTEREST RATE/FOREIGN EXCHANGE RISK



Because we are in liquidation and all of our available funds will be invested in
short-term interest bearing securities, we do not believe changes in interest
rate will have a significant effect on our financial condition.

IMPACT OF INFLATION



We believe that inflation has not had a material impact on our results of
operations since inception. Because we are in liquidation, we do not believe
that inflation will have an adverse impact on our financial condition in the
future.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

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