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11. Agreements

9 Months Ended

Sep. 30, 2015

Working Capital Arrangement. In May 2013 we extended the annual Grain Procurement and Working Capital Agreement with J.D. Heiskell dated March 2011. Pursuant to the agreement we agreed to procure whole yellow corn and grain sorghum (also called “milo”) from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions, however, in the past all of our grain purchases have been from J.D. 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, 2015 and is automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all ethanol to Kinergy Marketing or another marketing purchaser designated by the Company and all WDG and condensed distillers solubles to A.L. Gilbert. Our relationships with J.D. Heiskell, Kinergy Marketing, and A.L. Gilbert are well established and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. Revenue is recognized upon delivery of ethanol to J. D. Heiskell as revenue recognition criteria have been met and any performance required of the Company subsequent to the sale to J.D. Heiskell is inconsequential. 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 and nine months ended September 30, 2015 and 2014 are as follows:

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Ethanol sales	$	23,906	$	33,641	$	70,765	$	121,388
Wet distiller's grains sales		5,609		8,175		19,568		30,970
Corn oil sales		835		1018		2,771		3,263
Corn purchases		24,056		27,616		74,949		94,563
Milo Purchases		-		-		-		-
Accounts receivable		312		-		312		-
Accounts payable		1,539		1,904		1,539		1,904

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 initial terms of the agreements expire on August 31, 2016 with automatic one-year renewals thereafter. For the three months ended September 30, 2015 and 2014, the Company expensed marketing costs of $0.6 million and $0.7 million, respectively, under the terms of both ethanol and wet distiller’s grains agreements. For the nine months ended September 30, 2015 and 2014, the Company expensed marketing costs of $1.8 million and $2.3 million, respectively.