10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal quarter ended September 30, 2012
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Commission file number 000-50254

LAKE AREA CORN PROCESSORS, LLC
(Exact name of registrant as specified in its charter)
South Dakota	46-0460790
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
46269 SD Highway 34 P.O. Box 100 Wentworth, South Dakota	57075
(Address of principal executive offices)	(Zip Code)
(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

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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post 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, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller Reporting Company o
(Do not check if a smaller reporting company)

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 13, 2012, there are 29,620,000 membership units of the registrant outstanding.

INDEX

	Page No.
Part I FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	23
Part II OTHER INFORMATION	23
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	24
Item 4. Mine Safety Disclosures	24
Item 5. Other Information	24
Item 6. Exhibits	25
Signatures	25

2

PART I.        FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LAKE AREA CORN PROCESSORS, LLC

Consolidated Balance Sheets (Unaudited)

	September 30, 2012			December 31, 2011*
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,752,193		$	11,225,659
Accounts receivable	3,939,434			4,259,385
Other receivables	85,664			172,296
Inventory	11,333,617			10,680,451
Due from broker	1,451,331			907,349
Derivative financial instruments	2,452,359			29,263
Prepaid expenses	73,495			126,031
Total current assets	21,088,093			27,400,434
PROPERTY AND EQUIPMENT
Land	676,096			676,097
Land improvements	2,665,358			2,665,358
Buildings	8,330,927			8,088,853
Equipment	39,182,038			39,097,266
Construction in progress	554,057			—
	51,408,476			50,527,574
Less accumulated depreciation	(25,999,194		)	(24,053,888		)
Net property and equipment	25,409,282			26,473,686
OTHER ASSETS
Goodwill	10,395,766			10,395,766
Investments	3,065,788			2,972,091
Other	101,780			150,875
Total other assets	13,563,334			13,518,732
TOTAL ASSETS	$	60,060,709		$	67,392,852

* Derived from audited financial statements.

See Notes to Unaudited Consolidated Financial Statements.

3

LAKE AREA CORN PROCESSORS, LLC

Consolidated Balance Sheets (Unaudited)

	September 30, 2012		December 31, 2011*
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	6,280,785		10,778,861
Accrued liabilities	500,885		763,526
Derivative financial instruments	515,750		1,226,705
Current portion of guarantee payable	52,145		52,145
Current portion of notes payable	285,158		387,489
Total current liabilities	7,634,723		13,208,726
LONG-TERM LIABILITIES
Notes payable, net of current maturities	231,008		446,166
Guarantee payable, net of current portion	43,266		43,266
Total long-term liabilities	274,274		489,432
COMMITMENTS AND CONTINGENCIES
MEMBERS' EQUITY (29,620,000 units issued and outstanding)	52,151,712		53,694,694
TOTAL LIABILITIES AND MEMBERS' EQUITY	$	60,060,709	$	67,392,852

* Derived from audited financial statements.

See Notes to Unaudited Consolidated Financial Statements.

4

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Operations (Unaudited)

	Three Months Ended September 30, 2012			Three Months Ended September 30, 2011			Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011
REVENUES	$	34,424,396		$	37,567,181		$	97,273,527		$	109,967,989
COSTS OF REVENUES	33,114,047			34,008,510			95,231,086			95,651,902
GROSS PROFIT	1,310,349			3,558,671			2,042,441			14,316,087
OPERATING EXPENSES	649,491			759,043			2,176,884			2,273,070
INCOME (LOSS) FROM OPERATIONS	660,858			2,799,628			(134,443		)	12,043,017
OTHER INCOME (EXPENSE)
Interest and other income	6,467			403,450			29,083			460,612
Equity in net income of investments	62,402			77,885			93,697			189,976
Interest and other expense	(29,145		)	(52,565		)	(50,318		)	(158,063		)
Total other income	39,724			428,770			72,462			492,525
NET INCOME (LOSS)	$	700,582		$	3,228,398		$	(61,981	)	$	12,535,542
BASIC AND DILUTED EARNINGS (LOSS) PER UNIT	$	0.02		$	0.11		$	—		$	0.42
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	$	—		$	0.10		$	0.05		$	0.20

See Notes to Unaudited Consolidated Financial Statements.

5

LAKE AREA CORN PROCESSORS, LLC

Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011
OPERATING ACTIVITIES
Net income (loss)	$	(61,981	)	$	12,535,542
Changes to net income (loss) affecting cash and cash equivalents
Depreciation and amortization	1,994,401			2,079,800
Equity in net income of investments	(93,697		)	(189,976		)
Gain on litigation settlement	—			(380,994		)
Gain on sale of property and equipment	—			(9,300		)
(Increase) decrease in
Receivables	406,582			(478,664		)
Inventory	(653,166		)	877,147
Prepaid expenses	52,537			49,757
Derivative financial instruments and due from broker	(3,678,033		)	(565,799		)
Increase (decrease) in
Accounts payable	(4,516,788		)	(2,258,958		)
Accrued and other liabilities	(262,641		)	(203,104		)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(6,812,786		)	11,455,451
INVESTING ACTIVITIES
Litigation settlement	—			1,000,000
Purchase of property and equipment	(862,191		)	(38,811		)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(862,191		)	961,189
FINANCING ACTIVITIES
Decrease in outstanding checks in excess of bank balance	—			(584,412		)
Principal payments on short-term notes payable	—			(1,872,000		)
Principal payments on long-term notes payable	(317,489		)	(1,634,302		)
Distributions paid to LACP members	(1,481,000		)	(5,924,000		)
NET CASH USED IN FINANCING ACTIVITIES	(1,798,489		)	(10,014,714		)
NET INCREASE (DECREASE) IN CASH	(9,473,466		)	2,401,926
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	11,225,659			637,804
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,752,193		$	3,039,730
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	53,031		$	261,627
Capital expenditures in accounts payable	$	18,711		$	—

See Notes to Unaudited Consolidated Financial Statements

6

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

NOTE 1    .    NATURE OF OPERATIONS

Principal Business Activity

Lake Area Corn Processors, LLC and subsidiary (the Company) is a South Dakota limited liability company located in Wentworth, South Dakota. The Company was organized by investors to provide a portion of the corn supply for a 40 million-gallon (annual nameplate capacity) ethanol plant, owned by Dakota Ethanol, LLC (Dakota Ethanol). The Company sells ethanol and related products to customers located in North America.

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. The results of operations for the three and ninth months ended September 30, 2012 and 2011 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, 2011, contained in the annual report on Form 10-K for 2011.

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

Revenue from the production of ethanol and related products is recorded when title 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 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.

Cost of Revenues

The primary components of cost of revenues from the production of ethanol and related co-product are corn expense, energy expense (natural gas and electricity), raw materials expense (chemicals and denaturant), and direct labor costs.

Shipping costs on modified and wet distiller's grains are included in cost of revenues.

Inventory Valuation

Ethanol inventory, raw materials, work-in-process, and parts inventory are valued using methods which approximate the lower of cost (first-in, first-out) or market. Distillers grains and related products are stated at net realizable value. In the valuation of inventories and purchase and sale commitments, market is based on current replacement values except that it does not exceed net realizable values and is not less than net realizable values reduced by allowances for approximate normal profit margin.

7

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

Investment in commodities contracts, derivative instruments and hedging activities

The Company is exposed to certain risks related to our ongoing business operations.  The primary risks that we manage by using forward or derivative instruments are price risk on anticipated purchases of corn, natural gas and the sale of ethanol.

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material we use 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 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.

For transactions initiated prior to January 1, 2011, the Company applied the normal purchase and sales exemption under derivative accounting for forward purchases of corn. Corn purchase transactions initiated after December 31, 2010 are not exempted from the accounting and reporting requirements. As of September 30, 2012, the Company is committed to purchasing 2,700,000 bushels of corn on a forward contract basis with an average price of $6.40 per bushel. Dakota Ethanol has a derivative financial instrument asset of approximately $2,400,000 related to the forward contracted purchases of corn. The corn purchase contracts represent 15% of the annual plant corn usage.

The Company enters into firm-price purchase commitments with some of our natural gas suppliers under which we agree to buy natural gas at a price set in advance of the actual delivery of that natural gas to us.  Under these arrangements, we assume the risk of a price decrease in the market price of natural gas between the time this price is fixed and the time the natural gas is delivered.  At September 30, 2012, we are committed to purchasing 60,000 MMBtu's of natural gas with an average price of $2.78 per MMBtu.  We account for these transactions as normal purchases, and accordingly, do not mark these transactions to market. The natural gas purchases represent approximately 4% of the annual plant requirements.

The Company enters into short-term forward, option and futures contracts for corn and natural gas as a means of managing exposure to changes in commodity and energy prices. The Company enters into short-term forward, option and futures contracts for sales of ethanol to manage exposure to changes in energy 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. 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 and we are exposed to risk of loss in the market value of inventories. To reduce that risk, we generally take positions using forward and futures contracts and options.

Derivatives not designated as hedging instruments at September 30, 2012 and December 31, 2011 were as follows:

	Balance Sheet Classification	September 30, 2012			December 31, 2011*
Forward contracts	Current Assets	$	2,457,224		$	38,213
Futures contracts	Current Assets	$	272,313		$	1,012,825
Forward contracts	(Current Liabilities)	$	(4,865	)	$	(1,264,918	)
Futures contracts	(Current Liabilities)	$	(788,063	)	$	(983,562	)

*Derived from audited financial statements.

8

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

Realized and unrealized gains and losses related to derivative contracts related to 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.

	Statement of Income	Three Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,076,551	)	$	(1,233,860	)
Forward contracts	Cost of Revenues	$	3,650,203		$	(869,690	)

	Statement of Income	Nine Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,551,028	)	$	647,376
Forward contracts	Cost of Revenues	$	2,891,825		$	(3,996,370	)

Use of Estimates

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.

Environmental Liabilities

Dakota Ethanol's operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdiction in which it operates. These laws require Dakota Ethanol to investigate and remediate the effects of the release or disposal of materials at its locations. Accordingly, Dakota Ethanol has adopted policies, practices and procedures in the areas of pollution control, occupational health and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability which could result from such events. Environmental liabilities are recorded when Dakota Ethanol's liability is probable and the costs can be reasonably estimated.

Reclassifications

Certain amounts on the 2011 financial statements have been reclassified to conform to the current year classification. Such reclassifications had no effect on previously reported net income.

Recent Accounting Pronouncements

ASU 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives an entity the option in its annual indefinite-lived impairment test to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived asset is less than its carrying amount. The amendment is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company does not expect that the adoption of the above guidance will have a material impact on the Company's consolidated financial position or results of operations.

9

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

NOTE 3.     INVENTORY

Inventory consisted of the following as of September 30, 2012 and December 31, 2011:

	September 30, 2012		December 31, 2011*
Raw materials	$	6,758,863	$	7,617,243
Finished goods	2,561,110		1,283,093
Work in process	1,021,883		901,551
Parts inventory	991,761		878,564
	$	11,333,617	$	10,680,451

*Derived from audited financial statements.

NOTE 4.    SHORT-TERM NOTE PAYABLE

Dakota Ethanol has a revolving promissory note from First National Bank of Omaha (FNBO) in the amount of $10,000,000. The note expires on May 1, 2013 and the amount available is subject to certain restrictive covenants establishing minimum reporting requirements, ratios, working capital, net worth and borrowing base requirements. Interest on the outstanding principal balances will accrue at 315 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 3.40% at September 30, 2012. There is a commitment fee of 0.25% on the unused portion of the $10,000,000 availability. In addition, the bank draws the checking account balance to a minimum balance on a daily basis. The excess cash pays down the balance or any shortfall is drawn upon the note as needed. The note is collateralized by the ethanol plant, its accounts receivable and inventory. On both September 30, 2012, Dakota Ethanol had $0 outstanding and $10,000,000 available to be drawn on the revolving promissory note under the borrowing base. On December 31, 2011, Dakota Ethanol had $0 outstanding and $10,000,000 available to be drawn on the revolving promissory note under the borrowing base.

NOTE 5.    LONG-TERM NOTES PAYABLE

Dakota Ethanol has a long-term note payable to FNBO (Term Note 5).

As part of the note payable agreement, Dakota Ethanol is subject to certain restrictive covenants establishing minimum reporting requirements, ratios, working capital and net worth requirements. The note is collateralized by the ethanol plant and equipment, its accounts receivable and inventory. We are in compliance with our financial covenants as of September 30, 2012.

Term Note 5 is a reducing revolving note with an availability of $5,000,000. Interest on the outstanding principal balance will accrue at 315 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 3.40% at September 30, 2012. Dakota Ethanol may elect to borrow any principal amount repaid on Term Note 5 up to $5,000,000 subject to the terms of the agreement. Should Dakota Ethanol elect not to utilize this feature, the lender will assess an unused commitment fee of 0.25% on the unused portion of the note. Term Note 5 has a reducing feature through which the available amount of the note is reduced by $500,000 on the anniversary of the note starting May 1, 2013. The note matures on May 1, 2017. On September 30, 2012 and December 31, 2011, Dakota Ethanol had $0 outstanding and $5,000,000 available to be drawn on Term Note 5.

Dakota Ethanol issued a note payable related to the purchase of land adjacent to the plant site. The note was originally issued for $450,000. The note was paid in full on February 8, 2012. The note was payable in annual installments of $112,500 plus interest. Interest on outstanding principal balances accrued at a fixed rate of 7.0%. The note was collateralized by the land.

Dakota Ethanol entered into two loan agreements for alternative financing for our corn oil extraction equipment as we had agreed with FNBO; one loan with Rural Electric Economic Development, Inc (REED) and the other loan with First District Development Company (FDDC).

The note to REED, originally for $1,000,000, has a fixed interest rate of 4.7%. The note requires monthly installments of $18,734 and matures on May 25, 2014. The note is secured by the oil extraction equipment.

10

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

The note to FDDC, originally for $200,000, has a fixed interest rate of 5.5%. The note requires monthly installments of $3,820 and matures on May 22, 2014. The note is secured by the oil extraction equipment.

The balances of the notes payable are as follows:

	September 30, 2012			December 31, 2011*
Note payable to First National Bank, Omaha
Term Note 5	$	—		$	—
Note payable - Land	—			112,500
Note payable - REED	360,314			513,210
Note payable - FDDC	72,848			103,519
Note payable - Other	83,004			104,426
	516,166			833,655
Less current portion	(285,158		)	(387,489		)
	$	231,008		$	446,166

*Derived from audited financial statements

Minimum principal payments are estimated as follows:

Years Ending September 30,	Amount
2013	$	285,158
2014	209,210
2015	21,798

NOTE 6.    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 and options 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 observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. Over-the-counter commodity options contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. Forward purchase contracts are reported at fair

11

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from local grain terminal bid values. The fair value measurements consider observable data that may include live trading bids from local elevators and processing plants which are based off the CBOT markets.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, 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, 2012
Assets:
Derivative financial instruments, futures contracts	$	272,313		$	272,313		$	—		$	—
forward contracts	$	2,457,224		$	—		$	2,457,224		$	—
Liabilities:
Derivative financial instruments, futures contracts	$	(788,063	)	$	(788,063	)	$	—		$	—
forward contracts	$	(4,865	)	$	—		$	(4,865	)	$	—
December 31, 2011*
Assets:
Derivative financial instruments, futures contracts	$	1,012,825		$	1,012,825		$	—		$	—
forward contracts	$	38,213		$	—		$	38,213		$	—
Liabilities:
Derivative financial instruments, futures contracts	$	(983,562	)	$	(983,562	)	$	—		$	—
forward contracts	$	(1,264,918	)	$	—		$	(1,264,918	)	$	—

*Derived from audited financial statements.

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, 2012.

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. The methodologies for other financial assets and financial liabilities are discussed below.

The Company believes the carrying amount of cash and cash equivalents (level 1), accounts receivable (level 2), other receivables (level 2), due from broker (level 1), accounts payable (level 2) and short-term debt (level 3) approximates fair value due to the short maturity of these instruments.

12

LAKE AREA CORN PROCESSORS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2012 and 2011

The carrying amount of long-term obligations (level 3) at September 30, 2012 of $611,577 had an estimated fair value of approximately $612,650 based on estimated interest rates for comparable debt. The carrying amount of long-term obligations at December 31, 2011 of $929,066 had an estimated fair value of approximately $930,139 based on estimated interest rates for comparable debt.

NOTE 7.    RELATED PARTY TRANSACTIONS

Dakota Ethanol has a 7% interest in RPMG, and Dakota Ethanol has entered into an ethanol marketing agreement with RPMG for the exclusive rights to market, sell and distribute the entire ethanol inventory produced by Dakota Ethanol.  The marketing fees are included in net revenues.

Dakota Ethanol has entered into a dried distiller's grains marketing agreement with RPMG for the exclusive rights to market, sell and distribute the entire dried distiller's grains inventory produced by Dakota Ethanol.  The marketing fees are included in net revenues.

Dakota Ethanol has entered into a corn oil marketing agreement with RPMG for the exclusive rights to market, sell and distribute the entire corn oil inventory produced by Dakota Ethanol.  The marketing fees are included in net revenues.

Sales and marketing fees related to the agreements are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Sales ethanol	$	26,390,388	$	30,991,989	$	74,144,372	$	90,932,374
Sales distiller's grains and corn oil	2,403,627		3,120,057		5,488,648		6,766,808
Marketing fees ethanol	43,561		54,257		136,185		172,048
Marketing fees distillers grains and corn oil	12,909		21,131		32,076		58,444
	September 30, 2012		December 31, 2011
Amounts due included in accounts receivable	$	2,889,091	$	3,142,616

NOTE 8.    COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Construction Projects - Dakota Ethanol has entered into agreements for the upgrading of the plant control system . The total value of the project is approximately $900,000. As of September 30, 2012, Dakota Ethanol has paid $554,000, with $346,000 yet to be completed. The control system is expected to be completed during the fourth quarter of 2012. Dakota Ethanol plans to pay for the project through short-term financing and cash flows from operations.

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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, 2012, 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, 2011, included in the Company's Annual Report on Form 10-K for 2011.

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, 2011.

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.

Overview

Lake Area Corn Processors, LLC is a South Dakota limited liability company that owns and manages its wholly-owned subsidiary, Dakota Ethanol, L.L.C. Dakota Ethanol, L.L.C. owns and operates an ethanol plant located near Wentworth, South Dakota that has a nameplate production capacity of 40 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, L.L.C. 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 currently operates in excess of its nameplate capacity, producing approximately 47 million gallons of ethanol 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") to market all of the ethanol and corn oil that we produce at the plant. Further, RPMG, Inc. markets all of the distillers grains that we produce that we do not market internally to local customers.

In May 2012, our board of managers declared and paid a distribution to our members of $0.05 per capital unit for a total distribution of $1,481,000.

We have an ethanol marketing agreement with RPMG, a professional third party marketer, which is the sole marketer of our ethanol. We are an equity owner of RPMG which allows us to realize favorable marketing fees in the sale of our ethanol, distillers grains and corn oil. On August 27, 2012, we executed an amended marketing agreement with RPMG. The Member Amended and Restated Ethanol Marketing Agreement (the "RPMG Agreement") was effective starting on October 1, 2012. Prior to October 1, 2012, we marketed our ethanol through RPMG pursuant to our previous ethanol marketing agreement. The RPMG Agreement changes the manner in which certain costs and capital requirements are allocated between the owners of RPMG. Further, the RPMG Agreement provides that we can sell our ethanol either through an index arrangement or at a fixed price agreed to between us and RPMG. The term of the RPMG Agreement is perpetual, until it is terminated according to the RPMG Agreement. The primary reasons the RPMG Agreement would terminate are if we cease to be an owner of RPMG, if there is a breach of the RPMG Agreement which is not cured, or if we give advance notice to RPMG that we wish to terminate the RPMG Agreement. Notwithstanding our right to terminate the RPMG Agreement, we may be obligated to continue to market our ethanol through RPMG for a period of time after the termination. Further, following the termination we agreed to accept an assignment of certain railcar leases which RPMG has secured to service our ethanol sales. If the RPMG Agreement is terminated, it would trigger a

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redemption by RPMG of our ownership interest in RPMG.

On May 7, 2012, we executed amended loan agreements with our primary lender, First National Bank of Omaha ("FNBO"). We executed a Third Amendment of First Amended and Restated Construction Loan Agreement, a Second Amended and Restated Promissory Note (Long Term Reducing Revolver) and a Second Amended and Restated Revolving Promissory Note (Operating Line of Credit). These amended loan agreements extended the maturity dates of our revolving lines of credit, removed the minimum interest rate provisions of our loans and reduced the fee we pay on the unused portions of our loans. These amended loan agreements were effective as of May 1, 2012.

In the past, the ethanol industry was impacted by the Volumetric Ethanol Tax Credit ("VEETC") which is frequently referred to as the blenders' credit. The blenders' credit expired on December 31, 2011 and was not renewed. The blenders' credit provided a tax credit of 45 cents per gallon of ethanol that is blended with gasoline. The VEETC may have resulted in fuel blenders using more ethanol than was required pursuant to the Renewable Fuels Standard ("RFS") which may have increased demand for ethanol. Management believes that despite the expiration of VEETC, ethanol demand will be maintained provided the ethanol use requirement of the RFS continues. The RFS requires that a certain amount of renewable fuels must be used in the United States each year.

In August 2012, governors from eight states filed formal requests with the EPA to waive the requirements of the RFS. These waiver requests are subject to a public comment period which expired on October 11, 2012. Currently, the EPA is considering the waiver requests and the comments that it received. If the waiver requests are approved by the EPA, it could lead to a significant decrease in demand for ethanol which could negatively impact our operations and profitability.

Many in the ethanol industry believe that it would not be possible to meet the RFS requirement in future years without an increase in the percentage of ethanol that can be blended with gasoline for use in standard (non-flex fuel) vehicles. Most ethanol that is used in the United States is sold in a blend called E10. E10 is a blend of 10% ethanol and 90% gasoline. E10 is approved for use in all standard vehicles. The United States Environmental Protection Agency (the "EPA") has approved the use of E15, gasoline which is blended at a rate of 15% ethanol and 85% gasoline, in vehicles manufactured in the model year 2001 and later. In February, the EPA approved health effects and emissions testing on E15 which was required by the Clean Air Act before E15 can be sold into the market. In March, the EPA approved a model Misfueling Mitigation Plan and fuel survey which must be submitted by applicants before E15 registrations can be approved. Finally, in June 2012, the EPA issued its final approval for sales of E15. Although these developments are significant steps towards introduction of E15 in the marketplace, there are still obstacles to meaningful market penetration by E15. Many states still have regulatory issues that prevent the sale of E15. In addition, sales of E15 may be limited because it is not approved for use in all vehicles, the EPA requires a label for E15 that management believes may discourage consumers from using E15, and retailers may choose not to sell E15 due to concerns regarding liability. As a result, management believes that E15 may not have an immediate impact on ethanol demand in the United States.

United States ethanol production was previously benefited by a 54 cent per gallon tariff imposed on ethanol imported into the United States. On December 31, 2011, this tariff expired. Due to higher ethanol prices and the elimination of the tariff imposed on ethanol imported into the United States, ethanol imports have increased during our 2012 fiscal year. These ethanol imports have increased the ethanol supply in the United States which has negatively impacted ethanol prices. Further, these ethanol imports have come at a time when ethanol demand has been lower which has magnified the negative impact of these ethanol imports.

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Results of Operations

Comparison of the Fiscal Quarters Ended September 30, 2012 and 2011

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 operations for the fiscal quarters ended September 30, 2012 and 2011:

	2012			2011
Income Statement Data	Amount		%	Amount		%
Revenue	$	34,424,396	100.0	$	37,567,181	100.0
Cost of Revenues	33,114,047		96.2	34,008,510		90.5
Gross Profit	1,310,349		3.8	3,558,671		9.5
Operating Expense	649,491		1.9	759,043		2.0
Income from Operations	660,858		1.9	2,799,628		7.5
Other Income	39,724		0.1	428,770		1.1
Net Income	$	700,582	2.0	$	3,228,398	8.6

Revenues

Revenue from ethanol sales decreased by approximately 15% during our third quarter of 2012 compared to the same period of 2011. Revenue from distillers grains increased by approximately 28% during our third quarter of 2012 compared to the same period of 2011. Revenue from corn oil decreased by approximately 23% during our third quarter of 2012 compared to the same period of 2011.

Ethanol

Our ethanol revenue was approximately $4.6 million less during our third quarter of 2012 compared to our third quarter of 2011, a decrease of approximately 15%. This decrease in ethanol revenue was due to a decrease in the average price we received for our ethanol of approximately $0.32 per gallon, a decrease of approximately 12%, during our third quarter of 2012 compared to our third quarter of 2011. Management attributes this decrease in ethanol prices with lower ethanol demand along with continued high ethanol stocks during our third quarter of 2012 compared to the same period of 2011. Further, the demand for gasoline generally was lower during this period.

In addition to this decrease in ethanol prices, ethanol sales were lower during our third quarter of 2012 compared to the same period of 2011. Our total ethanol sales during our third quarter of 2012 were approximately 3% less than during the same period of 2011, a decrease of approximately 375,000 gallons. Management attributes this decrease in ethanol sales with more plant downtime which resulted in decreased total ethanol production and increased ethanol inventory. Management anticipates that ethanol sales will be comparable to prior years going forward.

Distillers Grains

Our total distillers grains revenue increased for our third quarter of 2012 compared to the same period of 2011. We sold less distillers grains in the dried form during our third quarter of 2012 compared to the same period of 2011. For our third quarter of 2012, we sold approximately 26% of our total distillers grains in the dried form and approximately 74% of our total distillers grains in the modified/wet form. For our third quarter of 2011, we sold approximately 37% of our total distillers grains in the dried form and approximately 63% of our total distillers grains in the modified/wet form. This change in the composition of our distillers grains sales was due to market conditions, including increased local demand. The average price we received for our dried distillers grains was approximately 24% greater during our third quarter of 2012 compared to the same period of 2011, an increase of approximately $39 per ton. The average price we received for our modified/wet distillers grains was approximately 51% greater for our third quarter of 2012 compared to the same period of 2011, an increase of approximately $86 per ton. Management attributes this increase in the selling price of our distillers grains with increased corn prices and correspondingly increased distillers grains demand. Since distillers grains are typically used as a feed substitute for corn, as the price of corn

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increases, the price of and demand for distillers grains typically also increase. In June 2012, following eighteen months of investigation, the Chinese dropped their anti-dumping complaint with respect to distillers grains produced in the United States. While the United States ethanol industry did not expect the Chinese to adopt a significant tariff on distillers grains due to China's rising demand for animal feed, the uncertainty that resulted from the antidumping investigation may have reduced distillers grains exports to China. Management anticipates that due to the termination of the anti-dumping investigation, distillers grains exports to China will increase, especially due to recent increases in corn prices. Rising distillers grains demand from China may lead to higher market prices for distillers grains in the United States.

Management expects to continue to make decisions as to whether our distillers grains will be marketed as dried distillers grains as opposed to modified/wet distillers grains based on market conditions. These market conditions include supply and demand factors as well as the price difference between dried distillers grains and modified/wet distillers grains along with the higher natural gas costs associated with drying our distillers grains.

Corn Oil

Our total pounds of corn oil sold decreased by approximately 13% during our third quarter of 2012 compared to the same period of 2011, a decrease of approximately 296,000 pounds, primarily due to more plant downtime and an effort to improve production efficiency which can result in decreased corn oil production. Management anticipates that corn oil production will continue to be variable based on the total production of ethanol at our plant. In addition to the decrease in pounds of corn oil sold, the average price we received for our corn oil decreased by approximately 12% for our third quarter of 2012 compared to the same period of 2011, a decrease of approximately $0.05 per pound. This decrease in market corn oil prices was primarily due to lower market corn oil demand, in part due to decreased biodiesel production. The biodiesel industry met its biodiesel use requirement under the RFS in the fall of 2012 and the biodiesel industry has significantly decreased production after the RFS was met. Management anticipates corn oil prices will be relatively flat in the foreseeable future depending on whether corn oil demand increases and whether this increase in demand is offset by additional corn oil supply.

Cost of Revenues

The primary raw materials we use to produce ethanol and distillers grains are corn and natural gas. Our cost of revenues relating to corn was approximately 2% higher for our third quarter of 2012 compared to the same period of 2011. Our average cost per bushel of corn increased by approximately 2% for our third quarter of 2012 compared to our third quarter of 2011. Management attributes the increase in corn prices with higher market corn prices due to decreased corn production resulting from this summer's drought, as well as a smaller corn carryover from the prior year. While we believe that we will be able to secure the corn we need to operate the ethanol plant during the remaining quarter of our 2012 fiscal year and into our 2013 fiscal year, we have been seeing increased competition for corn in our local market. We have seen other corn users expanding the area in which they purchase corn due to lower corn production to our south which can increase the price we pay for corn.

We used approximately the same number of bushels of corn during our third quarter of 2012 compared to the same period of 2011. Management anticipates that our corn consumption will remain at current levels into the foreseeable future.

Our cost of revenues related to natural gas decreased by approximately $489,000, a decrease of approximately 31%, for our third quarter of 2012 compared to our third quarter of 2011. This decrease was due to a decrease in market natural gas prices during our third quarter of 2012 compared to the same period of 2011. Our average cost per MMBtu of natural gas during our third quarter of 2012 was the approximately 31% less per MMBtu compared to the price for our third quarter of 2011. The decrease in market price of natural gas was due to strong natural gas supplies and production. Management anticipates that natural gas prices will remain at their current low levels compared to prior years due to steady natural gas demand, strong supplies of natural gas and increased natural gas production. We anticipate higher natural gas prices during the winter months due to increased natural gas demand for heating needs which typically results in premium natural gas pricing during the winter months.

We used the same number of MMBtus of natural gas during our third quarter of 2012 compared to the same period of 2011. Management anticipates that our natural gas consumption will remain at current levels into the foreseeable future.

Operating Expense

Our operating expenses were lower for our third quarter of 2012 compared to the same period of 2011 due primarily to decreases in professional and environmental compliance fees and wages and bonuses.

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Other Income and Expense

Our interest expense was lower for our third quarter of 2012 compared to the same period of 2011 because we had less debt outstanding and lower interest rates. We had less interest income during our third quarter of 2012 compared to the same period of 2011 due to having less cash on hand and lower interest rates.

Comparison of the Nine Months Ended September 30, 2012 and 2011

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 operations for the nine months ended September 30, 2012 and 2011:

	2012					2011
Income Statement Data	Amount			%		Amount		%
Revenue	$	97,273,527		100.0		$	109,967,989	100.0
Cost of Revenues	95,231,086			97.9		95,651,902		87.0
Gross Profit	2,042,441			2.1		14,316,087		13.0
Operating Expense	2,176,884			2.2		2,273,070		2.1
Income (Loss) from Operations	(134,443		)	(0.1	)	12,043,017		11.0
Other Income	72,462			0.1		492,525		0.4
Net Income (Loss)	$	(61,981	)	(0.1	)	$	12,535,542	11.4

Revenues

Revenue from ethanol sales decreased by approximately 18% during the nine months ended September 30, 2012 compared to the same period of 2011. Revenue from distillers grains increased by approximately 26% during the nine months ended September 30, 2012 compared to the same period of 2011. Revenue from corn oil decreased by approximately 8% during the nine months ended September 30, 2012 compared to the same period of 2011.

Ethanol

Our ethanol revenue was approximately $16,752,000 less during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, a decrease of approximately 18%. The average price we received for our ethanol decreased by approximately 15% for the nine months ended September 30, 2012 compared to the same period of 2011, a decrease of approximately $0.36 per gallon of ethanol sold. Our total gallons of ethanol sold during the nine months ended September 30, 2012 were approximately 5% less than during the same period of 2011, a decrease of approximately 1,687,000 gallons. This decrease was due in part to particularly high ethanol sales in 2011 that resulted from ethanol that we carried over from December 2010 into January 2011.

Distillers Grains

Our total distillers grains revenue increased by approximately $4,188,000 for the nine months ended September 30, 2012 compared to the same period of 2011. We sold fewer tons of distillers grains during nine months ended September 30, 2012, however the prices we received for our distillers grains were significantly higher for the nine months ended September 30, 2012 compared to the same period of 2011. The average price we received for our dried distillers grains increased by approximately $58 per ton, an increase of approximately 41%, for the nine months ended September 30, 2012 compared to the same period of 2011. The average price we received for our modified/wet distillers grains increased by approximately $47 per ton, an increase of approximately 28%, for the nine months ended September 30, 2012 compared to the same period of 2011. Additionally, from 2011 to 2012, our distillers grain production continued to shift from distillers grains produced in the dried form to distillers grains produced in the modified/wet form. For the nine months ended September 30, 2012, we sold approximately 15% of our distillers grains in the dried form and approximately 85% in the modified/wet form. During the nine months ended September 30, 2011, we sold approximately 27% of our distillers grains in the dried form and approximately 73% in the modified/wet form.

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Corn Oil

Our total pounds of corn oil sold increased by approximately 2% during the nine months ended September 30, 2012 compared to the same period of 2011 due to improved efficiency in operating our corn oil extraction equipment. Offsetting this increase in production, the average price we received for our corn oil decreased by approximately 9% for the nine months ended September 30, 2012 compared to the same period of 2011.

Cost of Revenues

Our cost of revenues related to corn was approximately 4% higher for the nine months ended September 30, 2012 compared to the same period of 2011. Our average cost per bushel of corn increased by approximately 6% for the nine months ended September 30, 2012 compared to the same period of 2011, an increase of approximately $0.36 per bushel of corn. We used approximately 2% fewer bushels of corn during the nine months ended September 30, 2012 compared to the same period of 2011.

Our cost of revenues related to natural gas decreased by approximately $1,482,000, a decrease of approximately 30%, for the nine months ended September 30, 2012 compared to the same period of 2011. Our average cost per MMBtu of natural gas during the nine months ended September 30, 2012 was approximately 29% lower compared to the nine months ended September 30, 2011, a decrease of approximately $1.38 per MMBtu of natural gas. We used approximately 2% less natural gas during the nine months ended September 30, 2012 compared to the same period of 2011. This decrease was due to decreased production of dried distillers grains and a warmer winter.

Operating Expense

Our operating expenses decreased by approximately 4%, or $96,000, for the nine months ended September 30, 2012 compared to the same period of 2011. This decrease was due primarily to decreases in professional and environmental compliance fees and wages and bonuses.

Other Income and Expense

Our interest expense was lower for the nine months ended September 30, 2012 compared to the same period of 2011 because we had significantly less debt outstanding. We also had less interest income during the nine months ended September 30, 2012 compared to the same period of 2011 due to lower interest rates and having less cash on hand during the 2012 period.

Changes in Financial Condition for the Nine Months Ended September 30, 2012

Current Assets

Our current assets were lower at September 30, 2012 compared to December 31, 2011 primarily due to decreased cash on hand and receivables. The decrease in our cash on hand is tied partially to recent changes in corn prices impacting our derivative investments and partially to tighter operating margins which has effected our profitability and also to the reduction of the deferred corn payment liability at the end of December. The amount we had due from our commodities broker was higher at September 30, 2012 compared to December 31, 2011 because we were required to hold more cash in our margin account with our commodities broker due to greater unrealized losses on our risk management positions.

Property and Equipment

Our net property and equipment was slightly lower at September 30, 2012 compared to December 31, 2011 as a result of regular depreciation of our equipment. We had approximately $554,000 in construction in progress at September 30, 2012 due to our plant scale upgrade project and our plant control systems upgrade project.

Current Liabilities

Our accounts payable were lower at September 30, 2012 compared to December 31, 2011 because our corn suppliers typically seek to defer payments for corn that is delivered at the end of the year for tax purposes which increases our accounts payable. These deferred payments were made early in our first quarter of 2012. The current portion of our notes payable was lower at September 30, 2012 compared to December 31, 2011 because we repaid our land purchase promissory note early which was included in the current portion of our notes payable, along with our continuing payments on our subordinated debt.

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Long-Term Liabilities

Our long-term liabilities were lower at September 30, 2012 compared to December 31, 2011 because of our continuing payments on our various long-term promissory notes.

Liquidity and Capital Resources

Our main sources of liquidity are cash from our continuing operations and amounts we have available to draw on our revolving lines of credit. 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 do not anticipate making any significant capital expenditures in the next 12 months other than ordinary repair and replacement of equipment in our ethanol plant in addition to our capital commitments which have previously been disclosed.

Currently, we have two revolving loans which allow us to borrow funds for working capital. These two revolving 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, 2012, we had $0 outstanding and $15,000,000 available to be drawn on these revolving loans. 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, 2012 and 2011:

	Nine Months Ended September 30,
	2012			2011
Net cash (used in) provided by operating activities	$	(6,812,786	)	$	11,455,451
Net cash (used in) provided by investing activities	(862,191		)	961,189
Net cash (used for) financing activities	(1,798,489		)	(10,014,714		)

Cash Flow From Operations. Our operating activities used more cash during the nine months ended September 30, 2012 compared to the same period of 2011, primarily due to decreased net income during the 2012 period. We also used more cash to pay down accounts payable and for margin calls related to our derivative instruments during the nine months ended September 30, 2012.

Cash Flow From Investing Activities. Our investing activities used more cash during the nine months ended September 30, 2012 compared to the same period of 2011, due to our plant control and scale upgrade projects. We also purchased equipment for our lab during our 2012 fiscal year which was included in our purchases of property and equipment. We received a one-time litigation settlement payment during the 2011 period which positively impacted our cash flows during that period.

Cash Flow From Financing Activities. Our financing activities used less cash during the nine months ended September 30, 2012 compared to the same period of 2011 as a result of decreased payments on checks drawn in excess of bank balance, decreased loan payments, decreased payments on our lines of credit, and decreased distributions to our owners.

Indebtedness

First National Bank of Omaha ("FNBO") is our primary lender. We have two loans outstanding with FNBO, a short-term revolving loan and a long-term revolving loan. We also have two loans that we used to offset the cost of our corn oil extraction equipment which totaled $1,200,000. We had a long-term loan related to a piece of property that we purchased adjacent to our ethanol plant which was repaid in February 2012. The specifics of each credit facility are discussed below.

Short-Term Debt Sources

We have a short-term revolving promissory note with FNBO that expires on May 1, 2013. The principal amount of this short-term revolving promissory note is $10 million. However, the maximum amount we can draw on this short-term loan is limited by a borrowing base calculation, described in the May 2012 amendment, based on a percentage of our inventory and accounts receivable less certain accounts payable and letters of credit that we may have outstanding from time to time. We agreed to pay a variable interest rate on the revolving promissory note at an annual rate 315 basis points above the one month London Interbank Offered Rate ("LIBOR"), adjusted monthly. The note is not subject to a floor. The interest rate for this loan at September 30, 2012 was 3.40%. We are required to pay a fee of 0.25% on the unused portion of the revolving promissory note. The revolving promissory note is collateralized by the ethanol plant, its accounts receivable and inventories. As of September 30,

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2012, we had $0 outstanding on our revolving promissory note and $10,000,000 available to be drawn.

Long-Term Debt Sources

We restructured our long-term revolving loan that we refer to as Term Note 5 in May 2012. Term Note 5 was restructured into a $5,000,000 loan with an interest rate that accrues at 315 basis points above the one month LIBOR, adjusted monthly. Term Note 5 is not subject to a floor. The credit limit on Term Note 5 reduces each year by $500,000 starting in May 2013 until the maturity date on May 1, 2017. Therefore, the funds available for us to draw on Term Note 5 will decrease each year. If in any year we have a principal balance outstanding on Term Note 5 in excess of the new credit limit, we must make a payment to FNBO such that the amount outstanding on Term Note 5 does not exceed the new credit limit. We are required to pay a fee of 0.25% on the unused portion of Term Note 5. On September 30, 2012, we had $0 outstanding and $5,000,000 available to be drawn on this loan. As of September 30, 2012, interest accrued on Term Note 5 at the rate of 3.40% per year.

We also had a long-term debt obligation related to our purchase of an additional 135 acres of land pursuant to a land purchase contract. The total cost of this additional land was $550,000. This note was paid in full on February 8, 2012.

We have a long-term debt obligation on a portion of a tax increment revenue bond series issued by Lake County, South Dakota of which we were the recipient of the proceeds.  The portion for which we are obligated is currently estimated at $172,000. Taxes levied on our property are used for paying the debt service on the bonds. We are obligated to pay any shortfall in debt service on the bonds should the property taxes collected not be sufficient to pay the entire debt service. The interest rate on the bonds is 7.75% annually.  The bonds require semi-annual payments of interest on December 1 and June 1, in addition to a payment of principal on December 1 of each year. While our obligation under the guarantee is expected to continue until maturity in 2018, such obligation may cease at some point in time if the property on which the plant is located appreciates in value to the extent that Lake County is able to collect a sufficient amount in taxes to cover the principal and interest payments on the taxable bonds. The principal balance outstanding was approximately $1,217,000 as of September 30, 2012.

Subordinated Debt

We raised a total of $1,200,000 in subordinated loans to help offset the cost of our corn oil extraction equipment from two different parties. We secured $1,000,000 in financing for the corn oil extraction equipment from the Rural Electric Economic Development, Inc. (REED) and $200,000 from the First District Development Company (FDDC). We closed on these loans on May 22, 2009. We agreed to pay 4.70% interest on the $1,000,000 loan from REED and 5.5% interest on the $200,000 FDDC loan. Both loans are amortized over a period of five years and both loans require monthly payments. The principal balance of the REED loan was approximately $360,000 as of September 30, 2012. The principal balance of the FDDC loan was approximately $73,000 as of September 30, 2012.

Covenants

Our credit facilities with FNBO are subject to various loan covenants. If we fail to comply with these loan covenants, FNBO can declare us to be in default of our loans. The material loan covenants applicable to our credit facilities are our fixed charge coverage ratio, our minimum net worth and minimum working capital requirements. We are required to maintain a fixed charge coverage ratio of no less than 1.10 to 1.0. This fixed charge coverage ratio compares our EBITDA adjusted earnings, as defined in our credit agreements, with our scheduled principal and interest payments on our outstanding debt obligations, including our subordinated debt. We are also required to maintain at least $4.8 million in working capital and maintain a minimum net worth of $20 million.

As of September 30, 2012, we were in compliance with all of our 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 FNBO, and FNBO refuses to waive the non-compliance, FNBO 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:

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Derivative Instruments

We enter into short-term forward grain, option and futures contracts as a means of securing corn and natural gas for the ethanol plant and managing exposure to changes in commodity and energy prices. We enter into short-term forward, option and futures contracts for sales of ethanol to manage exposure to changes in energy 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. 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, 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 sheet as derivative financial instruments.

Lower of cost or market accounting for inventory

With the significant change in the prices of our main inputs and outputs, the lower of cost or market analysis of inventories can have a significant impact on our financial performance.

The impact of market activity related to pricing of corn and ethanol will require us to continuously evaluate the pricing of our inventory under a lower of cost or market analysis.

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 as discussed below.  We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars. We have loans that are subject to variable interest rates, however, we have no amounts outstanding on these loans at this time. 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.

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.

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 an increase to our cost of revenues of approximately $1.4 million related to derivative instruments for the quarter ended September 30, 2012. We recorded a decrease to our cost of revenues of approximately $2.1 million related to derivative instruments for the quarter ended September 30, 2011. 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, 2012, we were committed to purchasing approximately 2.7 million bushels of corn with an average price of $6.40 per bushel. These corn purchases represent approximately 15% of our expected corn usage for the next 12 months As corn prices move in reaction to market trends and information, our income statement will be affected depending on the impact

22

such market movements have on the value of our derivative instruments. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects to our financial results, but are designed to produce long-term positive growth for us.

As of September 30, 2012, we were committed to purchasing approximately 60,000 MMBtus of natural gas during our 2012 fiscal year, with an average price of approximately $2.78 per MMBtu. The natural gas purchases represent approximately 4% of the annual plant requirements.

A sensitivity analysis has been prepared to estimate our exposure to corn and natural gas 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, 2012, 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, 2012. 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	49,000,000	Gallons	10	%	$	10,535,000
Corn	15,327,312	Bushels	10	%	$	11,250,247
Natural Gas	1,340,000	MMBTU	10	%	$	355,100

For comparison purposes, our sensitivity analysis for our 2011 fiscal year 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	49,000,000	Gallons	10	%	$	10,192,000
Corn	15,065,059	Bushels	10	%	$	9,340,337
Natural Gas	1,220,000	MMBTU	10	%	$	435,540

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, 2012. 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, 2012, 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

23

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.

The following risk factors are provided due to material changes from the risk factors previously disclosed in our annual report on Form 10-K. The risk factors set forth below should be read in conjunction with the risk factors section and the Management's Discussion and Analysis section for the fiscal year ended December 31, 2011, included in our annual report on Form 10-K.

We may be forced to reduce production or cease production altogether if we are unable to secure the corn we require to operate the ethanol plant. Due to tighter corn supplies, many ethanol producers are experiencing difficulty securing the corn they require to operate. This may result in some ethanol producers reducing or terminating production, even if operating margins are favorable due to the lack of corn availability. This has increased the price we have to pay for corn and may reduce the number of bushels that we can purchase. If we are unable to secure the corn we require to continue to operate the ethanol plant, we may have to reduce production or cease operating altogether which may negatively impact the value of our units.

If the ethanol use requirement of the Federal Renewable Fuels Standard ("RFS") is reduced or eliminated, it may negatively impact our profitability. The RFS requires that an increasing amount of renewable fuels must be used each year in the United States. Corn based ethanol, such as the ethanol we produce, can be used to meet a portion of the RFS requirement. In August 2012, governors from eight states petitioned the EPA for a waiver of the RFS requirement. The EPA is currently considering this waiver request. If the EPA decides to reduce or waive the RFS requirement, it may lead to a significant decrease in ethanol demand which could negatively impact our profitability and the value of our units.

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.

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ITEM 6.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following exhibits are filed as part of this report.

Exhibit No.	Exhibit
10.1	Member Amended and Restated Marketing Agreement between RPMG, Inc. and Dakota Ethanol, L.L.C. dated August 27, 2012. *+
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, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (iv) the Notes to Unaudited Consolidated Financial Statements.**

* Filed herewith.

** Furnished herewith

+ Confidential Treatment Requested

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 13, 2012	/s/ Scott Mundt
		Scott Mundt
		President and Chief Executive Officer (Principal Executive Officer)
Date:	November 13, 2012	/s/ Rob Buchholtz
		Rob Buchholtz
		Chief Financial Officer (Principal Financial and Accounting Officer)

25

EX-10.1

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been separately filed with the Commission.

MEMBER AMENDED AND RESTATED

ETHANOL MARKETING AGREEMENT

THIS AGREEMENT, entered into as of this 27th day of August, 2012, and effective as of October 1, 2012 ("Effective Date") by and between RPMG, Inc., a Minnesota corporation ("RPMG"); and Dakota Ethanol, LLC, a South Dakota Corporation ("Member").

WITNESSETH:

WHEREAS, RPMG is a Minnesota corporation engaged in the business of marketing ethanol for the members of Renewable Products Marketing Group, LLC ("LLC") and others; and

WHEREAS, Member is the operator of a plant in Wentworth, South Dakota for the production of ethanol (the "Facility") and is a member of LLC; and

WHEREAS, as a condition to its membership in LLC, Member has agreed to market all of the ethanol intended for fuel use produced by Member at the Facility ("Ethanol") through RPMG and RPMG has agreed to market such Ethanol production; and

WHEREAS, the parties desire to enter into this Agreement, for purposes of setting out the terms and conditions of the marketing arrangement;

NOW THEREFORE, in consideration of the mutual covenants and promises herein contained, the parties hereto agree as follows:

1.Exclusive Marketing Representative. RPMG shall, subject to the terms and conditions of this Agreement, be the sole marketing representative for the entire Ethanol production of Member at the Facility during the term of this Agreement other than limited sales of E85 or other blendstock locally.

2.Ethanol Specifications. All of the Ethanol produced by Member at the Facility for marketing by RPMG will, when delivered to a common carrier by Member, conform to the specifications described in the bill of lading, which may be A.S.T.M. D-4806 or such other specifications that may be, from time to time, promulgated by the industry for Ethanol.

3.Purchaser/Seller. Except as otherwise provided in Section 1, Member shall sell to RPMG and RPMG shall purchase and market all Ethanol produced by Member at the Facility during the term of this Agreement. Delivery by Member to RPMG of all such Ethanol shall be made at the time the Ethanol crosses the loading flange at the Facility to either a railcar and/or tank truck; provided, however, if the annual production capacity at the Facility is in excess of 80 million gallons then delivery by Member to RPMG for Ethanol shipped by unit train ("Large Facility Unit Train") shall be made when RPMG receives the shipping documentation for the Large Facility Unit Train. Title to the Ethanol shall pass to RPMG when delivered as provided in this Section 3. The Ethanol will be marketed by RPMG as described in Section 7 below.

4.Risk of Loss. RPMG shall be responsible for and shall bear the risk of loss of (subject to the terms of this Agreement) the Ethanol marketed for Member by RPMG from the time the product crosses the loading flange at the Facility in either a railcar or tank truck, provided that for Large Facility Unit Trains RPMG shall be responsible for and shall bear the risk of loss for Ethanol shipped by Large Facility Unit Train from the time that RPMG receives the shipping documentation for the Large Facility Unit Train.

1

5.Specific Marketing Tasks. RPMG shall be responsible for and shall have complete discretion in the marketing, sale and delivery of all Ethanol produced by the Facility during the term of this Agreement, including, but not limited to:

• Scheduling sufficient railcar, tank trucks and other transport;

• Negotiating the rates and tariffs to be charged for delivery of production to the customer;

• Promoting and advertising the sale of Ethanol;

• Tracking delivery;

• Negotiation of all purchase agreements with customers and any complaints in connection therewith;

• Accounting for all sales and related expenses and collection of accounts, including any legal collection procedures as may be necessary; and

• Hedging long and short Ethanol positions for the benefit of all Member participants and non-member participants in the Corridor Marketing Model.

6.Negotiation of Ethanol Price. RPMG will use commercially reasonable efforts to obtain the best price for all Ethanol sold by it subject to the terms of this Agreement. RPMG shall have complete discretion to fix the price, terms and conditions of the sale of Member's Ethanol production that is sold and marketed as Indexed Gallons. RPMG shall obtain Member's prior approval of all sales of Ethanol from the Facility on a fixed price.

7.Ethanol Marketing. A Member may elect in accordance with RPMG' s fixed price program prior to the delivery of Ethanol to have RPMG market and purchase Ethanol from Member on a fixed price ("Fixed Price Gallons"), or, if no such election is made with respect to any Ethanol, RPMG shall market and purchase the Ethanol production of Member as Indexed Gallons. All Ethanol other than Fixed Price Gallons shall be deemed "Indexed Gallons,"

(a) Fixed Price Gallons. For the Fixed Price Gallons, RPMG shall purchase Fixed Price Gallons of Ethanol from the Member at a price per net gallon as agreed upon by RPMG and Member. Member's confirmation of the sale terms of Fixed Price Gallons shall be provided by SharePoint, e-mail or other written communication means (the "Confirmation"). RPMG shall pay Member for Fixed Price Gallons in an amount equal to the FOB fixed price multiplied by the number of Fixed Price Gallons of Ethanol delivered by Member to RPMG for the period less any applicable costs allocated to the Fixed Price Gallons calculated in the same manner as determined under the then applicable Corridor Netback Model (the "Net Fixed Price"). In addition to any other rights or remedies set forth herein, if Member fails to deliver any or all of the Fixed Price Gallons on the terms set forth on a Confirmation, RPMG shall be entitled to all remedies available at law or in equity, including damages, specific performances and/or attorneys' fees and costs, and RPMG shall be under a duty to mitigate damages.

(b)Indexed Gallons. RPMG will market the aggregate production of the Indexed Gallons of contracting producers participating in the Corridor Netback Model based on the estimated production levels of all participants in the model by corridor. Determination of a producer's share of net revenue, allocation of expenses and payment shall be made by RPMG according to the Corridor Netback Model (the "Corridor Netback Model"). The Corridor Netback Model shall be used in calculating netback payments to Member and other LLC members and non-member participants in the Corridor Netback Model for all Ethanol sold by RPMG on behalf of Member, all other LLC member participants and non-member participants in the Corridor Netback Model (the "Netback Price"). Management of RPMG may make changes to the Corridor Netback Model to reflect changing economic circumstances on a monthly basis. Except as provided below, any changes shall be final

2

and binding on all contracting producers participating in the Corridor Netback Model. In the event of a material loss of budgeted production due to shutdowns or slowdowns of participants in the Corridor Netback Model, management of RPMG may propose to the Corridor Committee alternative costs allocations in the Corridor Netback Model that reflect allocation of costs based on Production (as defined in Section 14 below), rather than actual production.

(c)Payment of the Advance Rate. Each calendar month, RPMG shall estimate for Member (in good faith) the Netback Price per gallon of all Ethanol that RPMG has committed to sell to its customers through operation of the Corridor Netback Model and the Net Fixed Price per gallon of all Ethanol that RPMG has sold to its customers on a fixed price (the "Advance Rate"). For Ethanol shipped by truck, single manifest railcars, or unit trains (other than Large Facility Unit Trains), RPMG, on a weekly basis, will pay Member on an average net 10-day basis (e.g. payment on Wednesday shall be for Ethanol delivered during the seven-day period ending on the previous Wednesday) an amount equal to the Advance Rate multiplied by the number of Fixed Price Gallons or Indexed Gallons delivered by Member to RPMG for the period. For Ethanol shipped by Large Facility Unit Train, RPMG shall pay Member within two (2) business days from the time that RPMG receives the shipping documentation for the Large Facility Unit Train.

(d)Reconciliation to the Actual Netback Price or Net Fixed Price. At the end of each calendar month, promptly after the information necessary to calculate the Netback Price becomes available, RPMG will calculate the actual Netback Price for the preceding month under the Corridor Netback Model to reflect the actual selling price for all Indexed Gallons sold during the month and the actual expenses incurred during the period (the "Actual Netback Price") and RPMG will calculate the actual Net Fixed Price. Within ten (10) business days after the end of each month, RPMG shall furnish to Member a reconciliation of the Advance Rate to the Actual Netback Price or Net Fixed Price for the preceding month. If the Advance Rate paid to Member exceeded the applicable Actual Netback Price or Net Fixed Price, Member will refund to RPMG the overpayment within ten (10) days after receipt of the reconciliation. On the other hand, if the Advance Rate paid was less than the applicable Actual Netback Price or Net Fixed Price owed to Member, then RPMG will pay Member the additional amount owed to Member within ten (10) days after the completion of the reconciliation. In lieu of Member directly refunding any amounts to RPMG by separate payment, and RPMG directly refunding any amounts to Member by separate payment, under this Section 7 the parties by mutual agreement may offset or apply such amounts to subsequent payments to be made within RPMG's standard billing and payment cycle.

(e)***

(f)Other Adjustments. For Indexed Gallons, Member shall be charged monthly directly through a reduction in the Netback Price for any demurrage charges incurred by RPMG for railcars and other direct distribution expenses that result from actions taken by Member and that are not reflected in the Corridor Netback Model. For Fixed Price Gallons, Member shall be charged monthly directly through a reduction in payments from RPMG for any demurrage charges incurred by RPMG for railcars and other direct distribution expenses that result from actions taken by Member.

(g)The Corridor Committee. If Member disagrees with a decision of RPMG management, the Advance Rate, or the Netback Price as generated by the Corridor Netback Model, it may within ten (10) business days after the decision of RPMG management, or the distribution date of the Advance Rate or Netback Price, as applicable, appeal by written notice the decision to the Corridor Committee who shall approve or modify the decision of RPMG management or approve or modify the Advance

*** Confidential material redacted and filed separately with the Commission.

3

Rate or Netback Price by a majority vote of all the members of the Corridor Committee. The Corridor Committee shall deliver such determination in a written response to Member within ten (10) business days of the written notice of appeal. Any modification in the Advance Rate or Netback Price approved by the Corridor Committee shall be promptly presented to all contracting producers participating in the Corridor Netback Model. The Corridor Committee shall consist of at least one representative from each of the primary corridor markets (as determined based on delivery destination in the Corridor Netback Model) in which there are more than two members in such corridor market and one representative who shall collectively represent all members who are in corridor markets in which there are two or few members. The members of LLC, voting by corridor market group, shall elect Corridor Committee representatives annually, provided that if a Corridor Committee representative is no longer a member of the primary corridor market that he or she was elected to represent he or she shall no longer serve as a Corridor Committee representative and the members of such corridor market shall elect a new Corridor Committee representative.

(h)Appeal. If Member disagrees with a decision of the Corridor Committee, it may within ten (10) business days after the decision of the Corridor Committee, appeal the decision by written notice to LLC's Board of Governors, which shall approve or modify the decision of the Corridor Committee by a majority vote of all the governors of the Board that represent LLC members participating in the Corridor Netback Model. The decision of the Board of Governors shall be final and binding.

(i)Audit. Within ninety (90) days following the end of RPMG's fiscal year end, Member shall have the right to inspect the books and records of RPMG for the purpose of auditing calculations of the aggregate netback paid to member participants and non-member participants in the Corridor Netback Model for the preceding year. Member shall give written notice to RPMG of its desire to conduct an audit and RPMG shall provide reasonable access to all financial information necessary to complete such audit and shall allow Member to meet with RPMG's auditors to review such information. The audit shall be completed within forty-five (45) days after the completion of RPMG's annual audit, but no later than one hundred fifty (150) days following the end of RPMG's fiscal year. The cost of the audit shall be the responsibility of Member unless the auditor determines that RPMG underpaid Member by more than *** for the period audited, in which case RPMG shall pay the cost of the audit. If the auditor determines that RPMG underpaid Member, RPMG shall promptly pay such underpayment to Member and if the auditor determines that RPMG overpaid Member, Member shall promptly pay the overpayment to RPMG. The determination of the auditor shall be final and binding on both parties. If Member fails to exercise its right to audit as provided in this Section 7 for any year, it shall be deemed to have waived any claim to dispute the Actual Netback Price paid for such year, unless Member has provided notice to RPMG of a claim to dispute the Actual Netback Price paid for such year.

8.Marketing Fee. Member shall pay to RPMG a Marketing Fee equal to ***. The Marketing Fee shall be paid on a monthly basis. In lieu of Member directly paying any amounts to RPMG by separate payment, the parties may offset or apply such amounts to subsequent payments to be made within RPMG's standard billing and payment cycle.

9.Committed Sales. ***, Member has the right to declare, in writing, the volume of its eligible gallons of Ethanol projection to produce and sell during the calendar quarter. If Member does not notify RPMG in writing, the volume of Member's eligible gallons of Ethanol for sale each month in the calendar quarter will be deemed to be an amount equal to Member's last twelve month sales divided by twelve. *** Member acknowledges that from time to time RPMG may enter into forward contracts to sell Ethanol beyond

*** Confidential material redacted and filed separately with the Commission.

4

the current calendar quarter. Member acknowledges that such commitments are in the best interest of all members and non-member participants. Nothing set forth in this Section 9 shall relieve or modify a Member's obligation to deliver any or all of the Ethanol set forth on a Confirmation for the sale of Fixed Price Gallons.

10.Ethanol Shortage/Open Market Purchase. If (i) Member fails to deliver any or all of the Ethanol set forth on a Confirmation for the sale of Fixed Price Gallons; (ii) ***; (iii) *** (iv) ***, RPMG may purchase Ethanol in the marketplace at such reasonable price and in such reasonable quantity as is required to meet its delivery obligations; provided, however, that prior to making such purchases RPMG shall communicate the terms and conditions of such purchases to Member and Member shall have the right to meet such terms and conditions or fulfill its original commitment. If Member is unable or unwilling to deliver the required Ethanol on such terms and conditions, RPMG may complete the purchase. If RPMG does so, and as a result thereof incurs a financial loss, including incidental costs, Member will reimburse RPMG for any such loss or RPMG may elect to set off such financial loss against future payments to Member over a period not to exceed twenty four (24) months. In addition to the foregoing, if Member fails to deliver any or all of the Ethanol set forth on a Confirmation for the sale of Fixed Price Gallons, RPMG shall be entitled to all remedies available at law or in equity, including damages, specific performances and/or attorneys fees and costs, and RPMG shall be under a duty to mitigate damages.

11.Obligation to Deliver after Termination. Notwithstanding termination of this Agreement under Sections 13(a) through 13(d), Member shall be obligated to deliver to RPMG for marketing by RPMG in accordance with this Agreement, for the *** following termination of this Agreement, all of the Ethanol produced by Member. Notwithstanding termination of this Agreement, Member shall be obligated to deliver to RPMG Ethanol to cover Member's percentage of any committed production of Indexed Gallons as set forth in Sections 9 and 10 during the *** following termination of this Agreement and any fixed price contracts for which a Member has delivered a Commitment.

12.Term. The term of this Agreement shall commence on the Effective Date and shall continue until terminated as provided in Section 13.

13.Termination. This Agreement may be terminated under the circumstances set out below.

(a)Termination of Membership. This Agreement shall automatically terminate when Member ceases to be a member of LLC.

(b)Termination for Intentional Misconduct. If either party engages in intentional misconduct reasonably likely to result in significant adverse consequences to the other party, the party harmed or likely to be harmed by the intentional misconduct may terminate this Agreement immediately, upon written notice to the party engaging in the intentional misconduct.

(c)Termination for Uncured Breach. If one of the parties breaches the terms of this Agreement, the other party may give the breaching party a notice in writing which specifically sets out the nature and extent of the breach, and the steps that must be taken to cure the breach. After receiving the written notice, the breaching party will then have thirty (30) days to cure the breach, if the breach does not involve a failure to market and distribute Ethanol as required by this Agreement. If the breach involves a failure to market and distribute Ethanol as required by this Agreement, then the breaching party will have five (5) days after receiving the written notice to cure the breach. If the breaching party does not cure any breach within the applicable cure period, then the non-breaching party will have the right to terminate this Agreement immediately.

*** Confidential material redacted and filed separately with the Commission.

5

(d)Member Insolvency, etc. RPMG may terminate this Agreement if Member becomes insolvent, has a receiver appointed over its business or assets and such receiver is not discharged within thirty (30) days, files a petition in bankruptcy or has a petition in bankruptcy filed against it which, in either case, is not dismissed within thirty (30) days, or ceases to produce Ethanol for thirty (30) days or more.

(e)Termination by Mutual Written Agreement. This Agreement may also be terminated upon any terms and under any conditions which are mutually agreed upon in writing by the parties.

(f)Termination by Member. Member may terminate this Agreement for any

reason upon at least *** advance notice to RPMG.

14.Effect of Termination. The termination of this Agreement shall constitute a Triggering Event (as defined in LLC's Member Control Agreement) requiring LLC to redeem all of Member's Interest (as defined LLC's Member Control Agreement) in RPMG on the terms set forth in the Member Control Agreement. In addition, upon the conclusion of Member's delivery obligations to RPMG under Section 11, Member shall accept assignment from RPMG of the lease or leases for the number of 28,800 gallon capacity railcars (or such equivalent number of gallons of larger capacity railcars) determined as follows:

***

***

***

***

***Under all circumstance from and after termination of this Agreement, Member shall hold RPMG harmless for any direct or indirect damage, claim or loss with respect to the assignment or subletting of railcars to Member.

15.Licenses and Permits; Records. Member at all times shall have and maintain all of the licenses and permits necessary to operate the Facility. Member shall comply with all laws, regulations, rules and requirements of governmental authorities, including but not limited to the Renewable Fuels Standard of RINS reporting. In addition, Member shall establish record keeping and reporting systems compatible with RPMG's load out reporting system, currently ETS and AccuLoad III.

16.Good and Marketable Title. Member represents that it will have good and marketable title to all of the Ethanol marketed for it by RPMG and that all Ethanol delivered will be free and clear of all liens and encumbrances.

17.Subordination. In order to satisfy the payment obligations in Section 7 of this Agreement, RPMG may be required to obtain working capital from financing resources. Member agrees and acknowledges that the payment terms in this Agreement are a benefit to Member and agrees that it will subordinate its right to payment hereunder to the rights of any lender providing working capital to RPMG, provided that all members of LLC are required to agree to such subordination. Member shall execute such subordination agreement and other documents as may be necessary to evidence this undertaking.

18.Independent Contractor. Nothing contained in this Agreement will make RPMG the agent of Member for any purpose whatsoever. RPMG and its employees shall be deemed to be independent contractors

*** Confidential material redacted and filed separately with the Commission.

6

with full control over the manner and method of performance of the services they will be providing on behalf of Member under this Agreement.

19.Samples. Member will take and retain for a minimum of 60 days at least 2 samples of product per day at the point of delivery. At the request of RPMG, Member agrees to provide RPMG with samples of its Ethanol produced at the Facility so that it may be tested for product quality on a regular basis.

20.Insurance. During the entire term of this Agreement, Member will maintain insurance coverage with insurance companies having at least an AM Best Company rating of A -7. At a minimum, Member's insurance coverage must include:

(a)Commercial general product and public liability insurance, with liability limits of at least $5 million in the aggregate or umbrella insurance with at least $5 million in the aggregate;

(b)Workers' compensation/employers liability and auto liability insurance to the extent required by law; and

(c)RPMG, Inc. and Renewable Products Marketing Group, LLC shall be added as an additional insured with primary and non-contributory status under the commercial general product and public liability insurance policy, automobile liability insurance policy and umbrella policy, as applicable. Member also agrees to waive and will require its Commercial General Liability, Automobile Liability, Umbrella Liability and Workers' Compensation insurers to waive all rights of subrogation under such policies as against RPMG, Renewable Products Marketing Group, LLC and their directors, officers, and employees as it relates to this Agreement.

Member will not change its insurance coverage during the term of this Agreement if such change results in a failure to maintain the minimums set out above, and the policies shall provide that they may not be cancelled, nonrenewed or terminated without at least 30 days prior written notice to RPMG.

21.Indemnification and Hold Harmless - Member. If a third party makes a claim against RPMG or any person or organization related to it as the result of the actions or omissions of Member or any person or organization related to Member including, but not limited to, claims relating to the quality of Ethanol produced by Member or the performance of its obligations under this Agreement, Member shall indemnify RPMG and its related persons and organizations and hold them harmless from any liabilities, damages, costs and/or expenses, including costs of litigation and reasonable attorneys fees which they incur as a result of any such claims.

22.Indemnification and Hold Harmless - RPMG. The indemnification obligations of the parties under this Agreement will be mutual and RPMG, therefore, makes the same commitment to indemnify Member and its related persons or organizations to the extent any claim is made against Member or its related person arising out of any action or omission of RPMG.

23.Survival of Terms/Dispute Resolution. All representations, warranties and agreements made in connection with this Agreement will survive the termination of this Agreement. The parties will, therefore, be able to pursue claims related to those representations, warranties and agreements after the termination of this Agreement, unless those claims are barred by the applicable statute of limitations. Similarly, any claims that the parties have against each other that arise out of actions or omissions that take place while this Agreement is in effect will survive the termination of this Agreement. This means that the parties may pursue those claims even after the termination of this Agreement, unless applicable statutes of limitation bar those

7

claims. The parties agree that should a dispute between them arise in connection with this Agreement, the parties will, in good faith, attempt to mediate the dispute prior to the filing of any action in any court. Such mediation session shall occur at a place that is mutually agreeable, and shall be conducted by a mediator to be selected by mutual agreement of the parties.

24.Choice of Law. This Agreement shall be governed by, interpreted under and enforced in accordance with Minnesota law, without regard to conflicts of law principles.

25.Assignment. Member may not assign its rights or obligations under this Agreement, whether by way of a sale of all or substantially all of its assets, merger, sale of equity interests, a change of control or as a matter of law, without the prior written consent of RPMG, which consent may be withheld in the sole discretion of RPMG. Member shall be entitled to collaterally assign its rights under this Agreement solely for financing purposes, and RPMG shall agree to such collateral assignment provided that the lender accepts the terms of this Agreement or other mutually agreeable terms.

26.Entire Agreement. This Agreement constitutes the entire agreement between the parties covering everything agreed upon or understood in the transaction and supersedes any other preexisting agreement between the parties with respect to the same subject matter. There are no oral promises, conditions, representations, understandings, interpretations, or terms of any kind as conditions or inducements to the execution hereof or in effect between the parties, except as expressed in this Agreement. No change or addition shall be made to this Agreement except by a written document signed by both parties hereto.

27.Execution of Counterparts. This Agreement may be executed by the parties on any number of separate counterparts, and by each party on separate counterparts, each of such counterparts being deemed by the parties to be an original instrument; and all of such counterparts, taken together, shall be deemed to constitute one and the same instrument.

28.Duplicate Counterpart Includes Facsimile. The parties specifically agree and acknowledge that a duplicate hereof shall include, but not be limited to, a counterpart produced by virtue of a facsimile ("fax") machine or a .pdf copy.

29.Binding Effect. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, personal representatives, successors and assigns.

30.Confidential Information. The parties acknowledge that they will be exchanging information about their businesses under this Agreement which is confidential and proprietary, and the parties agree to handle that confidential and proprietary information in the manner described in this Section 30.

(a)Definition of Confidential Information. For purposes of this Agreement, the term "Confidential Information" will mean information related to the business operations of Member or RPMG that meets all of the following criteria:

(i)The information must not be generally known to the public and

must not be a part of the public domain;

(ii)The information must belong to the party claiming it is confidential

and must be in that party's possession;

(iii)The information must have been protected and safeguarded by the party claiming it is confidential by measures that were reasonable under the circumstances before the information was disclosed to the other party;

8

(iv)Written information must be clearly designated in writing as "Confidential Information" by the party claiming it is confidential before it is disclosed to the other party, except that all information about costs and prices will always be considered Confidential Information under this Agreement without the need for specifically designating it as such; and

(v)Verbal Confidential Information which is disclosed to the other party must be summarized in writing, designated in writing as "Confidential Information" and transmitted to the other party within ten (10) days of the verbal disclosure.

(b)Limitations on the Use of Confidential Information. Each party agrees that it will not use any Confidential Information that it obtains about the other party for any purpose other than to perform its obligations under this Agreement.

(c)The Duty not to Disclose Confidential Information. The parties agree that they will not disclose any Confidential Information about each other to any person or organization, other than their respective legal counsel and accountants, without first getting written consent to do so from the other party. Notwithstanding the foregoing, if a party or anyone to whom such party transmits Confidential Information in accordance with this Agreement is requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoenas, civil investigative demand or similar process, SEC filings or administrative proceedings) in connection with any proceeding, to disclose any Confidential Information, such party will give the disclosing party prompt written notice of such request or requirement so that the disclosing party may seek an appropriate protective order or other remedy and/or waive compliance with the provisions of this Agreement, and the receiving party will cooperate with the disclosing party to obtain such protective order. The fees and costs of obtaining such protective order, including payment of reasonable attorney's fees, shall be paid for by the disclosing party. If such protective order or other remedy is not obtained or the disclosing party waives compliance with the relevant provisions of this Agreement, the receiving party (or such other persons to whom such request is directed) will furnish only that portion of the Confidential Information which, in the opinion of legal counsel, is legally required to be disclosed, and upon the disclosing party's request, use commercially reasonable efforts to obtain assurances that the confidential treatment will be accorded to such information. This will be the case both while this Agreement is in effect and for a period of five (5) years after it has been terminated.

(d)The Duty to Notify the Other Party in Cases of Improper Use or Disclosure. Each party agrees to immediately notify the other party if either party becomes aware of any improper use of or any improper disclosure of the Confidential Information of the other party at any time while this Agreement is in effect, and for a period of five (5) years after it has been terminated.

(e)Protection of the Confidential Information. Each party agrees to develop effective procedures for protecting the Confidential Information that it obtains from the other party, and to implement those procedures with the same degree of care that it uses in protecting its own Confidential Information.

(f)Return of the Confidential Information. Immediately upon the termination of this Agreement, each party agrees to return to the other party all of the other party's Confidential Information that is in its possession or under its control.

31.Notices. Any notice or other communication required or permitted hereunder shall be in

9

writing and shall be considered delivered in all respects when it has been delivered by hand or mailed by first class mail postage prepaid, addressed as follows:

TO:RPMG, Inc.

1157 Valley Park Drive South, Suite 100

Shakopee, MN 55379

With a copy to:

TO:Member

With a copy to:

[Intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have set their hands the day and year first written above.

RPMG, INC.

By: /s/ Doug Punke

Its: CEO

MEMBER:

Dakota Ethanol, LLC

By: /s/ Scott Mundt

Its: CFO

10

EX-31.1

CERTIFICATION

I, Scott Mundt, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Lake Area Corn Processors, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 13, 2012	/s/ Scott Mundt
		Scott Mundt, Chief Executive Officer

EX-31.2

CERTIFICATION

I, Robbi Buchholtz, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Lake Area Corn Processors, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 13, 2012	/s/ Robbi Buchholtz
		Robbi Buchholtz, Chief Financial Officer

EX-32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Lake Area Corn Processors, LLC (the “Company”) for the fiscal quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Mundt, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 13, 2012	/s/ Scott Mundt
		Scott Mundt,
		Chief Executive Officer

EX-32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Lake Area Corn Processors, LLC (the “Company”) for the fiscal quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robbi Buchholtz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 13, 2012	/s/ Robbi Buchholtz
		Robbi Buchholtz,
		Chief Financial Officer

XML

Long Term Note Payable (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Long-term Debt	$ 516,166	$ 833,655
Long-term Debt, Current Maturities	(285,158)	(387,489)
Notes payable, net of current maturities	231,008	446,166
Notes Payable to Banks [Member]
Debt Instrument [Line Items]
Notes Payable	0	112,500
Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Notes Payable	83,004	104,426
Notes Payable to Banks [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	450,000
Debt Instrument, Frequency of Periodic Payment	annual installments
Debt Instrument, Periodic Payment, Principal	112,500
Debt Instrument, Interest Rate, Stated Percentage	7.00%
First National Bank of Omaha [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	5,000,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.25%
Line of Credit Facility, Reduction of Borrowing Capacity	500,000
Line of Credit Facility, Interest Rate at Period End	3.40%
Line of Credit Facility, Amount Outstanding	0	5,000,000
Debt Instrument, Basis Spread on Variable Rate	3.15%
Rural Electric Economic Development (REED) [Member] | Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Notes Payable	360,314	513,210
Debt Instrument, Face Amount	1,000,000
Debt Instrument, Frequency of Periodic Payment	monthly installments
Debt Instrument, Interest Rate, Stated Percentage	4.70%
Debt Instrument, Periodic Payment	18,734
First District Development Company (FDDC) [Member] | Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Notes Payable	72,848	103,519
Debt Instrument, Face Amount	200,000
Debt Instrument, Frequency of Periodic Payment	monthly installments
Debt Instrument, Interest Rate, Stated Percentage	5.50%
Debt Instrument, Periodic Payment	$ 3,820

XML

Short Term Note Payable

9 Months Ended

Sep. 30, 2012

Short Term Note Payable [Abstract]

Short Term Note Payable

SHORT-TERM NOTE PAYABLE

Dakota Ethanol has a revolving promissory note from First National Bank of Omaha (FNBO) in the amount of $10,000,000. The note expires on May 1, 2013 and the amount available is subject to certain restrictive covenants establishing minimum reporting requirements, ratios, working capital, net worth and borrowing base requirements. Interest on the outstanding principal balances will accrue at 315 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 3.40% at September 30, 2012. There is a commitment fee of 0.25% on the unused portion of the $10,000,000 availability. In addition, the bank draws the checking account balance to a minimum balance on a daily basis. The excess cash pays down the balance or any shortfall is drawn upon the note as needed. The note is collateralized by the ethanol plant, its accounts receivable and inventory. On both September 30, 2012, Dakota Ethanol had $0 outstanding and $10,000,000 available to be drawn on the revolving promissory note under the borrowing base. On December 31, 2011, Dakota Ethanol had $0 outstanding and $10,000,000 available to be drawn on the revolving promissory note under the borrowing base.

XML

Commitments, Contingencies and Agreements (Details) (Construction in Progress [Member], USD $)	9 Months Ended
	Sep. 30, 2012
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Unrecorded Unconditional Purchase Obligation, Purchases	$ 900,000
Payments for Construction in Process	554,000
Construction in Progress Expenditures Incurred but Not yet Paid	$ 346,000

XML

Related Party Transactions (Details) (USD $)				3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Investor [Member]	Sep. 30, 2012 Ethanol [Member] Affiliated Entity [Member]	Sep. 30, 2011 Ethanol [Member] Affiliated Entity [Member]	Sep. 30, 2012 Ethanol [Member] Affiliated Entity [Member]	Sep. 30, 2011 Ethanol [Member] Affiliated Entity [Member]	Sep. 30, 2012 Dstiller's Grains and Corn Oil [Member] Affiliated Entity [Member]	Sep. 30, 2011 Dstiller's Grains and Corn Oil [Member] Affiliated Entity [Member]	Sep. 30, 2012 Dstiller's Grains and Corn Oil [Member] Affiliated Entity [Member]	Sep. 30, 2011 Dstiller's Grains and Corn Oil [Member] Affiliated Entity [Member]	Sep. 30, 2012 Co-Products [Member] Affiliated Entity [Member]	Sep. 30, 2011 Co-Products [Member] Affiliated Entity [Member]	Sep. 30, 2012 Co-Products [Member] Affiliated Entity [Member]	Sep. 30, 2011 Co-Products [Member] Affiliated Entity [Member]
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage			7.00%
Revenue from Related Parties				$ 26,390,388	$ 30,991,989	$ 74,144,372	$ 90,932,374	$ 2,403,627	$ 3,120,057	$ 5,488,648	$ 6,766,808
Marketing Expenses from Transactions with Related Party				43,561	54,257	136,185	172,048					12,909	21,131	32,076	58,444
Due from Related Parties, Current	$ 2,889,091	$ 3,142,616

XML

Inventory

9 Months Ended

Sep. 30, 2012

Inventory [Abstract]

Inventory

INVENTORY

Inventory consisted of the following as of September 30, 2012 and December 31, 2011:

	September 30, 2012		December 31, 2011*
Raw materials	$	6,758,863	$	7,617,243
Finished goods	2,561,110		1,283,093
Work in process	1,021,883		901,551
Parts inventory	991,761		878,564
	$	11,333,617	$	10,680,451

*Derived from audited financial statements.

XML

Consolidated Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 1,752,193	$ 11,225,659
Accounts receivable	3,939,434	4,259,385
Other receivables	85,664	172,296
Inventory	11,333,617	10,680,451
Due from broker	1,451,331	907,349
Derivative financial instruments	2,452,359	29,263
Prepaid expenses	73,495	126,031
Total current assets	21,088,093	27,400,434
PROPERTY AND EQUIPMENT
Land	676,096	676,097
Land improvements	2,665,358	2,665,358
Buildings	8,330,927	8,088,853
Equipment	39,182,038	39,097,266
Construction in progress	554,057	0
Gross Property and Equipment	51,408,476	50,527,574
Less accumulated depreciation	(25,999,194)	(24,053,888)
Net property and equipment	25,409,282	26,473,686
OTHER ASSETS
Goodwill	10,395,766	10,395,766
Investments	3,065,788	2,972,091
Other	101,780	150,875
Total other assets	13,563,334	13,518,732
TOTAL ASSETS	60,060,709	67,392,852
CURRENT LIABILITIES
Accounts payable	6,280,785	10,778,861
Accrued liabilities	500,885	763,526
Derivative financial instruments	515,750	1,226,705
Current portion of guarantee payable	52,145	52,145
Current portion of notes payable	285,158	387,489
Total current liabilities	7,634,723	13,208,726
LONG-TERM LIABILITIES
Notes payable, net of current maturities	231,008	446,166
Guarantee payable, net of current portion	43,266	43,266
Total long-term liabilities	274,274	489,432
COMMITMENTS AND CONTINGENCIES
MEMBERS' EQUITY (29,620,000 units issued and outstanding)	52,151,712	53,694,694
TOTAL LIABILITIES AND MEMBERS' EQUITY	$ 60,060,709	$ 67,392,852

XML

Nature of Operations

9 Months Ended

Sep. 30, 2012

Nature of Operations [Abstract]

Nature of Operations

NATURE OF OPERATIONS

Principal Business Activity

Lake Area Corn Processors, LLC and subsidiary (the Company) is a South Dakota limited liability company located in Wentworth, South Dakota. The Company was organized by investors to provide a portion of the corn supply for a 40 million-gallon (annual nameplate capacity) ethanol plant, owned by Dakota Ethanol, LLC (Dakota Ethanol). The Company sells ethanol and related products to customers located in North America.

XML

Derivative Instruments - Income Statement (Details) (Cost of Sales [Member], Not Designated as Hedging Instrument [Member], USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Future [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income	$ (5,076,551)	$ (1,233,860)	$ (5,551,028)	$ 647,376
Forward Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income	$ 3,650,203	$ (869,690)	$ 2,891,825	$ (3,996,370)

XML

Short Term Note Payable (Details) (First National Bank of Omaha [Member], Line of Credit [Member], USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
First National Bank of Omaha [Member] | Line of Credit [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.15%
Line of Credit Facility, Maximum Borrowing Capacity	$ 10,000,000
Line of Credit Facility, Interest Rate at Period End	3.40%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.25%
Line of Credit Facility, Amount Outstanding	0	0
Line of Credit Facility, Remaining Borrowing Capacity	$ 10,000,000	$ 10,000,000

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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. The results of operations for the three and ninth months ended September 30, 2012 and 2011 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, 2011, contained in the annual report on Form 10-K for 2011.

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

Revenue from the production of ethanol and related products is recorded when title 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 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.

Cost of Revenues

The primary components of cost of revenues from the production of ethanol and related co-product are corn expense, energy expense (natural gas and electricity), raw materials expense (chemicals and denaturant), and direct labor costs.

Shipping costs on modified and wet distiller's grains are included in cost of revenues.

Inventory Valuation

Ethanol inventory, raw materials, work-in-process, and parts inventory are valued using methods which approximate the lower of cost (first-in, first-out) or market. Distillers grains and related products are stated at net realizable value. In the valuation of inventories and purchase and sale commitments, market is based on current replacement values except that it does not exceed net realizable values and is not less than net realizable values reduced by allowances for approximate normal profit margin.

Investment in commodities contracts, derivative instruments and hedging activities

The Company is exposed to certain risks related to our ongoing business operations.  The primary risks that we manage by using forward or derivative instruments are price risk on anticipated purchases of corn, natural gas and the sale of ethanol.

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material we use 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 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.

For transactions initiated prior to January 1, 2011, the Company applied the normal purchase and sales exemption under derivative accounting for forward purchases of corn. Corn purchase transactions initiated after December 31, 2010 are not exempted from the accounting and reporting requirements. As of September 30, 2012, the Company is committed to purchasing 2,700,000 bushels of corn on a forward contract basis with an average price of $6.40 per bushel. Dakota Ethanol has a derivative financial instrument asset of approximately $2,400,000 related to the forward contracted purchases of corn. The corn purchase contracts represent 15% of the annual plant corn usage.

The Company enters into firm-price purchase commitments with some of our natural gas suppliers under which we agree to buy natural gas at a price set in advance of the actual delivery of that natural gas to us.  Under these arrangements, we assume the risk of a price decrease in the market price of natural gas between the time this price is fixed and the time the natural gas is delivered.  At September 30, 2012, we are committed to purchasing 60,000 MMBtu's of natural gas with an average price of $2.78 per MMBtu.  We account for these transactions as normal purchases, and accordingly, do not mark these transactions to market. The natural gas purchases represent approximately 4% of the annual plant requirements.

The Company enters into short-term forward, option and futures contracts for corn and natural gas as a means of managing exposure to changes in commodity and energy prices. The Company enters into short-term forward, option and futures contracts for sales of ethanol to manage exposure to changes in energy 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. 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 and we are exposed to risk of loss in the market value of inventories. To reduce that risk, we generally take positions using forward and futures contracts and options.

Derivatives not designated as hedging instruments at September 30, 2012 and December 31, 2011 were as follows:

	Balance Sheet Classification	September 30, 2012			December 31, 2011*
Forward contracts	Current Assets	$	2,457,224		$	38,213
Futures contracts	Current Assets	$	272,313		$	1,012,825
Forward contracts	(Current Liabilities)	$	(4,865	)	$	(1,264,918	)
Futures contracts	(Current Liabilities)	$	(788,063	)	$	(983,562	)

*Derived from audited financial statements.

Realized and unrealized gains and losses related to derivative contracts related to 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.

	Statement of Income	Three Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,076,551	)	$	(1,233,860	)
Forward contracts	Cost of Revenues	$	3,650,203		$	(869,690	)

	Statement of Income	Nine Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,551,028	)	$	647,376
Forward contracts	Cost of Revenues	$	2,891,825		$	(3,996,370	)

Use of Estimates

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.

Environmental Liabilities

Dakota Ethanol's operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdiction in which it operates. These laws require Dakota Ethanol to investigate and remediate the effects of the release or disposal of materials at its locations. Accordingly, Dakota Ethanol has adopted policies, practices and procedures in the areas of pollution control, occupational health and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability which could result from such events. Environmental liabilities are recorded when Dakota Ethanol's liability is probable and the costs can be reasonably estimated.

Reclassifications

Certain amounts on the 2011 financial statements have been reclassified to conform to the current year classification. Such reclassifications had no effect on previously reported net income.

Recent Accounting Pronouncements

ASU 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives an entity the option in its annual indefinite-lived impairment test to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived asset is less than its carrying amount. The amendment is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company does not expect that the adoption of the above guidance will have a material impact on the Company's consolidated financial position or results of operations.

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Consolidated Balance Sheets Parenthetical	Sep. 30, 2012	Dec. 31, 2011
MEMBERS' EQUITY, units issued and outstanding	29,620,000	29,620,000

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Long Term Notes Payable (Tables)

9 Months Ended

Sep. 30, 2012

Long Term Note Payable [Abstract]

Schedule of Long-term Debt

	September 30, 2012			December 31, 2011*
Note payable to First National Bank, Omaha
Term Note 5	$	—		$	—
Note payable - Land	—			112,500
Note payable - REED	360,314			513,210
Note payable - FDDC	72,848			103,519
Note payable - Other	83,004			104,426
	516,166			833,655
Less current portion	(285,158		)	(387,489		)
	$	231,008		$	446,166

Schedule of Maturities of Long-term Debt

Years Ending September 30,	Amount
2013	$	285,158
2014	209,210
2015	21,798

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 13, 2012
Document Information [Line Items]
Entity Registrant Name	LAKE AREA CORN PROCESSORS LLC
Entity Central Index Key	0001156174
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		29,620,000

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value, by Balance Sheet Grouping

	Total			Level 1			Level 2			Level 3
September 30, 2012
Assets:
Derivative financial instruments, futures contracts	$	272,313		$	272,313		$	—		$	—
forward contracts	$	2,457,224		$	—		$	2,457,224		$	—
Liabilities:
Derivative financial instruments, futures contracts	$	(788,063	)	$	(788,063	)	$	—		$	—
forward contracts	$	(4,865	)	$	—		$	(4,865	)	$	—
December 31, 2011*
Assets:
Derivative financial instruments, futures contracts	$	1,012,825		$	1,012,825		$	—		$	—
forward contracts	$	38,213		$	—		$	38,213		$	—
Liabilities:
Derivative financial instruments, futures contracts	$	(983,562	)	$	(983,562	)	$	—		$	—
forward contracts	$	(1,264,918	)	$	—		$	(1,264,918	)	$	—

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
REVENUES	$ 34,424,396	$ 37,567,181	$ 97,273,527	$ 109,967,989
COSTS OF REVENUES	33,114,047	34,008,510	95,231,086	95,651,902
GROSS PROFIT	1,310,349	3,558,671	2,042,441	14,316,087
OPERATING EXPENSES	649,491	759,043	2,176,884	2,273,070
INCOME (LOSS) FROM OPERATIONS	660,858	2,799,628	(134,443)	12,043,017
OTHER INCOME (EXPENSE)
Interest and other income	6,467	403,450	29,083	460,612
Equity in net income of investments	62,402	77,885	93,697	189,976
Interest and other expense	(29,145)	(52,565)	(50,318)	(158,063)
Total other income	39,724	428,770	72,462	492,525
NET INCOME (LOSS)	$ 700,582	$ 3,228,398	$ (61,981)	$ 12,535,542
BASIC AND DILUTED EARNINGS (LOSS) PER UNIT	$ 0.02	$ 0.11	$ 0	$ 0.42
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	$ 0.00	$ 0.10	$ 0.05	$ 0.20

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Dakota Ethanol has a 7% interest in RPMG, and Dakota Ethanol has entered into an ethanol marketing agreement with RPMG for the exclusive rights to market, sell and distribute the entire ethanol inventory produced by Dakota Ethanol.  The marketing fees are included in net revenues.

Dakota Ethanol has entered into a dried distiller's grains marketing agreement with RPMG for the exclusive rights to market, sell and distribute the entire dried distiller's grains inventory produced by Dakota Ethanol.  The marketing fees are included in net revenues.

Dakota Ethanol has entered into a corn oil marketing agreement with RPMG for the exclusive rights to market, sell and distribute the entire corn oil inventory produced by Dakota Ethanol.  The marketing fees are included in net revenues.

Sales and marketing fees related to the agreements are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Sales ethanol	$	26,390,388	$	30,991,989	$	74,144,372	$	90,932,374
Sales distiller's grains and corn oil	2,403,627		3,120,057		5,488,648		6,766,808
Marketing fees ethanol	43,561		54,257		136,185		172,048
Marketing fees distillers grains and corn oil	12,909		21,131		32,076		58,444
	September 30, 2012		December 31, 2011
Amounts due included in accounts receivable	$	2,889,091	$	3,142,616

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

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 and options 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 observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. Over-the-counter commodity options contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. Forward purchase contracts are reported at fair value utilizing Level 2 inputs. For these contracts, the Company obtains fair value measurements from local grain terminal bid values. The fair value measurements consider observable data that may include live trading bids from local elevators and processing plants which are based off the CBOT markets.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, 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, 2012
Assets:
Derivative financial instruments, futures contracts	$	272,313		$	272,313		$	—		$	—
forward contracts	$	2,457,224		$	—		$	2,457,224		$	—
Liabilities:
Derivative financial instruments, futures contracts	$	(788,063	)	$	(788,063	)	$	—		$	—
forward contracts	$	(4,865	)	$	—		$	(4,865	)	$	—
December 31, 2011*
Assets:
Derivative financial instruments, futures contracts	$	1,012,825		$	1,012,825		$	—		$	—
forward contracts	$	38,213		$	—		$	38,213		$	—
Liabilities:
Derivative financial instruments, futures contracts	$	(983,562	)	$	(983,562	)	$	—		$	—
forward contracts	$	(1,264,918	)	$	—		$	(1,264,918	)	$	—

*Derived from audited financial statements.

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, 2012.

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. The methodologies for other financial assets and financial liabilities are discussed below.

The Company believes the carrying amount of cash and cash equivalents (level 1), accounts receivable (level 2), other receivables (level 2), due from broker (level 1), accounts payable (level 2) and short-term debt (level 3) approximates fair value due to the short maturity of these instruments.

The carrying amount of long-term obligations (level 3) at September 30, 2012 of $611,577 had an estimated fair value of approximately $612,650 based on estimated interest rates for comparable debt. The carrying amount of long-term obligations at December 31, 2011 of $929,066 had an estimated fair value of approximately $930,139 based on estimated interest rates for comparable debt.

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Inventory (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Inventory [Abstract]
Raw Materials	$ 6,758,863	$ 7,617,243
Finished Goods	2,561,110	1,283,093
Work in Process	1,021,883	901,551
Parts Inventory	991,761	878,564
Inventory	$ 11,333,617	$ 10,680,451

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Sales ethanol	$	26,390,388	$	30,991,989	$	74,144,372	$	90,932,374
Sales distiller's grains and corn oil	2,403,627		3,120,057		5,488,648		6,766,808
Marketing fees ethanol	43,561		54,257		136,185		172,048
Marketing fees distillers grains and corn oil	12,909		21,131		32,076		58,444
	September 30, 2012		December 31, 2011
Amounts due included in accounts receivable	$	2,889,091	$	3,142,616

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Derivatives Not Designated as Hedging Instruments

	Balance Sheet Classification	September 30, 2012			December 31, 2011*
Forward contracts	Current Assets	$	2,457,224		$	38,213
Futures contracts	Current Assets	$	272,313		$	1,012,825
Forward contracts	(Current Liabilities)	$	(4,865	)	$	(1,264,918	)
Futures contracts	(Current Liabilities)	$	(788,063	)	$	(983,562	)

Net realized and unrealized gains (losses) related to purchase contracts

	Statement of Income	Three Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,076,551	)	$	(1,233,860	)
Forward contracts	Cost of Revenues	$	3,650,203		$	(869,690	)

	Statement of Income	Nine Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,551,028	)	$	647,376
Forward contracts	Cost of Revenues	$	2,891,825		$	(3,996,370	)

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Commitments, Contingencies and Agreements

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Commitments, Contingencies and Agreements

COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Construction Projects - Dakota Ethanol has entered into agreements for the upgrading of the plant control system . The total value of the project is approximately $900,000. As of September 30, 2012, Dakota Ethanol has paid $554,000, with $346,000 yet to be completed. The control system is expected to be completed during the fourth quarter of 2012. Dakota Ethanol plans to pay for the project through short-term financing and cash flows from operations.

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Accounting Policies

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Principles of Consolidation

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

Revenue Recognition

Revenue from the production of ethanol and related products is recorded when title 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 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.

Cost of Revenues

Cost of Revenues

The primary components of cost of revenues from the production of ethanol and related co-product are corn expense, energy expense (natural gas and electricity), raw materials expense (chemicals and denaturant), and direct labor costs.

Shipping costs on modified and wet distiller's grains are included in cost of revenues.

Inventory Valuation

Inventory Valuation

Ethanol inventory, raw materials, work-in-process, and parts inventory are valued using methods which approximate the lower of cost (first-in, first-out) or market. Distillers grains and related products are stated at net realizable value. In the valuation of inventories and purchase and sale commitments, market is based on current replacement values except that it does not exceed net realizable values and is not less than net realizable values reduced by allowances for approximate normal profit margin.

Investment in commodities contracts, derivative instruments and hedging activities

Investment in commodities contracts, derivative instruments and hedging activities

The Company is exposed to certain risks related to our ongoing business operations.  The primary risks that we manage by using forward or derivative instruments are price risk on anticipated purchases of corn, natural gas and the sale of ethanol.

The Company is subject to market risk with respect to the price and availability of corn, the principal raw material we use 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 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.

For transactions initiated prior to January 1, 2011, the Company applied the normal purchase and sales exemption under derivative accounting for forward purchases of corn. Corn purchase transactions initiated after December 31, 2010 are not exempted from the accounting and reporting requirements. As of September 30, 2012, the Company is committed to purchasing 2,700,000 bushels of corn on a forward contract basis with an average price of $6.40 per bushel. Dakota Ethanol has a derivative financial instrument asset of approximately $2,400,000 related to the forward contracted purchases of corn. The corn purchase contracts represent 15% of the annual plant corn usage.

The Company enters into firm-price purchase commitments with some of our natural gas suppliers under which we agree to buy natural gas at a price set in advance of the actual delivery of that natural gas to us.  Under these arrangements, we assume the risk of a price decrease in the market price of natural gas between the time this price is fixed and the time the natural gas is delivered.  At September 30, 2012, we are committed to purchasing 60,000 MMBtu's of natural gas with an average price of $2.78 per MMBtu.  We account for these transactions as normal purchases, and accordingly, do not mark these transactions to market. The natural gas purchases represent approximately 4% of the annual plant requirements.

The Company enters into short-term forward, option and futures contracts for corn and natural gas as a means of managing exposure to changes in commodity and energy prices. The Company enters into short-term forward, option and futures contracts for sales of ethanol to manage exposure to changes in energy 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. 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 and we are exposed to risk of loss in the market value of inventories. To reduce that risk, we generally take positions using forward and futures contracts and options.

Derivatives not designated as hedging instruments at September 30, 2012 and December 31, 2011 were as follows:

	Balance Sheet Classification	September 30, 2012			December 31, 2011*
Forward contracts	Current Assets	$	2,457,224		$	38,213
Futures contracts	Current Assets	$	272,313		$	1,012,825
Forward contracts	(Current Liabilities)	$	(4,865	)	$	(1,264,918	)
Futures contracts	(Current Liabilities)	$	(788,063	)	$	(983,562	)

*Derived from audited financial statements.

Realized and unrealized gains and losses related to derivative contracts related to 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.

	Statement of Income	Three Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,076,551	)	$	(1,233,860	)
Forward contracts	Cost of Revenues	$	3,650,203		$	(869,690	)

	Statement of Income	Nine Months Ended September 30,
	Classification	2012			2011
Net realized and unrealized gains (losses) related to purchase contracts:
Futures contracts	Cost of Revenues	$	(5,551,028	)	$	647,376
Forward contracts	Cost of Revenues	$	2,891,825		$	(3,996,370	)

Use of Estimates

Use of Estimates

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.

Environmental Liabilities

Environmental Liabilities

Dakota Ethanol's operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdiction in which it operates. These laws require Dakota Ethanol to investigate and remediate the effects of the release or disposal of materials at its locations. Accordingly, Dakota Ethanol has adopted policies, practices and procedures in the areas of pollution control, occupational health and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability which could result from such events. Environmental liabilities are recorded when Dakota Ethanol's liability is probable and the costs can be reasonably estimated.

Reclassifications

Reclassifications

Certain amounts on the 2011 financial statements have been reclassified to conform to the current year classification. Such reclassifications had no effect on previously reported net income.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

ASU 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives an entity the option in its annual indefinite-lived impairment test to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived asset is less than its carrying amount. The amendment is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company does not expect that the adoption of the above guidance will have a material impact on the Company's consolidated financial position or results of operations.

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Inventory (Tables)

9 Months Ended

Sep. 30, 2012

Inventory [Abstract]

Schedule of Inventory

Inventory consisted of the following as of September 30, 2012 and December 31, 2011:

	September 30, 2012		December 31, 2011*
Raw materials	$	6,758,863	$	7,617,243
Finished goods	2,561,110		1,283,093
Work in process	1,021,883		901,551
Parts inventory	991,761		878,564
	$	11,333,617	$	10,680,451

*Derived from audited financial statements.

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Derivative Instruments - Balance Sheet (Details) (USD $)	9 Months Ended
	Sep. 30, 2012 Forward Contracts [Member] Corn [Member] bu	Sep. 30, 2012 Forward Contracts [Member] Natural Gas [Member] MMBTU	Sep. 30, 2012 Current Assets [Member] Not Designated as Hedging Instrument [Member] Future [Member]	Dec. 31, 2011 Current Assets [Member] Not Designated as Hedging Instrument [Member] Future [Member]	Sep. 30, 2012 Current Assets [Member] Not Designated as Hedging Instrument [Member] Forward Contracts [Member]	Dec. 31, 2011 Current Assets [Member] Not Designated as Hedging Instrument [Member] Forward Contracts [Member]	Sep. 30, 2012 Current Liabilities [Member] Not Designated as Hedging Instrument [Member] Future [Member]	Dec. 31, 2011 Current Liabilities [Member] Not Designated as Hedging Instrument [Member] Future [Member]	Sep. 30, 2012 Current Liabilities [Member] Not Designated as Hedging Instrument [Member] Forward Contracts [Member]	Dec. 31, 2011 Current Liabilities [Member] Not Designated as Hedging Instrument [Member] Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Product usage, percentage	15.00%	4.00%
Derivative, Number of Instruments Held	2,700,000	60,000
Derivative Liability	$ 2,400,000
Derivative, Average Price Per Unit	6.40	2.78
Derivative Assets, Current			272,313	1,012,825	2,457,224	38,213
Derivative Liabilities, Current							$ (788,063)	$ (983,562)	$ (4,865)	$ (1,264,918)

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Long Term Notes Payable Maturities of Long Term Debt (Details) (USD $)	Sep. 30, 2012
Maturities of Long-term Debt [Abstract]
Long-term Debt, Repayments, 2013	$ 285,158
Long-term Debt, Repayments, 2014	209,210
Long-term Debt, Repayments, 2015	$ 21,798

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES
Net income	$ (61,981)	$ 12,535,542
Changes to net income (loss) affecting cash and cash equivalents
Depreciation and amortization	1,994,401	2,079,800
Equity in net income of investments	(93,697)	(189,976)
Gain on litigation settlement	0	(380,994)
Gain on sale of property and equipment	0	(9,300)
(Increase) decrease in
Receivables	406,582	(478,664)
Inventory	(653,166)	877,147
Prepaid expenses	52,537	49,757
Derivative financial instruments and due from broker	(3,678,033)	(565,799)
Accounts payable	(4,516,788)	(2,258,958)
Accrued and other liabilities	(262,641)	(203,104)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(6,812,786)	11,455,451
INVESTING ACTIVITIES
Litigation settlement	0	1,000,000
Purchase of property and equipment	(862,191)	(38,811)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(862,191)	961,189
FINANCING ACTIVITIES
Decrease in outstanding checks in excess of bank balance	0	(584,412)
Principal payments on short-term notes payable	0	(1,872,000)
Principal payments on long-term notes payable	(317,489)	(1,634,302)
Distributions paid to LACP members	(1,481,000)	(5,924,000)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(1,798,489)	(10,014,714)
NET (DECREASE) IN CASH	(9,473,466)	2,401,926
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	11,225,659	637,804
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,752,193	3,039,730
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest	53,031	261,627
Capital expenditures in accounts payable	$ 18,711	$ 0

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Long Term Notes Payable

9 Months Ended

Sep. 30, 2012

Long Term Note Payable [Abstract]

Long Term Notes Payable

LONG-TERM NOTES PAYABLE

Dakota Ethanol has a long-term note payable to FNBO (Term Note 5).

As part of the note payable agreement, Dakota Ethanol is subject to certain restrictive covenants establishing minimum reporting requirements, ratios, working capital and net worth requirements. The note is collateralized by the ethanol plant and equipment, its accounts receivable and inventory. We are in compliance with our financial covenants as of September 30, 2012.

Term Note 5 is a reducing revolving note with an availability of $5,000,000. Interest on the outstanding principal balance will accrue at 315 basis points above the 1 month LIBOR rate and is not subject to a floor. The rate was 3.40% at September 30, 2012. Dakota Ethanol may elect to borrow any principal amount repaid on Term Note 5 up to $5,000,000 subject to the terms of the agreement. Should Dakota Ethanol elect not to utilize this feature, the lender will assess an unused commitment fee of 0.25% on the unused portion of the note. Term Note 5 has a reducing feature through which the available amount of the note is reduced by $500,000 on the anniversary of the note starting May 1, 2013. The note matures on May 1, 2017. On September 30, 2012 and December 31, 2011, Dakota Ethanol had $0 outstanding and $5,000,000 available to be drawn on Term Note 5.

Dakota Ethanol issued a note payable related to the purchase of land adjacent to the plant site. The note was originally issued for $450,000. The note was paid in full on February 8, 2012. The note was payable in annual installments of $112,500 plus interest. Interest on outstanding principal balances accrued at a fixed rate of 7.0%. The note was collateralized by the land.

Dakota Ethanol entered into two loan agreements for alternative financing for our corn oil extraction equipment as we had agreed with FNBO; one loan with Rural Electric Economic Development, Inc (REED) and the other loan with First District Development Company (FDDC).

The note to REED, originally for $1,000,000, has a fixed interest rate of 4.7%. The note requires monthly installments of $18,734 and matures on May 25, 2014. The note is secured by the oil extraction equipment.

The note to FDDC, originally for $200,000, has a fixed interest rate of 5.5%. The note requires monthly installments of $3,820 and matures on May 22, 2014. The note is secured by the oil extraction equipment.

The balances of the notes payable are as follows:

	September 30, 2012			December 31, 2011*
Note payable to First National Bank, Omaha
Term Note 5	$	—		$	—
Note payable - Land	—			112,500
Note payable - REED	360,314			513,210
Note payable - FDDC	72,848			103,519
Note payable - Other	83,004			104,426
	516,166			833,655
Less current portion	(285,158		)	(387,489		)
	$	231,008		$	446,166

*Derived from audited financial statements

Minimum principal payments are estimated as follows:

Years Ending September 30,	Amount
2013	$	285,158
2014	209,210
2015	21,798

XML

Fair Value Measurements (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Obligations, Fair Value Disclosure	$ 611,577	$ 929,066
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Obligations, Fair Value Disclosure	612,650	930,139
Future [Member] | Fair Value, Measurements, Recurring [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	272,313	1,012,825
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(788,063)	(983,562)
Future [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	272,313	1,012,825
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(788,063)	(983,562)
Future [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	0	0
Future [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	0	0
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	2,457,224	38,213
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(4,865)	(1,264,918)
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	0	0
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	2,457,224	38,213
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	(4,865)	(1,264,918)
Forward Contracts [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Assets	0	0
Derivative Financial Instruments, Liabilities, Fair Value Disclosure	$ 0	$ 0

XML

Nature of Operations Nature of Operations (Details) (Ethanol [Member], Product [Member])	9 Months Ended
	Sep. 30, 2012 gal
Ethanol [Member] | Product [Member]
Product Information [Line Items]
Annual production capacity	40,000,000