XML 25 R14.htm IDEA: XBRL DOCUMENT

8. Agreements

3 Months Ended

Mar. 31, 2021

Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s 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 Keyes Plant weigh bin. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2021 and the term can be automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all WDG the Company produces to A.L. Gilbert. The Company markets and sells DCO to A.L. Gilbert and other third parties under the J.D. Heiskell Purchasing Agreement. The Company’s relationships with J.D. Heiskell, 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. These agreements are ordinary purchase and sale agency agreements for the Keyes Plant. On May 13, 2020, J.D. Heiskell and the Company entered into Amendment No.1 to the J.D. Heiskell Purchasing Agreement to remove J.D. Heiskell’s obligations to purchase ethanol from the Company under the J.D. Heiskell Purchasing Agreement. Kinergy, our marketing partner, agreed to purchase ethanol from the Company.

The J.D. Heiskell sales and purchases activity associated with the J.D. Heiskell Purchase Agreement and J.D. Heiskell Procurement Agreement during the three months ended March 31, 2021 and 2020 were as follows:

	As of and for the three months ended March 31,
	2021		2020
Ethanol sales	$	-	$	24,383
Wet distiller's grains sales		11,035		8,374
Corn oil sales		1,042		928
Corn purchases		37,993		29,214
Accounts receivable		133		60
Accounts payable		415		1,749

Sales to Kinergy were $29.9 million and none for the three months ended March 31, 2021 and 2020. Accounts receivable associated with Kinergy was $1.2 million and $0.2 million as of March 31, 2021 and December 31, 2020, respectively.

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy and a Wet Distillers Grains Marketing Agreement with A.L. Gilbert. Under the terms of the agreements, subject to certain conditions, the Ethanol Marketing Agreement matures on August 31, 2021 and the Wet Distillers Grains Marketing Agreement matures on December 31, 2021 with automatic one-year renewals thereafter. For the three months ended March 31, 2021 and 2020, the Company expensed marketing costs of $0.4 and $0.6 million for each period respectively, under the terms of each agreement.

As of March 31, 2021, the Company has no forward sales commitments.