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11. Agreements

3 Months Ended

Mar. 31, 2014

Working Capital Arrangement. In May 2013 we extended the annual Grain Procurement and Working Capital Agreement with J.D. Heiskell that has been in place since March 2011. Pursuant to the agreement we agreed to procure whole yellow corn and grain sorghum (also called “milo”) from J.D. Heiskell. We have the ability to obtain grain from other sources subject to certain conditions, however, in the past all of our grain purchases have been from Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the weigh bin. The term of the Agreement expires on December 31, 2014 and is automatically renewed for additional one-year terms. Heiskell further agrees to sell all ethanol to Kinergy Marketing or other marketing purchaser designated by the Company and all WDG and syrup to A.L. Gilbert. These agreements are ordinary purchase and sale agency agreements for an ethanol plant.

The J.D. Heiskell sales activity associated with the Purchasing Agreement, Grain Procurement and Working Capital

Agreements during the three months ending March 31, 2014 as follows:

		Quarter ending March 31, 2014		Quarter ending March 31, 2013
Ethanol sales	$	46,004	$	5,497
Wet distiller's grains sales		9,715		1,684
Corn oil sales		901		175
Corn purchases		33,328		5,374
Accounts receivable		826		-
Accounts payable		2,065		354

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy Marketing and a Wet Distillers Grains marketing agreement with A. L Gilbert. Under the terms of the agreements, subject to certain conditions, the agreements mature on August 31, 2014 with automatic one-year renewals thereafter. For the three months ended March 31, 2014 and 2013, the Company expensed marketing costs of $0.8 million and $0.1 million, respectively, under the terms of both ethanol and wet distiller’s grains agreements.