SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



x			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the fiscal quarter ended
September 30, ~~2019~~2020

o			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

000-50254
(Commission file ~~number 000-50254~~number)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

~~Accelerated filer~~ o

Non-accelerated filer

Smaller Reporting Company

(Do not check if a smaller reporting company)

Emerging Growth Company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

As of November ~~14, 2019~~,13, 2020, there are 29,620,000 membership units of the registrant outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LAKE AREA CORN PROCESSORS, LLC

Consolidated Balance Sheets

LAKE AREA CORN PROCESSORS, LLC

Consolidated Balance Sheets

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Operations (Unaudited)


	Three Months Ended Septemer 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019

REVENUES	$	33,917,787	$	32,441,510	$	91,798,857	$	80,151,796

COSTS OF REVENUES	27,871,295		34,256,712		87,990,082		78,218,717

GROSS PROFIT (LOSS)	6,046,492		(1,815,202)		3,808,775		1,933,079

OPERATING EXPENSES	992,023		971,662		3,277,570		2,906,424

INCOME (LOSS) FROM OPERATIONS	5,054,469		(2,786,864)		531,205		(973,345)

OTHER INCOME (EXPENSE)
Interest and other income	42,419		12,320		388,449		163,385

Equity in net income (loss) of investments	1,019,662		(349,123)		(206,140)		(425,776)
Interest expense	(306,124)		(476,122)		(1,164,756)		(766,746)
Total other (expense)	755,957		(812,925)		(982,447)		(1,029,137)

NET INCOME (LOSS)	$	5,810,426	$	(3,599,789)	$	(451,242)	$	(2,002,482)

BASIC AND DILUTED EARNINGS (LOSS) PER UNIT	$	0.20	$	(0.12)	$	(0.02)	$	(0.07)

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	$	0	$	0	$	0	$	0

Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018

REVENUES $ 32,441,510
$ 18,796,356
$ 80,151,796
$ 58,677,962

COSTS OF REVENUES 34,256,712
18,078,236
78,218,717
53,282,450

GROSS PROFIT (LOSS) (1,815,202 ) 718,120
1,933,079
5,395,512

OPERATING EXPENSES 971,662
872,053
2,906,424
2,847,557

INCOME (LOSS) FROM OPERATIONS (2,786,864 ) (153,933 ) (973,345 ) 2,547,955

OTHER INCOME (EXPENSE)
Interest and other income 12,320
2,228
163,385
53,533
Equity in net income (loss) of investments (349,123 ) (30,513 ) (425,776 ) 559,970
Interest expense (476,122 ) —
(766,746 ) —
Total other income (expense) (812,925 ) (28,285 ) (1,029,137 ) 613,503

NET INCOME (LOSS) $ (3,599,789 ) $ (182,218 ) $ (2,002,482 ) $ 3,161,458

BASIC AND DILUTED EARNINGS (LOSS) PER UNIT $ (0.12 ) $ (0.01 ) $ (0.07 ) $ 0.11

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING FOR THE CALCULATION OF BASIC & DILUTED EARNINGS PER UNIT 29,620,000
29,620,000
29,620,000
29,620,000

DISTRIBUTIONS DECLARED PER UNIT $ —
$ —
$ —
$ 0.10

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Changes in Members' Equity (Unaudited)

Members' Equity

Balance - December 31, 2017 $ 68,282,537

Net income for the three-month period ended March 31, 2018 1,876,697

Distributions paid ($0.10 per capital unit) (2,962,000 )

Balance - March 31, 2018 $ 67,197,234

Net income for the three-month period ended June 30, 2018 1,466,978

Balance - June 30, 2018 $ 68,664,212

Net (loss) for the three-month period ended September 30, 2018 (182,218 )

Balance - September 30, 2018 $ 68,481,994


	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

Net (loss) for the three-month period ended September 30, 2019	$	(3,599,789)

Balance - September 30, 2019	$	66,034,642

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

Net (loss) for the three-month period ended September 30, 2019 (3,599,789 )

Balance - September 30, 2019 $ 66,034,642


	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

Net income for the three-month period ended September 30, 2020	$	5,810,426



Balance - September 30, 2020	$	63,761,698

Table of ~~this Statement.~~Contents

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019

OPERATING ACTIVITIES
Net (loss)	$	(451,242)	$	(2,002,482)
Adjustments to reconcile net (loss) to cash used in operating activities
Depreciation and amortization	4,295,699		3,529,356
Distributions in excess of earnings from investments	469,510		617,091



(Increase) decrease in
Accounts receivable	(343,878)		(2,956,690)
Inventory	5,045,657		(1,176,060)
Prepaid expenses	281,337		161,541
Derivative financial instruments	(636,276)		(226,499)

Increase (decrease) in
Accounts payable	(10,174,421)		(14,951)
Accrued and other liabilities	(80,577)		80,778
NET CASH USED IN OPERATING ACTIVITIES	(1,594,191)		(1,987,916)

INVESTING ACTIVITIES

Purchase of property and equipment	(334,571)		(8,868,064)
Purchase of investments	0		(633,924)
NET CASH USED IN INVESTING ACTIVITIES	(334,571)		(9,501,988)

FINANCING ACTIVITIES
Increase in outstanding checks in excess of bank balance	448,862		873,922
Borrowings on notes payable	43,770,400		47,500,000
Payments on notes payable	(53,000,000)		(33,099,076)


NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(8,780,738)		15,274,846

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(10,709,500)		3,784,942

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	12,823,653		1,697,937

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,114,153	$	5,482,879

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest, net of capitalized interest of $128 and $830,432 in 2020 and 2019, respectively.	$	1,245,296	$	356,215
Capital expenditures in accounts payable	0		81,387

Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018

OPERATING ACTIVITIES

Net income (loss) $ (2,002,482 ) $ 3,161,458
Adjustments to reconcile net income (loss) to cash (used in) operating activities

Depreciation and amortization 3,529,356
2,323,713
Distributions in excess of earnings from investments 617,091
1,602,045
(Increase) decrease in

Accounts receivable (2,956,690 ) 1,049,207
Inventory (1,176,060 ) (1,315,699 )
Prepaid expenses 161,541
115,922
Derivative financial instruments (226,499 ) 349,138
Increase (decrease) in

Accounts payable (14,951 ) (2,637,722 )
Accrued and other liabilities 80,778
(59,195 )
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,987,916 ) 4,588,867

INVESTING ACTIVITIES
Purchase of property and equipment (8,868,064 ) (15,171,559 )
Purchase of investments (633,924 ) (301,024 )
NET CASH (USED IN) INVESTING ACTIVITIES (9,501,988 ) (15,472,583 )

FINANCING ACTIVITIES

Increase (decrease) in outstanding checks in excess of bank balance 873,922
(179,594 )
Borrowings on notes payable 47,500,000
16,673,268
Payments on notes payable (33,099,076 ) (4,574,268 )
Financing costs paid —
(95,500 )
Distributions paid to members —
(2,962,000 )
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,274,846
8,861,906

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,784,942
(2,021,810 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,697,937
5,102,959

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,482,879
$ 3,081,149

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for interest, net of capitalized interest of $830,432 and $358,769 in 2019 and 2018, respectively. $ 356,215
$ —
Capital expenditures in accounts payable 81,387
2,909,331

See Notes to Unaudited Consolidated Financial Statements

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019

NOTE 1 . 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~~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~~5 companies in related industries. See note 4 for further details.

NOTE 2. 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 nine months ended September 30, ~~2019~~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, ~~2018,~~2019, contained in the annual report on Form 10-K for ~~2018.~~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 ~~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 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.

•sales of ethanol

•sales of distillers grains

•sales of distillers corn oil

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019

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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019

Revenues ethanol	$	26,424,724	$	25,563,757	$	69,910,876	$	62,573,333
Revenues distillers grains	6,131,560		5,634,315		17,866,954		14,539,232
Revenues distillers corn oil	1,361,503		1,243,438		4,021,027		3,039,231
	$	33,917,787	$	32,441,510	$	91,798,857	$	80,151,796

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018

Revenues ethanol $ 25,563,757
$ 14,599,385
$ 62,573,333
$ 45,970,750
Revenues distillers grains 5,634,315
3,630,835
14,539,232
11,056,256
Revenues distillers corn oil 1,243,438
566,136
3,039,231
1,650,956
$ 32,441,510
$ 18,796,356
$ 80,151,796
$ 58,677,962

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~~co-products 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.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019

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 ~~$2,131~~0 as of September 30, ~~2019~~2020 and December 31, ~~2018.~~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 ~~its~~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 September 30, ~~2019,~~2020, the Company is committed to purchasing approximately ~~1.7~~1.5 million bushels of corn on a forward contract basis with an average price of ~~$3.74~~$3.22 per bushel. The total corn purchase contracts represent 6%5% 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 September 30, ~~2019,~~2020, the Company is committed to purchasing approximately ~~652,000 MMBtu’s~~336,000 MMBtus of natural gas with an average price of ~~$2.64~~$2.12 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 ~~32%~~17% 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 September 30, ~~2019,~~2020, the Company is committed to selling approximately ~~32,000~~49,000 dry equivalent tons of distillers grains with an average price of ~~$127~~$117 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 ~~15%~~23% 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

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2020 AND 2019

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 September 30, ~~2019,~~2020, the Company is committed to selling approximately ~~2.0~~3.1 million pounds of distillers corn oil with an average price of ~~$0.23~~$0.28 per pound. The Company accounts for these transactions as normal sales, and accordingly, does

~~Table of Contents~~

~~LAKE AREA CORN PROCESSORS, LLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~SEPTEMBER 30, 2019 AND 2018~~

The Company does not have any firm-priced sales commitments for ethanol as of September 30, ~~2019.~~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 September 30, ~~2019~~2020 and December 31, ~~2018~~2019 were as follows:


	Balance Sheet Classification	September 30, 2020		December 31, 2019*

Forward contracts in gain position		$	224,549	$	160,687
Futures contracts in gain position		63		33,338
Futures contracts in loss position		(471,725)		(1,500)
Total		(247,113)		192,525
Cash held by broker		693,014		312,500
	Current Assets	$	445,901	$	505,025






Forward contracts in loss position	(Current Liabilities)	$	(3,450)	$	(698,850)

Balance Sheet Classification September 30, 2019 December 31, 2018*

Forward contracts in gain position $ 234,377
$ 676
Futures contracts in gain position 20,363
175,038
Futures contracts in loss position (52,738 ) —
Total 202,002
175,714
Cash held by broker 271,761
378,291
Current Assets $ 473,763
$ 554,005

Forward contracts in loss position (Current Liabilities) $ (61,734 ) $ (368,475 )

*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.

~~Realized and unrealized gains~~Gains and losses related to derivative contracts related to corn ~~and natural gas purchases~~ are included as a component of costs of ~~revenues and derivative contracts related to ethanol sales are included as a component of revenues in the accompanying financial statements.~~revenues.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019


	Statement of Operations	Three Months Ended September 30,
	Classification	2020		2019
Net realized and unrealized (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(258,881)	$	(788,253)
Forward contracts	Cost of Revenues	(57,419)		(424,895)

	Statement of Operations	Nine Months Ended September 30,
	Classification	2020		2019
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	1,177,383	$	(113,672)
Forward contracts	Cost of Revenues	(2,427,909)		53,655

The Company has investment interests in ~~five~~5 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.

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.

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 ~~2107-04~~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. ~~The Company does not expect~~Dakota Ethanol found it preferable to adopt ASU 2017-04 because the benefits of this standard to ~~have~~users of the

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2020 AND 2019

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

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~~LAKE AREA CORN PROCESSORS, LLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~SEPTEMBER 30, 2019 AND 2018~~

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 September 30, 2020, ethanol sales averaged approximately 78% of total revenues, while approximately 18% of revenues were generated from the sale of distiller grains and 4% of revenues were generated from the sale of corn oil. For the nine months ended September 30, 2020, ethanol sales averaged approximately 76% of total revenues, while approximately 20% of revenues were generated from the sale of distiller grains and 4% 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.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2020 AND 2019

Dakota Ethanol has a 6%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 June 30, ~~2019~~2020 unaudited interim results. The carrying amount of the Company’s investment was approximately ~~$1,266,000~~$1,197,000 and ~~$1,312,000~~$1,295,000 as of September 30, ~~2019~~2020 and December 31, ~~2018,~~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 September 30, ~~2019~~2020 unaudited interim results. The carrying amount of the Company’s investment was approximately ~~$220,000~~$194,000 and ~~$266,000~~$251,000 as of September 30, ~~2019~~2020 and December 31, ~~2018,~~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 September 30, ~~2019~~2020 unaudited interim results. The carrying amount of the Company’s investment was approximately ~~$5,700,000~~$4,874,000 and ~~$5,274,000~~$4,991,000 as of September 30, ~~2019~~2020 and December 31, ~~2018,~~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 September 30, ~~2019~~2020 unaudited interim results. The carrying amount of the Company’s investment was approximately $88,000 and $53,000 as of September 30, ~~2019~~2020 and December 31, ~~2018.~~2019, respectively.

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 September 30, ~~2019~~2020 unaudited interim results. The carrying amount of the Company’s investment was approximately ~~$10,079,000~~$9,860,000 and ~~$10,396,000~~$10,093,000 as of September 30, ~~2019~~2020 and December 31, ~~2018,~~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 ~~$1,129,000.~~$1,072,000. The excess is comprised of a basis adjustment of approximately ~~$464,000~~$440,000 and capitalized interest of ~~$665,000.~~$632,000. The excess is amortized over 20 years ~~when~~from May 2019, the time the plant ~~becomes~~became operational. The amortization is recorded in equity in net income of investments. Amortization was $14,416 for both the three months ended September 30, 2020 and ~~24,026~~2019, and $43,247 and $24,026 for the ~~three and~~ nine months ended September 30, ~~2019.~~2020 and 2019, respectively.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019

Condensed, combined unaudited financial information of the Company’s investments in RPMG, LT, GH, GEM and REF are as follows:


Balance Sheet	September 30, 2020		December 31, 2019
Current Assets	$	226,285,312	$	219,618,012
Other Assets	207,847,399		226,475,383
Current Liabilities	210,208,306		187,381,453
Long-term Liabilities	66,284,372		95,219,540
Members' Equity	157,640,033		163,492,402

	Three Months Ended
Income Statement	September 30, 2020		September 30, 2019
Revenue	$	93,946,470	$	94,474,407
Gross Profit	15,327,809		5,266,631
Net Income (Loss)	9,367,336		(2,645,668)

	Nine Months Ended
Income Statement	September 30, 2020		September 30, 2019
Revenue	$	236,109,319	$	230,715,486
Gross Profit	17,650,973		14,095,945
Net (Loss)	(2,106,037)		(2,933,142)

Balance Sheet September 30, 2019 December 31, 2018
Current Assets $ 17,986,800
$ 21,412,926
Other Assets 93,873,235
102,988,761
Current Liabilities 17,645,720
3,390,042
Long-term Liabilities 37,210,746
38,144,803
Members' Equity 57,003,569
52,353,842

Three Months Ended
Income Statement September 30, 2019 September 30, 2018
Revenue $ 60,517,220
$ 56,647,869
Gross Profit 1,677,900
1,620,076
Net Income (Loss) 524,949
(627,787 )

Nine Months Ended
Income Statement September 30, 2019 September 30, 2018
Revenue $ 182,761,442
$ 180,415,511
Gross Profit 8,284,287
10,581,169
Net Income 4,771,534
5,455,699

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~~LAKE AREA CORN PROCESSORS, LLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~SEPTEMBER 30, 2019 AND 2018~~

Balance Sheet September 30, 2019 December 31, 2018
Current Assets $ 13,381,722
$ 1,018,076
Other Assets 137,635,508
128,668,387
Current Liabilities 4,774,475
5,724,979
Long-term Liabilities 66,463,884
40,414,089
Members' Equity 79,778,871
83,547,395

Three Months Ended
Income Statement September 30, 2019 September 30, 2018
Revenue $ 30,246,280
$ —
Gross Profit 1,345,363
—
Net (Loss) (3,756,247 ) (84,776 )

Nine Months Ended
Income Statement September 30, 2019 September 30, 2018
Revenue $ 37,070,921
$ —
Gross (Loss) (594,383 ) —
Net (Loss) (9,124,363 ) (162,667 )

NOTE 5. 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~~$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 ~~1 month~~one-month LIBOR rate and is not subject to a floor. The rate was ~~5.10%~~3.15% at September 30, ~~2019.~~2020. There is a non-use fee of 0.25% on the unused portion of the ~~$10,000,000~~$2,000,000 availability. The note is collateralized by substantially all assets of the Company. The note expires on November 1, 2021. On September 30, ~~2019,~~2020, Dakota Ethanol had $0 balance outstanding and approximately ~~$5,281,000~~$2,000,000 available to be drawn on the revolving promissory note under the borrowing base.

NOTE 6. 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 ~~1 month~~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 ~~5.35%~~3.40% at September 30, ~~2019.~~2020. On September 30, ~~2019,~~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. ~~This loan~~Dakota Ethanol amended the note agreement with FCSA in June of 2020. Under the amendment, the available credit on the reducing revolving note was ~~amended on October 21, 2019.~~increased to $48,000,000. The amount Dakota Ethanol can borrow on the note decreases by $1,750,000 ~~semi-annually starting on January~~

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019

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 January 2023 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 has applied 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:~~follows. The balances reflect the updated agreement:


	September 30, 2020		December 31, 2019*
Notes Payable - FCSA	$	29,000,000	$	39,000,000


Notes Payable - Other	770,400		0
Less unamortized debt issuance costs	(8,264)		(10,792)
	29,762,136		38,989,208
Less current portion	(1,074,853)		(1,000,000)
	$	28,687,283	$	37,989,208
*Derived from audited financial statements

Principal maturities for the next five years are estimated as ~~follows:~~follows.



Years Ending September 30,	Principal
2021	$	1,074,853
2022	1,509,216
2023	1,176,910
2024	1,000,208
2025	2,000,215
thereafter	23,008,998
	$	29,770,400

Years Ending September 30, Principal
2020 $ 1,000,000
2021 1,000,000
2022 1,000,000
2023 4,500,000
2024 4,500,000
thereafter 27,000,000

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2020 AND 2019

NOTE 7. 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

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~~LAKE AREA CORN PROCESSORS, LLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~SEPTEMBER 30, 2019 AND 2018~~

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	Total		Level 1		Level 2		Level 3
September 30, 2020

Assets:
Derivative financial instruments,
futures contracts	$	63	$	63	$	0
forward contracts	$	224,549	$	0	$	224,549
Liabilities:
Derivative financial instruments,
futures contracts	$	471,725	$	471,725	$	0
forward contracts	$	3,450	$	0	$	3,450

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2020 AND 2019

During the three and nine months ended September 30, ~~2019,~~2020, the Company did not make any changes between Level 1 and Level 2 assets and liabilities. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~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 September 30, ~~2019.~~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.

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~~LAKE AREA CORN PROCESSORS, LLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~SEPTEMBER 30, 2019 AND 2018~~

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 September 30, ~~2019~~2020 of ~~$39,000,000~~$29,770,400 had an estimated fair value of approximately ~~$39,000,000~~$29,770,400 based on estimated interest rates for comparable debt. The carrying amount of long-term obligations at December 31, ~~2018~~2019 of ~~$24,600,000~~$39,000,000 had an estimated fair value of approximately ~~$24,600,000.~~$39,000,000.

NOTE 8. RELATED PARTY TRANSACTIONS

Dakota Ethanol has a 6%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.

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LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2020 AND 2019

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. ~~The Company also purchased ingredients from RPMG.~~Purchases during the three and nine months ended September 30, 2020 totaled approximately $425,000 and $801,000, respectively. Purchases during the three and nine months ended September 30, 2019 totaled approximately ~~$410,000~~$166,804 and ~~$1,410,000, respectively. Purchases during the three and nine months ended September 30, 2018 totaled approximately $319,000 and $1,181,000,~~$830,478, respectively. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the amount we owed to other related parties was approximately ~~$27,000~~$0 and ~~$37,000,~~$0, respectively.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and nine month periods ended September 30, ~~2019~~,2020, compared to the same periods of the prior year. This discussion should be read in conjunction with the consolidated financial statements and the Management's Discussion and Analysis section for the fiscal year ended December 31, ~~2018~~,2019, included in the Company's Annual Report on Form 10-K for ~~2018.~~2019.

Disclosure Regarding Forward-Looking Statements

This report contains historical information, as well as forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance, or our expected future operations and actions. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "future," "intend," "could," "hope," "predict," "target," "potential," "continue" or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions based on current information and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the reasons described in this report and our annual report on Form 10-K for the fiscal year ended December 31, ~~2018~~.2019.

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Lake Area Corn Processors, LLC is a South Dakota limited liability company that owns and manages its wholly-owned subsidiary, Dakota Ethanol, LLC. Dakota Ethanol, LLC owns and operates an ethanol plant located near Wentworth, South Dakota that has a nameplate production capacity of 90 million gallons of ethanol per year. Lake Area Corn Processors, LLC is referred to in this report as "LACP," the "company," "we," or "us." Dakota Ethanol, LLC is referred to in this report as "Dakota Ethanol" "we" "us" or the "ethanol plant."

Our revenue is derived from the sale and distribution of our ethanol, distillers grains and corn oil. The ethanol plant ~~recently~~ increased its nameplate capacity in May of 2019 from 50 million gallons per year to 90 million ~~gallon~~gallons per year. Corn is supplied to us primarily from our members who are local agricultural producers and from purchases of corn on the open market. We have engaged Renewable Products Marketing Group, Inc. ("RPMG, Inc.") to market all of the ethanol and corn oil that we produce at the ethanol plant. Further, RPMG, Inc. markets all of the distillers grains that we produce that we do not market internally to local customers.

~~On October 21, 2019, we entered into a Second Amendment to Amended and Restated Credit Agreement (the "Loan Amendment") with Farm Credit Services~~

Table of America, PCA and Farm Credit Services of America, FLCA ("FCSA"). In the Loan Amendment, we extended the maturity date of our $10 million revolving loan to November 1, 2021, we also extended the date when the available balance of our $40 million revolving loan starts to decrease from January 1, 2020 to January 1, 2021.Contents

Results of Operations

Comparison of the ~~Fiscal Quarters~~Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

The following table shows the results of our operations and the percentage of revenues, cost of revenues, operating expenses and other items to total revenues in our consolidated statements of income for the ~~fiscal quarters~~three months ended September 30, ~~2019~~2020 and ~~2018~~:2019:


	2020			2019
Income Statement Data	Amount		%	Amount		%
Revenues	$	33,917,787	100.0	$	32,441,510	100.0

Cost of Revenues	27,871,295		82.2	34,256,712		105.6

Gross Profit (Loss)	6,046,492		17.8	(1,815,202)		(5.6)

Operating Expense	992,023		2.9	971,662		3.0

Income (Loss) from Operations	5,054,469		14.9	(2,786,864)		(8.6)

Other Income (Expense)	755,957		2.2	(812,925)		(2.5)

Net Income (Loss)	$	5,810,426	17.1	$	(3,599,789)	(11.1)

2019 2018
Income Statement Data Amount % Amount %
Revenues $ 32,441,510
100.0
$ 18,796,356
100.0

Cost of Revenues 34,256,712
105.6
18,078,236
96.2

Gross Profit (Loss) (1,815,202 ) (5.6 ) 718,120
3.8

Operating Expense 971,662
3.0
872,053
4.6

(Loss) from Operations (2,786,864 ) (8.6 ) (153,933 ) (0.8 )

Other Income (Expense) (812,925 ) (2.5 ) (28,285 ) (0.2 )

Net (Loss) $ (3,599,789 ) (11.1 ) $ (182,218 ) (1.0 )
Revenues

~~Revenues~~

Revenue from ethanol sales increased by approximately ~~75%~~3.4% during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~.2019 due to increased gallons of ethanol sold, partially offset by lower average prices that we received for our ethanol during the 2020 period. Revenue from distillers grains sales increased by approximately ~~55%~~8.8% during ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018.~~2019 due primarily to increased tons of distillers grains sold during the 2020 period. Revenue from corn oil sales increased by approximately ~~120%~~9.5% during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~.2019 due primarily to increased pounds of corn oil sold during the 2020 period.

Ethanol

Our ethanol revenue was approximately ~~$10,964,000 greater~~$0.9 million higher during our ~~third quarter of 2019~~three months ended September 30, 2020 compared to ~~our~~ ~~third quarter of 2018~~,the three months ended September 30, 2019, an increase of approximately ~~75%~~3.4%. This increase in ethanol revenue was due primarily to an increase in the ~~amount~~volume of ethanol we sold, ~~due in part to our plant expansion project along with~~partially offset by a ~~higher~~lower average price we received ~~for the~~per gallon of ethanol we sold during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to ~~our~~ ~~third quarter of 2018~~.the three months ended September 30, 2019. We sold approximately ~~58%~~12.0% more gallons of ethanol during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~,2019, an increase of approximately ~~7,011,000 gallons. Management anticipates increased ethanol production and sales during the remainder of our 2019 fiscal year and into our 2020 fiscal year~~2.3 million gallons, due to ~~the completion~~reduced production in September of ~~our plant expansion project.~~2019.

The average price we received for our ethanol was ~~higher on a~~approximately $0.10 less per gallon ~~basis~~ during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to ~~our~~ ~~third quarter of 2018, with an increase~~the three months ended September 30, 2019, a decrease of approximately ~~11%~~7.7%. Management attributes this ~~increase~~decrease in ethanol prices during the three months ended September 30, 2020 with ~~higher corn prices~~decreased gasoline demand from travel restrictions and ~~less~~social distancing measures related to the COVID-19 pandemic. Since ethanol ~~supply in the market due to ethanol plants ceasing operations during our third quarter of 2019. The ethanol industry experienced~~is blended with gasoline, when gasoline demand ~~destruction domestically as~~is lower it has a result of certain small refinery exemptions the EPA allowed during 2018 and 2019. These exemptions reduced the amount of ethanol that was required to be blended during these years under the Renewable Fuels Standard (RFS) which resulted in significantly lesscorresponding impact on ethanol demand. The ~~existence of these exemptions came to light during 2018. This demand destruction negatively impacted operating margins~~most significant reductions in the ethanol industry which resulted in some ethanol producers ceasing operations. During June 2019, the EPA approved regulations which allow the use of E15 blends during the entire year which management believes may lead to additional ethanol demand inoccurred at the ~~future. However, management believes that additional~~end of our first quarter of 2020, however, the impact of this reduced gasoline demand ~~from E15 will be less than the demand which was lost due~~has continued to ~~the small refinery exemptions issued by the EPA in 2018 and 2019.~~impact us throughout our 2020 fiscal year.

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Distillers Grains

~~Distillers Grains~~

Our total distillers grains revenue was approximately ~~55% greater~~8.8% higher during ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018,~~2019 due primarily to increased ~~overall production at the plant due to our expansion project.~~total production. We sold approximately ~~51%~~20.0% more total tons of distillers grains during ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~2019 due to increased overall production at the ~~plant.~~ethanol plant compared to the same period of 2019.

The average price we received for our dried distillers grains was approximately ~~3% less~~10.2% lower during ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018,~~2019, a decrease of approximately $4$12.70 per ton. Management attributes the decrease in dried distillers grains prices during the ~~third quarter of 2019 with softer distillers grains export demand.~~three months ended September 30, 2020 to lower commodity prices and more available supply. The average price we received for our modified/wet distillers grains, on a dry-equivalent basis, was approximately ~~6% greater~~7.7% lower for ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018, an increase~~2019, a decrease of approximately $8$10.06 per ton. Management attributes this ~~increase~~decrease in modified/wet distillers grains prices with ~~higher corn~~lower commodity prices ~~locally which impacts modified distillers grains prices which are primarily used in our local~~

market. Management anticipates that distillers grains prices will remain stable for the near future unless we experience an increase in export demand for distillers grains or domestic ethanol production decreases which could reduce the supply of distillers grains in the ~~market. Management anticipates increased distillers grains production~~market and ~~sales during the remainder of our 2019 fiscal year and into our 2020 fiscal year due to our plant expansion project.~~more available supply.

Corn Oil

Our total pounds of corn oil sold increased by approximately ~~121%~~18.4% during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~,2019, an increase of approximately ~~2,852,000~~1.0 million pounds, primarily due to ~~increased overall production due to our plant expansion project along with~~ improved corn oil extraction ~~efficiency. Management anticipates increased corn oil~~efficiency and higher production ~~for~~compared to the ~~remainder of our 2019 fiscal year and into our 2020 fiscal year due to our plant expansion project.~~same period in 2019.

The average price per pound we received for our corn oil was ~~slightly less~~lower by 7.5% for ~~our third quarter of 2019 compared to~~the three months ended September 30, 2020 and the same period of 2018. The decrease in price is related to decreased biodiesel demand which negatively impacts corn oil demand as corn oil is used as a feedstock for biodiesel production. Management expects corn oil prices to decrease for the rest of our 2019 ~~fiscal year~~ due to ~~uncertainty in the biodiesel industry which is a significant source of corn oil demand.~~lower commodity prices.

Cost of Revenues

~~The primary raw materials we use to produce ethanol and distillers grains are corn and natural gas.~~

Corn

Our cost of revenues relating to corn was approximately ~~109% greater~~21.7% lower for ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~2019 due to ~~increased~~significantly decreased corn ~~bushels used along with higher market corn costs per bushel~~prices during the ~~2019~~2020 period.

~~We consumed approximately 58% more bushels of corn during our~~ ~~third quarter of 2019~~ compared to the same period of 2018 due to increased production at the ethanol plant from our plant expansion project. Management anticipates that our corn consumption will increase during our 2019 fiscal year and into our 2020 fiscal year as we anticipate increased ethanol production.

Our average cost per bushel of corn ~~increased~~decreased by approximately ~~33%~~30.0% for ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to ~~our~~ ~~third quarter~~the three months ended September 30, 2019. We consumed approximately 11.7% more bushels of ~~2018~~.corn during the three months ended September 30, 2020 compared to the same period of 2019. Management attributes the ~~increased~~decreased corn cost per bushel to ~~unfavorable weather conditions~~significantly lower corn prices during our ~~2019~~2020 fiscal ~~year which included a significant amount of snow along with wet weather which delayed~~period due to favorable planting ~~potentially impacting the amount of corn which will be harvested in 2019. Further, poor weather~~and growing conditions ~~have resulted in a late harvest in the fall of 2019 which may further impact~~as well as decreased market ~~corn prices.~~prices related to COVID-19. Management ~~anticipates that~~expects corn prices ~~will remain higher~~to increase for the rest of our ~~2019 fiscal year and into our~~ 2020 fiscal year.

Natural Gas

Our cost of revenues related to natural gas ~~increased~~decreased by approximately ~~$293,000, an increase~~$80,000, a decrease of approximately ~~35%~~7.0%, for ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to ~~our~~ ~~third quarter of 2018~~.the three months ended September 30, 2019. This ~~increase~~decrease was due to ~~increased~~slightly higher natural gas consumption, ~~from our plant expansion project, partially~~ offset by lower natural gas costs per MMBtu ~~due to stable market factors which resulted in lower natural gas prices~~ during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~.2019.

Our average cost per MMBtu of natural gas during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 was approximately ~~20% lower~~14.6% less compared to the cost per MMbtu for the three months ended September 30, 2019. Management attributes this decrease in our ~~third quarter of 2018.~~ average natural gas costs with generally lower natural gas prices and energy prices generally along with steady supply in 2020.

The volume of natural gas we ~~consumed was~~used increased by approximately ~~68% greater~~8.7% during ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~2019 due primarily to more distillers produced in the dried form and increased production atcompared to the ~~ethanol plant. Management anticipates increased natural gas consumption during the remaining quarter~~same period in 2019.

Table of ~~our 2019 fiscal year and into our 2020 fiscal year due to our plant expansion project coming online.~~Contents

Operating Expenses

Our operating expenses were ~~greater~~higher for ~~our~~ ~~third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~2019 due primarily to increased ~~wages and benefit costs in connection with our plant expansion.~~insurance expenses offset slightly by decreased professional fees.

Other Income and Expense

We had ~~higher interest expense~~more other income during ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~2019 due to ~~our plant expansion project.~~increased investment income during the 2020 period. We ~~were capitalizing interest in previous periods when our expansion project was under construction. Our~~

~~earnings~~had more income from our investments ~~were less~~ during ~~our third quarter of 2019~~the three months ended September 30, 2020 compared to the same period of ~~2018~~2019 due to ~~decreased~~improved profitability in the ethanol ~~industry. Most~~sector. We had less interest expense during the three months ended September 30, 2020 compared to the same period of ~~our investments are~~2019 due to lower carrying balances on outstanding debt in ~~companies involved in the ethanol industry.~~addition to lower interest rates.

Comparison of the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

The following table shows the results of our operations and the percentage of revenues, cost of revenues, operating expenses and other items to total revenues in our consolidated statements of income for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:


	2020			2019
Income Statement Data	Amount		%	Amount		%
Revenues	$	91,798,857	100.0	$	80,151,796	100.0

Cost of Revenues	87,990,082		95.9	78,218,717		97.6

Gross Profit	3,808,775		4.1	1,933,079		2.4

Operating Expense	3,277,570		3.5	2,906,424		3.6

Income (Loss) from Operations	531,205		0.6	(973,345)		(1.2)

Other (Expense)	(982,447)		(1.1)	(1,029,137)		(1.3)

Net (Loss)	$	(451,242)	(0.5)	$	(2,002,482)	(2.5)

2019 2018
Income Statement Data Amount % Amount %
Revenues $ 80,151,796
100.0
$ 58,677,962
100.0

Cost of Revenues 78,218,717
97.6
53,282,450
90.8

Gross Profit 1,933,079
2.4
5,395,512
9.2

Operating Expense 2,906,424
3.6
2,847,557
4.9

Income (Loss) from Operations (973,345 ) (1.2 ) 2,547,955
4.3

Other Income (Expense) (1,029,137 ) (1.3 ) 613,503
1.0

Net Income (Loss) $ (2,002,482 ) (2.5 ) $ 3,161,458
5.4

Revenues

~~Revenues~~

Revenue from ethanol sales increased by approximately ~~36%~~11.7% during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018.~~2019 due to increased gallons of ethanol sold, partially offset by lower average prices that we received for our ethanol during the 2020 period. Revenue from distillers grains sales increased by approximately ~~32%~~22.9% during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018.~~2019 due primarily to increased tons of dried distillers grains sold during the 2020 period. Revenue from corn oil sales increased by approximately ~~84%~~32.3% during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018.~~2019 due to increased pounds of corn oil sold during the 2020 period.

Ethanol

Our ethanol revenue was approximately ~~$16,603,000~~$7.34 million greater during our nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018,~~2019, an increase of approximately ~~36%~~11.7%. This increase in ethanol revenue was due primarily to an increase in the volume of ethanol we sold ~~along with an increase in the~~partially offset by a lower average price we received per gallon of ethanol sold during the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018.~~2019. We sold approximately ~~34%~~24.6% more gallons of ethanol during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018,~~2019, an increase of approximately ~~12,065,000~~12 million gallons, due to increased production at the plant following

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completion of our plant expansion ~~project.~~project during 2019 offset partially by the slowdown in production caused by COVID-19 in the second fiscal quarter of 2020.

The average price we received for our ethanol was approximately ~~$0.02 greater~~$0.14 less per gallon during the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018, an increase~~2019, a decrease of approximately 2%10.4%. Management attributes this ~~increase~~decrease in ethanol prices ~~with higher corn prices and decreased market supply of ethanol as some ethanol producers reduced production or ceased operations~~ during the nine months ended September 30, ~~2019.~~2020 with decreased ethanol demand due to decreased gasoline demand from the COVID-19 pandemic.

Distillers Grains

Our total distillers grains revenue was approximately ~~32%~~22.9% greater during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 due primarily to increased total ~~production and increased~~production. Following our expansion project, we are selling a greater percentage of our distillers grains in the dried form than in the past when we primarily produced modified distillers ~~grains prices, partially offset by lower dried distillers grains prices.~~grains. We sold approximately ~~27%~~27.0% more total tons of distillers grains during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 due to increased overall production at the ethanol plant due to our plant expansion project.

The average price we received for our dried distillers grains was approximately ~~10% less~~1.6% lower during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018,~~2019, a decrease of approximately ~~$14~~$2.03 per ton. Management attributes the slight decrease in dried distillers grains prices during the nine months ended September 30, ~~2019~~2020 to ~~increased supply following completion of our plant expansion project.~~lower prices in the commodity markets. The average price we received for our modified/wet distillers grains, on a dry-equivalent basis,

was approximately ~~8% greater~~2.4% less for the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018, an increase of approximately $10 per ton.~~2019. Management attributes this ~~increase~~decrease in modified/wet distillers grains prices with ~~a stronger local market due to increases~~lower prices in ~~prices of corn and soybean meal.~~the commodity markets.

Corn Oil

~~Corn Oil~~

Our total pounds of corn oil sold increased by approximately ~~75%~~34.9% during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018,~~2019, an increase of approximately ~~5,379,000~~4.4 million pounds, primarily due to increased overall production and improved corn oil extraction efficiency.

The average price per pound we received for our corn oil was ~~approximately 5% greater~~comparable for the nine months ended September 30, ~~2019 compared to~~2020 and the same period of ~~2018. The increase in our average corn oil price is related to higher crude oil prices.~~2019.

Cost of Revenues

Corn

Our cost of revenues relating to corn was approximately ~~58%~~10.7% greater for the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 due to increased corn bushels used due to the plant expansion project, ~~along with higher~~partially offset by lower corn costs per bushel during the ~~2019~~2020 period.

Our average cost per bushel of corn ~~increased~~decreased by approximately ~~18%~~12.0% for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018.~~2019. We consumed approximately ~~33%~~26.0% more bushels of corn during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018.~~2019. Management attributes the ~~increased~~decreased corn cost per bushel to ~~unfavorable weather~~favorable planting and growing conditions as well as the COVID-19 pandemic experienced during our ~~2019~~2020 fiscal year which included a significant amount of snow along with wet weather which delayed planting, potentially impacting the amount of corn which will be harvested in 2019. Further, poor weather conditions have resulted in a late harvest in the fall of 2019 which may further impact market corn prices.period. Management ~~anticipates that~~expects corn prices ~~will remain higher~~to increase for the rest of our ~~2019 fiscal year and into our~~ 2020 fiscal year.

Natural Gas

Our cost of revenues related to natural gas increased by approximately ~~$569,000,~~$560,000, an increase of approximately ~~21%~~16.8%, for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018.~~2019. This increase was primarily due to increased natural gas consumption ~~partially offset by lower natural gas prices per MMBtu~~ during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018.~~2019.

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Our average cost per MMBtu of natural gas during the nine months ended September 30, ~~2019~~2020 was approximately ~~12% less~~5.2% lower compared to the cost per MMbtu for the nine months ended September 30, ~~2018.~~2019. Management attributes this decrease in our average natural gas costs with generally lower natural gas prices in ~~2019.~~2020 due to the COVID-19 pandemic.

The volume of natural gas we used increased by approximately ~~37%~~23.1% during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 due primarily to increased production ~~due to~~from our plant expansion ~~project.~~project offset by the plant slowdown during the second quarter of 2020 due to the COVID-19 pandemic.

Operating Expenses

Our operating expenses were greater for the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 due primarily to increased ~~wage and benefit~~ expenses related to ~~increases in staff from our plant expansion.~~professional fees and insurance expense.

Other Income and Expense

We had ~~less earnings~~more dividend income from our lender during the nine months ended September 30, 2020 compared to the same period of 2019 due to having more debt drawn during the 2020 period. We had smaller losses on our investments during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 due to ~~decreased~~increased profitability in the ethanol industry. We had more interest expense during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018~~2019 because we ~~were capitalizing~~had more debt outstanding that was partially offset by lower interest ~~on our expansion project until it was completed during our second quarter of 2019.~~rates.

Changes in Financial Condition for the Nine Months Ended September 30, ~~2019~~2020

Current Assets

Our cash on hand at September 30, ~~2019~~2020 was ~~greater~~less compared to December 31, ~~2018~~2019 due to ~~timing of~~ the ~~quarter end~~reduction in corn payables and ~~larger checks we had outstanding in excess of our bank accounts.~~payments to reduce notes payable. We had ~~more~~greater accounts receivable at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to the timing of our quarter end and the payments related to the shipments of our ~~products in addition to the increased sales from our expansion.~~products. The value of our inventory was ~~greater~~less at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to ~~increased corn~~less inventory ~~for our expansion.~~on hand as well as lower input costs. The asset value of our derivative instruments was less at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to recent corn price changes which impacted our derivative instruments. We had less prepaid expenses at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to amortization of our insurance premiums.

Property and Equipment

The value of our property and equipment was ~~higher~~less at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 as a result of ~~capital expenditures for the plant expansion during~~regular depreciation of our ~~2019 fiscal year.~~assets.

Other Assets

The value of our investments was ~~greater~~less at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to ~~additional investment~~decreased profitability in ~~Ring-neck Energy & Feed, LLC along with fewer cash distributions in excess~~the ethanol industry during the first and second quarter of ~~earnings from~~2020, which the majority of our ~~investments.~~investments are related to.

Current Liabilities

We had more outstanding checks in excess of bank balances at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to the ~~increased price of~~fewer checks outstanding at December 31, 2019 as farmers choose to defer payments for corn ~~at September 30, 2019.~~until the new year. We use our revolving loan to pay any checks which are presented for payment which exceed the cash we have available in our accounts. Our accounts payable ~~was~~were lower at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due primarily to decreased corn ~~payments~~payables at September 30, ~~2019~~2020 compared to December 31, ~~2018.~~2019 as the deferred payments were paid during the first quarter. Our ~~accrued liabilities were greater~~derivative instrument liability was lower at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to ~~more accrued interest expense.~~corn price changes which impacted our derivative instruments.

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Long-Term Liabilities

Our long-term liabilities were ~~greater~~lower at September 30, ~~2019~~2020 compared to December 31, ~~2018~~2019 due to decreased borrowing ~~related to our plant expansion project.~~and reductions in notes payable resulting from increased profitability.

Liquidity and Capital Resources

Our main sources of liquidity are cash from our continuing operations, distributions we receive from our investments and amounts we have available to draw on our revolving credit facilities. Management does not anticipate that we will need to raise additional debt or equity financing in the next twelve months and management believes that our current sources of liquidity will be sufficient to continue our operations during that time period. We anticipate that any capital expenditures we undertake will be paid out of cash from operations and existing loans, and will not require any additional debt or equity financing.

Currently, we have two revolving loans which allow us to borrow funds for working capital. These loans are described in greater detail below in the section entitled "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Indebtedness." As of September 30, ~~2019,~~2020, we had ~~$39,000,000~~$23,000,000 outstanding and ~~$12,281,000~~$27,000,000 available to be drawn on our revolving loans, after taking into account the borrowing base calculation. Management anticipates that this is sufficient to maintain our liquidity and continue our operations.

The following table shows cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018~~:2019:


	Nine Months Ended September 30,
	2020		2019
Net cash (used in) operating activities	$	(1,594,191)	$	(1,987,916)
Net cash (used in) investing activities	(334,571)		(9,501,988)
Net cash provided by (used in) by financing activities	(8,780,738)		15,274,846

Nine Months Ended September 30,
2019 2018
Net cash (used in) provided by operating activities $ (1,987,916 ) $ 4,588,867
Net cash (used in) investing activities (9,501,988 ) (15,472,583 )
Net cash provided by financing activities 15,274,846
8,861,906

Cash Flow From Operations. Our operating activities ~~provided~~used less cash during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018,~~2019, due primarily to ~~reduced net income~~decreased losses during the ~~2019~~2020 period along with ~~an increase~~a decrease in inventory partially offset by a decrease in accounts ~~receivable which reduced cash.~~payable during the 2020 period.

Cash Flow From Investing Activities. Our investing activities used less cash during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018,~~2019, due to fewer capital ~~expenditures since we were nearing completion of our plant expansion project during the 2019 period along with an additional investment we purchased in Ring-neck Energy & Feed, LLC.~~expenditures.

Cash Flow From Financing Activities. Our financing activities ~~provided~~used more cash during the nine months ended September 30, ~~2019~~2020 compared to the same period of ~~2018,~~2019, due primarily to ~~increased~~ cash ~~we received from our debt instruments~~being used to ~~fund our plant expansion project and reduction of distributions paid partially offset by increased payments~~reduce the principle outstanding on our ~~outstanding debt instruments.~~loans during the 2020 period.

Indebtedness

We entered into a comprehensive credit facility with Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (collectively "FCSA"). We have a ~~$10~~$2 million revolving operating line of credit (the "Operating Line") and a ~~$40~~$48 million reducing revolving loan (the "Reducing Revolving Loan"). All of our assets, including the ethanol plant and equipment, its accounts receivable and inventory, serve as collateral for our loans with FCSA.

On August 1, 2017, we executed an amendment to our credit agreement to create ~~a new~~an $8 million term loan which we used to finance a portion of our investment in Ring-neck Energy & Feed, LLC.

On February 6, 2018, we executed an Amended and Restated Credit Agreement (the ~~"Amended and Restated Credit~~"Credit Agreement") with FCSA. Pursuant to the ~~Amended and Restated~~ Credit Agreement, ~~we increased~~ our total credit availability tois $40 million to support our expansion project. ~~Further, the maturity date of this increased~~The credit availability ~~under our Amended and Restated Credit Agreement was extended to~~matures on January 1, 2026. ~~Until February 1, 2023, interest~~Interest on the outstanding principal balance will accrue ~~pursuant to the Amended and Restated Credit Agreement on our increased credit availability~~ at the one month London Interbank Offered Rate ("LIBOR") plus ~~3.25% per year.~~325 basis points until February 1, 2023 and the basis increases to 350 points thereafter

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until maturity. The interest rate is not subject to a floor. We agreed to pay a fee of 0.50% on the unused portion of the increased credit availability.

On October 21, 2019, we entered into a Second Amendment to Amended and Restated Credit Agreement (the "Loan Amendment") with FCSA. In the Loan Amendment, we extended the maturity date of our $10 million revolving loan to November 1, 2021, we also extended the date when the available balance of our $40 million revolving loan starts to decrease from January 1, 2020 to January 1, 2021.

On June 5, 2020, we entered into a Third Amendment to the agreement (the "Third Amendment"). Under the Third Amendment, the available credit under the revolving operating note was reduced to $2,000,000 and the available credit on the reducing revolving note was increased to $48,000,000. The working capital covenant was reduced to $11,000,000 and the net worth covenant was reduced to $18,000,0000. The next measurement date for the debt service coverage ratio was deferred until December 31, 2021. The annual installment on the term note for 2020 was deferred until maturity in 2025. The interest rates were unchanged.

Operating Line

~~On February 6, 2018,~~ Dakota Ethanol ~~executed~~has a revolving promissory note from Farm Credit Services of America (FCSA) in an amount up to ~~$10,000,000~~$2,000,000 or the amount available in accordance with the borrowing base calculation, whichever is less. Interest on the outstanding principal balance will accrue at 300 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was ~~5.10%~~3.2% at September 30, ~~2019.~~2020. There is a non-use fee of ~~0.25%~~0.3% on the unused portion of the ~~$10,000,000~~$2,000,000 availability. The note is collateralized by substantially all assets of the Company. The note expires on November 1, 2021. On September 30, ~~2019,~~2020, Dakota Ethanol had $0 outstanding and ~~$5,281,000~~$2,000,000 available to be drawn on the revolving promissory note under the borrowing base.

Reducing Revolving Loan

~~On February 6, 2018,~~ Dakota Ethanol ~~executed~~has a reducing revolving promissory note from FCSA in the amount up to ~~$40,000,000~~$48,000,000 or the amount available in accordance with the borrowing availability under the credit agreement. The amount Dakota Ethanol can borrow on the note decreases by $1,750,000 semi-annually starting on ~~January~~July 1, 2021 until the maximum balance reaches ~~$26,000,000~~$32,250,000 on July 1, ~~2024.~~2025. The note matures on January 1, 2026. Interest on the outstanding principal balance will accrue at the one month London Interbank Offered Rate ("LIBOR") plus 325 basis points ~~above~~until February 1, 2023 and the ~~1 month LIBOR~~basis increases to 350 points thereafter until maturity. The interest rate ~~and~~ is not subject to a floor. The rate was ~~5.35%~~3.4% at September 30, ~~2019.~~2020. The note contains a non-use fee of ~~0.50%~~0.5% on the unused portion of the note. On September 30, ~~2019,~~2020, Dakota Ethanol had ~~$33,000,000~~$23,000,000 outstanding and ~~$7,000,000~~$25,000,000 available to be drawn on the note.

2017 Term Loan

On August 1, 2017, Dakota Ethanol executed a term note with FCSA in the amount of $8 million. 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 that was due in August 2020 was deferred to August 2025. The notes matures on August 1, 2025. Interest on the outstanding principal balance will accrue at 325 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was ~~5.35%~~3.4% at September 30, ~~2019.~~2020. On September 30, ~~2019,~~2020, Dakota Ethanol had $6,000,000 outstanding on the note.

2020 Loans

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 January 2023 and has an interest rate of 1.0%. Proceeds of the loan are restricted for use towards payroll costs and other allowable uses such as covered utilities for an eight-week period following the loan 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 applied for the loan to be forgiven during June

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of 2020. We are currently awaiting approval of the application. 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.

Covenants

Our credit facilities with FCSA are subject to various loan covenants. If we fail to comply with these loan covenants, FCSA can declare us to be in default of our loans. The material loan covenants applicable to our credit facilities are our working capital covenant, local net worth covenant and our debt service coverage ratio. We are required to maintain working capital (current assets minus current liabilities plus availability on our revolving loan) of at least ~~$13.5~~$11.0 million. We are required to maintain local net worth (total assets minus total liabilities minus the value of certain investments) of at least ~~$28~~$18 million. We are required to maintain a debt service coverage ratio of at least 1.25:1.00. The working capital and local net worth capital covenants are measured monthly while the debt service coverage covenant is measured annually at year-end. The debt service coverage covenant measurement will be measured again starting on December 31, 2021.

As of September 30, ~~2019,~~2020, we ~~were~~are in compliance with ~~all of our~~the working capital and local net worth loan covenants. Management's current financial projections indicate that we will be in compliance with our financial covenants for the next 12 months and we expect to remain in compliance thereafter. ~~Management does not believe that it is reasonably likely that we will fall out of compliance with our material loan covenants in the next 12 months.~~ If we fail to comply with the terms of our credit agreements with FCSA, and FCSA refuses to waive the non-compliance, FCSA may require us to immediately repay all amounts outstanding on our loans.

Application of Critical Accounting Policies

Management uses estimates and assumptions in preparing our consolidated financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Of the significant accounting policies described in the notes to our consolidated financial statements, we believe that the following are the most critical:

Derivative Instruments

We enter into short-term forward ~~grain,~~ option and futures contracts as a means of securing corn for the ethanol plant and managing exposure to changes in commodity prices. We enter into short-term forward, option and futures contracts for sales of ethanol to manage exposure to changes in commodity prices. All of our derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net ~~income.~~income or treated as normal purchases and sales contracts and analyzed for inherent losses. Although the contracts are considered economic hedges of specified risks, they are not designated as nor accounted for as hedging instruments.

As part of our trading activity, we use futures and option contracts offered through regulated commodity exchanges to reduce our risk and we are exposed to risk of loss in the market value of inventories. To reduce that risk, we generally take positions using cash and futures contracts and options.

Unrealized gains and losses related to derivative contracts for corn and natural gas purchases are included as a component of cost of revenues and derivative contracts related to ethanol sales are included as a component of revenues in the accompanying financial statements. The fair values of derivative contracts are presented on the accompanying balance sheets as derivative financial instruments.

Goodwill

Annually, as well as when an event triggering impairment may have occurred, the Company performs an impairment test on ~~goodwill. The Company performs a quantitative analysis that tests for impairment. The second step,~~goodwill which compares the fair value of the reporting unit with its carrying amount. An impairment charge is recognized, if necessary, ~~measures~~for the ~~impairment.~~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

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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.

Inventory Valuation

Revenue Recognition

The Company generally recognizes revenue at a point in time when performance obligations are satisfied. Revenue from the production of ethanol and related products is recorded when control transfers to customers. Generally, ethanol and related

products are shipped FOB shipping point, based on written contract terms between Dakota Ethanol and its customers. Collectability of revenue is reasonably assured based on historical evidence of collectability between Dakota Ethanol and its customers. Interest income is recognized as earned.

Shipping costs incurred by the Company in the sale of ethanol, dried distillers 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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the impact of market fluctuations associated with commodity prices and interest rates as discussed below. We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars. We use derivative financial instruments as part of an overall strategy to manage market risk. We use cash, futures and option contracts to hedge changes to the commodity prices of corn and natural gas. We do not enter into these derivative financial instruments for trading or speculative purposes, nor do we designate these contracts as hedges for accounting purposes.

Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from holding loans which bear variable interest rates. As of September 30, ~~2019,~~2020, we had ~~$39,000,000~~$29,000,000 outstanding on our variable interest rate loans with interest accruing at a rate of ~~5.35%~~3.40%. Our variable interest rates are calculated by adding a set basis to LIBOR. If we were to experience a 10% increase in LIBOR, the annual effect such change would have on our income statement, based on the amount we had outstanding on our variable interest rate loans as of September 30, ~~2019,~~2020, would be approximately ~~$82,000.~~$8,000.

Commodity Price Risk

We are exposed to market risk from changes in commodity prices. Exposure to commodity price risk results from our dependence on corn and natural gas in the ethanol production process. We seek to minimize the risks from fluctuations in the prices of corn and natural gas through the use of hedging instruments. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. Although we believe our hedge positions accomplish an economic hedge against our future purchases, they are not designated as such for hedge accounting purposes, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. We are marking to market our hedge positions, which means as the current market price of our hedge positions changes, the gains and losses are immediately recognized in our cost of revenues.

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The immediate recognition of hedging gains and losses can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged. We recorded a combined increase to our cost of revenues of approximately ~~$1,213,000~~$316,000 related to derivative instruments for the quarter ended September 30, ~~2019.~~2020. We recorded a combined increase to our cost of revenues of approximately ~~$82,000~~$1,213,000 related to derivative instruments for the quarter ended September 30, ~~2018.~~2019. There are several variables that could affect the extent to which our derivative instruments are impacted by price fluctuations in the cost of corn or natural gas. However, it is likely that commodity cash prices will have the greatest impact on the derivatives instruments with delivery dates nearest the current cash price.

As of September 30, ~~2019,~~2020, we were committed to purchasing approximately ~~1.7~~1.5 million bushels of corn with an average price of ~~$3.74~~$3.22 per bushel. These corn purchases represent approximately 6%5% of our project plant corn usage for the next 12 months.

As of September 30, ~~2019,~~2020, we were committed to purchasing approximately ~~652,000~~336,000 MMBtus of natural gas with an average price of ~~$2.64~~$2.12 per MMBtu. 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. The Company accounts for these transactions as normal purchases, and accordingly, does not mark these transactions to market. The natural gas purchases represent approximately ~~32%~~17% of the projected annual plant requirements.

As of September 30, ~~2019,~~2020, we were committed to selling approximately ~~32,000~~49,000 dry equivalent tons of distillers grains with an average price of ~~$127~~$117 per ton. The distillers grains sales represent approximately ~~15%~~23% of the projected annual plant production.

As of September 30, ~~2019,~~2020, we were committed to selling approximately ~~2.0~~3.1 million pounds of distillers corn oil with an average price of ~~$0.23~~$0.28 per pound. The distillers corn oil sales represent approximately 9%14% of the projected annual plant production.

We do not have any firm-priced sales commitments for ethanol as of September 30, ~~2019.~~2020.

A sensitivity analysis has been prepared to estimate our exposure to corn, natural gas and ethanol price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10% adverse change in the average cost of our corn and natural gas prices and average ethanol price as of September 30, ~~2019,~~2020, net of the forward and future contracts used to hedge our market risk for corn and natural gas usage requirements. The volumes are based on our expected use and sale of these commodities for a one year period from September 30, ~~2019.~~2020. The results of this analysis, which may differ from actual results, are as follows:


	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	%	$	12,003,842
Corn	30,666,667	Bushels	10	%	$	10,369,021
Natural Gas	2,070,000	MMBTU	10	%	$	312,124

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 % $ 13,800,000
Corn 28,671,665
Bushels 10 % $ 11,411,323
Natural Gas 1,418,234
MMBTU 10 % $ 300,666

For comparison purposes, our sensitivity analysis for our quarter ended September 30, ~~2018~~2019 is set forth below.


	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	%	$	13,800,000
Corn	28,671,665	Bushels	10	%	$	11,411,323
Natural Gas	1,418,234	MMBTU	10	%	$	300,666

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 52,500,000
Gallons 10 % $ 5,985,000
Corn 16,296,308
Bushels 10 % $ 4,693,337
Natural Gas 561,250
MMBTU 10 % $ 151,538

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ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

Our management, including our Chief Executive Officer (the principal executive officer), Scott Mundt, along with our Chief Financial Officer (the principal financial officer), Rob Buchholtz, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of September 30, ~~2019~~.2020. Based on this review and evaluation, these officers believe that our disclosure controls and procedures are effective in ensuring that material information related to us is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission.

For the fiscal quarter ended September 30, ~~2019~~,2020, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time in the ordinary course of business, Dakota Ethanol or Lake Area Corn Processors may be named as a defendant in legal proceedings related to various issues, including, worker's compensation claims, tort claims, or contractual disputes. We are not currently involved in any material legal proceedings, directly or indirectly, and we are not aware of any claims pending or threatened against us or any of the managers that could result in the commencement of material legal proceedings.

ITEM 1A. RISK FACTORS

~~There has not been any~~ The following risk factors are provided due to material ~~change to~~changes from the risk factors previously disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019. The risk factors set forth below should be read in conjunction with the risk factors section and the Management's Discussion and Analysis section included in our annual report on Form 10-K for the fiscal year ended December 31, 2019.

We are subject to global and regional economic downturns and related risks. The level of demand for our products is affected by global and regional demographic and macroeconomic conditions. A significant downturn in global economic growth, or recessionary conditions in major geographic regions for prolonged periods, may lead to reduced demand for our products, which could have a negative effect on the market price of our products in the United States. For example, in December 2019, a novel strain of coronavirus surfaced in Wuhan, China (“COVID-19”). In just a few months, the spread of COVID-19 has resulted in businesses suspending or terminating global operations and travel, self-imposed or government-mandated quarantines, and an overall slowdown of economic activity in some areas. Cases have been confirmed worldwide. To the extent that such economic conditions negatively impact consumer and business confidence, travel and consumption patterns or volumes for our products, our business and results of operations could be significantly and adversely affected.

COVID-19 may negatively impact our ability to operate our business which could decrease or eliminate the value of our units. COVID-19 has resulted in significant uncertainty in many areas of our business. We do not know how long these conditions will last. This uncertainty is expected to negatively impact our operations. We may experience labor shortages if our employees are unable or unwilling to come to work. In addition, if our suppliers cannot deliver the supplies we need to operate our business, including corn and chemicals for our operations, we may be forced to shutdown operations or reduce production. If we are unable to ship our products because of trucking or rail shipping disruptions, it could also result in a forced shutdown or reduction of production. If we are unable to operate the ethanol plant at capacity, it may result in unfavorable operating results, especially since we will continue to pay our fixed costs of maintaining the facility. Any shutdown or reduction of production, especially for an extended period of time, could reduce or eliminate the value of our units.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed as part of this report.



Exhibit No.		Exhibit
~~10.1~~ 31.1		Second Amendment to Amended and Restated Credit Agreement Dated October 21, 2019*
~~31.1~~	Certificate Pursuant to 17 CFR 240.13a-14(a)*
31.2		Certificate Pursuant to 17 CFR 240.13a-14(a)*
32.1		Certificate Pursuant to 18 U.S.C. Section 1350*
32.2		Certificate Pursuant to 18 U.S.C. Section 1350*
101		The following financial information from Lake Area Corn Processors, LLC's Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2019~~2020 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, (ii) Consolidated Statements of Income for the three and nine ~~month periods~~months ended September 30, ~~2019~~2020 and ~~2018,~~2019, (iii) Consolidated Statements of Cash Flows for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, and (iv) the Notes to Unaudited Consolidated Financial Statements.**

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		LAKE AREA CORN PROCESSORS, LLC

Date:	November ~~14, 2019~~13, 2020	/s/ Scott Mundt
		Scott Mundt
		President and Chief Executive Officer (Principal Executive Officer)

Date:	November ~~14, 2019~~13, 2020	/s/ Robbi Buchholtz
		Robbi Buchholtz
		Chief Financial Officer (Principal Financial and Accounting Officer)



LAKE AREA CORN PROCESSORS, LLC
(Exact name of registrant as specified in its charter)

~~South Dakota~~SD		46-0460790
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

46269 SD Highway 34		Wentworth	SD
P.O. Box 100 ~~Wentworth, South Dakota~~		57075
(Address of principal executive offices)		(Zip Code)

~~(605) 483-2676~~
(605)	483-2676
(Registrant's telephone number, including area code)

~~Securities registered pursuant to Section 12(b) of the Act:~~ ~~None~~

~~Securities registered pursuant to Section 12(g) of the Act:~~ ~~Membership Units~~



	Page No.
Part I FINANCIAL INFORMATION		32
Item 1. Financial Statements (Unaudited)		32
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2728
Item 4. Controls and Procedures		2830

Part II OTHER INFORMATION		2830
Item 1. Legal Proceedings		2830
Item 1A. Risk Factors		2930
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2931
Item 3. Defaults Upon Senior Securities		2931
Item 4. Mine Safety Disclosures		2931
Item 5. Other Information		2931
Item 6. Exhibits		2931
Signatures		3032


	September 30, 2019			December 31, 2018*				September 30, 2020		December 31, 2019*
ASSETS	(unaudited)						ASSETS	(unaudited)

CURRENT ASSETS							CURRENT ASSETS
Cash and cash equivalents	$	5,482,879		$	1,697,937		Cash and cash equivalents	$	2,114,153	$	12,823,653
Accounts receivable	4,149,707			1,202,196			Accounts receivable	1,919,969		1,576,093
Other receivables	36,036			26,857

Inventory	8,737,562			7,561,501			Inventory	5,497,765		10,543,422

Derivative financial instruments	473,763			554,005			Derivative financial instruments	445,901		505,025
Prepaid expenses	104,252			265,793			Prepaid expenses	198,085		479,422
Total current assets	18,984,199			11,308,289			Total current assets	10,175,873		25,927,615

PROPERTY AND EQUIPMENT							PROPERTY AND EQUIPMENT
Land	874,473			874,473			Land	874,473		874,473
Land improvements	8,558,720			8,558,720			Land improvements	8,631,224		8,631,224
Buildings	9,316,576			9,001,546			Buildings	9,316,576		9,316,576
Equipment	95,281,802			61,839,725			Equipment	95,849,293		95,395,121
Construction in progress	235,212			26,203,702			Construction in progress	0		150,925
	114,266,783			106,478,166				114,671,566		114,368,319
Less accumulated depreciation	(46,245,218		)	(42,729,898		)	Less accumulated depreciation	(51,910,690)		(47,660,838)
Net property and equipment	68,021,565			63,748,268			Net property and equipment	62,760,876		66,707,481

OTHER ASSETS							OTHER ASSETS
Goodwill	10,395,766			10,395,766			Goodwill	10,395,766		10,395,766
Investments	17,317,302			17,300,470			Investments	16,212,660		16,682,169
Other	101,285			113,279			Other	85,293		97,287
Total other assets	27,814,353			27,809,515			Total other assets	26,693,719		27,175,222

TOTAL ASSETS	$	114,820,117		$	102,866,072		TOTAL ASSETS	$	99,630,468	$	119,810,318



	September 30, 2019		December 31, 2018*			September 30, 2020		December 31, 2019*
LIABILITIES AND MEMBERS’ EQUITY	(unaudited)				LIABILITIES AND MEMBERS’ EQUITY	(unaudited)

CURRENT LIABILITIES					CURRENT LIABILITIES
Outstanding checks in excess of bank balance	$	3,121,137	$	2,247,215	Outstanding checks in excess of bank balance	$	1,604,126	$	1,155,264
Accounts payable	5,755,499		6,849,896		Accounts payable	3,637,967		13,812,388
Accrued liabilities	850,772		765,994		Accrued liabilities	857,091		933,668
Derivative financial instruments	61,734		368,475		Derivative financial instruments	3,450		698,850

Current portion of notes payable	1,000,000		1,000,000		Current portion of notes payable	1,074,853		1,000,000
Other	4,000		4,000		Other	4,000		4,000
Total current liabilities	10,793,142		11,235,580		Total current liabilities	7,181,487		17,604,170

LONG-TERM LIABILITIES					LONG-TERM LIABILITIES
Notes payable	37,988,333		23,585,368		Notes payable	28,687,283		37,989,208

Other	4,000		8,000		Other	0		4,000
Total long-term liabilities	37,992,333		23,593,368		Total long-term liabilities	28,687,283		37,993,208


MEMBERS' EQUITY (29,620,000 units issued and outstanding)	66,034,642		68,037,124		MEMBERS' EQUITY (29,620,000 units issued and outstanding)	63,761,698		64,212,940

TOTAL LIABILITIES AND MEMBERS' EQUITY	$	114,820,117	$	102,866,072	TOTAL LIABILITIES AND MEMBERS' EQUITY	$	99,630,468	$	119,810,318


	September 30, 2019		December 31, 2018*			September 30, 2020		December 31, 2019*
Raw materials	$	4,667,113	$	3,396,707	Raw materials	$	1,649,869	$	4,968,731
Finished goods	2,086,948		2,589,255		Finished goods	1,946,490		3,505,224
Work in process	802,294		514,881		Work in process	784,258		952,319
Parts inventory	1,181,207		1,060,658		Parts inventory	1,117,148		1,117,148
	$	8,737,562	$	7,561,501		$	5,497,765	$	10,543,422



	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018

REVENUES	$	32,441,510		$	18,796,356		$	80,151,796		$	58,677,962

COSTS OF REVENUES	34,256,712			18,078,236			78,218,717			53,282,450

GROSS PROFIT (LOSS)	(1,815,202		)	718,120			1,933,079			5,395,512

OPERATING EXPENSES	971,662			872,053			2,906,424			2,847,557

INCOME (LOSS) FROM OPERATIONS	(2,786,864		)	(153,933		)	(973,345		)	2,547,955

OTHER INCOME (EXPENSE)
Interest and other income	12,320			2,228			163,385			53,533
Equity in net income (loss) of investments	(349,123		)	(30,513		)	(425,776		)	559,970
Interest expense	(476,122		)	—			(766,746		)	—
Total other income (expense)	(812,925		)	(28,285		)	(1,029,137		)	613,503

NET INCOME (LOSS)	$	(3,599,789	)	$	(182,218	)	$	(2,002,482	)	$	3,161,458

BASIC AND DILUTED EARNINGS (LOSS) PER UNIT	$	(0.12	)	$	(0.01	)	$	(0.07	)	$	0.11

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING FOR THE CALCULATION OF BASIC & DILUTED EARNINGS PER UNIT	29,620,000			29,620,000			29,620,000			29,620,000

DISTRIBUTIONS DECLARED PER UNIT	$	—		$	—		$	—		$	0.10



	Members' Equity

Balance - December 31, 2017	$	68,282,537

Net income for the three-month period ended March 31, 2018	1,876,697

Distributions paid ($0.10 per capital unit)	(2,962,000		)

Balance - March 31, 2018	$	67,197,234

Net income for the three-month period ended June 30, 2018	1,466,978

Balance - June 30, 2018	$	68,664,212

Net (loss) for the three-month period ended September 30, 2018	(182,218		)

Balance - September 30, 2018	$	68,481,994



Balance Sheet	September 30, 2019			December 31, 2018
Current Assets	$	248,012,529		$	189,839,430
Other Assets	233,745,711			234,748,455
Current Liabilities	209,307,583			175,836,322
Long-term Liabilities	103,674,630			78,589,892
Members' Equity	168,776,027			170,161,671

	Three Months Ended
Income Statement	September 30, 2019			September 30, 2018
Revenue	$	94,474,407		$	60,363,855
Gross Profit	5,266,631			3,772,673
Net (Loss)	(2,645,668		)	(91,453		)

	Nine Months Ended
Income Statement	September 30, 2019			September 30, 2018
Revenue	$	230,715,486		$	190,895,421
Gross Profit	14,095,945			16,541,767
Net Income (Loss)	(2,933,142		)	6,472,358



	2019					2018
Income Statement Data	Amount			%		Amount			%
Revenues	$	32,441,510		100.0		$	18,796,356		100.0

Cost of Revenues	34,256,712			105.6		18,078,236			96.2

Gross Profit (Loss)	(1,815,202		)	(5.6	)	718,120			3.8

Operating Expense	971,662			3.0		872,053			4.6

(Loss) from Operations	(2,786,864		)	(8.6	)	(153,933		)	(0.8	)

Other Income (Expense)	(812,925		)	(2.5	)	(28,285		)	(0.2	)

Net (Loss)	$	(3,599,789	)	(11.1	)	$	(182,218	)	(1.0	)