10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number: 000-51764

LINCOLNWAY ENERGY, LLC

(Exact name of registrant as specified in its charter) 

Iowa	20-1118105
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

59511 W. Lincoln Highway, Nevada, Iowa	50201
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (515) 232-1010

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

Securities registered pursuant to Section 12(g) of the Act:  Limited Liability Company Units

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   ¨      No        þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.          Yes    ¨      No        þ

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.               Yes     þ     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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      þ      No          ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.           þ

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	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	¨

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

The aggregate market value of the units held by non-affiliates of the registrant was $49,806,736 as of March 31, 2012. The units are not listed on an exchange or otherwise publicly traded.  The value of the units for this purpose has been based upon the $1,258 book value per-unit as of March 31, 2012.  In determining this value, the registrant has assumed that all of its directors and its president and its chief financial officer are affiliates, but this assumption shall not apply to or be conclusive for any other purpose.

The number of units outstanding as of November 30, 2012 was 42,049.

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission with respect to the 2012 annual meeting of the members of the registrant are incorporated by reference into Item 11 of Part III of this Form 10-K.

LINCOLNWAY ENERGY, LLC

FORM 10-K

For the Fiscal Year Ended September 30, 2012

INDEX

Part I.
	Item 1.	Business.	1
	Item 1A.	Risk Factors.	10
	Item 1B.	Unresolved Staff Comments.	22
	Item 2.	Properties.	23
	Item 3.	Legal Proceedings.	24
Part II.
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	25
	Item 6.	Selected Financial Data.	29
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	29
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	41
	Item 8.	Financial Statements and Supplementary Data.	44
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	61
	Item 9A.	Controls and Procedures.	61
	Item 9B.	Other Information.	61
Part III.
	Item 10.	Directors, Executive Officers and Corporate Governance.	62
	Item 11.	Executive Compensation.	66
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	66
	Item 13.	Certain Relationships and Related Transactions, and Director Independence.	67
	Item 14.	Principal Accounting Fees and Services.	67
Part IV.
	Item 15.	Exhibits and Financial Statement Schedules.	68
SIGNATURES

Amendment to Distiller's Grains Marketing Agreement Between Lincolnway Energy and Hawkeye Gold, LLC	E-1
Master Loan Agreement and Amendment Among Farm Credit Services of America, FLC; Farm Credit Services of America, PCA; and Lincolnway Energy, LLC	E-3
Revolving Term Loan Supplement and Amendment Between Farm Credit Services of America, FLCA and Lincolnway Energy, LLC	E-16
Monitored Revolving Credit Supplement and Amendment Between Farm Credit Services of America, PCA and Lincolnway Energy, LLC	E-25
Certification of Chairman	E-35
Certification of Chief Financial Officer	E-36
Section 1350 Chairman	E-37
Section 1350 Certification of Chief Financial Officer	E-38

CAUTIONARY STATEMENT ON FORWARD LOOKING STATEMENTS

AND INDUSTRY AND MARKET DATA

Various discussions and statements in this annual report are or contain forward looking statements that express Lincolnway Energy's current beliefs, forecasts, projections and predictions about future events.  All statements other than statements of historical fact are forward looking statements, and include statements with respect to financial results and condition; anticipated trends in business, revenues, net income, net profits or net losses; projections concerning operations, capital needs and cash flow; investment, business, growth, expansion, acquisition and divestiture opportunities and strategies; management's plans or intentions for the future; competitive position or circumstances; and other forecasts, projections, predictions and statements of expectation.  Words such as "expects," "anticipates," "estimates," "plans," "may," "will," "contemplates," "forecasts," "strategy," "future," "potential," "predicts," "projects," "prospects," "possible," "continue," "hopes," "intends," "believes," "seeks," "should," "could," "thinks," "objectives" and other similar expressions or variations of those words or those types of words help identify forward looking statements.

Forward looking statements involve and are subject to various material risks, uncertainties and assumptions.  Forward looking statements are necessarily subjective and are made based on numerous and varied estimates, projections, views, beliefs, strategies and assumptions made or existing at the time of such statements and are not guarantees of future results or performance.  Forecasts and projections are also in all events likely to be inaccurate, at least to some degree, and especially over long periods of time.  Forecasts and projections are also currently difficult to make with any degree of reliability or certainty given the difficult and uncertain political, financial, market, economic and other circumstances and uncertainties in existence at the time of the preparation of this annual report, both generally and with respect to the ethanol industry, and both in the United States and internationally.  Lincolnway Energy disclaims any obligation to update or revise any forward looking statements based on the occurrence of future events, the receipt of new information, or otherwise.  Lincolnway Energy cannot guarantee Lincolnway Energy's future results, performance or business conditions, and strong or undue reliance must not be placed on any forward looking statements.

Actual future performance, outcomes and results may differ materially from those suggested by or expressed in forward looking statements as a result of numerous and varied factors, risks and uncertainties, some that are known and some that are not, and many of which are beyond the control of Lincolnway Energy and Lincolnway Energy's management.  It is not possible to predict or identify all of those factors, risks and uncertainties, but they include inaccurate assumptions or predictions by management, the accuracy and completeness of the information upon which part of Lincolnway Energy's business strategy is based and all of the various factors, risks and uncertainties discussed in this annual report, and in particular in Items 1, 1A, 7 and 7A of this annual report.

Lincolnway Energy may have obtained industry, market, competitive position and other data used in this annual report or in Lincolnway Energy's general business plan from Lincolnway Energy's own research or internal surveys, studies conducted by other persons and/or trade or industry associations or general publications and other publicly available information.  Lincolnway Energy attempts to utilize third party sources of information that Lincolnway Energy believes to be materially complete, accurate, balanced and reliable, but there is no assurance of the accuracy, completeness or reliability of any third party information.  For example, a trade or industry association for the ethanol industry may present information in a manner that is more favorable to the ethanol industry than would be presented by an independent source.  Industry publications and surveys and other publicly available information also generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of any information.

i

PART I

Item 1.    Business.

General Overview

Lincolnway Energy, LLC is an Iowa limited liability company that operates a dry mill, coal fired ethanol plant located in Nevada, Iowa.  Lincolnway Energy has been processing corn into fuel grade ethanol and distiller's grains at the ethanol plant since May 2006. 

The ethanol plant has a nameplate production capacity of 50,000,000 gallons of ethanol per year, which, at that capacity, would also generate approximately 136,000 tons of distiller's grains per year. Lincolnway Energy anticipates, however, being able to operate the plant at anywhere from 9% to 19% above the nameplate production capacity. Lincolnway Energy produced approximately11% over nameplate for the fiscal year ended September 30, 2012.

Lincolnway Energy extracts corn oil from the syrup which is generated in the production of ethanol.  Lincolnway Energy estimates that it will produce approximately 4,700 tons of corn oil per year at the plant.

EPCO Carbon Dioxide Products, Inc. has a plant on Lincolnway Energy's site that collects the carbon dioxide that is produced as part of the ethanol production process and converts that raw carbon dioxide into liquid carbon dioxide.  EPCO also markets and sells the liquid carbon dioxide.  Lincolnway Energy estimates that it will produce approximately 88,000 tons of carbon dioxide per year. 

Lincolnway Energy does not anticipate that sales of corn oil and carbon dioxide will be material sources of revenue for Lincolnway Energy, but Lincolnway Energy was able to implement the processes to collect corn oil and carbon dioxide on an economical basis and Lincolnway Energy does not have significant operating or other costs related to those processes.

DuPont Danisco Cellulosic Ethanol, LLC ("DDCE") purchased approximately 59.05 acres of real estate from Lincolnway Energy in October, 2011. The real estate is located to the southwest of the real estate on which Lincolnway Energy's ethanol plant is located. DDCE intends to build a cellulosic or advanced biofuels plant on the real estate.

Lincolnway Energy and DDCE also entered into a Load Out Services Agreement. The Load Out Services Agreement provides, in general, that DDCE will construct an aboveground pipeline from DDCE's plant to a holding tank on Lincolnway Energy's property, and that Lincolnway Energy will load out DDCE's product at Lincolnway Energy's rail or truck facilities. The Load Out Services Agreement sets forth the various fees and other amounts that DDCE will pay to Lincolnway Energy for those services, as well as allocating various costs and expenses between Lincolnway Energy and DDCE. The Load Out Services Agreement provides that if it is terminated, then Lincolnway Energy will grant DDCE an easement for the purpose of DDCE constructing its own rail tracks, and that Lincolnway Energy and DDCE will also at that time enter into a track usage agreement that will address how Lincolnway Energy and DDCE will jointly use certain tracks of Lincolnway Energy and other related matters.

Lincolnway Energy does not anticipate that the revenues under the Load Out Services Agreement will be a material source of revenue for Lincolnway Energy, but Lincolnway Energy believes that it will be able to provide the services required under the Load Out Services Agreement without materially increasing its operating or other costs.

Financial Information

Financial statements for Lincolnway Energy are included in Item 8 of this annual report.  The financial statements include information regarding Lincolnway Energy's revenues, profits or losses and total assets.  Item 6 of this annual report includes summary selected financial data.

Lincolnway Energy did not derive any revenue during the fiscal year ended September 30, 2012 from any customers located in any foreign country, and Lincolnway Energy did not have any assets located in a foreign country during that fiscal year.

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Principal Products and Their Markets

Lincolnway Energy's principal products are fuel grade ethanol and distiller's grains.

Ethanol

Lincolnway Energy produces fuel grade ethanol from corn.  The ethanol can be used as a blend component/fuel additive in gasoline.  Ethanol increases the octane rating of gasoline and reduces vehicle emissions, primarily carbon monoxide.  Although one of the most important federal support programs for ethanol expired on December 31, 2011, the use of ethanol is still supported by some governmental incentives and programs.  The loss of one or more of those remaining incentives or programs could be highly detrimental to the ethanol industry.

All of Lincolnway Energy's ethanol production is sold to Green Plains Trade Group LLC.  Under the agreement, Green Plains Trade Group LLC has the exclusive right to market all of the ethanol which is produced by Lincolnway Energy, except that Lincolnway Energy may market some of its ethanol in certain limited circumstances, such as ethanol which is the subject of any purchase order which was submitted by Green Plains Trade Group LLC but was rejected by Lincolnway Energy.  Lincolnway Energy may reject any purchase orders submitted by Green Plains Trade Group LLC, in Lincolnway Energy's sole discretion.  The purchase price payable to Lincolnway Energy under the agreement is Green Plains Trade Group LLC's contract selling price for the ethanol in question, less various costs and a fee to Green Plains Trade Group LLC, but the agreement includes a minimum purchase price.  Lincolnway Energy is dependent upon its agreement with Green Plains Trade Group LLC for the marketing and sale of Lincolnway Energy's ethanol, and Lincolnway Energy's loss of the agreement, or Lincolnway Energy's inability to negotiate a new agreement with Green Plains Trade Group LLC or another marketer before the expiration or termination of the agreement, could have material adverse effects on Lincolnway Energy.

On November 29, 2012, Lincolnway Energy and GPTG mutually agreed to terminate the ethanol marketing agreement effective December 31, 2012. The termination was requested by Lincolnway Energy because managers of Lincolnway Energy determined that it was in the best interests of Lincolnway Energy to retain a different ethanol marketer. Lincolnway Energy will actively pursue a contract with another marketer to replace GPTG.

The primary purchasers of ethanol are refiners, blenders or wholesale marketers of gasoline.  Lincolnway Energy anticipates that its ethanol production will be sold in various regional markets given the availability of rail service at Lincolnway Energy's ethanol plant and local markets that will be shipped by truck, but Green Plains Trade Group LLC controls the marketing of all of Lincolnway Energy's ethanol output.

Lincolnway Energy’s primary means of shipping and distributing ethanol will be by rail and truck.

The nameplate production capacity of Lincolnway Energy's ethanol plant is 50,000,000 gallons of ethanol per year, or approximately 4,167,000 gallons per month.  The ethanol plant exceeded the nameplate production capacity for the fiscal year ended September 30, 2012, however, by approximately 11%, with 55,712,726 gallons of ethanol produced during that period, and with an average daily production of 166,680 gallons. This is a 2.4% decrease from the prior fiscal year.

Lincolnway Energy anticipates that the ethanol plant will produce ethanol at a similar rate or higher during the fiscal year ending September 30, 2013.

Lincolnway Energy's revenues from the sale of ethanol during the fiscal years ended September 30, 2010, September 30, 2011 and September 30, 2012 accounted for approximately 83%, 80% and 75% respectively, of Lincolnway Energy's total revenues during those periods.  Lincolnway Energy estimates that its revenues from the sale of ethanol for the fiscal year ending September 30, 2013 will account for approximately 72% of Lincolnway Energy's total revenues for that fiscal year.

Distiller's Grains

Lincolnway Energy's other primary product is distiller's grains, which is a byproduct of the ethanol production process.  Distiller's grains are the solids that are left after the processing and fermentation of corn into ethanol.  Distiller's grains are a high protein feed supplement that are marketed primarily in the swine, dairy and beef industries.  Distiller's grains can also be used in poultry and other livestock feed.

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A dry mill ethanol process such as that utilized by Lincolnway Energy can produce wet distiller's grains and dried distiller's grains.  Wet distiller's grain contains approximately 60% moisture, and has a shelf life of approximately ten days.  Wet distiller's grains can therefore only be sold to users located within relatively close proximity to the ethanol plant.  Dried distiller's grain is wet distiller's grain that has been dried to 10% to 12% moisture.  Dried distiller's grain has an extended shelf life and may be sold and shipped to any market.

Lincolnway Energy's output of distiller's grains is sold to Hawkeye Gold, LLC under a Distiller's Grains Marketing Agreement. Prior to August 1, 2012, Lincolnway Energy paid Hawkeye Gold, LLC a marketing fee for dried distiller's grains and wet distiller's grains equal to the greater of a set percentage of the FOB plant price or a fixed dollar amount per ton for the dried distiller's grains or wet distiller's grains in question. The agreement was amended on August 1, 2012 to change the fees payable to Hawkeye Gold, LLC. Since that amendment, the fee for dried distiller's grains is a set percentage of the FOB plant price, but with both a specified maximum and minimum per short ton price. The fee for wet distiller's grains is also a set percentage of the FOB plant price, but with a specified maximum per short ton price.  The Distiller's Grains Marketing Agreement can be terminated by Lincolnway Energy or Hawkeye Gold, LLC on 90 days written notice.  Lincolnway Energy is dependent upon its agreement with Hawkeye Gold, LLC for the marketing and sale of Lincolnway Energy's distiller's grains, and Lincolnway Energy's loss of the agreement, or Lincolnway Energy's inability to negotiate a new agreement with Hawkeye Gold or another marketer before the expiration or termination of the agreement, could have material adverse effects on Lincolnway Energy.

The primary purchasers of distiller's grains are individuals or companies involved in dairy, beef or other livestock production.  Lincolnway Energy anticipates that approximately 7% of its distiller's grains will be locally marketed to nearby livestock producers, but Hawkeye Gold, LLC controls the marketing of all of Lincolnway Energy's distiller's grains.

Lincolnway Energy's primary means of shipping and distributing distiller's grain will be by rail and truck.  Local livestock producers are also able to pick up distiller's grains directly from the ethanol plant.

Lincolnway Energy produced 147,425 tons of distiller's grains during the fiscal year ended September 30, 2012, or approximately 12,797 tons of distiller's grains per month.  The composition of the distiller's grains was approximately 4% wet distiller's grains and 96% dried distiller's grains. Dried distillers production increased approximately 3% from the prior fiscal year.

Lincolnway Energy anticipates processing approximately 156,000 tons of distiller's grains during the fiscal year ending September 30, 2013.

Lincolnway Energy's revenues from the sale of distiller's grains during the fiscal years ended September 30, 2010, September 30, 2011 and September 30, 2012 accounted for approximately 17%, 18% and 23% respectively, of Lincolnway Energy's total revenues during those periods.  Lincolnway Energy estimates that its revenues from the sale of distiller's grains for the fiscal year ending September 30, 2013 will account for approximately 26% of Lincolnway Energy's total revenues for that fiscal year.

Other Byproducts

There are other byproducts from the production of ethanol at a dry mill plant, primarily corn oil and carbon dioxide.

Corn Oil

Lincolnway Energy has a corn oil extraction system that extracts corn oil from the syrup that is generated in the production of ethanol. Lincolnway Energy has an agreement with FEC Solutions, L.L.C. under which FEC Solutions, L.L.C. purchases all of Lincolnway Energy's output of corn oil for resale by FEC Solutions, L.L.C. Lincolnway Energy pays FEC Solutions, L.L.C. a marketing and technical assistance fee of a set percentage of the FOB sales price of the corn oil. The agreement renews for successive 36 month terms (on October 13 of the applicable year) unless Lincolnway Energy or FEC Solutions, L.L.C. elect to terminate the agreement at the end of the then current 36 month term. The current 36 month term expires on October 13, 2014.

Lincolnway Energy's primary means of shipping and distributing corn oil will be by truck.

Lincolnway Energy anticipates that FEC Solutions, L.L.C. will sell the corn oil in the biodiesel, livestock feed and industrial industries, but FEC Solutions, L.L.C. controls the marketing of all of Lincolnway Energy's output of corn oil.

3

Lincolnway Energy estimates that it will produce and sell approximately 4,700 tons of corn oil per year at the plant.  Lincolnway Energy does not, however, anticipate that corn oil will be a material product of Lincolnway Energy. Lincolnway Energy’s corn oil sales were approximately $1,500,000, $3,400,000 and $3,800,000 respectively, for the fiscal years ended September 30, 2010 and September 30, 2011, and September 30, 2012 which represented less than 2% , of Lincolnway Energy's total revenues for those respective fiscal years.  Lincolnway Energy's oil sales increased approximately 127% during the fiscal year ended September 30, 2011 when compared to the prior fiscal year. The increase was primarily due to an additive that was added to the process to improve the oil yield.

Carbon Dioxide

Lincolnway Energy has a Carbon Dioxide Purchase and Sale Agreement and a related Non-Exclusive CO2 Facility Site Lease Agreement with EPCO Carbon Dioxide Products, Inc.  Under those agreements, EPCO constructed a plant on Lincolnway Energy's site to collect the carbon dioxide which is produced as part of the ethanol production process and to convert that raw carbon dioxide into liquid carbon dioxide.  The EPCO plant became fully operational in August of 2010.

EPCO also markets and sells the liquid carbon dioxide gas under those agreements.  The purchase price payable by EPCO for the raw carbon dioxide provided by Lincolnway Energy is based upon EPCO's shipped tons of liquid carbon dioxide.  The agreement also includes a "take or pay" term which requires EPCO to purchase, during each contract year, the greater of 180 shipped tons per day or 70% of the annual liquid carbon dioxide production capacity of the EPCO plant at full capacity.  The annual liquid carbon dioxide production capacity of the EPCO plant will be determined based upon the capacity run procedures as set out in the agreement.  The take or pay obligation is trued up at the end of each contract year, and the purchase price for any "take or pay" tons will be the average per shipped ton purchase price paid by EPCO during the contract year. The term of the marketing agreement with EPCO is ten years from the date on which liquid carbon dioxide was first produced at the EPCO plant, which was during August, 2010, unless the agreement is earlier terminated for any of the other reasons set out in the agreement. EPCO is required to remove the plant and related equipment following any termination of the agreement.

EPCO is responsible for the shipment of all liquid carbon dioxide, which Lincolnway Energy contemplates, will be by truck.

Lincolnway Energy estimates it will sell approximately 87,000 tons of carbon dioxide per year to EPCO. Lincolnway Energy does not, however, anticipate that revenues from the sale of carbon dioxide to EPCO will be a material product of Lincolnway Energy, given that Lincolnway Energy estimates that those revenues will constitute less than 1% of Lincolnway Energy's total revenues during any fiscal year.

Sources and Availability of Raw Materials

Corn and coal are the primary raw materials that are utilized by Lincolnway Energy in the production of ethanol.  Corn is used to produce the ethanol, and coal is Lincolnway Energy's primary energy source for its ethanol plant.

Corn

Lincolnway Energy estimates that it will utilize approximately 21,000,000 bushels of corn per year at its ethanol plant, or approximately 1,750,000 bushels per month, assuming production at a capacity of approximately 59,000,000 gallons of ethanol per year.

Lincolnway Energy's ethanol plant is located in Nevada, Iowa. which is located in Story County. Although Lincolnway Energy anticipates purchasing corn from various sources and areas, Lincolnway Energy believes that Story County will produce a sufficient supply of corn, assuming normal growing conditions, to generate the necessary annual requirements of corn for the ethanol plant.  There is not, however, any assurance that Lincolnway Energy will be able to purchase sufficient corn supplies from Story County or regarding the supply or availability of corn given the numerous factors which affect the supply and price for corn.

4

Lincolnway Energy had an agreement with Heart of Iowa Cooperative, dba Key Cooperative, until October 10,2012, pursuant to which Lincolnway Energy could obtain up to 50% of its corn needs from Key Cooperative's facility located adjacent to Lincolnway Energy's ethanol plant, with the remaining 50% to be obtained from other Key Cooperative facilities or other licensed grain dealers. The 50% limitation for Key Cooperative's Nevada, Iowa location was imposed by the Iowa Department of Natural Resources, as part of the air permitting process.  Key Cooperative is a licensed grain dealer and has locations throughout central Iowa.  Key Cooperative is also a member of Lincolnway Energy.

Lincolnway Energy terminated the agreement with Key Cooperative effective as of October 10, 2012. Lincolnway Energy is required under the terms of the agreement to pay Key Cooperative a termination fee of $1,700,000. Payments of $425,000 will be made annually over a four year period with interest at the prime rate on the date of termination. The first payment will be made in the month of January 2013.

Lincolnway Energy anticipated originating its corn needs in house, and that it will procure its corn needs going forward from various sources, including possibly Key Cooperative. Lincolnway Energy may also determine at some point to enter into another grain procurement contract.

Lincolnway Energy purchased 19,396,505 bushels of corn for $128,490,494 from Key Cooperative during the fiscal year ended September 30, 2012, and, respectively, 20,029,808 and 19,884,281 bushels of corn for $127,764,206 and $71,804,446 during the fiscal years ended September 30, 2011 and September 30, 2010.

Corn is delivered to Lincolnway Energy's ethanol plant by truck.

Lincolnway Energy has corn storage capabilities for approximately 10 days of continuous ethanol production.

Coal

Lincolnway Energy's ethanol plant is a coal fired plant.  Lincolnway Energy's ethanol plant will utilize approximately 300 tons of coal per day, assuming production at a capacity of 59,000,000 gallons of ethanol per year.

Lincolnway Energy purchased approximately 99,000 tons of coal for $7.2 million during the fiscal year ended September 30, 2012, and, respectively, 102,000 and 99,000 tons of coal for $7.0 million and $6.0 million during the fiscal years ended September 30, 2011 and September 30, 2010.

Lincolnway Energy currently obtains all of its coal pursuant to an agreement between Lincolnway Energy and Williams Bulk Transfer.  The agreement allows Lincolnway Energy to purchase up to 220,000 tons of coal per year at a per ton price equal to the sum of the coal price and the transportation price, as those terms are defined in the agreement.  The coal price and the transportation price are subject to adjustment in various circumstances and based on various factors.  For example, the transportation price is subject to quarterly adjustment, upward or downward (but never below the initial transportation price stated in the agreement), by 100% of the quarterly percentage change in the All Inclusive Index—Less Fuel, and to a monthly adjustment, upward but not downward, through the addition of a fuel surcharge determined by the amount by which the average Retail On-Highway Diesel Fuel Price of the U.S. exceeds a specified amount per gallon.  The transportation price will also be increased on the scheduled adjustment dates set out in the agreement.  The coal price adjustments are based upon, in general, any increased costs as a result of any changes in laws, changes in inflation as determined by designated indices, and the quality of the coal.  Lincolnway Energy is required to pay a penalty of $16.00 per ton multiplied by the difference of the minimum requirement and actual quantity purchased, if Lincolnway Energy fails to purchase a minimum of 80,000 tons of coal in any calendar year.  The $16.00 per ton penalty amount is subject to adjustment as provided in the agreement.  Lincolnway Energy's agreement with Williams Bulk Transfer will expire by its terms on January 1, 2013. Lincolnway Energy was negotiating a new agreement with Williams Bulk Transfer as of the time of the preparation of this annual report and anticipates entering into a new agreement before the close of 2012. Lincolnway energy anticipates the new agreement will be on terms similar to the existing agreement, but with some changes in the pricing provisions and minimum usage requirements.

Lincolnway Energy is dependent upon its agreement with Williams Bulk Transfer for the supply of all of Lincolnway Energy's coal needs.  Lincolnway Energy's loss of its contract with Williams Bulk Transfer, or Lincolnway Energy's inability to negotiate a new contract with Williams Bulk Transfer or another supplier on favorable terms before the expiration or termination of the agreement, would have material adverse effects on Lincolnway Energy.

All of the coal utilized by Lincolnway Energy is delivered by truck.  Lincolnway Energy has coal storage for approximately 6 days of continuous ethanol production.

5

Other Raw Materials

Lincolnway Energy's ethanol plant also requires a significant amount of electricity and water supply. Lincolnway Energy's electricity needs are currently met by Alliant Energy.  Lincolnway Energy pays the general service rates for its electricity. Lincolnway Energy utilizes approximately two gallons of water to produce a gallon of ethanol, which results in the use of approximately 325,000 gallons of water per day.  Lincolnway Energy discharges 275,000 gallons of water per day that has been purified by a reverse osmosis system. Lincolnway Energy's water needs are currently met by the City of Nevada.

Rail Access

Rail access is critical to the operation of Lincolnway Energy's ethanol plant because rail is used for the shipment and distribution of ethanol and distiller's grains.  Lincolnway Energy utilizes rail track owned by Lincolnway Energy and tracks owned by the Union Pacific.  Lincolnway Energy has agreements with the Union Pacific regarding the use of its railroad tracks.

Lincolnway Energy constructed additional rail spur during 2011. The additional rail spur project cost approximately $3.4 million and was completed in December 2011.

Expansion Plans

Lincolnway Energy currently has no definite plans to expand its ethanol plant or to construct or acquire any additional ethanol plants.  Lincolnway Energy will, however, consider those matters as part of its ongoing operations and analysis of its business and the ethanol industry in general.

Technology Changes

Lincolnway Energy continues to monitor and evaluate any opportunities that may arise with respect to possible technological improvements and alternative energy sources for Lincolnway Energy's ethanol plant.  Lincolnway Energy is continuing to consider switching the fuel source for its plant from coal to biomass or natural gas.  Lincolnway Energy also continues to monitor technological developments in the industry, such as those purported to increase operating or production efficiencies or to generate energy or other savings in ethanol or distillers' grains production.

Research and Development Activities

Lincolnway Energy is not currently engaged in any significant research or development activities.

Competition

The ethanol industry and markets remain highly competitive even though new construction and expansion of ethanol plants in the United States slowed significantly during the last three to four years due to overall generally unfavorable credit and market conditions. As of January 2012, there were approximately 209 ethanol plants located in 29 different states in the U.S. with an ethanol production capacity of approximately 14.9 billion gallons per year. The annualized production of ethanol in the United States during 2011 was approximately 13.9 billion gallons. According to the Iowa Renewable Fuels Association, as of November 2012, Iowa had 41 ethanol plants in production, with a production capacity of approximately 3.7 billion gallons per year and utilizing over 1 billion bushels of corn. Iowa is one of the top five ethanol producing states in the United States. The United States is currently the world's top producer, consumer and exporter of fuel ethanol. World production was approximately 28.9 billion gallons in 2011, as compared to approximately 23 billion gallons in 2010, approximately 19.5 billion gallons in 2009 and approximately 17.3 billion gallons in 2008, and representing over a 400% growth since 2000. Over 40 countries are now producing ethanol, including Brazil, Canada, China, India, Thailand, Columbia, Australia, Turkey, Pakistan, Argentina and various other countries in the European Union and Central America. Many of those countries have also enacted renewable fuel use requirements. Unless otherwise noted, the statistics cited in this paragraph were according to the Renewable Fuels Association.

6

The general economic and ethanol industry circumstances have, however, been difficult and adverse over much of the past two to four years, with various ethanol plants having been closed or having reduced production. Many plants did, however, return to some level of profitability in the second half of 2009 and into the start of 2010 and again in the last half of 2011. The industry has, however, continued to be somewhat volatile.

The drought during 2012 also affected corn supplies and corn prices, and caused some plants to temporarily cease production.

Given that the Energy Independence and Security Act of 2007 increased the renewable fuels standard to 36 billion gallons of annual renewable fuel use by 2022 (up from the prior mandate of 7.5 billion gallons of annual use by 2012), it is likely that there will be some growth in the ethanol industry, both domestically and internationally, over the longer term; although most of that growth may be in cellulosic and advanced biofuels.

Lincolnway Energy's competitors in the U.S. include regional farmer-owned entities, and also the major oil companies and other large companies.

The competition in the ethanol industry has increased during the past four years, with sustained periods of declining ethanol prices, excess supplies of ethanol and higher and volatile corn prices, including during the 2012 drought.

The ethanol industry will also continue to face increasing competition from international suppliers of ethanol. International suppliers produce ethanol primarily from inputs other than corn, such as sugar cane, and have cost structures that may be substantially lower than Lincolnway Energy's and other U.S. based ethanol producers. The $.54 per gallon tariff on most foreign produced ethanol expired on December 31, 2011. Foreign suppliers of ethanol may significantly increase their imports to the United States.

Smaller competitors also pose a threat. Farmer-owned cooperatives and independent companies consisting of groups of individual farmers and investors have been able to compete successfully in the ethanol industry; although Lincolnway Energy believes that smaller ethanol plants may have increasing difficulty in competing with larger plants over the longer term and if the volatile market conditions of the last few years continue. These smaller competitors operate smaller facilities which do not affect the local price of corn grown in the proximity to the facility as much as larger facilities do, and some of the smaller competitors are farmer-owned and the farmer-owners either commit, or are incented by their ownership in the facility, to sell corn to the facility.

The continuing increase in domestic or foreign competition could cause Lincolnway Energy to have to reduce its prices and take other steps to compete effectively, which could adversely affect Lincolnway Energy's results of operations and financial position.

Many competitors will have greater production capacity, greater experience, more access to information and/or greater capital or other financial resources, any of which will make it difficult for Lincolnway Energy to compete with those competitors. For example, greater ethanol production may allow a competitor to market its ethanol or distiller's grains at lower prices than Lincolnway Energy. Lincolnway Energy believes there may be acquisitions and consolidations in the ethanol industry in 2013, and if those acquisitions and consolidations occur, they could lead to additional competitors with greater advantages over Lincolnway Energy. A competitor may also offer other products or services that are not offered by Lincolnway Energy, which may give the competitor an additional advantage over Lincolnway Energy.

An ethanol plant utilizing corn to produce ethanol may also experience competition in the form of other plants which produce ethanol from other products. For example, ethanol can be produced from corn stover, corn fiber, wheat straw, barley straw, switchgrass, miscanthus, trees, grasses, woodwastes, vegetative wastes and other wastes. Lincolnway Energy's ethanol plant is designed to produce ethanol only from corn.

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The Energy Independence and Security Act of 2007 requires that 21 billion gallons of the new 36 billion gallon renewable fuels standard must come from advanced biofuels, with 16 billion gallons of that amount required to come from cellulosic ethanol by 2022. Research is therefore continuing regarding cellulosic ethanol, and various companies are in various stages of developing and constructing some of the first generation cellulosic plants. Some of the cellulosic ethanol plants are working with the U.S. Department of Energy, and have received grant funds. Some of those plants could be characterized as "test" or "pilot" plants, but others are at larger productions levels. Although those plants have faced some financial and technological issues, Lincolnway Energy anticipates that cellulosic technologies and plants will be developed in the near future which will make the production of ethanol from these types of sources economical. As discussed elsewhere in this annual report, DuPont Danisco Cellulosic Ethanol, LLC has purchased approximately 59 acres of real estate from Lincolnway Energy for the purpose of constructing a cellulosic or advanced biofuels plant on the real estate. Lincolnway Energy's plant is not designed to produce ethanol from cellulosic stocks, and Lincolnway Energy does not contemplate converting its plant to produce ethanol from cellulosic stocks.

It is also possible that one or more of the other sources for producing ethanol may have greater advantages than corn, which would adversely affect an ethanol plant that produces ethanol solely from corn. For example, a plant using one of those sources may be able to produce ethanol on a more economical basis or on a more efficient or greater scale.

The increased production of ethanol from other sources could also adversely affect the price for ethanol generally.

Some competitors operate their ethanol plant and produce ethanol using different sources of energy than coal, or using various other sources of energy. The other sources of energy include natural gas and various forms of waste type products, such as woodwaste, tires, construction waste and other waste products. Those competitors may have lower production and input costs and/or higher operating efficiencies than Lincolnway Energy, which would allow them to produce and market their ethanol at lower prices than Lincolnway Energy.

Competition from newly developed fuel additives would also reduce the use of ethanol and Lincolnway Energy's profitability. Although it is difficult to predict if any new fuel additives will be developed, it likely will occur at some point, and it could be in the near future.

Research is also continually being conducted for alternatives to petroleum based fuel products and for additional renewable fuel products. For example, research is ongoing regarding the use of hydrogen, electric or solar powered vehicles and fuel cells. A breakthrough or discovery in any research could conceivably occur at any time, and could have the effect of greatly reducing the use of ethanol or of even making the use of ethanol obsolete at some point. There will be increased incentives to develop alternatives to petroleum based fuel products given the higher gasoline prices that began in 2008 and the continuing security and other concerns with the Middle East and certain other major oil producing nations.

Ethanol is a commodity and is priced on a very competitive basis. Lincolnway Energy believes that its ability to compete successfully in the ethanol industry will depend upon its ability to price its ethanol competitively, which in turn will depend on many factors, many of which are beyond the control of Lincolnway Energy and its management. As indicated above, one of those factors is that Lincolnway Energy is subject to material and substantial competition, including from competitors who will be able to produce or market significantly higher volumes of ethanol and at lower prices.

Lincolnway Energy believes that the principal competitive factors with respect to distiller's grains are price, proximity to purchasers and product quality.

Government Oversight and Regulation

Lincolnway Energy's business is subject to substantial governmental oversight and regulation, including relating to the discharge of materials into the air, water and soil; the generation, storage, handling, use, transportation and disposal of hazardous materials; and the health and safety of Lincolnway Energy's employees.

Lincolnway Energy needs to maintain various permits to be able to maintain and continue its operations. The permits include water and air permits from the Iowa Department of Natural Resources.

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Lincolnway Energy obtained a new air quality permit on July 8, 2011 from the Iowa Department of Natural Resources under the 250 ton rules.  The new permit has more testing mandates, and Lincolnway Energy will be subject to higher ongoing compliance and operating costs to show compliance under the new air quality permit. The permit was obtained as part of the process of settling allegations of the Iowa Environmental Protection Commission regarding emissions limit exceedences and to otherwise comply with air emissions requirements.

The principal risks associated with the substantial governmental oversight and regulation of Lincolnway Energy and its business are discussed in Item 1A of this annual report, at "Lincolnway Energy's Operations Are Subject To Substantial and Extensive Governmental Laws and Regulations Which Restrict and Increase the Cost of Lincolnway Energy's Business".

The ethanol industry has also been substantially supported by and dependent upon various federal and state programs, including various subsidies, tax exemptions and other forms of financial incentives. Some of those programs and the principal risks associated with the governmental support of the ethanol industry are discussed in Item 1A of this annual report, under "Loss of Current Governmental Support and Incentives for Ethanol Could Reduce the Use of Ethanol and Materially and Adversely Affect Lincolnway Energy's Results of Operations and Financial Position".

Employees

As of December 15, 2012, Lincolnway Energy had 43 employees, with 3 open positions.

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Item 1A.        Risk Factors.

Any of the following risks could significantly and adversely affect Lincolnway Energy's prospects, business, results of operation and financial condition.  The following risks are not the only risks Lincolnway Energy is subject to or may face, and they are not intended to be set forth in order of materiality or significance. An investment in units of Lincolnway Energy involves substantial risk, and is a speculative investment.

Risks Relating to Lincolnway Energy and Its Business

The Economy And The Ethanol Industry Continue To Be Subject To Generally Difficult Market, Credit And Other Circumstances The United States and virtually all international economies are still widely viewed as facing difficult and uncertain economic circumstances that may continue well into 2013, and perhaps longer. The United States and nearly all international economic circumstances include a shortage of available loans and credit to many industries, significant unemployment, flat or falling profits or losses in many industries, volatile stock and other investment markets, individual and business failures and bankruptcies, significant deficit spending and "bailout" programs by governments, and uncertain business and consumer confidence.

The ethanol industry has been similarly affected. For example, lenders and the credit markets have been generally unfavorable to the ethanol industry during the last two to four years, and the lack of available credit is one factor that has played a part in the proposed construction or expansion of some ethanol plants being canceled or indefinitely delayed. The ethanol industry also experienced decreasing profits over portions of that time period, and many ethanol plants experienced losses over most or some of that time period. The ethanol industry has also struggled with volatile corn prices, and record high corn prices, during parts of the last three years, triggered in 2012 by the drought that affected much of the United States. The record high corn prices, coupled with declining ethanol prices, negatively impacted profits.

There continues to be a substantial amount of political and economic uncertainty surrounding the budget deficit and related budget and tax issues in the United States. It is not clear at this time what exact measures will be taken to address those various and complex issues, but substantial cuts in the federal budget and changes to the tax code, including the elimination of various tax incentives and deductions and higher tax rates, are likely to occur. Nearly all of the states are facing similar political, economic, budget and tax issues. The possible outcomes to, and effects of, all of those issues are very difficult to analyze or predict at this time, but there will almost certainly be some adverse effects, at least in some ways and for some period of time, on certain groups or sectors of the economy, and perhaps the economy as a whole. Similar issues are also being faced by many other countries.

There is also uncertainty in the economy arising from continuing terrorism concerns, both in the United States and internationally, and the uncertainties and difficulties in Pakistan, Afghanistan, and the Middle East, including Israel, Syria, Iraq and Iran.

There has been substantial amount of civil unrest and other political uncertainty in the Middle East and other oil producing nations over the last two years, and there have been changes in the government in some countries, with additional and further changes appearing to be very likely. It is still not possible to predict with any certainty at this time the possible end results of the unrest and changes in government, and how that may affect oil supplies and prices, the general stability of those countries and the region, and those countries' economies and relationship with the United States. The results could, however, be materially adverse to the United States in general and to energy related industries, such as ethanol.

Lincolnway Energy is therefore still operating in an uncertain and volatile economic and industry environment.

Lincolnway Energy Is Heavily Dependent On A Management Team And Certain Suppliers And Service Providers, But Could Lose Any Of Their Services At Any Time.  Lincolnway Energy is heavily dependent upon its core management team of its president and chief executive officer, chief financial officer, plant manager, director of grains and controller, as well as on the companies which provide coal and corn to Lincolnway Energy and the companies which market Lincolnway Energy's ethanol and distiller's grains.  If any of those management team members or companies terminate their services or for any reason cease to provide services to Lincolnway Energy, Lincolnway Energy's business and operations could be adversely affected in a sudden and material way.  The services could be lost for reasons outside of anyone's control, such as death or disability.  The marketing companies may also be heavily dependent upon one or more key employees or other relationships, and the loss of any of those employees or relationships by a company could adversely affect the company's ability to continue to provide timely and quality services to Lincolnway Energy.

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Lincolnway Energy Is Subject To Risk Because Its Ethanol Plant Utilizes Coal.  The primary energy source for Lincolnway Energy's ethanol plant is coal.  The use of coal is subject to numerous federal and state regulations, including regarding permissible emissions levels.

Lincolnway Energy's ability to comply with the emissions and other requirements arising from its use of coal will depend to a degree on the type and quality of coal that is provided to Lincolnway Energy by its coal supplier.  If the coal does not meet the content and quality standards anticipated by Lincolnway Energy, Lincolnway Energy may not be able to meet its emissions and other regulatory and permit conditions and requirements.

As global warming and climate change issues become more prevalent and accepted, there will likely be increased governmental and public sentiment for more regulation of the use of coal as a source of energy.  Coal is generally viewed unfavorably in any "carbon footprint" type analysis in any event, but may be viewed even more unfavorably when used by an ethanol plant because some experts and federal and state regulatory agencies are taking the position that the ethanol industry in general also performs poorly in any carbon footprint and/or land use type analysis.  One result of those types of analysis will likely be stricter emissions requirements, which could lead to the need for capital expenditures in order to meet those requirements and higher ongoing compliance and operating costs.  Those expenditures and costs could be material, and adversely affect Lincolnway Energy's results of operation and business.

Many view the Obama administration's stance and policies as unfavorable to coal use, and Lincolnway Energy believes there will be increased regulatory requirements for coal in the future.

The use, storage and handling of coal also creates risks related to dust explosions and fire.  Although Lincolnway Energy will take precautions to try to avoid those types of incidents, there is no assurance that those precautions will be successful in every circumstance.

The use of coal also generates fly ash, and Lincolnway Energy may face economic, logistic and environmental issues and difficulties in disposing of its fly ash.

Lincolnway Energy currently obtains all of its coal from one coal supplier.  If the agreement is terminated or if that supplier fails to perform for any reason, Lincolnway Energy might face an interruption in the supply of coal and have to seek an alternate supply source.  Lincolnway Energy does not have any agreement with any alternative suppliers at this time. As with natural gas and other energy sources, coal supplies can be subject to interruption by weather, strikes, transportation, and production problems that can cause supply interruptions or shortages.  Lincolnway Energy has coal storage for approximately 6 days of continuous ethanol production, and an interruption in the supply of coal beyond that period could cause Lincolnway Energy to temporarily halt or discontinue the production of ethanol.

Lincolnway Energy May Not Be Successful In Converting To Another Fuel Source For Its Plant, And Even If It Is Successful, There Will Be Other Risks Associated With Other Fuel Sources.  Lincolnway Energy is considering the possibility of changing the energy source for its plant from coal to another source or sources, such as natural gas, wood waste, agricultural residues  and/or construction and demolition waste.  There is not, however, any assurance that Lincolnway Energy will be successful in converting its plant from coal to another energy source because the conversion involves various material considerations and issues, including regulatory, technological and financial considerations and issues.  You therefore should not assume that Lincolnway Energy will be able to convert its plant to another energy source, or on economical terms.

Even if Lincolnway Energy determines that it is technologically and economically feasible to convert its plant to another energy source, and is able to successfully implement the conversion, Lincolnway Energy will still face regulatory and other risks related to another energy source.  For example, there will still be air permit and emission limits requirements and issues that will need to be met by Lincolnway Energy.  As another example, Lincolnway Energy will need to be able to secure adequate sources of supply of the other energy source at an economical price, and from reputable third parties.  Some of the other possible energy sources, such as woodwastes, may vary in availability from time to time due to various factors, such as the economic circumstances of the industry in question.  For example, the availability of woodwaste from the construction industry will decline when the construction industry is struggling, such as was the case at the time of the preparation of this annual report.  Some of these other risks are not as equally applicable to coal.

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If Lincolnway Energy Ever Expands Or Attempts To Convert Its Plant To Another Fuel or Cellulosic Source, It Will Be Subject To The Risks Inherent In The Development And Construction Process.  If Lincolnway Energy ever determines to expand its existing ethanol plant or to pursue the construction of an additional ethanol plant, or to convert its plant to a fuel source other than coal or to convert from corn to a cellulosic source, Lincolnway Energy will be subject to the numerous material risks and uncertainties inherent in the development and construction process.  For example, it may be difficult to identify a suitable location for another ethanol plant because many favorable locations have already been acquired by other ethanol plants or ethanol plant developers.  Lincolnway Energy also believes that it could be difficult to obtain the necessary financing, at least at this time, given the generally unfavorable debt and equity financing market for the ethanol industry at the time of the preparation of this annual report.  Any expansion of Lincolnway Energy's plant or conversion of the plant to another fuel or cellulosic source may also involve some down time for the plant, which would in turn result in decreased ethanol and distiller's grain production.

Lincolnway Energy May Make Other Investments Or Engage In Other Business.  Lincolnway Energy's board has the authority to cause Lincolnway Energy to construct or acquire or to invest in other ethanol plants or to make other investments or to engage in other businesses.  The scope and nature of Lincolnway Energy's business could therefore change significantly, which could expose Lincolnway Energy to numerous other risks and uncertainties.  Lincolnway Energy's business may not always be limited only to owning and operating its current ethanol plant.

Lincolnway Energy Is Leveraged And Has Debt And Debt Service Requirements.  Lincolnway Energy will have loans outstanding from time to time under its revolving term and seasonal line of credit.  Lincolnway Energy does not, however, believe that it was substantially leveraged at the time of the preparation of this annual report.

Lincolnway Energy may, however, increase its debt in the future, and the use of leverage creates risks.  For example, if Lincolnway Energy ever became unable to generate profits and cash flow to service its debt and its ongoing operations and working capital needs, Lincolnway Energy could be forced to reduce or delay capital expenditures or any expansion plans, sell assets or operations, obtain additional loans or capital or attempt to restructure its loans and other debt.  Lincolnway Energy also may not be able to renew, extend or replace any existing loans or financing arrangements Lincolnway Energy may have in place from time to time.  If any of those events occur, Lincolnway Energy will need to attempt to obtain additional financing through the sale of additional units or debt in Lincolnway Energy or through additional loans from other lenders, but there is no assurance that any of those steps would be successful.

Lincolnway Energy will also need to comply with the various restrictions and covenants that will be included as part of Lincolnway Energy's credit and loan agreements.  The restrictions and covenants will likely include prohibitions or restrictions on incurring additional debt, granting additional security interests or liens, acquiring additional assets, mergers, the issuance of additional units, and making distributions to Lincolnway Energy's members.  The credit and loan agreements will also likely require Lincolnway Energy to maintain various financial ratios and other similar financial covenants.  Those restrictions and requirements may limit Lincolnway Energy's flexibility in planning for, or reacting to, competition or changes in the ethanol industry and Lincolnway Energy's ability to pursue other perceived business opportunities.

Lincolnway Energy's loans are secured by liens on all of Lincolnway Energy's assets, and if Lincolnway Energy breaches any of its agreements with its lenders, the lenders will be able to foreclose on Lincolnway Energy's assets.

Lincolnway Energy's Financing Costs Will Rise If Interest Rates Increase.  Lincolnway Energy could be affected by any increase in interest rates or other lending costs because Lincolnway Energy will likely generally have some outstanding loans or debt, which at times might be substantial.  Although difficult to predict and outside of Lincolnway Energy's control, it is possible that there may be increases in interest rates, at least over the longer term.

Lincolnway Energy's Potential Success Is Almost Exclusively Dependent On Ethanol Sales, And The Price Of Ethanol And Gasoline Can Vary Greatly And Are Beyond Lincolnway Energy's Control.  Although Lincolnway Energy's ethanol plant produces distiller's grains, corn oil and carbon dioxide, ethanol is the primary and material source of revenue for Lincolnway Energy, having generated approximately 83%, 80% and 75% of Lincolnway Energy's total revenues for the fiscal years ended September 30, 2010, 2011 and 2012, respectively.

Ethanol prices can vary significantly over both short and long term periods, and it is difficult to accurately predict changes in ethanol prices or in ethanol trends. As examples, the Chicago Mercantile Exchange price of ethanol was $1.975 for July 2012 delivery, but was at $2.79 for December 2011 delivery.

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The price of gasoline also varies significantly over both short and long term periods. The price for ethanol has generally had some correlation to the price of gasoline, so low gasoline prices or reductions in gasoline prices will also generally reduce ethanol prices and profitability.

The higher prices for gasoline over the past three years have caused businesses and consumers to actively seek ways to lower or reduce their gasoline consumption. For example, there is increased attention to requiring the auto industry to produce cars with higher fuel efficiency. Higher gasoline prices also increase the focus and attention on the research and development of alternative energy options, such as fuel cells. The existence of higher gasoline prices can therefore also adversely affect gasoline and ethanol prices and the profitability of ethanol plants.

On the other hand, if ethanol becomes more expensive than gasoline, blenders have little incentive to buy more ethanol beyond that required to meet the federal renewable fuel standards. The incentive for blenders became even less in that circumstance on December 31, 2011 when the federal 45 cent per gallon tax credit expired.

Lincolnway Energy's inability to foresee or accurately predict changes in the supply or prices of ethanol or gasoline will adversely affect Lincolnway Energy's business.

If ethanol prices decline to the point where it is unprofitable to produce ethanol and remain at that level, Lincolnway Energy could be required to suspend operations until the price increases to the level where it is once again economical or profitable to produce and market the ethanol. Any suspension of operations would have a material adverse effect on Lincolnway Energy's business, results of operations and financial condition. Some ethanol plants delayed opening or curtailed production due to the unfavorable market conditions which were in existence over the two to four year period preceding the date of this annual report. For example, the drought and corresponding substantial increase in corn prices during 2012, coupled with lower ethanol prices, let various ethanol plants to temporarily idle during parts of 2012.

Even if ethanol prices are generally favorable, Lincolnway Energy still may not be able to sell all of its ethanol, or at favorable prices.

Increases In Supplies Of Ethanol or Other Biofuels May Adversely Affect Ethanol And Ethanol Byproduct Prices.  Lincolnway Energy anticipates that there will continue to be increases in ethanol and other biofuels production over the long term, both in the United States and internationally.  For example, there will need to be increased ethanol and other biofuels production in order to meet the renewable fuels standards that were part of the Energy Independence and Security Act of 2007.

The existing renewable fuels standard requirements may at least provide some indirect price support as ethanol production increases to meet those standards, but it is possible that increasing ethanol or other biofuels production may at times lead or contribute to lower ethanol prices.  For example, at least currently, the demand for ethanol is primarily driven by the renewable fuels standard requirements, as opposed to general consumer demand, so if ethanol or other biofuels production exceeds the amounts required to meet the renewable fuels standard, there could be excess ethanol available, which would lower ethanol prices.

Also, a large portion of the increased biofuels production that will need to occur to meet the renewable fuels standard must come from cellulosic and other advanced biofuels and not ethanol produced from corn. Any increased demand or pricing arising from the implementation of the renewal fuels standards therefore might not apply to or benefit ethanol produced from corn.

Excess ethanol or other biofuels production capacity could also result from decreases in demand for ethanol, which could result from a number of factors, such as regulatory developments at the federal or state level, reduced gasoline consumption in the United States or advancements in alternatives to gasoline or in other gasoline additives.

Any increase in ethanol production will also lead to increases in distillers' grains and corn oil production, and increased supplies of those products could also lead to lower prices for those products.

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Continued Growth In The Ethanol Industry Depends On Use Of Increased Ethanol Blends And Related Expansion Of Infrastructure, Change In Public Views And Regulatory Support, Which May Not Occur On A Timely Basis, If At All.  Most experts believe that for ethanol use to grow significantly over both the near and longer term, there must be increased use of ethanol blends in excess of 10%, such as E15, E20, E30 and, in particular, E85. Although the U.S. Environmental Protection Agency approved the use of E15 in January 2011, the approval was limited to vehicles manufactured in 2001 or newer and all flew fuel vehicles. There was also resistance to even increasing the percentage from 10% to 15%, and there will be resistance to increasing the percentage above 15%. There are also various areas that need development and expansion in order for there to be any material increase in the use of higher ethanol blends, including E15, such as expanded production of flex fuel vehicles and the expanded use of pumps that can utilize higher ethanol blends, such as blender pumps. A blender pump allows a driver to fill his or her vehicle with any blend of ethanol from 0% to 85% depending on the type of vehicle they drive. There will likely need to be government subsidies and support, however, in order to cause service stations to install those types of pumps on a large scale, and there is currently no material support in Congress for any material type of those support programs. There will also need to be changes in the public's views and perceptions of ethanol in order for there to be increased use of higher blends of ethanol, as well as regulatory developments at both the federal and state level which allow the use of, and promote the use of, higher ethanol blends and the use of blender pumps and flex fuel vehicles.

Reports continue to be issued by various groups, however, such as the National Research Council, that question the use of ethanol and other biofuels, both from an economic and environmental perspective. Ethanol organizations disagree with, and respond to, most of those types of reports, but the reports continue to cause governmental, regulatory and public perception concerns and issues for the ethanol industry.

Lincolnway Energy's Results Of Operations, Financial Position And Business Outlook Will Likely Fluctuate Substantially Because Lincolnway Energy's Business Is Highly Dependent On Commodity Prices, Which Are Subject To Significant Volatility And Uncertainty, And On The Availability Of Raw Materials Supplies.  Lincolnway Energy's results of operations will be substantially dependent on commodity prices, especially prices for corn, coal, ethanol and unleaded gasoline. The prices of these commodities are volatile and beyond Lincolnway Energy's control.

Lincolnway Energy estimates that corn costs will, on the average, make up approximately 77% of Lincolnway Energy's total annual operating costs, but the percentage could be higher or lower dependent on the price of corn from time to time. Accordingly, rising corn prices could lower profit margins, and, at certain levels, corn prices would make ethanol uneconomical to produce and to use in the fuel markets. For example, corn prices began to rise significantly in approximately July, 2006 (when the cash corn price in Lincolnway Energy's local market area was approximately $2.09 per bushel) and generally continued to rise until mid-year 2008 (when the cash corn price in Lincolnway Energy's local market area reached approximately $7.15 per bushel). As another example, based on the projected increases in acreage for the 2012 crop year and the related projected increases in corn production based on historical yields, Lincolnway Energy had anticipated the possibility of lower corn prices. Instead, the widespread drought in the U.S. during 2012 greatly increased corn prices, with cash corn price bid reaching $7.70 in November 2012. The cash corn price in Lincolnway Energy's local market area was approximately $7.58 per bushel as of November 30, 2012, as opposed to approximately $5.81 per bushel as of November 30, 2011 and $5.32 per bushel as of November 30, 2010. The corn price on the Chicago Mercantile Exchange daily futures ranged from a low of $5.50 per bushel to a high of $8.49 per bushel during Lincolnway Energy's fiscal year ended September 30, 2012, and from a low of $5.35 per bushel to a high of $7.60 per bushel during Lincolnway Energy's fiscal year ended September 30, 2011, and from a low of $3.25 per bushel to a high of $5.29 per bushel during Lincolnway Energy's fiscal year ended September 30, 2010.

The supply and price of corn are influenced by many factors, including drought, hail and other adverse weather conditions; insects or disease; farmer planting decisions; imports; government policies and subsidies with respect to agriculture and international trade; and global and local demand and supply. The price for corn in the market area encompassing Lincolnway Energy's ethanol plant could be higher than the corn price payable in other markets. Lincolnway Energy will also compete for corn with the livestock producers and elevators located within Lincolnway Energy's market area.

There is also uncertainty regarding climate change, and any climate changes could adversely affect corn production in Lincolnway Energy's primary market area or other corn production areas in the United States and elsewhere, and thereby both the supply and price of corn.

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Lincolnway Energy's gross margin will depend significantly on the spread between ethanol and corn prices, and in particular the spread (sometimes referred to as the crush spread) between the price of a gallon of ethanol and the price for the amount of corn required to produce a gallon of ethanol. The price of ethanol and corn fluctuates frequently and widely, however, so any favorable spread between ethanol and corn prices which may exist from time to time cannot be relied upon as indicative of the future. It is possible for the circumstance to arise where corn costs increase and ethanol prices decrease to the point where Lincolnway Energy could be required to suspend operations, as some other ethanol plants did during 2008 and parts of 2009 and in 2012. Any suspension of operations could have a material adverse effect on Lincolnway Energy's business, results of operations and financial condition.

The supply and cost of other inputs needed by Lincolnway Energy can also vary greatly, such as coal, electric and other energy costs. Lincolnway Energy's ethanol plant utilizes coal as its primary energy source, and Lincolnway Energy estimates that coal costs will, on average, make up approximately 4% of Lincolnway Energy's annual total operating costs. The prices for and availability of coal are subject to numerous market conditions and factors which are beyond Lincolnway Energy's control. Significant disruptions in the supply of coal would impair Lincolnway Energy's ability to produce ethanol, and increases in coal prices or changes in Lincolnway Energy's coal costs relative to the costs paid by Lincolnway Energy's competitors would adversely affect Lincolnway Energy's competitiveness and results of operation and financial position.

Lincolnway Energy may attempt to offset a portion of the effects of such fluctuations by entering into forward contracts to supply ethanol and to purchase corn by engaging in hedging and other futures related activities, but those activities also involve substantial risks and may be ineffective to mitigate price fluctuations and may in fact lead to substantial losses.

Transportation issues and costs can also be a factor in the price for ethanol because ethanol is currently shipped by truck or by rail, and not by pipeline, and because ethanol generally needs to be shipped relatively long distances to a terminal where the ethanol can be blended with gasoline.

Lincolnway Energy's inability to foresee or accurately predict changes in the supply or prices of ethanol or of corn, coal and other inputs will adversely affect Lincolnway Energy's business, results of operation and financial position. For example, as noted above, Lincolnway Energy anticipated lower corn prices following the 2012 crop season, but the drought instead resulted in significantly higher corn prices. Also, as a result of the volatility of the prices for these commodities, Lincolnway Energy's results will likely fluctuate substantially over time. Lincolnway Energy will experience periods during which the prices for ethanol and distiller's grains decline and the costs of Lincolnway Energy's raw materials increase, which will result in lower profits or operating losses, which could be material at times, and which will adversely affect Lincolnway Energy's financial condition.

There Are Many Factors Important To The Success Of An Ethanol Plant That Are Beyond The Control Of Lincolnway Energy.  Lincolnway Energy's ability to successfully operate its ethanol plant and to market the ethanol, distillers grains and corn oil produced at the plant are subject to numerous factors and risks.

Some of those factors and risks relate directly to Lincolnway Energy, such as Lincolnway Energy's ability to retain qualified employees and other personnel, and on favorable terms, labor disputes or other employee issues, and unforeseen accidents at, or damages to, Lincolnway Energy's plant or other facilities.

Some of the factors and risks relate to the fact that the agricultural economy and the economy in general, and market prices and futures prices for oil, gasoline, ethanol, distiller's grains, corn oil, corn, coal and other inputs needed for Lincolnway Energy's ethanol operation, are all highly volatile and are influenced by many varying factors.  It is not possible to identify all possibly relevant factors, but some of the factors include the following and rumors or speculation about the following:

• Changing supply and demand relationships and trade deficit issues;

• Weather and other environmental conditions;

• Acts of God, including drought and storms;

• Agricultural, fiscal, monetary, economic, trade and exchange control programs and policies of governments;

• International, national, regional and local political and economic events and policies;

• Changes in fuel and energy costs or in interest rates or rates of inflation;

• Controversies or disputes about the use of biotechnology in crops, or errors or adverse reactions caused by the use of biotechnology in crops;

• Infestations or diseases in crops;

• Acts of terrorism or war, both nationally and internationally;

• Railcar or truck shortages or strikes within those industries;

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• Environmental and other regulations which impact both the demand for ethanol and the cost of operation of an ethanol plant;

• Governmental incentives related to ethanol;

• Illegal or improper activities or scandals by participants in the markets, such as those that have previously occurred in the accounting industry, the stock and mutual fund industry and the insurance industry; and

• The general emotions and psychology of businesses, consumers and of the market place in general, which at times can be totally unrelated to actual economic or market conditions or other more tangible factors.

It is very likely that there will be further acts of terrorism in the United States and abroad, including the possibility of acts aimed at disrupting the economy or the markets or various industries or sectors within the markets.  For example, there has been speculation about possible acts of terrorism aimed at the energy, agricultural and food industries.  Any speculation or rumors about, or actual acts of, terrorism could cause immediate and substantial reactions in a wide range of the markets and industries and in the economy in general.  The continued uncertainty in Afghanistan, Pakistan and the Middle East also continues to create uncertainties and could cause adverse reactions in the oil and energy markets and in the markets and economy in general.

Most of the above factors or occurrences cannot be controlled by Lincolnway Energy, and it will be impossible to always accurately predict or identify which factors are relevant or are likely to occur.

Also, even if Lincolnway Energy were somehow able to have fully current and correct information as to all factors, prices would still not always react as predicted or as would seem likely given the information.  For example, there have been many occasions where the movements of the futures markets have seemed totally unrelated to actual supply and demand and other more tangible factors.  The latter fact may be caused, in part, because of the substantial speculative trading that occurs in the futures markets.

The Use Of The Futures Markets By Lincolnway Energy Could Be Unsuccessful And Result In Substantial Losses.  Lincolnway Energy will likely attempt to minimize the effects of the volatility of corn, ethanol, distiller's grains and other prices by entering into forward pricing contracts and taking positions in the futures markets. The primary intent of those positions will be to attempt to protect the supply of, and the price at which Lincolnway Energy can buy corn and the price at which Lincolnway Energy can sell its ethanol or distiller's grains, but not all of the positions may be able to be properly categorized as being for hedging purposes.

Any attempt by Lincolnway Energy to use forward pricing contracts or the futures markets, whether in the form of hedging strategies or for more speculative trading purposes, may be unsuccessful, and in fact could result in substantial losses because commodity price movements and price movements in futures contracts and options are highly volatile and speculative, and are influenced by many factors which are beyond the control of anyone. Some of those factors include those noted above in "There Are Many Factors Important To The Success Of An Ethanol Plant That Are Beyond The Control Of Lincolnway Energy."

Lincolnway Energy will likely vary the amount of forward pricing, hedging and other risk mitigation strategies Lincolnway Energy may undertake, and Lincolnway Energy may at times choose not to engage in any such transactions. As a result, Lincolnway Energy's results of operations and financial position may be adversely affected by increases in the price of corn or coal or decreases in the price of ethanol or unleaded gasoline.

Futures markets will also sometimes be illiquid, and Lincolnway Energy may not be able to execute a buy or sell order at the desired price, or to close out an open position in a timely manner. The inability to close out an open position in a timely manner may result in substantial losses to Lincolnway Energy. Lincolnway Energy's potential losses and liabilities for any futures or options positions are not limited to margin amounts or to the amount held in or the value of Lincolnway Energy's trading account, and in the event of a deficiency in Lincolnway Energy's trading account due to a margin call made to the trading account, a loss exceeding the value of the trading account, or otherwise, Lincolnway Energy will be responsible for the full amount of the deficiency. Given the volatility of futures trading, margin calls can occur frequently and the amount of a margin call can be significant.

Losses from trades in the futures markets, coupled with the volatility in the corn and ethanol markets are factors that have caused some ethanol companies to incur significant losses and, in some cases, to temporarily idle operations or to seek bankruptcy protection.

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Lincolnway Energy's Operations Are Subject To Substantial And Extensive Governmental Laws And Regulations Which Restrict And Increase The Costs Of Lincolnway Energy's Business.  Lincolnway Energy's ethanol operations are subject to substantial and extensive governmental laws and regulations, including those relating to the discharge of materials into the air, water or ground, and the generation, storage, handling, use, transportation and disposal of hazardous materials. Some of those laws and regulations require Lincolnway Energy to maintain various permits and other approvals in order to continue ongoing operations. Lincolnway Energy will need to meet the various requirements and conditions necessary to the issuance and maintenance of those permits and approvals. The requirements and conditions may include that the ethanol plant facilities and operations meet various specifications regarding air quality, discharge, water and waste treatment, and various other operational matters. Lincolnway Energy's compliance with all necessary permits, approvals and laws and regulations will increase Lincolnway Energy's costs and expenses. Lincolnway Energy's failure to comply with those requirements or to maintain those permits and approvals may result in fines or penalties, the loss of the right to continue operations or claims by third parties.

Lincolnway Energy also anticipates that there will be changes in the approval requirements and other laws and regulations over time, and that those changes will increase the regulatory oversight and costs and expenses of Lincolnway Energy. For example, the regulation of the environment, including the use of water, wastewater, storm water and air emissions, is a constantly changing area of the law, and it is likely that more stringent federal or state environmental laws, rules or regulations, or interpretation or enforcement of existing laws, rules or regulations, could be adopted which would require Lincolnway Energy to make substantial capital expenditures and/or increase Lincolnway Energy's operating costs and expenses. New laws, rules and regulations may be advanced based upon claims related to global warming and climate change. It is also possible that federal or state environmental laws, rules or regulations could be adopted which have an adverse effect on the use of ethanol, such as changes in the regulations regarding the required oxygen content of automobile fumes. The new laws, rules or regulations could also arise or become necessary because of currently unknown conditions or problems arising from the production or use of ethanol, similar to what occurred with methyl tertiary-butyl ether (MTBE) because of the adverse environmental and health issues now known to be caused by MTBE.

Lincolnway Energy believes that increased regulation of plants powered by coal, such as Lincolnway Energy's ethanol plant, is particularly likely. Lincolnway Energy also foresees the possibility of increased regulation of ethanol plants arising from carbon footprint and life cycle and indirect land use change type analysis by regulators.

For example, in 2009, the State of California adopted a state low carbon fuels standard, which requires that renewable fuels used in California must accomplish certain reductions in greenhouse gases which are measured using a life cycle analysis that includes indirect land use change considerations. The current predominant views on how to apply a life cycle and indirect land use change analysis (including those of the United States EPA) generally lead to results that are not favorable to coal or to ethanol, and that is the case for California. The practical effect of California's low carbon fuel standard is that it precludes grain-based ethanol from outside California.

The Renewable Fuels Association, together with other parties, filed a lawsuit challenging California's low carbon fuel standard on the grounds that it violates both the supremacy clause and the commerce clause of the U.S. Constitution. A federal court ruled in late 2011 that the standard did violate the commerce clause, but that ruling has been appealed so the litigation is not over. California represents a significant ethanol market, and if corn based ethanol cannot be utilized in California, it could significantly reduce demand for corn-based ethanol such as that produced by Lincolnway Energy. Various other states are also looking at implementing low carbon fuel standard requirements for their states, so the outcome of the California lawsuit could have significant effects on the ethanol industry.

Lincolnway Energy May Become Subject To Various Environmental And Health And Safety And Property Damage Type Claims And Liabilities.  The nature of Lincolnway Energy's operations will expose it to the risk of environmental and health and safety claims and property damage claims. For example, if any of Lincolnway Energy's operations are found to have polluted the air or surface water or ground water, such as through an ethanol spill, Lincolnway Energy could become liable for substantial investigation, clean-up and remediation costs, both for its own property and for the property of others that may have been affected by the pollution or spill. Those types of claims could also be made against Lincolnway Energy based upon the acts or omissions of other persons, including persons transporting or handling ethanol. Environmental and property damages claims and issues can also arise due to spills, losses or other occurrences arising from events outside of Lincolnway Energy's control and which are possible in Lincolnway Energy's business, such as fire, explosions or blowouts.

A serious environmental violation or repeated environmental violation could result in Lincolnway Energy being unable to construct or operate any additional ethanol plants and the loss of defenses to nuisance suits. Lincolnway Energy may also be unable to obtain financing or necessary permits if Lincolnway Energy is subject to any pending administrative or legal action regarding environmental matters.

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Any of those types of events could have a material adverse effect on Lincolnway Energy's financial condition and future prospects.

There Is Continuing Negative Press And Public Sentiment Against The Ethanol Industry Which Could Lead To Reduced Governmental And Public Support For The Use Of Ethanol.  There continues to be negative press and public sentiment against the ethanol industry based upon claims that the use of corn to produce ethanol drives up grain prices, which hurts livestock farmers and also consumers due to increased food prices.  The widespread drought that occurred during 2012 affected corn supplies and prices, and will be pointed to by those arguing the "food versus fuel" position. The claims also include environmental type allegations, including that increased corn acreage and ethanol production could strain water supplies and worsen pollution in rivers and streams.  The criticisms also include that ethanol production is leading to land use changes, including the clearing of rain forests and other native lands for purposes of growing corn or other crops to be used for the production of ethanol or to replace land which is now used to produce crops for ethanol, which in turn releases carbon into the atmosphere that has been stored in the soil and otherwise has negative environmental impacts.  The continuing and growing criticism has come from, among others, environmental groups, the National Academy of Sciences, the American Lung Association and through the United Nations.

The negative press and public sentiment is also developing towards the "next generation" biofuels that are a significant component of achieving the use mandates in the renewable fuels standards. Those biofuels are those made from nonfeed stocks/cellulose, such as corn stalks, wheat straw, grasses and trees. Some organizations, including the National Resource Council, have issued reports critical of those biofuels, including that those biofuels are not economical without heavy government subsidies and will not have any positive overall environmental effect, and may have negative environmental results.

The criticism of the ethanol and biofuels industry could lead to further reductions in governmental supports for the industry and reduced public support and use of ethanol and other biofuels. The current criticisms regarding ethanol are based primarily on the production of ethanol from corn, and could accelerate the development of other economical sources for the production of ethanol and the development of other biofuels. Lincolnway Energy's plant can only produce ethanol from corn.

Loss Of Governmental Support And Incentives For Ethanol Could Reduce The Use Of Ethanol And Materially And Adversely Affect Lincolnway Energy's Results Of Operations And Financial Position.  There have been various federal and state laws and regulations and programs which have lead to the increasing use of ethanol, including various subsidies, tax exemptions and other forms of financial incentives. Some of the laws provide economic incentives to produce or use ethanol and other biofuels and some of the laws mandate the use of ethanol and other biofuels.

No guarantee can be given that any of those laws, regulations or programs will be continued, and the revocation or amendment of any one or more of those laws, regulations or programs could adversely affect the future use and price of ethanol in a material way. Governmental support of the ethanol industry may decrease due to the ongoing governmental budget and deficit issues. The current governmental support of the ethanol industry may also decrease as the ethanol industry matures and advances, or in the event of any adverse environmental or other occurrences in the ethanol industry. Some of the significant federal support programs have already expired or have been discontinued.

For example, various ethanol tax incentives, including the 45¢ per gallon blenders credit for ethanol use and the 54¢ secondary tariff on imported ethanol, expired on December 31, 2011. It appears that this credit and tariff will not be extended or renewed. Although the loss of those tax incentives was expected, the loss still had materially adverse effects on the ethanol industry.

Some other areas where the ethanol industry had hoped for additional legislative or regulatory support were for credits or other forms of support for the installation and use of blender pumps or flex fuel vehicles capable of using ethanol blends in excess of 15% and up to 85% and approvals of the use of ethanol blends in excess of 15%. No advancements were made in those areas during 2011 or 2012, however, and those areas are material issues for increasing the use of ethanol.

As noted above, the ethanol and biofuels industry has received substantial negative press as of late regarding the possible negative effects and side effects of ethanol and other biofuels production. Any negative public sentiment could lead to decreases in governmental support of the ethanol industry.

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Another continuing regulatory or governmental support issue for the ethanol industry is the fact that current law and infrastructure effectively preclude the use of higher ethanol blends in conventional automobiles, sometimes referred to as the "blend wall." The prior permitted blend amount was E10. Advocates lobbied the EPA and Congress for years to increase the permitted percentage for all vehicles from anywhere to 12% to 20%, but the EPA elected in January 2011 to only permit E15 and only for use in automobiles with a model year of 2001 or newer and for flex fuel vehicles. The EPA's action was not viewed as significant to the ethanol industry because of the limitation on vehicles and because many retailers do not have the proper dispensing equipment needed in order to offer E15. There was substantial resistance to increasing the permitted ethanol blend percentage from 10% to 15%, and there will be resistance to any further increases over 15%.

The remaining key component of the federal government's support for the ethanol industry is the renewable fuels standard that arose out of the Energy Independence and Security Act of 2007. Under that legislation, the renewable fuels mandate was increased to 36 billion gallons by 2022, with that requirement broken down among conventional biofuel, which includes ethanol derived from corn starch, advanced biofuels and cellulosic biofuels. There have, however, been various waiver requests from those standards filed with the U.S. Environmental Protection Commission, as well as calls for reductions in, or the repeal of, those standards. The EPA did announce in mid-November 2012 that the first of those waiver requests did not meet the statutory threshold for the evidence necessary to grant the waiver request. Additional waiver requests and continued efforts to extend the period of time for complying with the renewable fuels standards, or for reductions in, or the repeal of, those standards, are, however expected. Also, if ethanol and biofuels production does not increase, or declines due to adverse market conditions, that may lead to the need to lower, suspend or extend out further the renewable fuels standards, which might also provide support for those who want to reduce or eliminate those standards. Any of those actions would have adverse effects on the ethanol industry, which could be material, in particular any significant extension of the compliance period or any repeal of, or reductions in, the renewable fuel standards.

The actions of states are also important to the ethanol industry, and some states, such as Iowa and Minnesota, have various requirements which support the ethanol industry. A key state, however, California, has passed a low carbon fuel standard which will effectively shut out grain-based ethanol from outside California in the coming years. As noted elsewhere, a lawsuit has been brought challenging California's low carbon fuel standard, and the outcome of that litigation could have significant effects on the ethanol industry, in particular if California's legislation is allowed to stand, and other states adopt similar legislation. The legislation adopted by California, and any other similar legislation that would be adopted by any other states, could make it difficult to timely meet the renewable fuels standard.

There have also been some adverse movements in other states, such as efforts to ban ethanol in New Hampshire, labeling concerns in Nebraska and a repeal threat of the Florida renewable fuels standards.

Interruptions In The Supply Of Water, Electricity, Coal Or Other Energy Sources Or Other Interruptions In Production Would Have An Adverse Effect On Lincolnway Energy's Ethanol Plant.  Interruptions in the supply of water, electricity, coal or other energy sources at Lincolnway Energy's ethanol plant would have a material adverse impact on operations, and could require Lincolnway Energy to halt production at the ethanol plant.

Interruptions in or the loss of the supply of water, electricity, coal or other energy sources could occur, for example, because of software or other computer problems at the ethanol plant or at the plants of the suppliers of the water, electricity, coal or other energy.  Lincolnway Energy's and any suppliers' use of its software and other computer systems will be subject to attack by computer hackers, and to failure or interruption through equipment failures, viruses, acts of God and other events beyond the control of Lincolnway Energy or a supplier. As an example, Lincolnway Energy was provided with a notice of force majeure from its coal supplier in June 2012, arising from flooding. Although Lincolnway Energy did not experience any loss of coal deliveries, acts of God or other force majeure events affecting supplies could create supply problems for Lincolnway Energy.

Lincolnway Energy's operations are also subject to significant interruption if its ethanol plant experiences a major accident or is damaged by severe weather or other natural disasters.  Lincolnway Energy's operations are also subject to labor disruptions and unscheduled down time, and other operational hazards inherent in the ethanol industry, such as equipment failures, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation accidents and natural disasters.  Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction of property and equipment or environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties against Lincolnway Energy.

Lincolnway Energy's business is dependent upon the continuing availability of railroads, railcars, truck fleets and other infrastructure necessary for the production, transportation and use of ethanol.  Any disruptions or interruptions in that infrastructure could have a material adverse effect on Lincolnway Energy.

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Lincolnway Energy may not have insurance covering any of these types of matters or occurrences.  Any insurance Lincolnway Energy may have in place may not be adequate to fully cover the potential losses and hazards, and Lincolnway Energy may not be able to renew the insurance on commercially reasonable terms or at all.

Competition From Other Ethanol Producers Or Energy Sources Could Adversely Affect Lincolnway Energy And Could Reduce Lincolnway Energy's Profitability.  The ethanol industry is competitive and will likely become increasingly more competitive.  The competitors include both regional farmer-owned entities, and also the major oil companies and other large companies.  The U.S. ethanol industry also faces significant and increasing competition from international suppliers of ethanol.

Any increase in domestic or foreign competition could cause Lincolnway Energy to have to reduce its prices and take other steps to compete effectively, which could adversely affect Lincolnway Energy's results of operations and financial position.

Many competitors will have greater production capacity and/or greater capital or other financial resources, any of which may make it difficult for Lincolnway Energy to compete with the competitor.  A competitor may also offer other products or services that are not offered by Lincolnway Energy, which may give the competitor an additional advantage over Lincolnway Energy.

An ethanol plant utilizing corn to produce ethanol will also experience competition from other plants which produce ethanol from other products. For example, ethanol can be produced from corn stover, rice straw, wheat, cheese whey, potatoes, wheat, oats, barley straw, milo, sorghum, sugar bogasse, rice hulls, various wastes (such as wood and vegetation) and cellulose based biomass. Various federal incentives have been enacted to encourage and support the development of cellulosic based ethanol production, and the Energy Independence and Security Act of 2007 provides that 16 billion gallons of the 36 billion gallon renewable fuels mandate for 2022 must come from cellulosic biofuel. Approximately 25 companies were developing cellulosic based ethanol plants as of the time of the preparation of this annual report. Cellulosic and other ethanol technologies are viewed by many as the "next generation" ethanol technologies.

Although Lincolnway Energy believes there will continue to be a place for corn based ethanol production within the ethanol industry, it is possible that at some point in the future governmental and public support of the ethanol industry may be focused primarily upon, and provide significant advantages or benefits to, cellulosic and other developing ethanol technologies, which could have adverse effects on Lincolnway Energy and corn based ethanol production in general. The requirements for the use of cellulosic and other advanced biofuels in the 2007 energy act are evidence of the government's support of, and trending to, those types of biofuels. The public may also eventually support cellulosic and other advanced biofuels because of the perception that those types of biofuels do not have some of the perceived negative effects of corn based ethanol, such as the food versus fuel debate, given that cellulosic and other advanced biofuels are not made from products otherwise used in the food chain and are in some cases produced from "waste" products.

It is also possible that one or more of the other sources of products for ethanol production may from time to time have greater advantages than corn, which would adversely affect an ethanol plant that produces ethanol solely from corn. For example, a plant using one of those sources may be able to produce ethanol on a more economical basis or on a more efficient or greater scale. The increased production of ethanol from any of those sources could also adversely affect the price for ethanol generally. Lincolnway Energy's ethanol plant is designed to produce ethanol only from corn.

Some competitors operate their ethanol plant and produce ethanol using different sources of energy than coal, or using various other sources of energy. The other sources of energy include natural gas and various forms of waste type products such as wood, tires, construction waste and manure. Those competitors may have lower production and input costs and/or higher operating efficiencies than Lincolnway Energy, which would allow them to produce and market their ethanol at lower prices than Lincolnway Energy.

Competition from newly developed fuel additives would also reduce the use of ethanol and Lincolnway Energy's profitability. Although it is difficult to predict if any new fuel additives will be developed, it will likely occur at some point, and it could be in the near future.

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Research is also continually being conducted for alternatives to petroleum based fuel products and for additional renewable fuel products. For example, research is ongoing regarding the use of hydrogen, electric or solar powered vehicles and fuel cells. A breakthrough or discovery in any research could conceivably occur at any time, and will occur at some point, and could have the effect of greatly reducing the use of ethanol or of even making the use of ethanol obsolete over time. There will be increased incentives to develop alternatives to petroleum based fuel products given the high gasoline prices over the last three years and uncertainty in the Middle East. It is also commonly agreed that the dependence of the U.S. on foreign oil places the U.S. in difficult political and economic circumstances, and the federal government will likely assist in the development of alternatives to petroleum based fuel products given the issues that arise from the dependence of the U.S. on foreign oil.

Technological Advances Could Make Lincolnway Energy's Ethanol Plant Less Competitive.  Technological advances in the processes and procedures for producing ethanol and in the efficiency of ethanol plants are continually occurring, and further ongoing advances should be expected.  It is possible that those advances could make the processes and procedures that are utilized at Lincolnway Energy's ethanol plant or the ethanol and/or other by-products produced at the ethanol plant less competitive when compared to other producers.  Any modifications or changes to Lincolnway Energy's ethanol plant to utilize any new technology could be technologically or cost prohibitive, and could, at least initially, reduce Lincolnway Energy's profitability.

There Are Potential Conflicts Of Interest In The Structure And Operation Of Lincolnway Energy.  Although Lincolnway Energy does not believe any conflict of interest exists which in practice will be detrimental to Lincolnway Energy, potential conflicts of interest do exist in the structure and operation of Lincolnway Energy and its business.    For example, the directors and officers of Lincolnway Energy are not required to devote their full time or attention to Lincolnway Energy, and they are all involved in other full time businesses and may provide services to others.  Some of the directors or officers might be owners or otherwise interested in other ethanol plants.  The directors and the officers will experience conflicts of interest in allocating their time and services between Lincolnway Energy and their other businesses and interests.

The various companies that provide marketing and other services to Lincolnway Energy are also not required to devote their full time or attention to those services, and they will very likely be involved in other ethanol plants and ethanol related businesses and possibly other businesses or ventures, including having ownership or other interests in other ethanol plants.  The companies will therefore experience conflicts of interest in allocating their time and services between Lincolnway Energy and their various other ethanol plants or business ventures.  The companies providing ethanol and distiller's grains marketing services to Lincolnway Energy will be providing those same services to other ethanol plants, and may experience conflicts of interest in allocating favorable sales and sales when the supply of ethanol or distiller's grains exceeds the demand.

Risks Relating To Lincolnway Energy's Units.

Lincolnway Energy's Units Are Not A Liquid Investment.  No market exists for Lincolnway Energy's units.  A market will not develop for the units because the units are not freely transferable and can only be sold, assigned or otherwise transferred in compliance with the federal and applicable state securities laws and the terms and conditions of the second amended and restated operating agreement and unit assignment policy of Lincolnway Energy, which require the prior approval of the board for all sales and assignments of any units.  The restrictions set out in the securities laws, the second amended and restated operating agreement and the unit assignment policy may at times preclude the transfer of a unit.  The units are therefore not a liquid investment.

There Is No Guarantee Of Any Distributions From Lincolnway Energy.  Lincolnway Energy is not required to make any distributions to its members.  Lincolnway Energy could also be prohibited, or at least limited or restricted, from making any distributions under the terms of Lincolnway Energy's credit and loan agreements.  Lincolnway Energy's financial situation may also not allow it to make any distributions to its members in any event.  The payment of distributions will also always be at the discretion of the board of Lincolnway Energy and will depend on, among other things, the board's analysis of Lincolnway Energy's earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions regarding the payment of distributions and any other considerations that the board deems relevant.  There is therefore no assurance of regular distributions, or any distributions at all, to Lincolnway Energy's members.

The Staggered Terms Of Lincolnway Energy's Board May Delay Or Prevent Lincolnway Energy's Acquisition By A Third Party.  Lincolnway Energy's second amended and restated operating agreement provides for three classes of directors, based upon the term of office, with each director holding a three year term.  Some view that type of provision as making more difficult, or as deterring, a merger, tender offer or acquisition involving Lincolnway Energy that might result in the members receiving a premium for their units.

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Taxation And Other Risks.

Members Will Owe Taxes On Lincolnway Energy's Profits But May Never Receive Any Distributions From Lincolnway Energy.  Lincolnway Energy is not required to make any distributions, and it is possible that no distributions will be made by Lincolnway Energy, even if Lincolnway Energy has profits.

Any Lincolnway Energy profits will be taxable to its members in accordance with the members' respective percentage ownership of the units, whether or not the profits have been distributed.  Even if distributions are made, the distributions may not equal the taxes payable by a member on the member's share of Lincolnway Energy's profits.

Lincolnway Energy could also sustain losses offsetting the profits of a prior tax period, so a member might never receive a distribution or be able to sell the member's units for an amount equal to the taxes which have already been paid by the member.

The Internal Revenue Service Could Challenge Allocations And Audit Lincolnway Energy's Tax Returns.  The second amended and restated operating agreement of Lincolnway Energy provides for the allocation of profits, losses and credits among the members.  The Internal Revenue Service might challenge those allocations and reallocate various items in a manner which reduces deductions or increases income to the members, both of which would result in additional tax liability for members.

The Internal Revenue Service might also audit Lincolnway Energy's returns, and adjustments might be required as a result of an audit.  If an audit results in an adjustment, members could be required to file amended returns and to pay back taxes, plus interest and possibly penalties.  The members' tax returns might also be audited.

The Tax Laws May Change To The Detriment Of Lincolnway Energy And Its Members.  It is possible that the current federal and/or state tax treatment given to an investment in the units or to Lincolnway Energy may be changed by subsequent legislative, administrative or judicial action.  Any such changes could significantly alter the tax consequences and decrease the after tax rate of return on investment in the units.

For example, although Lincolnway Energy anticipates being treated as a partnership for tax purposes, if for some reason Lincolnway Energy was classified or treated as a corporation, or Lincolnway Energy's board determined that it would be beneficial for Lincolnway Energy and its members for Lincolnway Energy to become taxed as a corporation, Lincolnway Energy would pay corporate income tax and no profits or losses would flow through to the members.  The payment of taxes by Lincolnway Energy would lower the cash available for distribution to the members, and any distributions would be taxed to the members as dividends.

Software Problems And Computer Viruses May Have A Materially Adverse Effect Upon Lincolnway Energy.  Lincolnway Energy will utilize various software applications in connection with its ethanol operation.  There is no assurance that the operation of any software or other computer systems will be uninterrupted or error free or will otherwise be successful.  There is also no assurance or guarantee that the software will continue to be available to Lincolnway Energy or that the software will be able to be maintained and updated as necessary from time to time.

Lincolnway Energy 's use of its software and other computer systems will be subject to attack by computer hackers and to failure or interruption through viruses or acts of God or other occurrences beyond the control of Lincolnway Energy, such as computer failure, communications line failure, power failure, mechanical failure, equipment malfunction or failure, and lightning.

The refiners, suppliers and other persons who Lincolnway Energy has business relationships with are also subject to the same software and computer system risks, and may affect their ability to do business with Lincolnway Energy.

Any problems with any software or other computer systems might have material adverse effects on Lincolnway Energy.

Item 1B.    Unresolved Staff Comments.

This Item is not applicable to Lincolnway Energy because Lincolnway Energy is not an accelerated filer, a large accelerated filer or a well-known seasoned issuer, as those terms are defined in the rules of the Securities and Exchange Commission.

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Item 2.    Properties.

Lincolnway Energy's office and its ethanol plant are located on approximately 64 acres in Nevada, Iowa.  Lincolnway Energy owns the real estate and its office and ethanol plant, but all of those properties are subject to a first mortgage and security interest held by Lincolnway Energy's primary lender, Farm Credit, and to a mortgage and security interest held by the Iowa Department of Transportation.

Lincolnway Energy's office building has approximately 1,400 square feet.  Lincolnway Energy utilizes the office building for office space for Lincolnway Energy's management and other staff.  Lincolnway Energy was utilizing approximately 90% of the available office space as of the date of this annual report, with the remaining 10% being available to accommodate any expansion of Lincolnway Energy's staff.  The office building also includes grain receiving facilities.

Lincolnway Energy's ethanol plant and related facilities include the following material buildings and related fixtures and equipment:

• process building containing lab, offices and control room;

• maintenance building containing offices, storage and a welding shop;

• administration building containing furniture and fixtures, office equipment, computers, telephone system, board room and grain receiving; and

• rail spur, paved access roads, dryers, evaporators, fermenters, grain bins and storage facilities for ethanol and distiller's grains.

Lincolnway Energy also owns approximately 147 acres of real estate which is adjacent to the 64 acre parcel noted above.  Approximately 54 acres of this real estate was used to construct additional railroad spur tracks as discussed in the following paragraph. The remaining 93 acres are available for future development, but Lincolnway Energy does not, currently, have any definite plans for the use of that real estate in Lincolnway Energy's ethanol operations, and most of the real estate will likely be custom farmed during 2013.

Lincolnway Energy, LLC completed the construction of an additional 9,372 feet of rail spur to Lincolnway Energy's existing track in December of 2011. The cost of the additional rail spur project was approximately $3.4 million. The primary purpose for constructing the additional rail spur was to add rail car capacity so that Lincolnway Energy will be able to ship ethanol in unit trains, which generally means a rail shipment of between at least 84 cars and generally up to 100 rail cars. The additional track also allows Lincolnway Energy to have a sorting track for 20 cars.

Lincolnway Energy sold 59.05 acres of real estate that was also adjacent to Lincolnway Energy's 64 acre parcel noted above to DuPont Danisco Cellulosic Ethanol, LLC on October 5, 2011. The sale of the real estate is discussed in more detail in Item 1 above in this annual report.

Lincolnway Energy leases 120 hopper rail cars which are used for transporting distiller's grains. Lincolnway Energy has a lease for 90 hopper rail cars for a three year term which is scheduled to expire in March 2014 and a month to month lease agreement for an additional 30 hopper rail cars. Lincolnway Energy also leases 130 tank rail cars that are used for transporting ethanol. The scheduled term of leases goes to March 2014 for 30 cars and September 2016 for 100 cars.

Lincolnway Energy also leases various miscellaneous office equipment and equipment utilized in the operation of the ethanol plant.

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Item 3.    Legal Proceedings.

Except as noted in the following paragraphs, as of the date of this annual report, Lincolnway Energy was not aware of any material pending legal proceeding to which Lincolnway Energy was a party or of which any of Lincolnway Energy's property was the subject, other than ordinary routine litigation, if any, that was incidental to Lincolnway Energy's business. As of the date of this annual report, Lincolnway Energy was not aware that any governmental authority was contemplating any material proceeding against Lincolnway Energy or any of Lincolnway Energy's property.

On May 3, 2010, Lincolnway Energy was sued by GS CleanTech Corporation ("GS CleanTech"), a wholly owned subsidiary of GS (Green Shift) CleanTech Corporation. The lawsuit involves claims by GS CleanTech that it owns proprietary rights related to the separation of corn oil from the by-product stream of the dry mill ethanol manufacturing process. The lawsuit was initially filed in United Stated District Court for the Northern District of Iowa as Case No. 5:10-cv-04036, and alleged infringement of United States Patent No. 7,601,858 ("858 Patent").

Shortly after the case was filed, GS CleanTech petitioned the Multi-District Litigation Panel of the Federal Judiciary, and was successful in having Lincolnway Energy's case as well as numerous other cases moved to the United States District Court for the Southern District of Indiana for all pretrial activity. The MDL proceeding is captioned: In re: Method of Processing Ethanol Byproducts and Related Subsystems ('858) Patent Litigation, Master Case No.: 1:10-ml-2181-LJM-DML.

Since the beginning of the case, GS CleanTech has obtained issuance of additional United States patents related to the corn oil separation technology. As a result, additional patents have been asserted against Lincolnway Energy. In addition to the '858 Patent, GS CleanTech has now asserted U.S. Patent No. 8,008,516 (the "'516 Patent") and U.S. Patent No. 8,008,517 (the "'517 Patent"), both of which are continuations of, and are based upon the disclosures of, the '858 Patent. GS CleanTech has also asserted U.S. Patent No. 8,168,037 ("'037 Patent") against Lincolnway Energy and certain of the other MDL Defendants. The '037 Patent purports to cover certain process steps and is based upon a slightly differing patent specification as compared to the '858 Patent. Additionally, on November 7, 2012, the United States District Court for the Southern District of Indiana entered an Order granting permission to GS CleanTech to assert newly issued United States Patent No. 8,283,484 ("'484 Patent"). The litigation began as an infringement claim of one patent, but, with the additional patents noted in this paragraph, now involves five different patents.

Claims construction related to the patent claim terms of the '858 Patent has occurred. The Court construed various of the terms. GS CleanTech has requested that further construction be had as it relates to the patent claims of the '516 Patent and the '517 Patent. The Court has not adopted GS CleanTech's position. The newly asserted '037 Patent may require claims construction, and a separate Case Management Order has been entered as it relates to said patent and the parties against whom it is asserted. A claims construction procedure and further modifications to the Case Management Order may also be required in light of the Court's grant of permission to GS CleanTech to assert the '484 Patent.

GS CleanTech is seeking damages in this lawsuit. GS CleanTech has claimed damages consisting of at least a reasonable royalty rate and disgorgement of profits and lost profits. GS CleanTech has further claimed the infringing conduct by Lincolnway Energy is willful resulting in entitlement to recover treble damages and attorney fees pursuant to the provisions of 35 U.S.C. §284.

In the MDL case, the Defendants have filed a Motion for Summary Judgment of Non-Infringement based upon a single claims element. Said element focuses upon the de-oiled syrup stream emerging from the centrifuge after oil separation has occurred, and requires that the de-oiled stream be substantially free of oil. GS CleanTech has filed a separate Motion for Summary Judgment of Infringement asserting that the oil separation processes of all of the Defendants, including Lincolnway Energy, infringe the '858 Patent, the '516 Patent and the '517 Patent. Defendants are working collectively to resist GS Clean Tech's Motion for Summary Judgment of Infringement.

Lincolnway Energy has produced documents pursuant to a Protective Order entered by the US District Court and has provided a corporate deposition to GS CleanTech pursuant to FRCP 30(B)(6).  Lincolnway Energy has joined with a number of other ethanol manufacturers as well as ethanol process equipment manufacturers in defending against the GS CleanTech patents and the claims asserted by GS CleanTech thereunder.  These defenses include claims of non-infringement as well as claims of patent invalidity based upon a number of grounds.  Depositions have been jointly taken by Defendants as to these defenses as well as the claims asserted by GS CleanTech. Discovery is ongoing in this lawsuit.

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Lincolnway Energy is unable as of the date of this annual report to determine the likelihood of an unfavorable outcome or the amount or range of possible loss or whether the lawsuit will have a material adverse affect on Lincolnway Energy. The lawsuit has, however, increased Lincolnway Energy's legal costs.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Lincolnway Energy is authorized to issue an unlimited number of units, but member approval is required in order to issue more than 45,608 units.  Lincolnway Energy had 42,049 outstanding units as of November 30, 2012, which were held of record by 959 different members. The determination of the number of members is based upon the number of record holders of the units as reflected in Lincolnway Energy's internal unit records.

Lincolnway Energy did not issue any units during the fiscal year ended September 30, 2012.

Lincolnway Energy's units are not listed on any exchange, and there is no public trading market for Lincolnway Energy's units.  An investment in Lincolnway Energy's units is not a liquid investment because the second amended and restated operating agreement of Lincolnway Energy establishes various conditions on the issuance of additional units and various restrictions on the sale, assignment or other transfer of units.

The second amended and restated operating agreement of Lincolnway Energy provides that the board of Lincolnway Energy may not issue any units for a consideration or value of less than $500 per unit or issue more than an aggregate of 45,608 units, without the vote of the members, except that the directors of Lincolnway Energy may effectuate a split of the outstanding units into a lesser or greater number of units, based upon a uniform multiple, without the vote of the members.  In that event, the $500 amount and the 45,608 amount shall also be increased or decreased in accordance with the multiple that was utilized in the split of the units.  The second amended and restated operating agreement also provides that Lincolnway Energy may not issue any units to any director or officer of Lincolnway Energy in their capacity as such, without the vote of the members.  The necessary vote in any of the circumstances described in this paragraph is the vote of the members holding at least a majority of the outstanding units represented at a meeting at which a quorum of the members is present.  The members holding at least 25% of the outstanding units constitute a quorum at any meeting of the members.

The second amended and restated operating agreement of Lincolnway Energy also provides that no member shall, directly or indirectly, own, hold or control more than 49% of the outstanding units at any time, unless the member exceeds that percentage by reason of Lincolnway Energy purchasing units.  The second amended and restated operating agreement provides that for this purpose a member will be deemed to indirectly own, hold and control all units which are owned by the member's spouse or any of the member's parents or minor children and by any entity of which any one or more of the member or any of those relatives owns at least 10% of the outstanding voting equity of the entity.

The second amended and restated operating agreement of Lincolnway Energy also establishes restrictions on the sale, assignment or other transfer of units.

The second amended and restated operating agreement provides that a member may not sell, transfer, assign or otherwise dispose of or convey any units, whether voluntarily or involuntarily, or grant a security interest in any units, except in compliance with the second amended and restated operating agreement and also only with the prior written approval of the board of Lincolnway Energy and in compliance and accordance with the policies and procedures as may be adopted from time to time by the board.  The board is authorized to adopt and implement those policies and procedures for any reasonable purpose, as determined by the board.  A reasonable purpose includes prohibiting, restricting, limiting, delaying or placing conditions on any assignment of units which, alone or together with any other past or anticipated assignments, would or might reasonably be determined to:

• Violate or cause Lincolnway Energy to violate or to otherwise be in noncompliance with any law, rule, regulation or order, including any securities law, rule, regulation or order;

• Cause Lincolnway Energy to be taxed as a corporation for tax purposes, including by reason of Section 7704 of the Internal Revenue Code of 1986;

• Result in the termination of Lincolnway Energy or Lincolnway Energy's tax year for tax purposes, including under Section 708 of the Internal Revenue Code of 1986, or cause the application to Lincolnway Energy of Sections 168(g)(1)(B) or 168(h) of the Internal Revenue Code of 1986 or similar or analogous rules;

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• Violate any term or condition of the second amended and restated operating agreement, including the 49% ownership limitation noted above;

• Violate or cause Lincolnway Energy to violate or to otherwise be in noncompliance with any law, rule, regulation or order applicable to Lincolnway Energy's selection or use of its then current fiscal year, including Section 444 of the Internal Revenue Code of 1986;

• Require Lincolnway Energy to become licensed, registered or regulated as an investment company, a broker-dealer or any other form of regulated entity under any law, rule, regulation or order; or

• Create or result in any fractional units.

The policies and procedures adopted by the board regarding the assignment of units are referred to as the unit assignment policy.  Lincolnway Energy's current unit assignment policy mirrors the terms of the second amended and restated operating agreement and provides that all assignments require the prior approval of the board, and that the board may prohibit, restrict, limit, delay or place conditions on any assignment which might have any of the effects described in the preceding subparagraphs.  Several of those potential effects could be applicable to Lincolnway Energy at any given time.

One example that will be applicable to Lincolnway Energy on an ongoing basis arises from the fact that Lincolnway Energy is taxable as a partnership for income tax purposes.  There are various statutes and regulations that Lincolnway Energy must comply with in order to maintain that tax classification.  One applicable statute and related regulation is Section 7704 of the Internal Revenue Code of 1986 and Section 1.7704-1 of the Treasury Regulations.  Section 7704 provides, in general, that a partnership which becomes a publicly traded partnership under Section 7704 will be taxed as a corporation.  Section 7704 provides that a publicly traded partnership is a partnership whose interests either are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent.  Section 1.7704-1 sets forth some rules for making a determination of whether a partnership is readily tradable on a secondary market or the substantial equivalent for that purpose, and establishes some specified processes and procedures as "safe harbors" under the publicly traded partnership rules.  The safe harbors include a limited matching service and a limited repurchase option.

The general rule under the publicly traded partnership rules is that no more than 2% of a partnership's outstanding units may be transferred during any taxable year, unless the partnership has established one of the safe harbors that are available under the publicly traded partnership rules.  As noted above, the safe harbors include a limited matching service and a limited repurchase option.  If one or both of those processes have been established, a partnership may permit the transfer of up to an aggregate of 10% of the partnership's outstanding units during any taxable year, so long as no more than 2% of the transfers occur outside of the matching service or the repurchase option and all of the other transfers are made in accordance with the terms of the matching service or the repurchase option.

Lincolnway Energy has established a qualified matching service on Lincolnway Energy's website, and the second amended and restated operating agreement of Lincolnway Energy includes a repurchase provision which complies with the safe harbor for a repurchase option under the publicly traded partnership rules.  There are numerous conditions and requirements in both the qualified matching service and the repurchase option, so neither provides any significant liquidity for Lincolnway Energy's units.  Also, Lincolnway Energy has no obligation to purchase any units under the repurchase provisions in the second amended and restated operating agreement.

Lincolnway Energy has not made any repurchases of its units pursuant to the repurchase provisions set forth in the second amended and restated operating agreement.

There have been some sales of units pursuant to Lincolnway Energy's qualified matching service.  The purchase price and other terms of any transactions pursuant to Lincolnway Energy's qualified matching service are negotiated and established solely by the seller and the buyer.  Lincolnway Energy does not endorse or recommend any sale of units and is not responsible for the fairness of the purchase price paid in any transactions made pursuant to the qualified matching service, or for the payment or other terms of any transaction.  Lincolnway Energy therefore does not represent or guarantee in any way that any of the prices paid pursuant to the qualified matching service are fair or accurately reflect the value of Lincolnway Energy's units, and Lincolnway Energy does not endorse or recommend any sales of units at any of the prices listed by a member in the qualified matching service or on the same or similar terms.

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The publicly traded partnership rules exclude some types of transfers from the 2% and 10% limitations.  As an example, a gift of units by a member to certain family members of the member is not counted towards the 2% and 10% limitations.

Another example of a transfer limitation that currently will be applicable to Lincolnway Energy on an ongoing basis arises from the fact that Lincolnway Energy has elected to utilize a September 30 fiscal year end.  Given that fact, no more than 5% of Lincolnway Energy's units can be owned by pass-through type entities, such as Subchapter S corporations, limited liability companies or partnerships.  At the time of the preparation of this annual report, Lincolnway Energy was at the 5% maximum amount, so no transfers of any units to a pass-through type entity were permitted.

The second amended and restated operating agreement and the unit assignment policy both contemplate that a member desiring to assign any units must present Lincolnway Energy with a unit assignment application and any other information requested by the board.  The board is not required to act on a unit assignment application until the next regularly scheduled meeting of the board which follows the date on which Lincolnway Energy receives the completed and executed unit assignment application.

An assignment of a unit which is approved by the board will be effective for all purposes, including for purposes of allocations and distributions, only as of the date determined by the board, but the date must be within 32 days of the date of the approval of the assignment by the board.  Lincolnway Energy believes that approach is necessary in order to provide a uniform effective date for assignments of units.

The unit assignment policy also provides that Lincolnway Energy may require the assigning member or the assignee to provide a legal opinion to Lincolnway Energy regarding the assignment, and that Lincolnway Energy may require that Lincolnway Energy be paid or reimbursed for all of its fees, costs and expenses incurred in connection with any assignment, including legal and accounting fees.

As of the date of this annual report, Lincolnway Energy did not have any equity compensation plans (including any individual equity compensation arrangements) in place for any directors, officers, employees or other persons.

As of the date of this annual report, Lincolnway Energy had no plans to, and had not agreed to register any of its units under any federal or state securities laws.

There were no outstanding warrants, options or other rights to purchase any units of Lincolnway Energy as of the date of this annual report, and there were no outstanding securities which were convertible or exchangeable into or for any units of Lincolnway Energy.  Lincolnway Energy's units are not convertible into any other securities.

The payment of distributions to members by Lincolnway Energy is within the discretion of the board of Lincolnway Energy, and there is no assurance of any distributions from Lincolnway Energy.  The payment of distributions is also subject to Lincolnway Energy's compliance with the various covenants and requirements of Lincolnway Energy's credit and loan agreements, and it is possible that those covenants and requirements will at times prevent Lincolnway Energy from paying a distribution to its members.

Lincolnway Energy has declared six distributions since Lincolnway Energy was organized in May 2004.  The first distribution was declared in November 2006 and was in the amount of $150 per unit, resulting in an aggregate distribution of $6,428,850.  The second distribution was declared in May 2007, and was in the amount of $200 per unit, resulting in an aggregate distribution of $8,409,800.  The third distribution was declared in November 2007, and was in the amount of $125 per unit, resulting in an aggregate distribution of $5,256,125.  The fourth distribution was declared in May 2008, and was in the amount of $75 per unit, resulting in an aggregate distribution of $3,153,675.  The fifth distribution was declared in February 2010, and was in the amount of $50 per unit, resulting in an aggregate distribution of $2,102,450. The sixth distribution was declared in February 2012, and was in the amount of $25 per unit, resulting in an aggregate distribution of $1,051,225.

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Lincolnway Energy does not contemplate being able to establish a definite or regular distribution policy or history because the determination of whether a distribution can or should be made by Lincolnway Energy will need to be made by the board of Lincolnway Energy based upon the then existing facts and circumstances of Lincolnway Energy, which could change materially from time to time. For example, although a distribution was declared in November of both 2006 and 2007 and in May of both 2007 and 2008, the board of Lincolnway Energy determined that no distribution should be made by Lincolnway Energy during November 2008, May 2009 or in November 2009, given the generally unfavorable economic outlook and the prevailing conditions in the ethanol industry. As noted above, Lincolnway Energy did declare a distribution in February of 2010 and February 2012, but both of those distributions were at a lower per unit amount than the prior distributions by Lincolnway Energy. Also, no distribution was declared in November of 2010, in February or November of 2011, or in November 2012. Although no firm decision has been made, it is possible that no, or perhaps reduced, distributions will be declared and paid by Lincolnway Energy during the fiscal year ending September 30, 2013.

None of Lincolnway Energy's units were purchased by or on behalf of Lincolnway Energy or any affiliated purchaser (as defined in Rule 10b-18(a)(3) of the Securities Exchange Act of 1934) of Lincolnway Energy during the period of July 1, 2012 to September 30, 2012. As of the date of this annual report, Lincolnway Energy did not have any publicly announced plans or programs with respect to purchases of its units.

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Item 6.    Selected Financial Data.

The following information is summary selected financial data for Lincolnway Energy for the fiscal years ended September 30, 2012, 2011, 2010, 2009 and 2008 with respect to statements of operations data and balance sheet data. The data is qualified by, and must be read in conjunction with, Item 1A of this annual report, "Risk Factors", Item 7 of this annual report, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and with the financial statements and supplementary data included in Item 8 of this annual report.

Statements of Operations Data:	2012			2011			2010			2009			2008
Revenues	$	169,567,374		$	173,951,126		$	114,373,268		$	110,223,531		$	147,040,911
Cost of goods sold	171,827,633			169,817,362			106,744,081			113,576,938			138,309,541
Gross profit(loss)	(2,260,259		)	4,133,764			7,629,187			(3,353,407		)	8,731,370
General and administrative expense	2,955,565			2,649,796			2,440,390			2,366,638			2,647,368
(Gain) loss on sale or disposal of property and equipment	(489,664		)	—			—			—			—
Contract settlement fee	1,700,000			—			—			—			—
Operating income (loss)	(6,426,160		)	1,483,968			5,188,797			(5,720,045		)	6,084,002
Interest expense	(237,565		)	(593,461		)	(851,358		)	(860,303		)	(1,430,469		)
Other income-interest and grant	6,957			9,542			25,019			165,007			181,895
Net income (loss)	$	(6,656,768	)	$	900,049		$	4,362,458		$	(6,415,341	)	$	4,835,428
Weighted average units outstanding	42,049			42,049			42,049			42,049			42,049
Net income (loss) per unit - basic and diluted	$	(158.31	)	$	21.40		$	103.75		$	(152.57	)	$	115.00
Cash distributions per unit	$	25.00		$	—		$	50.00		$	—		$	200.00

	2012		2011		2010		2009		2008
Working Capital	$	12,327,668	$	10,403,670	$	11,493,635	$	6,670,560	$	10,216,873
Net Property Plant & Equipment	$	37,246,286	$	44,693,362	$	49,821,446	$	57,293,563	$	65,010,487
Total Assets	$	54,001,124	$	61,198,788	$	65,898,900	$	71,092,101	$	90,516,722
Long-Term Obligations	$	5,149,053	$	3,188,021	$	9,859,711	$	14,938,584	$	19,998,369
Members' Equity	$	45,431,316	$	53,139,309	$	52,239,260	$	49,979,252	$	56,394,593
Book Value per Member Unit	$	1,080	$	1,264	$	1,242	$	1,189	$	1,341

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Except for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties, and which speak only as of the date of this annual report.  No one should place strong or undue reliance on any forward looking statements.  Lincolnway Energy's actual results or actions may differ materially from these forward-looking statements for many reasons, including the risks described in Item 1A and elsewhere in this annual report.  This Item should be read in conjunction with the financial statements and related notes and with the understanding that Lincolnway Energy's actual future results may be materially different from what is currently expected or projected by Lincolnway Energy.

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Overview

Lincolnway Energy is an Iowa limited liability company that operates a dry mill, coal fired ethanol plant located in Nevada, Iowa. Lincolnway Energy has been processing corn into fuel grade ethanol and distillers grains since May 22, 2006. The ethanol plant has a nameplate production capacity of 50,000,000 gallons, which, at that capacity, would also generate approximately 136,000 tons of distillers' grains per year. The ethanol plant produced 55,712,726 gallons of ethanol and 147,425 tons of distillers' grains during the fiscal year ended September 30, 2012. Lincolnway Energy had a planned shut down during the month of November, 2011 and May, 2012 to complete routine maintenance work.

Lincolnway Energy's plant also produces corn oil and carbon dioxide.

Lincolnway Energy's revenues for the fiscal year ended September 30, 2012 were derived from the sale of Lincolnway Energy's ethanol to Green Plains Trading Group, LLC. (GPTG), the sale of its distiller's grains to Hawkeye Gold, LLC, the sale of its corn oil to FEC Solutions, LLC (FECS), and the sale of its carbon dioxide to EPCO Carbon Dioxide Products, Inc.

Lincolnway Energy's ethanol was sold pursuant to an ethanol marketing agreement between Lincolnway Energy and GPTG. The purchase price payable to Lincolnway Energy is GPTG's contract selling price for the ethanol in question, less various costs and a fee to GPTG. The ethanol marketing agreement includes a minimum purchase price. Title and all risk of loss and damage to all ethanol passed to GPTG at the time the ethanol passes across the inlet flange into the rail cars or trucks of the GPTG carrier at the Lincolnway Energy plant. On November 29, 2012, Lincolnway Energy and GPTG mutually agreed to terminate the ethanol marketing agreement effective December 31, 2012. The termination was requested by Lincolnway Energy because managers of Lincolnway Energy determined that it was in the best interests of Lincolnway Energy to retain a different ethanol marketer. Lincolnway Energy will actively pursue a contract with another marketer to replace GPTG.

Lincolnway Energy's output of distiller's grains is sold to Hawkeye Gold, LLC under a Distiller's Grains Marketing Agreement between Lincolnway Energy and Hawkeye Gold, LLC. Prior to August 1, 2012, Lincolnway Energy paid Hawkeye Gold, LLC a marketing fee for dried distiller's grains and wet distiller's grains equal to the greater of a set percentage of the FOB plant price or a fixed dollar amount per ton for the dried distiller's grains or wet distiller's grains in question. The agreement was amended on August 1, 2012 to change the fees payable to Hawkeye Gold, LLC. Since that amendment, the fee for dried distiller's grains is a set percentage of the FOB plant price, but with both a specified maximum and a minimum per short ton price. The fee for wet distiller's grains is also a set percentage of the FOB plant price, but with a specified maximum per short ton price. The Distiller's Grains Marketing Agreement can be terminated by Lincolnway Energy or Hawkeye Gold, LLC on 90 days written notice.

Lincolnway Energy extracts corn oil from the syrup that is generated in the production of ethanol. FECS purchases all of Lincolnway Energy's output of corn oil for resale by FECS pursuant to an agreement that became effective on October 13, 2008. Lincolnway Energy pays FECS a marketing and technical assistance fee of a set percentage of the FOB sales price of the corn oil. The agreement renews for successive 36 month terms, on October 13 of the applicable year, unless Lincolnway Energy or FECS elects to terminate the agreement at the end of the then current 36 month term. The current 36 month term expires in October 2014.

EPCO Carbon Dioxide Products, Inc. constructed a plant on Lincolnway Energy's site in mid 2010 to collect the carbon dioxide which is produced as part of the ethanol production process and to convert that raw carbon dioxide into liquid carbon dioxide gas. Lincolnway Energy and EPCO also have an agreement under which EPCO markets and sells the liquid carbon dioxide . The purchase price payable by EPCO for the carbon dioxide provided by Lincolnway Energy is based upon EPCO's shipped tons of liquid carbon dioxide. The current purchase price is the greater of the fixed per shipped ton price specified in the agreement or the margin price, as that term is defined in the agreement. EPCO has also agreed to a take or pay obligation for each year under the Agreement of the greater of 180 shipped tons per day or 70% of the annual liquid CO2 production capacity of the EPCO plant at full capacity. The term of the marketing agreement with EPCO is ten years from the first date on which liquid carbon dioxide was produced at the EPCO plant, which occurred during August, 2010, unless the agreement is earlier terminated for any of the other reasons set out in the agreement.

Lincolnway Energy is dependent upon its agreements for the marketing and sale of its products, in particular ethanol and distillers' grains, and Lincolnway Energy's loss of those agreements could have material adverse effects on Lincolnway Energy.

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Comparison of Fiscal Years Ended September 30, 2012 and 2011

Statements of Operations Data:	2012					2011
	Amount			%		Amount			%
Revenues	$	169,567,374		100.0		$	173,951,126		100.0
Cost of goods sold	171,827,633			101.3		169,817,362			97.6
Gross profit (loss)	(2,260,259		)	(1.3	)	4,133,764			2.4
General and administrative expense	2,955,565			1.7		2,649,796			1.5
(Gain) loss on sale or disposal of property and equipment	(489,664		)	(0.2	)	—			—
Contract settlement fee	1,700,000			1.0		—			—
Operating income (loss)	(6,426,160		)	(3.8	)	1,483,968			0.9
Interest expense	(237,565		)	(0.1	)	(593,461		)	(0.3	)
Interest income	6,957			—		9,542			—
Net income (loss)	$	(6,656,768	)	(3.9	)	$	900,049		0.6

Revenues from operations for the fiscal year ended September 30, 2012 were approximately $169.6 million, consisting of $126.4 million of ethanol sales (net of hedging activity) (75%), $38.6 million in distiller's grains sales (23%) and $4.6 million of corn oil, syrup and CO2 sales (2%).  Revenues decreased in fiscal year 2012 by approximately 2.5%, when compared to the fiscal year 2011. Lincolnway Energy sold approximately 55.3 million gallons of ethanol at an average gross price of $2.29 per gallon, 146,516 tons of dried distillers grains at an average gross price of $258.97 per ton, and 6,142 tons of wet distillers grains at an average gross price of $101.19 per ton during the fiscal year ended September 30, 2012.  Lincolnway Energy also sold approximately 4,815 tons of corn oil at an average gross price of $780.57 per ton during the 2012 fiscal year.  The decrease in revenues for the fiscal year ended September 30, 2012 resulted from a 3.0% decrease in ethanol sales volume and a 6.5% decrease in price for ethanol as compared to the previous fiscal year. The revenues for the year ended September 30, 2012 include combined unrealized and realized net loss on derivative ethanol contracts of $7,308 compared to a $1.1 million loss for the year ended September 30, 2011.

The average price Lincolnway Energy received for its dried distiller's grains increased to $258.97 per ton in fiscal year 2012, from $215.26 per ton in fiscal year 2011.    Management believes the increase in the price for distiller's grains is a result of the increase in the price of corn and increased domestic and export demand for dried distillers grains. Distiller grains are typically impacted by increases in corn prices as distillers grains are primarily used as an animal feed substitute for corn. Management anticipates continued strong demand for distillers grains due to higher corn prices.

Lincolnway Energy anticipates that its results of operations for the remainder of calendar year 2012 will continue to be affected by a surplus of ethanol and volatility in the commodity markets.

Lincolnway Energy's cost of goods sold for the fiscal year ended September 30, 2012 totaled approximately $171.8 million, which was an increase of 1.2% when compared to fiscal year 2011.  The increase in cost of goods sold for the 2012 fiscal year is primarily due to a 4.4% increase in the average cost of corn per bushel for fiscal year 2012 offset by a 2.4% decrease in ethanol production for the 2012.  Cost of goods sold major components are: corn costs, energy costs, ingredient costs, production labor, repairs and maintenance, process depreciation, and ethanol and distiller's grain freight expense and marketing fees.

Corn costs excluding hedging activity for the fiscal year ended September 30, 2012 totaled approximately $129.1 million, compared to $126.0 million for fiscal year 2011. Approximately 19.7 million bushels of corn was ground during fiscal year 2012 at an average cost of $6.62 per bushel, compared to 20.0 million bushels at an average cost of $6.34 for fiscal year 2011. The decrease in bushels ground was due to an decrease in production during fiscal year 2012. The increase in corn price is partially attributed to an increase in corn demand that leads to tight corn supply and the drought that we experienced in the summer of 2012. Ethanol yields stayed relatively neutral from fiscal year 2012 compared to 2011. Corn hedging activity includes a combined unrealized and realized net loss of $1.0 million from derivative instruments compared to a $3.0 million combined unrealized and realized net loss for fiscal year 2011.  Corn costs, including the combined unrealized and realized net loss from derivative instruments, represented 75.9% of cost of goods sold for the fiscal year ended September 30, 2012, compared to76.1% of costs of goods sold for fiscal year 2011.

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Lincolnway Energy anticipates continued volatility in Lincolnway Energy's corn costs due to the timing of the change in value of the derivative instruments relative to the cost and use of the corn being hedged.

Energy costs for the fiscal year ended September 30, 2012 totaled approximately $9.8 million or 5.7% of cost of goods sold, compared to $9.6 million, or 5.7% of cost of goods sold, for the 2011 fiscal year.  Energy costs consist of coal costs, electricity and propane costs.  For the fiscal year ended September 30, 2012, Lincolnway Energy purchased 98,801 tons of coal at an approximate total cost of $7.2 million compared to approximately 102,029 tons at an approximate cost of $7.0 million for fiscal year 2011. Electricity and propane costs amounted to approximately $2.3 million, a decrease of $.08 million from fiscal year 2011 and approximately $.3 million of sodium bicarbonate, sand and lime cost for fiscal year 2012 that is added to the combustor with the coal. The increase in energy cost is due to a price increase for coal and offset by the decrease in production gallons for the fiscal year 2012.

Ingredient costs for the fiscal year ended September 30, 2012 totaled approximately $7.0 million or 4.1% of cost of goods sold, compared to $7.1 million, or 4.2% of cost of goods sold, for the 2011 fiscal year.  Ingredient costs consist of denaturant, enzymes, fermentation and process chemicals. Denaturant costs (natural gasoline) decreased $.2 million for the fiscal year ended September 30, 2012 compared to fiscal year 2011.  This decrease is a result of a 3.0% decrease in ethanol gallons produced for the fiscal year ended September 30, 2012 compared to fiscal year 2011 and a less than 1.0% decrease in price for denaturant.

Production labor, repairs and maintenance and other plant costs totaled approximately $6.7 million, or 3.9% of cost of goods sold, for the fiscal year ended September 30, 2012, compared to $5.8 million, or 3.4% of cost of goods sold, for fiscal year 2011. The increase in cost is due to increased repair and maintenance cost that totaled approximately $2.6 million for fiscal year ended September 30, 2012, compared to $1.6 million, for fiscal year 2012. The increase in cost for repairs and maintenance is due to the age, wear and tear on the plant.

Depreciation totaled approximately $7.0 million, or 4.1% of cost of goods sold, for the fiscal year ended September 30, 2012, compared to $7.5 million, or 4.4% of cost of goods sold, for fiscal year 2011.

Ethanol, distiller's grain and corn oil freight expense and marketing fees totaled approximately $11.0 million, or 6.4% of cost of goods sold, during the fiscal year ended September 30, 2012, compared to $10.6 million, or 6.2% of cost of goods sold, for fiscal year 2011.  The increase is due to an increase in sales of distillers grain and corn oil for fiscal year 2012 compared to 2011.

General and administrative expenses totaled approximately $3.0 million during the fiscal year ended September 30, 2012, compared to $2.6 million for fiscal year 2011. The $.4 million increase is due to an increase in legal fees for the patent litigation and air permit appeal and E15 registration fees with the EPA.

For the fiscal year ended September 30, 2012, a contract settlement fee of $1.7 million and gain on land sale of $489,664 was recognized, whereas no comparable items were recognized in fiscal year 2011. The contract settlement fee incurred was related to the early termination of an agreement with Lincolnway Energy's primary corn supplier. The gain on land sale was recognized due to the sale of a land parcel adjacent to Lincolnway Energy's primary site. Management believes both of these matters are generally one-time, nonrecurring items.

Other income and expense totaled approximately $.2 million net expense during the fiscal year ended September 30, 2012, compared to $.6 million net expense for fiscal year 2011. The decrease in net expense is due to a decrease in interest expense compared to 2011.

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Comparison of Fiscal Years Ended September 30, 2011 and 2010

Statements of Operations Data:	2011					2010
	Amount			%		Amount			%
Revenues	$	173,951,126		100.0		$	114,373,268		100.0
Cost of goods sold	169,817,362			97.6		106,744,081			93.3
Gross profit	4,133,764			2.4		7,629,187			6.7
General and administrative expense	2,649,796			1.5		2,440,390			2.1
Operating income	1,483,968			0.9		5,188,797			4.6
Interest expense	(593,461		)	(0.3	)	(851,358		)	(0.7	)
Other income-interest	9,542			—		25,019			—
Net income	$	900,049		0.6		$	4,362,458		3.9

Revenues from operations for the fiscal year ended September 30, 2011 were approximately $174.0 million, consisting of $138.5 million of ethanol sales (net of hedging activity) (80%), $31.7 million in distiller's grains sales (18%) and $3.8 million of corn oil, syrup and CO2 sales (2%).  Revenues increased in fiscal year 2011 by approximately 52.1%, when compared to the fiscal year 2010. Lincolnway Energy sold approximately 57.0 million gallons of ethanol at an average gross price of $2.45 per gallon, 143,760 tons of dried distillers grains at an average gross price of $215.26 per ton, and 11,706 tons of wet distillers grains at an average gross price of $65.76 per ton during the fiscal year ended September 30, 2011.  Lincolnway Energy also sold approximately 3,835 tons of corn oil at an average gross price of $892.00 per ton during the 2011 fiscal year.  The increase in revenues for the fiscal year ended September 30, 2011 resulted from a 3.4% increase in ethanol sales volume and a 42.4% increase in price for ethanol as compared to the previous fiscal year. Management believes the ethanol price increase is a result of higher corn and energy prices along with increased exports to Europe, Canada and Brazil which positively impacted ethanol demand during the 2011 fiscal year.  The revenues for the year ended September 30, 2011 include combined unrealized and realized net loss on derivative ethanol contracts of $1.1 million compared to a $1.4 million loss for the year ended September 30, 2010.

The average price Lincolnway Energy received for its dried distiller's grains increased to $215.26 per ton in fiscal year 2011, from $145.38 per ton in fiscal year 2010.    Management believes the increase in the price for distiller's grains is a result of the increase in the price of corn and increased domestic and export demand for dried distillers grains. Distiller grains are typically impacted by increases in corn prices as distillers grains are primarily used as an animal feed substitute for corn. Management anticipates continued strong demand for distillers grains due to higher corn prices.

Lincolnway Energy anticipates that its results of operations for the remainder of calendar year 2011 and for 2012 will continue to be affected by a surplus of ethanol and volatility in the commodity markets.

Lincolnway Energy's cost of goods sold for the fiscal year ended September 30, 2011 totaled approximately $169.8 million, which was an increase of 59.1% when compared to fiscal year 2010.  The increase in cost of goods sold for the 2011 fiscal year is primarily due to a 76.6% increase in the average cost of corn per bushel for fiscal year 2011 and a 3% increase in ethanol production for the 2011.  Cost of goods sold major components are: corn costs, energy costs, ingredient costs, production labor, repairs and maintenance, process depreciation, and ethanol and distiller's grain freight expense and marketing fees.

Corn costs excluding hedging activity for the fiscal year ended September 30, 2011 totaled approximately $126.0 million, compared to $70.4 million for fiscal year 2010. Approximately 20.0 million bushels of corn was ground during fiscal year 2011 at an average cost of $6.34 per bushel, compared to 19.7 million bushels at an average cost of $3.59 for fiscal year 2010. The increase in bushels ground was due to an increase in production during fiscal year 2011. The increase in corn price is partially attributed to an increase in corn demand that leads to tight corn supply and the rise of energy prices. Ethanol yields have improved in the fiscal year 2011 because of the quality of the corn crop harvested in 2011 compared to 2010. Corn hedging activity includes a combined unrealized and realized net loss of $3.0 million from derivative instruments compared to a $1.5 million combined unrealized and realized net gain for fiscal year 2010.  Corn costs, including the combined unrealized and realized net loss from derivative instruments, represented 76.1% of cost of goods sold for the fiscal year ended September 30, 2011, compared to 64.9% of costs of goods sold for fiscal year 2010.

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Lincolnway Energy anticipates continued volatility in Lincolnway Energy's corn costs due to the timing of the change in value of the derivative instruments relative to the cost and use of the corn being hedged.

Energy costs for the fiscal year ended September 30, 2011 totaled approximately $9.6 million or 5.7% of cost of goods sold, compared to $8.8 million, or 8.2% of cost of goods sold, for the 2010 fiscal year.  Energy costs consist of coal costs, electricity and propane costs.  For the fiscal year ended September 30, 2011, Lincolnway Energy purchased approximately 102,029 tons of coal at an approximate total cost of $7.0 million compared to approximately 98,500 tons at an approximate cost of $6.0 million for fiscal year 2010. Electricity and propane costs amounted to approximately $2.4 million, a decrease of $.2 million from fiscal year 2010 and approximately $.3 million of sodium bicarbonate, sand and lime cost for fiscal year 2011 that is added to the combustor with the coal. The increase in energy cost is due to a price increase for coal and the increase in production gallons for the fiscal year 2011.

Ingredient costs for the fiscal year ended September 30, 2011 totaled approximately $7.1 million or 4% of cost of goods sold, compared to $5.1 million, or 4.8% of cost of goods sold, for the 2010 fiscal year.  Ingredient costs consist of denaturant, enzymes, fermentation and process chemicals. Denaturant costs (natural gasoline) increased $.9 million for the fiscal year ended September 30, 2011 compared to fiscal year 2010.  Denaturant cost have increased significantly from an average cost per gallon of $1.87 for the 2010 period, compared to $2.30 for the 2011 period. Enzymes, fermentation and process chemicals cost also increased by $1.1 million for the 2011 period compared to the 2010 period. The increase is a result of an increase in production gallons and also the price of chemicals were higher for the fiscal year 2011 compared to fiscal year 2010.

Production labor, repairs and maintenance and other plant costs totaled approximately $5.6 million, or 3.3% of cost of goods sold, for the fiscal year ended September 30, 2011, compared to $5.3 million, or 4.9% of cost of goods sold, for fiscal year 2010. The increase in cost is due to increased labor costs and higher repair and maintenance and plant cost due to increased production and the wear and tear on the plant.

Depreciation totaled approximately $7.5 million, or 4.4% of cost of goods sold, for the fiscal year ended September 30, 2011, compared to $7.6 million, or 7% of cost of goods sold, for fiscal year 2010.

Ethanol, distiller's grain and corn oil freight expense and marketing fees totaled approximately $10.6 million, or 6.2% of cost of goods sold, during the fiscal year ended September 30, 2011, compared to $10.4 million, or 9.8% of cost of goods sold, for fiscal year 2010.  The increase is due to an increase in sales of ethanol, distillers grain and corn oil for fiscal year 2011 compared to 2010.

General and administrative expenses totaled approximately $2.7 million during the fiscal year ended September 30, 2011, compared to $2.4 million for fiscal year 2010. The $.3 million increase is due to an increase in legal fees for the patent litigation and air permit appeal.

Other income and expense totaled approximately $.6 million net expense during the fiscal year ended September 30, 2011, compared to $.8 million net expense for fiscal year 2010. The decrease in net expense is due to a decrease in interest expense compared to 2010.

Risks, Trends and Factors that May Affect Future Operating Results

The operations and profitability of Lincolnway Energy are highly dependent on the prices of the key commodities utilized and sold as part of the production process.  These include corn, ethanol, and distillers' grain.  Since the correlation of prices between these commodities is not perfect, and is in fact often very volatile, Lincolnway Energy is at risk of diminishing returns in periods of rising corn prices and decreasing ethanol prices.  The prices of these commodities are determined by a variety of factors, including growing season weather, governmental policies, political change, international trade, and macroeconomic trends.  Lincolnway Energy attempts to mitigate or hedge some of these risks through the use of various pricing mechanisms including cash contracts, futures contracts, options on futures, and derivative instruments.

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Corn

Corn values in 2012 proved to be one of the most volatile in modern history with December corn futures trading at a new record high of $8.49 per bushel on August 10, 2012. The volatile market was driven by continued severe hot and dry conditions with plagued the majority of the U.S corn belt. USDA made aggressive yield reductions in the July and August crop report. Over a period of two monthly crop reports the U.S. corn yield was lowered a staggering 42.6 bushels per acre. Total 2012/2013 U. S. corn production fell by more than 4.0 billion bushels as a result. Consistently higher corn prices have thus far worked to create the projected demand destruction necessary to balance historically low U.S. corn ending stocks. The 2012/2013 U.S. corn carryout was forecasted at 619 million bushels in October (stocks to use ratio of 5.6%), which represented the lowest U.S. corn stock figure since 1995/1996, 426 million bushels (stocks to use ratio of 5.0%)

Ethanol

The operating environment for the U.S. ethanol producer in the 4th quarter of 2012 continues to be challenged by lower total gasoline consumption in the U.S and secondly, Brazilian sugarcane-based ethanol imports are flowing as a source of advanced biofuels (considered lower in carbon than the U.S. based ethanol production), during a period where the U.S production base is already slowed by a factor of greater than 10 percent. This difficult operating environment for the U.S. ethanol producer has been the longest sustained period of depressed margins the U.S. ethanol industry has seen in the last several years. If U.S. ethanol production continues to decline, ethanol prices may show some recovery. This could, however, encourage some idled U.S. production to ramp up to full capacity, or possibly increased interest from Brazil to import more of the sugarcane-based ethanol.

Other/Regulatory/Governmental

Ethanol production in the United States has benefited by various tax incentives, but the more recent trends in the legislative area have not been favorable to the ethanol industry. For example, one of the most significant tax incentives was the federal Volumetric Ethanol Excise Tax Credit (VEETC).  VEETC provided a volumetric ethanol excise tax credit of 45¢ per gallon of ethanol blended with gasoline.  This credit expired, however, on December 31, 2011, and it does not appear that the credit will be reinstated or renewed. Although the loss of this tax credit was expected by the industry, the loss still has had materially adverse effects on the ethanol industry.

Some other areas where the ethanol industry had hoped for additional legislative or regulatory support were for credits or other forms of support for the installation and use of blender pumps or flex fuel vehicles capable of using ethanol blends in excess of 15% and up to 85% and approvals of the use of ethanol blends in excess of 15%. No advancements were made in those areas during 2011 or 2012, however, and those areas are material issues for increasing the use of ethanol.

There have also been some adverse movements at the state legislative level, such as efforts to ban ethanol in New Hampshire, labeling concerns in Nebraska and a repeal threat of the Florida renewable fuels standard. Also, although a federal court judge ruled in late 2011 that California's low carbon fuel standard violated the commerce clause of the Constitution, the ruling is being appealed, so there are still concerns regarding access of corn based ethanol to the California market, which is one of the largest U.S. markets for ethanol.

Perhaps the remaining most significant federal legislation supporting the ethanol and biofuels industry is the Energy Independence and Security Act of 2007. The Act provides for the increasing use of ethanol and other biofuels through the renewable fuels standards. There have been various waiver requests from those standards filed with the U.S. Environmental Protection Commission, as well as calls for reductions in, or the repeal of, those standards. The EPA did announce in mid-November 2012 that the first of those requests did not meet the statutory threshold for the evidence necessary to grant the request. Additional waiver requests and continued efforts by some to extend the period of time for complying with the renewable fuels standards, or for reductions in or the repeal of those standards, are, however, expected. Any such actions would have adverse effects on the ethanol industry, which could be material, in particular any repeal of, or reductions in, those standards.

Changes in governmental policies and support, as well as supply and demand factors, therefore continue to be ongoing risk factors for the ethanol industry and for Lincolnway Energy.

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Critical Accounting Estimates and Accounting Policies

Lincolnway Energy's financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which Lincolnway Energy operates.  This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.  These estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements.  Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported.  Management believes the following policies are both important to the portrayal of Lincolnway Energy's financial condition and results of operations and require subjective or complex judgments; therefore, management considers the following to be critical accounting policies.

Revenue Recognition

Revenue from the sale of Lincolnway Energy's ethanol and distiller's grains is recognized at the time title and all risks of ownership transfer to the customers.  This generally occurs upon the loading of the product.  For ethanol, title passes from Lincolnway Energy at the time the product crosses the loading flange in either a railcar or truck. For distiller's grains, title passes upon the loading of distiller's grains into trucks.  For railcar shipments, this takes place when the railcar is filled and the marketer receives written notice that the railcars have been loaded and are available for billing.  Shipping and handling costs incurred by Lincolnway Energy for the sale of ethanol and distiller's grain are included in costs of goods sold.

Lincolnway Energy's ethanol production is sold to Green Plains Trade Group LLC, as is discussed above in the "Overview" section of this Item.  The purchase price payable to Lincolnway Energy under its agreement with Green Plains is Green Plains' contract selling price for the ethanol in question, less various costs and a fee to Green Plains, but the agreement includes a minimum purchase price.

Lincolnway Energy's distiller's grain production is sold to Hawkeye Gold, LLC.  Since August 12, 2012, Lincolnway Energy pays Hawkeye Gold, LLC a marketing fee for dried distiller's grains of set percentage of the FOB plant price for the dried distiller's grain, but with both a maximum and a minimum per short ton fee.  The marketing fee for wet distiller's grains is currently also a set percentage of the FOB plant price for the wet distiller's grains, but with a maximum per short ton fee. The fee prior to August 12, 2012 for both dry and wet distiller's grains was the greater of a set percentage of the FOB plant price or a fixed dollar amount per ton.

Lincolnway Energy's corn oil production is sold to FEC Solutions, LLC. For corn oil, title passes upon the loading of the corn oil into the trucks. The purchase price payable by FECS for each shipment of corn oil is the FOB sales price less a marketing and technical assistance fee in an amount equal to a specified percentage of the FOB sales price.

Lincolnway Energy's CO2 production is sold to EPCO Carbon Dioxide Products, Inc. For CO2, title passes at the point at which the carbon dioxide pipe from Lincolnway Energy's plant joins the corresponding pipe from the EPCO plant.  The purchase price payable by EPCO for the carbon dioxide provided by Lincolnway Energy during each calendar month is based upon EPCO's shipped tons of liquid carbon dioxide.  EPCO is under the agreement to purchase, during each contract year, a minimum of the greater of 180 shipped tons per day or 70% of the annual liquid carbon dioxide production capacity of the EPCO plant at full capacity, with that capacity to be determined in accordance with the testing processes set out in the agreement.  The "take or pay" obligation is trued up at the end of each contract year, and the purchase price for any "take or pay" tons will be the average per shipped ton purchase price paid by EPCO during the contract year.  Lincolnway Energy began selling CO2 to EPCO in August 1, 2010.

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Derivative Instruments

Lincolnway Energy enters into derivative contracts to hedge its exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales.   Lincolnway Energy does not typically enter into derivative instruments other than for hedging purposes.  All the derivative contracts are recognized on the September 30, 2012, 2011 and 2010 balance sheets at fair value.  Although Lincolnway Energy believes Lincolnway Energy's derivative positions are economic hedges, none has been designated as a hedge for accounting purposes.  Accordingly, any realized or unrealized gain or loss related to these derivative instruments is recorded in the statement of operations as a component of cost of goods sold in the case of corn contracts and as a component of revenue in the case of ethanol sales.

The effects on operating income from derivatives is as follows for the years ending September 30, 2012, 2011 and 2010:

	2012			2011			2010
Increase (decrease) in revenue due to derivatives related to ethanol sales:
Realized	$	(7,308	)	$	(2,655,034	)	$	45,434
Unrealized	—			1,528,367			(1,483,997		)
Total effect on revenue	(7,308		)	(1,126,667		)	(1,438,563		)
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
Realized	(1,134,488		)	(2,946,138		)	604,475
Unrealized	134,050			(44,125		)	849,475
Total effect on cost of goods sold	(1,000,438		)	(2,990,263		)	1,453,950
Total (decrease) increase to operating income due to derivative activities	$	(1,007,746	)	$	(4,116,930	)	$	15,387

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed "normal purchases and normal sales", and therefore are not marked to market in Lincolnway Energy's financial statements, but are subject to a lower of cost or market assessment.

Inventories

Inventories are stated at the lower of cost or market using the first-in, first-out method.  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.

For the years ended September 30, 2012 and 2011, the Company recognized a reserve and resulting loss of $368,000 and none, respectively, for a lower of cost or market inventory adjustment.

Off-Balance Sheet Arrangements

Lincolnway Energy currently does not have any off-balance sheet arrangements.

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Liquidity and Capital Resources

On September 30, 2012, Lincolnway Energy had $151,824 in cash and equivalents and $11.0 million available under committed loan agreements.  Lincolnway Energy’s business is highly impacted by commodity prices, including prices for corn, ethanol and distillers grains.  There are times that Lincolnway Energy may operate at negative operating margins.

The following table shows cash flows for the fiscal years ended September 30, 2012 and 2011:

	Year ended September 30,
	2012			2011
Net cash provided by operating activities	$	1,552,641		$	5,354,786
Net cash provided by (used in) investing activities	131,682			(2,883,108		)
Net cash (used in) financing activities	(1,566,634		)	(5,295,653		)

For the fiscal year ended September 30, 2012, cash provided by operating activities was $1.6 million, compared to cash provided by operating activities of $5.4 million for the fiscal year ended September 30, 2011. The $3.8 million decrease is primarily due to a decrease in net income for fiscal year 2012 of $7.6 million offset by changes in working capital components of $3.8 million.

Cash flows from investing activities reflect the impact of property and equipment acquired for the ethanol plant.  Net cash provided by investing activities increased by $3.0 million for the fiscal year ended September 30, 2012, when compared to the fiscal year ended September 30, 2011.  The increase is primarily due to a decrease of capital expenditures for the fiscal year 2012 and the proceeds received from the sale of property to DuPont Danisco Cellulosic Ethanol, LLC. In the fiscal year 2011, the rail spur addition made up approximately $2.5 million of the capital expenditures.

Cash flows from financing activities include transactions and events whereby cash is obtained or paid back to or from depositors, creditors or investors.  Net cash used in financing activities decreased by $3.7 million for the fiscal year ended September 30, 2012, when compared to the fiscal year ended September 30, 2011.  The decrease is due to a decrease of $4.8 million of payments made on long-term borrowings for the fiscal year ended September 30, 2012 compared to the 2011 fiscal year. This is offset by the $1.1 million in distribution payments made in fiscal year 2012 to Lincolnway Energy members.

  Lincolnway Energy anticipates keeping cash balances at a low but acceptable level that will meet covenants.  If Lincolnway Energy should get in a negative cash position, Lincolnway Energy will having access to the $11.0 million line available on the line of credit agreements.

As of September 30, 2012, Lincolnway Energy was in compliance with all covenants in its loan agreements with Farm Credit.

The following table shows cash flows for the fiscal years ended September 30, 2011 and 2010:

	Year ended September 30,
	2011			2010
Net cash provided by operating activities	$	5,354,786		$	8,811,200
Net cash (used in) investing activities	(2,883,108		)	(847,730		)
Net cash (used in) financing activities	(5,295,653		)	(10,930,307		)

For the fiscal year ended September 30, 2011, cash provided by operating activities was $5.4 million, compared to cash provided by operating activities of $8.8 million for the fiscal year ended September 30, 2010. The $3.4 million decrease is primarily due to a decrease in net income for fiscal year 2011 of $3.4 million.

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Cash flows from investing activities reflect the impact of property and equipment acquired for the ethanol plant.  Net cash used in investing activities increased by $2.0 million for the fiscal year ended September 30, 2011, when compared to the fiscal year ended September 30, 2010.  The increase is primarily due to an increase of capital expenditures for the fiscal year 2011. The rail spur addition makes up approximately $2.5 million of the capital expenditures for the fiscal year 2011.

Cash flows from financing activities include transactions and events whereby cash is obtained or paid back to or from depositors, creditors or investors.  Net cash used in financing activities decreased by $5.6 million for the fiscal year ended September 30, 2011, when compared to the fiscal year ended September 30, 2010.  The decrease is due to no distribution payments being made in fiscal year 2011 to Lincolnway Energy members and a decrease of $3.5 million of additional payments made on long-term borrowing compared to the 2010 fiscal year.

  As of September 30, 2011, Lincolnway Energy was in compliance with all covenants in its loan agreements with Co-Bank.

Loans and Agreements

Lincolnway Energy entered into a Master Loan Agreement on August 20, 2012 with Farm Credit Services of America, FLCA and Farm Credit Services of America, PCA, along with various related supplements and collateral related agreements and documents. CoBank, ACB has a participation interest in the underlying loans and serves as administrative agent for the loans, and is therefore also a party to some of the agreements and documents.

One of the supplements is a Revolving Term Loan Supplement, pursuant to which Lincolnway Energy may borrow, repay and reborrow up to $5,000,000 in principal amount at any one time. The revolving term loan is used to provide working capital and to consolidate under the revolving term loan the remaining $1,500,000 that was outstanding under Lincolnway Energy's Construction and Term Loan Supplement dated March 24, 2005. Lincolnway Energy pays interest on the unpaid balance of the revolving term loan at a variable rate (adjusting on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. Lincolnway Energy must also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The revolving term loan commitment will expire, and Lincolnway Energy must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017.

The other supplement entered into pursuant to the Master Loan Agreement is a Monitored Revolving Credit Supplement, pursuant to which Lincolnway Energy may borrow, repay and reborrow up to $10,000,000 in principal at any one time, provided that the amount available and outstanding under the loan cannot exceed the borrowing base as calculated pursuant to the supplement. The purpose of the loan is to finance inventory and receivables, and the assets included in the borrowing base calculation are therefore primarily inventory and receivables of Lincolnway Energy. Lincolnway Energy will pay interest on the unpaid balance of the loan at a variable rate (adjusting on a weekly basis) based upon the one-month LIBOR index rate plus 3.25%. Lincolnway Energy will also pay a commitment fee on the average daily unused portion of the loan at the rate of .30% per annum, payable monthly. The term of the loan will expire, and Lincolnway Energy must pay all unpaid principal amounts outstanding under the loan, on July 1, 2013.

The loan available under the Monitored Revolving Credit Supplement will replace the $10,000,000 that was available under Lincolnway Energy's existing $10,000,000 revolving term loan with Farm Credit and CoBank.

The aggregate increase in amount of principal available to Lincolnway Energy under the Master Loan Agreement from Lincolnway Energy's existing loan agreements is $3.5 million.

The loans are secured by first priority liens created by security agreements and mortgages covering all of Lincolnway Energy's assets and properties, including Lincolnway Energy's inventory, receivables, plant, real estate and commodity trading accounts.

The Master Loan Agreement includes various conditions and financial covenants that need to be met by Lincolnway Energy, as well as other terms and covenants generally common to loan transactions of this type within the ethanol industry. Lincolnway Energy is also required to pay an annual fee of $4,500 under the Master Loan Agreement.

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Lincolnway Energy also had subordinated debt financing which included a subordinated note of $1,250,000 payable to Fagen, Inc., with an interest rate of 4%, and a $1,216,781 note payable to Fagen, Inc., with an interest rate of 5% per annum.  On August 26, 2011, Fagen, Inc. allowed Lincolnway Energy to pay the $1,216,781 note in full before it maturity. Lincolnway Energy and Fagen entered into a settlement agreement on November 10, 2011 to settle disputes related to the liability with the State of Iowa alleged air emission violations against Lincolnway Energy. The settlement agreement reduced the $1,250,000 promissory note payable to Fagen, Inc., by $270,000, leaving a balance of $980,000. On November 14, 2011, Lincolnway Energy was required to repay $300,000 of the note plus accrued interest and on December 14, 2011, Lincolnway Energy was required to make the remaining payment of $680,000 plus accrued interest.

Lincolnway Energy also entered into a $500,000 loan agreement with the Iowa Department of Transportation in February 2005.  Under the agreement, the loan proceeds were disbursed upon submission of paid invoices and interest at 2.11% per annum began to accrue on January 1, 2007.  Payments began on July 1, 2007.  The remaining loan balance on the Department of Transportation loan was $238,021 as of September 30, 2012. Lincolnway Energy also had a $300,000 loan agreement and a $100,000 forgivable loan agreement with the Iowa Department of Economic Development.  The $300,000 loan did not impose any interest, and the $100,000 loan was forgivable upon the completion of Lincolnway Energy's ethanol plant and the production of at least 50 million gallons of ethanol before the project completion date of October 31, 2008.  The Iowa Department of Economic Development determined those conditions to forgiveness of the $100,000 loan were met, and the loan was forgiven on January 22, 2009.  Lincolnway Energy made the final payment on the Iowa Department of Economic Development loan on October 5, 2011.

Lincolnway Energy entered into a lease agreement with First Union Rail to lease 90 hopper rail cars for the purpose of transporting distiller’s grain.  The initial five-year term of the lease commenced March 2006 and ended March 2011, but the lease was extended to March 2014 by a rider. The rider calls for monthly payments of $56,700 plus applicable taxes.  The rider also established an additional usage rental of 2.5 cents per mile for each car that exceeds 30,000 miles.  Lincolnway Energy is required to maintain a certificate of deposit of $351,000 as partial security for Lincolnway Energy's obligation under the lease.  Lincolnway Energy has classified this certificate of deposit as restricted cash in other assets.

Lincolnway Energy terminated its ethanol marketing agreement with RPMG, Inc. effective October 1, 2009, and as part of that process, Lincolnway Energy was assigned a railcar lease between RPMG, Inc. and Trinity Industries Leasing Company.  The lease includes 100 tank rail cars used for transporting ethanol.  The lease calls for monthly payments of $52,500 plus applicable taxes, beginning October 1, 2009.  There is also an additional usage rental of 3 cents per mile for each car that exceeds 35,000 miles.  The lease has a scheduled maturity date of September 2016.

On February 2, 2010, Lincolnway Energy entered into a lease agreement with an Trinity Industries Leasing Company to lease an additional 30 ethanol tank rail cars.  The one-year term of the lease ended on February 2011.  On March 8, 2011 Lincolnway Energy extended this lease with two riders for 15 railcars each. Each rider calls for monthly payments of $9,750 plus applicable taxes. There was also an additional usage rental of 3 cents per mile for each car that exceeds 30,000 miles.  The lease term on the riders is for three years commencing March 2011 and expiring March 2014.

Lincolnway Energy entered into a Purchase and Sale Agreement with DuPont Danisco Cellulosic Ethanol, LLC ("DDCE") on June 23, 2011 pursuant to which DDCE would, subject to the satisfaction of the various contingencies set out in the Agreement, purchase certain real estate from Lincolnway Energy for the purpose of DDCE constructing a cellulosic or advanced biofuels plant on the real estate. The contingencies under the agreement were satisfied, and the closing of the sale and purchase of the real estate occurred on October 5, 2011. The real estate purchased by DDCE was approximately 59.05 acres and is located to the southwest of the real estate on which Lincolnway Energy's ethanol plant is located. The purchase price paid by DDCE under the agreement was $20,000 per acre, resulting in an aggregate purchase price to Lincolnway Energy of $1,181,000.

Lincolnway Energy and DDCE also entered into a Load Out Services Agreement. The Load Out Services Agreement provides, in general, that DDCE will construct an aboveground pipeline from DDCE's plant to a holding tank on Lincolnway Energy's property, and that Lincolnway Energy will load out DDCE's product at Lincolnway Energy's rail or truck facilities. The Load Out Services Agreement sets forth the various fees and other amounts that DDCE will pay to Lincolnway Energy for those services, as well as allocating various costs and expenses between Lincolnway Energy and DDCE. The Load Out Services Agreement provides that if it is terminated, then Lincolnway Energy will grant DDCE an easement for the purpose of DDCE constructing its own rail tracks, and that Lincolnway Energy and DDCE will also at that time enter into a track usage agreement which will address how Lincolnway Energy and DDCE will jointly use certain tracks of Lincolnway Energy and other related matters. The initial term of the Load Out Services Agreement is ten years from the date of the Load Out Services Agreement, which was October 4, 2011. DDCE currently contemplates commencing construction of its plant in the second calendar quarter of 2013, with an estimated start-up date of the fourth calendar quarter of 2014.

40

Contractual Obligations Table

In addition to long-term debt obligations, Lincolnway Energy has certain other contractual cash obligations and commitments.  The following tables provide information regarding Lincolnway Energy's contractual obligations and commitments as of September 30, 2012:

					Payment Due By Period
			Less than		Two to		Four to		More than
Contractual Obligations	Total		One Year		Three Years		Five Years		Five Years
Long-Term Debt Obligations	$	3,475,021	$	50,968	$	105,202	$	3,318,851	$	—
Interest Obligation of Long-Term Debt 1	12,731		4,755		6,243		1,442		291
Revolving Credit Loan	200,000		200,000		—		—		—
Settlement Payable	1,700,000		425,000		850,000		425,000		—
Operating Lease Obligations	3,934,000		1,594,000		1,710,000		630,000		—
Purchase Obligations
Coal Supplier Commitment	89,702		89,702		—		—		—
Corn Supplier Commitment	4,343,755		4,343,755		—		—		—
Denaturant Commitment	470,297		470,297		—		—		—
Total	$	14,225,506	$	7,178,477	$	2,671,445	$	4,375,293	$	291

1 Department of Transportation agreement at 2.11%

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

In addition to the risks inherent in the ethanol industry and Lincolnway Energy's operation, Lincolnway Energy is exposed to various market risks.  The primary market risks arise as a result of possible changes in interest rates and certain commodity prices.

Interest Rate Risk

Lincolnway Energy has various outstanding loan agreements and promissory notes that expose Lincolnway Energy to market risk related to changes in the interest rate imposed under those loan agreements and promissory notes.

Lincolnway Energy has loan agreements and/or promissory notes with the following entities, and with the principal balance and interest rates indicated:

	Principal Balance
Lender	As of September 30, 2012		Rate
Farm Credit - revolving credit loan	$	200,000	3.46	%
Farm Credit - revolving term loan	3,237,000		3.71	%
IA Department of Transportation	238,021		2.11	%
	$	3,675,021

The interest rate under the IA. Department of Transportation loan agreement is fixed at the interest rates specified above.  The interest rate on the Farm Credit monitored revolving credit loan is a variable interest rate loan bases on the one-month LIBOR index rate plus 3.25%, adjusting weekly. The interest rate on the Farm Credit revolving term loan is a variable interest rate based on the one-month LIBOR index plus 3.50% adjusted weekly. For more information on the payments see Item 7 - Loans and Agreements.

Lincolnway Energy does not anticipate any material increase in interest rates during 2013.

41

Commodity Price Risk

Lincolnway Energy is also exposed to market risk with respect to the price of ethanol, Lincolnway Energy's principal product, and the price and availability of corn, the principal commodity used by Lincolnway Energy to produce ethanol, and coal. The other primary product of Lincolnway Energy is distiller's grains, and Lincolnway Energy is also subject to market risk with respect to the price for distillers grains. The prices for ethanol, distillers' grains, corn and coal are volatile, and Lincolnway Energy will experience market conditions where the prices Lincolnway Energy receives for its ethanol and distillers' grains are declining, but the price Lincolnway Energy pays for its corn, coal and other inputs is increasing. Lincolnway Energy's results will therefore vary substantially over time, and include the possibility of losses, which could be substantial.

In general, rising ethanol and distillers grains prices result in higher profit margins, and therefore represent favorable market conditions. Lincolnway Energy is, however, subject to various material risks related to its production of ethanol and distillers' grains and the price for ethanol and distillers' grains. For example, ethanol and distillers grains prices are influenced by various factors beyond the control of Lincolnway Energy's management, including the supply and demand for gasoline, the availability of substitutes and the effect of laws and regulations.

In general, rising corn prices result in lower profit margins and, accordingly, represent unfavorable market conditions. Lincolnway Energy will generally not be able to pass along increased corn costs to its ethanol customers. Lincolnway Energy is subject to various material risks related to the availability and price of corn, many of which are beyond the control of Lincolnway Energy. For example, the availability and price of corn is subject to wide fluctuations due to various unpredictable factors which are beyond the control of Lincolnway Energy's management, including weather conditions, crop yields, farmer planting decisions, governmental policies with respect to agriculture and local, regional, national and international trade, demand and supply.

If Lincolnway Energy's corn costs were to increase $.10 cents per bushel from one year to the next, the impact on cost of goods sold would be approximately $1.98 million for the year.

Lincolnway Energy's average corn costs for the fiscal years ended September 30, 2012, 2011 and 2010 were, respectively, approximately $6.62 per bushel, $6.34 per bushel and $3.59 per bushel.

During the fiscal year ended September 30, 2012, corn prices based on the Chicago Mercantile Exchange daily futures data ranged from a low of $5.50 per bushel in June 2012 to a high of $8.49 per bushel in August 2012. The corn prices based on the Chicago Mercantile Exchange daily futures data during the fiscal year ended September 30, 2011 ranged from a low of $4.65 per bushel to a high of $7.87 per bushel.

The average price Lincolnway Energy received for its ethanol during the fiscal year ended September 30, 2012 was approximately $2.29 per gallon, as compared to $2.45 per gallon and $1.72 during, respectively, the fiscal years ended September 30, 2011 and 2010.

During the fiscal year ended September 30, 2012, ethanol prices based on the Chicago Mercantile Exchange daily futures data ranged from a low of $1.975 per gallon in June 2012 to a high of $2.79 per gallon in November 2011. The ethanol price based on the Chicago Mercantile Exchange daily futures data during the fiscal year ended September 30, 2011, ranged from a low of $1.90 per gallon in September 2010, to a high of $3.07 in July 2011.

Lincolnway Energy may from time to time take various cash, futures, options or other positions with respect to its corn and ethanol needs in an attempt to minimize or reduce Lincolnway Energy's price risks related to corn and ethanol. Those activities are, however, also subject to various material risks, including that price movements in the cash and futures corn and ethanol markets are highly volatile and influenced by many factors and occurrences that are beyond the control of Lincolnway Energy.

42

Although Lincolnway Energy intends that its futures and option positions accomplish an economic hedge against Lincolnway Energy's future purchases of corn or future sales of ethanol, Lincolnway Energy has chosen not to use hedge accounting for those positions, which would match the gain or loss on the positions to the specific commodity purchase being hedged. Lincolnway Energy is instead using fair value accounting for the positions, which generally means that as the current market price of the positions changes, the realized or unrealized gains and losses are immediately recognized in Lincolnway Energy's costs of goods sold in the statement of operations for corn positions or as a component of revenue in the statement of operations for ethanol positions. The immediate recognition of gains and losses on those positions can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the positions relative to the cost and use of the commodity being hedged. For example, Lincolnway Energy's corn position gain and (loss) that was included in its earnings for the fiscal year ended September 30, 2012 was a loss of $1,000,438, as opposed to a loss of $2,990,263 for the fiscal year ended September 30, 2011, and as opposed to a gain of $1,453,950 for the fiscal year ended September 30, 2010. Lincolnway Energy's ethanol position gain and (loss) that was included in its earnings for the fiscal year ended September 30, 2012 was a loss of $7,308, as compared to a loss of $1,126,667 for the fiscal year ended September 30, 2011, and as opposed to a loss of $1,438,563 for the fiscal year ended September 30, 2010.

The extent to which Lincolnway Energy may enter into arrangements with respect to its ethanol or corn during the year may vary substantially from time to time based upon a number of factors, including supply and demand factors affecting the needs of customers to purchase ethanol or suppliers to sell Lincolnway Energy raw materials on a fixed price basis, and Lincolnway Energy's views as to future market trends, seasonal factors and the cost of future contracts.    

Another important raw material for the production of Lincolnway Energy's ethanol is coal. Lincolnway Energy's cost per ton for coal under its current coal supply agreement is subject to various fixed and periodic adjustments based on factors which are outside of the control of Lincolnway Energy's management. The factors include changes in certain inflation type indices, increases in transportation costs and the quality of the coal. Lincolnway Energy's coal costs will therefore vary, and the variations could be material. Coal costs represented approximately 4.4% of Lincolnway Energy's total cost of goods sold for the fiscal year ended September 30, 2012, compared to, respectively, 4.3% and 6% for the 2011 and 2010 fiscal years.

43

Item 8.    Financial Statements and Supplementary Data.

Contents

Report of Independent Registered Public Accounting Firm	45
Financial Statements
Balance Sheets	46
Statements of Operations	48
Statements of Members’ Equity	49
Statements of Cash Flows	50
Notes to Financial Statements	52

44

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Members

Lincolnway Energy, LLC

We have audited the accompanying balance sheets of Lincolnway Energy, LLC as of September 30, 2012 and 2011, and the related statements of operations, members' equity, and cash flows for each of the three years in the period ended September 30, 2012.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the  financial statements referred to above present fairly, in all material respects, the financial position of Lincolnway Energy, LLC as of September 30 , 2012 and 2011, and the results of its operations and its cash flows for each of the three years in the period ended September 30 , 2012, in conformity with U.S. generally accepted accounting principles.

/s/ McGladrey LLP

Des Moines, Iowa

December 21, 2012

45

Lincolnway Energy, LLC

Balance Sheets

September 30, 2012 and 2011

	2012			2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	151,824		$	34,135
Derivative financial instruments (Notes 9 and 10)	71,978			520,045
Trade and other accounts receivable (Note 8)	9,276,324			8,041,523
Inventories (Note 3)	5,922,936			6,350,544
Prepaid expenses and other	325,361			328,881
Total current assets	15,748,423			15,275,128
PROPERTY AND EQUIPMENT
Land and land improvements	6,949,062			7,633,650
Buildings and improvements	1,604,305			1,604,305
Plant and process equipment	79,580,097			76,014,786
Construction in progress	21,226			2,562,694
Office furniture and equipment	405,188			407,725
	88,559,878			88,223,160
Accumulated depreciation	(51,313,592		)	(43,529,798		)
	37,246,286			44,693,362
OTHER ASSETS
Restricted cash (Note 6)	351,000			351,000
Financing costs, net of amortization of  $305,384 and $252,070	166,577			219,891
Deposit	298,350			476,437
Investments	190,488			182,970
	1,006,415			1,230,298
	$	54,001,124		$	61,198,788

See Notes to Financial Statements.

46

Lincolnway Energy, LLC

Balance Sheets (Continued)

September 30, 2012 and 2011

	2012		2011
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,018,976	$	1,359,836
Accounts payable, related party (Note 7)	829,067		1,179,981
Current maturities of long-term debt (Note 5)	50,968		1,452,409
Current settlement payable, related party (Note 7)	425,000		—
Revolving credit loan (Note 4)	200,000		—
Accrued expenses	896,744		879,232
Total current liabilities	3,420,755		4,871,458
NONCURRENT LIABILITIES
Long-term debt, less current maturities (Note 5)	3,424,053		2,738,021
Settlement payable, net of current amount, related party (Note 7)	1,275,000		—
Other	450,000		450,000
Total noncurrent liabilities	5,149,053		3,188,021
COMMITMENTS AND CONTINGENCY (Notes 6, 8 and 12)
MEMBERS’ EQUITY (Note 2)
Member contributions, 42,049 units issued and outstanding	38,990,105		38,990,105
Retained earnings	6,441,211		14,149,204
	45,431,316		53,139,309
	$	54,001,124	$	61,198,788

47

Lincolnway Energy, LLC

Statements of Operations

Years Ended September 30, 2012, 2011 and 2010

	2012			2011			2010
Revenues (Notes 1 and 8)	$	169,567,374		$	173,951,126		$	114,373,268
Cost of goods sold (Notes 7 and 8)	171,827,633			169,817,362			106,744,081
Gross profit (loss)	(2,260,259		)	4,133,764			7,629,187
General and administrative expenses	2,955,565			2,649,796			2,440,390
(Gain) loss on sale or disposal of property and equipment (Note 13)	(489,664		)	—			—
Contract settlement fee (Note 7)	1,700,000			—			—
Operating income (loss)	(6,426,160		)	1,483,968			5,188,797
Other income (expense):
Interest income	6,957			9,542			25,019
Interest expense	(237,565		)	(593,461		)	(851,358		)
	(230,608		)	(583,919		)	(826,339		)
Net income (loss)	$	(6,656,768	)	$	900,049		$	4,362,458
Weighted average units outstanding	42,049			42,049			42,049
Net income (loss)  per unit - basic and diluted	$	(158.31	)	$	21.40		$	103.75

See Notes to Financial Statements.

48

Lincolnway Energy, LLC

Statements of Members' Equity

Years Ended September 30, 2012, 2011 and 2010

	Member Contributions		Retained Earnings			Total
Balance, September 30, 2009	$	38,990,105	$	10,989,147		$	49,979,252
Distributions ($50 per unit)	—		(2,102,450		)	(2,102,450		)
Net income	—		4,362,458			4,362,458
Balance, September 30, 2010	38,990,105		13,249,155			52,239,260
Net income	—		900,049			900,049
Balance, September 30, 2011	38,990,105		14,149,204			53,139,309
Distributions ($25 per unit)	—		(1,051,225		)	(1,051,225		)
Net loss	—		(6,656,768		)	(6,656,768		)
Balance, September 30, 2012	$	38,990,105	$	6,441,211		$	45,431,316

See Notes to Financial Statements.

49

Lincolnway Energy, LLC

Statements of Cash Flows

Years Ended September 30, 2012, 2011 and 2010

	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(6,656,768	)	$	900,049		$	4,362,458
Adjustments to reconcile net income (loss)  to net cash provided by operating activities:
Depreciation and amortization	7,850,854			8,232,529			8,378,554
(Gain) loss on sale or disposal of property and equipment	(489,664		)	62,696			573
Contract settlement fee	1,700,000			—			—
Changes in working capital components:
Trade and other accounts receivable	(1,234,801		)	(2,161,480		)	(2,107,860		)
Inventories	427,608			(2,399,465		)	(1,465,707		)
Prepaid expenses and other	3,520			(30,244		)	(101,590		)
Deposits	178,087			(476,437		)	151,036
Accounts payable	(340,860		)	86,760			173,278
Accounts payable, related party	(350,914		)	719,023			162,425
Accrued expenses	17,512			(172,428		)	31,435
Derivative financial instruments	448,067			593,783			(773,402		)
Net cash provided by  operating  activities	1,552,641			5,354,786			8,811,200
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(1,041,800		)	(2,870,231		)	(823,612		)
Proceeds from sale of property	1,181,000			—			—
Purchase of investments	(7,518		)	(12,877		)	(24,118		)
Net cash provided by (used in) investing activities	131,682			(2,883,108		)	(847,730		)
CASH FLOWS FROM FINANCING ACTIVITIES
Member distributions	(1,051,225		)	—			(2,102,450		)
Proceeds from revolving credit loan	9,137,000			—			—
Payments on revolving credit loan	(8,937,000		)	—			—
Proceeds from long-term borrowings	24,170,000			1,000,000			—
Payments on long-term borrowings	(24,885,409		)	(6,295,653		)	(8,827,857		)
Net cash (used in) financing activities	(1,566,634		)	(5,295,653		)	(10,930,307		)
Net increase (decrease) in cash and cash equivalents	117,689			(2,823,975		)	(2,966,837		)
CASH AND CASH EQUIVALENTS
Beginning	34,135			2,858,110			5,824,947
Ending	$	151,824		$	34,135		$	2,858,110
(Continued)

50

Lincolnway Energy, LLC

Statements of Cash Flows (Continued)

Years Ended September 30, 2012, 2011 and 2010

	2012		2011		2010
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest including capitalized interest 2012 none; 2011 $42,073; 2010 none	$	231,132	$	645,013	$	838,191
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Construction in progress included in accounts payable	$	—	$	184,776	$	37,805
Construction in progress included in accrued expenses	$	—	$	69,228	$	2,688

See Notes to  Financial Statements.

51

Lincolnway Energy, LLC

Notes to Financial Statements

Note 1.    Nature of Business and Significant Accounting Policies

Principal business activity:  Lincolnway Energy, LLC (the Company), located in Nevada, Iowa, was formed in May 2004 to pool investors to build a 50 million gallon annual production dry mill corn-based ethanol plant.  The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006. The Company is directly influenced by commodity markets and the agricultural and energy industries and, accordingly, its results of operations and financial condition may be significantly affected by cyclical market trends and the regulatory, political and economic conditions in these industries.

A summary of significant accounting policies follows:

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 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Concentration of credit risk:  The Company’s cash balances are maintained in bank deposit accounts which at times may exceed federally insured limits.  The Company has not experienced any losses in such accounts.

Cash and cash equivalents:  For the purposes of reporting the statement of cash flows, the Company includes as cash equivalents all cash accounts and highly liquid debt instruments which are not subject to withdrawal restrictions or penalties.  Certificates of deposit are considered investments as all have been purchased with maturities in excess of ninety days.  Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents.  The Company has repurchase agreements with one bank, which totaled approximately $175,469 at September 30, 2012.  In accordance with the terms of the repurchase agreements, the Company does not take possession of the related securities.  The Company’s agreements also contain provisions to ensure that the market value of the underlying assets remain sufficient to protect the Company in the event of default by the banks by requiring that the underlying securities have a total market value of at least 100% of the bank’s total obligations under the agreements.

Trade accounts receivable:  Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions.  Receivables are written off when deemed uncollectible.  Recoveries of receivables written off are recorded when received.  A receivable is considered past due if any portion of the receivable is outstanding more than 90 days.

Inventories:  Inventories are stated at the lower of cost or market using the first-in, first-out method.  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.

Financing costs:  Financing costs are recorded at cost and include expenditures directly related to securing debt financing.  The Company is amortizing these costs using the effective interest method over the term of the agreement.  The financing costs are included in interest expense on the statement of operations.

Property and equipment:  Property and equipment is stated at cost.  Construction in progress is comprised of costs related to the projects that are not completed.  Depreciation is computed using the straight-line method over the following estimated useful lives:

	Years
Land improvements	20
Buildings and improvements	40
Plant and process equipment	5 – 20
Office furniture and equipment	3 – 7

Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.  

52

Investments:  The Company has investments in financial service cooperatives.  These investments are carried at cost including allocated retained earnings of the cooperatives.

Derivative financial instruments:  The Company enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales.  The Company does not typically enter into derivative instruments other than for hedging purposes.  All the derivative contracts are recognized on the balance sheet at their fair market value.  Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes.   Accordingly, any realized or unrealized gain or loss related to corn derivatives is recorded in the statement of operations as a component of cost of goods sold.  Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet.

Deposit:  The Internal Revenue Service (under Section 7519) requires partnerships that elect a fiscal year over a calendar year to make a deposit each year.  The deposit is 25% of annual taxable net income, multiplied by the tax rate of 36% for the reporting fiscal year.

Revenue recognition:  Revenue from the sale of the Company’s ethanol and distillers grains is recognized at the time title and all risks of ownership transfer to the customers.  This generally occurs upon the loading of the product.  For ethanol, title passes at the time the product crosses the loading flange in either a railcar or truck.  For distiller’s grain, title passes upon the loading into trucks.  For railcar shipments, this takes place when the railcar is filled and the marketer receives written notice that they have been loaded and are available for billing.  Shipping and handling costs incurred by the Company for the sale of ethanol and distiller’s grain are included in costs of goods sold. Commissions for the marketing and sale of ethanol and distiller grains are included in costs of goods sold.

Revenue by product is as follows:

(Excludes hedging activity)

(In thousands)	2012		2011		2010
Ethanol	$	126,440	$	139,536	$	94,612
Distiller's Grain	38,564		31,716		19,434
Other	4,570		3,826		1,766

Income taxes:  The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes.  Instead, the Company’s 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. Management has evaluated the Company's material tax positions and determined there were no uncertain tax positions that require adjustment to the financial statements. The Company does not currently anticipate significant changes in its uncertain tax positions over the next 12 months. Generally, the Company remains subject to income tax examinations by U.S. federal or state tax authorities for fiscal years 2009 and thereafter.

Earnings per unit:  Basic and diluted earnings per unit have been computed on the basis of the weighted average number of units outstanding during each period presented.

Fair value of financial instruments:  The carrying amounts of cash and cash equivalents, derivative financial instruments, trade accounts receivable, accounts payable and accrued expenses approximate fair value.  The carrying amount of long-term debt approximates fair value because the interest rates are based on current rates offered to the Company for debt with similar terms and maturities.

Reclassification: Certain amounts in the 2011 balance sheet have been reclassified to be consistent with their 2012 presentation with no effect on net income.

53

Note 2.    Members' Equity

The Company was formed on May 19, 2004.  It was initially capitalized by the issuance of 1,924 membership units totaling $962,000 to the founding members of the Company.  The Company has one class of membership units.  A majority of the Board of Directors owns a membership interest in the Company.  The Company is authorized to issue up to 45,608 membership units without member approval.

Income and losses are allocated to all members based on their pro rata ownership interest. All unit transfers are effective the last day of the month.    Units may be issued or transferred only to persons eligible to be members of the Company and only in compliance with the provisions of the operating agreement.

The Company is organized as an Iowa limited liability company. Members' liability is limited as specified in the Company's operating agreement and pursuant to the Iowa Limited Liability Company Act. The duration of the Company shall be perpetual unless dissolved as provided in the operating agreement.

Note 3.    Inventories

Inventories consist of the following as of September 30, 2012 and 2011:

	2012		2011
Raw materials, including corn, coal, chemicals and supplies	$	2,048,130	$	3,956,604
Work in process	1,432,257		1,303,654
Ethanol and distillers grain	2,442,549		1,090,286
Total	$	5,922,936	$	6,350,544

For the years ended September 30, 2012 and 2011, the Company recognized a reserve and resulting loss of $368,000 and none, respectively, for a lower of cost or market inventory adjustment.

Note 4.    Revolving Credit Loan

The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a monitored revolving credit loan for up to $10,000,000. The amount available and outstanding under the loan cannot exceed the borrowing base as calculated per the agreement (approximately $9,400,000 as of September 30, 2012). The purpose of the loan is to finance inventory and receivables. The Company will pay interest monthly on the unpaid balance at a variable rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.25%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .30% per annum, payable monthly. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the loan, on July 1, 2013. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. There was a balance of $200,000 outstanding as of September 30, 2012.

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Note 5.    Long-Term Debt

Long-term debt consists of the following as of September 30, 2012 and 2011

	2012			2011
Construction term loan.  (A)	$	—		$	1,500,000
Construction/revolving term loan.  (B)	—			1,000,000
Revolving term loan. (C)	3,237,000			—
Note payable to contractor, unsecured, interest-only quarterly
payments at 4% due through maturity date of December 2011.	—			1,250,000
Note payable to Iowa Department of Economic Development.  (D)	—			152,500
Note payable to Iowa Department of Transportation.  (E)	238,021			287,930
	3,475,021			4,190,430
Less current maturities	(50,968		)	(1,452,409		)
	$	3,424,053		$	2,738,021

Maturities of long-term debt as of September 30, 2012 are as follows:

Years ending September 30:
2013	$	50,968
2014	52,049
2015	53,153
2016	54,280
2017	3,264,571
	$	3,475,021

(A) The Company had a construction and term loan with a financial institution.  Borrowings under the term loan included a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate was reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change was applicable to all outstanding balances as of that date.  The agreement required 30 principal payments of $1,250,000 per quarter commencing in December 2006 through March 2013.  The agreement required the maintenance of certain financial and nonfinancial covenants.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets.  On August 20, 2012, the $1,500,000 balance remaining on this loan was consolidated under the revolving term loan, described in (C) below, and this construction term loan was closed.

(B) The Company had a $10,000,000 construction/revolving term credit facility with a financial institution which would expire on September 1, 2016.  Borrowings under the credit facility agreement included a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate was reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change was applicable to all outstanding balances as of that date.  Borrowings were subject to borrowing base restrictions as defined in the agreement.  The credit facility and revolving credit agreement required the maintenance of certain financial and nonfinancial covenants.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets.  This credit facility was replaced with the revolving term loan, described in (C) below.

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(C) The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a revolving term loan available for up to $5,000,000. The revolving term loan is to be used to provide working capital and to consolidate under the revolving term loan the remaining $1,500,000 that is outstanding under the construction term loan (A). The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017.

(D) The Company also had a $300,000 loan agreement with the Iowa Department of Economic Development (IDED).  The $300,000 loan was noninterest-bearing and due in monthly payments of $2,500 beginning December 2006 and a final payment of $152,500 due November 2011.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets and subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (A) and (B).  On October 5, 2011, the final payment of $152,500 was made by the Company.

(E) The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005.  The proceeds were disbursed upon submission of paid invoices.  Interest at 2.11% began accruing on January 1, 2007.  Principal payments will be due semiannually through July 2016.  The loan is secured by all rail track material constructed as part of the plant construction.  The debt is subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (C) and Note 4.

Note 6.    Lease Commitments

The Company entered into a lease agreement with an unrelated third party to lease 90 hopper rail cars for the purpose of transporting distiller’s grain.  The five-year term of the lease commenced March 2006 and ended March 2011.  On March 26, 2011 the Company extended this lease with a rider. The rider calls for monthly payments of $56,700 plus applicable taxes.  There was also an additional usage rental of 2.5 cents per mile for each car that exceeds 30,000 miles.  The amendment that was made to the lease agreement on June 19, 2007, allowed the Company to purchase a certificate of deposit for $351,000 in lieu of the letter of credit that was required as partial security for the Company’s obligation under the lease.  The Company has classified this certificate of deposit as restricted cash in other assets. The lease term on the rider is for three years commencing March 2011 and expiring March 2014. In conjunction with a change in the Company’s ethanol marketer, on September 21, 2009, the Company was assigned a lease that was previously between the Company’s previous ethanol marketer and an unrelated third party.  The lease includes 100 tank rail cars for the purpose of transporting ethanol.  The lease calls for monthly payments of $52,500 plus applicable taxes, beginning October 1, 2009.  There is also an additional usage rental of 3 cents per mile for each car that exceeds 35,000 miles.  The lease has an expiration date of September 2016.

On February 2, 2010, the Company entered into a lease agreement with an unrelated third party to lease an additional 30 ethanol tank rail cars.  The one-year term of the lease ended on February 2011.  On March 8, 2011 the Company extended this lease with two riders for 15 railcars each. Each rider calls for monthly payments of $9,750 plus applicable taxes. There was also an additional usage rental of 3 cents per mile for each car that exceeds 30,000 miles.  The lease term on the riders is for three years commencing March 2011 and expiring March 2014.

The Company also leases office equipment and other equipment under operating leases that will expire at various dates through June 2015.

Approximate minimum lease payments under these operating leases for future years are as follows:

Years ending Sept 30:
2013	$	1,594,000
2014	1,075,000
2015	635,000
2016	630,000
2017	—
	$	3,934,000

Rent expense under the above operating leases totaled approximately, $1,890,000, $1,745,000 and $1,597,000 for the years ended September 30, 2012, 2011 and 2010, respectively.

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Note 7.    Related-Party Transactions

The Company has an agreement with the Heart of Iowa Coop (HOIC), dba Key Cooperative, a member of the Company, to provide 100% of the requirement of corn for use in the operation of the ethanol plant.  The agreement became effective when the Company began accepting corn for the use at the ethanol plant in May 2006 and will continue for a period of 20 years.  The Company pays a handling fee of $.0675 per bushel of corn.  If the Company chooses to buy corn that is not elevated by HOIC, and is inside a 60-mile radius of Nevada, Iowa, the Company will be required to pay HOIC $.04 per bushel of corn, outside a 60-mile radius, $.03 per bushel of corn.  The agreement may be terminated before the end of the term by providing six months’ notice of termination and paying the other party $2,000,000, reduced by $50,000 for each completed year of the agreement.  The amount is payable over four years with interest at the prime rate on the date of termination.  The Company purchased corn totaling $128,490,494, $127,764,206 and $71,804,446 for the years ended September 30, 2012, 2011 and 2010, respectively. 

As of September 30, 2012, the Company has a corn cash forward contract with HOIC amounting to 588,585 bushels, for a commitment of approximately $4,343,755 and several basis forward contracts representing 1,350,000 bushels of corn.  The contracts mature on various dates through December 2012.  The Company also has made miscellaneous purchases from HOIC amounting to $200,610, $84,739 and $96,392 for the years ended September 30, 2012, 2011 and 2010, respectively. The 2012 purchases include $117,562 in grain storage fees. As of September 30, 2012 and 2011 the amount due to HOIC is $829,067 and $1,179,981, respectively.

On April 10, 2012, the Company delivered notice to HOIC to terminate the Amended and Restated Grain Handling Agreement they hold with HOIC. The termination of the agreement will be effective January 10, 2013. The Company will begin to originate corn in house at the time of termination. The Company recorded a termination cost of $1,700,000 as required under the agreement, which was expensed for the quarter ending June 30, 2012. Payments of $425,000 will be made annually over a four year period with interest at the prime rate on the date of termination.

The Company is also purchasing propane and anhydrous ammonia from Innovative Ag Services (IAS), a member of the Company. Total purchases for the years ended September 30, 2012, 2011 and 2010 were $170,878, $16,402 and $21,714, respectively.

Note 8.    Commitments and Major Customer and Subsequent Event

On September 25, 2009, the Company entered into an agreement with an unrelated entity.  The agreement became effective on October 1, 2009.  The unrelated entity is responsible for marketing and purchasing all of the ethanol produced by the company.  For the years ended September 30, 2012, 2011 and 2010, the Company has expensed $690,664, $712,258 and $695,945, under this agreement for marketing fees, respectively.  Revenues with this customer were $126,439,534, $139,535,766 and $94,611,865 for the years ended September 30, 2012, 2011 and 2010, respectively.  Trade accounts receivable of $6,778,356 and $6,129,247 was due from the customer as of September 30, 2012 and 2011 respectively.  As of September 30, 2012, the Company has ethanol sales commitments with the unrelated entity of 5,380,000gallons through December 2012. The sales price is approximately 10 cents under the monthly average OPIS-Chicago index price.

Subsequent to year end, the Company and unrelated party mutually agreed to terminate the ethanol marketing agreement effective December 31, 2012.

 The Company has entered into an agreement with an unrelated entity for marketing, selling and distributing the distiller’s grain as of October 1, 2007.   For the years ended September 30, 2012, 2011 and 2010, the Company has expensed marketing fees of $628,349, $535,226 and $295,353, respectively, under this agreement.  Revenues with this customer were $38,564,213, $31,715,564 and $19,434,064 for the years ended September 30, 2012, 2011 and 2010, respectively.  Trade accounts receivable of $2,064,496 and $1,083,695 was due from the customer as of September 30, 2012 and 2011, respectively.  As of September 30, 2012, the Company has distiller’s grain sales commitments with the unrelated entity of 4,385tons for a total sales commitment of approximately $1,176,418 less marketing fees.

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The Company has an agreement with an unrelated party to provide the coal supply for the ethanol plant.  The agreement includes the purchase of coal at a cost per ton and a transportation cost per ton as defined in the agreement.  The cost is subject to price adjustments on a monthly basis.  If the Company fails to purchase the minimum number of tons of coal for the calendar year , the Company shall pay an amount per ton multiplied by the difference of the minimum requirement and actual quantity purchased.  That agreement expired as of January 1, 2008.   On October 1, 2007 the Company entered into an amended agreement to the original coal supply agreement.  The term of the agreement has been extended from the original expiration date to January 1, 2013.  The same minimum purchase commitment is required from the Company as the previous agreement.  The calendar year 2012 has a remaining estimated purchase commitment totaling approximately $89,702.  For the years ended September 30, 2012, 2011 and 2010, the Company has purchased coal of $7,217,257, $7,001,676 and $5,989,438 respectively.

The Company has entered into a variable contract with a supplier of denaturant.  The variable contract is for a minimum purchase of 216,000 gallons at the average of the OPIS Conway In-Well Natural Gasoline High and Low prices for the full calendar month of date of loading plus $0.1875 per net gallon. The term of the contract is from October 1, 2012 through December 31, 2012.   The estimated future purchase commitment on this contract is approximately $470,297.

Note 9.    Risk Management

The Company’s activities expose it to a variety of market risks, including the effects of changes in commodity prices.  These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program.  The Company’s risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations.  The Company’s specific goal is to protect the Company from large moves in the commodity costs.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchases and sales contracts.

Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives.

Derivatives not designated as hedging instruments as of September 30, 2012 and 2011 are as follows:

	2012			2011
Derivative assets	$	134,050		$	292,375
Cash held by (due to) broker	(62,072		)	227,670
Total	$	71,978		$	520,045

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The effects on operating income from derivative activities is as follows for the years ending September 30, are as follows:

	2012			2011			2010
Increase (decrease) in revenue due to derivatives related to ethanol sales:
Realized	$	(7,308	)	$	(2,655,034	)	$	45,434
Unrealized	—			1,528,367			(1,483,997		)
Total effect on revenue	(7,308		)	(1,126,667		)	(1,438,563		)
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
Realized	(1,134,488		)	(2,946,138		)	604,475
Unrealized	134,050			(44,125		)	849,475
Total effect on cost of goods sold	(1,000,438		)	(2,990,263		)	1,453,950
Total (decrease) increase  to operating income due to derivative activities	$	(1,007,746	)	$	(4,116,930	)	$	15,387

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment.   

Note 10.    Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various methods including market, income and cost approaches.  Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market-corroborated, or generally unobservable inputs.  The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2Valuations for assets and liabilities traded in less active dealer or broker markets.  Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value.

Derivative financial instruments:  Commodity futures and exchange-traded commodity 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 CME and NYMEX markets.  The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets.

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The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2012 and 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	2012
	Total		Level 1		Level 2		Level 3
Assets, derivative financial instruments	$	134,050	$	134,050	$	—	$	—
	2011
	Total		Level 1		Level 2		Level 3
Assets, derivative financial instruments	$	292,375	$	292,375	$	—	$	—

Note 11.    Employee Benefit Plan

The Company adopted a 401(k) plan covering substantially all employees effective February 1, 2006.  The Company provides matching contributions of 50% for up to 6% of employee compensation.  Company contributions and plan expenses for the years ended September 30, 2012, 2011 and 2010 totaled $72,360, $65,495 and $69,069, respectively.

Note 12.    Contingency

In May 2010, a lawsuit was filed against the Company and approximately twenty other ethanol plants, design firms and equipment manufacturers by an unrelated party claiming the Company’s operation of the corn oil extraction system is infringing at least one patent. The plaintiff seeks injunctive relief, an award of damages with interest and any other remedies available under certain patent statutes or otherwise under law.  The Company is currently defending the lawsuit with legal counsel and has asserted various defenses including that it does not infringe and, further, that the patents are invalid.  The Company is unable to determine at this time if the lawsuit will have a material adverse affect on the Company.

Note 13.    Sale of Property

On October 5, 2011, the Company completed the sale of a land parcel adjacent to its primary site for a sales price of $1,181,000. A gain of $496,098 was recognized for the sale of property for the year ended September 30, 2012.

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Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Lincolnway Energy has not had any change in its accountants or any disagreements with its accountants which are required to be disclosed under this Item.

Item 9A.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Lincolnway Energy's management, with the participation of Lincolnway Energy's chairman and chief financial  officer, have evaluated the  effectiveness of Lincolnway Energy's disclosure  controls and procedures  (as defined in Rule  13a-15(e)  under  the Securities Exchange  Act of 1934) as of the end of the  period  covered by this annual report.  As a result of such evaluation,  the chairman and the chief financial  officer have  concluded  that such  disclosure  controls and procedures are effective to provide  reasonable  assurance that the  information required to be disclosed in the reports Lincolnway Energy  files or submits  under the Securities Exchange  Act of 1934 is (i)  recorded,  processed,  summarized  and reported within the time  periods specified  in the  Securities  and  Exchange Commission's   rules  and  forms,  and (ii)  accumulated  and  communicated  to management,  including Lincolnway Energy's  principal executive and principal financial officers or persons performing such functions,  as appropriate,  to allow timely decisions regarding  disclosure. Lincolnway Energy believes that a control system, no matter how well designed and operated,  cannot provide absolute assurance that the  objectives of the control system are met, and no evaluation of controls can provide  absolute  assurance that all control issues and instances of fraud,  if any, within a company have been detected.

Management's Annual Report on Internal Control Over Financial Reporting.

The management of Lincolnway Energy is responsible for establishing and maintaining adequate internal control over financial reporting for Lincolnway Energy.  Lincolnway Energy's internal control system was designed to, in general, provide reasonable assurance to Lincolnway Energy's management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Lincolnway Energy's management assessed the effectiveness of Lincolnway Energy's internal control over financial reporting as of September 30, 2012.  The framework used by management in making that assessment was the criteria set forth in the document entitled "Internal Control – Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, Lincolnway Energy's management has determined that as of September 30, 2012, Lincolnway Energy's internal control over financial reporting was effective for the purposes for which it is intended.

An attestation report from Lincolnway Energy's accounting firm on Lincolnway Energy's internal control over financial reporting is not included in this annual report because an attestation report is only required under the regulations of the Securities and Exchange Commission for accelerated filers or large accelerated filers.

Changes in Internal Control over Financial Reporting

No change in Lincolnway Energy's internal control over financial  reporting occurred during the fourth quarter of the fiscal year ended September 30, 2012 that has materially affected,  or is  reasonably  likely to materially  affect,  Lincolnway Energy's internal  control over  financial reporting.

Item 9B.    Other Information.

Lincolnway Energy did not have any information that was required to be disclosed in a report on Form 8-K during the fourth quarter of the fiscal year ended September 30, 2012 that was not reported on a Form 8-K.

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

The directors and executive officers of Lincolnway Energy as of the date of this annual report were as follows:

Name	Age	Position(s)
Jeff Taylor	46	Director and Chairman
Kurt Olson	56	Director and Vice Chairman
Richard Johnson	77	Director and Secretary
Terrill Wycoff	70	Director and Treasurer
Timothy Fevold	52	Director
William Couser	58	Director
James Hill	67	Director
Rick Vaughan	53	Director
Brian Conrad	51	Director
Kim Supercynski	50	Chief Financial Officer and Interim President and Chief Executive Officer

An individual may be nominated for election as a director of Lincolnway Energy by the members of Lincolnway Energy in accordance with the procedures set out in the second amended and restated operating agreement, or by the nominating committee of the directors, with the recommendations of the nominating committee being subject to approval by the directors. The directors are elected by the members for three year terms, with the terms of the directors being staggered so that three directors are elected at each annual meeting. The vote by the members is generally done by a written ballot and without any discussion by the members.

Lincolnway Energy therefore does not know what specific experience, qualifications, attributes or skills of the current directors led any particular member or members to vote for any director. All of the current directors were, however, nominated by the nominating committee of the directors, and the nominating committee, and the directors in considering the recommendations of the nominating committee, considered the experience, qualifications, attributes or skills set out in the following paragraphs and in the following biographies of the directors in reaching the conclusion that the current directors should serve as a director and therefore be recommended to the members at the annual meetings of the members at which the directors were elected to their current respective three year terms.

One factor that was considered and that applies to each director is that each director has gained substantial experience, knowledge and background regarding Lincolnway Energy's operations and the ethanol industry in general through their service as a director of Lincolnway Energy. Seven of the current directors have served as a director since Lincolnway Energy was organized in May of 2004, and the other two directors have served since July 27, 2007.

Over that period of time, Lincolnway Energy, along with the ethanol industry in general and the economy as a whole, have experienced a wide range of political, economic and market circumstances, ranging from very favorable to very difficult circumstances. The current directors have therefore gained valuable background and experience over a diverse range of circumstances that do not always occur over just an eight year period of time.

Another factor that was considered and that applies to all of the directors is the training, educational and industry association opportunities that have been engaged in by the directors. For example the majority of directors have attended the Renewable Fuels Association annual conference and the Iowa Institute of Coops director training workshops.  Those activities have given the directors additional experience and background both with respect to the ethanol industry and serving on the board of a company.

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Another factor that was considered and that applies to each director is that each director has individual experience in operating a business through their own personal business endeavors that are discussed below. Each director has also evidenced a willingness and ability in their individual businesses to consider and pursue innovative or new approaches, as well as a willingness and ability to assume leadership roles in those businesses and industries, all of which are attributes that are helpful in an evolving and changing industry such as the ethanol industry. Another practical consideration is that each director is willing to devote the time, which can be significant at times, that is necessary to serve as a director and on committees of the directors. The following paragraphs provide some information regarding the directors and executive officers of Lincolnway Energy.

Jeff Taylor. Mr. Taylor has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members which will be held in 2014. Mr. Taylor served as the vice president/vice chairman of Lincolnway Energy from the time Lincolnway Energy was organized in May, 2004 until April, 2008. Mr. Taylor has served as the chairman of Lincolnway Energy since May, 2008. Mr. Taylor has been self-employed as a farmer since 1988, and he owns and operates farms in Story County, Iowa. Mr. Taylor received a Bachelor of Science degree from Iowa State University in farm operations and agricultural studies. Mr. Taylor provides, among other things, agriculture and management background and experience to the directors. An agricultural background provides, among other things, experience that is useful to the directors in connection with analyzing issues related to corn and distillers' grain. Mr. Taylor also completed board member and chairman certification from the Iowa Institute of Cooperatives.

Kurt Olson. Kurt Olson has been a director of Lincolnway Energy since July 27, 2007, and his current term as a director will end at the annual meeting of the members which is held in 2013. Mr. Olson served as the secretary of Lincolnway Energy from May, 2008 until February, 2011. He has served as the Vice Chairman of Lincolnway Energy since March 1, 2011. Mr. Olson graduated in 1978 from Iowa State University in ag-economics and has been actively involved in business operations and management of real estate in central Iowa for over 28 years. Mr. Olson was employed with Litchfield Realty Company from 1987 to 2003. He served as the president of Litchfield Realty and its subsidiaries, AgServ Company and FarmLand Real Estate and Management, LC. The business of AgServ Company included a grain elevator, an agronomy supplier, a feed manufacturer and a soybean seed processor. In 2003, Mr. Olson purchased Farmland Real Estate and Management, LC. Farmland Real Estate and Management, LC markets crop insurance and manages farmland. Mr. Olson provides, among other things, agricultural, real estate and farm management background and experience to the directors.

Richard Johnson. Richard Johnson has been a director of Lincolnway Energy since July 27, 2007, and his current term as a director will end at the annual meeting of the members that will be held in 2013.  He has served as the secretary of Lincolnway Energy since March, 2011.  Richard was a self-employed certified public accountant from 2003 until his retirement in 2009.  He has served as a director of a bank holding company, Ogden Bancshares, since 2006, and as a director of one of its subsidiaries, Ames Community Bank, since 2009.  He served as a director of another Ogden Bancshares subsidiary, Vision Bank of Iowa, from 2006 until April, 2010.  He also served as a director of EMC National Life Insurance Company (EMCNL) from 2003 untilMay, 2010.  Richard has been a director and the treasurer of Petroleum Marketers Management Insurance Company (PMMIC) since 2000.  Richard serves as chairman of the Capital/Shareholder Committee of Ogden Bancshares and is chairman of the audit committee for PMMIC.  Richard served as the audit committee chair of EMCNL from 2003 untilMay, 2010, and as a member of the audit committee of Vision Bank of Iowa from 2006 untilApril, 2010.  He also served as the elected auditor of the State of Iowa from 1979 to 2003.  Richard completed a six year term on December 31, 2006 as a trustee of the Financial Accounting Foundation, which is the board that oversees and provides board member selection and funding of the national Accounting Standards Boards.  Richard served as a member of the Iowa Accountancy Examining Board from January 2003 to May 2009.  The Accountancy Board licenses and regulates certified public accountants and accounting practitioners in the State of Iowa.  Richard brings, among other things, financial accounting experience, including audit committee experience, and outside board and association experience to the directors.

Brian Conrad. Brian Conrad has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members which will be held in 2014. Mr. Conrad served as the vice chairman of Lincolnway Energy from May, 2008 until February, 2011. Mr. Conrad has been employed with Exelon Wind as Manager, Business Development since December 2010 and is involved in the development and acquisition of wind projects. Prior to Exelon Wind, Mr. Conrad was employed with John Deere Credit from 1988 until December, 2010. He held various positions with John Deere Credit, including credit operations, and sales and marketing. His last position with John Deere Credit was Business Development Manager for the Western U.S. for John Deere Wind Energy. On December 10, 2010 Exelon Corporation purchased John Deere Wind Energy. Mr. Conrad has an undergraduate degree in economics and business administration and a Masters in Business Administration. Mr. Conrad provides, among other things, background and experience in sales, financing and acquisitions to the directors.

Terrill Wycoff. Terry Wycoff has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members which will be held in 2015.

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Terry has also served as the treasurer of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. Terry retired on March 31, 2012 from his employment at First National Bank, Ames, Iowa after 50 years of service. Terry's last position with First National Bank was Executive Vice President. He still serves as a member of the board of directors of First National Bank. Terry adds, among other things, background and experience in banking and finance to the directors.

Timothy Fevold. Mr. Fevold has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members which will be held in 2014. Mr. Fevold served as the secretary of Lincolnway Energy from the time Lincolnway Energy was organized in May, 2004 until April, 2008. He is currently chairman of Lincolnway Energy's Corporate Governance and Nominating Committee, and he also serves on the Audit Committee. Mr. Fevold has been employed by Hertz Farm Management, based in Nevada, Iowa, since 1982, and is an accredited farm manager. He represents absentee landowners throughout Central Iowa. Mr. Fevold has also been licensed as a real estate broker in Iowa since 1987. Mr. Fevold brings, among other things, additional agriculture, real estate and farm management background and experience to the directors.

William Couser. Mr. Couser has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members which will be held in 2015. Mr. Couser was the chairman of Lincolnway Energy from the time Lincolnway Energy was organized in May, 2004 until April, 2008. He also served as the interim president and chief executive officer of Lincolnway Energy from May, 2004 until July 13, 2005. Mr. Couser has served as a director of Iowa Renewable Fuels Association for the past eight years, and he served as the president of the Iowa Renewable Fuels Association from January, 2004 to December, 2010. He is also serving as a director of the Iowa Cattlemen's Association and Iowa Institute for Coops. He has served as director on those boards for the past five years. Mr. Couser has been self-employed as a farmer since 1977. His farming operations include row crops and cattle. Mr. Couser brings, among other things, additional agricultural and management background and experience to the directors. Mr. Couser also brings outside board and affiliations background and experience to the directors, including in the ethanol industry as noted above.

James Hill. Mr. Hill has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members which will be held in 2013. Following graduation from college, Mr. Hill worked in management at Northwestern Bell Telephone Company in various capacities in Minnesota. In 1969, he returned to the family farming and cattle feeding operation in Iowa. While farming and feeding cattle, Mr. Hill became involved in cattle industry organizations, and he has served as chairman of the Iowa Beef Industry Council and president of the Iowa Cattlemen's Association. He also served as president of the board of directors of the Ellsworth-Williams Coop during its merger with Prairie Land Coop. He has also served as an advisory council member for Farm Credit Services of America since approximately 1994. Mr. Hill brings, among other things, additional agricultural, management and outside board and industry association background and experience to the directors.

Rick Vaughan. Rick Vaughan has been a director of Lincolnway Energy since Lincolnway Energy was organized in May, 2004. His current term as a director will end at the annual meeting of the members that will be held in 2015. Rick served as the General Manager of Prairie Land Cooperative from February 1995 until August 2011. Prairie Land Cooperative merged with Innovative Ag Services on September 1, 2011. He became Co-CEO of Innovative Ag Services on September 1, 2011 and CEO in December 2012. Innovative Ag Services is a farm supply business serving producers in grain marketing and services, agronomy products and services, feed manufacturing, diesel fuel and propane products and services. Rick brings, among other things, agricultural, cooperative, management and marketing experience and background to the directors.

Kim Supercynski. Ms. Supercynski has served as the chief financial officer of Lincolnway Energy since October 2005. Kim was appointed to serve as Lincolnway Energy's interim president and chief executive officer effective as of November 9, 2012 and until a new president and chief executive officer is identified and retained by Lincolnway Energy. She served as the corporate controller for Garst Seed Company, located in Slater, Iowa, from approximately February 1996 to October 2005. Her responsibilities in that capacity included overseeing the accounting department. Garst Seed Company is an affiliate of Syngenta, Inc., which is a large international company that sells, markets and produces agricultural seed. Prior to working at Garst Seed Company. Kim was a controller for a third party administrator for employee benefit plans. She also has six years of experience working in public accounting. Kim is a certified public accountant and a certified treasury professional.

Rick Brehm was with Lincolnway Energy from May 17, 2005 until November 9, 2012. Rick first served as the general manager, and then served as president and chief executive officer from July 13, 2005 until November 9, 2012.

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Number and Term of Directors and Officers    

The number of directors for Lincolnway Energy was fixed at 9 as of the date of this annual report. Each of Lincolnway Energy's directors is elected to a three year term and until his or her successor is elected. The terms of the directors are staggered, so that three of the directors' terms expire in one year, three expire the next year, and three expire the following year.

The officers of Lincolnway Energy are elected annually by the directors at its annual meeting, and hold office until the next annual meeting of the directors and until their respective successors are chosen. Any officer may be removed by the directors at any time, with or without cause, subject to any employment agreement as may exist between Lincolnway Energy and any officer. Lincolnway Energy did not have any written employment agreements with any officer as of the date of this annual report.

Significant Employees

Lincolnway Energy currently has three employees who Lincolnway Energy expects to make a significant contribution to its business, in addition to Lincolnway Energy's executive officers identified above. Those employees are Kristine Strum, David Sommerlot and Owen Shunkwiler. Lincolnway Energy does not have a written employment agreement with any of those employees.

Kristine Strum.    Ms. Strum has served as the controller for Lincolnway Energy since December 12, 2005. She was employed as a controller by Iowa Newspapers, Inc., in Ames, Iowa, from August, 1989 to December, 2005. Iowa Newspapers, Inc. is a newspaper publishing company. Ms. Strum is 46.

David Sommerlot. Mr. Sommerlot has been Lincolnway Energy's plant manager since September 8, 2009. He was employed by Cargill, Inc. from 1976 to July 1985, working at Cargill, Inc.'s Iowa Protein Products Soy Specialties facility in Cedar Rapids, Iowa. He was transferred by Cargill, Inc. in July of 1985 to Bloomington, Illinois, where he served as the plant superintendent of Cargill, Inc.'s soy crushing facility. He was transferred again in September 1994 to Des Moines, Iowa, where he served as the plant superintendent for Cargill, Inc.'s oil processing facility until March 2009. Mr. Sommerlot is 58.

Owen Shunkwiler. Mr. Shunkwiler was retained as Lincolnway Energy's Director of Grains on October 22, 2012. He will manage Lincolnway Energy's in-house corn origination. He was employed by Cargill, Inc. from 1979 to 1994 as a country elevator location manager in Montana and Nebraska. He moved to Sioux City, Iowa to serve as the general manager of the Sioux City Livestock Market from 1994 to 1996. He served as location manager for Archer Daniels Midland from 1997 until February 2002 in Iowa and Texas. He was employed by POET in February 2002 as general manager of the dry mill ethanol plant until August 2011. Mr. Shunkwiler was a search consultant with Hedlin Ag Enterprises from March 2012 to October 2012. Mr. Shunkwiler is 56.

Code of Ethics

Lincolnway Energy has adopted a code of ethics that applies to Lincolnway Energy's directors, principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions for Lincolnway Energy.

No Changes to Director Nomination Procedures

There were no material changes during the fiscal year ended September 30, 2012 to the procedures by which the members of Lincolnway Energy may recommend nominees for election as a director of Lincolnway Energy.

Audit Committee Financial Expert

Lincolnway Energy has an audit committee. The members of the audit committee as of the date of this annual report were Richard Johnson, Tim Fevold, Brian Conrad and Rick Vaughan.

Lincolnway Energy's board has determined that Richard Johnson is an audit committee financial expert, as that term is defined in the applicable regulations of the Securities and Exchange Commission. Lincolnway Energy's board has also determined that Richard Johnson and all of the other members of the audit committee meet the standards of independence under the Governance Guidelines and applicable NASDAQ Stock Market listing standards, including that each of the committee members are free of any relationship that would interfere with the member's individual exercise of independent judgment.

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Item 11.    Executive Compensation.

The information required by this Item is incorporated by reference from the "Compensation Of Directors", "Compensation Of Executive Officers", "Compensation Committee Interlocks And Insider Participation" and "Compensation Committee Report" sections in Lincolnway Energy's definitive proxy statement to be filed by Lincolnway Energy with respect to the annual meeting of the members of Lincolnway Energy which will be held in 2013, which definitive proxy statement shall be filed not later than 120 days after the end of the fiscal year covered by this annual report.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

As of the date of this annual report, Lincolnway Energy was only authorized to issue units of membership interest, and Lincolnway Energy did not have any other classes or series of units.

As of the date of this annual report, Lincolnway Energy did not have any compensation plans, including any individual compensation arrangements, under which units of Lincolnway Energy are authorized for issuance.

The following table sets forth certain information regarding the beneficial ownership of units of Lincolnway Energy as of November 30, 2012 by the directors and executive officers of Lincolnway Energy.  Lincolnway Energy had 42,049 outstanding units on November 30, 2012.

Name of Beneficial Owner	Amount and Nature Of Beneficial  Ownership1		Percent of Class
William Couser, Director	413	2	0.98	%
Jeff Taylor, Director and Chairman	500	2,3	1.19	%
Timothy Fevold, Director	101		0.24	%
Terrill Wycoff, Director and Treasurer	275		0.65	%
James Hill, Director	250		0.59	%
Brian Conrad, Director	553	2	1.32	%
Rick Vaughan, Director	—		—	%
Richard Johnson, Director and Secretary	140		0.33	%
Kurt Olson, Director and Vice Chairman	200		0.48	%
Kim Supercynski, Chief Financial Officer	25	4	0.06	%
David Sommerlot, Plant Manager	—		—	%
Owen Shunkwiler, Director of Grains	—		—	%
All directors and executive officers as a group	2,457		5.84	%

1 Unless otherwise indicated by a footnote, all of the units are directly owned by the listed individual or jointly owned with their spouse and are not pledged as security by the listed individual.

2 All of the units are pledged as security by the listed individual.

3 Fifty of the units are held by a trust for which Jeff Taylor serves as one of the trustees.

4 All of the units are owned by the spouse of the listed individual.

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To Lincolnway Energy's knowledge, as of the date of this annual report:

• No person or group was the beneficial owner of more than 5% of Lincolnway Energy's outstanding units, and no person or group held more than 5% of Lincolnway Energy's outstanding units pursuant to any voting trust or similar agreement, and

• There are no arrangements, including any pledge of units by any person, the operation of which may at a subsequent date result in a change in control of Lincolnway Energy.

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

There were no transactions since the beginning of Lincolnway Energy's fiscal year ended September 30, 2012, and there are no currently proposed transactions, in which Lincolnway Energy was or is to be a participant where the amount involved exceeds $120,000, and in which any of the following types of persons had, or will have, a direct or indirect material interest:

• any director or executive officer of Lincolnway Energy;

• any person who is known by Lincolnway Energy to be the beneficial owner of more than 5% of Lincolnway Energy's outstanding units; or

• any immediate family member of any of the foregoing persons.

Director Independence

The directors of Lincolnway Energy are William Couser, Jeff Taylor, Timothy Fevold, Terrill Wycoff, James Hill, Brian Conrad, Rick Vaughan, Richard Johnson and Kurt Olson.  Each of the directors meets the standards of independence under the Governance Guidelines and applicable NASDAQ Stock Market listing standards, including that each director is free of any relationship that would interfere with the director's individual exercise of independent judgment.

Item 14.    Principal Accounting Fees and Services.

The following table presents fees for professional services rendered by McGladrey LLP for the audit of Lincolnway Energy's annual financial statements for the fiscal years ended September 30, 2011 and 2012 and fees billed for other services rendered by McGladrey LLP and its affiliate RSM McGladrey, Inc. during those periods:

	Year Ended September 30,
	2012		2011
Audit Fees	$	80,600	$	79,000
Tax Fees	$	19,255	$	24,000
Total	$	99,855	$	103,000

Audit Fees.  The audit fees were billed for the audit by McGladrey LLP of Lincolnway Energy's annual financial statements and review of the financial statements included in Lincolnway Energy's quarterly reports on Form 10-Q or services that are normally provided by McGladrey LLP in connection with statutory and regulatory filings or engagements.

Tax Fees.  The tax fees were billed for services rendered by McGladrey LLP or RSM McGladrey, Inc. for tax compliance, tax advice and tax planning.  The nature of the services comprising the tax fees was for year end tax preparation of the partnership return and associated K-1's.

Each specific engagement of McGladrey LLP is pre-approved by the audit committee of the board of Lincolnway Energy.

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PART IV

Item 15.    Exhibits and Financial Statement Schedules.

(a) Financial Statements and Schedules.

The financial statements are set forth in Item 8 of this annual report.  Financial statement schedules have been omitted because they are not required or are not applicable, or the information is otherwise included in this annual report.

(b) Exhibits.

The following exhibits are filed as part of this annual report.  Exhibits previously filed are incorporated by reference, as noted.

			Incorporated by Reference
Exhibit		Filed Herewith;		Period		Filing
Number	Exhibit Description	Page Number	Form	Ending	Exhibit	Date
3.1	Restatement of the Certificate of Organization		10-K	9/30/2010	3.1	12/21/2010
3.2	Second Amended and Restated Operating Agreement and Unit Assignment Policy		10-K	9/30/2010	3.2	12/21/2010
10.5	Loan Agreement Between Lincolnway Energy,  LLC and Iowa Department of Transportation		10		10.5	1/27/2006
10.7	Distiller's Grain Marketing Agreement Between Lincolnway Energy, LLC and Hawkeye Gold, LLC. See Exhibit 10.7.1 for an amendment to this agreement		10-K	9/30/2007	10.7	12/21/2007
10.7.1	Amendment to Distiller's Grains Marketing Agreement Between Lincolnway Energy and Hawkeye Gold, LLC	E-1
*10.9	Coal Supply Agreement Between Lincolnway Energy, LLC and Williams Bulk Transfer, Inc.  See Exhibit 10.9.1 for an amendment to this agreement.		10		10.9	1/27/2006
10.9.1	Amendment Number One to Coal Supply Agreement Between Lincolnway Energy, LLC and Williams Bulk Transfer, Inc.		10-K	9/30/2007	10.9.1	12/21/2007
10.11	Amended and Restated Grain Handling Agreement Between Lincolnway Energy, LLC and Heart of Iowa Cooperative		10		10.11	1/27/2006
10.13	Industry Track Contract Between Lincolnway Energy, LLC and Union Pacific Railroad		10-Q	6/30/2006	10.13	8/14/2006
*10.15	Ethanol Marketing Agreement Between Lincolnway Energy, LLC and Green Plains Trade Group LLC		10-K	9/30/2009	10.15	12/22/2009
10.16	Master Loan Agreement and Amendment Among Farm Credit Services of America, FLC; Farm Credit Services of America, PCA; and Lincolnway Energy, LLC	E-3
10.17	Revolving Term Loan Supplement and Amendment Between Farm Credit Service of America, FLCA and Lincolnway Energy, LLC	E-16
10.18	Monitored Revolving Credit Supplement and Amendment Between Farm Credit Services of America, PCA and Lincolnway Energy, LLC	E-25
14	Code of Ethics		10-K	9/30/2009	14.0	12/22/2009

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31.1	Rule 13a-14(a) Certification of Chairman	E-35
31.2	Rule 13a-14(a) Certification of Chief Financial Officer	E-36
32.1	Section 1350 Certification of Chairman	E-37
32.2	Section 1350 Certification of Chief Financial Officer	E-38
101	Interactive Data Files (furnished electronically herewith pursuant to Rule 405 of Regulation S-T
*	Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the Securities and Exchange Commission.

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.

	LINCOLNWAY ENERGY, LLC
Date:  December 21, 2012	By:	/s/ Jeff Taylor
		Jeff Taylor, Chairman

Date:  December 21, 2012	By:	/s/ Kim Supercynski
		Kim Supercynski, Chief Financial
		Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

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Date:  December 21, 2012	/s/ William Couser
	William Couser, Director
Date:  December 21, 2012	/s/ Jeff Taylor
	Jeff Taylor, Director
Date:  December 21, 2012	/s/ Timothy Fevold
	Timothy Fevold, Director
Date:  December 21, 2012	/s/ Terrill Wycoff
	Terrill Wycoff, Director
Date:  December 21, 2012	/s/ Kurt Olson
	Kurt Olson, Director
Date:  December 21, 2012	/s/ James Hill
	James Hill, Director
Date:  December 21, 2012	/s/ Brian Conrad
	Brian Conrad, Director

Date:  December 21, 2012	/s/ Richard Johnson
	Richard Johnson, Director
Date:  December 21, 2012	/s/ Rick Vaughan
	Rick Vaughan, Director
Date:  December 21, 2012	/s/ Kim Supercynski
	Kim Supercynski, Chief Financial
	Officer

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EXHIBIT INDEX

Exhibits Filed With Form 10-K

of Lincolnway Energy, LLC

For the Fiscal Year Ended September 30, 2012

Description of Exhibit			Page
10.7.1	Amendment to Distiller's Grains		E-1
	Marketing Agreement Between
	Lincolnway Energy, LLC and
	Hawkeye Gold, LLC
10.16	Master Loan Agreement and Amendment Among		E-3
	Farm Credit Services of America,
	FLCA; Farm Credit Services of
	America, PCA; and
	Lincolnway Energy, LLC
10.17	Revolving Term Loan Supplement and Amendment		E-16
	Between Farm Credit Service of
	America, FLCA; and
	Lincolnway Energy, LLC
10.18	Monitored Revolving Credit Supplement		E-25
	and Amendment Between Farm Credit
	Services of America, PCA and
	Lincolnway Energy, LLC
31	Rule 13a-14(a)/15d-14(a) Certifications
	31.1	Rule 13a-14(a) Certification of Chairman	E-35
	31.2	Rule 13a-14(a) Certification of Chief Financial Officer	E-36
32	Section 1350 Certifications
	32.1	Section 1350 Certification of Chairman	E-37
	32.2	Section 1350 Certification of Chief Financial Officer	E-38

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EX-10.7.1

EX-10.16

EXHIBIT 10.16

MLA No. RI0218E

MASTER LOAN AGREEMENT

THIS MASTER LOAN AGREEMENT is entered into as of August 21, 2012 among FARM CREDIT SERVICES OF AMERICA, FLCA, FARM CREDIT SERVICES OF AMERICA, PCA (collectively, "Lead Leader"), and LINCOLNWAY ENERGY, LLC, Nevada, Iowa (the "Company").

BACKGROUND

FLCA and the Company are parties to a Master Loan Agreement dated March 24, 2005 as amended (the "Existing Agreement"). Hereinafter, the term "Lead Lender" shall mean FLCA, PCA or both, as applicable in the context. Pursuant to the terms of the Existing Agreement, the parties entered into one or more Supplements thereto. Lead Lender and the Company now desire to amend and restate new Supplements that may be issued thereunder. For that reason and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged). Lead Lender and the Company hereby agree that the Existing Agreement shall be amended and restated to read as follows:

SECTION 1.    Supplements.    In the event the Company desires to borrow from Lead Lender and Lead Lender is willing to lend to the Company, or in the event Lead Lender and the Company desire to consolidate any existing loans hereunder, the parties will enter into a Supplement to this agreement (a "Supplement"). Each supplement will set forth the amount of the loan, the purpose of the loan, the interest rate or rate options applicable to the loan, the repayment terms of the loan, and any other terms and conditions applicable to that particular loan. Each loan will be governed by the terms and conditions contained in this agreement and in the Supplement relating to the loan. As of the date hereof, the following Supplements are outstanding hereunder and shall be governed by the terms and conditions hereof: (A) the Monitored Revolving Credit Supplement dated of even date herewith and numbered RIA218S02; and (B) the Revolving Term Loan Supplement dated of even date herewith and numbered RIA218T02C (the "Revolving Term Loan Supplement").

SECTION 2.    Sale of Participation Interests and Appointment of Administrative Agent.    The Company acknowledges that concurrent with the execution of this Master Loan Agreement and related Supplements, Lead Lender is selling a participation interest in this Master Loan Agreement and related Supplements, Lead Lender is selling a participation interest in this Master Loan Agreement Supplements executed concurrently herewith to CoBank, ACB. Pursuant to an Amended and Restated Administrative Agency Agreement of even date herewith ("Agency Agreement"), Lead Lender has appointed CoBank, ACB, to act as Administrative Agent ("Agent") to act in place of Lead Lender hereunder and under the Supplements and any security documents to be executed thereunder. All funds to be advanced hereunder shall be made by Agent, all repayments by the Company hereunder shall be made to Agent, and all notices to be made to Lead Lender hereunder shall be made to Agent. Agent shall be solely responsible for the administration of this agreement, the Supplements and the security documents to be executed by the Company thereunder and the enforcement of all rights and remedies of Lead Lender hereunder and thereunder. Company acknowledges the appointment of Agent and consents to such appointment.

SECTION 3.    Availability.    Loans will be made available on any day on which Agent and the Federal Reserve Banks are open for business upon the telephonic or written request of the Company. Requests for loans must be received no later that 12:00 Noon Company's local time on the date the loan is desired. Loans will be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by the Company. The Company shall furnish to Agent a duly completed and executed copy of a CoBank Delegation and Wire and Electronic Transfer Authorization Form, and Agent shall be entitled to rely on (and shall incur no liability to the Company in acting on) any request or direction furnished in accordance with the terms thereof.

SECTION 4.    Repayment.    The Company's obligation to repay each loan shall be evidenced by the promissory note set forth in the Supplement relating to that loan or by such replacement note as Agent shall require. Agent shall maintain a record of all loans, the interest accrued thereon, and all payments made with respect thereto, and such record shall, absent proof of manifest error, be conclusive evidence of the outstanding principal and interest on the loans. All payments shall be made by wire transfer of immediately available funds, by check, or by automated clearing house or other similar cash handling processes as specified by separate agreement between the Company and Agent. Wire transfers shall be made to ABA No. 307088754 for advice to and credit of CoBank (or to such other account as Agent may direct by notice). The Company shall give Agent telephonic notice no later than 12:00 Noon Company's local time of its intent to pay by wire and funds received after 3:00 p.m. Company's local time shall be credited on the next business day. Checks shall be mailed to CoBank, Department 167, Denver, Colorado 80291-0167 (or to such other place as Agent may direct by notice). Credit for payment by

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Master Loan Agreement RI0328E

check will not be given until the later of: (A) the day on which Agent receives immediately available funds; or (B) the next business day after receipt of the check.

SECTION 5.    Capitalization.    The Company agrees to purchase voting (Class D) or non-voting (Class E) stock in Farm Credit Services of America, ACA (currently a minimum of $1,000.00 worth of stock consisting of at least 200 shares of $5.00 par value stock) as required under the policy of Lead Lender at the time of acquisition. Lead Lender policy may change from time to time. Lead Lender shall have a first lien on the stock for payment of any liability of the Company to Lead Lender. Said stock shall be owned as follows:

Owner Name:    Lincolnway Energy, LLCSSN/TIN: 20-1118105

The Company authorizes and appoints the following to act on behalf of all owners, to vote the Class D stock, and to accept, receive and receipt for any dividends declared on the stock:

SECTION 6.    Security.    The Company's obligations under this agreement, all Supplements (whenever executed), and all instruments and documents contemplated hereby or thereby, shall be secured by a statutory first lien on all equity which the Company may now own or hereafter acquire in Lead Lender (including Lead Lender's parent company, as applicable). In addition, the Company agrees to grant to Lead Lender, by means of such instruments and documents as Agent shall require, a first lien (subject only to exceptions approved in writing by Agent) on all personal property of the Company, and on all real property of the Company, whether now existing or hereafter acquired. As additional security for those obligations: (A) the Company agrees to grant to Lead Lender, by means of such instruments and documents as Agent shall require, a first priority lien on such of its other assets, whether now existing or hereafter acquired, as Agent may from time to time require; and (B) the Company agrees to grant to Lead Lender, by means of such instruments and documents as Agent shall require, a first priority lien on all realty which the Company may from time to time acquire after the date hereof. Lead Lender may at its discretion assign collateral to the Agent under the Agency Agreement.

SECTION 7.    Conditions Precedent.

(A)    Conditions to Initial Supplement.    Lead Lender's obligation to extent credit under the initial Supplement hereto is subject to the conditions precedent that Agent receive, in form and content satisfactory to Agent, each of the following:

This Agreement, Etc. A duly executed copy of this agreement and all instruments and documents contemplated hereby.

(B)    Conditions to Each Supplement.    Lead Lenders obligation to extend credit under each Supplement, including the initial Supplement, is subject to the conditions precedent that Agent receive, in form and content satisfactory to Agent, each of the following:

(1)    Supplement.    A duly executed copy of the Supplement and all instruments and documents contemplated thereby.

(2)    Evidence of Authority.    Such certified board resolutions, certificated of incumbency, and other evidence that Agent may require that the Supplement, all instruments and documents executed in connection therewith, and, in the case of initial Supplement hereto, this agreement and all instruments and documents executed in connection herewith, have been duly authorized and executed.

(3)    Fees and Other Charges.    All fees and other charges provided for herein or in the Supplement.

(4)    Evidence of Perfection, Etc. Such evidence as Agent may require that Lead Lender has a duly perfected first priority lien on all security for the Company's obligations, and that the Company is in compliance with Section 9(D) hereof.

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Master Loan Agreement RI0328E

(C)    Conditions to Each Loan. Lead Lender's obligation under each Supplement to make any loan to the Company thereunder is subject to the condition that no "Event of Default" (as defined in Section 12 hereof) or event which with the giving of notice and/or the passage of time would become an Event of Default hereunder (a "Potential Default"), shall have occurred and be continuing.

SECTION 8.    Representations and Warranties.

(A)    This Agreement. The Company represents and warrants to Lead Lender and Agent that as of the date of this agreement:

(1)     Compliance.    The Company and, to the extent contemplated hereunder, each "Subsidiary" (as defined below), is in compliance with all of the terms of this agreement, and no Event of Default or Potential Default exists hereunder.

(2)     Subsidiaries.    The Company has no "Subsidiary(ies)" (as defined below). For purpose hereof, a "Subsidiary" shall mean a corporation of which shares of stock having ordinary voting power to elect a majority of the board of directors or other managers of such corporation are owned, directly or indirectly, by the Company.

(B)    Each Supplement. The execution by the Company of each Supplement hereto shall constitute a representation and warranty to Lead Lender and Agent that:

(1)    Applications.    Each representation and warranty and all information set forth i any application or other documents submitted in connection with, or to induce Lead Lender to enter into, such Supplement, is correct in all material respects as of the date of the Supplement.

(2)    Conflicting Agreements, Etc.    This agreement, the Supplements, and all security and other instruments and documents relating hereto and thereto (collectively, at any time, the "Loan Documents"), do not conflict with, or require the consent of any party to, any other agreement to which the Company is a party or by which it or its property may be bound or affected, and do not conflict with any provision of the Company's bylaws, articles of incorporation, or other organizational documents.

(3)    Compliance. The Company and, to the extent contemplated hereunder, each Subsidiary, is in compliance with all of the terms of the Loan Documents (including, without limitation, Section 9(A) of this agreement on eligibility to borrow from Lead Lender).

(4)    Binding Agreement. The Loan Documents create legal, valid, and binding obligations of the Company which are enforceable in accordance with their terms, except to the extent that enforcement ma be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally.

SECTION 9.    Affirmative Covenants.    Unless otherwise agreed to in writing by Agent while this agreement is in effect, the Company agrees to and with respect to Subsections 9(B) through 9(G) hereof, agrees to cause each Subsidiary to:

(A)    Eligibility. Maintain its status as an entity eligible to borrow form Lead Lender.

(B)    Corporate Existence, Licenses, Etc. (1) Preserve and keep in full force and effect its existence and good standing in the jurisdiction of its incorporation or formation; (2) qualify and remain qualified to transact business in all jurisdictions where such qualification is required; and (3) obtain and maintain all licenses, certificated, permits, authorizations, approvals, and the like which are material to the conduct of its business or require by law, rule, regulation, ordinance, code, order, and the like (collectively, "Laws").

(C)    Compliance with Laws.    Comply in all material respects with all applicable Laws, including, without limitation, all Laws relating to environmental protection and any patron or member investment program that it may have. In addition, the Company agrees to cause all persons occupying or present on any of its properties, and to cause each Subsidiary to cause all persons occupying or present on any of its properties, to comply in all material respects with all environmental protection Laws.

(D)    Insurance. Maintain insurance with insurance companies or associations acceptable to Agent in such amounts and covering such risks as are usually carried by companies engaged in the same or similar business and similarly situated, and make such increases in the type or amount of coverage as Agent may request. All such policies insuring any

E-5

Master Loan Agreement RI0328E

collateral for the Company's obligations to Lead Lender shall have mortgagee or lender loss payable clauses or endorsements in form and content acceptable to Agent. At Agent's request, all policies (or such other proof of compliance with this Subsection as may be satisfactory to Agent) shall be delivered to Agent.

(E)    Property Maintenance.    Maintain all of its property that is necessary to or useful in the proper conduct of its business in good working condition, ordinary wear and tear excepted.

(F)    Books and Records.    Keep adequate records and books of account in which complete entries will be made in accordance with generally accepted accounting principles ("GAAP") consistently applied.

(G)    Inspection.    Permit Agent or its agents, upon reasonable notice and during normal business hours or at such other times as the parties may agree, to examine its properties, books, and records, and to discuss its affairs, finances, and accounts, with its respective officers, directors, employees, and independent certified public accountants.

(H)    Reports and Notices.    Furnish to Agent:

(1)    Annual Financial Statements. As soon as available, but in no event more than 90 days after the end of each fiscal year of the Company occurring during the term hereof, annual consolidated and consolidating financial statements of the Company and its consolidated Subsidiaries, if any, prepared in accordance with GAAP consistently applied. Such financial statements shall: (a) be audited by independent certified public accountants selected by the Company and acceptable to Agent; (b) be accompanied by a report of such accountants containing an opinion thereon acceptable to Agent; (c) be prepared in reasonable detail and in comparative form; and (d) include a balance sheet, a state of income, a statement of retained earnings, a statement of cash flows, and all notes and schedules relating thereto.

(2)    Interim Financial Statements. As soon as available, but in no event more than 30 days after the end of each month, a consolidated balance sheet of the Company and its consolidated Subsidiaries, if any, as of the end of such month, a consolidated statement of income for the Company and its consolidated Subsidiaries, if any, for such period and for the period year to date, and such other interim statements as Agent may specifically request, all prepared in reasonable detail and in comparative form in accordance with GAAP consistently applied and, if required by written notice from Agent certified by an authorized officer or employee of the Company acceptable to Agent.

(3)    Notice of Default. Promptly after becoming aware thereof, notice of the occurrence of an Event of Default or a Potential Default.

(4)    Notice of Non-Environmental Litigation.     Promptly after the commencement thereof, notice of the commencement of all actions, suits, or proceedings before any court, arbitrator, or governmental department, commission, board, bureau, agency, or instrumentality affecting the Company or any Subsidiary which, if determined adversely to the Company or any such Subsidiary, could have a material adverse effect on the financial condition, properties, profits, or operations of the Company or any such Subsidiary.

(5)    Notice of Environmental Litigation, Etc. Promptly after receipt thereof, notice of the receipt of all pleadings, orders, complaints, indictments, or any other communication alleging a condition that may require the Company or any Subsidiary to undertake or to contribute to a cleanup or criminal sanctions related to alleged violations of such Laws, or which claim personal injury or property damage to any person as a result of environmental factors or conditions.

(6)    Bylaws and Articles. Promptly after any change in the Company's operating agreement or articles of organization (or like documents), copies of all such changes, certified by the Company's Secretary.

(7)    Other Information. Such other information regarding the condition or operations, financial or otherwise, of the Company or any Subsidiary as Agent may from time to time reasonably request, including but not limited to copies of all pleadings, notices, and communications referred to in Subsections 9(H)4 and (5) above.

(I)    Commodity Account Control Agreement(s). On or before November 1, 2012 provide to agent a duly executed original and/or replacement commodity account control agreement(s) regarding the Company's commodity trading account(s) with ADM Investor Services, Inc., in form an substance acceptable to Agent, and such other evidence as Agent may require that such agreement(s) have been duly authorized and executed.

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Master Loan Agreement RI0328E

(J)    Grain Contracts. On or before November 1, 2012 provide to Agent copies of grain contracts in form and content acceptable to Agent.

(K)Risk Management Policy. On or before November 1, 2012 provide to Agent an updated Risk Management Policy in form and content acceptable to Agent.

SECTION 10.     Negative Covenants. Unless otherwise agreed to in writing by Agent, while this agreement is in effect the Company will not:

(A)     Borrowings. Create, incur, assume, or allow to exist, directly or indirectly, any indebtedness or liability for borrowed money (including trade or banker's acceptances), letters of credit, or the deferred purchase price of property or services (including capitalized leases), except for: (1) debt to Lead Lender and/or Agent; (2) accounts payable to trade creditors incurred in the ordinary course of business; (3) current operating liabilities (other than for borrowed money) incurred in the ordinary course of business; (4) unsecured debt of the Company to Key Cooperative, in an aggregate amount not to exceed $1,700,000.00; and (5) debt of the Company to miscellaneous creditors, in an aggregate amount not to exceed $1,000,000.00, with terms and conditions satisfactory to Agent.

(B)    Liens. Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge, lien (including the lien of an attachment, judgment, or execution), security interest, or other encumbrance of any kind upon any of its property, real or personal (collectively, "Liens"). The forgoing restrictions shall not apply to; (1) Liens in favor of Lead Lender and/or Agent; (2) Liens for taxes, assessments, or governmental charges that are not past due; (3) Liens and deposits under workers' compensation, unemployment insurance, and social security Laws; (4) Liens and deposits to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), and like obligations arising in the ordinary course of business as conducted on the date hereof; (5) Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and like persons that secure obligations that are not past due; (6) easements, rights-of-way, restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto; and (7) Liens in favor of miscellaneous creditors to secure indebtedness permitted hereunder.

(C)    Mergers, Acquisitions, Etc. Merge or consolidate with any other entity or acquire all or a material part of the assets of any person or entity, or form or create any new Subsidiary or affiliate, or commence operations under any other name, organization, or entity, including any joint venture.

(D)    Transfer of Assets. Sell, transfer, lease, or otherwise dispose of any of its assets, except in the ordinary course of business.

(E)    Loans and Investments. Make any loan or advance to any person or entity, or purchase any capital stock, obligations or other securities of, make any capital contribution to, or otherwise invest in any person or entity, or form or create any partnerships or joint ventures except: (1) trade credit extended in the ordinary course of business.

(F)    Contingent Liabilities.    Assume, guarantee, become liable as a surety, endorse, contingently agree to purchase, or otherwise be or become liable, directly or indirectly (including, but not limited to, by means of a maintenance agreement, an asset, or stock purchase agreement, or any other agreement designed to ensure any creditor against loss), for or on account of the obligation of any person or entity, except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of the Company's business.

(G)    Change in Business. Engage in any business activities or operations substantially different from or unrelated to the Company's present business activities or operations.

(H)    Leases.    Create, incur, assume, or permit to exist any obligation as lessee under operating leases or leases which should be capitalized in accordance with GAAP for the rental or hire of any real or personal property, except: (1) leases which do not in the aggregate require the Company to make scheduled payments to the lessors in any fiscal year of the Company in excess of $100,000.00; and (2) leases of up to and including 220 railroad cars under terms and conditions acceptable to Agent.

(I)    Changes to Operating Agreements. Amend or otherwise make nay material changes to the Company's Articles of Organization, Operating Agreement, and ethanol and distillers grain marketing contracts.

(K)    Dividends, Etc. Declare or pay any dividends, or make any distribution of assets to the stockholders, or purchase, redeem, retire or otherwise acquire for any value any of its capital stock, or allocate or otherwise set apart any sum

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Master Loan Agreement RI0328E

for any of the foregoing, except that in any fiscal year of the Company, the Company may pay dividends in an amount up to 100% of its net income for the prior fiscal year, provided that no Event of Default or Potential Default shall have occurred and be continuing or would result therefrom.

SECTION 11.    Financial Covenants. Unless otherwise agreed to in writing, while this agreement is in effect:

(A)     Working Capital. The Company will have at the end of each period for which financial statements are required to be furnished pursuant to Section 9(H) hereof an excess of current assets over current liabilities (both as determined in accordance with GAAP consistently applied) of not less than $10,000,000.00, except that in determining current assets, any amount available under the Revolving Term Loan Supplement (less the amount that would be considered a current liability under GAAP if fully advanced hereto may be included.

(B)    Net Worth. The Company will have at the end of each period for which financial statement are required to be furnished pursuant to Section 9(H) hereof an excess of total assets over total liabilities (both as determined in accordance with GAAP consistently applied) of not less than $45,000,000.00.

SECTION 12.    Events of Default. Each of the following shall constitute an "Event of Default" under this agreement:

(A)    Payment Default. The Company should fail to make any payment required under this agreement or any other Loan Document when due, or should fail to purchase any equity in Lead Lender or Lead Lender's parent Association as and when required by the Capital Plan and/or Bylaws of Lead Lender or its parent Association.

(B)    Representations and Warranties. Any representation or warranty made or deemed made by the Company herein or in any Supplement, application, agreement, certificate, or other document related to or furnished in connection with this agreement or any Supplement, shall prove to have been false or misleading in any material respect on or as of the date made or deemed made.

(C)    Certain Affirmative Covenants. The Company or, to the extent required hereunder, any Subsidiary should fail to perform or comply with Sections 9(A) through 9(H)(2), 9(H)(6) through 9(H)(8) or any reporting covenant set forth in any Supplement hereto, and such failure continues for 15 days after written notice thereof shall have been delivered by Agent to the Company.

(D)    Other Covenants and Agreements. The Company or, to the extent required hereunder, any Subsidiary should fail to perform or comply with any other covenant or agreement contained herein or in any other Loan Document or shall use the proceeds of any loan for an unauthorized purpose.

(E)    Cross-Default.    The Company should, after any applicable grace period, breach or be in default under the terms of any other agreement between the Company and Lead Lender or Agent, or between the Company and any affiliate of Lead Lender or Agent, including without limitation Lead Lender Leasing Services Corporation.

(F)    Other Indebtedness. The Company or any Subsidiary should fail to pay when due any indebtedness to any other person or entity for borrowed money or nay long-term obligation for the deferred purchase price of property (including any capitalized lease), or any other event occurs which, under any agreement or instrument relating to such indebtedness or obligation, has the effect of accelerating or permitting the acceleration of such indebtedness or obligation, whether or not such indebtedness or obligation is actually accelerated or the right to accelerate is conditioned on the giving of notice, the passage of time, otherwise.

(G)    Judgments. A judgment, decree, or order for the payment of money shall be rendered against the Company or any Subsidiary and either: (1) enforcement proceedings shall have been commenced; (2) a Lien prohibited under Section 10(B) hereof shall have been obtained; or (3) such judgment, decree, or order shall continue unsatisfied and in effect for a period of 20 consecutive days without being vacated, discharged, satisfied, or stayed pending appeal.

(H)    Insolvency, Etc. The Company or any Subsidiary shall: (1) become insolvent or shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they come due; or (2) suspend its business operations or a material part thereof or make an assignment for the benefit of creditors; or (3) apply for , consent to, or acquiesce in the appointment of a trustee, receiver, or other custodian for it or any of its property or, in the absence of such application, consent, or acquiescence, a trustee, receiver, or other custodian is so appointed; or (4) commence or have commenced against it any

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Master Loan Agreement RI0328E

proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation Law of any jurisdiction.

(I)    Material Adverse Change. Any material adverse change occurs, as reasonably determined by Agent, the Company's financial condition, results of operation, or ability to perform its obligations hereunder or under an instrument or document contemplated hereby.

(J)    Revocation of Guaranty. Any guaranty, suretyship, subordination agreement, maintenance agreement, or other agreement furnished in connection with the Company's obligations hereunder and under any Supplement shall, at any time, cease to be in full force and effect, or shall be revoked or declared null and void, or the validity or enforceability there of shall be contested by the guarantor, surety or other maker thereof (the "Guarantor"), or the Guarantor shall deny any further liability or obligations thereunder, or shall fail to perform its obligations thereunder, or any representation or warranty set forth therein shall be breached, or the Guarantor shall breach or be in default under the terms of any other agreement with Lead Lender and/or Agent (including any loan agreement or security agreement), or default set forth in Subsections (F) through (H) here of shall occur with respect to the Guarantor.

SECTION 13.     Remedies. Upon the occurrence and during the continuance of an Event of Default or any Potential Default, Lead Lender shall have no obligation to continue to extend credit to the Company and may discontinue doing so at anytime without prior notice. For all purposes hereof, the term "Potential Default" means the occurrence of any event which, with the passage of time or the giving of notice or both would become an Event of Default. In addition, upon the occurrence and during the continuance of any Event of Default, Lead Lender or Agent may, upon notice to the Company, terminate any commitment and declare the entire unpaid principal balance of the loans, all accrued interest thereon, and all other amounts payable under this agreement, all Supplements, and the other Loan Documents to be immediately due and payable. Upon such a declaration, the unpaid principal balance of the loans and all such other amounts hall become immediately due and payable, without protest, presentment, demand, or further notice of any kind, all of which are hereby expressly waived by the Company. In addition, upon such an acceleration:

(A)    Enforcement. Lead Lender or Agent may proceed to protect, exercise, and enforce such rights and remedies as may be provided by this agreement, any other Loan Document or under Law. Each and every one of such rights and remedies shall be cumulative and may be exercised from time to time, and no failure on the part of Lead Lender or Agent to exercise, and no delay in exercising, any right or remedy shall operate as a waiver thereof, and no single or partial exercise of any right or remedy shall preclude any other or future exercise thereof, or the exercise of any other right. Without limiting the forgoing, Agent may hold and/or set off and apply against the Company's obligation to Lead Lender by Lead Lender or Agent, or any balances held by Lead Lender or Agent for the Company's account (whether or not such balances are then due).

(B)    Application of Funds. Agent may apply all payments received by it to the Company's obligations to Lead Lender in such order and manner as Agent may elect in its sole discretion.

In addition to the rights and remedies set forth above: (1) upon the occurrence and during the continuance of the Event of Default, then at Agent's option in each instance, the entire indebtedness outstanding hereunder and under all Supplements shall bear interest from the date of such Event of Default until such Event of Default shall have been waived or cured in a manner satisfactory to Agent at 4.00% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan; and (2) after the maturity of any loan (whether as a result of acceleration or otherwise), the unpaid principal balance of such loan (including without limitation, principal, interest, fees and expenses) shall automatically bear interest at 4.00 per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan. All interest provided for herein shall be payable on demand and shall be calculated on the basis of a year consisting of 360 days.

SECTION 14.     Broken Funding Surcharge. Notwithstanding any provision contained in any Supplement giving the Company the right to repay any loan prior to the date in would otherwise be due and payable, the Company agrees that in the event it repays any fixed rate balance prior to its scheduled due date or prior to the last day of the fixed rate period applicable there to (whether such payment is made voluntarily, as a result of an acceleration, or otherwise), the Company will pay to Agent a surcharge in an amount equal to the greater of: (i) an amount that would result in Lead Lender, Agent, and all subparticipants being made whole (on a present value basis) for the actual or imputed funding losses incurred by Lead Lender, Agent, and all subparticipants as a result thereof; or (ii) $300.00. Notwithstanding the foregoing, in the event any fixed rate balance is repaid as a result of the Company refinancing the loan with another lender or by other means, then in lieu of the foregoing, the Company shall pay to Agent a surcharge in an amount sufficient (on a present value basis) to enable Lead Lender, Agent, and all subparticipants to maintain the yield they would have earned during the fixed rate period on the amount repaid. Such surcharges will be calculated in accordance with methodology established by Lead Lender, Agent, and all subparticipants (copies of which will be made available to the Company upon request).

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Master Loan Agreement RI0328E

SECTION 15.    Complete Agreement, Amendments. This agreement, all Supplements, and all other instruments and documents contemplated hereby and thereby, are intended by the parties to be a complete and final expression of their agreement. No amendment or modification of this Agreement shall be effective unless in writing signed by both parties hereto. No waiver of any provision hereof, and no consent to any departure by either party herefrom, shall be effective unless approved in writing by the other party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. In the even this agreement is amended or restate, each such amendment or restatement shall be applicable to all Supplements hereto.

SECTION 16.     Other Types of Credit. From time to time, Lead Lender may issue letters of credit or extend other types of credit to or for the account of the Company. In the event the parties desire to do so under the terms of this agreement, such extensions of credit may be set forth in any supplement hereto and this agreement shall be applicable thereto.

SECTION 17.    Applicable Law. Without giving effect to the principle of conflict of laws and except to the extent governed by federal law, the Laws of the State of Colorado, without reference to choice of law doctrine, shall govern this agreement, each Supplement and any other Loan Documentsfor which Colorado is specified as the applicable law, and all disputes and matters between the parties to this agreement, including all disputes and matters whatsoever arising under, in connection with or incident to the lending and/or leasing or other business relationship between the parties, and the rights and obligations of the parties to this agreement or any other Loan Documents by and between the parties for which Colorado is specified as the applicable law.

SECTION 18.     Notices. All notices hereunder shall be in writing and shall be deemed to be duly given upon delivery if personally delivered or sent by telegram or facsimile transmission, or three days after mailing if sent by express, certified or registered main, to the parties at the following addresses (or such other address for a party as shall be specified by like notice):

If to Agent, as follows:    If to the Company, as follows:

For general correspondence purposes:    

CoBank, ACB    Lincolnway Energy, LLC

P.O. Box 5110    59511 West Lincoln Highway

Denver, Colorado 80217-5110    Nevada, Iowa 50201

For direct delivery purposes, when desired:    Attention: Project Coordinator/Manager

5500 South Quebec Street    Fax No.: (515) 663-9335

Greenwood Village, Colorado 80111-1914

Attention: Credit Information Services

Fax No.: (303) 224-6101

Farm Credit of America, FLCA

and Farm Credit of America, PCA

5015 S. 118th

Omaha, NE 68137

Attention: Ms. Kathy Frahm

Facsimile: 402-348-3500

SECTION 19.     Taxes and Expenses. To the extent allowed by law, the Company agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained or employed by Lead Lender and/or Agent, and including any expenses of in-house counsel of Lead Lender and/or Agent) incurred by Lead Lender and/or Agent and any participants of Lead Lender in connection with the origination, administration, collection, and enforcement of this agreement and the other Loan Documents, including, without limitation, all costs and expenses incurred in perfecting, maintain, determining the priority of, and releasing any security for the Company's obligations to Lead Lender, and any stamp, intangible, transfer, or like tax payable in connection with this agreement or any other Loan Document.

SECTION 20.     Effectiveness and Severability. This agreement shall continue in effect until: (A) all indebtedness and obligations of the Company under this agreement, all SUpplements, and all other Loan Documents shall have been paid or satisfied; (B) Lead Lender has no commitment to extend credit to or for the account of the Company under any Supplement;

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Master Loan Agreement RI0328E

and (C) either party sends written notice to the other terminating this agreement. Any provision of this agreement of any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof.

SECTION 21.    Successors and Assigns. This agreement, each Supplement, and the other Loan Documents shall be binding upon and inure to the benefit of the COmpany and Lead Lender and their respective successors and assigns, except that the Company may not assign or transfer its rights or obligations under this agreement, any Supplement or any other Loan Document without the prior written consent of Agent.

SECTION 22.    Participations, Etc. From time to time, Lead Lender may sell to one or more banks, financial institutions, or other lenders a participation in one or more of the loans or other extensions of credit made pursuant to this agreement. However, no such participation shall relieve Lead Lender of any commitment made to the Company hereunder. In connection with the foregoing, Lead Lender may disclose information concerning the Company and its Subsidiaries, if any, to any participant or prospective participant, provided that such participant or prospective participant agrees to keep such information confidential. Patronage distributions in the event of a sale of a participation interest shall be governed by the Bylaws and Capital Plan of Lead Lender or Lead Lender's Parent Association (as each may be amended from time to time). A sale of a participation interest may include certain voting rights of the participants regard the loans hereunder (including without limitation the administration, servicing, and enforcement thereof). Lead Lender agrees to give written notification to the Company of any sale of a participation interest, which notification may be given by Agent.

SECTION 23.    Counterpart Signatures. This agreement, each Supplement and any other Loan Document may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and shall be binding upon all parties and their respective permitted successors and assigns, and all of which taken together shall constitute one and the same agreement.

SECTION 24.    Administrative Fee. The Company agrees to pay to Agent on November 1, 2013, and on each November 1 thereafter, for as long as the Company has commitments from Lead Lender, an administrative fee in the amount of $4,500.00.

IN WITNESS WHEREOF, the parties have caused this agreement to be executed by their duly authorized officers as of the date shown above.

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Master Loan Agreement RI0328E

SECTION 22.    Participations, Etc. From time to time, Lead Lender may sell to one or more banks, financial institutions, or other lenders a participation in one or more of the loans or other extensions of credit made pursuant to this agreement. However, no such participation shall relieve Lead Lender of any commitment made to the Company hereunder. In connection with the foregoing, Lead Lender may disclose information concerning the Company and its Subsidiaries, if any, to any participant or prospective participant, provided that such participant or prospective participant agrees to keep such information confidential. Patronage distributions in the event of a sale of a participation interest shall be governed by the Bylaws and Capital Plan of Lead Lender or Lead Lender's Parent Association (as each may be amended from time to time). A sale of a participation interest may include certain voting rights of the participants regard the loans hereunder (including without limitation the administration, servicing, and enforcement thereof). Lead Lender agrees to give written notification to the Company of any sale of a participation interest, which notification may be given by Agent.

SECTION 23.    Counterpart Signatures. This agreement, each Supplement and any other Loan Document may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and shall be binding upon all parties and their respective permitted successors and assigns, and all of which taken together shall constitute one and the same agreement.

SECTION 24.    Administrative Fee. The Company agrees to pay to Agent on November 1, 2013, and on each November 1 thereafter, for as long as the Company has commitments from Lead Lender, an administrative fee in the amount of $4,500.00.

IN WITNESS WHEREOF, the parties have caused this agreement to be executed by their duly authorized officers as of the date shown above.

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EXHIBIT A

Lincolnway Energy, LLC

Nevada, Iowa

Compliance Certificate

As of Month Ended _______________________________________

This certificate is delivered pursuant to the Master Loan Agreement dated ______________________, 2012 (hereinafter referred to as the "MLA") between Lincolnway Energy, LLC (hereinafter referred to as the "Company") and Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (hereinafter referred to as "Farm Credit"). Terms used herein and defined in the MLA shall have their defined meanings when used herein.

Section 11 (A) - Working Capital
Required to be no less than $10,000,000 at all times
GAAP Current Assets
plus: Unadvanced Portion of Term Revolver
Adjusted Current Assets		$0
GAAP Current Liabilities
plus: current portion of Term Revolver When Fully Advanced
Adjusted Current Liabilities		$0
	GAAP Working Capital --->	$0
	Adjusted working Capital--->	$0
Compliance (Yes/No)
Section 11 (B) - Net Worth
Required to be no less than $45,000,000 at all times
Net Worth -->
Compliance (Yes/No)

FINANCIAL OFFICER CERTIFICATION

The undersigned hereby certifies that the foregoing is a correct statement of financial condition and compliance as of the month end stated above, and that, during such month, there existed at no time any condition or event which constituted an event of default or which, after notice or lapse of time or both, would constitute an event of default in the performance of any covenants contained in the MLA.

By:___________________________________________________________    Title:_______________________________________    Date:________________

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Amendment No. RI0218F

AMENDMENT

TO THE

MASTER LOAN AGREEMENT

THIS AMENDMENT is entered into as of November 8, 2012 between FARM CREDIT SERVICES OF AMERICA, FLCA AND FARM CREIT SERVICES OF AMERICA, PCA ("Lead Lender") and LINCOLNWAY ENERGY, LLC, Nevada, Iowa (the "Company").

BACKGROUND

CoBank and the Company are parties to a Master Loan Agreement dated August 21, 2012 (such agreement is hereinafter referred to as the "MLA"). CoBank and the Company now desire to amend the MLA. For that reason, and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), CoBank and the Company agree as follows:

1.    Section 11 (B) of the MLA is hereby amended and restated to read as follows:

SECTION 11. Financial Covenants. Unless otherwise agreed to in writing, while this agreement is in effect:

(B)    Net Worth. The Company will have at the end of each period for which financial statements are required to furnished pursuant to Section 9(H) hereof an excess of total assets over total liabilities (both as determined in accordance with GAAP consistently applied) of not less than $39,000,000.00.

2.    Except as set forth in this amendment, the MLA, including all amendments thereto, shall continue in full force and effect as written.

IN WITNESS WHEREOF, the parties have caused this amendment to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA,
FLCA AND FARM CREDIT SERVICES OF
AMERICA, PCA LINCOLNWAY ENERGY, LLC

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Amendment No. RI0218F

AMENDMENT

TO THE

MASTER LOAN AGREEMENT

THIS AMENDMENT is entered into as of November 8, 2012 between FARM CREDIT SERVICES OF AMERICA, FLCA AND FARM CREIT SERVICES OF AMERICA, PCA ("Lead Lender") and LINCOLNWAY ENERGY, LLC, Nevada, Iowa (the "Company").

BACKGROUND

CoBank and the Company are parties to a Master Loan Agreement dated August 21, 2012 (such agreement is hereinafter referred to as the "MLA"). CoBank and the Company now desire to amend the MLA. For that reason, and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), CoBank and the Company agree as follows:

1.    Section 11 (B) of the MLA is hereby amended and restated to read as follows:

SECTION 11. Financial Covenants. Unless otherwise agreed to in writing, while this agreement is in effect:

(B)    Net Worth. The Company will have at the end of each period for which financial statements are required to furnished pursuant to Section 9(H) hereof an excess of total assets over total liabilities (both as determined in accordance with GAAP consistently applied) of not less than $39,000,000.00.

2.    Except as set forth in this amendment, the MLA, including all amendments thereto, shall continue in full force and effect as written.

IN WITNESS WHEREOF, the parties have caused this amendment to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA,
FLCA AND FARM CREDIT SERVICES OF
AMERICA, PCA LINCOLNWAY ENERGY, LLC

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EX-10.17

EXHIBIT 10.17

Loan No. R10218T02C

REVOLVING TERM LOAN SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated August 21, 2012 (the "MLA"), is entered into as of August 21, 2012 FARM CREDIT SERVICES OF AMERICA, FLCA ("Lead Lender") and LINCOLNWAY ENERGY, LLC, Nevada Iowa (the "Company"), and amends and restates the Supplement dated March 24, 2005 as previously amended and numbered R10218T02.

SECTION 1. The Revolving Term Loan Commitment. On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed $5,000,000.00 at any one time outstanding (the "Commitment"). Within the limits of the Commitment, the Company may borrow, repay and reborrow.

SECTION 2. Purpose and Transfer. The purpose of Commitment is to provide working capital to the Company. In addition, the purpose of the Commitment is to consolidate under this Supplement the Company's existing indebtedness to Lead Lender under the Construction Term Loan Supplement dated March 24, 2005 and numbered R10218T01, as previously amended, (the "Existing Agreement"). The Company agrees that on the date when all conditions precedent to Lead Lender's obligation to extend credit hereunder have been satisfied: (A) the principal balance outstanding under the Existing Agreement shall be transferred to and charged against the Commitment; (B) all accrued obligation of the Company under the Existing Agreement for the payment of interest or other charges shall be transferred to and become part of the Company's obligation under this Supplement as if fully set forth herein; and (C) the Existing Agreement and the promissory note set forth in or executed in connection therewith shall be deemed replaced and superseded, but the indebtedness evidenced by such note shall not be deemed to have been paid off, by this Supplement and the MLA. In addition, in the event any balances bearing interest at a fixed rate are outstanding on the date such loans are being transferred hereto, then such balances shall continue to be subject to such rates for the remaining agreed upon fixed rate periods but shall otherwise be subject to the terms hereof.

SECTION 3. Term. Intentionally Omitted.

SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loan(s) in accordance with one or more of the following interest rate options, as selected by the Company:

(A) One-Month LIBOR Index Rate. At a rate (rounded upward to the nearest 1/100th and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as hereinafter defined] or required by any other federal law or regulation) per annum equal at all times to 3.00% above the rate quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time for the offering of one (1)-month U.S. dollars deposits, as published by Bloomberg or another major information vendor listed on BBA's official website on the first "U.S. Banking Day" (as hereinafter defined) in each week, with such rate to change weekly on such day. The rate shall be reset automatically, without the necessity of notice being provided to the Company or any other party, on the first "U.S. Banking Day" of each succeeding week, and each change in the rate shall be applicable to all balances subject to this option. Information about the then-current rate shall be made available upon telephonic request. For purposes hereof: (1) "U.S. Banking Day" shall mean a day on which Agent (as that term is defined in the MLA) is open for business and banks are open for business in New York, New York; (2) "Eurocurrency Liabilities" shall have the meaning as set forth in "FRB Regulation D"; and (3) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

E-16

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

(B) Quoted Rate. At a fixed rate per annum to be quoted by Agent in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to Agent in its sole discretion in each instance, provided that: (1) the minimum fixed period shall be 180 days; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; and (3) the maximum number of fixes in place at any one time shall be five.

(C) LIBOR. At a fixed rate per annum equal to "LIBOR" (as hereinafter defined) plus 3.00%. Under this option: (1) rates may be fixed for "Interest Periods" (as hereinafter defined) of 6, 9, or 12 months, as selected by the Company; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; (3) the maximum number of fixes in place at any one time shall be five; and (4) rates may only be fixed on a "Banking Day" (as hereinafter defined) on three Banking Days' prior written notice. For purposes hereof: (a) "LIBOR" shall mean the rate (rounded upward to the nearest sixteenth and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as herein defined] or required by any other federal law or regulation) quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time two Banking Days before the commencement of the Interest Period for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by the Company, as published by Bloomberg or another major information vendor listed on BBA's official website; (b) "Banking Day" shall mean a day on which Agent is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England; (c) "Interest Period" shall mean a period commencing on the date this option is to take effect and ending on the numerically corresponding day in the next calendar month or the month that is 6, 9, or 12 months thereafter, as the case may be; provided however that: (i) in the event such ending day is not a Banking Day, such period shall be extended to the next Banking Day unless such Business Day falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (ii) if there is no numerically corresponding day in the month, then such period shall end on the last Banking Day in the relevant month; (d) "Eurocurrency Liabilities" shall have meaning as set forth in "FRB Regulation D"; and (e) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

The Company shall select the applicant rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed for periods expiring after the maturity date of the loans and rates may not be fixed in such a manner as to cause the Company to have to break any fixed rate balance in order to pay any installment of principal. All elections provided for herein shall be made electronically (if applicable), telephonically or in writing and must be received by Agent not later than 12:00 Noon Company's local time in order to be considered to have been received on that day; provided, however, that in the case of LIBOR rate loans, all such elections must be confirmed in writing upon Agent's request. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on such other day in such month as Agent shall require in a written notice to the Company; provided, however, in the event the Company elects to fix all or a portion of the indebtedness outstanding under the LIBOR interest rate option above, at Agent's option upon written notice to the Company, interest shall be payable at the maturity of the Interest Period and if the LIBOR interest rate fix is for a period longer than three months, interest on that portion of the indebtedness outstanding shall be payable quarterly in arrears on each three-month anniversary of the commencement date of such Interest Period, and at maturity.

SECTION 5. Promissory Note. The Company promises to repay the loans that are outstanding at the time the Commitment expires on June 1, 2017. If any installment due date is not a day on which Agent is open for business, then such payment shall be made on the next day on which Agent is open for business. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

E-17

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

SECTION 6. Prepayment. Subject to the broken funding surcharge provision of the MLA, the Company may on one Business Day's prior written notice prepay all or any portion of the loan(s). During the term of the Commitment, prepayments shall be applied to such balances, fixed or variable, as the Company shall specify. After the expiration of the term of Commitment, prepayments shall, unless Agent otherwise agrees, be applied to principal installments in the inverse order of their maturity and to such balances, fixed or variable, as Agent shall specify.

SECTION 7. Letters of Credit. In addition to loans, the Company may utilize, if agreeable to Agent in its sole discretion in each instance, the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after Agent's receipt of a duly completed and executed copy of Agent's then current form of Application and Reimbursement Agreement, or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall reduce the amount available under the Commitment by the maximum amount capable or being drawn thereunder. Any draw under any letter of credit issued hereunder shall be deemed a loan under the Commitment and shall be repaid in accordance with this Supplement. Each letter of credit must be in form and content acceptable to Agent and must expire no later than the maturity date of the Commitment.

SECTION 8. Security. The Company's obligations hereunder and, to the extent related hereto, the MLA, including without limitation any future advances under any existing mortgage or deed of trust, shall be secured as provided in the Security Section of the MLA.

SECTION 9. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.60% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, FLCA LINCOLNWAY ENERGY, LLC

E-18

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

SECTION 9. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.60% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, FLCA LINCOLNWAY ENERGY, LLC

E-19

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

Loan No. R10218T02D

REVOLVING TERM LOAN SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated August 21, 2012 (the "MLA"), is entered into as of November 8, 2012 FARM CREDIT SERVICES OF AMERICA, FLCA ("Lead Lender") and LINCOLNWAY ENERGY, LLC, Nevada Iowa (the "Company"), and amends and restates the Supplement dated August 21, 2012 and numbered R10218T02C.

SECTION 1. The Revolving Term Loan Commitment. On the terms and conditions set forth in the MLA and this Supplement, Lead Lender agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed $5,000,000.00 at any one time outstanding (the "Commitment"). Within the limits of the Commitment, the Company may borrow, repay and reborrow.

SECTION 2. Purpose. The purpose of the Commitment is to provide working capital to the Company.

SECTION 3. Term. Intentionally Omitted.

SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loan(s) in accordance with one or more of the following interest rate options, as selected by the Company:

(A) One-Month LIBOR Index Rate. At a rate (rounded upward to the nearest 1/100th and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as hereinafter defined] or required by any other federal law or regulation) per annum equal at all times to 3.50% above the rate quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time for the offering of one (1)-month U.S. dollars deposits, as published by Bloomberg or another major information vendor listed on BBA's official website on the first "U.S. Banking Day" (as hereinafter defined) in each week, with such rate to change weekly on such day. The rate shall be reset automatically, without the necessity of notice being provided to the Company or any other party, on the first "U.S. Banking Day" of each succeeding week, and each change in the rate shall be applicable to all balances subject to this option. Information about the then-current rate shall be made available upon telephonic request. For purposes hereof: (1) "U.S. Banking Day" shall mean a day on which Agent is open for business and banks are open for business in New York, New York; (2) "Eurocurrency Liabilities" shall have the meaning as set forth in "FRB Regulation D"; and (3) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

(B) Quoted Rate. At a fixed rate per annum to be quoted by Agent in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to Agent in its sole discretion in each instance, provided that: (1) the minimum fixed period shall be 180 days; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; and (3) the maximum number of fixes in place at any one time shall be five.

(C) LIBOR. At a fixed rate per annum equal to "LIBOR" (as hereinafter defined) plus 3.50%. Under this option: (1) rates may be fixed for "Interest Periods" (as hereinafter defined) of 1, 2, 3, 6, 9, or 12 months, as selected by the Company; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; (3) the maximum number of fixes in place at any one time shall be five; and (4) rates may only be fixed on a "Banking Day" (as hereinafter defined) on three Banking Days' prior written notice. For purposes hereof: (a) "LIBOR" shall mean the rate (rounded upward to the nearest sixteenth and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as herein defined] or required by any other federal law or regulation) quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time two Banking Days before the commencement of the Interest Period for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by the Company, as published by Bloomberg or another

E-20

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

major information vendor listed on BBA's official website; (b) "Banking Day" shall mean a day on which Agent is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England; (c) "Interest Period" shall mean a period commencing on the date this option is to take effect and ending on the numerically corresponding day in the next calendar month or the month that is 2, 3, 6, 9, or 12 months thereafter, as the case may be; provided however that: (i) in the event such ending day is not a Banking Day, such period shall be extended to the next Banking Day unless such Business Day falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (ii) if there is no numerically corresponding day in the month, then such period shall end on the last Banking Day in the relevant month; (d) "Eurocurrency Liabilities" shall have meaning as set forth in "FRB Regulation D"; and (e) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

The Company shall select the applicant rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed for periods expiring after the maturity date of the loans and rates may not be fixed in such a manner as to cause the Company to have to break any fixed rate balance in order to pay any installment of principal. All elections provided for herein shall be made electronically (if applicable), telephonically or in writing and must be received by Agent not later than 12:00 Noon Company's local time in order to be considered to have been received on that day; provided, however, that in the case of LIBOR rate loans, all such elections must be confirmed in writing upon Agent's request. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on such other day in such month as Agent shall require in a written notice to the Company; provided, however, in the event the Company elects to fix all or a portion of the indebtedness outstanding under the LIBOR interest rate option above, at Agent's option upon written notice to the Company, interest shall be payable at the maturity of the Interest Period and if the LIBOR interest rate fix is for a period longer than three months, interest on that portion of the indebtedness outstanding shall be payable quarterly in arrears on each three-month anniversary of the commencement date of such Interest Period, and at maturity.

SECTION 5. Promissory Note. The Company promises to repay the loans that are outstanding at the time the Commitment expires on June 1, 2017. If any installment due date is not a day on which Agent is open for business, then such payment shall be made on the next day on which Agent is open for business. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

SECTION 6. Prepayment. Subject to the broken funding surcharge provision of the MLA, the Company may on one Business Day's prior written notice prepay all or any portion of the loan(s). During the term of the Commitment, prepayments shall be applied to such balances, fixed or variable, as the Company shall specify. After the expiration of the term of Commitment, prepayments shall, unless Agent otherwise agrees, be applied to principal installments in the inverse order of their maturity and to such balances, fixed or variable, as Agent shall specify.

SECTION 7. Letters of Credit. In addition to loans, the Company may utilize, if agreeable to Agent in its sole discretion in each instance, the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after Agent's receipt of a duly completed and executed copy of Agent's then current form of Application and Reimbursement Agreement, or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall reduce the amount available under the Commitment by the maximum amount capable or being drawn thereunder. Any draw under any letter of credit issued hereunder shall be deemed a loan under the Commitment and shall be repaid in accordance with this Supplement. Each letter

E-21

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

of credit must be in form and content acceptable to Agent and must expire no later than the maturity date of the Commitment.

SECTION 8. Security. The Company's obligations hereunder and, to the extent related hereto, the MLA, including without limitation any future advances under any existing mortgage or deed of trust, shall be secured as provided in the Security Section of the MLA.

SECTION 9. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.60% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.

(Signature on following page)

E-22

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, FLCA LINCOLNWAY ENERGY, LLC

E-23

Revolving Term Loan Supplement R10218T02B

LINCOLNWAY ENERGY, LLC

Nevada, Iowa

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, FLCA LINCOLNWAY ENERGY, LLC

E-24

EX-10.18

EXHIBIT 10.18

Loan No. R10218S02

MONITORED REVOLVING CREDIT SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated August 21, 2012 (the "MLA"), is entered into as of August 21, 2012 FARM CREDIT SERVICES OF AMERICA, PCA ("Lead Lender") and LINCOLNWAY ENERGY, LLC, Nevada Iowa (the "Company").

SECTION 1. The Revolving Credit Facility. On the terms and conditions set forth in the MLA and this Supplement, Lead Lender agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed, at anyone time outstanding, $10,000,000.00 (the "Commitment"):provided, however that the amount available under the Commitment shall not exceed the "Borrowing Base" (as calculated pursuant to the Borrowing Base Report attached hereto as Exhibit A) on the date for which Borrowing Base Reports are required to Section 6 below. Within the limits of the Commitment, the Company may borrow, repay and reborrow.

SECTION 2. Purpose. The purpose of Commitment is to finance the inventory and receivables referred to in the Borrowing Base Report.

SECTION 3. Term. The term of the Commitment shall be from the date hereof, up to and including July 1, 2013, or such later date as Agent (as that term is defined in the MLA) may, in its sole discretion, authorize in writing.

SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loan(s) in accordance with one or more of the following interest rate:

(A) One-Month LIBOR Index Rate. At a rate (rounded upward to the nearest 1/100th and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as hereinafter defined] or required by any other federal law or regulation) per annum equal at all times to 2.75% above the rate quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time for the offering of one (1)-month U.S. dollars deposits, as published by Bloomberg or another major information vendor listed on BBA's official website on the first "U.S. Banking Day" (as hereinafter defined) in each week, with such rate to change weekly on such day. The rate shall be reset automatically, without the necessity of notice being provided to the Company or any other party, on the first "U.S. Banking Day" of each succeeding week, and each change in the rate shall be applicable to all balances subject to this option. Information about the then-current rate shall be made available upon telephonic request. For purposes hereof: (1) "U.S. Banking Day" shall mean a day on which Agent (as that term is defined in the MLA) is open for business and banks are open for business in New York, New York; (2) "Eurocurrency Liabilities" shall have the meaning as set forth in "FRB Regulation D"; and (3) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on such other day in such month as Agent shall require in a written notice to the Company.

SECTION 5. Promissory Note. The Company promises to repay the unpaid principal balance of the loans on the last day of the term of the Commitment. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof.

E-25

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

SECTION 6. Borrowing Base Reports, Etc. The Company agrees to furnish a Borrowing Base Report to Agent at such times or intervals as Agent may from time to time request. Until receipt of such a request, the Company agrees to furnish a Borrowing Base Report to Agent within 30 days after each month end calculating the Borrowing Base as of the last day of the month for which the report is being furnished. However, if no balance is outstanding hereunder on the last day of such month, then no Report need be furnished. If on the date for which a Borrowing Base Report is required the amount outstanding under the Commitment exceeds the Borrowing Base, the Company shall immediately notify Agent and repay so much of the loans as is necessary to reduce the amount outstanding under the Commitment to the limits of the Borrowing Base.

SECTION 7. Letters of Credit. If agreeable to Agent in its sole discretion in each instance, in addition to loans, the Company may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after Agent's receipt of a duly completed and executed copy of Agent's then current for of Application and Reimbursement Agreement or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. Any draw under any letter of credit issued hereunder shall be deemed a loan under the commitment and shall be repaid in accordance with this Supplement. Each letter of credit must be in form and content acceptable to Agent and must expire no later than the maturity date of the Commitment. Notwithstanding the forgoing or any other provision hereof, the maximum amount capable of being drawn under each letter of credit must be statused against the Borrowing Base in the same manner as if it were a loan, and in the event that (after repaying all loans) the maximum amount capable of being drawn under the letters of credit exceeds the Borrowing Base, then the Company shall immediately notify Agent and pay to Agent (to be held as cash collateral) an amount equal to such excess.

SECTION 8. Security. The Company's obligations hereunder and, to the extent related hereto, the MLA, including without limitation any future advances under any existing mortgage or deed of trust, shall be secured as provided in the Security Section of the MLA.

SECTION 9. Collateral Inspections. In consideration of the loans made hereunder, the Company will permit Agent or its representatives, agents or independent contractor, during normal business hours or at such other times as Agent and the Company may agree to: (A) inspect or examine the Company's properties, books and records; (B) make copies of the Company's books and records; and (C) discuss the Company's affairs, finances and accounts with its officers, employees and independent certified public accountants. Without limiting the foregoing, the Company will permit Agent, through an employee of Agent or through an independent third party contracted by Agent, to conduct on an annual basis a review of the collateral covered by the Security Agreement. The Company further agrees to pay to Agent a collateral inspection fee designated by Agent and reimburse Agent all reasonable costs and expenses incurred by Agent in connection with such collateral inspection reviews performed by Agent employees or its agents.

SECTION 10. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.30% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment. For purposes of calculating the commitment fee only, the "Commitment" shall mean the dollar amount specified in Section 1 hereof, irrespective of the Borrowing Base.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

E-26

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

E-27

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

SECTION 10. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.30% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment. For purposes of calculating the commitment fee only, the "Commitment" shall mean the dollar amount specified in Section 1 hereof, irrespective of the Borrowing Base.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, PCA LINCOLNWAY ENERGY, LLC

E-28

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

Lincolnway Energy, LLC (00031748) <-- For Period Ending

For purposes hereof, ELIGIBLE INVENTORY shall mean inventory which: (a) is of a type shown below; (b) is owned by the borrower and not held by the borrower on consignment or similar basis; (c) is not subject to a lien except in favor of Cobank; (d) is in commercially marketable condition; and (e) is not deemed ineligible by CoBank. Furthermore, market price shall mean the commodity FOB at the plant. For purposes hereof, ELIGIBLE RECEIVABLES shall mean rights to payment for goods sold and delivered or for services rendered which: (a) are not subject to any dispute, set-off, or counterclaim; (b) are not owing by an account debtor that is subject to a bankruptcy, reorganization, receivership or like proceeding; (c) are not subject to a lien in favor of any third party, other than liens authorized by CoBank in writing; (d) are not owing by an account debtor that is owned or controlled by the borrower; and (c) not deemed ineligible by CoBank. For purposes hereof, CONTRACT RECEIVABLES shall mean all seemed gains & losses on cash, hedged to arrive and basis purchase and sales contracts for grain which (a) are not in dispute; (b) are legally enforceable; (c) are not subject to a lien except in favor of CoBank and (d) are not deemed ineligible by CoBank.

Line	Type of Eligible Asset	Amount/Price/Volume	Advance Rate	Collateral Value
1	Corn Inventory - Collateral Receipts Not Issued to CoBank		85%
2	Corn Inventory - Collateral Receipts Issued to CoBank		90%
3	Net Liquidated Value of Brokerage Accounts		90%
4	Net Contract Receivables for Old Crop Gains		80%
5	Net Contract Receivables for New Crop Gains		70%
6	Net Contract Receivables for 2nd Year New Crop Gains		—%
7	Net Contract Receivables for New Crop Beyond 2 Years		—%
8	Subtotal-Net Contract Receivables for Grain
	"For Corn, Old Crop ends September 30. Net contract receivables are Accrued Gains & Losses on Open Purchase & Sales contracts.
9	Less All Grain Payables		100%
10	Owned DDGS Inventory (tons)
11	DDGS Price (market - $/ton)
12	DDGS Value (Line 11 x Line 12)		65%
13	Owned WDGS Inventory (tons)
14	WDGS Price (market - $/ton)
15	WDGS Value (Line 14 x Line 15)		65%
16	Owned Ethanol Inventory (gallons)
17	Ethanol Price (market - $/gallons)
18	Ethanol Value (Line 17 x Line 18)		80%
19	Ethanol Receivables less than 10 days Past Due*		85%
20	DDGS & WDGS Receivables less than 10 days Past Due*		85%
21	Total Borrowing Base --->
22	Less: Book Overdraft(s)		100%
23	Less: Demand Patron Notes/Deposits		100%
24	Less: Outstanding Balance of Loan(s)		100%
25	Less: Issued Letters of Credit		100%
26	Total Deducts (Lines 22+23+24+25) --->
27	EXCESS OR DEFICIT* (Line 21 - Line 26) --->

*NOTE: If a deficit exists, Please contact Relationship Manager Immediately with: 1) An updated borrowing base report, and 2) Specifies of all payments remitted since end of period (check members, wire routing number, etc.)

I HEREBY CERTIFY THAT TO THE BEST OF MY KNOWLEDGE THIS INFORMATION IS TRUE AND CORRECT.

E-29

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

Authorized Signature	Title	Date
Period Name:

E-30

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

Loan No. R10218S02A

MONITORED REVOLVING CREDIT SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated August 21, 2012 (the "MLA"), is entered into as of November 8, 2012 FARM CREDIT SERVICES OF AMERICA, PCA ("Lead Lender") and LINCOLNWAY ENERGY, LLC, Nevada Iowa (the "Company"), and amends and restates the Supplement dated August 21, 2012 and numbered R10218S02.

SECTION 1. The Revolving Credit Facility. On the terms and conditions set forth in the MLA and this Supplement, Lead Lender agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed, at anyone time outstanding, $10,000,000.00 (the "Commitment"):provided, however that the amount available under the Commitment shall not exceed the "Borrowing Base" (as calculated pursuant to the Borrowing Base Report attached hereto as Exhibit A) on the date for which Borrowing Base Reports are required to Section 6 below. Within the limits of the Commitment, the Company may borrow, repay and reborrow.

SECTION 2. Purpose. The purpose of Commitment is to finance the inventory and receivables referred to in the Borrowing Base Report.

SECTION 3. Term. The term of the Commitment shall be from the date hereof, up to and including July 1, 2013, or such later date as Agent (as that term is defined in the MLA) may, in its sole discretion, authorize in writing.

SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loan(s) in accordance with one or more of the following interest rate:

(A) One-Month LIBOR Index Rate. At a rate (rounded upward to the nearest 1/100th and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as hereinafter defined] or required by any other federal law or regulation) per annum equal at all times to 3.25% above the rate quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time for the offering of one (1)-month U.S. dollars deposits, as published by Bloomberg or another major information vendor listed on BBA's official website on the first "U.S. Banking Day" (as hereinafter defined) in each week, with such rate to change weekly on such day. The rate shall be reset automatically, without the necessity of notice being provided to the Company or any other party, on the first "U.S. Banking Day" of each succeeding week, and each change in the rate shall be applicable to all balances subject to this option. Information about the then-current rate shall be made available upon telephonic request. For purposes hereof: (1) "U.S. Banking Day" shall mean a day on which Agent (as that term is defined in the MLA) is open for business and banks are open for business in New York, New York; (2) "Eurocurrency Liabilities" shall have the meaning as set forth in "FRB Regulation D"; and (3) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on such other day in such month as Agent shall require in a written notice to the Company.

SECTION 5. Promissory Note. The Company promises to repay the unpaid principal balance of the loans on the last day of the term of the Commitment. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

E-31

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

SECTION 6. Borrowing Base Reports, Etc. The Company agrees to furnish a Borrowing Base Report to Agent at such times or intervals as Agent may from time to time request. Until receipt of such a request, the Company agrees to furnish a Borrowing Base Report to Agent within 30 days after each month end calculating the Borrowing Base as of the last day of the month for which the report is being furnished. However, if no balance is outstanding hereunder on the last day of such month, then no Report need be furnished. If on the date for which a Borrowing Base Report is required the amount outstanding under the Commitment exceeds the Borrowing Base, the Company shall immediately notify Agent and repay so much of the loans as is necessary to reduce the amount outstanding under the Commitment to the limits of the Borrowing Base.

SECTION 7. Letters of Credit. If agreeable to Agent in its sole discretion in each instance, in addition to loans, the Company may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after Agent's receipt of a duly completed and executed copy of Agent's then current for of Application and Reimbursement Agreement or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. Any draw under any letter of credit issued hereunder shall be deemed a loan under the commitment and shall be repaid in accordance with this Supplement. Each letter of credit must be in form and content acceptable to Agent and must expire no later than the maturity date of the Commitment. Notwithstanding the forgoing or any other provision hereof, the maximum amount capable of being drawn under each letter of credit must be statused against the Borrowing Base in the same manner as if it were a loan, and in the event that (after repaying all loans) the maximum amount capable of being drawn under the letters of credit exceeds the Borrowing Base, then the Company shall immediately notify Agent and pay to Agent (to be held as cash collateral) an amount equal to such excess.

SECTION 8. Security. The Company's obligations hereunder and, to the extent related hereto, the MLA, including without limitation any future advances under any existing mortgage or deed of trust, shall be secured as provided in the Security Section of the MLA.

SECTION 9. Collateral Inspections. In consideration of the loans made hereunder, the Company will permit Agent or its representatives, agents or independent contractor, during normal business hours or at such other times as Agent and the Company may agree to: (A) inspect or examine the Company's properties, books and records; (B) make copies of the Company's books and records; and (C) discuss the Company's affairs, finances and accounts with its officers, employees and independent certified public accountants. Without limiting the foregoing, the Company will permit Agent, through an employee of Agent or through an independent third party contracted by Agent, to conduct on an annual basis a review of the collateral covered by the Security Agreement. The Company further agrees to pay to Agent a collateral inspection fee designated by Agent and reimburse Agent all reasonable costs and expenses incurred by Agent in connection with such collateral inspection reviews performed by Agent employees or its agents.

SECTION 10. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.30% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment. For purposes of calculating the commitment fee only, the "Commitment" shall mean the dollar amount specified in Section 1 hereof, irrespective of the Borrowing Base.

E-32

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, PCA LINCOLNWAY ENERGY, LLC

E-33

Monitored Revolving Credit Supplement R10218S02

LINCOLNWAY ENERGY,LLC

Nevada, Iowa

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

FARM CREDIT SERVICES OF AMERICA, PCA LINCOLNWAY ENERGY, LLC

E-34

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a) CERTIFICATION

I, Jeff Taylor, certify that:

1.I have reviewed this annual report on Form 10-K of Lincolnway Energy, 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 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 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: December 21, 2012./s/ Jeff Taylor

Jeff Taylor, Chairman

E-35

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a) CERTIFICATION

I, Kim Supercynski, certify that:

1.I have reviewed this annual report on Form 10-K of Lincolnway Energy, 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 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 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: December 21, 2012. /s/ Kim Supercynski

Kim Supercynski, Chief Financial Officer

E-36

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, I, Jeff Taylor, Chairman of Lincolnway Energy, LLC, certify that to my knowledge (i) Lincolnway Energy, LLC's Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Lincolnway Energy, LLC.

Date: December 21, 2012

/s/ Jeff Taylor

Jeff Taylor, Chairman

[A signed original of this written statement has been provided to Lincolnway Energy, LLC and will be retained by Lincolnway Energy, LLC and furnished to the Securities and Exchange Commission or its staff upon request.]

E-37

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, I, Kim Supercynski, Chief Financial Officer of Lincolnway Energy, LLC, certify that to my knowledge (i) Lincolnway Energy, LLC's Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Lincolnway Energy, LLC.

Date: December 21, 2012

/s/ Kim Supercynski

Kim Supercynski, Chief Financial Officer

[A signed original of this written statement has been provided to Lincolnway Energy, LLC and will be retained by Lincolnway Energy, LLC and furnished to the Securities and Exchange Commission or its staff upon request.]

E-38

XML

Commitments and Major Customer and Subsequent Event (Details) (USD $)	12 Months Ended
	Sep. 30, 2012 gal	Sep. 30, 2011	Sep. 30, 2010
Revenue, Major Customer [Line Items]
Future sales commitment, price under OPIS index	$ 0.10
Ethanol [Member]
Revenue, Major Customer [Line Items]
Marketing expense	690,664	712,258	695,945
Revenue, major customer, amount	126,439,534	139,535,766	94,611,865
Ethanol receivable	6,778,356	6,129,247
Sales commitments (in gallons or tons)	5,380,000
Distiller's Grain [Member]
Revenue, Major Customer [Line Items]
Marketing expense	628,349	535,226	295,353
Revenue, major customer, amount	38,564,213	31,715,564	19,434,064
Distillers grains receivable	2,064,496	1,083,695
Supply Commitment, Future Sales Commitment Tons	4,385
Sales commitments	$ 1,176,418

XML

Inventories (Details) (USD $)	Sep. 30, 2012	Sep. 30, 2011
Inventory Disclosure [Abstract]
Raw materials, including corn, coal, chemicals and supplies	$ 2,048,130	$ 3,956,604
Work in process	1,432,257	1,303,654
Ethanol and distillers grain	2,442,549	1,090,286
Inventory total	5,922,936	6,350,544
Inventory valuation reserves	$ 368,000

XML

Long-Term Debt (Tables)

12 Months Ended

Sep. 30, 2012

Long-term Debt, Current and Noncurrent [Abstract]

Schedule of Long-term Debt Instruments

(A) The Company had a construction and term loan with a financial institution.  Borrowings under the term loan included a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate was reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change was applicable to all outstanding balances as of that date.  The agreement required 30 principal payments of $1,250,000 per quarter commencing in December 2006 through March 2013.  The agreement required the maintenance of certain financial and nonfinancial covenants.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets.  On August 20, 2012, the $1,500,000 balance remaining on this loan was consolidated under the revolving term loan, described in (C) below, and this construction term loan was closed.

(B) The Company had a $10,000,000 construction/revolving term credit facility with a financial institution which would expire on September 1, 2016.  Borrowings under the credit facility agreement included a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate was reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change was applicable to all outstanding balances as of that date.  Borrowings were subject to borrowing base restrictions as defined in the agreement.  The credit facility and revolving credit agreement required the maintenance of certain financial and nonfinancial covenants.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets.  This credit facility was replaced with the revolving term loan, described in (C) below.

(C) The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a revolving term loan available for up to $5,000,000. The revolving term loan is to be used to provide working capital and to consolidate under the revolving term loan the remaining $1,500,000 that is outstanding under the construction term loan (A). The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017.

(D) The Company also had a $300,000 loan agreement with the Iowa Department of Economic Development (IDED).  The $300,000 loan was noninterest-bearing and due in monthly payments of $2,500 beginning December 2006 and a final payment of $152,500 due November 2011.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets and subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (A) and (B).  On October 5, 2011, the final payment of $152,500 was made by the Company.

(E) The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005.  The proceeds were disbursed upon submission of paid invoices.  Interest at 2.11% began accruing on January 1, 2007.  Principal payments will be due semiannually through July 2016.  The loan is secured by all rail track material constructed as part of the plant construction.  The debt is subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (C) and Note 4.

Long-term debt consists of the following as of September 30, 2012 and 2011

	2012			2011
Construction term loan.  (A)	$	—		$	1,500,000
Construction/revolving term loan.  (B)	—			1,000,000
Revolving term loan. (C)	3,237,000			—
Note payable to contractor, unsecured, interest-only quarterly
payments at 4% due through maturity date of December 2011.	—			1,250,000
Note payable to Iowa Department of Economic Development.  (D)	—			152,500
Note payable to Iowa Department of Transportation.  (E)	238,021			287,930
	3,475,021			4,190,430
Less current maturities	(50,968		)	(1,452,409		)
	$	3,424,053		$	2,738,021

Schedule of Maturities of Long-term Debt

Maturities of long-term debt as of September 30, 2012 are as follows:

Years ending September 30:
2013	$	50,968
2014	52,049
2015	53,153
2016	54,280
2017	3,264,571
	$	3,475,021

XML

Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $)	Sep. 30, 2012	Sep. 30, 2011
Total [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, derivative financial instruments	$ 134,050	$ 292,375
Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, derivative financial instruments	134,050	292,375
Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, derivative financial instruments	0	0
Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, derivative financial instruments	$ 0	$ 0

XML

Lease Commitments Fufutre Operating Lease Commitments (Details) (USD $)	Sep. 30, 2012
Leases [Abstract]
2013	$ 1,594,000
2014	1,075,000
2015	635,000
2016	630,000
2017	0
Total minimum lease payments, operating leases	$ 3,934,000

XML

Nature of Business and Significant Accounting Policies

12 Months Ended

Sep. 30, 2012

Nature of Business and Significant Accounting Policies [Abstract]

Business Description and Accounting Policies

Nature of Business and Significant Accounting Policies

Principal business activity:  Lincolnway Energy, LLC (the Company), located in Nevada, Iowa, was formed in May 2004 to pool investors to build a 50 million gallon annual production dry mill corn-based ethanol plant.  The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006. The Company is directly influenced by commodity markets and the agricultural and energy industries and, accordingly, its results of operations and financial condition may be significantly affected by cyclical market trends and the regulatory, political and economic conditions in these industries.

A summary of significant accounting policies follows:

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 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Concentration of credit risk:  The Company’s cash balances are maintained in bank deposit accounts which at times may exceed federally insured limits.  The Company has not experienced any losses in such accounts.

Cash and cash equivalents:  For the purposes of reporting the statement of cash flows, the Company includes as cash equivalents all cash accounts and highly liquid debt instruments which are not subject to withdrawal restrictions or penalties.  Certificates of deposit are considered investments as all have been purchased with maturities in excess of ninety days.  Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents.  The Company has repurchase agreements with one bank, which totaled approximately $175,469 at September 30, 2012.  In accordance with the terms of the repurchase agreements, the Company does not take possession of the related securities.  The Company’s agreements also contain provisions to ensure that the market value of the underlying assets remain sufficient to protect the Company in the event of default by the banks by requiring that the underlying securities have a total market value of at least 100% of the bank’s total obligations under the agreements.

Trade accounts receivable:  Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions.  Receivables are written off when deemed uncollectible.  Recoveries of receivables written off are recorded when received.  A receivable is considered past due if any portion of the receivable is outstanding more than 90 days.

Inventories:  Inventories are stated at the lower of cost or market using the first-in, first-out method.  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.

Financing costs:  Financing costs are recorded at cost and include expenditures directly related to securing debt financing.  The Company is amortizing these costs using the effective interest method over the term of the agreement.  The financing costs are included in interest expense on the statement of operations.

Property and equipment:  Property and equipment is stated at cost.  Construction in progress is comprised of costs related to the projects that are not completed.  Depreciation is computed using the straight-line method over the following estimated useful lives:

	Years
Land improvements	20
Buildings and improvements	40
Plant and process equipment	5 – 20
Office furniture and equipment	3 – 7

Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.  

Investments:  The Company has investments in financial service cooperatives.  These investments are carried at cost including allocated retained earnings of the cooperatives.

Derivative financial instruments:  The Company enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales.  The Company does not typically enter into derivative instruments other than for hedging purposes.  All the derivative contracts are recognized on the balance sheet at their fair market value.  Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes.   Accordingly, any realized or unrealized gain or loss related to corn derivatives is recorded in the statement of operations as a component of cost of goods sold.  Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet.

Deposit:  The Internal Revenue Service (under Section 7519) requires partnerships that elect a fiscal year over a calendar year to make a deposit each year.  The deposit is 25% of annual taxable net income, multiplied by the tax rate of 36% for the reporting fiscal year.

Revenue recognition:  Revenue from the sale of the Company’s ethanol and distillers grains is recognized at the time title and all risks of ownership transfer to the customers.  This generally occurs upon the loading of the product.  For ethanol, title passes at the time the product crosses the loading flange in either a railcar or truck.  For distiller’s grain, title passes upon the loading into trucks.  For railcar shipments, this takes place when the railcar is filled and the marketer receives written notice that they have been loaded and are available for billing.  Shipping and handling costs incurred by the Company for the sale of ethanol and distiller’s grain are included in costs of goods sold. Commissions for the marketing and sale of ethanol and distiller grains are included in costs of goods sold.

Revenue by product is as follows:

(Excludes hedging activity)

(In thousands)	2012		2011		2010
Ethanol	$	126,440	$	139,536	$	94,612
Distiller's Grain	38,564		31,716		19,434
Other	4,570		3,826		1,766

Income taxes:  The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes.  Instead, the Company’s 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. Management has evaluated the Company's material tax positions and determined there were no uncertain tax positions that require adjustment to the financial statements. The Company does not currently anticipate significant changes in its uncertain tax positions over the next 12 months. Generally, the Company remains subject to income tax examinations by U.S. federal or state tax authorities for fiscal years 2009 and thereafter.

Earnings per unit:  Basic and diluted earnings per unit have been computed on the basis of the weighted average number of units outstanding during each period presented.

Fair value of financial instruments:  The carrying amounts of cash and cash equivalents, derivative financial instruments, trade accounts receivable, accounts payable and accrued expenses approximate fair value.  The carrying amount of long-term debt approximates fair value because the interest rates are based on current rates offered to the Company for debt with similar terms and maturities.

Reclassification: Certain amounts in the 2011 balance sheet have been reclassified to be consistent with their 2012 presentation with no effect on net income.

XML

Employee Benefit Plan (Details) (401K [Member], USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
401K [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, employer matching contribution, percent	50.00%
Defined contribution plan, maximum annual contribution per employee, percent	6.00%
Defined benefit plan, contributions by employer and plan expenses	$ 72,360	$ 65,495	$ 69,069

XML

Nature of Business and Significant Accounting Policies Textuals (Details) (USD $)	12 Months Ended
	Sep. 30, 2012 gal D
Product Information [Line Items]
Annual ethanol production	50,000,000
Securities sold under agreements to repurchase	$ 175,469
Number of days outstanding for a past due trade receivables	90

XML

Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2012 and 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	2012
	Total		Level 1		Level 2		Level 3
Assets, derivative financial instruments	$	134,050	$	134,050	$	—	$	—
	2011
	Total		Level 1		Level 2		Level 3
Assets, derivative financial instruments	$	292,375	$	292,375	$	—	$	—

XML

Sale of Property (Details) (USD $)	12 Months Ended
	Sep. 30, 2012
Sale of Property [Abstract]
Land sales	$ 1,181,000
Gain on sale of property	$ 496,098

XML

Nature of Business and Significant Accounting Policies Property and Equipment (Details)	12 Months Ended
	Sep. 30, 2012
Land improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	20 years
Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	40 years
Plant and process equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Plant and process equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	20 years
Office furniture and equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Office furniture and equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	7 years

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Nature of Business and Significant Accounting Policies Revenue by Product (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Ethanol [Member]
Revenue from External Customer [Line Items]
Revenue by product	$ 126,440	$ 139,536	$ 94,612
Distiller's Grain [Member]
Revenue from External Customer [Line Items]
Revenue by product	38,564	31,716	19,434
Other [Member]
Revenue from External Customer [Line Items]
Revenue by product	$ 4,570	$ 3,826	$ 1,766

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Statement of Cash Flows (Parenthetical) (USD $)	12 Months Ended
	Sep. 30, 2011
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION, cash paid for interest including capitalized interest	$ 42,073

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Members' Equity (Details) (USD $)	0 Months Ended
	May 20, 2004
Capital Unit [Line Items]
Sale of membership units (in units)	1,924
Sale of membership units	$ 962,000
Authorized of membership units without member approval (in units)	45,608

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Commitments and Major Customer and Subsequent Event Purchase Committments (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Coal Contract [Member]
Long-term Purchase Commitment [Line Items]
Long-term purchase commitment, amount	$ 89,702
Payments to suppliers	7,217,257	7,001,676	5,989,438
Denaturant [Member]
Long-term Purchase Commitment [Line Items]
Long-term purchase commitment, amount	$ 470,297
Long-term purchase commitment, minimum quantity required (in gallons)	216,000
Denaturant price per unit	0.1875

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Balance Sheets Statement (USD $)	Sep. 30, 2012	Sep. 30, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 151,824	$ 34,135
Derivative financial instruments (Note 9 and 10)	71,978	520,045
Trade and other accounts receivable (Note 8)	9,276,324	8,041,523
Inventories (Note 3)	5,922,936	6,350,544
Prepaid expenses and other	325,361	328,881
Total current assets	15,748,423	15,275,128
PROPERTY AND EQUIPMENT
Land and land improvements	6,949,062	7,633,650
Buildings and improvements	1,604,305	1,604,305
Plant and process equipment	79,580,097	76,014,786
Construction in progress	21,226	2,562,694
Office furniture and equipment	405,188	407,725
Property, plant and equipment gross	88,559,878	88,223,160
Accumulated depreciation	(51,313,592)	(43,529,798)
Property, plant and equipment, net	37,246,286	44,693,362
OTHER ASSETS
Restricted cash (Note 6)	351,000	351,000
Financing costs, net of amortization of $305,384 and $252,070	166,577	219,891
Deposit	298,350	476,437
Investments	190,488	182,970
Other assets, noncurrent	1,006,415	1,230,298
Assets	54,001,124	61,198,788
CURRENT LIABILITIES
Accounts payable	1,018,976	1,359,836
Accounts payable, related party (Note 7)	829,067	1,179,981
Current maturities of long-term debt (Note 5)	50,968	1,452,409
Current settlement payable, related party (Note 7)	425,000	0
Revolving credit loan (Note 4)	200,000	0
Accrued expenses	896,744	879,232
Total current liabilities	3,420,755	4,871,458
NONCURRENT LIABILITIES
Long-term debt, less current maturities (Note 5)	3,424,053	2,738,021
Settlement payable, net of current amount, related party (Note 7)	1,275,000	0
Other	450,000	450,000
Total noncurrent liabilities	5,149,053	3,188,021
COMMITMENTS AND CONTINGENCY (Notes 6, 8 and 12)
MEMBERS' EQUITY (Note 2)
Member contributions, 42,049 units issued and outstanding	38,990,105	38,990,105
Retained Earnings	6,441,211	14,149,204
Members' Equity	45,431,316	53,139,309
Liabilities and Members' Equity	$ 54,001,124	$ 61,198,788

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Statements of Members' Equity (Parenthetical) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2010
Distribution per unit	$ 25	$ 50

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Long-Term Debt (Details) (USD $)	0 Months Ended		8 Months Ended	12 Months Ended
	Aug. 20, 2012	Oct. 05, 2011	Aug. 19, 2012	Sep. 30, 2012	Sep. 30, 2011
Debt Instrument [Line Items]
Construction term loan				$ 0	$ 1,500,000
Construction revolving term loan				0	1,000,000
Revolving term loan				3,237,000	0
Note payable to contractor, unsecured, interest only				0	1,250,000
Note payable to Iowa Department of Economic Development				0	152,500
Note payable to Iowa Department of Transportation				238,021	287,930
Long-term debt, total				3,475,021	4,190,430
Less current maturities				(50,968)	(1,452,409)
Long-term debt, less current maturities				3,424,053	2,738,021
Debt instrument, interest rate terms			3.30%	3.30%
Debt instrument, periodic payment, principal				1,250,000
Line of credit facility, maximum borrowing capacity			10,000,000
Revolving term loan, maximum borrowing capacity	5,000,000
Basis spread on variable rate	3.50%
Line of credit facility, unused capacity, commitment fee percentage	0.60%
Promissory note - IDED				300,000
Note payable - IDED - monthly payments					2,500
Note payable - IDED - final payment		152,500
Railroad revolving loan fund				500,000
Debt instrument, interest rate, stated percentage				2.11%
Maturities of Long-term Debt [Abstract]
2013				50,968
2014				52,049
2015				53,153
2016				54,280
2017				$ 3,264,571

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Nature of Business and Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2012

Nature of Business and Significant Accounting Policies [Abstract]

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 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Concentration of credit risk

Concentration of credit risk:  The Company’s cash balances are maintained in bank deposit accounts which at times may exceed federally insured limits.  The Company has not experienced any losses in such accounts.

Cash and cash equivalents

Cash and cash equivalents:  For the purposes of reporting the statement of cash flows, the Company includes as cash equivalents all cash accounts and highly liquid debt instruments which are not subject to withdrawal restrictions or penalties.  Certificates of deposit are considered investments as all have been purchased with maturities in excess of ninety days.  Although the Company maintains its cash accounts in one bank, the Company believes it is not exposed to any significant credit risk on cash and cash equivalents.  The Company has repurchase agreements with one bank, which totaled approximately $175,469 at September 30, 2012.  In accordance with the terms of the repurchase agreements, the Company does not take possession of the related securities.  The Company’s agreements also contain provisions to ensure that the market value of the underlying assets remain sufficient to protect the Company in the event of default by the banks by requiring that the underlying securities have a total market value of at least 100% of the bank’s total obligations under the agreements.

Trade accounts receivable

Trade accounts receivable:  Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions.  Receivables are written off when deemed uncollectible.  Recoveries of receivables written off are recorded when received.  A receivable is considered past due if any portion of the receivable is outstanding more than 90 days.

Inventories

Inventories:  Inventories are stated at the lower of cost or market using the first-in, first-out method.  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.

Financing costs

Financing costs:  Financing costs are recorded at cost and include expenditures directly related to securing debt financing.  The Company is amortizing these costs using the effective interest method over the term of the agreement.  The financing costs are included in interest expense on the statement of operations.

Property and equipment

Property and equipment:  Property and equipment is stated at cost.  Construction in progress is comprised of costs related to the projects that are not completed.  Depreciation is computed using the straight-line method over the following estimated useful lives:

	Years
Land improvements	20
Buildings and improvements	40
Plant and process equipment	5 – 20
Office furniture and equipment	3 – 7

Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.  

Investments

Investments:  The Company has investments in financial service cooperatives.  These investments are carried at cost including allocated retained earnings of the cooperatives.

Derivative financial instruments

Derivative financial instruments:  The Company enters into derivative contracts to hedge the Company’s exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol sales.  The Company does not typically enter into derivative instruments other than for hedging purposes.  All the derivative contracts are recognized on the balance sheet at their fair market value.  Although the Company believes its derivative positions are economic hedges, none have been designated as a hedge for accounting purposes.   Accordingly, any realized or unrealized gain or loss related to corn derivatives is recorded in the statement of operations as a component of cost of goods sold.  Any realized or unrealized gain or loss related to ethanol derivative instruments is recorded in the statement of operations as a component of revenue. The Company reports all contracts with the same counter party on a net basis on the balance sheet.

Deposit

Deposit:  The Internal Revenue Service (under Section 7519) requires partnerships that elect a fiscal year over a calendar year to make a deposit each year.  The deposit is 25% of annual taxable net income, multiplied by the tax rate of 36% for the reporting fiscal year.

Revenue recognition

Revenue recognition:  Revenue from the sale of the Company’s ethanol and distillers grains is recognized at the time title and all risks of ownership transfer to the customers.  This generally occurs upon the loading of the product.  For ethanol, title passes at the time the product crosses the loading flange in either a railcar or truck.  For distiller’s grain, title passes upon the loading into trucks.  For railcar shipments, this takes place when the railcar is filled and the marketer receives written notice that they have been loaded and are available for billing.  Shipping and handling costs incurred by the Company for the sale of ethanol and distiller’s grain are included in costs of goods sold. Commissions for the marketing and sale of ethanol and distiller grains are included in costs of goods sold.

Income taxes

Income taxes:  The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes.  Instead, the Company’s 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. Management has evaluated the Company's material tax positions and determined there were no uncertain tax positions that require adjustment to the financial statements. The Company does not currently anticipate significant changes in its uncertain tax positions over the next 12 months. Generally, the Company remains subject to income tax examinations by U.S. federal or state tax authorities for fiscal years 2009 and thereafter.

Earnings per unit

Earnings per unit:  Basic and diluted earnings per unit have been computed on the basis of the weighted average number of units outstanding during each period presented.

Fair value of financial instruments

Fair value of financial instruments:  The carrying amounts of cash and cash equivalents, derivative financial instruments, trade accounts receivable, accounts payable and accrued expenses approximate fair value.  The carrying amount of long-term debt approximates fair value because the interest rates are based on current rates offered to the Company for debt with similar terms and maturities.

Reclassification

Reclassification: Certain amounts in the 2011 balance sheet have been reclassified to be consistent with their 2012 presentation with no effect on net income.

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Lease Commitments (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010	Jun. 19, 2007	Sep. 30, 2012 Hopper Rail Cars [Member] cars	Mar. 26, 2011 Hopper Rail Cars [Member] mi	Mar. 08, 2011 Tank Rail Cars [Member] cars mi	Feb. 02, 2010 Tank Rail Cars [Member] cars	Sep. 21, 2009 Tank Rail Cars [Member] cars mi
Operating Leased Assets [Line Items]
Number of vehicles					90		15	30	100
Monthly lease payments						$ 56,700	$ 9,750		$ 52,500
Restricted cash	351,000	351,000		351,000
Additional Rental Payments, Over Mileage Threshold						0.025	0.03		0.030
Additional Rental Payments, Mileage Threshold						30,000	30,000		35,000
Operating leases, rent expense	$ 1,890,000	$ 1,745,000	$ 1,597,000

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Inventories (Tables)

12 Months Ended

Sep. 30, 2012

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventories consist of the following as of September 30, 2012 and 2011:

	2012		2011
Raw materials, including corn, coal, chemicals and supplies	$	2,048,130	$	3,956,604
Work in process	1,432,257		1,303,654
Ethanol and distillers grain	2,442,549		1,090,286
Total	$	5,922,936	$	6,350,544

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Statement of Cash Flows Statement (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (6,656,768)	$ 900,049	$ 4,362,458
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	7,850,854	8,232,529	8,378,554
(Gain) loss on sale or disposal of property and equipment	(489,664)	62,696	573
Contract settlement fee	1,700,000	0	0
Changes in working capital components:
Trade and other accounts receivable	(1,234,801)	(2,161,480)	(2,107,860)
Inventories	427,608	(2,399,465)	(1,465,707)
Prepaid expenses and other	3,520	(30,244)	(101,590)
Deposits	178,087	(476,437)	151,036
Accounts payable	(340,860)	86,760	173,278
Accounts payable, related party	(350,914)	719,023	162,425
Accrued expenses	17,512	(172,428)	31,435
Derivative financial instruments	448,067	593,783	(773,402)
Net cash provided by operating activities	1,552,641	5,354,786	8,811,200
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(1,041,800)	(2,870,231)	(823,612)
Proceeds from sale of property	1,181,000	0	0
Purchase of investments	(7,518)	(12,877)	(24,118)
Net cash provided by (used in) investing activities	131,682	(2,883,108)	(847,730)
CASH FLOWS FROM FINANCING ACTIVITIES
Member distributions	(1,051,225)	0	(2,102,450)
Proceeds from revolving credit loan	9,137,000	0	0
Payments on revolving credit loan	(8,937,000)	0	0
Proceeds from long-term borrowings	24,170,000	1,000,000	0
Payments on long-term borrowings	(24,885,409)	(6,295,653)	(8,827,857)
Net cash (used in) financing activities	(1,566,634)	(5,295,653)	(10,930,307)
Net increase (decrease) in cash and cash equivalents	117,689	(2,823,975)	(2,966,837)
CASH AND CASH EQUIVALENTS
Beginning	34,135	2,858,110
Ending	151,824	34,135	2,858,110
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest including capitalized interest 2012 none; 2011 $42,073; 2010 none	231,132	645,013	838,191
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Construction in progress included in accounts payable	0	184,776	37,805
Construction in progress included in accrued expenses	$ 0	$ 69,228	$ 2,688

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Balance Sheets (Parenthetical) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OTHER ASSETS
Financing costs, net of amortization of	$ 305,384	$ 252,070
MEMBER'S EQUITY
units issued and outstanding	42,049	42,049

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Risk Management

12 Months Ended

Sep. 30, 2012

Risk Management [Abstract]

Derivative Instruments and Hedging Activities Disclosure

Risk Management

The Company’s activities expose it to a variety of market risks, including the effects of changes in commodity prices.  These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program.  The Company’s risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations.  The Company’s specific goal is to protect the Company from large moves in the commodity costs.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchases and sales contracts.

Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives.

Derivatives not designated as hedging instruments as of September 30, 2012 and 2011 are as follows:

	2012			2011
Derivative assets	$	134,050		$	292,375
Cash held by (due to) broker	(62,072		)	227,670
Total	$	71,978		$	520,045

The effects on operating income from derivative activities is as follows for the years ending September 30, are as follows:

	2012			2011			2010
Increase (decrease) in revenue due to derivatives related to ethanol sales:
Realized	$	(7,308	)	$	(2,655,034	)	$	45,434
Unrealized	—			1,528,367			(1,483,997		)
Total effect on revenue	(7,308		)	(1,126,667		)	(1,438,563		)
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
Realized	(1,134,488		)	(2,946,138		)	604,475
Unrealized	134,050			(44,125		)	849,475
Total effect on cost of goods sold	(1,000,438		)	(2,990,263		)	1,453,950
Total (decrease) increase  to operating income due to derivative activities	$	(1,007,746	)	$	(4,116,930	)	$	15,387

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company’s financial statements, but are subject to a lower of cost or market assessment.

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Document and Entity Information (USD $)	12 Months Ended
	Sep. 30, 2012	Nov. 30, 2012	Mar. 31, 2012
Entity Information [Line Items]
Entity Registrant Name	Lincolnway Energy, LLC
Entity Central Index Key	0001350420
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		42,049
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 49,806,736

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Fair Value Measurements

12 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various methods including market, income and cost approaches.  Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market-corroborated, or generally unobservable inputs.  The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2Valuations for assets and liabilities traded in less active dealer or broker markets.  Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value.

Derivative financial instruments:  Commodity futures and exchange-traded commodity 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 CME and NYMEX markets.  The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets.

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2012 and 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	2012
	Total		Level 1		Level 2		Level 3
Assets, derivative financial instruments	$	134,050	$	134,050	$	—	$	—
	2011
	Total		Level 1		Level 2		Level 3
Assets, derivative financial instruments	$	292,375	$	292,375	$	—	$	—

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Statements of Operations Statement (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Revenues (Notes 1 and 8)	$ 169,567,374	$ 173,951,126	$ 114,373,268
Cost of goods sold ( Notes 7 and 8)	171,827,633	169,817,362	106,744,081
Gross profit (loss)	(2,260,259)	4,133,764	7,629,187
General and administrative expenses	2,955,565	2,649,796	2,440,390
(Gain) loss on sale or disposal of property and equipment (Note 13)	489,664	0	0
Contract settlement fee (Note 7)	1,700,000	0	0
Operating income (loss)	(6,426,160)	1,483,968	5,188,797
Other income (expense):
Interest income	6,957	9,542	25,019
Interest expense	(237,565)	(593,461)	(851,358)
Other nonoperating income and expense	(230,608)	(583,919)	(826,339)
Net income (loss)	$ (6,656,768)	$ 900,049	$ 4,362,458
Weighted average units outstanding	42,049	42,049	42,049
Net income (loss) per unit - basic and diluted	$ (158.31)	$ 21.40	$ 103.75

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Revolving Credit Loan

12 Months Ended

Sep. 30, 2012

Revolving Credit Loan [Abstract]

Revolving Credit Loan

Revolving Credit Loan

The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a monitored revolving credit loan for up to $10,000,000. The amount available and outstanding under the loan cannot exceed the borrowing base as calculated per the agreement (approximately $9,400,000 as of September 30, 2012). The purpose of the loan is to finance inventory and receivables. The Company will pay interest monthly on the unpaid balance at a variable rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.25%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .30% per annum, payable monthly. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the loan, on July 1, 2013. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. There was a balance of $200,000 outstanding as of September 30, 2012.

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Inventories

12 Months Ended

Sep. 30, 2012

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following as of September 30, 2012 and 2011:

	2012		2011
Raw materials, including corn, coal, chemicals and supplies	$	2,048,130	$	3,956,604
Work in process	1,432,257		1,303,654
Ethanol and distillers grain	2,442,549		1,090,286
Total	$	5,922,936	$	6,350,544

For the years ended September 30, 2012 and 2011, the Company recognized a reserve and resulting loss of $368,000 and none, respectively, for a lower of cost or market inventory adjustment.

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Nature of Business and Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2012

Nature of Business and Significant Accounting Policies [Abstract]

Schedule of Property and Equipment, Estimated Useful Lives

Depreciation is computed using the straight-line method over the following estimated useful lives:

	Years
Land improvements	20
Buildings and improvements	40
Plant and process equipment	5 – 20
Office furniture and equipment	3 – 7

Schedule of Revenue by Product

Revenue by product is as follows:

(Excludes hedging activity)

(In thousands)	2012		2011		2010
Ethanol	$	126,440	$	139,536	$	94,612
Distiller's Grain	38,564		31,716		19,434
Other	4,570		3,826		1,766

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Employee Benefit Plan

12 Months Ended

Sep. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plan

Employee Benefit Plan

The Company adopted a 401(k) plan covering substantially all employees effective February 1, 2006.  The Company provides matching contributions of 50% for up to 6% of employee compensation.  Company contributions and plan expenses for the years ended September 30, 2012, 2011 and 2010 totaled $72,360, $65,495 and $69,069, respectively.

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Related-Party Transactions

12 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

Related-Party Transactions

The Company has an agreement with the Heart of Iowa Coop (HOIC), dba Key Cooperative, a member of the Company, to provide 100% of the requirement of corn for use in the operation of the ethanol plant.  The agreement became effective when the Company began accepting corn for the use at the ethanol plant in May 2006 and will continue for a period of 20 years.  The Company pays a handling fee of $.0675 per bushel of corn.  If the Company chooses to buy corn that is not elevated by HOIC, and is inside a 60-mile radius of Nevada, Iowa, the Company will be required to pay HOIC $.04 per bushel of corn, outside a 60-mile radius, $.03 per bushel of corn.  The agreement may be terminated before the end of the term by providing six months’ notice of termination and paying the other party $2,000,000, reduced by $50,000 for each completed year of the agreement.  The amount is payable over four years with interest at the prime rate on the date of termination.  The Company purchased corn totaling $128,490,494, $127,764,206 and $71,804,446 for the years ended September 30, 2012, 2011 and 2010, respectively. 

As of September 30, 2012, the Company has a corn cash forward contract with HOIC amounting to 588,585 bushels, for a commitment of approximately $4,343,755 and several basis forward contracts representing 1,350,000 bushels of corn.  The contracts mature on various dates through December 2012.  The Company also has made miscellaneous purchases from HOIC amounting to $200,610, $84,739 and $96,392 for the years ended September 30, 2012, 2011 and 2010, respectively. The 2012 purchases include $117,562 in grain storage fees. As of September 30, 2012 and 2011 the amount due to HOIC is $829,067 and $1,179,981, respectively.

On April 10, 2012, the Company delivered notice to HOIC to terminate the Amended and Restated Grain Handling Agreement they hold with HOIC. The termination of the agreement will be effective January 10, 2013. The Company will begin to originate corn in house at the time of termination. The Company recorded a termination cost of $1,700,000 as required under the agreement, which was expensed for the quarter ending June 30, 2012. Payments of $425,000 will be made annually over a four year period with interest at the prime rate on the date of termination.

The Company is also purchasing propane and anhydrous ammonia from Innovative Ag Services (IAS), a member of the Company. Total purchases for the years ended September 30, 2012, 2011 and 2010 were $170,878, $16,402 and $21,714, respectively.

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Long-Term Debt

12 Months Ended

Sep. 30, 2012

Long-term Debt, Current and Noncurrent [Abstract]

Long-term Debt

Long-Term Debt

Long-term debt consists of the following as of September 30, 2012 and 2011

	2012			2011
Construction term loan.  (A)	$	—		$	1,500,000
Construction/revolving term loan.  (B)	—			1,000,000
Revolving term loan. (C)	3,237,000			—
Note payable to contractor, unsecured, interest-only quarterly
payments at 4% due through maturity date of December 2011.	—			1,250,000
Note payable to Iowa Department of Economic Development.  (D)	—			152,500
Note payable to Iowa Department of Transportation.  (E)	238,021			287,930
	3,475,021			4,190,430
Less current maturities	(50,968		)	(1,452,409		)
	$	3,424,053		$	2,738,021

Maturities of long-term debt as of September 30, 2012 are as follows:

Years ending September 30:
2013	$	50,968
2014	52,049
2015	53,153
2016	54,280
2017	3,264,571
	$	3,475,021

(A) The Company had a construction and term loan with a financial institution.  Borrowings under the term loan included a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate was reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change was applicable to all outstanding balances as of that date.  The agreement required 30 principal payments of $1,250,000 per quarter commencing in December 2006 through March 2013.  The agreement required the maintenance of certain financial and nonfinancial covenants.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets.  On August 20, 2012, the $1,500,000 balance remaining on this loan was consolidated under the revolving term loan, described in (C) below, and this construction term loan was closed.

(B) The Company had a $10,000,000 construction/revolving term credit facility with a financial institution which would expire on September 1, 2016.  Borrowings under the credit facility agreement included a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate was reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change was applicable to all outstanding balances as of that date.  Borrowings were subject to borrowing base restrictions as defined in the agreement.  The credit facility and revolving credit agreement required the maintenance of certain financial and nonfinancial covenants.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets.  This credit facility was replaced with the revolving term loan, described in (C) below.

(C) The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a revolving term loan available for up to $5,000,000. The revolving term loan is to be used to provide working capital and to consolidate under the revolving term loan the remaining $1,500,000 that is outstanding under the construction term loan (A). The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017.

(D) The Company also had a $300,000 loan agreement with the Iowa Department of Economic Development (IDED).  The $300,000 loan was noninterest-bearing and due in monthly payments of $2,500 beginning December 2006 and a final payment of $152,500 due November 2011.  Borrowings under this agreement were collateralized by substantially all of the Company’s assets and subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (A) and (B).  On October 5, 2011, the final payment of $152,500 was made by the Company.

(E) The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005.  The proceeds were disbursed upon submission of paid invoices.  Interest at 2.11% began accruing on January 1, 2007.  Principal payments will be due semiannually through July 2016.  The loan is secured by all rail track material constructed as part of the plant construction.  The debt is subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (C) and Note 4.

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Lease Commitments

12 Months Ended

Sep. 30, 2012

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Lease Commitments

The Company entered into a lease agreement with an unrelated third party to lease 90 hopper rail cars for the purpose of transporting distiller’s grain.  The five-year term of the lease commenced March 2006 and ended March 2011.  On March 26, 2011 the Company extended this lease with a rider. The rider calls for monthly payments of $56,700 plus applicable taxes.  There was also an additional usage rental of 2.5 cents per mile for each car that exceeds 30,000 miles.  The amendment that was made to the lease agreement on June 19, 2007, allowed the Company to purchase a certificate of deposit for $351,000 in lieu of the letter of credit that was required as partial security for the Company’s obligation under the lease.  The Company has classified this certificate of deposit as restricted cash in other assets. The lease term on the rider is for three years commencing March 2011 and expiring March 2014. In conjunction with a change in the Company’s ethanol marketer, on September 21, 2009, the Company was assigned a lease that was previously between the Company’s previous ethanol marketer and an unrelated third party.  The lease includes 100 tank rail cars for the purpose of transporting ethanol.  The lease calls for monthly payments of $52,500 plus applicable taxes, beginning October 1, 2009.  There is also an additional usage rental of 3 cents per mile for each car that exceeds 35,000 miles.  The lease has an expiration date of September 2016.

On February 2, 2010, the Company entered into a lease agreement with an unrelated third party to lease an additional 30 ethanol tank rail cars.  The one-year term of the lease ended on February 2011.  On March 8, 2011 the Company extended this lease with two riders for 15 railcars each. Each rider calls for monthly payments of $9,750 plus applicable taxes. There was also an additional usage rental of 3 cents per mile for each car that exceeds 30,000 miles.  The lease term on the riders is for three years commencing March 2011 and expiring March 2014.

The Company also leases office equipment and other equipment under operating leases that will expire at various dates through June 2015.

Approximate minimum lease payments under these operating leases for future years are as follows:

Years ending Sept 30:
2013	$	1,594,000
2014	1,075,000
2015	635,000
2016	630,000
2017	—
	$	3,934,000

Rent expense under the above operating leases totaled approximately, $1,890,000, $1,745,000 and $1,597,000 for the years ended September 30, 2012, 2011 and 2010, respectively.

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Commitments and Major Customer and Subsequent Event

12 Months Ended

Sep. 30, 2012

Commitments and Major Customer [Abstract]

Commitments and Major Customer and Subsequent Event

Commitments and Major Customer and Subsequent Event

On September 25, 2009, the Company entered into an agreement with an unrelated entity.  The agreement became effective on October 1, 2009.  The unrelated entity is responsible for marketing and purchasing all of the ethanol produced by the company.  For the years ended September 30, 2012, 2011 and 2010, the Company has expensed $690,664, $712,258 and $695,945, under this agreement for marketing fees, respectively.  Revenues with this customer were $126,439,534, $139,535,766 and $94,611,865 for the years ended September 30, 2012, 2011 and 2010, respectively.  Trade accounts receivable of $6,778,356 and $6,129,247 was due from the customer as of September 30, 2012 and 2011 respectively.  As of September 30, 2012, the Company has ethanol sales commitments with the unrelated entity of 5,380,000gallons through December 2012. The sales price is approximately 10 cents under the monthly average OPIS-Chicago index price.

Subsequent to year end, the Company and unrelated party mutually agreed to terminate the ethanol marketing agreement effective December 31, 2012.

 The Company has entered into an agreement with an unrelated entity for marketing, selling and distributing the distiller’s grain as of October 1, 2007.   For the years ended September 30, 2012, 2011 and 2010, the Company has expensed marketing fees of $628,349, $535,226 and $295,353, respectively, under this agreement.  Revenues with this customer were $38,564,213, $31,715,564 and $19,434,064 for the years ended September 30, 2012, 2011 and 2010, respectively.  Trade accounts receivable of $2,064,496 and $1,083,695 was due from the customer as of September 30, 2012 and 2011, respectively.  As of September 30, 2012, the Company has distiller’s grain sales commitments with the unrelated entity of 4,385tons for a total sales commitment of approximately $1,176,418 less marketing fees.

The Company has an agreement with an unrelated party to provide the coal supply for the ethanol plant.  The agreement includes the purchase of coal at a cost per ton and a transportation cost per ton as defined in the agreement.  The cost is subject to price adjustments on a monthly basis.  If the Company fails to purchase the minimum number of tons of coal for the calendar year , the Company shall pay an amount per ton multiplied by the difference of the minimum requirement and actual quantity purchased.  That agreement expired as of January 1, 2008.   On October 1, 2007 the Company entered into an amended agreement to the original coal supply agreement.  The term of the agreement has been extended from the original expiration date to January 1, 2013.  The same minimum purchase commitment is required from the Company as the previous agreement.  The calendar year 2012 has a remaining estimated purchase commitment totaling approximately $89,702.  For the years ended September 30, 2012, 2011 and 2010, the Company has purchased coal of $7,217,257, $7,001,676 and $5,989,438 respectively.

The Company has entered into a variable contract with a supplier of denaturant.  The variable contract is for a minimum purchase of 216,000 gallons at the average of the OPIS Conway In-Well Natural Gasoline High and Low prices for the full calendar month of date of loading plus $0.1875 per net gallon. The term of the contract is from October 1, 2012 through December 31, 2012.   The estimated future purchase commitment on this contract is approximately $470,297.

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Revolving Credit Loan (Details) (USD $)	0 Months Ended
	Aug. 20, 2012	Sep. 30, 2012	Aug. 19, 2012	Sep. 30, 2011
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity			$ 10,000,000
Basis spread on variable rate	3.50%
Line of credit facility, unused capacity, commitment fee percentage	0.60%
Line of Credit Facility, Amount Outstanding		200,000		0
Revolving Credit Loan [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	10,000,000
Line of Credit Facility, Remaining Borrowing Capacity	9,400,000
Description of variable rate basis	LIBOR
Basis spread on variable rate	3.25%
Line of credit facility, unused capacity, commitment fee percentage	0.30%
Line of Credit Facility, Amount Outstanding		$ 200,000

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Sale of Property

12 Months Ended

Sep. 30, 2012

Sale of Property [Abstract]

Sale of Property

Sale of Property

On October 5, 2011, the Company completed the sale of a land parcel adjacent to its primary site for a sales price of $1,181,000. A gain of $496,098 was recognized for the sale of property for the year ended September 30, 2012.

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Lease Commitments Lease Commitments (Tables)

12 Months Ended

Sep. 30, 2012

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

Approximate minimum lease payments under these operating leases for future years are as follows:

Years ending Sept 30:
2013	$	1,594,000
2014	1,075,000
2015	635,000
2016	630,000
2017	—
	$	3,934,000

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Risk Management (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Trading Activity, Gains and Losses, Net [Line Items]
Derivative financial instruments	$ 71,978	$ 520,045
Trading Activity, Gains and Losses, Net	(1,007,746)	(4,116,930)	15,387
Sales [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	(7,308)	(1,126,667)	(1,438,563)
Cost of Goods, Total [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	(1,000,438)	(2,990,263)	1,453,950
Gain (Loss) on Settlement of Derivative Instrument [Member] | Sales [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	(7,308)	(2,655,034)	45,434
Gain (Loss) on Settlement of Derivative Instrument [Member] | Cost of Goods, Total [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	(1,134,488)	(2,946,138)	604,475
Unrealized Gain (Loss or Write-down) [Member] | Sales [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	0	1,528,367	(1,483,997)
Unrealized Gain (Loss or Write-down) [Member] | Cost of Goods, Total [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Trading Activity, Gains and Losses, Net	134,050	(44,125)	849,475
Not Designated as Hedging Instrument [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Assets, derivative financial instruments	134,050	292,375
Payables to Broker-Dealers and Clearing Organizations	(62,072)
Receivables from Clearing Organizations		227,670
Derivative financial instruments	$ 71,978	$ 520,045

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Statements of Members' Equity (USD $)	Total	Member Contributions	Retained Earnings
Balance at Sep. 30, 2009	$ 49,979,252	$ 38,990,105	$ 10,989,147
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions	(2,102,450)		(2,102,450)
Net income (loss)	4,362,458		4,362,458
Balance at Sep. 30, 2010	52,239,260	38,990,105	13,249,155
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions	0
Net income (loss)	900,049		900,049
Balance at Sep. 30, 2011	53,139,309	38,990,105	14,149,204
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions	(1,051,225)		(1,051,225)
Net income (loss)	(6,656,768)		(6,656,768)
Balance at Sep. 30, 2012	$ 45,431,316	$ 38,990,105	$ 6,441,211

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Members' Equity

12 Months Ended

Sep. 30, 2012

Members’ Equity [Abstract]

Members' Equity

Members' Equity

The Company was formed on May 19, 2004.  It was initially capitalized by the issuance of 1,924 membership units totaling $962,000 to the founding members of the Company.  The Company has one class of membership units.  A majority of the Board of Directors owns a membership interest in the Company.  The Company is authorized to issue up to 45,608 membership units without member approval.

Income and losses are allocated to all members based on their pro rata ownership interest. All unit transfers are effective the last day of the month.    Units may be issued or transferred only to persons eligible to be members of the Company and only in compliance with the provisions of the operating agreement.

The Company is organized as an Iowa limited liability company. Members' liability is limited as specified in the Company's operating agreement and pursuant to the Iowa Limited Liability Company Act. The duration of the Company shall be perpetual unless dissolved as provided in the operating agreement.

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Risk Management (Tables)

12 Months Ended

Sep. 30, 2012

Risk Management [Abstract]

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location

Derivatives not designated as hedging instruments as of September 30, 2012 and 2011 are as follows:

	2012			2011
Derivative assets	$	134,050		$	292,375
Cash held by (due to) broker	(62,072		)	227,670
Total	$	71,978		$	520,045

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The effects on operating income from derivative activities is as follows for the years ending September 30, are as follows:

	2012			2011			2010
Increase (decrease) in revenue due to derivatives related to ethanol sales:
Realized	$	(7,308	)	$	(2,655,034	)	$	45,434
Unrealized	—			1,528,367			(1,483,997		)
Total effect on revenue	(7,308		)	(1,126,667		)	(1,438,563		)
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
Realized	(1,134,488		)	(2,946,138		)	604,475
Unrealized	134,050			(44,125		)	849,475
Total effect on cost of goods sold	(1,000,438		)	(2,990,263		)	1,453,950
Total (decrease) increase  to operating income due to derivative activities	$	(1,007,746	)	$	(4,116,930	)	$	15,387

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Related-Party Transactions (Details) (USD $)	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010
Related Party Transaction [Line Items]
Contract settlement fee	$ 1,700,000	$ 0	$ 0
Key Coop [Member]
Related Party Transaction [Line Items]
Related party transaction, description of transaction	100.00%
Duration of contract (in years)	20 years
Handling fee	0.0675
Handling fee that is not elevated by HOIC, and is inside a 60-mile radius of Nevada, Iowa	0.04
Handling fee that is not elevated by HOIC, and is outside a 60-mile radius of Nevada, Iowa	0.03
Loss on contract termination	2,000,000
Reduction in termination fee	50,000
Purchases from related party	128,490,494	127,764,206	71,804,446
Corn cash contracts	588,585
Purchase commitment, remaining minimum amount committed	4,343,755
Corn basis forward contract	1,350,000
Related party transaction, amounts of transaction	200,610	84,739	96,392
Grain storage fees	117,562
Accounts payable, related parties, current	829,067	1,179,981
Contract settlement fee	1,700,000
Payment for contract settlement	425,000
Innovative Ag Services [Member]
Related Party Transaction [Line Items]
Purchases from related party	$ 170,878	$ 16,402	$ 21,714

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Contingency

12 Months Ended

Sep. 30, 2012

Contingency [Abstract]

Legal Matters and Contingencies

Contingency

In May 2010, a lawsuit was filed against the Company and approximately twenty other ethanol plants, design firms and equipment manufacturers by an unrelated party claiming the Company’s operation of the corn oil extraction system is infringing at least one patent. The plaintiff seeks injunctive relief, an award of damages with interest and any other remedies available under certain patent statutes or otherwise under law.  The Company is currently defending the lawsuit with legal counsel and has asserted various defenses including that it does not infringe and, further, that the patents are invalid.  The Company is unable to determine at this time if the lawsuit will have a material adverse affect on the Company.