UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended September 30, 2003

OR

o Transition report under Section 13 or 15(d) of the Exchange Act.

For the transition period from                to                .

Commission file number 333-99065

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC

(Exact name of small business issuer as specified in its charter)

Minnesota	41-1997390
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2448 – 540^th Street, Suite 1
P. O. Box 216
Granite Falls, Minnesota 56241-0216
(Address of principal executive offices)

(320) 564-3100
(Issuer’s telephone number)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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

State the number of shares outstanding for each of the issuer’s classes of common equity as of the latest practicable date: As of November 11, 2003, there were 1,417 units of Ownership outstanding.

Transitional Small Business Disclosure Format (Check one): o Yes   x No

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Plan of Operation
	Item 3: Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EX-10.2 Corn Storage and Delivery Agreement
EX-31.1 Certification by Chief Manager/Chairman
EX-31.2 Certification by Treasurer
EX-32 Certification by Chairman & Treasurer

CONTENTS

		Page
		No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements		2
Item 2.	Plan of Operation		13
Item 3.	Controls and Procedures		18
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		18
Item 2.	Changes in Securities		18
Item 3.	Defaults Upon Senior Securities		19
Item 4.	Submission of Matters to a Vote of Security Holders		19
Item 5.	Other Information		19
Item 6.	Exhibits and Reports on Form 8-K		19
SIGNATURES			20
CERTIFICATIONS

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

C O N T E N T S

		Page
Financial Statements
	Balance Sheets		3
	Statements of Operations		4
	Statements of Cash Flows		6
	Notes to Financial Statements		7

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GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC

(A Development Stage Company)

Balance Sheets

				September 30,			December 31,
				2003			2002
				(Unaudited)			(Audited)
			ASSETS
Current Assets
	Cash			$	2,601		$	251,987
	Prepaid expenses				6,035			1,005
			Total current assets		8,636			252,992
Equipment
	Office equipment				6,317			6,317
	Less accumulated depreciation				1,052			105
			Net equipment		5,265			6,212
Other Assets
	Deferred offering costs				177,794			134,978
			Total other assets		177,794			134,978
			Total Assets	$	191,695		$	394,182
LIABILITIES AND MEMBERS’ EQUITY (DEFICIT)
Current Liabilities
	Accounts payable			$	63,946		$	39,095
	Accrued interest				8,254			5,201
	Note payable-Granite Falls Bank				99,000			—
	Note payable-City of Granite Falls				47,800			—
		Total current liabilities			219,000			44,296
Long-Term Debt					—			47,800
Commitments and Contingencies
Members’ Equity (Deficit)
	Member contributions, net of costs related to capital contributions, 1,417 units outstanding at September 30, 2003 and December 31, 2002				628,641			628,641
	Deficit accumulated during development stage				(655,946	)		(326,555	)
			Total members’ equity (deficit)		(27,305	)		302,086
			Total Liabilities and Members’ Equity (Deficit)	$	191,695		$	394,182

Notes to Financial Statements are an integral part of this Statement.

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GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC

(A Development Stage Company)

Statements of Operations

									From Inception
			Quarter Ended			Quarter Ended			(December 29, 2000)
			September 30,			September 30,			to September 30,
			2003			2002			2003
			(Unaudited)			(Unaudited)			(Unaudited)
Revenues			$	—		$	—		$	—
Operating Expenses
	Project coordinator			12,513			17,512			135,613
	Surveying, site and permitting expense			10,020			6,700			112,573
	Professional and consulting fees			40,063			58,066			271,752
	General and administrative			35,835			3,928			131,619
		Total operating expenses		98,431			86,206			651,557
Operating Loss				(98,431	)		(86,206	)		(651,557	)
Other Income (Expense)
	Interest income			32			1,330			3,969
	Miscellaneous income			—			—			1,000
	Interest expense			(1,155	)		(1,175	)		(9,358	)
		Total other income (expense), net		(1,123	)		155			(4,389	)
Net Loss			$	(99,554	)	$	(86,051	)	$	(655,946	)
Net Loss Per Unit (1,417, 1,336 and 721 weighted
average units outstanding, respectively)			$	(70.26	)	$	(64.41	)	$	(909.77	)

Notes to Financial Statements are an integral part of this Statement.

4

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC

(A Development Stage Company)

Statements of Operations

			Nine Months Ended			Nine Months Ended
			September 30,			September 30,
			2003			2002
			(Unaudited)			(Unaudited)
Revenues			$	—		$	—
Operating Expenses
	Project coordinator			42,473			44,890
	Surveying, site and permitting expense			22,855			33,531
	Professional and consulting fees			148,845			94,312
	General and administrative			112,912			10,463
		Total operating expenses		327,085			183,196
Operating Loss				(327,085	)		(183,196	)
Other Income (Expense)
	Interest income			748			2,322
	Interest expense			(3,054	)		(4,102	)
		Total other income (expense), net		(2,306	)		(1,780	)
Net Loss			$	(329,391	)	$	(184,976	)
Net Loss Per Unit (1,417 and 763 weighted
average units outstanding, respectively)			$	(232.46	)	$	(242.43	)

Notes to Financial Statements are an integral part of this Statement.

5

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC

(A Development Stage Company)

Statements of Cash Flows

										From Inception
				Nine Months Ended			Nine Months Ended			(December 29, 2000)
				September 30,			September 30,			to September 30,
				2003			2002			2003
				(Unaudited)			(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
	Net loss			$	(329,391	)	$	(184,976	)	$	(655,946	)
	Adjustments to reconcile net loss to net cash from operations:
		Depreciation			947			—			1,052
		Changes in assets and liabilities
			Prepaid expenses		(5,030	)		(2,435	)		(6,035	)
			Accounts payable		29,282			(30,900	)		63,946
			Accrued interest		3,053			4,102			9,357
			Net cash used in operating activities		(301,139	)		(214,209	)		(587,626	)
Cash Flows from Investing Activities
		Capital expenditures			—			—			(6,317	)
			Net cash used in investing activities		—			—			(6,317	)
Cash Flows from Financing Activities
		Proceeds from short term notes payable			99,000			—			99,000
		Proceeds from long term notes payable			—			—			72,800
		Member contributions			—			638,500			638,500
		Payments for costs of raising capital			—			(35,962	)		(35,962	)
		Payments for deferred offering costs			(47,247	)		(82,650	)		(177,794	)
			Net cash provided by financing financing activities		51,753			519,888			596,544
Net (Decrease) Increase in Cash					(249,386	)		305,679			2,601
Cash – Beginning of Period					251,987			17,557			—
Cash – End of Period				$	2,601		$	323,236		$	2,601
Supplemental Disclosure of Noncash Investing and Financing Activities
		Deferred offering costs in accounts payable		$	—		$	9,131		$	—
		Conversion of note payable and accrued interest into member units		$	—		$	26,103		$	26,103

Notes to Financial Statements are an integral part of this Statement.

6

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
(A Development Stage Company)

Notes to Financial Statements

September 30, 2003

The statements included herein have been prepared by the company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the financial statements for the interim period, on a basis consistent with the annual audited financial statements. The adjustments made to these statements consists only of normal recurring adjustments. These financial statements should be read in conjunction with the financial statements and the summary of significant accounting polices and notes thereto included in the company’s Registration Statement on Form SB-2, as amended (SEC Registration No. 333-99065).

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company, which anticipates its plant location to be near Granite Falls, Minnesota, was organized to fund and construct a 40 million gallon ethanol plant with distribution to upper Midwest states. In addition, the Company intends to produce and sell distillers dried grains as a co-product of ethanol production. Construction is anticipated to begin in 2004. As of September 30, 2003, the Company is in the development stage with its efforts being principally devoted to organizational, project feasibility, equity raising and permitting activities.

Fiscal Reporting Period

The Company has adopted a fiscal year ending December 31 for reporting financial operations.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Significant estimates include the deferral of expenditures for offering costs which are dependent upon successful financing and project development, as discussed below. It is at least reasonably possible that these estimates may change in the near term.

7

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
(A Development Stage Company)

Notes to Financial Statements

September 30, 2003

Cash

The Company maintains its accounts at one financial institution which is a member of the Company. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation.

Deferred Offering Costs

The Company defers the costs incurred to raise equity financing until that financing occurs. At such time that the issuance of new equity units occurs, these costs will be netted against the proceeds received; or if the financing does not occur, they will be expensed.

Equipment

Equipment is stated at the lower of cost or estimated fair value. Depreciation is provided over an estimated useful life of five years by use of the straight line depreciation method. Depreciation expense for the nine months ending 2003 and 2002 was $947 and $0, respectively. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.

Fair Value of Financial Instruments

The fair value of the Company’s cash and note payable to Granite Falls Bank approximates its carrying value. It is not currently practicable to estimate the fair value of the notes payable to the City of Granite Falls since these agreements contain unique terms, conditions, and restrictions, which were negotiated at arm’s length with the City of Granite Falls, as discussed in Note 3, there is no readily determinable similar instrument on which to base an estimate of fair value.

Grants

The Company will recognize grant income as other income for reimbursement of expenses incurred upon complying with the conditions of the grant. For reimbursements of capital expenditures, the grants are recognized as a reduction of the basis of the asset upon complying with the conditions of the grant.

8

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
(A Development Stage Company)

Notes to Financial Statements

September 30, 2003

Income Taxes

Granite Falls Community Ethanol Plant, LLC is treated as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, its earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.

Reclassification

Certain amounts in the Statement of Operations for 2002 and Inception to date have been reclassified to conform to 2003 classifications. These reclassifications had no effect on net loss as previously reported.

2.     DEVELOPMENT STAGE ENTERPRISE

The Company was formed on December 29, 2000 to have an indefinite life. The Company was initially capitalized by proceeds from notes payable to the City of Granite Falls, Minnesota and later by contributions from its founding members and additional seed capital investors. The seven founders contributed an aggregate of $55,000 for 700 units and subsequently the Board of Governors approved a 1:2 reverse membership unit split for the founding members. In addition, six of the seven founding members agreed to return to the Company one-half of each of their remaining units, thereby reducing the number of units held by each such founding member to twenty-five. Sixty-five members, including six of the founders or their affiliates, contributed an additional aggregate of $583,500 for 1,167 units that were issued between March and July 2002 pursuant to a private placement memorandum. On July 31, 2002, the Company discontinued selling units under the private placement memorandum. In August 2002, the Company converted a $25,000 note payable plus accrued interest to the City of Granite Falls to 50 membership units. Net Loss Per Unit retroactively reflects the two 1:2 reverse membership unit splits as well as the return of units to the Company by the founders.

Income and losses are allocated to all members based upon their respective percentage units held. See Note 4 for further discussion of members’ equity.

9

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
(A Development Stage Company)

Notes to Financial Statements

September 30, 2003

3.     NOTES PAYABLE

At September 30, 2003 and December 31, 2002, the Company has $47,800 of notes payable with the City of Granite Falls, Minnesota due on January 1, 2003, subsequently extended to January 1, 2004, including interest at 7%. All notes are secured by terms and conditions of the Development Agreement dated February 2, 2001, and subsequently amended, between the City and the Company. The repayment of up to the entire amount may be forgiven subject to the covenants set forth in the Development Agreement.

Under the terms of the Development Agreement, partial forgiveness of the notes payable would have occurred if construction or commencement of construction or the letting of a contract for the construction of the project occurs on or before January 1, 2003. The notes payable can be forgiven at a rate of $5,000 for each job created, up to ten jobs, within six months of the start-up of operations of the facility, provided each job pays a gross annual wage or salary of not less than $24,500. In addition, upon the completion of financing and organizational startup, $25,000 of the notes payable may be converted to equity with a market value of $25,000 or more. In August 2002, the City Council of Granite Falls approved the conversion of a $25,000 note due from the Company plus accrued interest into fifty membership units. The notes payable are completely forgiven, in their entirety, if the project is abandoned.

As of September 30, 2003, the Company has a line of credit from a bank expiring January 15, 2004 at a maximum of $200,000 with an interest rate of 5.75% and secured by a separate security agreement and guaranteed by two members of the Company. The outstanding balance as of September 30, 2003, was $99,000.

4.     MEMBERS’ EQUITY

As specified in the Company’s operating agreement, the Company initially will have one class of membership units. No member shall transfer all or any portion of an interest without the prior written consent of the Board of Governors. The Company has prepared an SB-2 Registration Statement for a minimum of 18,000 units and a maximum of 30,000 units which will be available for sale at $1,000 per unit with a minimum investment of $5,000. During February 2003, the Company’s Registration Statement was declared effective. Should the Company not raise the minimum of $18,000,000 through the offering by June 30, 2003, the offering period may be extended on two occasions of up to 90 days each. As of September 30, 2003, the Company has not met the minimum equity and has elected to extend their offering to December 27, 2003. Should the Company not raise the minimum $18,000,000 through the extension period(s), the capital raised through the offering will be returned to the respective investors. As of September 30, 2003, the Company has received subscriptions for approximately 6,160 membership units or an aggregate of $6,190,000 subscription payments.

10

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
(A Development Stage Company)

Notes to Financial Statements

September 30, 2003

5.     COMMITMENTS AND CONTINGENCIES

The Company has signed a letter of intent with a general contractor, who is also a member, for various design and construction services. The letter of intent stipulates that the engineer and general contractor will be engaged to construct a plant for approximately $43 million. The Company intends to begin construction in 2004 and anticipates total project costs to approximate $55 million.

In addition to the equity the Company intends to raise by December 27, 2003 of $18 to $30 million, the Company will need to obtain debt financing of $25 to $37 million, depending upon the amount of equity raised, to fund the cost of the project. The Company needs to obtain a debt financing commitment by January 27, 2003. The Company does not currently have a written commitment to obtain the additional debt financing. The Company had originally intended to raise the minimum equity by June 30, 2003, but has elected to exercise extensions to December 27, 2003.

In February 2002, the Company executed an energy management and engineering service agreement with an organization that will provide economic comparisons and engineering cost estimates. The total initial commitment for this agreement is $20,000 plus a maximum of $2,500 for travel expense. As of September 30, 2003, $37,750 of these costs are included in accounts payable. The agreement expired in October 2002 and was extended for seven months. In May 2003, the Company terminated this agreement.

In fiscal 2001, the Company made a nominal payment to obtain an option to purchase approximately 31.72 acres of land for a price of $168,000. This option will expire on December 31, 2003. The Company is considering this parcel of land as a viable site for their ethanol plant.

In March 2003, the Company made a nominal payment to obtain an option agreement to purchase approximately 25.3 acres of land for approximately $168,000. This agreement gives the Company until December 31, 2004 to exercise this option.

In March 2001, the Company executed an agreement, as subsequently amended, with a member to serve as project coordinator. The agreement pays a maximum of $5,000 per month, renews every thirty days, and may be terminated by the Company at any time with no less than 10 days written notice.

11

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
(A Development Stage Company)

Notes to Financial Statements

September 30, 2003

In February 2003, the Company entered an agreement with unrelated party for the Company’s project consultant. The agreement pays $1,250 per week, with a one-time bonus of $40,000 ($20,000 minimum in Company stock), if, after the Company has raised the minimum amount of equity required to close on its public offering, and as required by a prospective lender to secure a loan adequate to finance the Company’s project. As of September 30, 2003, $1,747 of these costs are included in accounts payable.

In April 2003, the Company entered an agreement with David E. Thompson, a principal of Flolo-Thompson, Inc. (FTI), to primarily focus on transportation, with an emphasis on rail rates, competing modes, transloading alternatives, potential rail-water outlets and new types of rail equipment. The consulting fee will be $75 per hour plus any out-of-pocket expenses, with fees prior to start up at a maximum of $10,000, of which $5,000 will be at risk. As of September 30, 2003, $292 of these costs are included in accounts payable.

6.     GOING CONCERN

As shown in the accompanying financial statements, the Company incurred a net loss of $655,946 from inception to September 30, 2003. The Company has spent approximately $135,000 for engineering, permitting, and water resource exploration which have been expensed. The Company has incurred a shortage of operating cash. The Company had not raised the minimum offering by June 30, 2003 and extended its offering a final time through December 27, 2003. These factors create an uncertainty about the Company’s ability to continue as a going concern. Management of the Company has obtained a line of credit and is seeking additional grants, although they have not yet secured any commitments for such grants. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

7.     SUBSEQUENT EVENT

In October 2003, the Company entered into a corn storage and grain handling agreement with a member. The parties agree that their obligations shall be subject to and conditioned upon final approval by the lenders and final financial close of the public offering. In addition, the member does agree that it shall execute a subscription agreement in connection with the above referenced public offering and that the minimum subscribed amount and contribution with respect to the project represented thereby shall be no less than $500,000.

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Item 2. Plan of Operation.

     This report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions 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 risks described in our Registration Statement on Form SB-2, as amended (SEC Registration No. 333-99065) and appearing elsewhere in this report. We are not under any duty to update the forward-looking statements contained in this report. We cannot guarantee future results, 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

     We are a start-up limited liability company. We plan to build an ethanol processing plant that will produce ethanol and dry distillers grains utilizing corn as the feed stock. We plan to locate the plant near Granite Falls, Minnesota on two parcel 56 acre site we have options to purchase. We expect our plant to consume approximately 15 million bushels of corn annually, and produce approximately 40 million gallons of fuel-grade ethanol and 130,000 tons of distillers grains for livestock and poultry feed annually.

     We filed a Registration Statement on Form SB-2 (SEC Registration No. 333-99065), as amended (the “Registration Statement”), with the Securities and Exchange Commission, which became effective on February 10, 2003, for an initial public offering of an aggregate minimum of 18,000 and an aggregate maximum of 30,000 Membership Units priced at $1,000 per Unit (the “Offering”). We have until December 27, 2003 to complete this Offering. See “Liquidity and Capital Resources.”

     We expect that the project will cost a total of approximately $55,000,000. We have raised $638,500 in seed capital and plan to raise a minimum of $18,000,000 and a maximum of $30,000,000 in equity pursuant to the Offering and secure the balance through debt financing. We will require a significant amount of debt financing to complete the project. The amount of debt financing required depends on the amount of equity we raise in the Offering. We will close on the entire Offering when we raise the minimum amount offered and secure a commitment from a lender for our debt financing. Although we are reviewing proposals from multiple lenders, we currently have no agreement with any lender for the debt financing that we need. Assuming we raise the minimum amount of equity through the Offering, we have until January 27, 2003 to secure our debt financing. If we do not secure the debt financing that we need, we will not be able to construct our proposed ethanol plant and may have to liquidate our assets and abandon our business. See “Liquidity and Capital Resources.”

     We expect that it will take 14-16 months from the date we close the Offering and secure our debt financing to construct the ethanol plant subject to additional delays due to permitting and adverse weather conditions. We have no agreement with any party to sell any of our expected production. We plan to pay commissions or fees to distributors to market and sell our products. We intend to hire staff only for direct operations of our ethanol business.

13

     We plan to use the calendar year as our fiscal year.

Plan of Operation to Close of the Offering

     We are not using any underwriter or selling agents to sell the Units being offered pursuant to our Public Offering. Our officers and Board of Managers are personally handling the sales efforts and the necessary investor meetings and follow up will require the bulk of our attention to the close of the Offering.

     In addition to our sales efforts, we are in the process of finalizing various air and water permitting requirements with the Minnesota Pollution Control Agency and with the Minnesota Department of Natural Resources, respectively, which we anticipate obtaining.

     We have retained a consultant to negotiate our rail contract and he is working with both the TC&W railroad and the Burlington Northern Sante Fe railroad.

     The natural gas commitments to our site are being negotiated both as to cost and a final provider contract. We are also working to finalize agreements with our electrical service provider.

     We have entered into an option agreement to acquire an additional 25 acres of land adjoining our original 31 acre plant site for which we also have an option. This additional land will allow us to better locate the actual plant on the site and provide land that we intend to lease to Farmers Cooperative Elevator Company. We have obtained from the City of Granite Falls an orderly annexation agreement to rezone our plant on these two sites as one parcel contingent on completing the offering.

     Farmers Cooperative Elevator, a member of the Company, agreed to build a new elevator on our plant site. In October 2003, we entered into a Corn Storage and Delivery Agreement with Farmers Cooperative Elevator for the land lease and corn procurement which is subject to lender approval and the closing of the Offering.

     We also are meeting with potential marketers for our ethanol and distillers dried grains. We will seek to have arrangements completed for marketing well before the plant is completed.

     Finally, we continue to seek and negotiate with potential lenders for our long-term debt financing. Currently, we are reviewing proposals from various lenders; however, no decision has been made.

Plan of Operation to Start-Up of Ethanol Plant

     If we close on the Offering and the debt financing that we need, we plan to spend the following 14 – 16 months designing, developing and constructing the ethanol plant. We believe that the proceeds of the Offering and the necessary debt financing will provide sufficient cash on hand to cover development costs, including, but not limited to, installation of utilities, construction, equipment acquisition, and interest expenses. In addition we expect to have sufficient cash on hand to cover our operating and administrative costs, such as raw materials, personnel, general and administrative expenses and legal and accounting fees for the first few weeks of operations until we begin collecting payment for the ethanol and distillers grains we produce and sell.

     The following is an estimate of our sources and uses of funds until the ethanol plant is built and we begin operations. The information set forth below is only an estimate and actual sources and uses of

14

funds could be much higher due to a variety of factors, including those described in the Registration Statement and elsewhere in this report.

SOURCES OF FUNDS:

	MINIMUM			MAXIMUM
Equity		18,000,000			30,000,000
Less Offering Expenses		(225,000	)		(225,000	)
Seed Capital		638,500			638,500
Debt		37,000,000			25,000,000
Total Sources of Funds		55,413,500			55,413,500

USES OF FUNDS:

Plant Construction (fixed fee)	43,050,000
Land and Site Development (1)	2,500,000
Administrative Building and Furnishings (2)	200,000
Railroad (3)	750,000
Insurance Costs	500,000
Construction Contingency	1,000,000
Capitalized Interest (4)	800,000
Financing Costs (5)	750,000
Organizational Costs	425,000
Start-Up Costs (6)	4,800,000
Total Uses of Funds	54,775,000

(1)  We estimate that total land and site development costs will approximate $2,500,000 to meet the contractor’s requirements. These costs include: Purchase of 31 acre land parcel $168,000, obtaining all legal authority to use the site for its intended purpose, installation of natural gas, electrical and water supply infrastructure.

(2)  We anticipate expending approximately $200,000 to build a 2,600 square foot light office administration building on the site and install our computer and telephone systems, furniture and other office equipment.

(3)  We have budgeted $750,000 to design and construct a 3,400 foot rail spur from our plant site to the TC&W main rail line and to purchase and install the associated switching gear.

(4)  Capitalized interest consists of the interest we anticipate accruing during the development and construction period of our project. We plan to borrow between $25 and $37 million, depending upon the amount we raise in the offering. Our actual capitalized interest will vary on the amount we borrow and the applicable interest rate.

(5)  Financing costs consist of all costs associated with the procurement of our $25 to $37 million of project debt financing. These costs include bank origination and legal fees, loan processing fees, appraisal and title insurance charges, recording and deed registration tax, our legal and accounting fees associated with the financing and project coordinator fees, if any, associated with securing the financing. Our actual financing costs will vary on the amount we borrow.

(6)  We project $4,800,000 of start-up costs. These represent costs of beginning production after the plant construction is finished but before we begin generating income. Start-up costs include $600,000 of pre-production period expenses, $1,500,000 of initial inventories of corn and other ingredients and chemicals, our initial $500,000 of work-in-process, $950,000 of ethanol and dry distillers grain inventories, $500,000 of spare parts for our process equipment, and $750,000 of working capital.

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     We expect to spend the majority of our funds, approximately $46,000,000, on site acquisition, site preparation, and construction of the ethanol plant, infrastructure and equipment. These costs include leveling and grading the site, general site work to prepare for construction of the ethanol plant, preparing and pouring foundations, and material and labor to construct the plant and ancillary facilities. We will also be purchasing and installing ethanol production equipment, such as pumps, grinders, processing equipment, storage tanks and conveyors. Fagen, Inc., our contractor, will handle construction, equipment purchases and installation, which we will pay for by making monthly progress payments based on the work completed and invoiced to us by Fagen.

Administration

     We currently employ a project coordinator and a project consultant. We do not have a full-time office staff and we do not expect to retain one until the ethanol plant is near completion. Until then, we are dependent on our part-time officers and the board of managers to maintain our books and records. These individuals are responsible for complying with the rules and regulations promulgated under the Securities and Exchange Act of 1934 concerning the maintenance of accurate books and records, and the timely submission of periodic reports and other requirements with the Securities Exchange Commission.

Operating Expenses

     When the ethanol plant nears completion, we expect to incur various operating expenses, such as supplies, utilities and salaries for administration and production personnel. Along with operating expenses, we anticipate that we will have significant expenses relating to financing and interest. We have allocated funds in our capital structure for these expenses, but cannot assure you that the funds allocated will be sufficient to cover these expenses. We may need additional funding to cover these costs if sufficient funds are not available or if costs are higher than expected.

Employees

     Upon completion of the ethanol plant, we expect to have approximately 30 employees, including 20 in ethanol production operations, and ten in general management and administration. We will not maintain an internal sales organization. We anticipate that we will need the following personnel to operate and manage our ethanol plant:

Position		No. of Employees
General Manager			1
Plant Manager			1
Controller			1
Lab Manager			1
Lab Technician			1
Secretary/Clerical			3
Shift Supervisors			4
Maintenance Supervisor			1
Maintenance Craftsmen			5
Plant Operators			12
	Total		30

     The position titles, job responsibilities and numbers allocated to each position may differ when we begin to employ individuals for each position.

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     In October 2003, we engaged the Farmers Cooperative Elevator Company, a member of the Company, to serve as our commodities manager to manage our corn supply and hedging positions.

Liquidity and Capital Resources

     As of September 30, 2003, we had cash and cash equivalents of $2,601 and total assets of $191,695. We raised $638,500 in seed capital which we have used to fund our organization and operation to date. As of September 30, 2003, we had current liabilities of $219,000, which consists primarily of accounts payable, a Note to the City of Granite Falls in the amount of $47,800 due January 1, 2004 and a note payable to Granite Falls Bank for $99,000 due on January 15, 2004. Total members’ equity as of September 30, 2003 was $(27,305). Since inception, we have generated no revenue from operations, and cash flows provided by financing activities through September 30, 2003 consists primarily of member contributions.

     As of September 30, 2003, our current liabilities exceed our current assets and our total liabilities exceed our total assets. We have continued to incur losses since that time. In order to cover our cash shortfall we are seeking to arrange loans and grants to bridge our liquidity to closing of the Offering. We have not as yet secured any commitments for such financing. We have available $101,000 under our line of credit with Granite Falls Bank.

     We are seeking to raise a minimum of $18,000,000 and a maximum of $30,000,000 in the Offering. We believe the project will cost a total of approximately $55,000,000. We plan to finance the project with seed capital, proceeds from the Offering, any grants we are able to obtain and debt financing. Other than forgivable loans from the City of Granite Falls totaling $47,800, we have no commitment for any other grants. We do not have any commitments for the debt financing that we need. Completion of the proposed ethanol plant depends on our ability to satisfy all conditions to breaking escrow and close on the entire Offering.

     We expect that our debt financing will be in the form of a construction loan that will convert to a permanent loan when we begin operations. We also expect that the loan will be secured by all of our real property and substantially all of our other assets, including receivables and inventories. In addition to repaying the principal, we plan to pay interest at market rates for loans to start-up ethanol projects, plus annual fees for maintenance and observation of the loan by the lender. We intend to capitalize all of our interest until we commence start-up operation, which means that we will not make any payment on the loan until we construct the ethanol plant and begin producing ethanol. We expect that our debt financing will consist of a construction loan with a term of 16 months which will then convert to a permanent loan when we begin operations. We expect that the permanent loan will be for a term of 120 months. We expect to repay the permanent loan through fixed monthly payments of principal and interest beginning after we commence operations. If the project suffers delays, we may not be able to timely repay the loan. If interest rates increase, we will have higher interest payments, which could adversely affect our business.

     The amount of debt financing that we need depends on the amount of equity we raise in the Offering and whether we receive any of the grants we intend to pursue. We intend to seek debt financing from lenders who have provided debt financing to other ethanol projects in the past or who have expressed an interest in providing debt financing to ethanol projects. We plan to locate these lenders by contacting lenders who currently provide debt financing to the ethanol industry. These lenders include farm credit system financial institutions with Title I and Title II authority under the Farm Credit Act, other state or federally chartered financial institutions, and insurance companies.

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Item 3: Controls and Procedures.

     As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and the principal financial officer, of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the principal executive officer and the principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

     There was no change in the Company’s internal controls over financial reporting subsequent to the date of such evaluation that significantly affected, or could significantly affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

     None.

Item 2. Changes in Securities.

     The Securities and Exchange Commission originally declared our Registration Statement on Form SB-2 (SEC Registration No. 333-99065), as amended (the “Registration Statement”), effective on February 10, 2003. We commenced our initial public offering of our membership units on February 10, 2003. We have no underwriter and our officers and governors are selling the membership units on our behalf directly to investors. We have not obtained and do not plan to use the services of any placement agent or broker-dealer for this offering. We do not pay our officers or managers any compensation for services related to the offer or sale of the units.

     We registered a maximum of 30,000 membership units with an aggregate gross offering price of $30,000,000, or $1,000.00 per unit. Each membership unit represents a pro rata ownership interest in our capital, profits, losses and distributions. Investors must purchase a minimum of five membership units ($5,000 minimum investment). We require an aggregate minimum purchase of $18,000,000 by all investors (including purchases by our existing governors and members or their affiliates) before we will accept any subscriptions. When an investor subscribes, that investor must remit 10% of the purchase price for the membership units the investor is purchasing. The investor will sign a promissory note agreeing to pay the 90% balance within 20 days after we send the investor a written notice to pay. We will send that notice after we receive written subscriptions totaling a minimum of $18,000,000. We have extended the closing date for our offering from September 30, 2003 to December 27, 2003, and the date by which our debt financing commitment must be secured to January 27, 2003.

     We are holding all funds received from investors in an interest-bearing escrow account at Granite Falls Bank, our escrow agent, until we receive the minimum subscription amount of $18,000,000 and secure a written commitment from one or more lenders for debt financing to construct and start-up the plant. The board of governors, in its discretion, may extend the offering period (and the time we hold investor funds in our escrow account) beyond June 30, 2003 on one more occasion of up to 90 days each upon written notice to our escrow agent. In September 2003, we extended the offering for a final time until December 27, 2003.

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     As of September 30, 2003 and November 11, 2003, we received subscriptions for approximately 6,160 and 6,671 membership units, respectively, or an aggregate of $6,160,000 and $6,671,000 of subscription payments, respectively. We have not yet met the conditions to breaking escrow and therefore have not completed the sale of any of the membership units subscribed. We will not break escrow and complete the sale of any of the units subscribed until we raise at least the minimum amount offered.

     From February 10, 2003 (the effective date of the Registration Statement) to September 30, 2003, total expenses incurred related to the Offering were approximately $290,175, of which $87,591 was incurred for the quarter ended September 30, 2003. None of these payments were direct or indirect payments to our managers, officers or their associates, persons owning 10% or more of any class of our equity securities or our affiliates. From February 10, 2003 to September 30, 2003, we did not receive or use any net offering proceeds.

Item 3. Defaults Upon Senior Securities.

     None.

Item 4. Submission of Matters to a Vote of Security Holders.

     None.

Item 5. Other Information.

     None.

Item 6. Exhibits and Reports on Form 8-K.

     (a)  The following exhibits are included herein:

3.2	Third Amended and Restated Operating and Member Control Agreement (Incorporated hereby by reference to Appendix A to the Company’s Form 424(B)(3) filed on February 12, 2003 (SEC Registration No. 333-99065)
4.1	Escrow Agreement, as amended (Incorporated herein by reference to Exhibit 4.2 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form SB-2 filed on February 7, 2003 (SEC Registration No. 333-99065)
4.2	Letter to the Escrow Agent notifying them of intent of the Company to extend offering 90 days from June 30, 2003 (Incorporated herein by reference to Exhibit 4.2 of the Company’s Form 10-QSB for the period ended June 30, 2003)
10.1	Form of Subscription Application and Agreement (Incorporated hereby by reference to Appendix B to the Company’s Form 424(B)(3) filed on February 12, 2003 (SEC Registration No. 333-99065)
10.2	Corn Storage and Delivery Agreement and Pre-Closing Memorandum dated October 6, 2003 between the Company and Farmers Cooperative Elevator Company*
31.1	Certification by the Chief Manager/Chairman of the Board pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification by the Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32	Certification by the Chief Manager/Chairman of the Board and the Treasurer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this Exhibit is “furnished” pursuant to SEC rules, but is deemed not “filed”)*

     * Filed herewith

     (b)  Reports on Form 8-K:

          None.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GRANITE FALL COMMUNITY ETHANOL PLANT, LLC
Date: November 13, 2003	/s/ Paul Enstad
	Paul Enstad
	Chief Manager and Chairman of the Board
	(Principal Executive Officer)
Date: November 13, 2003	/s/ Julie Oftedahl-Volstad
	Julie Oftedahl-Volstad
	Treasurer
	(Principal Financial and Accounting Officer)

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